BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 1230 Hearing Date: July 6,
2015
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|Author: |Gomez |
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|Version: |June 30, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Sarah Mason |
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Subject: California Americans With Disabilities Small Business
Capital Access Loan Program.
SUMMARY: Establishes the California Americans With Disabilities Act
Small Business Capital Access Loan Program within the California
Capital Access Loan Program in order to create a self-sustaining
program to provide loans to assist small businesses in financing
the costs of projects that alter or retrofit existing small
business facilities according to certain criteria, to comply
with the federal Americans with Disabilities Act.
Existing law:
1) Pursuant to federal law, under the Americans with
Disabilities Act (ADA), provides that no individual shall be
discriminated against on the basis of disability in the full
and equal enjoyment of the goods, services, facilities,
privileges, advantages, or accommodations of any place of
public accommodation by any person who owns, leases, or
leases to, or operates a place of public accommodation.
(42 U.S.C. Sec. 12182.)
2) The Unruh Civil Rights Act (Unruh Act) provides that all
persons, regardless of sex, race, color, religion, ancestry,
national origin, disability or medical condition, are
entitled to the full and equal accommodations, advantages,
facilities, privileges, or services in all business
AB 1230 (Gomez) Page 2
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establishments of every kind whatsoever. A violation of the
ADA also constitutes a violation of the Unruh Act. A
violation of this section subjects a person to actual damages
incurred by an injured party, treble actual damages but not
less than $4,000, and any attorney's fees as the court may
determine to be proper. (Civil Code (Civ) § 51 et seq.)
3) Provides that individuals with disabilities or medical
conditions have the same right as the general public to the
full and free use of the streets, highways, sidewalks,
walkways, public buildings, medical facilities, including
hospitals, clinics and physicians' offices, public facilities
and other public places. It also provides that a violation
of an individual's rights under the ADA constitutes a
violation of state law. (Civ § 54.)
4) Provides that individuals with disabilities shall be entitled
to full and equal access to public accommodations, subject
only to the conditions and limitations established by law, or
state or federal regulation, and applicable alike to all
persons. It further provides that individuals with
disabilities shall be entitled to full and equal access to
all housing accommodations offered for rent or lease, subject
to conditions and limitations established by law. (Civ §
54.1)
5) Provides that a violation of the ADA also constitutes a
violation of Civ § 54.1. A violation of Section 54.1
subjects a person to actual damages, plus treble actual
damages but not less than $1,000, and attorney's fees as the
court deems proper. (Civ § 55)
6) Establishes the California Commission on Disability Access
(Commission), an independent state agency composed of 19
members, with general responsibility for monitoring
disability access compliance in California, and with
authority to make recommendations to the Legislature for
necessary changes in order to facilitate implementation of
state and federal laws on disability access.
AB 1230 (Gomez) Page 3
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(Government Code § 8299 et seq.)
7) Requires the Commission to use its funding, as appropriate,
to provide information about preventing or minimizing
compliance problems among California businesses, and
recommending programs to enable persons with disabilities to
obtain full and equal access to public facilities. (GC §
8299.05.)
8) Makes it a priority for the Commission to provide educational
resources to promote and facilitate disability access
compliance. (GC § 8299.06.)
9) Establishes GO-Biz within the Governor's Office for the
purpose of serving as the lead state entity for economic
strategy and marketing of California on issues relating to
business development, private sector investment and economic
growth. GO-Biz also serves as the administrative oversight
for the California Business Investment Service and the Office
of the Small Business Advocate. (GC §§ 12096 - 12098.5)
10)Enacts the Small Business Financial Assistance Act of 2013
and establishes the Small Business Finance Center within the
Infrastructure and Economic Development Bank (I-Bank) within
GO-Biz, to promote economic revitalization, enable future
development, and encourage a healthy climate for jobs in
California. I-Bank for the purpose of assisting businesses
seeking capital resources not otherwise available in the
private markets including:
a) Loan guarantees and other credit enhancements;
b) Direct loans and other debt instruments;
c) Disaster loan guarantees; and
d) Surety bond guarantees. (GC §§63088-63089.98)
11)Establishes the California Pollution Control Financing
Authority Act (CPCFA Act) with the purpose of providing
industry within the state, irrespective of company size, with
an alternative method of financing in providing, acquiring,
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enlarging, or installing facilities for establishing pollution
control, providing supplies of clean water, and producing
energy from alternative or renewable sources, that are needed
to accomplish the purposes of this division; to assist
economically distressed counties and cities to develop and
implement growth policies and programs that reduce pollution
hazards and the degradation of the environment or promote
infill development and; to assist with the financing of the
costs of assessment, remedial planning and reporting,
technical assistance, and the cleanup, remediation, or
development of brownfield sites, or other similar or related
costs.
(Health and Safety Code (HSC) § 44502)
12)Establishes the Capital Access Loan Program for Small
Businesses (CalCAP) which encourages banks and other financial
institutions to make loans to small businesses that have
difficulty obtaining financing. (HSC §§ 44559 - 44559.12)
This bill:
1) States Legislative intent to create and fund the California
Americans With Disabilities Act Small Business Capital Access
Loan Program (Small Business ADA Program) to assist small
businesses in complying with the ADA. Specifies that it is
not the intent of the Legislature to assist the physical
expansion of small businesses that includes modifications
that comply with the ADA. Requires the Small Business ADA
Program to be administered by the CPCFA and follow the terms
and conditions for the CalCAP.
2) Makes the following definitions for purposes of the Small
Business ADA Program:
a) "Americans with Disabilities Act" means the federal ADA.
b) "California Americans with Disabilities Act Small
Business Capital Access Loan Program Fund" or "fund" means
a fund established and administered by the CPCFA to be used
for purposes of the Small Business ADA Program.
c) "Eligible cost" means and includes all or any part of
the price of construction, purchase price of real or
personal property, the price of demolishing or removing any
AB 1230 (Gomez) Page 5
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buildings or structures, the price of all machinery and
equipment, the amount of financing charges and interest
prior to, during, and for a period not to exceed the later
of one year or one year following completion of
construction, as determined by CPCFA, the price of
insurance during construction, the amount of funding or
financing noncapital expenses, the amount of reserves for
principal and interest and for extensions, enlargements,
additions, replacements, renovations and improvements, the
price of engineering, financial and legal services and
other service contracts, the price of plans,
specifications, studies, surveys, estimates, administrative
expenses, and any other expenses of funding or financing,
that are necessary and allocable to the eligible project,
and shall not include costs not directly related to
physical alterations necessary for compliance with the ADA.
d) "Eligible project" means the physical alterations or
retrofits to an existing small business facility of less
than 10,000 square feet necessary to ensure that facility
is in compliance with the ADA, and the financing necessary
to pay eligible costs of the project.
e) "Qualified loan" means a loan or portion of loan where
the proceeds of the loan or portion of loan are limited to
the eligible costs for an eligible project under this
program, and where the loan or portion of loan does not
exceed fifty thousand dollars.
f) "Small business" or "qualified business" means a
business that has fewer than 15 full-time equivalent
employees, less than one million dollars in total gross
annual income from all sources and does not provide
overnight accommodations.
1) Establishes the Small Business ADA Program Fund (Fund) in the
State Treasury to be administered by CPCFA and provides a
continuous appropriation for carrying out the purposes of
this section.
2) Requires CPFCA to adopt regulations implement the Small
Business ADA Program, including provisions to:
a) Establish a new loss reserve account for each
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participating lender enrolling loans in this program.
b) Obtain a certification from each participating lender
and small business upon enrollment of a qualified loan that
the proceeds of the loan will be used for the eligible
costs of an eligible project.
c) Contribute an additional incentive from the fund for
each loan enrolled for a qualified business located in
severely affected communities.
d) Restrict the enrollment of a qualified loan in any other
capital access loan program for small business offered by
the CPFCA as long as funds are available for the Small
Business ADA program.
e) Limit the term of loss coverage for each qualified loan
to no more than five years.
f) Recapture CPFCA's contribution from the loss reserve
account for each enrolled loan upon the maturation of such
loan or after five years from the date of enrollment, which
ever happens first, to be deposited in the fund and applied
to future expenditures for contributions and administrative
costs
1) Transfers $50 million from the General Fund (GF) to the Small
Business ADA Fund for the purposes of funding loss reserve
accounts and administering Small Business ADA Program.
FISCAL EFFECT: Unknown. This bill is keyed "fiscal" by
Legislative Counsel but the current version of the bill has not
yet been considered by a policy committee of the Legislature.
The prior version of this bill, which established the California
Americans with Disabilities Act Small Business Compliance
Financing Authority, rather than a Program within an existing
authority (CPFCA) as this bill now proposes, was estimated by
the Assembly Committee on Appropriations, in an analysis dated
May 13, 2015, to result in a one-time GF appropriation of $50
million and estimated annual costs of approximately $800,000 to
the Treasurer to administer the Authority, initially paid from
the GF appropriation, and eventually paid from revenue generated
by financing activities.
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COMMENTS:
1. Purpose. This bill is sponsored by the Author . According to
the Author, annually, countless businesses endure predatory
lawsuits over ADA compliance. These lawsuits can close
businesses and create a greater burden on the disabled
community that seeks to be served by local business. The
Author states that this bill is not intended to provide loans
for small businesses to pay for legal fees or settlements to
ADA complaints but rather the goal is to assist the small
business with paying for changes to existing facilities in
order to be compliant with ADA. The Author notes that the $50
million from the General Fund is designed to serve as seed
money for the Program, which is meant to be self-sustaining.
According to information provided by the Author, existing law
provides various programs to expand access to persons with
disabilities and promote compliance with the federal ADA of
1990. Existing law also authorizes specified authorities to
make loans. The loans are funded by bond issuances to lower
the cost of financing certain kinds of projects such as
health facilities in order to pass along those savings to the
public paying for health care at their facilities.
The Author notes that California small businesses continue to
be challenged in acquiring sufficient capital for proactive
facility upgrades, retrofits, and other improvements to
ensure they are complying with the ADA. According to the
Author, every year, hundreds of lawsuits are filed against
small businesses and "mom and pop stores," claiming they are
violating disability regulations. The Author states that
more than 40 percent of the nation's ADA cases are filed in
California and often, these lawsuits are filed by a handful
of attorneys, usually in limited jurisdiction, seeking only
statutory penalty damages, as opposed to injunctive or
remedial relief centered on securing substantial public value
for the disability community. According to the Author, this
type of predatory litigation arguably weakens the rights of
the disabled community by compelling small businesses to
spend more money on legal fees and costs than on improving
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their establishments to improve accessibility.
2. California Pollution Control Financing Agency (CPCFA) and
California Capital Access Program (CalCAP). Founded in 1972,
and housed in the State Treasurer's Office, the California
Pollution Control Financing Authority (CPCFA) provides
financial assistance for participating parties seeking to
build pollution control facilities. CPCFA's board is
comprised of the State Treasurer, the State Controller, and
the Director of Finance. CPCFA administers the "CalReUSE"
program to assist in the rejuvenation and development of
brownfield sites by issuing low-interest loans up to
$500,000; the Rate Reduction Bond Program, which allows joint
powers agencies to issue bonds to finance publicly owned
utility projects secured by utility property; conduit bond
programs, whereby CPCFA issues bonds, and lends the proceeds
to both large and small businesses to acquire, construct, or
install pollution control, waste disposal, and resource
recovery facilities; a loan loss reserve program funded by
the Air Resources Board (ARB) to assist owners and operators
of small fleets of heavy-duty diesel trucks achieve early
compliance with ARB's Statewide Truck and Bus Regulation
designed to reduce diesel particulate matter emission.
Additionally, CPCFA provides finance incentives to both
lenders and borrowers for the purchase and installation of
electric vehicle charging stations at California businesses,
by providing rebates to borrowers who participate, and may
provide lenders with up to 100 percent coverage on certain
loan defaults.
CPCFA also administers the California Capital Access Program,
(CalCAP), which insures loans made by participating financial
institutions to small businesses. CalCAP is a form of loan
portfolio insurance which may provide up to 100 percent
coverage on certain loan defaults. Each lender is entirely
liable for its loan losses; however, those losses can be
reimbursed from each lender's loan loss reserve account. The
loss reserve accounts are built through contributions made by
the borrower, lender, and CPCFA.
Historically, CalCAP was funded from small business
assistance fees collected from its bond issuance, but the
Legislature appropriated $6 million from the GF to the
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program in 2010. In recent years, CalCAP has grown
significantly due to federal funding: CPCFA received $27.8
million in 2011, the same amount again in 2013, and expects a
third transfer of the same amount in 2015. In 2014, CalCAP
recruited 10 new lenders to participate in the various
programs, and 43 lenders enrolled loans. CalCAP lenders
enrolled 3,491 loans totaling $247 million in 2014, an
increase of about 8 percent in the number of loans and 20
percent in the amount of money loaned compared with 2013.
In October 2010, Congress passed and the President signed the
Small Business Jobs Act which, among other things, created
the State Small Business Credit Initiative (SSBCI), which is
authorized to expend up to $1.5 billion for state sponsored
small business finance programs. Over the life of the
program, every federal dollar must be matched by $10 private
sector dollars. California uses its moneys to capitalize the
SBLGP administered through the I-Bank and CalCAP.
As of the end of 2014, California has encumbered $87.6
million, with approximately $40.6 million set aside to cover
loan guarantees; $7.2 million deposited with private
financial institutions through the CalCAP and $39.8 million
used for the collateral support program. Approximately, $2.4
million has been used for direct administrative costs,
resulting in a cumulative 2.18% administrative cost per
dollars allocated by the U.S. Treasury.
In 2014, California encumbered $36.9 million of SSBCI funds.
Of this amount, approximately $12.9 million set aside to
cover loan guarantees; $2.2 million deposited with private
financial institutions through the CalCAP and $21.4 million
used for the collateral support program. In 2014, 1,630
loans were made to small businesses, which leveraged $192.6
million in private funds at a 19:1 ratio. Since inception,
$493.3 million in loans to small business were leveraged
(18:1 ratio). Since inception, 47,202 jobs have been created
(7,372) or retained (39,830) by the close of 2013. In 2014
job impacts were 2,228 new jobs and 13,931 retained jobs.
3. Related Legislation This Year. SB 67 (Galgiani) exempts a
small business from statutory damage liability in connection
with a construction-related accessibility claim and extends
the period for correcting construction-related violations
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that are the basis of a claim from 60 days to 120 days of
being served with the complaint, for purposes of reducing a
defendant's minimum statutory damage liability to $1,000.
( Status: The bill is pending in the Senate Judiciary
Committee.)
AB 1342 (Steinorth) appropriates $120,000 from the GF to the
Commission which shall be used to provide funding to
establish two permanent outreach coordinator positions and
enacts other measures intended to promote disability access
compliance. ( Status : The bill is currently pending in the
Senate Judiciary Committee.)
AB 1393 (Burke) expands the authority and program focus of
the CPCFA from providing financial assistance to address the
control and remediation of pollution and the capital access
challenges of small businesses to offering unlimited types of
financial products to an expansive list of public and private
entities, as specified. ( Status: The bill is currently
pending in the Senate Committee on Governance and Finance.)
4.Prior Related Legislation. Multiple Legislative efforts have
been pursued over the years aimed at encouraging compliance
with ADA but also curbing frivolous ADA lawsuits.
SB 1186 (Steinberg, Chapter 383, Statutes of 2012) enacted a
comprehensive package of disability litigation reforms.
AB 901 (V. Manuel Pérez, Chapter 483, Statutes of 2011)
expanded the definition of financial institutions eligible to
participate in CalCAP and increased CalCAP reporting
requirements.
AB 981 (Hueso, Chapter 484, Statues of 2011) provided
additional incentives within CalCAP to encourage lenders to
lend to small businesses.
AB 1632 (Blumenfield, Chapter 731, Statutes of 2010)
transferred a total of $32.4 million from the GF to the
California Small Business Expansion Fund, CalCAP, and the
California Economic Development Fund to support small
businesses and facilitate matching funds that would ensure a
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full complement of federal funding for these programs.
SB 1608 (Corbett, Chapter 549, Statutes of 2008) established
the Commission and enacted various other reforms intended to
increase voluntary compliance with longstanding state and
federal laws requiring access to the disabled in any place of
public accommodation.
SUPPORT AND OPPOSITION:
Support:
California Citizens Against Lawsuit Abuse
California Small Business Association
City of Thousand Oaks
Civil Justice Association of California
Consumer Attorneys of California
Disability Rights California
National Federation of Independent Business
Orange County Business Council
Opposition:
None on file as of July 1, 2015.
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