BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 1353           Hearing Date:    6/23/2015
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          |Author:   |Patterson                                             |
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          |Version:  |2/27/2015                                             |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Randy Chinn                                           |
          |:         |                                                      |
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          SUBJECT:  Highway rest areas:  vending machines:  utility costs


          DIGEST:  This bill exempts blind vendors from having to pay  
          utility costs for their vending machines operating in roadside  
          rest areas.
            
          ANALYSIS:
          
          Existing law:
          
          1)Establishes the Business Enterprises Program for the Blind  
            (BEPB) within the Department of Rehabilitation (DOR) to  
            provide blind persons with employment, economic opportunities,  
            and the means to be self-sufficient.

          2)Gives priority to blind persons to operate vending businesses  
            on state properties, including roadside rest areas.

          3)Requires blind vendors to reimburse Caltrans for costs of  
            maintenance, operations, design review, and other activities  
            related to operating vending machines in state roadside rest  
            areas.

          4)Requires the hosting agency to pay for the cost of utilities  
            for vending machines operated by blind vendors under the BEPB  
            in state buildings.










          AB 1353 (Patterson)                                Page 2 of ?
          
          
          This bill exempts blind vendors from having to pay for utility  
          costs (e.g., electricity, water, sewer) incurred by their  
          vending machines operating at roadside rest areas under the BEPB  
          and requires Caltrans to pay for those utility costs using state  
          funds.

          

          COMMENTS:

          1)Purpose.  The author believes that "this bill is needed to  
            bring equity into how the state treats blind vendors that  
            service state buildings and those that service state rest stop  
            areas.  Furthermore, the discrepancy is inconsistent with the  
            intent of the BEPB because it threatens the viability and  
            livelihood of many California small business owners who are  
            blind vendors."

            Supporters note that blind vendors already pay the DOR 6% of  
            their sales for maintenance and support.  Having these vendors  
            which operate at rest stops also pay for utility service seems  
            inequitable to them and financially hazardous.

          2)Background.  According to a 2013 annual report of the DOR's  
            BEPB, 17 blind vendors operated vending facilities at 29  
            roadside rest areas along interstate highways in California,  
            averaging just over $50,000 in annual income per vendor.   
            Vendors sell items from automated vending machines, including  
            refrigerated soft drinks, snacks, ice cream, and hot  
            beverages.  A single vendor conducts business at each rest  
            stop (and for some vendors more than one rest stop), operating  
            between seven and 11 vending machines per site.  Monthly  
            utility costs depend on the number and type of vending machine  
            (and the need for refrigeration or heating, in particular) and  
            the climate, season, and placement of machines (indoor vs.  
            outdoor).  According to the author, electricity costs range  
            from around $350 per month to $700-$900 per month depending on  
            these factors.  Using these figures, a ballpark estimate of  
            the total subsidy provided by this bill is about $200,000  
            annually.

            A current interagency agreement between the DOR and Caltrans  
            requires vendors to pay for utility costs at the roadside rest  
            areas.  In the 13 facilities in which meters are installed,  
            vendors pay utility costs directly to the electricity  








          AB 1353 (Patterson)                                Page 3 of ?
          
          
            provider.  At the remaining sites, the interagency agreement  
            requires vendors to pay $200 per month per vending site and  
            DOR reimburses Caltrans for the balance of electricity costs.

          3)What's fair?  Utility rates are increasing, so naturally  
            utility bills for vending machines are rising.  These can be  
            expensive to operate, as many involve refrigeration or  
            heating, which are energy-intensive activities, particularly  
            for machines which are open to the elements 24/7.  As Caltrans  
            installs meters at the rest stops, the vendors' cost of  
            utility service will double or more.  It seems likely that  
            these increasing costs jeopardize the self-sufficiency which  
            the BEPB is supposed to facilitate.  However, should it be  
            demonstrated that blind vendors under BEPB are operating very  
            profitably, there would be less justification for this public  
            subsidy.
          Related Legislation:
          
          AB 1602 (Patterson, 2014) - exempts blind vendors from having to  
          pay for utility costs for their vending machines operating in  
          roadside rest areas.  This bill was held in the Senate  
          Appropriations Committee.

          Assembly Vote:

            Floor:    78-0
            Appr:     17-0
            Trans:    15-0
          
          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  No


            POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,
                          June 17, 2015.)
          
            SUPPORT:  

          California Council of the Blind
          Resources for Independence Central Valley
          15 individuals

          OPPOSITION:









          AB 1353 (Patterson)                                Page 4 of ?
          
          
          None received



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