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 ----------------------------------------------------------------- |Author: |Patterson | |----------+------------------------------------------------------| |Version: |2/27/2015 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Randy Chinn | |: | | ----------------------------------------------------------------- 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 -- END --