BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 251 (Roth) - Civil rights: disability access ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 20, 2015 |Policy Vote: JUD. 6 - 0, GOV. & | | | F. 7 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 26, 2015 |Consultant: Robert Ingenito | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 251 would (1) enact a tax credit for businesses that make accessibility improvements and (2) require certain state and local agencies to help businesses make accessibility improvements. Fiscal Impact: The Franchise Tax Board (FTB) estimate of the current version of the bill is pending. The bill would likely lead to an annual General Fund revenue loss in the tens of millions of dollars minimally. FTB estimated previously that the May 4, 2015 version of the bill would result in SB 251 (Roth) Page 1 of ? General Fund revenue losses of $42 million in 2015-16, $100 million in 2016-17, and $120 million in 2017-18. The revenue impact from the current version of the bill would likely be of similar magnitude. FTB would incur annual administration costs, likely in the hundreds of thousands of dollars minimally, to administer the tax credit. The Division of the State Architect within the Department of General Services would incur minor costs to administer its provisions of the bill. Potentially major one-time and ongoing costs to local agencies for material development, applicant notification, and expedited review requirements mandated in the bill. To the extent the increase in local agency workload qualifies as a reimbursable state mandate, local agencies could submit claims for reimbursement of those costs (General Fund). Background: In California, individuals with disabilities and medical conditions have legal protections to ensure full and free access to and use of roadways, sidewalks, buildings and facilities open to the public, hospitals and medical facilities, and housing. After Congress enacted the Americans with Disabilities Act (ADA) in 1990, the Legislature provided that violations of the ADA are also violations of state legal protections, which are comparatively higher and independent of the ADA. Additionally, under the Unruh Civil Rights Act, 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 establishments. A violation of the ADA also constitutes a violation of the Act. Persons violating the Act are subject to actual damages incurred by an injured party plus treble damages, with a minimum of $4,000, plus any attorney's fees as the court may determine to be proper. I. Tax Credits. California law allows various income tax SB 251 (Roth) Page 2 of ? credits, deductions, and sales and use tax exemptions to provide incentives to reward taxpayers that incur certain expenses that benefit the public, such as child adoption, or to influence behavior, including business practices and decisions, such as research and development credits. The Legislature typically enacts such tax incentives to encourage taxpayers to do something that but for the tax credit, they would not do. The Department of Finance is required to annually publish a list of tax expenditures, currently totaling around $51 billion per year. In 1990, Congress enacted a disabled access tax credit against federal taxes for businesses with annual gross receipts of less than $1 million or fewer than 30 full-time employees equal to 50 percent of the difference between the amount of expenditures reasonable and necessary to accomplish the below purposes and $250, not to exceed $10,000: Remove barriers that prevent a business from being accessible to or usable by individuals with disabilities; Provide qualified interpreters or other methods of making audio materials available to hearing-impaired individuals; Provide qualified readers, taped texts, and other methods of making visual materials available to individuals with visual impairments; and Acquire or modify equipment or devices for individuals with disabilities. II. Local Land Use Permitting. Cities and counties have broad authority to oversee land use within their boundaries, including the ability to approve or deny permits, licenses, certificates SB 251 (Roth) Page 3 of ? or other entitlements needed to construct a project or improvement. The Permit Streamlining Act sets deadlines for cities and counties to make some of those land use decisions, such as approving permits. The length of time that a city or county has to act varies for different projects, based on factors such as the type of project and whether the project requires an environmental impact report before the city or county makes its decision. So, local building departments make decisions about how to prioritize permitting applications in order to meet those deadlines and properly exercise local governments' police power. III. Construction-Related Accessibility Standards Compliance Act. The Americans with Disabilities Act (ADA) as well as provisions in state law set standards that public buildings-including businesses-must meet to ensure that persons with disabilities have full access. Some of these accessibility standards lay out how public buildings must be constructed. The standards that any given building must meet depends on the history of that building, such as when it was constructed and whether it has been improved. In 2003, the Legislature enacted the Certified Access Specialist Program, administered by the Office of the State Architect, to inspect places of public accommodation to ensure compliance with disability access standards. Persons being sued in a disability access action over a property that has been inspected by a Certified Access Specialist (CASp), and determined to meet applicable construction-related accessibility standards, or is pending a determination by a CASp, may obtain a stay of the action for 90 days and an early evaluation conference to resolve the case. In 2012, the Legislature again amended the law to provide that (1) any business in California that has received a CASp inspection has 60 days to cure an access violation and the Court may reduce statutory damages by up to 75 percent, and (2) small businesses with 25 or fewer employees that have not had a CASp inspection have 30 days to fix a violation, and the Court may reduce their statutory damages up to 50 percent. State law additionally directs the California Commission on Disability Access to develop educational materials to help SB 251 (Roth) Page 4 of ? California businesses understand the accessibility standards they must meet and identify common violations of the ADA. IV. Charter Cities and Counties. The California Constitution allows cities and counties that adopt charters to control their own "municipal affairs." In all other matters, charter cities must follow the general, statewide laws. Because the Constitution does not define "municipal affairs," the courts determine whether a topic is a municipal affair or whether it is an issue of statewide concern. Proposed Law: This bill would make several changes to assist businesses in complying with ADA requirements. I. Tax Credits. SB 251 would enact tax credits amounts paid for eligible access expenditures that exceed $250 for the 2016 through 2022 taxable years, based largely on the current federal credit. The credit amount is calculated the same way as the federal credit, and is equal to half of the difference between the amount of the expenditure that exceeds $250. A taxpayer with expenses that exceed $10,250 can take a maximum credit of $5,000. If the taxpayer meets the definition of small business, the credit would be in an amount equal to 50 percent of the difference between the total eligible access expenditures incurred by a taxpayer that do not exceed fifteen thousand two hundred fifty dollars ($15,250) and two hundred fifty dollars ($250). Overall, the maximum credit a small business could receive would be $7,500. All taxpayers can carry over the credit for six years. Additionally, FTB may prescribe any rules, guidelines, or procedures necessary to implement the credit, which are exempt from the Administrative Procedures Act. The measure would sunset the credit on December 1, 2023, and contains legislative findings and declarations to comply with SB 1335. SB 251 (Roth) Page 5 of ? II. Local Land Use Permitting. SB 251 would require local agencies to: Expedite their review of an application for a project to modify a public building if the building has been inspected by a CASp and the CASp has completed a written inspection report stating that the building currently complies with all of the applicable construction-related standards. Develop materials on the ADA, and to provide those materials to project applicants, along with a notice stating that approval of the permit does not mean that the project complies with the ADA. SB 251 states that these two requirements apply to all cities and counties, including charter cities and counties. The bill includes a legislative finding and declaration that the bill addresses a matter of statewide concern because it pertains to development permit applications. III. Construction-Related Accessibility Standards Compliance Act. SB 251 would amend the Construction-Related Accessibility Standards Compliance Act to: Import the definition of microbusiness into the Act, and provides that a defendant meeting that definition shall not be liable for statutory damages for more than one offense if they corrected the violation before the lawsuit was filed. Provide that any business inspected by a CASp that corrects a violation defined as a "minor matter" within 30 days of the service of summons and complaint asserting a claim or receipt of written notice, shall not be liable for SB 251 (Roth) Page 6 of ? a violation of a construction-related accessibility standard. "Minor matters" only include violations for interior and exterior signage, the color and condition of parking lot paint striping, and truncated domes. Provide that any business that corrects a violation within 90 days of receiving a CASp inspection shall not be liable for a violation of a construction-related accessibility standard. IV. Other provisions. SB 251 additionally would: Require commercial property owners and lessors to state on every lease form or renal agreement that both they and the tenant are responsible for compliance with ADA, and that the terms of the lease or other contract must allocate compliance responsibility between the two. Require an individual who wishes to become a CASp to provide the State Architect with unspecified information about the city or county in which they provide, or plan to provide, service. The State Architect must post that information on its website. Directs the California Commission on Disability Access to link to the State Architect's CASp website and provide state agencies and local building departments with educational materials explaining the ADA. Extend the sunset in Civil Code Section 55.32 until January 1, 2019. SB 251 (Roth) Page 7 of ? Staff Comments: By imposing additional duties on local agencies with respect to the receipt and review of applications for development projects, this bill would impose a state-mandated local program. If the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs would be required. The amount is unknown, but potentially significant. -- END --