BILL ANALYSIS Ó
SB 251
Page 1
Date of Hearing: August 26, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 251
(Roth) - As Amended August 20, 2015
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| |Revenue and Taxation | |9 - 0 |
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Urgency: No State Mandated Local Program: YesReimbursable:
Yes
SUMMARY:
This bill makes numerous changes to provide financial relief to
small businesses with respect to construction-related
accessibility litigation and to encourage compliance with
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construction-related accessibility standards. Specifically, this
bill:
1)Provides, beginning on or after January 1, 2016 and before
January 1, 2021, a credit under the Personal Income Tax (PIT)
Law and the Corporation Tax (CT) Law to a small business equal
to 10% of eligible access expenditures in excess of $250 but
less than $10,250.
2)Defines small business, for purpose of the above, as
consistent with definition in a parallel federal tax credit,
i.e. one either with gross receipts of $1 million or less in
the prior year or with not more than 30 full-time employees in
the prior year.
3)Establishes a presumption that certain "technical violations,"
as specified, do not cause a person difficulty, discomfort, or
embarrassment for the purpose of awarding minimum statutory
damaged in a construction-related disability claim, if the
defendant is a small business that has corrected the
violations within 15 days of receipt of the claim.
4)Protects a business from liability for minimum statutory
damages in a construction-related disability claim during the
120-day period after the business obtains in inspection, which
predates the claim, by a Certified Accessibility Specialist
(CASp) under specified conditions, including:
a) That the business employed 100 or fewer employees on
average over the prior three years and
b) That the business corrects, within 120 days of the CASp
inspection, all construction-related violations noted in
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the CASp's inspection report that are the bases of the
claim.
5)Requires a CASp to file, within ten days of inspecting a
business pursuant to the provisions of this bill, a specified
notice with the State Architect for listing on the State
Architect's website, indicating that the CASp has inspected
the business.
6)Requires the State Architect to do the following:
a) Publish and regularly update, on its website, an easily
accessible list of small businesses that have filed a
notice that they have obtained a CASp inspection.
b) Develop a process by which businesses may notify the
State Architect, as specified, of an inspection by a
certified access specialist.
c) Develop a form for businesses to notify the public that
the business has obtained a CASp inspection.
d) Require each applicant for CASp certification and
recertification to provide the State Architect with
information about location (city, county) where they intend
to, or have provided services, and requires the State
Architect to post this information on its website.
7)Requires local building departments, including charter cities
and counties, to develop and provide, to applicants for a
building permit, materials relating to the requirements of the
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Americans with Disabilities Act (ADA) and a notice that
approval of a permit does not signify compliance with the ADA.
Agencies may, in lieu of developing their own materials,
provide applicants with materials developed by the California
Commission on Disability Access (CCDA).
8)Requires local building departments, including charter cities
and counties, to expedite review of a building permit if:
a) The applicant provides a copy of a disability access
inspection certification provided by a CASp.
b) The project is necessary to address either an alleged
violation of a construction-related accessibility standard
or a violation noted in the inspection.
c) The applicant has had a CASp review any project plans
for compliance with construction-related accessibility
standards.
9)Extends the sunset, from January 1, 2016 to January ,1, 2019,
on the following requirements:
a) For attorneys to send copies of demand letters regarding
violations of construction-related accessibility standards
to the State Bar of California, and for the Bar to report
on this information to the Legislature.
b) For attorneys to send copies of complaints and demand
letters alleging violations of construction-related
accessibility standards to the CCDA, and for the CCDA to
review and report on this information to the Legislature.
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FISCAL EFFECT:
1)The Franchise Tax Board estimates General Fund revenue losses
of $250,000 in 2015-16, $450,000 in 2016-17, and $500,000 in
2017-18 and until the tax credit expires.
2)Minor ongoing costs ($20,000) to the State Architect
associated with updating the existing CASp database to provide
a mechanism to capture the required information, developing a
process and form documents for the new notice requirements.
The requirement to collect and post the service locations of
CASps is a minor and absorbable cost, as the State Architect
already collects and posts this information on a voluntary
basis.
3)Potential significant ongoing state-reimbursable General Fund
costs for local building departments to provide expedited
review for qualifying permit applications.
COMMENTS:
1)Background and Purpose. Under the twenty-five year old federal
ADA, a business that constitutes a place of public
accommodation (e.g., many places of lodging, entertainment,
recreation, restaurants, bars, theaters, stores, health clubs,
etc.) is prohibited from discriminating on the basis of
disability if its operations affect interstate commerce. Since
1992, public accommodations in California have been required
to comply with not only the ADA, but also with the state's
Unruh Act, which incorporates the ADA into its provisions and
makes a violation of the ADA punishable as a violation of
Unruh. All violations of Unruh are subject to statutory
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damages of at least $4,000 per violation, except some cases
where the violation is based on a construction-related
accessibility claim, in which case lower damages (a minimum of
$1,000, or $2,000, depending on the circumstances of the case)
apply.
There has been widespread media coverage about the problem of
what has been described as "serial ADA litigation." A handful
of highly litigious plaintiffs have in fact targeted small
businesses, especially those without the financial resources
and sophistication to challenge such lawsuits on their merits.
According to data compiled by the California Commission on
Disability Access, more than half (54%) of the
construction-related accessibility complaints filed between
2012 and 2014 were filed by two law firms; and 46 percent of
all complaints were filed by just 14 parties.
The author of this bill contends that additional tools are
necessary to protect small businesses from high-frequency
litigants and encourage compliance with the 25-year-old state
and federal laws. The author therefore proposes a number of
changes as described above to provide financial relief to
businesses and encourage businesses to obtain CASp inspection
and comply with construction-related accessibility standards
so that disabled consumers can exercise their rights to fully
and equally access public accommodations in the state.
2)Related Legislation. AB 1342 (Steinorth), pending in Senate
Appropriations, provides funding for two new outreach
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positions at the CCDA, requires a commercial property owner to
state on every lease form or rental agreement executed after
July 1, 2016, whether or not the property being leased has
undergone inspection by a CASp, and requires a commercial
property owner to provide additional information to the tenant
or lessor about the condition of the rented or leased
property.
AB 1521 (Assembly Committee on the Judiciary), pending in
Senate Judiciary, enacts new pre-filing procedures and an
additional filing fee for "high-frequency litigants" and
provides new tools for businesses to use when they are served
with complaints alleging violations of construction-related
accessibility claims.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081