BILL ANALYSIS
AB 1186
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2009-2010 Regular Session
BILL NO: AB 1186
AUTHOR: Blumenfield
AMENDED: May 28, 2009
FISCAL: No HEARING DATE: June 22, 2009
URGENCY: No CONSULTANT: Randy Pestor
SUBJECT : AIR POLLUTON/PARKING CASHOUT PROGRAM
SUMMARY :
Existing law :
1) Provides the California Air Resources Board (ARB) with
primary responsibility for control of mobile source air
pollution, including adoption of rules for reducing vehicle
emissions and the specification of vehicular fuel
composition. (Health and Safety Code 39000 et seq. and
39500 et seq.). The ARB must coordinate efforts to attain
and maintain ambient air quality standards. (39003). Any
person violating any provision of vehicle air pollution
control requirements, or any regulation of the ARB adopted
pursuant to those requirements, for which a penalty is not
provided, is subject to a civil penalty not to exceed $500.
(43016).
2) Provides that air pollution control districts (APCDs) and
air quality management districts (AQMDs) have primary
responsibility for controlling air pollution from all
sources, other than emissions from mobile sources. (40000
et seq.).
3) Under Employee Parking Law requirements (43845):
a) Requires any employer of 50 or more persons in a
nonattainment air basin to offer a parking cash-out
program if the employer provides a parking subsidy to
employees.
b) Provides that the parking cash-out program does not
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apply to an employer who has leased employee parking
before 1993, until the expiration of that lease or
unless the lease permits the employer to reduce, without
penalty, the number of parking spaces subject to the
lease.
c) Provides legislative intent that the cash-out
requirements apply only to employers who can reduce,
without penalty, the number of paid parking spaces they
maintain for the use of their employees and instead
provide their employees with the parking cash-out
option.
This bill , under Employee Parking Law requirements:
1) Requires the lessor of a nonresidential building located in
a nonattainment area offering tenant parking to list
parking costs as a separate line item on all lease
agreements entered into, or renewed, on or after January 1,
2011
2) Provides that the above requirement applies only to the
lessor of a nonresidential building that enters into, or
renews, a lease agreement providing occupancy for 50 or
more persons.
COMMENTS :
1) Purpose of Bill . According to the author "Employers are
not taking advantage of an existing state program - the
parking cash-out program - because it is too difficult to
calculate the value of employee parking when it is included
with the total cost of office rental space. Consequently,
this bill requires a lessor of a nonresidential building
that offers parking to its tenants to list the parking
costs as a separate line item in all lease agreements."
The author notes that "The goal of this bill is to bring about
greater use of the existing parking cash-out program, in
order to gain the resulting benefits of traffic congestion
relief and air pollution reductions. Many owners of
commercial real estate offer 'bundled' parking with all
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other leased office space. This practice makes it
difficult, if not impossible, for employers to separate the
cost of parking spaces associated with the commercial space
that is being leased. Without that information, employers
are unable to offer employees cash in lieu of parking
subsidies."
2) Background on parking cash out . AB 2109 (Katz), Chapter
554, Statutes of 1992, enacted the parking cash-out
procedures in response to "a number of studies which show
that employees are much more likely to rideshare using
transit or carpools when they have to pay the full cost of
parking spaces" and a concern that employer subsidized
parking spaces distort the free market and encourage
single-occupant auto trips with all of the associated
problems like congestion and air pollution. The author
noted that it is difficult to attract users to alternative
travel opportunities if parking continues to be subsidized
and wanted to give employees a choice of accepting a
subsidized parking space or an equivalent cash amount. AB
2109 included five key components. AB 2109:
Required any employer of 50 or more persons in a
nonattainment air basin to offer a parking cash-out
program if the employer provides a parking subsidy to
employees, subject to certain requirements.
Allowed a parking cash-out program to be a mitigating
feature of a congestion management program.
Required a city or county to grant an appropriate
reduction in the parking requirements applicable to a
commercial development, at the request of a commercial
development that has implemented a parking cash-out
program, and allowed the space no longer needed for
parking purposes to be used for other appropriate
purposes.
Provided that parking cash-out payments received by
employees is taxable as income, except any amount used
for ridesharing purposes.
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Allowed the parking cash-out program to be an employer
business expense deduction under the Personal Income Tax
Law and the Bank and Corporation Tax Law.
1) Legislative Analyst's Office (LAO) reports on parking
cashout . According to "A Commuter's Dilemma: Extra Cash
or Free Parking" (LAO, March 19, 2002), "California's
parking cash-out law seeks to reduce the incentive to drive
to work that is created when an employer offers free
parking. It does this by mandating that certain employers
also offer as an alternative to employees, the cash
equivalent of the parking space. While the law by design
affects a very limited share of the state's free parking
spaces statewide, it provides an additional tool for the
state to reduce commute driving and alleviate congestion
and pollution emission."
The LAO's review of various research on the issue found that
free parking appears to significantly increase the rate of
solo driving among commuters. For example, a 1990 study of
commute behavior in Los Angeles and Ottawa, Canada found
that solo driving fell by an average of 41% when employees
paid to park. A 2000 survey of Bay Area commuters "found
stark differences in travel behavior among commuters with
and without access to free parking," according to the LAO -
with 77% of commuters driving alone when free parking is
available and only 39% driving alone when they have to pay
to park. Also, only 4.8% commute by transit when free
parking is available, while 42% commute by transit without
free parking.
4) Related legislation . SB 425 (Simitian): a) prohibits a
deduction under Personal Income Tax Law and Corporation Tax
Law for employer parking subsidy expenses unless all
employees provided with a parking subsidy are offered a
parking cashout program; and b) authorizes a credit under
both of those laws in an amount not to exceed certain
amounts for qualified commute reduction expenditures. SB
425 was approved by the Senate Transportation and Housing
Committee April 28, 2008 (8-1) and was placed on the Senate
Revenue and Taxation Committee suspense file May 13, 2009.
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SB 728 (Lowenthal) revises Employee Parking Law to: a)
provide for the ARB to impose the 43016 $500 civil penalty
for a violation of the Law; b) authorize a city, county,
APCD or AQMD to adopt a penalty or other mechanism to
ensure that an employer within the jurisdiction of those
entities is in compliance with the Law; c) provide that if
the entity establishes a penalty, the entity governing body
must also establish procedures for providing notice to
employers that are in violation of the Law and for appeal
by the employer; and d) provides that if a penalty is
imposed on an employer by the ARB and the local entity,
only the ARB imposed penalty applies. SB 728 was approved
by the Senate Environmental Quality Committee May, 4, 2009
(5-2), Senate Transportation and Housing Committee May 14,
2009 (6-3), and the Senate May 26, 2009 (21-16). This bill
is currently with the Assembly Transportation Committee.
5) Opposition and support concerns . Opponents generally raise
concerns regarding the existing Employee Parking Law. With
regard to AB 1186, opponents assert that an employee could
establish a right to inspect lease terms if there is a
dispute regarding parking costs, and that parking costs may
not be determined for a tenant at the time a lease is
executed if a landlord contracts for parking through a
third party.
According to some supporters, many leases do not indicate
parking costs, preventing "employers from easily
calculating the value of the parking for purposes of
providing parking cash-out benefits to their employees" and
AB 1186 "will make it easier for employers to offer parking
cash-out." Los Angeles is concerned that "bundling"
parking with leased space prevents employers from
determining parking costs.
6) Clarification needed . Clarification is needed to: a)
strike provisions of this bill and instead require a lessor
to provide parking information to the lessee who may be an
employer, b) allow a lessor to provide parking cost
information to the lessee (tenant) within 30 days after
execution of the lease if the information is not a line
item in the lease, c) incorporate the requirement into
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Employee Parking Law requirements (43845), and d) include
the definition of "employer" under the definition
provisions of the Law.
7) Double Referral to Transportation and Housing Committee .
If this measure is approved by this committee, the do pass
motion must include the action to re-refer the bill to the
Senate Transportation and Housing Committee.
SOURCE : City of Los Angeles
SUPPORT : Breathe California, Coalition for Clean Air,
Environmental Defense Fund, Natural Resources
Defense Council, Planning and Conservation
League
OPPOSITION : Apartment Association, CA Southern Cities;
Apartment Association of Greater Los Angeles;
Santa Barbara Rental Property Owners
Association