BILL ANALYSIS �
AB 1602
Page 1
Date of Hearing: March 24, 2014
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 1602 (Patterson) - As Amended: March 13, 2014
SUBJECT : Safety roadside rest areas: Business Enterprises
Program for the Blind
SUMMARY : Prohibits the California Department of Transportation
(Caltrans) from being reimbursed for utility costs of vending
facilities operated under the Business Enterprises Program for
the Blind at safety roadside rest areas; requires Caltrans to
pay utility costs (e.g., fees for electricity, water, and sewage
services) associated with these vending activities.
EXISTING LAW :
1)Establishes the Business Enterprises Program within the
Department of Rehabilitation to provide blind persons with
remunerative employment, to enlarge economic opportunities for
the blind, and to stimulate the blind to strive to make
themselves self-supporting.
2)Gives blind person's priority to vending facilities on any
state property including, for example, cafeterias, snack bars,
and automatic vending machines.
3)Prohibits the Department of Rehabilitation from allowing the
placement of a blind vendor in a vending facility unless the
director first determines that the facility produces or is
likely to produce an adequate net income for a blind vendor.
4)Directs Caltrans to allow the placement of vending facilities
in safety roadside rest areas, unless prohibited by federal
law; requires Caltrans to give priority for vending facilities
to blind vendors operating within Business Enterprises
Program.
5)Requires blind vendors to reimburse Caltrans for the costs of
maintenance, operations, design review, and other activities
related to the operation of vending machines in safety
roadside rest areas.
6)As set forth in Department of Rehabilitation regulations,
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specifically requires blind vendors to be solely responsible
for payment of all rent or utility charges in accordance with
the terms and conditions of the vendor operating agreement,
permit, or contract.
7)As set forth in federal regulations, permits vending machines
in safety roadside rest areas, under certain conditions,
including that states must give priority to operate vending
machine to blind persons. Federal regulations also
specifically provide that costs of installation, operation,
and maintenance of all vending machines are not eligible for
federal reimbursement.
FISCAL EFFECT : Based on Caltrans' estimates, total annual costs
for utilities related to vending facilities in safety roadside
rest areas could exceed $150,000, to be paid for from the State
Highway Account.
COMMENTS : The Business Enterprises Program is a food service
organization with operations in government facilities as well as
in private industry. Federal and state statutes governing this
program provide a priority to blind vendors to operate food
service facilities in federal and state government buildings.
County and city buildings are not included in this priority but
many county and city governments make their food service
facilities available to the vendors in the program.
Blind vendors receive ongoing support from the Department of
Rehabilitation as long as they remain in the program. This
support may include such benefits as financial assistance for
buying new appliances and equipment, various training
opportunities, upward mobility support, business counseling
services, fiscal oversight, and guidance to assist with their
financial responsibilities. Vendors pay up to 6% of their net
sales to the Department of Rehabilitation for deposit into a
trust fund, which in turn is used to pay for services provided
in the program. Vendors are required to secure all necessary
business and health permits, obtain required insurance policies,
hire and supervise employees, pay business and sales taxes,
develop menus, and purchase merchandise for sale.
Since the inception of the Business Enterprises Program at
safety roadside rest areas, Caltrans has provided electricity to
the vending facilities and obtained reimbursement from the
Department of Rehabilitation, which generally collected
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reimbursement from vendors on a flat rate basis. Between 1995
and 2008, vendors paid $200 a month for utilities.
In 2008, the interagency agreement between Caltrans and the
Department of Rehabilitation expired. At that time, the
Department of Rehabilitation determined (for reasons that are
unclear) that blind vendors would no longer be required to pay
the $200 monthly utility costs associated with vending machines
at safety roadside rest areas. Effective 2012, however, under a
renegotiated interagency agreement between the two state
agencies, vendors are required to resume the $200 flat rate
payments for utility services until such time as an independent
meter is installed at the vending site. After that vendors will
be required to pay for utilities directly. Reportedly, the
renewed interagency agreement-and the requirement to pay for
utilities-was as a result of Caltrans' position that it would
not issue any additional permits for vending services at its
safety roadside rest areas unless it was reimbursed for utility
costs, per existing law.
The current interagency agreement between the Department of
Rehabilitation and Caltrans provides for vending machines in 29
safety roadside rest areas. Consistent with state law and
regulations, the interagency agreement requires vendors to pay
for utility costs at these sites. Ten of the sites have
independent electric meters. (Plans are in the works to convert
all vending locations to independent meters). At these sites,
vendors pay utility costs directly to the electricity provider.
At the remaining sites, the interagency agreement requires
vendors to pay $200 per month per vending site for costs
incurred by Caltrans for electricity.
Not all vendors in the Business Enterprises Program are required
to pay for utilities. For instance, vending facilities in state
buildings within the purview of the Department of General
Services do not pay utility costs. On the other hand, Caltrans
is not alone in charging for utilities. For example, facilities
on county government properties generally pay utility costs and
a cursory review of other state laws indicates that charging
vendors in safety roadside rest areas for utilities is not
uncommon. Furthermore, that practice is not inconsistent with
the requirement that vendors cover other operating costs like
rent and utilities for use of private property used to support
their vending businesses, such as warehouses used to store
vending merchandise.
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The author introduced AB 1602 to remedy what he believes is an
inequity in the Business Enterprises Program with respect to
requirements that vendors pay utility costs. The author argues
that vendors operating vending machines in state buildings do
not to pay utility costs (because state agencies absorb the
electricity costs) while vendors that operate vending machines
at safety roadside rest areas do. The author introduced AB 1602
to "ensure that all participants in the Business Enterprises
Program for the Blind are treated equally."
Supporters of this bill are concerned that Caltrans' plans to
install independent electric meters at safety roadside rest
areas will put vendors out of business. They argue that this
will negatively impact motorists who rely on safety roadside
rest area vending facilities for refreshment during a break from
driving. Supporters also assert that having to pay utilities is
inconsistent with federal and state law and regulations which
require agencies to provide satisfactory sites to vend on
federal and state property. They point to this as evidence that
federal and state law intended that there be government
subsidies for overhead costs (including, they say, utilities)
provided in support of blind vendors.
There are 29 vending locations currently provided for in the
interagency agreement between the Department of Rehabilitation
and Caltrans, with an average of 9 vending machines at each
safety roadside rest area. According to the author's office,
utility cost estimates for existing vending facilities that have
independent electric meters range from a low of $350 a month in
winter months to a high of $900 in summer months.
Under this bill, Caltrans will be responsible for incurring all
utility costs associated with these vending machines. Caltrans
estimates that annual electricity costs for each of the 29 sites
is over $5,000 and that total utility costs for vending
facilities could reach or exceed $200,000 annually.
REGISTERED SUPPORT / OPPOSITION :
Support
The California Vendors Policy Committee
The National Federation of the Blind's Entrepreneurs Initiative
Six blinds vendors
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Twenty-four individuals
Opposition
None on file
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093