Existing law provides various programs to expand access to persons with disabilities and promote compliance with the federal Americans with Disabilities Act of 1990.

Existing law establishes the Capital Access Loan Program, which is administered by the California Pollution Control Financing Authority (authority) to assist small businesses to finance the costs of complying with environmental mandates and the remediation of contamination on their properties.

This bill would establish the California Americans with Disabilities Act Small Business Capital Access Loan Program within the Capital Access Loan Program, to create a self-sustaining program to provide loans to assist small businesses in financing the costs of projects that alter or retrofit existing small business facilities, meeting specified criteria, to comply with the federal Americans with Disabilities Act.

This bill would authorize the authority to administer the program, including adopting regulations, and controlling funds appropriated for the program, as specified.

This bill would establish the California Americans with Disabilities Act Small Business Capital Access Loan Program Fund, as a continuously appropriated fund, and require the authority to use the fund for all its purposes. This bill would also transfer $10,000,000 from the General Fund to the California Americans with Disabilities Act Small Business Capital Access Loan Program Fund.

Existing law provides various programs to expand access to persons with disabilities and promote compliance with the federal Americans with Disabilities Act of 1990.

Existing law establishes the Capital Access Loan Program, which is administered by the California Pollution Control Financing Authority (authority) to assist small businesses to finance the costs of complying with environmental mandates and the remediation of contamination on their properties.

This bill would establish the California Americans with Disabilities Act Small Business Capital Access Loan Program within the Capital Access Loan Program, to create a self-sustaining program to provide loans to assist small businesses in financing the costs of projects that alter or retrofit existing small business facilities, meeting specified criteria, to comply with the federal Americans with Disabilities Act.

This bill would authorize the authority to administer the program, including adopting regulations, and controlling funds appropriated for the program, as specified.

This bill would establish the California Americans with Disabilities Act Small Business Capital Access Loan Program Fund, as a continuously appropriated fund, and require the authority to use the fund for all its purposes. This bill would also transfer $10,000,000 from the General Fund to the California Americans with Disabilities Act Small Business Capital Access Loan Program Fund.

Existing law provides various programs to expand access to persons with disabilities and promote compliance with the federal Americans with Disabilities Act of 1990.

Existing law establishes the Capital Access Loan Program, which is administered by the California Pollution Control Financing Authority (authority) to assist small businesses to finance the costs of complying with environmental mandates and the remediation of contamination on their properties.

This bill would establish the California Americans with Disabilities Act Small Business Capital Access Loan Program within the Capital Access Loan Program, to create a self-sustaining program to provide loans to assist small businesses finance in financing the costs of projects that alter or retrofit existing small business facilities, meeting specified criteria, to comply with the federal American with Disabilities Act.

This bill would authorize the authority to administer the program, including adopting regulations, and controlling funds appropriated for the program, as specified.

This bill would establish the California Americans with Disabilities Act Small Business Compliance Financing Authority Capital Access Loan Program Fund, as a continuously appropriated fund, and require the authority to use the fund for all its purposes. This bill would also transfer $50,000,000 $10,000,000 from the General Fund to the California Americans with Disabilities Act Small Business Compliance Financing Authority Capital Access Loan Program Fund.

Existing law provides various programs to expand access to persons with disabilities and promote compliance with the federal Americans with Disabilities Act of 1990. Existing law authorizes a specified authority to make loans, funded by bonds issuances, to health facilities to assist those participating health facilities lower the costs of financing certain kinds of projects in order to pass along those savings to the public paying for healthcare at those facilities.

This bill would enact establish the California Americans with Disabilities Act Small Business Compliance Financing Authority Act to establish Capital Access Loan Program within the Capital Access Loan Program, to create a self-sustaining program to provide loans to assist small businesses finance the costs of projects that alter or retrofit existing small business facilities facilities, meeting specified criteria, to comply with the federal American with Disabilities Act.

This bill would establish in state government the California Americans with Disabilities Act Small Business Compliance Financing Authority, composed of seven specified members. This bill would require the Treasurer, as chair of the authority, to appoint an executive director who serves at the pleasure of the authority. This bill would require the authority to comply with existing open meeting and public record disclosure laws, authorize the authority to administer the program, including adopting regulations, and controlling funds appropriated for the program, as specified.

This bill would establish the California Americans with Disabilities Act Small Business Compliance Financing Authority Fund, as a continuously appropriated fund, and require the authority to use the fund for all its purposes. This bill would also transfer $50,000,000 from the General Fund to the California Americans with Disabilities Act Small Business Compliance Financing Authority Fund.

Existing law provides various programs to expand access to persons with disabilities and promote compliance with the federal Americans with Disabilities Act of 1990. Existing law authorizes a specified authority to make loans, funded by bonds issuances, to health facilities to assist those participating health facilities lower the costs of financing certain kinds of projects in order to pass along those savings to the public paying for healthcare at those facilities.

This bill would enact the California Americans with Disabilities Act Small Business Compliance Financing Authority Act to establish a self-sustaining program to provide loans, funded in part by bond issuances, loans to assist small businesses finance the costs of projects that alter or retrofit existing small business facilities to comply with the federal American with Disabilities Act. This bill would specify that any bonds issued under the act do not constitute a debt or liability of the state or a pledge of the faith and credit of the state, other than the California Americans with Disabilities Act Small Business Compliance Financing Authority.

This bill would establish in state government the California Americans with Disabilities Act Small Business Compliance Financing Authority, composed of seven specified members. This bill would require the Treasurer, as chair of the authority, to appoint an executive director who serves at the pleasure of the authority. This bill would require the authority to comply with existing open meeting and public record disclosure laws, as specified.

This bill would establish the California Americans with Disabilities Act Small Business Compliance Financing Authority Fund, as a continuously appropriated fund, and require the authority to use the fund for all its purposes. This bill would also transfer $50,000,000 from the General Fund to the California Americans with Disabilities Act Small Business Compliance Financing Authority Fund.

The Planning and Zoning Law authorizes the legislative body of a city, including a charter city, a county, or a city and county under specified conditions to adopt for a period of 45 days as an urgency measure an interim ordinance prohibiting any uses that may be in conflict with a contemplated general plan, specific plan, or zoning proposal that the legislative body, the planning commission, or the planning department is considering or studying or intends to study within a reasonable time. The law also authorizes prescribed extensions of the interim ordinance, subject to specified conditions. The law further requires the legislative body to issue a written report describing the measures taken to alleviate the condition which led to the adoption of the interim ordinance at least 10 days prior to the expiration of the interim ordinance or any extension.

This bill would instead require the written report to be issued 15 days prior to the expiration of the interim ordinance or any extension.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1230

Author:(Gomez)

As Amended Ver:September 3, 2015

2/3 vote

Original Committee Reference: B. & F.

SUMMARY: Establishes the California Americans with Disabilities Act Small Business Capital Access Loan Program (Program) to provide loans to small businesses so they can comply with the requirements of the Americans with Disabilities Act (ADA). Specifically, this bill:

1. Establishes the Program within the California Pollution Control Financing Authority (CPCFA).

2. States that it is the intent of Legislature to establish a self-sustaining program within CPCFA to provide loans to assist small businesses in complying with the ADA.

   1. Defines "small business" as a business located in California that meets all of the following criteria:

      1. Fifteen or fewer full-time equivalent employees;

      2. Less than $1 million in total gross annual income from all sources; and,

      3. Does not provide overnight accommodations.

3. Provides that CPCFA may direct the Treasurer to invest moneys in the Americans with Disabilities Act Small Business Compliance Financing Authority Fund (Fund) that are not required for its current needs, in the eligible securities as specified, or in interest-bearing accounts in state or national banks or other financial institutions having principal offices located in the state. The CPCFA may alternatively require the transfer of moneys to the Surplus Money Investment Fund for investment.

4. Requires CPCFA adopt regulations that do the following:

   1. Establish a new loss reserve account for each participating lender enrolling loans in this program;

   2. Obtain a certification from each participating lender and small business upon enrollment of a qualified loan that the proceeds of the loan will be used for the eligible costs of an eligible project;

   3. Contribute an additional incentive from the fund for each loan enrolled for a qualified business located in a severely affected community;

   4. Restrict the enrollment of a qualified loan in any other Capital Access Loan Program for small business offered by the authority as long as funds are available for this program;

   5. Limit the term of loss coverage for each qualified loan to no more than five years; and

   6. Recapture from the loss reserve account the authority's contribution for each enrolled loan upon the maturation of such loan or after five years from the date of enrollment, which ever happens first, to be deposited in the fund and applied to program and administrative costs.

5. Appropriates a sum of $10 million from the General Fund (GF) to the Fund for the purposes of funding the activities of the California Americans with Disabilities Act Small Business Compliance Financing Authority (Authority).

6. Defines the following:

   1. "Eligible cost" means and includes all or any part of the price of construction, purchase price of real or personal property, the price of demolishing or removing any buildings or structures, the price of all machinery and equipment, the amount of financing charges and interest prior to, during, and for a period not to exceed the later of one year or one year following completion of construction, as determined by the authority, the price of insurance during construction, the amount of funding or financing noncapital expenses, the amount of reserves for principal and interest and for extensions, enlargements, additions, replacements, renovations and improvements, the price of engineering, financial and legal services and other service contracts, the price of plans, specifications, studies, surveys, estimates, administrative expenses, and any other expenses of funding or financing, that are necessary and allocable to the eligible project, and shall not include costs not directly related to physical alterations necessary for compliance with the ADA.

   2. "Eligible project" means the physical alterations or retrofits to an existing small business facility of less than 10,000 square feet necessary to ensure that facility is in compliance with the ADA, and the financing necessary to pay eligible costs of the project.

   3. "Qualified loan" means a loan or portion of loan where the proceeds of the loan or portion of loan are limited to the eligible costs for an eligible project under this program, and where the loan or portion of loan does not exceed $50,000.

7. Provides that all moneys in the fund derived from any source shall be held in trust for the life of the program.

   1. Specifies that program expenditures shall include both of the following:

   2. Contributions paid by the authority in support of qualified loans; and,

   3. Reasonable costs to educate the small business community and participating lenders about the program, including travel within the state.

8. Requires administrative expenditures to be limited to 5% of the initial appropriation plus 5% of all moneys recaptured, and shall include all of the following:

   1. Personnel costs;

   2. Service and vending contracts necessary to carry out the program; and,

   3. Other reasonable direct and indirect administrative costs.

The Senate amendments:

1. Place administration of the loan program within CPCFA.

2. Change the name of the program from "California Americans with Disabilities Act Small Business Compliance Financing Act" to the "California Americans with Disabilities small Business Capital Access Loan Program."

3. Lower the amount of one-time GF appropriation from $50 million to $10 million.

4. Define and limit administrative expenditures.

EXISTING LAW: Provides for various financing authorities administered by the state Treasury including:

1. CPCFA: CPCFA is able to facilitate low cost financing to qualified waste and recycling projects. Other projects to control pollution and improve water supply can qualify for tax-exempt financing as allowed by federal tax law. Examples of recent assistance include projects to purchase clean-air vehicles by waste companies, construct and operate anaerobic digesters, recycle used oil, convert animal waste to clean burning fuel, and develop construction and demolition debris recycling programs.

2. The California Health Facilities Financing Authority (CHFFA) was established to be the state's vehicle for providing financial assistance to public and non-profit health care providers through loans, grants and tax-exempt bonds.

3. The California Educational Facilities Authority (CEFA) administers programs that provide tax-exempt, low-cost financing to private, non-profit higher educational facilities.

4. Additionally, CEFA manages the California Student Loan Authority, which has the authority to issue tax-exempt bonds to fund student loans and to purchase federally reinsured student loans from eligible lending institutions.

5. California Transportation Financing Authority (CTFA). CTFA is authorized to issue, or approve the issuance of, revenue bonds to finance transportation projects. The CTFA will review proposed projects to ensure they are financially sound, and has the ability to approve tolls as part of the financing plans to repay revenue bonds.

FISCAL EFFECT: According to the Senate Appropriations Committee:

1. The bill includes a one-time GF appropriation of $50 million.

2. CPCFA would incur annual administrative costs of $376,000 (special funds).

COMMENTS: Need for this bill.

Every year, hundreds of lawsuits are filed against small businesses and "mom and pop stores," claiming they are violating disability regulations. In fact, more than 40 percent of the nation's ADA cases are filed in California. Often, these lawsuits are filed by a handful of attorneys, usually in limited jurisdiction, seeking only statutory penalty damages, as opposed to injunctive or remedial relief centered on securing substantial public value for the disabilities community. This type of predatory litigation arguably weakens the rights of the disabilities community by compelling small businesses to spend more money on legal fees and costs than on improving their establishments to improve accessibility.

Our solution is to create the California Americans with Disabilities, Small Business Compliance Financing Authority, a self-sustaining program to provide affordable loans to assist small businesses finance the costs of facility alterations and retrofits necessary to comply with the ADA.

AB 1230 would establish a related authority and continuously appropriate fund to finance the activities of the authority, while transferring $50,000,000 from the state's GF to the California Americans with Disabilities Act Small Business Compliance Financing Authority Fund. This initial investment would be seed money for the loans and repayments will make the program self-sustaining.

This bill establishes a system to help small businesses become ADA compliant. It establishes a direct loan program that would allow loans or the purchase of loans in connection with the financing of projects pursuant to an agreement between the Authority and qualifying businesses. Initial costs of setting up this program would be covered via a transfer of $50 million from the GF to the Authority.

Analysis Prepared by: Mark Farouk / B. & F. / (916) 319-3081 FN: 0002246

 THIRD READING  

Bill No: AB 1230

Author: Gomez (D)

Amended: 6/30/15 in Senate

Vote: 27

SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 7/6/15

AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/27/15

AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

ASSEMBLY FLOOR: 77-1, 6/2/15 - See last page for vote

SUBJECT: California Americans With Disabilities Small Business Capital Access Loan Program

SOURCE: Author

DIGEST: This bill establishes the California Americans With Disabilities Act Small Business Capital Access Loan Program within the California Capital Access Loan Program in order to create a self-sustaining program to provide loans to assist small businesses in financing the costs of projects that alter or retrofit existing small business facilities according to certain criteria, to comply with the federal Americans with Disabilities Act.

ANALYSIS:

Existing law:

1. Provides, pursuant to federal law, under the Americans with Disabilities Act (ADA), that no individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases, or leases to, or operates a place of public accommodation. (42 U.S.C. Sec. 12182.)

2. Provides, under the Unruh Civil Rights Act (Unruh Act), that 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 of every kind whatsoever. (Civil Code (Civ) § 51 et seq.)

3. Establishes the California Commission on Disability Access (Commission), an independent state agency composed of 19 members, with general responsibility for monitoring disability access compliance in California, and with authority to make recommendations to the Legislature for necessary changes in order to facilitate implementation of state and federal laws on disability access. Makes it a priority for the Commission to provide educational resources to promote and facilitate disability access compliance. (Government Code § 8299 et seq.)

4. Establishes the California Pollution Control Financing Authority Act (CPCFA Act) with the purpose of providing industry within the state, irrespective of company size, with an alternative method of financing in providing, acquiring, enlarging, or installing facilities for establishing pollution control, providing supplies of clean water, and producing energy from alternative or renewable sources, that are needed to accomplish the purposes of this division; to assist economically distressed counties and cities to develop and implement growth policies and programs that reduce pollution hazards and the degradation of the environment or promote infill development and; to assist with the financing of the costs of assessment, remedial planning and reporting, technical assistance, and the cleanup, remediation, or development of brownfield sites, or other similar or related costs. (Health and Safety Code (HSC) § 44502)

5. Establishes the Capital Access Loan Program for Small Businesses (CalCAP) which encourages banks and other financial institutions to make loans to small businesses that have difficulty obtaining financing. (HSC §§ 44559 - 44559.12)

This bill:

1. States legislative intent to create and fund the California Americans With Disabilities Act Small Business Capital Access Loan Program (Small Business ADA Program) to assist small businesses in complying with the ADA. Specifies that it is not the intent of the Legislature to assist the physical expansion of small businesses that includes modifications that comply with the ADA. Requires the Small Business ADA Program to be administered by the CPCFA and follow the terms and conditions for the CalCAP.

2. Establishes the Small Business ADA Program Fund (Fund) in the State Treasury to be administered by CPCFA and provides a continuous appropriation for carrying out the purposes of this section.

3. Transfers $50 million from the General Fund (GF) to the Small Business ADA Program Fund for the purposes of funding loss reserve accounts and administering Small Business ADA Program.
   
   

Background

CPCFA administers the CalCAP which insures loans made by participating financial institutions to small businesses. CalCAP is a form of loan portfolio insurance which may provide up to 100 percent coverage on certain loan defaults. Each lender is entirely liable for its loan losses; however, those losses can be reimbursed from each lender's loan loss reserve account. The loss reserve accounts are built through contributions made by the borrower, lender, and CPCFA.

Historically, CalCAP was funded from small business assistance fees collected from its bond issuance, but the Legislature appropriated $6 million from the GF to the program in 2010. In recent years, CalCAP has grown significantly due to federal funding: CPCFA received $27.8 million in 2011, the same amount again in 2013, and expects a third transfer of the same amount in 2015. In 2014, CalCAP recruited 10 new lenders to participate in the various programs, and 43 lenders enrolled loans. CalCAP lenders enrolled 3,491 loans totaling $247 million in 2014, an increase of about eight percent in the number of loans and 20 percent in the amount of money loaned compared with 2013.

Multiple legislative efforts have been pursued over the years aimed at encouraging compliance with ADA but also curbing frivolous ADA lawsuits. The author states that more than 40 percent of the nation’s ADA cases are filed in California and often, these lawsuits are filed by a handful of attorneys, usually in limited jurisdiction, seeking only statutory penalty damages, as opposed to injunctive or remedial relief centered on securing substantial public value for the disability community. According to the author, this type of predatory litigation arguably weakens the rights of the disabled community by compelling small businesses to spend more money on legal fees and costs than on improving their establishments to improve accessibility. The author states that this bill is not intended to provide loans for small businesses to pay for legal fees or settlements to ADA complaints but rather the goal is to assist the small business with paying for changes to existing facilities in order to be compliant with ADA. The author notes that the $50 million from the GF is designed to serve as seed money for the Small Business ADA Program, which is meant to be self-sustaining.

FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee, this bill will result in a one-time GF appropriation of $50 million and administrative costs to CPCFA of $376,000 from special funds.

SUPPORT: (Verified 8/28/15)

State Treasurer John Chiang

California Citizens Against Lawsuit Abuse

California Small Business Association

City of Thousand Oaks

Civil Justice Association of California

Consumer Attorneys of California

Disability Rights California

National Federation of Independent Business

Orange County Business Council

State Farm

OPPOSITION: (Verified 8/28/15)

None received

ARGUMENTS IN SUPPORT: Supporters note that by helping small businesses afford the costs for changes to buildings to comply with the ADA that they may otherwise not be able to, this bill helps reduce the inevitable litigation that can cripple small businesses. Supporters believe that this bill provides a critical source of funding to assist small businesses stay in operation and also provide access to the goods and services they offer to senior and disabled patrons.

ASSEMBLY FLOOR: 77-1, 6/2/15

AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins

NOES: Hadley

NO VOTE RECORDED: Chávez, Melendez

Prepared by: Sarah Mason / B., P. & E.D. / (916) 651-4104

8/30/15 19:27:43

**** END ****

 THIRD READING  

Bill No: AB 1230

Author: Gomez (D), et al.

Amended: 9/3/15 in Senate

Vote: 27

SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 7/6/15

AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/27/15

AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

ASSEMBLY FLOOR: 77-1, 6/2/15 - See last page for vote

SUBJECT: California Americans With Disabilities Small Business Capital Access Loan Program

SOURCE: Author

DIGEST: This bill establishes the California Americans With Disabilities Act Small Business Capital Access Loan Program (Small Business ADA Program) within the California Capital Access Loan Program in order to create a self-sustaining program to provide loans to assist small businesses in financing the costs of projects that alter or retrofit existing small business facilities according to certain criteria, to comply with the federal Americans with Disabilities Act.

Senate Floor Amendments of 9/3/15 make technical and clarifying changes and replace the $50 million General Fund (GF) transfer for purposes of funding the Small Business ADA Program with $10 million.

ANALYSIS:

Existing law:

1. Provides, pursuant to federal law, under the Americans with Disabilities Act (ADA), that no individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases, or leases to, or operates a place of public accommodation. (42 U.S.C. Sec. 12182.)

2. Provides, under the Unruh Civil Rights Act (Unruh Act), that 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 of every kind whatsoever. (Civil Code § 51 et seq.)

3. Establishes the California Commission on Disability Access (Commission), an independent state agency composed of 19 members, with general responsibility for monitoring disability access compliance in California, and with authority to make recommendations to the Legislature for necessary changes in order to facilitate implementation of state and federal laws on disability access. Makes it a priority for the Commission to provide educational resources to promote and facilitate disability access compliance. (Government Code § 8299 et seq.)

4. Establishes the California Pollution Control Financing Authority Act (CPCFA Act) with the purpose of providing industry within the state, irrespective of company size, with an alternative method of financing in providing, acquiring, enlarging, or installing facilities for establishing pollution control, providing supplies of clean water, and producing energy from alternative or renewable sources, that are needed to accomplish the purposes of this division; to assist economically distressed counties and cities to develop and implement growth policies and programs that reduce pollution hazards and the degradation of the environment or promote infill development; and to assist with the financing of the costs of assessment, remedial planning and reporting, technical assistance, and the cleanup, remediation, or development of brownfield sites, or other similar or related costs. (Health and Safety Code (HSC) § 44502)

5. Establishes the Capital Access Loan Program for Small Businesses (CalCAP) which encourages banks and other financial institutions to make loans to small businesses that have difficulty obtaining financing. (HSC §§ 44559 - 44559.12)

This bill:

1. States legislative intent to create and fund the Small Business ADA Program to assist small businesses in complying with the ADA. Specifies that it is not the intent of the Legislature to assist the physical expansion of small businesses that includes modifications that comply with the ADA. Requires the Small Business ADA Program to be administered by the CPCFA and follow the terms and conditions for the CalCAP.

2. Establishes the Small Business ADA Program Fund (Fund) in the State Treasury to be administered by CPCFA and provides a continuous appropriation for carrying out the purposes of this section.

3. Transfers $10 million from the GF to the Small Business ADA Program Fund for the purposes of funding loss reserve accounts and administering Small Business ADA Program.
   
   

Background

CPCFA administers the CalCAP which insures loans made by participating financial institutions to small businesses. CalCAP is a form of loan portfolio insurance which may provide up to 100 percent coverage on certain loan defaults. Each lender is entirely liable for its loan losses; however, those losses can be reimbursed from each lender's loan loss reserve account. The loss reserve accounts are built through contributions made by the borrower, lender, and CPCFA.

Historically, CalCAP was funded from small business assistance fees collected from its bond issuance, but the Legislature appropriated $6 million from the GF to the program in 2010. In recent years, CalCAP has grown significantly due to federal funding: CPCFA received $27.8 million in 2011, the same amount again in 2013, and expects a third transfer of the same amount in 2015. In 2014, CalCAP recruited 10 new lenders to participate in the various programs, and 43 lenders enrolled loans. CalCAP lenders enrolled 3,491 loans totaling $247 million in 2014, an increase of about eight percent in the number of loans and 20 percent in the amount of money loaned compared with 2013.

Multiple legislative efforts have been pursued over the years aimed at encouraging compliance with ADA but also curbing frivolous ADA lawsuits. The author states that more than 40 percent of the nation’s ADA cases are filed in California and often, these lawsuits are filed by a handful of attorneys, usually in limited jurisdiction, seeking only statutory penalty damages, as opposed to injunctive or remedial relief centered on securing substantial public value for the disability community. According to the author, this type of predatory litigation arguably weakens the rights of the disabled community by compelling small businesses to spend more money on legal fees and costs than on improving their establishments to improve accessibility. The author states that this bill is not intended to provide loans for small businesses to pay for legal fees or settlements to ADA complaints but rather the goal is to assist the small business with paying for changes to existing facilities in order to be compliant with ADA. The author notes that the $50 million from the GF is designed to serve as seed money for the Small Business ADA Program, which is meant to be self-sustaining.

FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee, this bill will result in administrative costs to CPCFA of $376,000 from special funds. This bill will also result in a one-time GF appropriation of $10 million.

SUPPORT: (Verified 9/3/15)

State Treasurer John Chiang

California Citizens Against Lawsuit Abuse

California Small Business Association

City of Thousand Oaks

Civil Justice Association of California

Consumer Attorneys of California

Disability Rights California

National Federation of Independent Business

Orange County Business Council

State Farm

OPPOSITION: (Verified 9/3/15)

None received

ARGUMENTS IN SUPPORT: Supporters note that by helping small businesses afford the costs for changes to buildings to comply with the ADA that they may otherwise not be able to, this bill helps reduce the inevitable litigation that can cripple small businesses. Supporters believe that this bill provides a critical source of funding to assist small businesses stay in operation and also provide access to the goods and services they offer to senior and disabled patrons.

ASSEMBLY FLOOR: 77-1, 6/2/15

AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins

NOES: Hadley

NO VOTE RECORDED: Chávez, Melendez

Prepared by: Sarah Mason / B., P. & E.D. / (916) 651-4104

9/4/15 13:32:16

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1230 (Gomez) - California Americans With Disabilities Small Business Capital Access Loan Program.

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 1230 would establish the California Americans With Disabilities Act Small Business Capital Access Loan Program within the California Pollution Control Financing Authority (CPCFA), to create a self-sustaining loan program to assist small businesses finance the costs of projects that alter or retrofit existing facilities according to certain criteria, to comply with the federal Americans with Disabilities Act (ADA).

Fiscal Impact:

• The bill includes a one-time General Fund appropriation of $50 million.

• CPCFA would incur annual administrative costs of $376,000 (special funds).

Background:

Individuals with disabilities and medical conditions have legal protections to ensure full and free access to and the use of roadways, sidewalks, buildings and facilities open to the public, hospitals and medical facilities, and housing. After Congress enacted the 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.

Anecdotal evidence suggests that lawsuits are filed each year against small businesses for ADA violations. Many of these lawsuits seek only statutory penalty damages, as opposed to the injunctive relief that would improve conditions for disabled persons. Consequently, small businesses can be forced to pay for legal fees and costs instead of improving their properties.

Proposed Law:

This bill would, among other things, do the following:

• Establish the Small Business ADA Program Fund in the State Treasury to be administered by CPCFA.

• Require CPFCA to adopt regulations implement the Small Business ADA Program, including provisions to (1) establish a new loss reserve account for each participating lender enrolling loans in this program, (2) obtain a certification from each participating lender and small business upon enrollment of a qualified loan that the proceeds of the loan will be used for the eligible costs of an eligible project, (3) contribute an additional incentive from the fund for each loan enrolled for a qualified business located in severely affected communities, (4) restrict the enrollment of a qualified loan in any other capital access loan program for small business offered by the CPFCA as long as funds are available for the Small Business ADA program, (5) limit the term of loss coverage for each qualified loan to no more than five years, and (6) recapture CPFCA’s contribution from the loss reserve account for each enrolled loan upon the maturation of such loan or after five years from the date of enrollment, which ever happens first, to be deposited in the fund and applied to future expenditures for contributions and administrative costs.

• Transfer $50 million from the General Fund to the Small Business ADA Fund for the purposes of funding loss reserve accounts and administering Small Business ADA Program.

Related Legislation:

AB 1393 (Burke) would expand the authority and program focus of CPCFA from providing financial assistance to address the control and remediation of pollution and the capital access challenges of small businesses to offering unlimited types of financial products to an expansive list of public and private entities, as specified. The bill is currently pending in this Committee.

Staff Comments:

This bill would create a financing mechanism within CPCFA to provide affordable loans to small businesses to finance the alterations and retrofits necessary to comply with ADA. The bill would authorize CPCFA to issue revenue bonds to finance the loans and would appropriate $50 million from the General Fund to launch the program, but anticipates the program will be self-sustaining thereafter, funding costs with interest generated from the loans. CPCFA indicates that it would need three additional positions at an ongoing cost of $376,000 to administer the program.

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SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Jerry Hill, Chair

2015 - 2016 Regular

Bill No: AB 1230 Hearing Date: July 6, 2015

Subject: California Americans With Disabilities Small Business Capital Access Loan Program.

SUMMARY:

Establishes the California Americans With Disabilities Act Small Business Capital Access Loan Program within the California Capital Access Loan Program in order to create a self-sustaining program to provide loans to assist small businesses in financing the costs of projects that alter or retrofit existing small business facilities according to certain criteria, to comply with the federal Americans with Disabilities Act.

Existing law:

1. Pursuant to federal law, under the Americans with Disabilities Act (ADA), provides that no individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases, or leases to, or operates a place of public accommodation.
   (42 U.S.C. Sec. 12182.)

2. The Unruh Civil Rights Act (Unruh Act) provides that 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 of every kind whatsoever. A violation of the ADA also constitutes a violation of the Unruh Act. A violation of this section subjects a person to actual damages incurred by an injured party, treble actual damages but not less than $4,000, and any attorney’s fees as the court may determine to be proper. (Civil Code (Civ) § 51 et seq.)

3. Provides that individuals with disabilities or medical conditions have the same right as the general public to the full and free use of the streets, highways, sidewalks, walkways, public buildings, medical facilities, including hospitals, clinics and physicians’ offices, public facilities and other public places. It also provides that a violation of an individual’s rights under the ADA constitutes a violation of state law. (Civ § 54.)

4. Provides that individuals with disabilities shall be entitled to full and equal access to public accommodations, subject only to the conditions and limitations established by law, or state or federal regulation, and applicable alike to all persons. It further provides that individuals with disabilities shall be entitled to full and equal access to all housing accommodations offered for rent or lease, subject to conditions and limitations established by law. (Civ § 54.1)

5. Provides that a violation of the ADA also constitutes a violation of Civ § 54.1. A violation of Section 54.1 subjects a person to actual damages, plus treble actual damages but not less than $1,000, and attorney’s fees as the court deems proper. (Civ § 55)

6. Establishes the California Commission on Disability Access (Commission), an independent state agency composed of 19 members, with general responsibility for monitoring disability access compliance in California, and with authority to make recommendations to the Legislature for necessary changes in order to facilitate implementation of state and federal laws on disability access.
   (Government Code § 8299 et seq.)

7. Requires the Commission to use its funding, as appropriate, to provide information about preventing or minimizing compliance problems among California businesses, and recommending programs to enable persons with disabilities to obtain full and equal access to public facilities. (GC § 8299.05.)

8. Makes it a priority for the Commission to provide educational resources to promote and facilitate disability access compliance. (GC § 8299.06.)

9. Establishes GO-Biz within the Governor's Office for the purpose of serving as the lead state entity for economic strategy and marketing of California on issues relating to business development, private sector investment and economic growth. GO-Biz also serves as the administrative oversight for the California Business Investment Service and the Office of the Small Business Advocate. (GC §§ 12096 – 12098.5)

10. Enacts the Small Business Financial Assistance Act of 2013 and establishes the Small Business Finance Center within the Infrastructure and Economic Development Bank (I-Bank) within GO-Biz, to promote economic revitalization, enable future development, and encourage a healthy climate for jobs in California. I-Bank for the purpose of assisting businesses seeking capital resources not otherwise available in the private markets including:

1. Loan guarantees and other credit enhancements;

2. Direct loans and other debt instruments;

3. Disaster loan guarantees; and

4. Surety bond guarantees. (GC §§63088-63089.98)

11. Establishes the California Pollution Control Financing Authority Act (CPCFA Act) with the purpose of providing industry within the state, irrespective of company size, with an alternative method of financing in providing, acquiring, enlarging, or installing facilities for establishing pollution control, providing supplies of clean water, and producing energy from alternative or renewable sources, that are needed to accomplish the purposes of this division; to assist economically distressed counties and cities to develop and implement growth policies and programs that reduce pollution hazards and the degradation of the environment or promote infill development and; to assist with the financing of the costs of assessment, remedial planning and reporting, technical assistance, and the cleanup, remediation, or development of brownfield sites, or other similar or related costs.
    (Health and Safety Code (HSC) § 44502)

11. Establishes the Capital Access Loan Program for Small Businesses (CalCAP) which encourages banks and other financial institutions to make loans to small businesses that have difficulty obtaining financing. (HSC §§ 44559 - 44559.12)

This bill:

1. States Legislative intent to create and fund the California Americans With Disabilities Act Small Business Capital Access Loan Program (Small Business ADA Program) to assist small businesses in complying with the ADA. Specifies that it is not the intent of the Legislature to assist the physical expansion of small businesses that includes modifications that comply with the ADA. Requires the Small Business ADA Program to be administered by the CPCFA and follow the terms and conditions for the CalCAP.

2. Makes the following definitions for purposes of the Small Business ADA Program:

1. “Americans with Disabilities Act” means the federal ADA.

2. “California Americans with Disabilities Act Small Business Capital Access Loan Program Fund” or “fund” means a fund established and administered by the CPCFA to be used for purposes of the Small Business ADA Program.

3. “Eligible cost” means and includes all or any part of the price of construction, purchase price of real or personal property, the price of demolishing or removing any buildings or structures, the price of all machinery and equipment, the amount of financing charges and interest prior to, during, and for a period not to exceed the later of one year or one year following completion of construction, as determined by CPCFA, the price of insurance during construction, the amount of funding or financing noncapital expenses, the amount of reserves for principal and interest and for extensions, enlargements, additions, replacements, renovations and improvements, the price of engineering, financial and legal services and other service contracts, the price of plans, specifications, studies, surveys, estimates, administrative expenses, and any other expenses of funding or financing, that are necessary and allocable to the eligible project, and shall not include costs not directly related to physical alterations necessary for compliance with the ADA.

4. “Eligible project” means the physical alterations or retrofits to an existing small business facility of less than 10,000 square feet necessary to ensure that facility is in compliance with the ADA, and the financing necessary to pay eligible costs of the project.

5. “Qualified loan” means a loan or portion of loan where the proceeds of the loan or portion of loan are limited to the eligible costs for an eligible project under this program, and where the loan or portion of loan does not exceed fifty thousand dollars.

6. “Small business” or “qualified business” means a business that has fewer than 15 full-time equivalent employees, less than one million dollars in total gross annual income from all sources and does not provide overnight accommodations.

3. Establishes the Small Business ADA Program Fund (Fund) in the State Treasury to be administered by CPCFA and provides a continuous appropriation for carrying out the purposes of this section.

4. Requires CPFCA to adopt regulations implement the Small Business ADA Program, including provisions to:

1. Establish a new loss reserve account for each participating lender enrolling loans in this program.

2. Obtain a certification from each participating lender and small business upon enrollment of a qualified loan that the proceeds of the loan will be used for the eligible costs of an eligible project.

3. Contribute an additional incentive from the fund for each loan enrolled for a qualified business located in severely affected communities.

4. Restrict the enrollment of a qualified loan in any other capital access loan program for small business offered by the CPFCA as long as funds are available for the Small Business ADA program.

5. Limit the term of loss coverage for each qualified loan to no more than five years.

6. Recapture CPFCA’s contribution from the loss reserve account for each enrolled loan upon the maturation of such loan or after five years from the date of enrollment, which ever happens first, to be deposited in the fund and applied to future expenditures for contributions and administrative costs

5. Transfers $50 million from the General Fund (GF) to the Small Business ADA Fund for the purposes of funding loss reserve accounts and administering Small Business ADA Program.

FISCAL EFFECT: Unknown. This bill is keyed “fiscal” by Legislative Counsel but the current version of the bill has not yet been considered by a policy committee of the Legislature. The prior version of this bill, which established the California Americans with Disabilities Act Small Business Compliance Financing Authority, rather than a Program within an existing authority (CPFCA) as this bill now proposes, was estimated by the Assembly Committee on Appropriations, in an analysis dated May 13, 2015, to result in a one-time GF appropriation of $50 million and estimated annual costs of approximately $800,000 to the Treasurer to administer the Authority, initially paid from the GF appropriation, and eventually paid from revenue generated by financing activities.

COMMENTS:

1. Purpose.  This bill is sponsored by the Author.  According to the Author, annually, countless businesses endure predatory lawsuits over ADA compliance. These lawsuits can close businesses and create a greater burden on the disabled community that seeks to be served by local business. The Author states that this bill is not intended to provide loans for small businesses to pay for legal fees or settlements to ADA complaints but rather the goal is to assist the small business with paying for changes to existing facilities in order to be compliant with ADA. The Author notes that the $50 million from the General Fund is designed to serve as seed money for the Program, which is meant to be self-sustaining.

According to information provided by the Author, existing law provides various programs to expand access to persons with disabilities and promote compliance with the federal ADA of 1990. Existing law also authorizes specified authorities to make loans. The loans are funded by bond issuances to lower the cost of financing certain kinds of projects such as health facilities in order to pass along those savings to the public paying for health care at their facilities.

The Author notes that California small businesses continue to be challenged in acquiring sufficient capital for proactive facility upgrades, retrofits, and other improvements to ensure they are complying with the ADA. According to the Author, every year, hundreds of lawsuits are filed against small businesses and “mom and pop stores,” claiming they are violating disability regulations. The Author states that more than 40 percent of the nation’s ADA cases are filed in California and often, these lawsuits are filed by a handful of attorneys, usually in limited jurisdiction, seeking only statutory penalty damages, as opposed to injunctive or remedial relief centered on securing substantial public value for the disability community. According to the Author, this type of predatory litigation arguably weakens the rights of the disabled community by compelling small businesses to spend more money on legal fees and costs than on improving their establishments to improve accessibility.

2. California Pollution Control Financing Agency (CPCFA) and California Capital Access Program (CalCAP). Founded in 1972, and housed in the State Treasurer's Office, the California Pollution Control Financing Authority (CPCFA) provides financial assistance for participating parties seeking to build pollution control facilities. CPCFA's board is comprised of the State Treasurer, the State Controller, and the Director of Finance. CPCFA administers the “CalReUSE” program to assist in the rejuvenation and development of brownfield sites by issuing low-interest loans up to $500,000; the Rate Reduction Bond Program, which allows joint powers agencies to issue bonds to finance publicly owned utility projects secured by utility property; conduit bond programs, whereby CPCFA issues bonds, and lends the proceeds to both large and small businesses to acquire, construct, or install pollution control, waste disposal, and resource recovery facilities; a loan loss reserve program funded by the Air Resources Board (ARB) to assist owners and operators of small fleets of heavy-duty diesel trucks achieve early compliance with ARB's Statewide Truck and Bus Regulation designed to reduce diesel particulate matter emission. Additionally, CPCFA provides finance incentives to both lenders and borrowers for the purchase and installation of electric vehicle charging stations at California businesses, by providing rebates to borrowers who participate, and may provide lenders with up to 100 percent coverage on certain loan defaults.

CPCFA also administers the California Capital Access Program, (CalCAP), which insures loans made by participating financial institutions to small businesses. CalCAP is a form of loan portfolio insurance which may provide up to 100 percent coverage on certain loan defaults. Each lender is entirely liable for its loan losses; however, those losses can be reimbursed from each lender's loan loss reserve account. The loss reserve accounts are built through contributions made by the borrower, lender, and CPCFA.

Historically, CalCAP was funded from small business assistance fees collected from its bond issuance, but the Legislature appropriated $6 million from the GF to the program in 2010. In recent years, CalCAP has grown significantly due to federal funding: CPCFA received $27.8 million in 2011, the same amount again in 2013, and expects a third transfer of the same amount in 2015. In 2014, CalCAP recruited 10 new lenders to participate in the various programs, and 43 lenders enrolled loans. CalCAP lenders enrolled 3,491 loans totaling $247 million in 2014, an increase of about 8 percent in the number of loans and 20 percent in the amount of money loaned compared with 2013.

In October 2010, Congress passed and the President signed the Small Business Jobs Act which, among other things, created the State Small Business Credit Initiative (SSBCI), which is authorized to expend up to $1.5 billion for state sponsored small business finance programs. Over the life of the program, every federal dollar must be matched by $10 private sector dollars. California uses its moneys to capitalize the SBLGP administered through the I-Bank and CalCAP.

As of the end of 2014, California has encumbered $87.6 million, with approximately $40.6 million set aside to cover loan guarantees; $7.2 million deposited with private financial institutions through the CalCAP and $39.8 million used for the collateral support program. Approximately, $2.4 million has been used for direct administrative costs, resulting in a cumulative 2.18% administrative cost per dollars allocated by the U.S. Treasury.

In 2014, California encumbered $36.9 million of SSBCI funds. Of this amount, approximately $12.9 million set aside to cover loan guarantees; $2.2 million deposited with private financial institutions through the CalCAP and $21.4 million used for the collateral support program. In 2014, 1,630 loans were made to small businesses, which leveraged $192.6 million in private funds at a 19:1 ratio. Since inception, $493.3 million in loans to small business were leveraged (18:1 ratio). Since inception, 47,202 jobs have been created (7,372) or retained (39,830) by the close of 2013. In 2014 job impacts were 2,228 new jobs and 13,931 retained jobs.

3. Related Legislation This Year. SB 67 (Galgiani) exempts a small business from statutory damage liability in connection with a construction-related accessibility claim and extends the period for correcting construction-related violations that are the basis of a claim from 60 days to 120 days of being served with the complaint, for purposes of reducing a defendant’s minimum statutory damage liability to $1,000. (Status: The bill is pending in the Senate Judiciary Committee.)

AB 1342 (Steinorth) appropriates $120,000 from the GF to the Commission which shall be used to provide funding to establish two permanent outreach coordinator positions and enacts other measures intended to promote disability access compliance. (Status: The bill is currently pending in the Senate Judiciary Committee.)

AB 1393 (Burke) expands the authority and program focus of the CPCFA from providing financial assistance to address the control and remediation of pollution and the capital access challenges of small businesses to offering unlimited types of financial products to an expansive list of public and private entities, as specified. (Status: The bill is currently pending in the Senate Committee on Governance and Finance.)

4. Prior Related Legislation. Multiple Legislative efforts have been pursued over the years aimed at encouraging compliance with ADA but also curbing frivolous ADA lawsuits.

SB 1186 (Steinberg, Chapter 383, Statutes of 2012) enacted a comprehensive package of disability litigation reforms.

AB 901 (V. Manuel Pérez, Chapter 483, Statutes of 2011) expanded the definition of financial institutions eligible to participate in CalCAP and increased CalCAP reporting requirements.

AB 981 (Hueso, Chapter 484, Statues of 2011) provided additional incentives within CalCAP to encourage lenders to lend to small businesses.

AB 1632 (Blumenfield, Chapter 731, Statutes of 2010) transferred a total of $32.4 million from the GF to the California Small Business Expansion Fund, CalCAP, and the California Economic Development Fund to support small businesses and facilitate matching funds that would ensure a full complement of federal funding for these programs.

SB 1608 (Corbett, Chapter 549, Statutes of 2008) established the Commission and enacted various other reforms intended to increase voluntary compliance with longstanding state and federal laws requiring access to the disabled in any place of public accommodation.

SUPPORT AND OPPOSITION:

Support:

California Citizens Against Lawsuit Abuse

California Small Business Association

City of Thousand Oaks

Civil Justice Association of California

Consumer Attorneys of California

Disability Rights California

National Federation of Independent Business

Orange County Business Council

Opposition:

None on file as of July 1, 2015.

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ASSEMBLY THIRD READING

ATR Bill Id:AB 1230

Author:(Gomez)

As Amended Ver:May 28, 2015

2/3 vote

SUMMARY: Establishes the California Americans with Disabilities Act Small Business Compliance Financing Authority (Authority) to provide loans to small businesses so they can comply with the requirements of the Americans with Disabilities Act (ADA). Specifically, this bill:

1. States that it is the intent of Legislature to establish a self-sustaining program to provide loans to assist small businesses in complying with the ADA.

   1. Defines "small business" as a business located in California that meets all of the following criteria:

      1. Less than six full-time equivalent employees.

      2. Less than $1 million in total gross annual income from all sources; and,

      3. Does not provide overnight accommodations.

2. Specifies that that the Authority is composed of the following members:

   1. The Treasurer, who shall serve as chair;

   2. The Controller;

   3. The Director of Finance;

   4. The Director of General Services;

   5. One member appointed by Senate Rules Committee who shall have special knowledge or experience with accessibility issues for people with disabilities;

   6. One member appointed by the Speaker of the Assembly who shall be the owner of a small business or a member of organization that represents the interests of small businesses; and,

   7. One member appointed by the Governor, subject to Senate confirmation who shall be a member of the State Bar of California with professional experience in consumer protection laws.

3. Provides that each member of the Authority shall serve a term of four years and at the expiration of their term shall continue to hold office until the successor has been appointed and qualifies to begin serving. Allows a member of the Authority to be reappointed to a new term. Limits the application of these specific provisions to appointees of the Senate Rules Committee, The Assembly Speaker and the Governor.

4. States that the State Treasurer, in his or her capacity as the chair, shall appoint an executive director who shall not be a member of the Authority and shall receive a compensation fixed by the Authority.

5. Requires the executive director or the person designated by the Authority in a resolution to keep a record of proceedings of the Authority and a copy of other records and documents of the Authority.

6. Provides for a majority vote of the Authority to take any action and that four members shall constitute a quorum.

7. Establishes the Americans with Disabilities Act Small Business Compliance Financing Authority Fund (Fund) in the state Treasury with all money in the Fund continuously appropriated to the Authority.

8. Allows the Authority to pledge any or all of the moneys in the Fund as security for payment of the principal of, and interest on, any secured or unsecured loan made as necessary or convenient to the accomplish any purpose of the Authority.

9. Provides that the Authority may direct the Treasurer to invest moneys in the Fund that are not required for its current needs, in the eligible securities as specified, or in interest-bearing accounts in state or national banks or other financial institutions having principal offices located in the state. The Authority may alternatively require the transfer of moneys in the Fund to the Surplus Money Investment Fund for investment.

10. Specifies that all expenses of the Authority incurred shall be payable solely from funds and Authority provided to the Authority.

11. Requires the Authority to establish financial eligibility standards for each small business seeking financing from the Authority by studying the creditworthiness and earning capacity of the small business, the impact of new debt and the completion of the project on the small business, and the amount of pledged revenues, debt service coverage, and basic security.

12. Allows the Authority to do any of the following:

    1. Adopt bylaws for the regulation of its affairs and the conduct of its business;

    2. Adopt an official seal;

    3. Sue and be sued in its name;

    4. Receive and accept gifts, grants, or donations of money from any agency of the federal government, another state entity, a city, county, city and county, any other political subdivision of the state, an individual, association, or corporation;

    5. Engage private consultants to provide professional and technical services and advice;

    6. Determine the location and character of any project to be financed; acquire, construct, enlarge, remodel, renovate, alter, improve, furnish, equip, fund, finance, own, maintain, manage, repair, operate, lease as lessee or lessor, and regulate a project and enter into contracts for any or all of those purposes; enter into contracts for the management and operation of a project or other small business facilities owned by the Authority; designate a participating property manager as its agent to determine the location and character of a project undertaken by that participating small business and, as the agent of the Authority, acquire, construct, enlarge, remodel, renovate, alter, improve, furnish, equip, own, maintain, manage, repair, operate, lease as lessee or lessor, and regulate the same and, as the agent of the Authority, to enter into contracts for any or all of those purposes, including contracts for the management and operation of that project or other small business facilities owned by the Authority;

    7. Receive and accept from any source loans, contributions, or grants for, or in aid of, the construction, financing, or refinancing of a project or any portion of a project in money, property, labor, or other things of value;

    8. Make secured or unsecured loans to, or purchase secured or unsecured loans of, any participating small business in connection with financing the costs of a project in accordance with an agreement between the Authority and the participating small business. However, the Authority shall not make any loan to a small business to finance the cost of a project that exceeds the lesser of $50,000 or the total cost of the project, as determined by the participating small business and approved by the Authority;

    9. Enter into any and all agreements or contracts, including agreements for liquidity or credit enhancement, interest rate swaps or hedges; execute any and all instruments; and do and perform any and all acts or things necessary, convenient, or desirable for the purposes of the Authority or to carry out any power expressly granted; and

    10. Invest any moneys held in reserve or sinking funds or any moneys not required for immediate use or disbursement, at the discretion of the Authority, in any obligations authorized by law for the investment of trust funds in the custody of the Treasurer.

13. Prohibits the Authority from making a loan to a small business with a repayment period of 60 months or longer, except if the project is located on real property that is leased. If the project is located on real property that is leased, the repayment period shall not exceed the term of the lease, excluding any option to extend the lease.

14. Specifies that the Authority shall only make a loan that includes an interest rate that equals the pooled money investment rate at the time the loan is approved and is sufficient to repay the reasonable pro rata expenses of the Authority to administer the loan.

15. Allows the Authority to require any information it deems necessary and prudent prior to providing a loan to a small business and may require any term, condition, security, or repayment provision it deems necessary in the event the Authority chooses to provide a loan.

16. Appropriates a sum of $50 million from the General Fund (GF) to the Fund for the purposes of funding the activities of the Authority.

EXISTING LAW: Provides for various financing authorities administered by the state Treasury including:

1. California Pollution Control Financing Authority (CPCFA): CPCFA is able to facilitate low cost financing to qualified waste and recycling projects. Other projects to control pollution and improve water supply can qualify for tax-exempt financing as allowed by federal tax law. Examples of recent assistance include projects to purchase clean-air vehicles by waste companies, construct and operate anaerobic digesters, recycle used oil, convert animal waste to clean burning fuel, and develop construction and demolition debris recycling programs.

2. The California Health Facilities Financing Authority (CHFFA) was established to be the state's vehicle for providing financial assistance to public and non-profit health care providers through loans, grants and tax-exempt bonds.

3. The California Educational Facilities Authority (CEFA) administers programs that provide tax-exempt, low-cost financing to private, non-profit higher educational facilities.

4. Additionally, CEFA manages the California Student Loan Authority, which has the authority to issue tax-exempt bonds to fund student loans and to purchase federally reinsured student loans from eligible lending institutions.

5. California Transportation Financing Authority (CTFA). CTFA is authorized to issue, or approve the issuance of, revenue bonds to finance transportation projects. The CTFA will review proposed projects to ensure they are financially sound, and has the ability to approve tolls as part of the financing plans to repay revenue bonds.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. One-time GF appropriation of $50 million.

2. Estimated annual costs of approximately $800,000 to the Treasurer to administer the Authority, initially paid from the GF appropriation, and eventually paid from revenue generated by financing activities.

COMMENTS:

Need for the bill.

Every year, hundreds of lawsuits are filed against small businesses and "mom and pop stores," claiming they are violating disability regulations. In fact, more than 40 percent of the nation’s ADA cases are filed in California. Often, these lawsuits are filed by a handful of attorneys, usually in limited jurisdiction, seeking only statutory penalty damages, as opposed to injunctive or remedial relief centered on securing substantial public value for the disabilities community. This type of predatory litigation arguably weakens the rights of the disabilities community by compelling small businesses to spend more money on legal fees and costs than on improving their establishments to improve accessibility.

Our solution is to create the California Americans with Disabilities, Small Business Compliance Financing Authority, a self-sustaining program to provide affordable loans to assist small businesses finance the costs of facility alterations and retrofits necessary to comply with the ADA.

AB 1230 would establish a related authority and continuously appropriate fund to finance the activities of the authority, while transferring $50,000,000 from the state's General fund to the California Americans with Disabilities Act Small Business Compliance Financing Authority Fund. This initial investment would be seed money for the loans and repayments will make the program self-sustaining.

This bill establishes a system to help small businesses become ADA compliant. It establishes a direct loan program that would allow loans or the purchase of loans in connection with the financing of projects pursuant to an agreement between the Authority and qualifying businesses. Initial costs of setting up this program would be covered via a transfer of $50 million from the General Fund to the Authority.

Recent amendments.

When this bill was heard in Assembly Banking and Finance Committee on April 27, 2015 the committee analysis noted several issues that needed repair concerning the bond issuance authority created via this bill. The amendments adopted May 28, 2015, have addressed those concerns.

Analysis Prepared by: Mark Farouk / B. & F. / (916) 319-3081 FN: 0000794

Date of Hearing: May 13, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 1230

Author:(Gomez) – As Amended Ver:March 24, 2015

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill establishes the California Americans with Disabilities Act Small Business Compliance Financing Authority (Authority) to provide financing to small businesses to comply with the requirements of the Americans with Disabilities Act (ADA). In summary, this bill:

1) Establishes membership of the Authority as the Treasurer, Controller, Director of Finance, Director of General Services, one member appointed by the Senate Rules Committee who represents persons with disabilities, one member appointed by the Speaker of the Assembly who represents owners of small businesses, and one member appointed by the Governor, subject to senate confirmation, who is a member of the state bar and has experience with consumer protection laws, each of whom will have four year terms.

2) Appropriates $50,000,000 from the General Fund for the purposes of funding the initial activities of the Authority, and specifies that all expenses of the Authority shall be payable solely from funds provided to and revenue earned by the Authority.

3) Authorizes the Authority to make secured and unsecured loans, and purchase loans of any participating small business in connection with financing the costs of an ADA compliance project, subject to a maximum total project cost of $50,000, a maximum loan term of 60 months, and an interest rate equal to the Pooled Money Investment Rate at the time the loan is made, subject to specified limitations and exceptions.

4) Allows the Authority to issue revenue bonds, payable solely out of revenues of the Authority from financing activities, subject to standard terms and limitations.

5) Defines "small business" as a California business with fewer than six full-time employees, with less than $1 million in total gross annual income from all sources, and that does not provide overnight accommodations, and requires the Authority to establish eligibility standards for each small business applicant based on credit, debt service coverage, financial impact of ADA compliance project, and related factors.

6) Allows the Authority to invest any surplus moneys in the Fund in interest bearing accounts or in the Surplus Money Investment Fund, as required.

FISCAL EFFECT:

1) One-time GF appropriation of $50 million.

2) Estimated annual costs of approximately $800,000 to the Treasurer to administer the Authority, initially paid from the GF appropriation, and eventually paid from revenue generated by financing activities.

COMMENTS:

1) Purpose. According to the author, hundreds of lawsuits are filed each year against small businesses for ADA violations, with more than 40% of these occurring in California. The author claims many of these lawsuits seek only statutory penalty damages and not the injunctive relief that would improve conditions for disabled persons. The author believes this sort of predatory litigation weakens rights and access for disabled persons by forcing small businesses to pay for legal fees and costs instead of improving their properties.

AB 1230 creates a finance authority to provide affordable loans to small businesses to finance the alterations and retrofits necessary to comply with ADA. The bill authorizes the Authority to issue revenue bonds to finance the loans and appropriates $50 million from the General Fund to launch the program, but anticipates the program will be self-sustaining thereafter, funding costs with interest generated from the loans.

2) Revenue Bonds for Private Activity. Revenue bonds are an instrument often used to finance public works projects undertaken by private developers. Revenue bonds are issued by a public agency, but are repaid only with the proceeds of the development activity and are not guaranteed by the state. Typically, the proceeds of the bonds are lent to developers, or in the case of this bill, small businesses, and the bonds are repaid with the interest generated by the loans. Investors in revenue bonds only have recourse to the underlying loan assets.

Revenue bonds are considered tax free by the Internal Revenue Service if the activity financed is publicly-owned or has public value, allowing the issuer to offer lower interest rates on the bonds and pass those savings to the borrowers. As a result, they are attractive for financing activity that has public value but may not be affordable with private financing.

There is some risk that the activity being financed in this bill may not qualify the revenue bonds for tax exempt status, making them less attractive for financing the small business loans. The author may wish to consider whether financing the program solely with the initial $50 million General Fund appropriation is a safer way to achieve the bill's aims.

Analysis Prepared by: Joel Tashjian / APPR. / (916) 319-2081

Date of Hearing: April 27, 2015

ASSEMBLY COMMITTEE ON BANKING AND FINANCE

Matthew Dababneh, Chair

ABPCA Bill Id:AB 1230

Author:(Gomez) – As Amended Ver:March 24, 2015

SUBJECT: California Americans with Disabilities Act Small Business Compliance Financing Act

SUMMARY: Establishes the California Americans with Disabilities Act Small Business Compliance Financing Authority (Authority) to provide loans to small businesses so they can comply with the requirements of the Americans with Disabilities Act (ADA). Specifically, this bill:

1. States that it is the intent of Legislature to establish a self-sustaining program to provide loans to assist small businesses in complying with the ADA.
   
   

   1. Defines “Small business” as a business located in California that meets all of the following criteria:
      
      

      1. Less than six full-time equivalent employees.
         
         

      2.  Less than one million dollars ($1,000,000) in total gross annual income from all sources; and,
         
         

      3. Does not provide overnight accommodations.
         
         

2. Specifies that that the Authority is composed of the following members:
   
   

   1. The Treasurer, who shall serve as chair;
      
      

   2. The Controller;
      
      

   3. The Director of Finance;
      
      

   4. The Director of General Services;
      
      

   5. One member appointed by Senate Rules Committee who shall have special knowledge or experience with accessibility issues for people with disabilities;
      
      

   6. One member appointed by the Speaker of the Assembly who shall be the owner of a small business or a member of organization that represents the interests of small businesses; and,
      
      

   7. One member appointed by the Governor, subject to Senate confirmation who shall be a member of the State Bar of California with professional experience in consumer protection laws.
      
      

3. Provides that each member of the Authority shall serve a term of four years and at the expiration of their term shall continue to hold office until the successor has been appointed and qualifies to begin serving. Allows a member of the Authority to be reappointed to a new term. Limits the application of these specific provisions to appointees of the Senate Committee on Rules, The Assembly Speaker and the Governor.
   
   

4. States that the State Treasurer, in his or her capacity as the chair, shall appoint an executive director who shall not be a member of the Authority and shall receive a compensation fixed by the Authority.
   
   

5. Requires the executive director or the person designated by the Authority in a resolution to keep a record of proceedings of the Authority and a copy of other records and documents of the Authority.
   
   

6. Provides for a majority vote of the Authority to take any action and that four members shall constitute a quorum.
   
   

7. Allows the Authority to issue revenue bonds.
   
   

8. Specifies that except as expressly provided otherwise by the Authority, revenue bonds shall be payable from any revenues or moneys of the Authority available therefor and not otherwise pledged, subject only to any agreements with the holders of particular bonds or notes pledging any particular revenues or moneys. Negotiable bonds shall be and be deemed to be for all purposes negotiable instruments, notwithstanding that these bonds may be payable from a special fund, subject only to the provisions of these bonds for registration.

9. Allows the Authority’s revenue bonds to be issued as serial bonds or as term bonds, or the Authority, in its discretion, may issue bonds of both types. The issuance of all revenue bonds shall be authorized by resolution of the Authority and shall bear such date or dates, mature at such time or times, not exceeding 40 years from their respective dates, bear interest at such rate or rates, be payable at such time or times, be in such denominations, be in such form, either coupon or registered, carry such registration privileges, be executed in such manner, be payable in lawful money of the United States of America at such place or places, and be subject to such terms of redemption, as the indenture, trust agreement, or resolution relating to these revenue bonds may provide. The Authority’s revenue bonds or notes may be sold by the Treasurer at public or private sale, after giving due consideration to the recommendation of the participating small business, for the price or prices and upon the terms and conditions as the Authority shall determine. The Treasurer may sell these revenue bonds at a price below the par value thereof. However, the discount on any bonds so sold shall not exceed 6 percent of the par value thereof, except in the case of any bonds payable in whole or in part from moneys held under one or more outstanding resolutions or indentures. Pending preparation of the definitive bonds, the Authority may issue interim receipts or certificates or temporary bonds which shall be exchanged for such definitive bonds.

10. Allows a resolution or resolutions authorizing the issuance of any revenue bonds or any issue of revenue bonds may contain provisions, which shall be a part of the contract with the holders of the bonds to be authorized, as to pledging all or any part of the revenues of a project or any revenue-producing contract or contracts made by the Authority with an individual, partnership, corporation or association or other body, public or private, to secure the payment of the bonds or of a particular issue of bonds.

11. Provides that neither the members of the Authority nor any person executing the revenue bonds shall be liable personally on the bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

12. Permits the Authority to purchase its bonds with any moneys available to the Authority for this purpose. The Authority may exchange bonds for its bonds. The Authority may hold, pledge, exchange, cancel, or resell these bonds, subject to and in accordance with its agreements with bondholders.
    
    

13.  Provides that revenue bonds issued shall not be deemed to constitute a debt or liability of the state or of a political subdivision thereof or a pledge of the faith and credit of the state or of that political subdivision, other than the Authority, but shall be payable solely from the moneys in the Fund. These bonds shall contain a statement to the effect that neither the State of California nor the Authority shall be obligated to pay the principal of, or the interest thereon, except from revenues of the Authority, and that neither the faith and credit nor the taxing power of the State of California or of a political subdivision thereof is pledged to the payment of the principal of or the interest on these bonds. The issuance of revenue bonds shall not directly or indirectly or contingently obligate the state or a political subdivision thereof to levy or to pledge a form of taxation whatever therefor or to make an appropriation for their payment.

14. Specifies that any holder of revenue bonds issued or any of the coupons appertaining thereto, and the trustee or trustees under any indenture or trust agreement, except to the extent the rights herein given may be restricted by any resolution authorizing the issuance of, or any such indenture or trust agreement securing, such bonds, may, either at law or in equity, by suit, action, mandamus or other proceedings, protect and enforce any and all rights under the laws of the state or granted hereunder or under such resolution or indenture or trust agreement, and may enforce and compel the performance of all duties required or by such resolution, indenture, or trust agreement to be performed by the Authority or by any officer, employee or agent thereof.
    
    

15. Establishes the Americans with Disabilities Act Small Business Compliance Financing Authority Fund (Fund) in the state Treasury with all money in the Fund continuously appropriated to the Authority.
    
    

16. Provides that all moneys in the Fund derived from any source shall be held in trust for the security and payment of bonds of the Authority and shall not be used or pledged for any other purpose so long as the bonds are outstanding and unpaid.
    
    

17. Allows the Authority to pledge any or all of the moneys in the Fund as security for payment of the principal of, and interest on, any secured or unsecured loan made as necessary or convenient to the accomplish any purpose of the Authority.
    
    

18. Provides that the Authority may direct the Treasurer to invest moneys in the Fund that are not required for its current needs, including proceeds from the sale of any bonds, in the eligible securities as specified, or in interest-bearing accounts in state or national banks or other financial institutions having principal offices located in the state. The Authority may alternatively require the transfer of moneys in the Fund to the Surplus Money Investment Fund for investment.
    
    

19. Specifies that all expenses of the Authority incurred shall be payable solely from funds and Authority provided to the Authority.
    
    

20. Requires the Authority to establish financial eligibility standards for each small business seeking financing from the Authority by studying the creditworthiness and earning capacity of the small business, the impact of new debt and the completion of the project on the small business, and the amount of pledged revenues, debt service coverage, and basic security.
    
    

21. Allows the Authority to do any of the following:
    
    

    1. Adopt bylaws for the regulation of its affairs and the conduct of its business;
       
       

    2. Adopt an official seal;
       
       

    3. Sue and be sued in its name;
       
       

    4. Receive and accept gifts, grants, or donations of money from any agency of the federal government, another state entity, a city, county, city and county, any other political subdivision of the state, an individual, association, or corporation;
       
       

    5. Engage private consultants to provide professional and technical services and advice;
       
       

    6. Determine the location and character of any project to be financed; acquire, construct, enlarge, remodel, renovate, alter, improve, furnish, equip, fund, finance, own, maintain, manage, repair, operate, lease as lessee or lessor, and regulate a project and enter into contracts for any or all of those purposes; enter into contracts for the management and operation of a project or other small business facilities owned by the Authority; designate a participating property manager as its agent to determine the location and character of a project undertaken by that participating small business and, as the agent of the Authority, acquire, construct, enlarge, remodel, renovate, alter, improve, furnish, equip, own, maintain, manage, repair, operate, lease as lessee or lessor, and regulate the same and, as the agent of the Authority, to enter into contracts for any or all of those purposes, including contracts for the management and operation of that project or other small business facilities owned by the Authority;
       
       

    7. Receive and accept from any source loans, contributions, or grants for, or in aid of, the construction, financing, or refinancing of a project or any portion of a project in money, property, labor, or other things of value;
       
       

    8. Make secured or unsecured loans to, or purchase secured or unsecured loans of, any participating small business in connection with financing the costs of a project in accordance with an agreement between the Authority and the participating small business. However, the Authority shall not make any loan to a small business to finance the cost of a project that exceeds the lesser of $50,000 or the total cost of the project, as determined by the participating small business and approved by the Authority;
       
       

    9. Enter into any and all agreements or contracts, including agreements for liquidity or credit enhancement, bond exchange agreements, interest rate swaps or hedges; execute any and all instruments; and do and perform any and all acts or things necessary, convenient, or desirable for the purposes of the Authority or to carry out any power expressly granted; and
       
       

    10. Invest any moneys held in reserve or sinking funds or any moneys not required for immediate use or disbursement, at the discretion of the Authority, in any obligations authorized by the resolution authorizing the issuance of the bonds secured thereof or authorized by law for the investment of trust funds in the custody of the Treasurer.
        
        

22. Prohibits the Authority from making a loan to a small business with a repayment period of 60 months or longer, except if the project is located on real property that is leased. If the project is located on real property that is leased, the repayment period shall not exceed the term of the lease, excluding any option to extend the lease.
    
    

23. Specifies that the Authority shall only make a loan that includes an interest rate that equals the pooled money investment rate at the time the loan is approved and is sufficient to repay the reasonable pro rata expenses of the Authority to administer the loan, including, but not limited to, the costs of issuing revenue bonds to fund the loan.
    
    

24. Allows Authority to require any information it deems necessary and prudent prior to providing a loan to a small business and may require any term, condition, security, or repayment provision it deems necessary in the event the Authority chooses to provide a loan.
    
    

25. Provides that all moneys received, whether as proceeds from selling or incurring revenue bonds or as revenues, shall be deemed to be trust funds to be held and applied solely as provided. Until the funds are applied, and notwithstanding any other provision of law, the moneys may be invested in any obligations or securities authorized by resolutions of the Authority authorizing the issuance of the bonds. Any officer with whom, or any bank or trust company with which, the moneys are deposited shall act as trustee of the moneys and shall hold and apply the moneys for the purposes hereof, subject to any regulations adopted and the resolution authorizing the issuance of the bonds or the indenture or trust agreement securing the bonds.
    
    

26. Allows the Authority to provide for the issuance of bonds of the Authority for the purpose of redeeming, refunding, or retiring any bonds or any series or issue of bonds then outstanding issued for the benefit of a participating small business to finance or refinance a project, including the payment of any redemption premium thereon and any interest accrued or to accrue to the date of redemption, purchase, or maturity of the bonds.
    
    

27. Provides that the proceeds of any bonds issued for the purpose of refunding of outstanding bonds may, in the discretion of the Authority, be applied to the purchase, redemption prior to maturity, or retirement at maturity of any outstanding bonds on their earliest redemption date or dates, upon their purchase or maturity, or paid to a third person to assume the Authority’s obligation or the applicable bond issuer’s obligation to make the payments, and may, pending that application, be placed in escrow to be applied to the purchase, retirement at maturity, or redemption on the date or dates determined by the Authority or the participating small business.
    
    

28. Allows any proceeds placed in escrow may, pending their use, be invested and reinvested in obligations or securities authorized by resolutions of the Authority or as determined by the participating small business, payable or maturing at the time or times as are appropriate to assure the prompt payment of the principal, interest, and redemption premium, if any, of the outstanding bonds to be refunded at maturity or redemption of the bonds to be refunded either at their earliest redemption date or dates or any subsequent redemption date or dates or for payment of interest on the refunding bonds on or prior to the final date of redemption or payment of the bonds to be refunded. After the terms of the escrow have been fully satisfied and carried out, any balance of the proceeds and interest, income and profits, if any, earned or realized on the investments thereof may be returned to the Authority for use by the Authority or the participating small business.
    
    

29. Provides that bonds issued by the Authority are hereby made securities in which all banks, bankers, savings banks, trust companies and other persons carrying on a banking business; all insurance companies, insurance associations and other persons carrying on an insurance business; and all administrators, executors, guardians, trustees and other fiduciaries, and all other persons whatsoever who now are or may hereafter be authorized to invest in bonds or other obligations of the state, may properly and legally invest any funds, including capital belonging to them or within their control; and such bonds, notes or other securities or obligations are hereby made securities which may properly and legally be deposited with and received by any state or municipal officers or agency of the state for any purpose for which the deposit of bonds or other obligations of the state is now or may hereafter be authorized by law.
    
    

30. Specifies that bonds issued by the Authority are tax free.

31. Appropriates a sum of $50,000,000 from the General Fund to the Fund for the purposes of funding the activities of the Authority.

EXISTING LAW: Provides for various financing authorities administered by the state Treasure including:

1. California Pollution Control Financing Authority (CPCFA): CPCFA is able to facilitate low cost financing to qualified waste and recycling projects. Other projects to control pollution and improve water supply can qualify for tax-exempt financing as allowed by federal tax law. Examples of recent assistance include projects to purchase clean-air vehicles by waste companies, construct and operate anaerobic digesters, recycle used oil, convert animal waste to clean burning fuel, and develop construction and demolition debris recycling programs.
   
   

2. The California Health Facilities Financing Authority (CHFFA) was established to be the State's vehicle for providing financial assistance to public and non-profit health care providers through loans, grants and tax-exempt bonds.
   
   

3. The California Educational Facilities Authority (CEFA) administers programs that provide tax-exempt, low-cost financing to private, non-profit higher educational facilities.
   
   

4. Additionally, CEFA manages the California Student Loan Authority, which has the authority to issue tax-exempt bonds to fund student loans and to purchase federally reinsured student loans from eligible lending institutions.
   
   

5. California Transportation Financing Authority (CTFA). CTFA is authorized to issue, or approve the issuance of, revenue bonds to finance transportation projects. The CTFA will review proposed projects to ensure they are financially sound, and has the ability to approve tolls as part of the financing plans to repay revenue bonds.

FISCAL EFFECT: Provides an appropriation from the General Fund of $50,000,000.

COMMENTS:

Need for the bill.

Every year, hundreds of lawsuits are filed against small businesses and “mom and pop stores,” claiming they are violating disability regulations. In fact, more than 40 percent of the nation’s ADA cases are filed in California. Often, these lawsuits are filed by a handful of attorneys, usually in limited jurisdiction, seeking only statutory penalty damages, as opposed to injunctive or remedial relief centered on securing substantial public value for the disabilities community. This type of predatory litigation arguably weakens the rights of the disabilities community by compelling small businesses to spend more money on legal fees and costs than on improving their establishments to improve accessibility.

Our solution is to create the California Americans with Disabilities, Small Business Compliance Financing Authority, a self-sustaining program to provide affordable loans to assist small businesses finance the costs of facility alterations and retrofits necessary to comply with the ADA.

AB 1230 would establish a related authority and continuously appropriate fund to finance the activities of the authority, while transferring $50,000,000 from the state’s General fund to the California Americans with Disabilities Act Small Business Compliance Financing Authority Fund. This initial investment would be seed money for the loans and repayments will make the program self-sustaining.

AB 1230 establishes a two part system to help small businesses become ADA compliant. First, it establishes a direct loan program that would allow loans or the purchase of loans in connection with the financing of projects pursuant to an agreement between the Authority and qualifying businesses. In order to fund the operations and lending capacity of the Authority, the Authority would be able to issue revenue bonds. Initial costs of setting up this program would be covered via a transfer of $50 million from the General Fund to the Authority.

Issues for consideration.

AB 1230 is a work in progress intended to address an important issue that effects Californian's with disabilities and small businesses. However as this bill moves forward the author may wish to consider resolving a few issues.

1. The process for loan repayment is unclear. Moving forward, the language should specify the repayment processes and loan servicing provisions.
   
   

2. AB 1230 specifies that bonds issued in accordance with the Program would be tax-exempt, yet these bonds may not fit the Internal Revenue Code requirements to receive tax-exempt status. From Internal Revenue Service Publication 4079:

Governmental bonds are tax-exempt bonds issued by a state or local government, the proceeds of which are generally used to finance activities or facilities owned, operated, or used by that or another government for its own purposes. This can include financing the building, maintenance, or repair of various types of public infrastructure such as highways, schools, fire stations, libraries, or other types of municipal facilities. Ultimately, though, a tax-exempt governmental bond is a state or local bond that is neither a private activity bond, as defined in section 141 of the Code, nor an arbitrage bond within the meaning of section 148 of the Code.

REGISTERED SUPPORT / OPPOSITION:

Support

Disability Rights California

Opposition

None on file.

Analysis Prepared by: Mark Farouk / B. & F. / (916) 319-3081