BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1230


                                                                    Page  1


          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          1230 (Gomez)


          As Amended  September 3, 2015


          2/3 vote


           -------------------------------------------------------------------- 
          |ASSEMBLY:  |77-1  |(June 2, 2015) |SENATE: |39-0  |(September 8,    |
          |           |      |               |        |      |2015)            |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |
           -------------------------------------------------------------------- 


          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. 


             a)   Defines "small business" as a business located in  
               California that meets all of the following criteria:
               i)     Fifteen or fewer full-time equivalent employees;
               ii)    Less than $1 million in total gross annual income  








                                                                    AB 1230


                                                                    Page  2


                 from all sources; and,


               iii)   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:


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


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


             d)   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;


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


             f)   Recapture from the loss reserve account the authority's  








                                                                    AB 1230


                                                                    Page  3


               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:


             a)   "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.
             b)    "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.


             c)    "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  








                                                                    AB 1230


                                                                    Page  4


               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.


             a)   Specifies that program expenditures shall include both  
               of the following:
             b)   Contributions paid by the authority in support of  
               qualified loans; and,


             c)   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:
             a)   Personnel costs;
             b)   Service and vending contracts necessary to carry out the  
               program; and,


             c)   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."









                                                                    AB 1230


                                                                    Page  5



          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  








                                                                    AB 1230


                                                                    Page  6


            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


                                                                    Page  7




            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