San Mateo County

Chamber of Commerce Alliance

New Issues:

1. AB 1370 (Lieber) Income and Corporation Taxes: Net Operating Losses

2. AB 1840 (Calderon) Sales and Use Taxes: Retailers

AB 1956 (Calderon) Tangible Personal Property: Digital Property Report

3. AB 3025 (Lieber) Polystyrene Packaging

4. SB 1057 (Migden) Rental Cars

5. SB 1165 (Kuehl) Environment: Environmental Impact Report

6. SB 1608 (Corbett) Disabled Persons: Equal Access Rights: Civil Actions

7. SB 1717 (Perata) Workers’ Compensation: Permanent Partial Disability

Updated Issues:

8. Legislative Bill Updates

May 2008

Legislative Report #5

Prepared by:

Shaun Lumachi

shaun@chamberadvocacy.biz

562.843.0947

1. AB 1370 (Lieber) Income and Corporation Taxes: Net Operating Losses

Summary

1. AB 1370 will allow a deduction for specified portions of net operating losses that, in general, are allowed to be carried forward for specified periods.

2. Those laws allow a carry forward of 100% of net operating losses for any taxable year beginning on or after January 1, 1997, in the case of a taxpayer who operates a new business with respect to losses incurred during the first 3 taxable years of operating the new business, if certain conditions are met.

Background

3. For purposes of those laws, new business includes any taxpayer that is engaged in biopharmaceutical and other biotechnology activities, as defined.

4. This bill, under both laws, for taxable years beginning on and after January 1, 2008, and before January 1, 2028, would allow those losses to be carried forward for the 20-year period following the year in which the net operating loss was deducted.

5. The election to compute the net operating loss under this section shall be made in a statement attached to the original return, timely filed for the year in which the net operating loss is incurred.

6. This section of tax law shall only apply to net operating losses incurred by a qualified taxpayer as a net operating loss that occurred during the taxable year beginning on or after January 1, 2008, and before January 1, 2028.

7. This section shall remain in effect only until December 1, 2028, and as of that date is repealed, unless a later enacted statute, that is enacted before December 1, 2028, deletes or extends that date.

8. Defines "qualified taxpayer" as one that is engaged in biopharmaceutical business activities as described in Codes 325411 to 325414, inclusive, and 541710 of the North American Industry Classification System (NAICS) published by the United States (U.S.) Census Bureau, 2002 Edition, and that has not received regulatory approval for any product from the U.S. Food and Drug Administration.

Arguments in Support

9. Allows biotechnology companies to deduct Net Operating Losses (NOL) over 20 years, instead of 10, encourages investments in medical science and provides additional revenue for emerging biotechnology companies to sustain their growth, expand their workforce, expedite research and development and continue the development of new products.

Arguments in Opposition

10. The length of time a biotechnology company can deduct NOL’s will allow a fiscal effect of about $300,000 starting in 2019.

Supporting

BayBio

BIOCOM

California Healthcare Institute

Silicon Valley Leadership Group

Opposing

None at this time

2. AB 1840 (Calderon) Sales and Use Taxes: Retailers

AB 1956 (Calderon) Tangible Personal Property: Digital Property Report

Summary

AB 1840

1. AB 1840 specifies that a retailer engaged in business in California means any retailer that has substantial nexus with this state for whom federal law permits this state to impose a use tax collection duty.

2. Current law imposes a tax on the gross receipts from the sale in California of, or the storage, use, or other consumption in this state of, tangible personal property.

3. That law imposes the sales tax upon "retailers," and defines a "retailer engaged in business in this state" to include specified entities.

4. Existing law provides that every retailer engaged in business in this state and making sales of tangible personal property for storage, use, or other consumption in this state, that engages in specified activity in this state shall, at the time of sale or at the time the storage, use, or other consumption becomes taxable, collect the tax from the purchaser.

5. AB 1840 would revise those provisions relating to the definition of a "retailer engaged in business in this state" and would clarify existing law by providing that a retailer is deemed to be engaged in business in this state if a retailer has substantial nexus with this state, as provided by applicable federal and state law.

AB 1956

6. This bill would require the State Board of Equalization, within 60 days of the effective date of the proposed law, to submit a report to the Legislature on transactions involving digital property within California.

7. The report shall include, but is not limited to, a proposed regulation that would provide that tangible personal property and sales of digital property are subject to a tax

Background

8. One of the greatest controversies in the field of state taxation today concerns the constitutional authority of the states to impose sales or use taxes on goods purchased from out-of-state retailers – either through mail order or over the Internet.

9. Currently, the State of California lacks jurisdiction to require out-of-state retailers to collect a sales or use tax when the retailer has no "physical presence" in the taxing state.

10. In 1992 the Supreme Court issued a ruling that satisfying due process concerns does not require a physical presence, but rather requires only minimum contacts with the taxing state.

11. Thus, when a mail-order business purposefully directs its activities at residents of the taxing state, the Due Process Clause does not prohibit the state’s requiring the retailer to collect the state’s use tax.

12. However, the Court further held that physical presence in the state was required for a business to have a “substantial nexus” with the taxing state for purposes of the Commerce Clause.

13. The Court therefore affirmed that in order to survive a Commerce Clause challenge, a retailer must have substantial nexus in the taxing state before that state can require the retailer to collect its use tax.

14. For example, when a California resident purchases a coat from L.L. Bean, Inc. through its web site, the purchaser's use of that coat in California is subject to California's use tax.

15. The most practical means for the state to enforce the tax is to have L.L. Bean, Inc. collect the tax at the time of sale.

16. Because L.L. Bean, Inc. does not have substantial nexus in California, however (e.g., it neither owns nor rents property in the state, hires no employees or independent contractors here, and delivers all of its merchandise into the state through common carriers), California is constitutionally prohibited from requiring L.L. Bean, Inc. to collect the tax.

17. If the purchaser fails to remit the tax to California, and escapes sales or use taxation, this creates a tax gap.

18. It is estimated that this gap in California’s sales and use tax system, costs the state nearly $1.1 billion in state tax revenues.

Arguments in Support

19. Over $1 billion in state and local revenues is lost each year from unreported use tax associated with out-of-state Internet and mail order sales.

20. This bill helps close this loophole by expanding the Board of Equalization’s ability to require out-of-state retailers to register and collect California's use tax.

21. Specially, this measure would enable California to enforce its use tax law to the maximum extent permitted under federal law.

22. Many California-based brick-and-mortar stores, such as Barnes and Noble and Borders, have online affiliates that should be collecting sales tax on their sales to California residents but have in the past managed to skirt the law as it is currently written.

23. This also puts the California-based competitors of online and mail order retailers at a competitive disadvantage because these traditional retailers are required by law to collect sales tax.

Arguments in Opposition

24. AB 1956 impermissibly avoids the 2/3 vote threshold required by Proposition 13 by ordering the Board of Equalization to draft a new regulation to tax digital media without providing underlying statutory authority. In other words, the bill is scored majority-vote because it ignores the fundamental requirement that regulations interpret existing law, and existing law does not tax digital media.

25. AB 1956 “declares” there is existing authority to tax digital media by manipulating and stretching terminology in current statutes that provide for sales and use tax of tangible products.

26. Digital media is nothing like tangible products, which is why it has never before been subject to tax. If statutory authority existed for the new tax regulation, no bill would be necessary.

27. The claim of existing authority to tax digital media is clear grounds for legal challenge. AB 1956 sets a dangerous precedent for illegal enactment of a new tax by majority vote and an impermissible new tax on services, since delivery of digital media is often a service as much as a product

28. AB 1956 expressly exempts the new unauthorized tax regulation from the regular rule-making process, meaning complete elimination of the regular public-comment process by which negatively-impacted consumers and businesses should have an opportunity to provide input and concerns.

29. Although digital media is sold to California consumers in the online marketplace from around the globe, federal law prohibits California from taxing any companies that do not have a sufficient nexus or connection to California.

30. Therefore, companies who operate or provide jobs within California are the easiest and most certain targets of AB 1840/1956.

31. In-state companies will be required to collect the new Internet tax while out-of-state companies will not.

32. There will not be a level playing field with other states which will place in-state companies at a competitive price disadvantage.

33. At a time when the California economy is suffering, AB 1840/1956 impose what amounts to a heavy new penalty on numerous California industries who are crucial to our state’s economic vitality.

34. California has a large, desirable consumer population, but digital media industries are highly mobile and can access California consumers from outside our state’s borders as easily as within.

35. AB 1840/1956 could trigger a mass movement of high-paying, clean and green, technology sector jobs out of our state.

36. Will result in a flood of litigation. Enactment of AB 1840/1956 would open up many potential areas of litigation due to the complexity and amorphous nature of digital and e-commerce transactions, the broad, vague scope of the bill, and the lack of statutory authority for the new tax.

37. This will mean costly litigation for the state of California, local governments, and companies.

38. Fewer California technology sector companies and jobs and reduced sales will mean fewer personal income tax revenues due to lost jobs, fewer corporate income tax revenues due to lost companies and lost sales income, and fewer property and sales tax revenues due to lost California operations.

39. Additionally, the flood of litigation and liability that AB 1840/1956 will likely generate against the state will be extremely costly.

40. The amorphous nature of digital media and its channels of delivery make it especially vulnerable to theft. Increasingly faster computers and Internet connections have made illegal downloads of software, movies, music and the like easier.

41. In 2005, in the music industry alone, there were 20 billion estimated illegal downloads, a loss of at least $2 billion. AB 1840/1956 will significantly burden companies already facing challenges unique to the sale of digital media.

42. Moreover, increasing the cost of California digital purchases by 8.25% will likely encourage even more digital piracy.

43. Digital piracy leads to lost jobs, lost sales, and lost tax revenues.

44. California should focus its efforts on reducing lost revenues resulting from digital media theft rather than burdening digital media providers and consumers with more taxes.

45. Bills like AB 1840/1956 demonstrate a stunning disregard for the business climate required to retain California’s global leadership edge in digital media and the online marketplace.

46. Enactment of AB 1840/1956 will place California squarely on a path to relinquish its leadership role in digital media technology to states like Nevada who will likely never impose such a tax.

47. Currently, less than a third of the states impose a tax on digital media, and a number of these states have very different tax structures and populations than California.

48. Most of the states considered comparable to California DO NOT have a digital tax – including New York, Michigan, and Florida.

Supporting

American Federation of State, County and Municipal Employees,

AFL-CIO

California Professional Firefighters

California State Association of Counties

California Tax Reform Association

California Teachers Association

Peace Officers Research Association of California

Opposing

California Chamber of Commerce

Accounting Options

AeA

AGx Technologies, Inc.

Alight LLC

American Vanpac Couriers, Inc.

B Chem Engineering

B.W. Implement Company

C & H Clubs, Inc.

Cadence Design Systems, Inc.

California Alliance for Consumer Protection

California Bankers Association

California Broadcasters Assn.

California Business Roundtable

California Cable & Telecommunications Association

California Cascade Industries

California Log Cabin Republicans

California Manufacturers and Technology Association

California Retailers Association

California Taxpayers Association

CAM Contractors, Inc.

Cato Research Ltd.

CEM Group, Inc.

Classic Installs, Inc.

CMA Insurance Services

Coastal Cardiology

Corinthian House Residence, Inc.

Corona Chamber of Commerce

Creativity, Inc

CTIA - The Wireless Association

Data Builders, Inc.

Dependable Cleaning

Ditch Witch Equipment Co., Inc.

DMAF Consulting

DRYKEF, Inc.

Einstein Industries, Inc.

Electronic Data Systems Corp.

Elite Control, Inc.

EMC Planning Group, Inc.

Entertainment Software Association

Esquire Plaza

Evapco, West

Facilitec West

Flo-Kem, Inc.

Fox Entertainment Group, Inc.

Fuller Sound/CSS Music/ D.A.W.N.

Fullerton Chamber of Commerce

G. A. Gertmenian & Sons

Galaxy Desserts

Gale Banks Engineering

Genica Corporation

Greater Bakersfield Chamber of Commerce

Green Way Building Group, Inc.

Growers' Refrigeration and Geneva Refrigerated Truck Service

Harvey Titanium, Ltd.

Heal Staffing, Inc.

Help Me 2 Learn Company

Hermosa Beach Chamber of Commerce and Visitors Bureau

HR Jungle

Howard Jarvis Taxpayers Association

Humboldt Community Access & Resource Center (HCAR)

Hydra

Innovative Maintenance Solutions, Inc.

Irvine Sensors Corporation

JMR Electronics

KASL Consulting Engineers

Kennemetal

Kirker Glass, Inc.

Knight Transportation

Laminating Company of America

Lawyers Against Lawsuit Abuse

La-Z-Boy West

Live Oak Associates, Inc.

Lodi Grading & Paving, Inc.

LTG Associates, Inc.

Manheim Central California

Medical Benefits Administration, Inc.

Microsoft Corporation

Milpitas Chamber of Commerce

Mission Lodge

Morehouse Foods, Inc.

Motion Pictures Association of America, Inc.

Nagel Landscaping

Napa Chamber of Commerce

New Horizons

NLB Corporation

Ogletree's Inc.

Otto B Clean Equipment & Supply's

Oxnard Chamber of Commerce

Palm Desert Chamber of Commerce

Pandora Data System, Inc.

Pasadena Service Federal Credit Union

Peabody Engineering & Supply Inc.

Pier 39

Plan-It Interactive

Quality Metal Fabrication, LLC

Rare Service Heating & Airconditioning, Inc.

Reasons to Believe

Remote Visions, Inc.

Risse Mechanical

RPP & Van Kleeck General Contracting, Inc.

SCP Insurance Service, Inc.

Santa Clara Chamber of Commerce

Seawright Custom Precast, Inc

Shachihata Inc. (USA)

Sierra Pine Rocklin

Smart Pumps, Inc.- dba -Smart Products, Inc.

Sony Pictures Entertainment

St. John's Retirement Village

Stephen P. McGee, Law Offices of

Stewart Heating & Air, Inc.

Superior Communications

T-Mobile

Tension Envelope Corp

The Klabin Company

The Maynard Group

The Spice Hunter

Time Warner Cable, Inc.

Tink, Inc.

Troll Systems

Troy Sheet Metal Works

Verizon

VLSI Research Inc.

Ware Malcomb

Way Financial

Western Jet Aviation, Inc.

William-Sonoma, Inc.

Z Gallerie

ZL Technologies, Inc.

35 Individuals

4. AB 3025 (Lieber) Polystyrene Packaging

Summary

1. AB 3025 would prohibit on and after January 1, 2012, wholesaler, as defined from selling or offering for sale, expanded polystyrene loose fill packaging in this state, unless it is 100% recycled material.

Background

2. Existing law prohibits the sale of plastic bags labeled with the term "compostable," "biodegradable," "degradable," or any form of those terms unless the bags meet specified standards.

3. Wholesaler means a person who purchases polystyrene loose fill packaging for resale in this state.

4. A wholesaler shall not sell or offer for sale in the state expanded polystyrene loose fill packaging material.

5. Does not apply to expanded polystyrene loose fill packaging material if it is 100 percent recycled material.

Arguments in Support

6. In a time where California needs to concentrate on eliminating excess waste and products that are unfriendly to the environment, AB 3025 will eliminate large quantities of packaging waste and promote recycle material.

Arguments in Opposition

7. The questionable nature of the Legislature spending valuable time and resources on this issue when major budget and public policy issues impacting the health and welfare of the state are at stake.

8. There is a lack of a robust recycling infrastructure that exists for polystyrene loose fill packaging material.

Supporting

Californians Against Waste

Opposing

California Chamber of Commerce

California Manufacturers & Technology Association

5. SB 1057 (Migden) Rental Cars

Summary

1. SB 1057 would require a rental company to only advertise, quote, and charge a rental rate that includes the entire amount, except taxes, that a renter must pay for a rental car, as specified, and would delete the authority of a rental company to separately state those amounts.

2. The bill would also prohibit a rental company from charging a renter a tourism commission assessment.

3. By January 1, 2010, the bill would further require every rental company to report to the Legislature on the number and amount of tourism commission assessments that were collected from consumers during January 1, 2007, to January 1, 2009, inclusive, and the gross revenues obtained from the separate listing or itemization of airport concession fees during that same time period.

Background

4. Under current law, a passenger vehicle rental company is required to only advertise a rental rate that includes the entire amount, except taxes, a customer facility charge, and a mileage charge, that a renter must pay to hire or lease a vehicle for the period of time to which the rental rate applies.

5. Existing law also specifies that when a rental company provides a quote or imposes a charge, it may separately state the rental rate, taxes, customer facility charge, airport concession fee, tourism commission assessment, and mileage charge.

Arguments in Support

6. SB 1057 is an effort to stop rental car companies from bilking consumers who rent cars at California airports.

7. SB 1057 would repeal 2006 legislation (AB 2592, Leno) which has allowed companies to overcharge California consumers by millions of dollars—$24 million in 2007 alone.

8. Migden said she also intends to prohibit car rental companies from passing on to consumers costs of funding the California Travel and Tourism Commission (CTTC)—a cost that the rental car companies were supposed to impose on themselves.

9. "This law needs to be fixed before more consumers lose their hard-earned money to overcharging by unethical car rental firms," said Migden.

10. In a last-minute "gut and amend" in 2006 rental car companies operating out of California airports agreed to increase tourism assessments that they contribute to the budget of the CTTC, in exchange for being allowed to "unbundle" (separately list) their fees when the companies advertise or quote rates (for example, on the Internet).

11. One of the fees that the rental car companies have to pay – a fee they wanted to unbundled – is the charge that airports levy on them. That airport concession fee is typically about 11 percent of the rental price.

12. When the law went into effect last January, two things happened.

13. First, instead of simply unbundling their previously charged rates, rental car companies added an additional 11 percent to the rates they were previously quoting – rates that already included the 11 percent airport concession fee.

14. Using AB 2592, these companies simply enriched themselves to the tune of an 11 percent increase in rates, at California consumers’ expense.

15. Moreover, while rental car companies promised to pay for the costs of the CTTC as part of the gut and amend deal, they have instead passed the cost of that assessment to California consumers, imposing what is in essence a new tax levied on rental car customers to pay for the Commission.

16. In response to these actions by car rental firms, the University of San Diego School of Law’s Center for Public Interest Law (CPIL) filed a major class action anti-trust case against seven rental car firms in November alleging that the add-on charges were the product of unlawful and collusive private price fixing.

17. Migden’s legislation also requires rental car companies to provide the legislature with a certified audit of how much additional money they made off of consumers while AB 2592 has been in effect.

Arguments in Opposition

18. In addition to requiring rental car companies to advertise the entire rental rate that includes the taxes, customer facility charge, airport concession fee and the mileage charge, this bill would prevent rental car companies from charging consumers the current tourism commission assessment used to fund and promote California as a tourist destination across the country and around the world.

19. The current law is a result of extensive negotiations in 2006 with the rental car industry and consumer advocates ultimately resulting in the consensus AB 2592 (Leno).

20. The changes to the law embodied in SB 1057 would undo many of the agreements reached in the current law.

21. Additionally SB 1057 would make it difficult if not impossible for national rental car companies to advertise their products and make it difficult for consumers to compare these services as many mandatory items like taxes, customer facility charges and airport concessions fees vary greatly among different jurisdictions.

22. Furthermore the bill will prevent rental car companies from collecting the tourism commission assessment. This assessment generates over $50 million towards the funding and promotion of tourism.

23. With this funding, the tourism commission is able to significantly strengthen and expand current marketing and advertising efforts in key existing domestic and international markets and introduce the California brand to new domestic and international opportunity markets.

24. Tourism is California’s fourth largest employer and fifth largest contributor to the gross state product.

25. Today the travel and tourism industry brings in over $93.8 billion to the state economy, employs over 928,720 Californians and generates approximately $2.1 billion in local taxes and $3.5 billion in state taxes.

26. The importance of investing in the promotion of California as a tourist destination cannot be underscored enough.

27. The ability to continue to market California as a global destination for tourism will be vital to sustaining this critical component of our state’s economy.

Supporting

Not available at this time.

Opposing

California Chamber of Commerce

6. SB 1165 (Kuehl) Environment: Environmental Impact Report

Summary

1. SB 1165 addresses two key elements of the California Environmental Quality Act (CEQA) by proposing to provide greater transparency in the creation of draft EIRs by allowing the public to comment on administrative drafts just as developers and their paid consultants may; and 2) requiring EIRs that are older than 5 years to be reviewed before a project is approved.

Background

2. The CEQA sets procedures for preparing and commenting on a draft environmental impact report (EIR) or negative declaration by:

a. Requiring a draft EIR or negative declaration to be prepared directly, or under contract to, a public agency

b. Providing that the above requirement does not prohibit anyone from submitting information or comments to the public agency, which may be submitted in any format, must be considered by the public agency, and may be included in any EIR or negative declaration.

c. Provides that a subsequent or supplemental EIR is not required when an EIR has been prepared for a project unless substantial project changes are proposed that require major EIR revisions, substantial changes occur with respect to the circumstances under which the project is being undertaken that require major EIR revisions, or new information becomes available that was not known and could not have been known at the time the EIR was certified as complete.

3. This bill revises procedures for preparing and commenting on a draft EIR or negative declaration by:

d. Clarifying that the draft EIR or negative declaration must be prepared directly, or under contract to, the lead agency (rather than a public agency).

e. Authorizing a person to submit information or comments to the lead agency, repealing provisions authorizing comments to be submitted in any format and to be included in the environmental document, and specifying that written communications to the lead agency and consultants regarding the project or its potential environmental effects must be considered and retained by the lead agency.

f. Require a lead agency to make available to the public administrative drafts of EIRs and negative declarations, or portions of those documents, when the draft is available to the public for comment if the administrative draft is circulated to the project applicant.

4. Defines "administrative draft" to be an EIR, negative declaration, or mitigated negative declaration that is circulated by the lead agency to a responsible agency, or to other departments within the agency, prior to

providing public notice of the draft EIR, negative declaration, or mitigated negative declaration.

5. Revises procedures for preparing a subsequent or supplemental EIR by:

g. Providing that the EIR must have been prepared within the past 5 years in order for a subsequent or supplemental EIR to be required under the 3 conditions.

h. Prohibits a lead agency action from being based on an EIR that was certified more than 5 years ago without treating that EIR as an uncertified draft EIR, circulating that EIR for public review and comment, and recertifying that EIR before taking an action on that project based on that EIR. This provision does not prohibit the incorporation by reference or tiering off of that EIR that was certified more than 5 years ago.

Arguments in Support

6. SB 1165 addresses two key elements of the California Environmental Quality Act (CEQA) by:

a. proposing to provide greater transparency in the creation of draft EIRs by allowing the public to comment on administrative drafts just as developers and their paid consultants may; and

b. requiring EIRs that are older than 5 years to be reviewed before a project is approved.

Arguments in Opposition

7. SB 1165 is a solution in search of a problem and would gut the CEQA in a number of ways.

8. The provisions of the bill would apply to all public projects including state transportation projects, levee construction, expansion of University of California Campuses, elementary and high schools, regional projects that are designed to protect the environment such as natural community conservation programs, local government infrastructure projects such as police and fire stations, libraries, local roads, parks, etc.

9. The bill expressly prohibits any lead agency from relying on an EIR more than 5 years old when it takes “actions” – not projects as defined by CEQA – related to the project.

10. Lead agency actions may include non-discretionary subsequent actions such as final map approvals, the issuance of individual building permits for structures contemplated by the EIR and approved by the agency at the time the EIR was certified, plan check and building inspection services, etc.

11. These non-discretionary actions are by definition, not a project subject to CEQA.

12. Courts have declared that the mere passage of time – a non-project – is not an environmental impact.

13. SB 1165 would gut this principle of CEQA.

14. A five-year limitation would act as an incentive to bring litigation regarding the EIR.

15. Even if a court of appeal ultimately upheld the EIR, the litigation process could easily take 5 years and the lead agency would have to recirculate the judicially validated EIR.

16. Additionally, under California’s excessive regulatory regime, many projects – even relatively small projects – are still trying to obtain permits from responsible agencies five years after the EIR has been certified.

17. There would be no incentive to engaging in master-planned communities.

18. Some projects may have begun construction on infrastructure financed by local bonds; these projects would now be thrown into chaos.

19. A number of statewide bond-funded public projects such as highway transportation, the build-out of California university campuses pursuant to their long range development plans, levee projects, and other critical infrastructure would be halted.

20. These projects would be put in a perpetual cycle of CEQA analysis.

21. SB 1165 establishes a scheme that would make any written communication to the lead agency part of the record in litigation.

22. Opponents can insert one sentence of important information buried in boxes of irrelevant information on a lead agency, but the lead agency has no discretion to exclude the irrelevant information from the record.

23. Yet the lead agency must respond to all the irrelevant information and explain why it is irrelevant.

24. If they miss the one sentence of relevant information, a project opponent can have the CEQA document invalidated by a court.

25. Any disagreement between the lead agency and the commentator could be viewed by reviewing courts as a significant impact.

Supporting

7. SB 1608 (Corbett) Disabled Persons: Equal Access Rights: Civil Actions

Summary

1. SB 1608 is a bipartisan comprehensive reform measure designed to address two important goals:

a. Promoting and increasing compliance with state and federal civil rights laws providing for equal access for individuals with disabilities in public accommodations;

b. Reducing unwarranted, unnecessary litigation that does not advance the goals of disability access.

2. SB 1608 promotes statewide efforts to facilitate better compliance with disability access laws, to encourage resolution of access issues without litigation, and to reduce the use of litigation as a means of seeking monetary profit rather than improved access.

Background

3. Existing law provides for the licensure and regulation of persons engaged in the practice of architecture by the California Architects Board.

4. This bill would require a person licensed to practice architecture, as a condition of continued licensure, to complete coursework regarding disability access requirements, as specified, and provide proof of that completion to the California Architects Board.

5. Existing law prohibits any person, firm, or corporation from denying or interfering with a disabled person's admittance to or enjoyment of public facilities, or from otherwise interfering with the rights of an individual with a disability, including the right to be accompanied by a guide dog, signal dog, or service dog, as specified.

6. The existing federal law, the Americans with Disabilities Act of 1990, prohibits discrimination against an individual with a disability on the basis of that disability in specified situations, including employment opportunities and access to public accommodations, services, and transportation.

7. This bill would require an attorney to provide a specified written advisory to a building owner or tenant with each demand for money or complaint for any alleged physical access violation, as defined, in a form to be developed by the Judicial Council, and on a separate page clearly distinguishable from the demand for money, as specified.

8. Existing law authorizes the State Architect to establish a program for voluntary certification by the state of any person who meets specified criteria as a certified access specialist with respect to access to buildings for persons with disabilities.

9. This bill would enact the Construction-Related Accessibility Standards Compliance Act, which would provide for the inspection of sites by certified access specialists and the provision of specified certificates and reports regarding those inspections.

10. The bill would require that, commencing July 1, 2009, all inspections of a privately owned place of public accommodation that relate to permitting, plan checks, or new construction be conducted by a building inspector who is a certified access specialist.

11. It would require a local agency to employ or retain a sufficient number of building inspectors, and in no event less than one, who are certified access specialists.

12. The bill would allow a local government to charge or increase inspection fees to the extent necessary to offset the costs of complying with these provisions.

13. By imposing a new requirement on local agencies with respect to building inspectors, the bill would impose a state-mandated local program.

14. The bill would require a court, with respect to an action involving an accessibility claim, to issue an order that, among other things, grants a 90-day stay of the action and schedules an early evaluation conference if the defendant has satisfied certain requirements relating to inspection of the site at issue.

15. The bill would provide that damages may be recovered only for a violation of a construction-related accessibility standard that personally and actually deterred the plaintiff.

16. Existing law establishes various boards and commissions within state government.

17. The bill would establish the California Commission on Disability Access for certain purposes relating to disability access, and would require the commission to conduct studies and make reports to the Legislature, as specified.

18. Existing law provides that any person adversely affected by a regulation or other specified action of any state agency respecting the administration of any building standard may appeal the issue for resolution to the California Building Standards Commission.

19. Existing law also provides that, if any local agency having authority to enforce a state building standard and any person adversely affected by any regulation or other specified action of that agency respecting that building standard both wish to appeal the issue for resolution to the commission, then both parties may appeal to the commission.

20. Existing law provides that the commission may accept that appeal only if it determines that the issues involved in the appeal have statewide significance.

21. This bill would provide, in addition, that, with respect to a building standard adopted by the commission relating to making public accommodations accessible to and usable by people with disabilities, if either a local agency having authority to enforce that building standard or a person adversely affected by a regulation or other specified action of that agency respecting that building standard wishes to appeal the issue for resolution to the commission, then either party may appeal to the commission.

22. It would provide that the commission may accept the appeal only if it determines that the issues involved in the appeal have statewide significance.

23. Existing law requires all construction inspectors, plans examiners, and building officials to complete a minimum of 45 hours of continuing education for every 3-year period, as specified.

24. This bill would require that at least 8 of those hours of continuing education relate to disability access requirements, as specified.

25. The bill would allow a local government to charge or increase inspection fees to the extent necessary to offset any added costs incurred in complying with these provisions.

26. The bill would provide that certain provisions described above shall become operative only upon the funding, and commencement of operations, of the California Commission on Disability Access, and shall cease to be operative 60 days following the cessation of operations of the commission.

27. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state.

28. Statutory provisions establish procedures for making that reimbursement.

29. This bill would provide that no reimbursement is required by this act for a specified reason.

Arguments in Support

30. SB 1608 addresses the small but widely destructive, atypical group of plaintiffs and lawyers that use the disability laws and court system to systematically extract monetary settlements from businesses rather than to seek disability access.

31. Promotes the use of state-certified disability access specialists in the areas of building, construction and new tenant improvements.

32. Creates an independent state commission on disability access in the state of California wich will serve as an advisory body and information center on disability access issues.

Arguments in Opposition

33. The composition of the proposed California Commission on Disability Access, which would have 19 members, 7 of whom are required to be from the disability community and 6 from the business community. This commission could not do any better than the current system due to having less than 51% of the total number of commission members from the disability community.

34. This bill puts the Building Standards Commission in the position of enforcing California civil rights laws.

35. There are concerns that the process of the early evaluation conference does not include the ability of the plaintiff or plaintiff's representative to have an expert survey the facility to list all of the access violations (also known as site inspection).