Government Affairs Committee Meeting Chair: Jan Sobel (West Valley Boys & Girls Club) Co-Chairs: Alex Kasendorf (Alpert, Barr & Grant, APLC) David Gershwin (David Gershwin Consulting) Wednesday, July 15, 2015 12:00 1:30 p.m.; Lunch served at 11:45 a.m. Providence Tarzana Medical Center, 18321 Clark St., Tarzana Women s Pavilion Auditorium 1. Welcome & Self-Introductions 2. VICA Announcements & Updates Lunch Courtesy of Providence Tarzana Medical Center AGENDA 3. Legislative Updates from Elected Official Staffers 4. LADWP Revenue Requirements presentation by Jeffery Peltola, LADWP, Chief Financial Officer and Neil Guglielmo, LADWP, Budget Director 5. 2015 Legislative Update presentation by VICA staff 6. AB 437 (Atkins) Small Business Grant Program discussion and action item 7. AB 866 (Garcia) Economic Development: Small Business discussion and action item 8. AB 451 (Bonilla) Private Parking Facilities discussion and action item 9. New/Old Business 10. Upcoming 2015 Government Affairs Committee Meetings: Aug. 19, Oct. 14 Conflict of Interest Policy: You must disclose a conflict of interest prior to speaking on an issue. This requirement does not prevent you from voting on the item.
AB 437 Small Business Grant Program Originating Committee: Government Affairs Date: July 15, 2015 Position: The Valley Industry and Commerce Association (VICA) supports/opposes Assembly Bill 437 (Atkins), which allows small businesses to receive a state grant in proportion to the amount of research and development tax credits they have earned. Background: Current law provides for several programs that support small businesses, including the Office of the Small Business Advocate, which represents the views and interests of small businesses. The Personal Income Tax Law imposes fees on taxable income at specified rates based upon the amount of taxable income. The Corporation Tax Law imposes taxes based on net income. The Personal Income Tax Law and the Corporation Tax Law allow a credit against mandated taxes based on increasing research expenses. Data from the Franchise Tax Board shows $100 million in tax credits generated for businesses with $1 million to $10 million in gross receipts, but only $10 million of those credits were used. Small businesses are sometimes unable to use credits due to lack of tax liability. From a period between Jan. 1, 2016, and ending Jan. 1, 2023, AB 437 would establish the Research and Development Small Business Grant Program. This program would provide qualified small businesses with less than $5 million in gross receipts a one-time grant equal to either 10 percent of unused tax credits received in 2014-15 or 15 percent of excess credits generated from 2016-21. These grants are to be used for qualified research, including any basic or applied research for the advancement of scientific or engineering knowledge or the improved effectiveness of commercial products. AB 437 would continuously appropriate money from the General Fund to award these grants, in specified amounts per calendar year, to be allocated by the Franchise Tax Board. This bill would specify that any grant money received by a qualified small business would be excluded from its income and would provide that any excess credit amount attributable to the qualified small business would be reduced by the amount allowed as a grant. Impacted Entities: California small businesses, business owners seeking to conduct research, research facilities, manufacturers, technological businesses Business Nexus: AB 437 allows businesses to claim unused tax credits. Businesses could use these grants to directly fund and continue new or existing research and development. Discussion: Support Argument: While California s Research and Development Tax Credits (R & D) were created in 1987 to increase the incomes of innovative businesses in order for them to create new jobs and expand product lines data from the Franchise Tax Board shows that many small and medium sized businesses are able to earn the R & D Tax Credits but are not able to receive their monetary benefit because they do not have enough taxable liabilities. These businesses have a great deal of potential but without some way to monetarize earned R & D credits, they may never reach their full potential.
AB 437 allows small businesses to receive a grant from the state in proportion to the amount of research and tax credits they have earned. This grant program uses the R & D tax credit to determine how much investment the state should provide the small business. Specifically, the bill authorizes eligible businesses to receive a grant for 15% of the credits generated starting in 2016. The bill also allows a two year look back period for which small businesses can receive a grant for 10% of all tax credits received in 2014 and 2015. This bill helps small businesses cash-out earned tax credits, which would allow business owners to increase their workforce and expand their product lines. Opposition Argument: This bill will take money from the California General Fund, which could be used for other purposes. While small businesses are a good investment, money from the California General Fund could be used for other purposes such as education, transportation, or other causes that could be seen as more vital than small businesses. Estimates predict a $22 million, $27 million and $27 million decrease in General Fund revenues for fiscal years (FY) 2015/2016, FY 2016/2017 and FY 2017/2018 respectively, AB 437 essentially forces the taxpayer to be an investor in these research efforts whether they have future value or not. Since the funds used for this grant program would come from the California General Fund, they would be using taxpayer money to fund these research efforts. In addition, research projects for businesses may take many years to complete. These funds may not be in place long enough for the small businesses to complete their research and development. Committee Discussion: Pending Committee discussion. Supporters: Baybio, Biocom, California Asian Pacific Chamber of Commerce, California Association for Micro Enterprise Opportunity, California Chamber of Commerce, California Metals Coalition, California Healthcare Institute, Flextech Alliance, National Federation of Independent Business, Small Business California Opponents: California Tax Reform Association Process History: Brought to Government Affairs Committee on July 15, 2015: Pass Fail Tabled Amended Brought to the Board of Directors on August 27, 2015: Pass Fail Tabled Amended
AB 866 Small Business Regulatory Enforcement Fairness Act Originating Committee: Government Affairs Date: July 15, 2015 Position: The Valley Industry and Commerce Association (VICA) supports/opposes Assembly Bill 866 (E. Garcia), which would expand the duties of the Small Business Advocate to include sharing contact information for small business organizations with state rulemaking agencies, which may be used to disseminate public information about a proposed rule or amendment. Background: Current law establishes the Governor s Office of Business and Economic Development, also known as GO-Biz, to serve the Governor as the lead entity for economic strategy and the marketing of California on issues relating to business development, private sector investment and economic growth. Existing law establishes the duties and functions of the Office of the Small Business Advocate (OSBA) within GO-Biz. Those duties include representing the views and interests of small businesses before other state agencies whose policies and activities may affect small businesses. Under existing law, each agency of the state is required to provide the OSBA reports, documents and public records that the OSBA deems necessary to carry out his or her functions. In addition, state agencies are required to create compliance guides to assist small businesses and nonprofit organizations in complying with various regulations. AB 866 would additionally authorize the OSBA to provide rulemaking agencies with contact information for small business organizations. The bill would additionally require each agency that develops a compliance guide to notify the OSBA within 45 days after the guide becomes available to the public, and to include in that notice information on how a small business can obtain a copy of the compliance guide. Impacted Entities: Small businesses owners, regulatory state agencies, GO-Biz, the Office of the Small Business Advocate Business Nexus: Small businesses could see increased economic opportunities with mandated communication between GO-Biz, OSBA and small business organizations. This bill can increase transparency between rulemaking agencies and affected small businesses. Discussion: Support Argument: AB 866 improves upon existing processes to help rulemaking agencies fully consider economic impacts of regulations on small businesses. The existing procedures allow for comments and suggestions, but are dependent on impacted entities submitting information on potential affects. This legislation allows the state s government to create safeguards that ensure rulemaking agencies consider small businesses. Providing contact information for business organizations is a common sense solution to an important concern for business owners. While small businesses are most affected by California s regulatory mandates, they have the least ability to engage on these important issues. Given that nearly 3 million firms in California have no employees and 90 percent of firms with employees have less than 20, these methods are important to ensuring the state s long-term economic growth. This bill provides an important new resource for agency s seeking information on how a proposal could affect small businesses.
Opposition Argument: AB 866 creates a costly mandate for California. The legislation requires GO-Biz to commit the necessary funds to provide rulemaking agencies with the required information. There will be ongoing General Fund costs to GO-Biz of approximately $260,000 to fund three positions for workload related to the expanded duties of the OSBA. The OSBA already serves as the primary advocate for California s small business community. The state does not need to commit additional resources; there are established programs to assist small businesses. Committee Discussion: Pending Committee discussion. Supporters: Building Owners and Managers Association, California Asian Pacific Chamber of Commerce, California Business Properties Association, California Chamber of Commerce, California Manufacturers and Technology Association, Industrial Environmental Association, International Council of Shopping Centers, NAIOP-Commercial Real Estate Development Association, National Federation of Independent Business, USANA Health Science Opponents: None Received Process History: Brought to Government Affairs Committee on July 15, 2015: Pass Fail Tabled Amended Brought to the Board of Directors on August 27, 2015: Pass Fail Tabled Amended
AB 451 Private Parking Facilities Originating Committee: Government Affairs Date: July 15, 2015 Position: The Valley Industry and Commerce Association (VICA) supports/opposes Assembly Bill 451 (Bonilla), which permits a city or county to authorize the operator of a privately owned and maintained offstreet parking facility to regulate unauthorized parking in that facility. Background: Existing law authorizes a city or county to regulate privately owned and maintained offstreet parking facilities. This can be done by ordinance or resolution within the city or county for facilities that are generally held open for use of the public for purposes of vehicular parking. The ordinance or resolution can specify that specific traffic laws apply, including basic speed laws and prohibitions against reckless driving. In 2011, the California Attorney General concluded that existing laws do not authorize an operator of a privately owned parking facility to issue parking citations with monetary sanctions. It was reasoned that monetary citations, violations or penalties are traditionally municipal functions. As such and without legislative action these citations may only be issued by a government entity. AB 451 allows a city or county to delegate enforcement of unauthorized parking to the operator of a privately owned and maintained offstreet parking facility. This bill requires the operator to post notices stating that violators may be subject to a parking invoice fee, and include clear instructions that describes how to contest a parking fee invoice. AB 451 prohibits the owner or operator from transmitting the parking fee invoice to the Department of Motor Vehicles. The bill would also require a city or county that authorizes private parking regulation to include specific provisions including those related to resolving disputes over the parking fee invoice. The bill provides a prohibition on incentives based on the number of invoices issued and places a cap on the parking invoice fee equivalent to a municipal parking fine. In this bill, a parking lot owner may not represent itself as a local government. Impacted Entities: California private parking facilities, local businesses with parking facilities, commuters and patrons of local businesses, drivers who rely on parking held for the public s use Business Nexus: This bill encourages private entities to properly regulate available public parking. Properly regulated parking could increase economic opportunities by freeing up limited parking for consumers and patrons. Discussion: Support Argument: Many parking lots in California are privately owned. In some cities, up to 70% of downtown parking spaces are privately owned. For this reason, municipalities have enacted ordinances authorizing private parking lot operators to regulate their lots and enforce parking violations through the use of parking invoices. Current state law does not prescribe whether or not private companies can enforce parking limits in private lots, even when local jurisdictions authorize a company to do so. AB 451 addresses this problem by providing much needed clarity to cities and counties. Authorizing localities to adopt new parking ordinances will best facilitate increased economic activity within their jurisdiction.
Previous attempts at legislation posed concerns for potential abuse. AB 451 has remedied these claims by establishing dispute resolution consistent with state law. A parking operator is expressly prohibited from representing themselves as a local government and invoice fees are capped. The legislation similarly removes potential incentives to issue invoices. AB 451 is the common-sense solution for parking concerns; it respects local governments and empowers them to create a policy that best fits their community and local parking operators. Opposition Argument: AB 451 creates an empty threat against unauthorized parking. The bill provides no clear language or provisions that would allow parking lot operators to deter unauthorized parking. Instead, operators would be reliant on parking invoices to encourage consumers to abide by parking regulations and free up limited parking for other consumers. There are existing provisions and recourse in place for private parking operators to discourage unauthorized parking. Owners may opt to tow a vehicle that is in violation. As such, this bill creates unnecessary mandates for a problem that already has a viable solution. Although this bill expressly prohibits a private parking operator from transmitting information to and from the DMV, it is not clear if operators may obtain sensitive information from other sources. This information could be used to take the violator to small claims court in an effort to obtain an unpaid parking invoice fee, further overcrowding our courts. Supporters hope that a receipt of an invoice will be enough of an incentive to prevent unauthorized parking. Committee Discussion: Pending Committee discussion. Supporters: City of Walnut Creek, California Retailers Association, City of Indian Wells, League of California Cities, Regional Parking, Inc. Opponents: None received as of June 22, 2015. Process History: Brought to Government Affairs Committee on July 15, 2015: Pass Fail Tabled Amended Brought to the Board of Directors on August 27, 2015: Pass Fail Tabled Amended