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AB-255 COVID-19 Emergency Small Business Eviction and Rent Relief Act.(2021-2022)

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Date Published: 03/26/2021 04:00 AM
AB255:v98#DOCUMENT

Amended  IN  Assembly  March 25, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 255


Introduced by Assembly Member Muratsuchi

January 14, 2021


An act relating to COVID-19 relief. An act to add Section 1952.9 to the Civil Code, relating to COVID-19 relief.


LEGISLATIVE COUNSEL'S DIGEST


AB 255, as amended, Muratsuchi. Tenancy: commercial leases: COVID-19 rent relief. COVID-19 Emergency Small Business Eviction and Rent Relief Act.
Existing law provides that a tenant is guilty of unlawful detainer if the tenant continues to possess the property without permission of the landlord in specified circumstances, including when the tenant has violated the lease or rental agreement by defaulting on rent, and requires the tenant be served a 3 days’ notice in writing to cure the default, as specified. Existing law provides that an unlawful detainer action is subject to the COVID-19 Tenant Relief Act of 2020, which provides tenants with specified temporary protections from eviction, if the default in the payment of rent is based upon COVID-19 rental debt, as defined.
This bill would require a landlord, who receives a statement signed under penalty of perjury by a commercial tenant, as defined, and supported by documentary evidence that attests that the tenant requests emergency rent relief because the business of the commercial tenant has experienced a decrease in average monthly gross revenue of at least 50%, which is reasonably attributable to public health regulations adopted to address the COVID-19 pandemic, during the qualifying time period, as defined, as compared with the 12 months immediately preceding the qualifying time period, as defined, to conduct a good faith negotiation to form a plan to allow the commercial tenant a reasonable opportunity to repay COVID-19 lease debt while minimizing the hardship to the landlord. By expanding the scope of the crime of perjury, this bill would impose a state-mandated local program. The bill would prohibit, except as provided, a landlord from terminating a lease of a commercial tenant, before the date that is one year from the end of the qualifying time period, who paid 25% of the amount due under the lease during the qualifying time period.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would state the intent of the Legislature to enact legislation that would provide commercial rent relief protections for small businesses affected by the COVID-19 pandemic to help them weather this public health and economic crisis without losing their businesses.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NOYES  

The people of the State of California do enact as follows:


SECTION 1.

 This act may be cited as the “COVID-19 Emergency Small Business Eviction and Rent Relief Act.”

SEC. 2.

 (a) California small businesses are drivers of economic growth by creating two-thirds of new jobs and employing nearly half of all private sector employees.
(b) California is home to 4.1 million small businesses, representing 99.8 percent of all businesses in the state and employing 7.2 million workers in California, which is 48.5 percent of the state’s total workforce.
(c) The COVID-19 pandemic has presented a significant challenge to small businesses, employers, and employees. An August 2020 Small Business Majority survey found that 44 percent of small businesses are at risk of shutting down. Data released through the United States Census Current Population Survey found that minority-owned businesses are disproportionately impacted. The number of active businesses owned by African Americans dropped by 41 percent, Latinx by 32 percent, Asians by 25 percent, and immigrants by 36 percent.
(d) Small business support is critical to ensure these Californians are connected to the resources they need to pivot and adapt to the COVID-19 marketplace.
(e) It is the intent of the Legislature to support small businesses by enacting commercial rent relief as businesses work to safely reopen and recover from the COVID-19 pandemic.

SEC. 3.

 Section 1952.9 is added to the Civil Code, to read:

1952.9.
 (a) As used in this section:
(1) “Certificate of hardship” means a statement, signed under penalty of perjury by a commercial tenant and supported by documentary evidence, attesting to both of the following:
(A) The tenant requests emergency rent relief because the business of the commercial tenant has experienced a decrease in average monthly gross revenue of at least 50 percent during the qualifying time period as compared with the 12 months immediately preceding the qualifying time period.
(B) The decrease in average monthly gross revenue described in subparagraph (A) is reasonably attributable to public health regulations adopted to address the COVID-19 pandemic.
(2) “Commercial tenant” means a person or entity, whose offices are domiciled in the state, that meets all of the following criteria:
(A) The person or entity hires real property in this state that is not a dwelling unit, as defined in Section 1940, or a mobilehome, as defined in Section 798.3.
(B) The person or entity employs no more than 50 employees.
(C) The person or entity operates an independently owned and operated business or nonprofit organization that is not dominant in its field of operation and has its principal office in the state.
(D) Between January 1, 2018, and January 1, 2021, the person or entity had average annual gross revenues not exceeding five million dollars ($5,000,000).
(3) “COVID-19 lease debt” means an unpaid financial obligation of a commercial tenant under the tenancy that came due during the qualifying time period.
(4) “Qualifying time period” means the period of time between March 1, 2020, and August 1, 2021.
(b) (1) If a landlord receives a certificate of hardship from a commercial tenant, the landlord and the tenant shall conduct a good faith negotiation to form a plan to allow the commercial tenant a reasonable opportunity to repay COVID-19 lease debt while minimizing the hardship to the landlord.
(2) A landlord shall be deemed in compliance with this subdivision if the landlord is unable to consent to the plan described in paragraph (1) without subjecting the landlord to significant risk of default on their own financial obligations.
(c) (1) If the commercial tenant has paid at least 25 percent of the amount due under the lease during the qualifying time period, both of the following shall apply:
(A) The landlord shall not terminate the lease for failure to pay a COVID-19 lease debt before the date that is one year from the end of the qualifying time period.
(B) The commercial tenant is not guilty of unlawful detainer before the date that is one year from the end of the qualifying time period.
(2) This subdivision shall not apply if compliance with this subdivision would subject the landlord to significant risk of default on its own financial obligations.
(d) This section does not prohibit the termination or amendment of a lease for reasons other than a failure to pay a COVID-19 lease debt for the reasons described in paragraph (1) of subdivision (a) or for reasons other than a failure to pay a COVID-19 lease debt.
(e) (1) This section establishes a minimum standard to protect a commercial tenant from eviction and to provide emergency rent relief.
(2) This act does not preempt a local law that provides greater protection to a commercial tenant.

SEC. 4.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
SECTION 1.

It is the intent of the Legislature to enact legislation that would provide commercial rent relief protections for small businesses affected by the COVID-19 pandemic to help them weather this public health and economic crisis without losing their businesses.