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AB-1146 California Small Business Rent Relief Act.(2021-2022)

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Date Published: 04/14/2021 09:00 PM
AB1146:v96#DOCUMENT

Amended  IN  Assembly  April 14, 2021
Amended  IN  Assembly  April 06, 2021
Amended  IN  Assembly  March 25, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 1146


Introduced by Assembly Member Cervantes
(Coauthors: Assembly Members Boerner Horvath, Chau, Cunningham, Petrie-Norris, Ramos, and Smith)

February 18, 2021


An act to add and repeal Article 11 (commencing with Section 63049.80) of Chapter 2 of Division 1 of Title 6.7 of the Government Code, relating to rent forgiveness.


LEGISLATIVE COUNSEL'S DIGEST


AB 1146, as amended, Cervantes. California Small Business Rent Relief Act.
Existing law, the Bergeson-Peace Infrastructure and Economic Development Bank Act, establishes the California Infrastructure and Economic Development Bank (bank). The act authorizes the bank, among other things, to make loans, issue bonds, and provide financial assistance for various types of projects that qualify as economic development or public development facilities.
Existing law authorizes counties, cities, and other local agencies to impose various taxes and fees in connection with activity or property within those jurisdictions.
This bill would enact the California Small Business Rent Relief Act, which would authorize a county to establish a local small business rent forgiveness and tax relief program, as provided, for the purpose of providing credits to qualified taxpayers, as defined, to be used against any tax or fee owed to the county by the qualified taxpayer, and for which the county has authority to collect a credit in lieu of cash. The bill would authorize the bank to establish the California Small Business Rent Forgiveness and Tax Relief Program, as provided, for the purpose of providing grants to qualified counties, as defined, to implement a small business rent forgiveness and tax relief program. The bill would create the Small Business Rent Forgiveness and Tax Relief Account within the California Infrastructure and Economic Development Bank Fund, for the purpose of receiving moneys transferred to the account, and would require all moneys in the account to be available for expenditure, upon appropriation by the Legislature, for the purpose of implementing the California Small Business Rent Forgiveness and Tax Relief Program. The bill would require the bank to submit a report to the Governor and the Legislature on program activities, as provided.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Article 11 (commencing with Section 63049.80) is added to Chapter 2 of Division 1 of Title 6.7 of the Government Code, to read:
Article  11. California Small Business Rent Relief Act

63049.80.
 This article shall be known, and may be cited, as the California Small Business Rent Relief Act.

63049.81.
 For purposes of this article, all of the following definitions shall apply:
(a) “Account” means the Small Business Rent Forgiveness and Tax Relief Account established pursuant to Section 63049.84.
(b) “Bank” means the California Infrastructure and Economic Development Bank.
(c) “Full-time equivalent” means either of the following:
(1) In the case of an employee paid hourly, “full-time equivalent” means the total number of hours worked per month for the qualified tenant by the employee, not to exceed 140 hours per month per employee, divided by 140.
(2) In the case of a salaried employee, “full-time equivalent” means the total number of weeks worked per month for the qualified tenant by the employee divided by 4 multiplied by the fraction of full-time employment that the employee worked.
(d)  “Program” means the California Small Business Rent Forgiveness and Tax Relief Program authorized to be established pursuant to Section 63049.82.
(e)  “Qualified county” means a county that establishes a local small business rent forgiveness and tax relief program pursuant to the authority in Section 63049.86.
(f)  “Qualified property” means commercial real property that is rented or leased to a qualified tenant.
(g)  “Qualified taxpayer” means a taxpayer that satisfies both of the following:
(1) Owns qualified property.
(2) Has Has, with the intention of qualifying for a credit under this article, entered into an enforceable agreement with a qualified tenant to forgive all past due rental or lease payments owed on the qualified property between April 1, 2020, and June 31, 2021. The terms of the agreement shall release the qualified tenant from any and all claims for nonpayment, rental debt, or related fees and charges.
(h) “Qualified tenant” means a tenant tenant operating a business either for profit or as a nonprofit, however formed, including, but not limited to, a sole proprietorship, a partnership, a cooperative, a limited liability company, or a corporation, that satisfies all of the following:
(1) Rents or leases qualified property from a qualified taxpayer for an uninterrupted period from February 1, 2020, through May 31, 2021.
(2) Employed 20 50 or fewer full-time equivalent employees during the month of February 2020.
(3) The business on the qualified property has been significantly impacted by COVID-19 emergency orders.
(4) Is currently active and operating, or has a clear plan to reopen when the state permits reopening of the business.

63049.82.
 (a) The California Infrastructure and Economic Development Bank may establish the California Rent Forgiveness and Tax Relief Program. The program shall not be implemented until the Governor transfers sufficient moneys into the account to implement the program.
(b) The purpose of the program is to provide grants to qualified counties to implement a local small business rent forgiveness and tax relief program authorized pursuant to Section 63049.86.
(c) (1) The amount of any grant made to a qualified county shall not exceed 25 percent of the county’s share of property tax assessed on commercial property in the taxable year beginning on or after January 1, 2020, and before January 1, 2021.
(2) A qualified county may request an allocation, in addition to any amount otherwise provided pursuant to this article, in an amount not to exceed 50 percent of the county’s estimated and reasonable administration costs.

63049.83.
 The Governor may, pursuant to the authority in Section 8645, transfer moneys to the account from any fund legally available.

63049.84.
 (a) The Small Business Rent Forgiveness and Tax Relief Account is hereby established within the California Infrastructure and Economic Development Bank Fund for the purpose of receiving moneys transferred pursuant to Section 63049.83.
(b) All moneys in the account are available for expenditure, upon appropriation by the Legislature, for the purpose of implementing the program.

63049.85.
 (a) Upon the transfer of moneys to the account pursuant to Section 63049.83, the bank shall adopt a resolution making a finding that there are sufficient moneys in the account to cover the costs of implementing the program, including, but not limited to, appropriate oversight costs.
(b) Upon the adoption of a resolution pursuant to subdivision (a), the bank shall adopt guidelines and requirements for implementing the program, including, but not limited to, both of the following:
(1) (A) A process for awarding grants to qualified counties.
(B) A process that, to the extent that the total amount of grants applied for by qualified counties exceeds the funds available for implementation of the program, reduces each applicant’s grant amount by an equal percentage.
(2) Deadlines and written procedures for qualified counties to apply for grants.

63049.86.
 (a) A county may adopt a resolution or ordinance establishing a local small business rent forgiveness and tax relief program for the purpose of providing credits to qualified taxpayers.
(b) (1) The county may provide a credit, to be used against any tax or fee owed to the county by a qualified taxpayer, and for which the county has authority to collect a credit in lieu of cash.
(2) This article does not confer any new authority relative to the operation of a tax and fee credit by a county.
(3) (A) The value of the credit shall be calculated as 30 percent of the estimated amount of 14 months of rental or lease payments, using the rental or lease rate for the month of February 2020, to determine this value.
(B) Notwithstanding subparagraph (A), if the qualified taxpayer collected rental or lease payments related to the qualified property between April 1, 2020, and June 31, 2021, the value of the credit shall be reduced as necessary to ensure the sum of the credit and those rental or lease payments collected between April 1, 2020, and June 31, 2021, shall not exceed 100 percent of the estimated amount of 14 months of rental or lease payments, using the rental or lease rate for the month of February 2020 to determine this value.
(c) The program authorized by this section may apply to taxes and fees owed to the county for the 2020–21, 2021–22, and 2022–23 fiscal years, including any amounts owed in arrears or delinquent during those years.
(d) A county may apply for a grant, in the form and manner as prescribed by the bank, to cover the costs of the program established pursuant to subdivision (a).
(e) Participation in a local small business rent forgiveness and tax relief program by a qualified taxpayer shall be optional.

63049.87.
 (a) (1) On or before one year after implementation of the program, and annually thereafter, the bank shall submit a report to the Governor and the Legislature on program activity. The report shall include, but is not limited to, all of the following:
(A) The total amount of moneys in the account, at the beginning of the fiscal year and at the end of the fiscal year.
(B) The number of qualified counties that applied for grants.
(C) The number of qualified counties that received grants.
(D) The number of qualified taxpayers that received a credit.
(E) The number of qualified tenants assisted in each of the fiscal years that credits were provided.
(F) The total dollar amount of rents forgiven.
(G) Information on the size of each qualified tenant that entered into an agreement with a qualified taxpayer for the forgiveness of rent or lease payments. The information required by this paragraph shall be categorized based on the number of employees as follows:
(i) Fewer than five Five or fewer employees.
(ii) Five Six to 20 employees.
(iii) 21 to 50 employees.
(2) A report required to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795.
(b) The bank may include the information required by this section in any annual report of the bank, in lieu of submitting a separate report for purposes of complying with this section.

63049.88.
 This article shall remain in effect until January 1, 2024, and as of that date is repealed.

SEC. 2.

 For the purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Article 11 (commencing with Section 63049.80) of Chapter 2 of Division 1 of Title 6.7 of the Government Code, as proposed to be added by Section 1 of this act, the Legislature finds and declares as follows:
(a) The specific goals, purposes, and objectives of the tax expenditures authorized by this act are to reduce past due rental burden on small business and small nonprofit tenants.
(b) The performance indicators used to determine if the act is achieving its goals, purposes, and objectives are as follows:
(1) The number of qualified counties that applied for grants.
(2) The number of qualified counties that received grants.
(3) The number of qualified taxpayers that received a credit.
(4) The number of qualified tenants assisted in each of the fiscal years that credits were provided.
(5) The total dollar amount of rents forgiven.
(c) The information required by subdivision (b) shall be collected and reported to the Governor and the Legislature in accordance with Section 63049.87 of the Government Code.