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

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Date Published: 01/03/2022 02:00 PM
AB1146:v95#DOCUMENT

Amended  IN  Assembly  January 03, 2022
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) 12100.210) of Chapter 2 1.6 of Part 2 of Division 1 3 of Title 6.7 2 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. law establishes the Office of Small Business Advocate (CalOSBA) within the Governor’s Office of Business and Economic Development, also known as GO-Biz, to advocate for causes of small business and to provide small businesses with the information they need to survive in the marketplace.
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 CalOSBA to establish the California Small Business Rent Forgiveness and Tax Relief Program, as provided, for the purpose of providing grants allocating credit authority 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 CalOSBA 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:

SECTION 1.

 Article 11 (commencing with Section 12100.210) is added to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code, to read:
Article  11. California Small Business Rent Relief Act

63049.80.12100.210.
 This article shall be known, and may be cited, as the California Small Business Rent Relief Act.

63049.81.12100.211.
 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. 12100.214.

(b)“Bank” means the California Infrastructure and Economic Development Bank.

(b) “CalOSBA” or “office” means the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development.
(c) “Credit awarding agreement” means the required cooperative agreement between the office and fiscal agent that includes the duties and responsibilities of the fiscal agent and the qualifying county in carrying out the purpose of the article.
(d) “Eligible credit-awarding entity” means a qualified county, or a nonprofit or consortium of nonprofit community-based organizations designated by the qualified county to administer the program in the county. The nonprofit or consortium of nonprofits shall be exempt from federal income taxation pursuant to Section 501(c)(3) of the Internal Revenue Code and shall have received, on or after July 1, 2020, funding through the California Small Business Technical Assistance Expansion Program created pursuant to Section 12100.63.
(e) “Eligible tax and fee” means the tax and fee designated in the local rent forgiveness and tax relief program as being eligible for payment by the credits authorized pursuant to this article. The tax and fee shall be limited to the county portion of the property tax or shall be a tax and fee that is imposed by and collected by the qualified county.
(f) “Fiscal agent” means the eligible credit-awarding entity selected by the office from among eligible credit-awarding entities to administer funds from the California Small Business Rent Forgiveness Program in one or more counties.

(c)

(g) “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)

(h) “Program” means the California Small Business Rent Forgiveness and Tax Relief Program authorized to be established pursuant to Section 63049.82. 12100.212.

(e)

(i) “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. 12100.216.

(f)

(j) “Qualified property” means commercial real property that is rented or leased to a qualified tenant.

(g)

(k) “Qualified taxpayer” means a taxpayer that satisfies both of the following:
(1) Owns qualified property.
(2) 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)

(l) “Qualified tenant” means a 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, June 30, 2021.
(2) Employed Is not an employer or employed 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.

63049.82.12100.212.
 (a) The California Infrastructure and Economic Development Bank CalOSBA may establish the California Rent Forgiveness and Tax Relief Program. The program shall not be implemented until the Governor transfers sufficient moneys are transferred into the account to implement the program.
(b) The purpose of the program is to provide grants allocate credit authority to qualified counties to implement a local small business rent forgiveness and tax relief program authorized pursuant to Section 63049.86. 12100.216, consistent with the requirements of this article.
(c) The office shall enter into a credit-awarding agreement with each fiscal agent selected to implement the program. The credit-awarding agreement shall identify the duties and responsibilities of the fiscal agent and the qualified county in carrying out the purposes of this article. The credit-awarding agreement shall identify the county the fiscal agent is required to serve, the fiscal controls that will be applied during the program term, a commitment that outreach and marketing to underserved business groups and business owners located in low-wealth and rural areas, as appropriate, will be undertaken, and the tracking and reporting requirements related to outreach and technical assistance activities, applications received, and tax credits awarded. The office may provide additional guidance and requirements in the credit-awarding agreement to ensure the requirements and purposes of this article are met.

(c)

(d) (1) The amount of any grant tax credit authority 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 An eligible credit-awarding entity may request an allocation, in addition to any amount the credit allocation authority otherwise provided pursuant to this article, in an amount not to exceed 50 of up to 100 percent of the county’s estimated and reasonable administration costs. costs, including fiscal agent fees, marketing costs, and costs for conducting outreach to qualified tenants and taxpayers.
(3) Any unused grant money shall be transferred back to the office by December 30, 2022.

63049.83.12100.213.
 The Governor may, pursuant to the authority in Section 8645, transfer moneys to the account from any fund legally available.

63049.84.12100.214.
 (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. 13997.6.
(b) All moneys in the account are available for expenditure, upon appropriation by the Legislature, for the purpose of implementing the program.
(c) The office may use up to 0.5 percent of moneys transferred for administrative costs.
(d) (1) A qualified county may submit to the Department of Finance a countywide claim detailing credits applied by a qualified taxpayer for the payment of an eligible county tax or fee. Submittals shall be on a quarterly basis beginning in the first quarter following the award of tax credit authority by CalOSBA.
(2) The Department of Finance shall review the claims for accuracy and, upon determining the claims are accurate and complete, shall notify the Controller. The Controller shall provide reimbursement in the amount specified by the Department of Finance.
(3) Claims shall only be paid for credits applied to an eligible tax or fee designated in the qualified county’s local rent relief and tax forgiveness program.
(4) The Department of Finance and the Controller shall establish guidelines in carrying out the provisions of this chapter. These guidelines shall include a procedure for the review of claims submitted by a qualified county to the Department of Finance for allocations under this chapter. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to guidelines established pursuant to this paragraph.

63049.85.12100.215.
 (a) Upon the transfer of moneys to the account pursuant to Section 63049.83, 12100.213, the bank director of the office shall adopt a resolution making make a finding that as to whether 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 determination that there are sufficient funds to operate the program pursuant to subdivision (a), the bank office shall adopt guidelines and requirements for implementing the program, including, but not limited to, both all of the following:
(1) (A) A process for awarding grants credit authority to qualified counties. eligible credit-awarding entities through their fiscal agents.
(B) A process that, to the extent that the total amount of grants credit authority applied for by qualified counties eligible credit-awarding entities exceeds the funds available for implementation of the program, reduces each applicant’s grant amount by an equal percentage.
(C) Criteria for selecting one fiscal agent per county from among the eligible credit-awarding entities shall include, but are not limited to, all of the following:
(i) Demonstrated operational experience and organizational capacity to serve one county, or in the case of a consortium of nonprofits, one or more counties, of the state, consistent with the requirements of this article.
(ii) Demonstrated preexisting relationships with the county’s small business community.
(iii) Identified key outreach activities that are for the specific county they will serve and that are aimed at ensuring all eligible small business groups are aware of the program, including by identifying underserved small business groups that have faced historic barriers to accessing capital, such as businesses majority owned and operated on a daily basis by women, minorities or persons of color, veterans, undocumented individuals, and individuals living in low-wealth areas on low incomes.
(iv) Prioritization for proposed fiscal agents that are qualified and experienced in administering similar programs.
(v) Prioritization for eligible credit-awarding entities that commit to working with nonprofit organizations with a mission that includes economic or business development support for California’s underserved businesses and entrepreneurs.
(2) Deadlines and written procedures for qualified counties to apply for grants.
(3) A process, developed in consultation with and approved by the Department of Finance, by which a qualified county shall receive reimbursement for the value of credits submitted to the county by a qualified taxpayer for an eligible tax or fee.
(4) A process and requirements for monitoring, tracking, and reporting on the use of program funds and credit authority by the office, each fiscal agent and qualified county, and the qualified taxpayer.
(5) A process to be used by the fiscal agent for requesting each qualified tenant who receives rent forgiveness pursuant to this program to self-identify the race, gender, and ethnicity of the small business owner. Each fiscal agent shall request, but shall not mandate, that a qualified tenant provide this information.
(c) A credit may be recaptured, in whole or in part, if the fiscal agent or CalOSBA determines that a tenant has failed to meet the criteria for a qualified tenant pursuant to subdivision (l) of Section 12100.211 or a taxpayer has failed to meet the criteria for a qualified taxpayer pursuant to subdivision (k) of Section 12100.211, or both.

63049.86.12100.216.
 (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. taxpayers that is consistent with the requirements of this article and that is funded through a credit-awarding agreement with CalOSBA.
(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. The local small business rent forgiveness and tax relief program that is established pursuant to this article shall specifically designate eligible taxes and fees for which a credit may be applied. As part of the establishment of the program pursuant to subdivision (a), the county shall also adopt a resolution that includes findings that applying the credit to the designated taxes and fees and receiving the reimbursement by the state, under the provisions of the California Small Business Rent Forgiveness and Tax Relief Program and this article, will not create a negative financial impact on the county or any known taxing entity.
(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) The program authorized by this section shall prioritize outreach efforts to qualified tenants and qualified taxpayers who rent or lease commercial property to qualified tenants who meet both of the following criteria:
(1) For purposes of ensuring all qualified tenants are aware of the program, the qualified tenant is a member of a group that has faced historic barriers in accessing capital, and is defined as a business majority owned and operated on a daily basis by women, minorities or persons of color, veterans, undocumented individuals, or individuals living in low-wealth or rural areas on low incomes.
(2) The qualified tenant has suffered economic impacts or revenue losses due to the COVID-19 pandemic, as determined by the fiscal agent.
(e) A fiscal agent shall request, but shall not mandate, that a qualified tenant that receives rent forgiveness through this program self-identify their race, gender, and ethnicity. This information shall be reported in aggregate to the state.

(d)

(f) (1) A county may apply for a grant, in the form and manner as prescribed by the bank, office, to cover the costs of the program established pursuant to subdivision (a).
(2) A county may designate an eligible credit-awarding entity to apply for and administer the local small business rent forgiveness and tax relief program.

(e)

(g) Participation in a local small business rent forgiveness and tax relief program by a qualified taxpayer shall be optional.

63049.87.12100.217.
 (a) (1) On or before one year after implementation of the program, and annually thereafter, the bank office 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. provided, and to the extent information has been provided by the fiscal agents, the race, gender, and ethnicity of the owners.
(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) No employees.

(i)

(ii) Five or fewer employees.

(ii)

(iii) Six to 20 employees.

(iii)

(iv) 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 office may include the information required by this section in any annual report of the bank, office in lieu of submitting a separate report for purposes of complying with this section.

63049.88.12100.218.
 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 12100.217 of the Government Code.