Menjivar Bill Would Increase Commercial Tenant Protections for California Small Businesses and Nonprofits

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Senator Caroline Menjivar (D- Burbank) has introduced Senate Bill 1103 to mitigate the increasing costs of operating a small business (25 employees or less) or nonprofit (50 employees or less) in California, and to protect these commercial tenants from unexpected imminent rent increases, hidden added fees, and unclear lease terms. 

“Small business entrepreneurship is a vital avenue for economic mobility for many in my district and across California,” states Senator Menjivar. “Their storefronts contribute to the aesthetics and vitality of our business corridors, as well as increase the walkability and cultural representation within neighborhoods. Also, the San Fernando Valley has always leaned on programs provided by community-based nonprofits. Government agencies alone cannot close the service gaps afflicting the most vulnerable Californians and we rely on the dedicated service of nonprofits. Let’s protect those making immeasurable contributions to their communities and local economies!”

A survey of California small businesses and nonprofits, conducted by the California Reinvestment Coalition (CRC) in 2018, found that 86% of the respondents reported being faced with displacement. Reasons include:

·         Small business owners with limited English proficiency often encounter complex commercial lease agreements. While existing state law requires residential leases to be translated in other languages, commercial leases are not.

·         On top of rising rents, small business owners and nonprofits commonly encounter exorbitant added fees. Security deposits routinely exceed multiple months of rent and common area maintenance fees can compound the costs without adequate explanation or notice.

·         Small businesses and nonprofits are afforded only 30 days’ notice for a rent increase or termination of tenancy. This brief window often precludes them from remaining in their existing location or relocating within the community where they have established substantial connections and name recognition.

SB 1103 can decrease instances of preventable business closures, and the loss of critical community-based and culturally significant goods and services in neighborhoods by:

·         Expanding existing translation requirements to commercial leases.

·         Limiting security deposits to one month’s rent for small businesses and nonprofits.

·         Increasing the required notice periods for a small business or nonprofit facing a rent increase or termination of tenancy so they are commensurate with those periods available to residential tenants. 

SB 1103 will be heard in the relevant policy committee(s) in the spring.

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