Small Business Alliance for Equitable Communities Co-Sponsors Bill Introduced by Senator Caroline Menjivar to Sustain Small Businesses and Nonprofits That Contribute to Our Local Economies
LOS ANGELES, FEBRUARY 13, 2024 – The Small Business Alliance for Equitable Communities announced today that California State Senator Caroline Menjivar (D-San Fernando Valley) introduced SB 1103. This bill will provide much-needed protection to small businesses and nonprofits being pushed out of their communities due to outrageous rents and fees. SB 1103 is co-sponsored by Inclusive Action for the City, Public Counsel, Bet Tzedek Legal Services, the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area, and the California Association for Micro Enterprise Opportunity (CAMEO).
Across California, small businesses and nonprofits are being forced out of business and displaced from their communities at an alarming rate. A survey of nonprofits working with thousands of small-business owners in California found that 86% of respondents reported that small businesses face displacement.
“In recent years, we have assisted hundreds of mom-and-pop businesses and smaller nonprofits that, without warning, experienced massive rent hikes and termination of their tenancies,” said Ritu Mahajan Estes, Directing Attorney of Public Counsel’s Community Development Project. “The displacement of small businesses and nonprofits not only harms the cultural fabric of our communities but is devastating for families who rely on entrepreneurship to make a living. We’re proud to co-sponsor this groundbreaking legislation that protects community-serving small businesses and nonprofits.”
As commercial tenants, these pillars of our local economy have far fewer protections than residential tenants. Rent increases, unclear and unfair lease terms, and exorbitant added fees make finding and staying in a commercial space extremely difficult. Further, small business owners with limited English proficiency often encounter complex commercial lease agreements that are difficult to navigate.
“Across California, inadequate commercial tenant protections fail to protect the small nonprofits and community-serving small businesses that sustain our local economies, activate our streets, and bring neighbors together,” said Doug Smith, Senior Director of Policy and Legal Strategy for Inclusive Action. “SB 1103 will bring much-needed fairness, transparency, and stability to California’s small business economy.”
In addition to rising rents, small business owners and nonprofits also commonly encounter prohibitive added fees. For example, security deposits routinely exceed multiple months of rent, and common area maintenance fees often compound the costs of a lease without adequate explanation or notice.
“Small business entrepreneurship is a vital avenue for economic mobility for many in my district and across California,” states California State Senator Caroline Menjivar. “Their storefronts contribute to the aesthetics and vitality of our business corridors and 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!”
Small businesses and nonprofits are also afforded only 30 days’ notice for a rent increase or termination of a tenancy. This short window often precludes a business or small nonprofit from remaining in its existing location or relocating within the same community.
“Hundreds of small businesses across California have shut down after facing rent hikes & evictions after the COVID-19 pandemic. Commercial tenants deserve stronger rental protections to help them keep their businesses afloat. This bill will ensure that.” said Jassmin Poyaoan, Program Director of the Economic Justice Practice at the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area.
SB 1103 will expand existing translation requirements to commercial leases that are negotiated in a language other than English. In these situations, the commercial tenant will be provided with a translation of the lease in the language in which the lease was negotiated. SB 1103 limits security deposits to one month’s rent for small businesses and small nonprofits. SB 1103 also increases notice periods for small businesses and small nonprofit commercial tenants facing a rent increase or termination of tenancy so that they have adequate time to make a plan to stay in business.
“Day in and day out, Bet Tzedek provides free legal aid to keep small businesses in their neighborhoods, protecting them against displacement. Commercial tenants have fewer protections than residential tenants, so these small business owners are much more susceptible to eviction as they are subjected to sometimes capricious higher rents and fees. This hurts the small business owners’ livelihoods and their families’ and communities’ financial health. This bill presents an opportunity to fight against small business displacement and strengthen our communities’ economic base.” said Nadia Segura, Director of the Small Business Development Program at Bet Tzedek Legal Services.
“With little to no protections for our communities’ small business owners, the commercial tenant market mirrors the once-wild west of small business financing. California passed responsible small business lending policy including transparency and reining in predatory fees,” says Carolina Martinez, CEO of CAMEO. “That’s why extending the same sense of responsibility to commercial leasing makes sense, giving small business owners more information and reining in predatory practices.”
Next, SB 1103 will be considered in a policy committee in the spring.
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Inclusive Action for the City (IAC) is a Community Development Financial Institution and nonprofit organization based in Los Angeles whose mission is to bring people together to build strong local economies that uplift low-income urban communities through advocacy and transformative economic development initiatives. IAC serves the community through policy advocacy, research, consulting services, business coaching, and a lending program, among other efforts. IAC co-founded the Los Angeles Street Vendor Campaign and has worked with street vendors and other small business owners for over 10 years.
Public Counsel is a nonprofit public interest law firm dedicated to advancing civil rights and racial and economic justice and amplifying our clients’ power through comprehensive legal advocacy. Founded on and strengthened by a pro bono legal service model, our staff and volunteers seek justice through direct legal services, promote healthy and resilient communities through education and outreach, and support community-led efforts to transform unjust systems through litigation and policy advocacy in and beyond Los Angeles.
Bet Tzedek engages in community lawyering, legal education and outreach, and structural policy change. We respond to emerging community needs while providing self-determination tools that empower individuals to advocate for themselves and their communities. Bet Tzedek achieves this by providing legal services that integrate with broader social support services, creating additional entry points for critical legal services, and using our collective voices to reform systems.
Lawyers Committee for Civil Rights – San Francisco is one of the oldest civil rights institutions on the West Coast. LCCRSF works to dismantle systems of oppression and racism and build an equitable and just society. LCCRSF is committed to closing the racial wealth gap and empowering communities of color. Its Economic Justice work leads to increasing business and economic opportunities that will enable individuals to have self-determination over their livelihoods and communities while advancing a more equitable economy.
California Association for Micro Enterprise Opportunity (CAMEO) is California’s statewide micro-business network made up of 400 organizations, agencies, and individuals dedicated to furthering Micro-Business development in California with small and micro-business financing such as loans and credit, technical assistance and business management training. Annually, CAMEO members serve about 200,000 very small businesses with training, business and credit assistance, and loans. These firms – largely start-ups with less than six employees – support or create 300,000 new jobs in California and generate a total of $15 billion in economic activity.
