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HomeMy Public PortalAbout12-082�City of Carson Report to Mayor and City Council a ' �X - , August 7, 2012 New Business Consent SUBJECT: CONSIDERATION OF RESOLUTION NO. 12-082 OPPOSING AB 1447 (FEUER), AB 1534 (WIECKOWSKI) AND SB 956 (LIEU) AND SUPPORTING THE COALITION TO PROTECT OUR FREEDOM TO DRIVE , & &�,. C C /,�vl Submitted by David C. Biggs Approved by David C. Biggs City Manager City Manager I. SUMMARY This item is on the agenda at the request of Councilmember Santarina. The Coalition to Protect our Freedom to Drive (Coalition) stands in opposition to proposed legislation AB 1447 (Feuer), AB 1534 (Wieckowski) and SB 956 (Lieu) collectively. According to the Coalition the legislation will deny thousands of low- income and credit -challenged Californians the freedom to own a vehicle, damage thousands of California jobs and businesses and severely deplete revenues to local government (Exhibit No. 2). Tonight the City Council is requested to support Resolution No. 12-082 (Exhibit No. 1). II. RECOMMENDATION TAKE the following actions: 1. WAIVE further reading and ADOPT Resolution No. 12-082, "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARSON, CALIFORNIA OPPOSING AB 1447 (FEUER), AB 1534 (WIECKOWSKI) AND SB 956 (LIEU) AND SUPPORTING THE COALITION TO PROTECT OUR FREEDOM TO DRIVE." 2. DIRECT staff to transmit an executed copy of the resolution to Assemblymember Feuer, Assemblymember Wieckowski, Senator Lieu and Assemblymember Furutani. III. ALTERNATIVES TAKE another action the City Council deems appropriate. IV. BACKGROUND The Coalition to Protect our Freedom to Drive is an organization comprised of concerned small businesses, state and local government officials, automotive associations, consumers, automobile owners, Chambers of Commerce and others eager to protect access to vehicles for all Californians. The status of each of these bills is as follows (Exhibit No. 3-5): City of Carson Report to Mayor and City Council August 7, 2012 V. VI. AB 1447 (Feuer) Currently in the Assembly Committee on Appropriations AB 1447 would require a buy -here -pay -here dealer to issue a 30 -day or 1,000 -mile warranty to the buyer or lessee of a used vehicle bought or leased at retail price, and would require the warranty to cover the engine, transmission, drive axle, front and rear wheel drive components, engine cooling system, brakes, front and rear suspension systems, steering, seatbelts, inflatable restraint systems, catalytic converter or other emissions components, heater, seals and gaskets, electrical, electronic, and computer components, alternator, generator, starter, and ignition system. AB 1534 (Wieckowski) Currently in the Senate Committee on Appropriations AB 1534 would require a buy -here -pay -here dealer, as defined, to affix to and to prominently and conspicuously display a label on any used vehicle offered for retail sale that states the reasonable market value of the vehicle. SB 956 (Lieu) Currentiv in the Senate Committee on Appropriations SB 956 would require buy -here -pay -here dealers to register as finance lenders with the California Department of Corporations and would cap interest on their loans at 17% plus the federal funds rate (currently at 0.25%). In addition, it would place restrictions on how and when dealers could repossess vehicles. FISCAL IMPACT None. EXHIBITS 1. 2. 3. 4. 5. Document4 Prepared by: TO:Rev04-23-12 Reviewed by: Resolution No. 12-082. (pgs. 4-5) PublicCEO "City Halls Get wake Up Call on Sales Tax Losses in Used Car Regulation Bills. (pgs. 6-7) Current Bill Status AB 1447. (pgs. 8-9) Current Bill Status AB 1534. (pgs. 10-11) Current Bill Status SB 956. (pgs. 12-13) Lisa Berglund Principal Administrative Analyst 2 City of Carson Report to Mayor and City Council August 7, 2012 Administrative Services Development Services Economic Development Public Services Action taken by City Council Date Action 3 RESOLUTION NO. 12-082 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARSON, CALIFORNIA, OPPOSING AB 1447 (FEUER), AB 1534 (WIECKOWSKI) AND SB 956 (LIEU) AND SUPPORTING THE COALITION TO PROTECT OUR FREEDOM TO DRIVE WHEREAS, Buy Here Pay Here dealers provide their own financing on sales of used cars and typically sell to people with credit problems WHEREAS, AB 1447 The bill would remove the option an auto dealer has to sell a vehicle "as is", a permissible practice under Federal Trade Commission requirements with proper use of the Federal Buyers Guide WHEREAS, AB 1534 Impose a regulation requiring dealers to affix a label to every car stating its "reasonable market value", not taking into account the enormous differences between two similar make/model/year cars in vastly different condition. WHEREAS, SB 956 would cap interest rates on retail installment sales and leases at a floating rate that, at the moment would be 17.25%. The dealer in this case would be expected to carry a much higher amount financed at a lower rate, compared to credit cards that have a higher rate and lower average balances. WHEREAS, the Coalition to Protect our Freedom to Drive predicts these bills are knee- jerk reactions to a sensationalized media articles that were unfounded and biased about the buy - here, pay -here industry. WHEREAS, the Coalition to Protect our Freedom to Drive believe these proposed laws will hurt the very consumers the bills' authors claim they are protecting by limiting low income workers and those with less -than -perfect credit access to reasonable automotive financing and transportation disrupting individuals' ability to get to their jobs, schools and doctor's appointments. WHEREAS, losses in sales tax revenues to state and local governments will be in the $234 million to $337 million dollar range. WHEREAS, businesses selling pre -owned vehicles will no longer lend to high credit -risk buyers when government increases that risk. WHEREAS, proposed legislation AB 1447 (Feuer), AB 1534 (Wieckowski) and SB 956 (Lieu) aiming to regulate the Buy Here Pay Here used car industry has survived key committee votes in Sacramento, bringing it significantly closer to final passage. SB 956 won passage in a marathon state Senate Judiciary Committee session, just days before summer recess. [ MORE ] EXHIBIT NO. B 1 RESOLUTION NO. 12-082 PAGE 2 of 3 WHEREAS, the Coalition to Protect our Freedom to Drive are asking for a "NO VOTE" on SB 956, AB 1447 and AB 1534 and a call for an independent study of the general & fiscal impact these bills to be completed to understand the true effects these bills will have on California's driving public, state revenues, and the business community. NOW THEREFORE, BE IT RESOLVED, that the City Council of the City of Carson proclaims its opposition to AB 1447, AB 1534 and SB 956 and its support of Coalition to Protect our Freedom to Drive. PASSED, APPROVED and ADOPTED this day of August 2012. ATTEST: City Clerk Donesia L. Gause, CMC APPROVED AS TO FORM: City Attorney [ MORE J Mayor Jim Dear City halls get wakeup call on sales tax losses in used car regulation bills I PublicCEO Page 1 of 2 A* PUBLICCEO.com Home About PublicCEO Job Board Subscribe 2011 Local Government Award Winners CITY HALLS GET WAKEUP CALL ON SALES TAX LOSSES IN USED CAR REGULATION BILLS Sub Local Governments - Exclusive — 31 July 2012 Headlines Popular Recent Tags Mayors, council members and city managers throughout California are being alerted to California officials bracing for potentially budget -busting losses in local sales tax revenue if a three -bill "consumer uproar over fire -prevention fee protection" package is passed after the legislature reconvenes on Aug. 6. - Pay Here, found the business sector is already heavily regulated by the state, with Oakland police stung by new The Coalition to Protect Our Freedom to Drive is calling, visiting and emailing city officials criticism throughout the state to urge municipal opposition to Senate Bill 956, authored by Sen. Ted Lieu (D -Laguna Beach); Assembly Bill 1447 by Assemblyman Mike Feuer (D -West San Francisco 49ers stadium Hollywood), and AB 1534 by Assemblyman Bob Weickowski (D -Fremont.) beams rise from the dirt in Santa Clara Larry Grooms, a coalition spokesman, said, "Unintended consequences from the harsh and expensive regulatory provisions in the bills will cut off the source of used car financing for California borrowing from special customers with little or no credit, and no sale means no sales tax revenue for cities, counties fund accounts surges; audit under and the state itself." way Grooms added, "The legislature didn't explore the fiscal and economic consequences from SAN BERNARDINO COUNTY: Pension reform measures these bills, and neither did the League of California Cities, so local officials were in the dark proposed until the coalition began spreading the word within the past three months." Click Here for more Coalition research into the self-financing used car business model, commonly called Buy Here headlines... - Pay Here, found the business sector is already heavily regulated by the state, with consumer complaints to the Department of Motor Vehicles average under 1 percent a year. According to the State Board of Equalization used car dealers generated just under $468 million in state and local sales taxes in calendar year 2011. Industry projections if the three - bill package becomes law are for sales tax revenue losses ranging from $234 million to $337 The Monaco Group million a year. Former State Senator George Runner, now elected as a member of the Board of Equalization, wrote in a Capitol Weekly guest column in early July, "A Board of Equalization staff analysis confirms this; there would be fewer car sales due to more individuals deemed ineligible for loans. Fewer sales mean less money for state and local government from reduced sales tax revenues." Runner added, "For many in our state, no car means no job. No job means they're unable to rebuild their credit. Alternatively, some could resort to illegal, often dangerous, loan sharks to borrow enough at an even higher rate to buy a car outright. That doesn't serve anyone and could only increase crime and unemployment." He concluded, "In the case of SB 956, AB 1447 and AB 1534 the sum of the parts is indeed greater than the whale. Rather than help consumers, these bills will hurt them. They will destroy jobs and diminish tax revenue." Last week the 2,000 -member Sacramento Metro Chamber of Commerce, oldest and largest voice for business in the greater Sacramento area, declared its opposition to each of the three bills, the Chamber believes will do more harm than good for businesses and consumers. With its resolution in opposition the Sacramento Metro Chamber became the largest business advocacy organization to align with the Coalition to Protect Our Freedom to Drive, joining such other organizations as the Antelope Valley Board of Trade, California Taxpayer EXHIBIT NO. n 2 New Postal Rates Download • a• http: //www.publicceo.coml20l 2/07/city-halls-get-wakeup-call-on-sales-tax-losses-in-used-c... 8/l/2012 laity halls get wakeup call on sales tax losses in used car regulation bills I PublicchU Page 2 of 2 Protection Committee, Antelope Valley Chambers of Commerce, AV Hispanic Chamber of Commerce and others. Because the bills have already been passed through their respective house of origin, local officials will have little time to weigh-in on what happens with the bills when the legislature reconvenes on Aug. 6. Some cities, including Lancaster, Palmdale and Agoura Hills, lacking time to hold the two meetings needed to pass a formal resolution in opposition, all agreed to have council members write opposition letters as individuals. The statewide coalition was formed in May to warn state lawmakers and city officials about unintended consequences from the bills, including inability of credit -challenged Californians to buy cars from Buy Here - Pay Here dealerships, and subsequent multi-million dollars losses in state, county and city sales tax revenue, along with loss in vehicle license fees. The coalition has a website at www.protectfreedomtodrive.com ABOUT THE AUTHOR Dan Oney © 2012 PublicCEO. All Rights Reserved. GUTSY OPINIONS How .to Fvi* BMl VN Poifo of Us soon c c r a m e rt o I o c o 1 cniir,� c c r:etur a r „ Powered by verve http://www.publicceo.coml20l2/07/city-halls-get-wakeup-call-on-sales-tax-losses-in-used-c... 8/1/2012 AB 1447 Assembly Bill - Status CURRENT BILL STATUS MEASURE : A.B. No. 1447 AUTHOR(S) Feuer. TOPIC Automobile sales finance: sellers. HOUSE LOCATION SEN +LAST AMENDED DATE 06/25/2012 TYPE OF BILL Active Non -Urgency Non -Appropriations Majority Vote Required State -Mandated Local Program Fiscal Non -Tax Levy LAST HIST. ACT. DATE: 07/05/2012 LAST HIST. ACTION From committee (Ayes 3. Noes 1.) (July 3) APPR. COMM. LOCATION SEN APPROPRIATIONS HEARING DATE 08/06/2012 Page 1 of 1 Do pass and re-refer to Com. on APPR. Re-referred to Com. on TITLE An act to add Sections 1795.51 and 2983.35 to the Civil Code, and to add Sections 241 and 241.1 to the Vehicle Code, relating to automobile sales. EXHIBIT NO. Q 3 1-1--// ......... ... ...:... 4',. -- .`..../.....1./1 1 1'1/1.:11 111n1 1 AGA/..1. 1 A 1'7 1.:11 701'lm04 ..+.,+ 7/1_'/)n 1'l Coalition to Protect our Freedom to Drive Page 1 of* 1 Bad Bills NO on AB 1441 AS 1447 w111: • AB 1447 will require an ambiguous and costly warranty mandate on all used cars B�5g sold in a Buy -Here, Pay Here, transaction. This mandate conflicts with existing California's Uniform Commercial Cade and Federal regulations permitting the sale ofgoods 'AS IS." • The bill would add significantly to the cost of a vehicle transaction, making It more AB1534 expensive for lower income buyers who wish to purchase vehicles 'AS IS." • The bill would remove the option an auto dealer has to sell a vehicle "AS IS', a "--- - permissible practice under Federal Trade Commission requirements with proper use of the Federal Buyers Guide. AB14a California law states a dealer may not offer a warranty unless approved by the Department of Insurance to meet the minimum liquidity and loss -reserve requirements to cover losses and warranty claims. • The bill is an over -reaction to sensationalized and misguided LA Times articles on Our Take the complexities of'buy-here pay -here" auto dealer operations. The bill authors do L� Y not understand the multiple and conflicting consequences proposed by AB 1447 and Its counter -parts. Weare calling for a General $ Fiscal Impact Study to assess the advisability and feasibility of the requirements set forth in this bill. • There are over 9,000 used car dealers in California — the overwhelming majority who do an excellent job — employing citizens, providing vehicles to the under- served and generating significant sales tax revenue for the state and local €' economy. This bill will create a disincentive for many of these licensed motor vehicle dealers who offer buy -here, pay -here lending options to continue in that p (BOUT US Ula VIBNS `TNE FACTS ' The Coslklan stands in opposition to proposed lagislation'AS1447,Ae1534and Se95bas The Coalition to Protect our Freedom to Drive is Our Coalition has determi ed there will bean ,anorganizedoncomprisedofconcernedsmall ernormouelose orrevenueetosteteandlocale. -busirnassap, 'toNctH eely, the legislation wEldeny thousands ; orlow-Intone and naoAtchalkngad Csllfomlans the freedom to oust a vshlde. erateand local govemment government when them Is a 50-90% d...;; oPlWals, automotbe aasocisrlorns,consumers, sales volume at katal dealerships r. :. auomobb owners, and othats.: w RM MIME> REAR MNE> - REN MlNtE> HE ' FIs 'ST P'Ing53t"A :956 �rdlCrNERE�Tii01NTl�QI�iIENN� -,; , COALITION TO PROTECT OUR 9 IL FREEDOM TO DRIVE http://\,vivw.protectfreedomtodrive.com/ 7/26/2012 AB 1534 Assembly Bill - Status CURRENT BILL STATUS MEASURE : A.B. No. 1534 AUTHOR(S) Wieckowski (Coauthor: Senator Correa). TOPIC Vehicles: dealers: used vehicle sales: labeling requirements. HOUSE LOCATION SEN +LAST AMENDED DATE 06/25/2012 TYPE OF BILL Active Non -Urgency Non -Appropriations Majority Vote Required State -Mandated Local Program Fiscal Non -Tax Levy LAST HIST. ACT. DATE: 07/05/2012 Page 1 of 1 LAST HIST. ACTION From committee: Do pass and re-refer to Com. on APPR. (Ayes 3. Noes 2.) (July 3). Re-referred to Com. on APPR. COMM. LOCATION SEN APPROPRIATIONS HEARING DATE 08/06/2012 TITLE An act to add Chapter 6 (commencing with Section 11950) to Division 5 of the Vehicle Code, relating to vehicles. EXHIBIT NO. 0 4 lPQinfn on Qnv/niih/l 1-1 /hill/acm/ah 1 S01-1 55O/ah 1 5�4 hill ?01 ?,0706 ;tgt 7/26/7(117 l.uallLluu W rroLeL;L our rreeuorrl Lo Ur1Ve Bad Bills NO on AB 1534 CLICK HERETO L) FULL TEXT_ . AB 1534 will: • Impose a regulation requiring dealers to affix a label to every SB 956 car stating its "reasonable market value" — a vague term at best not taking into account the enormous differences �-- between two similar make/model/year cars in vastly different condition. A disservice to consumers placing an equal value AB 153 on two very different automobiles. • Contain information used to determine the "reasonable market value". AB 1447 OurTaNe OUT US The Coalition stands in opposition to proposed inosiation A01447, AB 634 and 58 956 as :>'wlectively, the legislatlonvdl deny thousands a?low4ncomeand cradh{fiavanged `ColUomlans the freedom to own a vehicle. - IM MI NE> dtCOALITION TO PROTECT OUR FREEDOM TO DRIVE http://www.protectfreedomtodrive.com/ OURIMEMBiNS The Coalition to Protect our freedom to Drive is an orpenlutioncanprived of concerned small. businesses, state and kcal government . orfrdalsi awomodveassxindonc, connrmers, ammoble owners, and others': . 'REA6MiRE� rage >, or 1 7/26/2012 SB 956 Assembly Bill - Status CURRENT BILL STATUS MEASURE : S.B. No. 956 AUTHOR(S) Lieu (Coauthor: Senator Correa) (Coauthors: Assembly Members Alejo and Wieckowski). TOPIC Buy -here -pay -here automobile sellers and lenders. HOUSE LOCATION ASM +LAST AMENDED DATE 06/19/2012 TYPE OF BILL : Active Non -Urgency Non -Appropriations Majority Vote Required State -Mandated Local Program Fiscal Non -Tax Levy LAST HIST. ACT. DATE: 07/05/2012 Page 1 of 1 LAST HIST. ACTION From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 7. Noes 3.) (July 3). COMM. LOCATION ASM JUDICIARY COMM. ACTION DATE 07/03/2012 COMM. ACTION Do pass as amended and be re-referred to the Committee on Appropriations. COMM. VOTE SUMMARY Ayes: 07 Noes: 03PASS TITLE An act to add Chapter lb (commencing with Section 18500) to Division 8 of the Business and Professions Code, and to amend Section 22054 of the Financial Code, relating to automobile sellers and lenders. EXHIBIT NO. 0 5 httn•//xxn"u Ieainfn rn amdniih/l 1-1? /hi ll/cPnkh 0051-100n/ch 45F hill ?01?0705 ctntuz 7/7Fi/)n17 Coalition to Protect our Freedom to Drive Page 1 of 1 Bad Bills NO on SB 956 SB 956 will: • Cap interest rates on retail installment sales and leases (which, in fact, don't even SB 95W have an "interest rate') at a floating rate that, at the moment would be 17.25%. The current rate is far lower than the average credit card rate. The dealer in this case would be expected to carry a much higher amount financed at a lower rate, compared to credit cards that have a higher rate and lower average balances. AB 1534 • Impose a licensing requirement (beyond the presently required dealer license) with the Department of Corporations adding expensive additional bonding requirements. . �.._. • Require a BHPH dealer to wait 11 days after default before Instituting repossession proceedings. AB1441 • timft the amount of repossession expenses the dealer can pass along to the consumer to $500. Require the dealer to hire a licensed repossession agency to repossess a vehicle from a defaulting consumer, adding to the cost of repossession to the consumer. Our Take Require the dealer to allow the consumer two months' time to repay fees and charges in connection with past -due payments that have been brought current. ABOUT US The Coalition studs In op Gon to Proposed ,.legislation AS 1447, AS and 90 95b as collectively, the IsQotladonwill deny thousands of low -Income and credit-choAnged Californians the freedom to own a vehicle. READ INHE> 'NELP BS STOP' COALITION TO PROTECT OUR SOL FREEDOM TO DRIVE OUR-OIEMB�RS The Coalition m Protect out Freedom to Drive is an orgaMxalion comp wd of Conceroad small . businesses, seats and loci government ofMals,aummotivonwocladww,c Wwners, aummoblle ownrmrs, and others REA1 MIREi THE �1AOTS OurCoNwon two date nkod there will be an anormous lobe of ravenues to at%@ Wall local gowmmont When than 7s a 50-90% dernan In wow volume at local deeMnhips REA9MARE� . AND B 956; http://www.protectfreedomtodrive.com/ 7/26/2012