Article 9.5 - California Small Agricultural Business Drought and Flood Relief Grant Program

Sections (6)

Amended by Stats. 2023, Ch. 45, Sec. 30. (AB 127) Effective July 10, 2023. Repealed as of January 1, 2027, pursuant to Section 12100.105.

(a)The Legislature finds and declares that it is in the public interest to assist small agricultural businesses in the State of California that are impacted by severe drought and flooding.

(b)This article shall govern the procedure by which qualified small businesses may obtain grant relief from the California Small Agricultural Business Drought and Flood Relief Grant Program.

§ 12100.101

Amended by Stats. 2023, Ch. 45, Sec. 31. (AB 127) Effective July 10, 2023. Repealed as of January 1, 2027, pursuant to Section 12100.105.

For the purposes of this article, unless the context requires otherwise:

(a)“Applicant” means any California taxpayer, including, but not limited to, an individual, corporation, nonprofit organization, cooperative, or partnership, who submits an application for the program.

(b)“California Small Agricultural Business Drought and Flood Relief Grant Program” or “program” means the grant program established by this article.

(c)“CalOSBA” or “office” means the Office of the Small Business Advocate within the Governor’s Office of Business and

Economic Development.

(d)“Decline in annual gross receipts or gross profits” means a decrease in annual gross receipts or gross profits when comparing the 2022 taxable year to the 2019 taxable year, as documented by tax returns or Internal Revenue Service Form 990.

(e)“Director” means the Director of the Office of the Small Business Advocate.

(f)“Fiscal agent” means a nonprofit or private institution capable of online and mobile application development, customer support, document validation, impact analysis, grant agreements, and awards disbursement, as well as marketing, engagement, and strategic partnerships for implementation.

(g)“Full-time employee” has the same meaning as

in subdivision (c) of Section 515 of the Labor Code.

(h)(1) “Qualified small business” means a business that meets all of the following criteria, as confirmed by the office or fiscal agent through review of revenue declines, other relief funds received, credit history, tax returns, payroll records, and bank account validation:

(A) Is a sole proprietor, independent contractor, C-corporation, S-corporation, cooperative, limited liability company, partnership, nonprofit, or limited partnership, domiciled in California, with 100 or fewer full-time employees in the 2022 and 2023 taxable

years.

(B) Began operating in the state prior to January 1, 2020.

currently active and operating.

(D) Has been affected by severe drought according to the United States Department of Agriculture drought

monitor or is within or serves a county that has a state or federal disaster declaration for flooding.

(E) Provides organizing documents, including a federal tax return or Internal Revenue Service Form 990, and a copy of official filings with the Secretary of State or with the local municipality, as applicable, including, but not limited to, articles of incorporation, certificate of organization, fictitious name of registration, or government-issued business license.

(2)Notwithstanding paragraph (1), “qualified small business” shall not include any of the

following:

(A)Businesses without a physical presence in the state.

(B)Governmental entities, other than Native American tribes, or elected official offices.

(C)Businesses primarily engaged in political or lobbying activities, regardless of whether the entity is registered as a 501(c)(3), 501(c)(6), or 501(c)(19) nonprofit entity or other nonprofit entity.

(D)Passive businesses, investment companies, and investors who file a Schedule E on their tax returns.

(E)Financial institutions or businesses primarily engaged in the business of lending, such as banks, finance companies, and factoring companies.

(F)Businesses engaged

in any activity that is unlawful under federal, state, or local law.

(G)Businesses that restrict patronage for any reason other than capacity.

(H)Speculative businesses.

(I)Businesses with any owner of greater than 10 percent of the equity interest in it who meets one or more of the following criteria:

(i)The owner has, within the prior three years, been convicted, or had a civil judgment rendered against the owner, or has had commenced any form of parole or probation, including probation before judgment, for commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a federal, state, or local public transaction or contract under a public transaction, violation of federal or state antitrust or

procurement statutes or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, or receiving stolen property.

(ii) The owner is presently indicted for, or otherwise criminally or civilly charged by, a federal, state, or local governmental entity, with commission of any of the offenses enumerated in clause (i).

(J) Affiliated companies, as described in Section 121.103 of Title 13 of the Code of Federal Regulations, as it read on August 1, 2022.

(K) Other businesses to be determined by the office consistently with the requirements and intent of this subdivision.

§ 12100.102

Added by Stats. 2022, Ch. 570, Sec. 3. (AB 157) Effective September 27, 2022. Repealed as of January 1, 2027, pursuant to Section 12100.105.

If the office determines that the grantee has failed to meet the criteria for a qualified small business under Section 12100.101, or for a small farmer or socially disadvantaged farmer under Section 12100.103, as may be applicable, a grant may be recaptured, in whole or in part, in accordance with Article 8 (commencing with Section 19294) of Chapter 5 of Part 10.2 of Division 2 of the Revenue and Taxation Code.

§ 12100.103

Amended by Stats. 2023, Ch. 45, Sec. 32. (AB 127) Effective July 10, 2023. Repealed as of January 1, 2027, pursuant to Section 12100.105.

(a)The California Small Agricultural Business Drought and Flood Relief Grant Program is hereby created within the office.

(b)The program shall be under the direct authority of the director.

(c)The purpose of the program is to provide grants to qualified small agricultural businesses that have been affected by severe drought

and flooding.

(d)The office may contract with a fiscal agent, or amend an existing contract with a fiscal agent to meet the requirements of this article, to carry out the programs at a rate of no more than 5 percent of administrative and program funds appropriated by the Legislature for purposes of

this article.

(e)Subject to appropriation of funds for grants by the Legislature, the office shall allocate grants to qualified small agricultural businesses that meet the requirements of this article in one or more rounds.

(f)(1) The office shall conduct marketing and outreach for equitable awareness and the distribution of grants that includes all of the following:

(A) Engaging multiple partners, including, but not limited to, business and nonprofit associations, chambers of commerce, economic development corporations, and other nonprofit mission-based organizations, and organizations with nonprofit expertise.

(B) Providing access to technical assistance services covering all counties

in the state and in multiple languages to reach non-English-speaking individuals in all counties in the state.

(C) Building awareness, including those in underserved and underbanked communities, by collaborating with multiple community groups to distribute program information, provide applicant access through multiple branded partner portals, or advertising or social media outreach through owned, paid, or earned media channels.

(2)For the qualified small agricultural business portion of the program, the office shall conduct outreach in advance of open application rounds for a minimum of three weeks prior to opening each application round. Following each application round, the fiscal agent shall assess service gaps and address outreach deficiencies as necessary to improve program equity.

(3)The office or fiscal

agent shall provide information on how to connect to additional support resources to each applicant, whether or not the applicant is selected as a grant recipient.

(g)Program grant funds

allocated in the Budget Act of 2022 related to drought impacts shall be administered as follows:

(1)A total of 10 percent of grant funds shall be held for qualified small agricultural businesses that do not file 2022 tax year returns until 2024.

(2)A total of 20 percent of grant funds shall be allocated in one or more rounds of grants for small and socially disadvantaged farmers who are qualified small agricultural businesses pursuant to the following:

(A)Grants shall be awarded in the following amounts:

(i)Twenty thousand dollars ($20,000) for applicants with a decline in annual gross receipts or gross profits of 10 percent or more and less than 30 percent.

(ii) Sixty thousand dollars ($60,000) for applicants with a decline in annual gross receipts or gross profits of 30 percent or more and less than 40 percent.

(iii) Eighty thousand dollars ($80,000) for applicants with a decline in annual gross receipts or gross profits of 40 percent or more and less than 50 percent.

(iv) One hundred thousand dollars ($100,000) for applicants with a decline in annual gross receipts or gross profits of 50 percent or more.

(B) The office or fiscal agent shall allocate up to 5 percent of program funds to nonprofit entities, tribal governments, resource conservation districts, or other entities with experience providing

technical assistance to small farms or socially disadvantaged farmers to provide services to help maximize the participation of small farms or socially disadvantaged farmers in the one or more rounds of grants authorized by this subdivision.

(i)“Small farm” has the meaning described in the publication Updating the ERS Farm Typology, dated April 2013, issued by Economic Research Service of the United States Department of Agriculture.

(ii) “Socially disadvantaged farmer” has the meaning provided by subdivision (b) of Section 512 of the Food and Agricultural Code, as it read on August 1, 2022.

(D) For the purposes of this subdivision, the office or fiscal agent may contract with other fiscal agents to provide

technical assistance.

(E) The office shall consult with the Farm Equity Advisor at the Department of Food and Agriculture for purposes of implementing this subdivision.

(3)(A) The remaining percentage of grant funds shall be allocated to qualified small agricultural businesses most impacted by severe drought, including, but not limited to, those that are identified as in the following 2022 North American Industry Classification System codes:

(i)Codes beginning with 115 – Support Activities for Agriculture and Forestry.

(ii) Codes beginning with 311 – Food Manufacturing.

(iii) 424910 – Farm Supplies Merchant Wholesalers.

(iv) 444240 – Nursery, Garden Center, and Farm Supply Retailers.

(v)484220 – Specialized Freight (except Used Goods) Trucking, Local (local agricultural products trucking).

(vi) Codes beginning with 1121 – Cattle Ranching and Farming.

(B) Grants shall be awarded in the following amounts:

(i)Sixty thousand dollars ($60,000) for applicants with a decline in annual gross receipts or gross profits of 30 percent or more and less than 40 percent.

(ii) Eighty thousand dollars ($80,000) for applicants with a decline in annual gross

receipts or gross profits of 40 percent or more and less than 50 percent.

(iii) One hundred thousand dollars ($100,000) for applicants with a decline in annual gross receipts or gross profits of 50 percent or more.

(4)Grant moneys awarded under this subdivision shall only be used for costs to maintain the recipient business through the drought, including the following:

(A)Employee expenses, including payroll costs, health care benefits, paid sick, medical, or family leave, and insurance premiums.

(B)Working capital and overhead, including rent, utilities, mortgage principal, and interest payments, but excluding mortgage prepayments, and debt obligations, including principal and interest, incurred before the onset of severe drought.

(C)Any other drought-related expenses not already covered through grants, forgivable loans, or other relief through state, county, or city programs.

(h)Program grant funds allocated in the Budget Act of 2023 related to storm flooding impacts shall be administered as follows:

(1)Grant funds shall be allocated to qualified small agricultural businesses impacted by flooding including, but not limited to, those that are identified as in the following 2022 North American Industry Classification System codes:

(A)Codes beginning with 115 – Support Activities for

Agriculture and Forestry.

(B)Codes beginning with 1121 – Cattle Ranching and Farming.

(D)444240 – Nursery, Garden Center, and Farm Supply Retailers.

(E)484220 – Specialized Freight (except Used Goods) Trucking, Local (local agricultural products trucking).

(2)Three tiers of grant amounts shall be relative to revenue levels for qualified small agricultural businesses, to be determined by CalOSBA.

(3)Grant moneys awarded under this subdivision may be used for costs to maintain the recipient business through flooding, including, but not limited to, the following:

(A)Employee expenses, including payroll costs, health care benefits, paid sick, medical, or family leave, and insurance premiums.

(B)Working capital and overhead, including rent, utilities, mortgage principal, and interest payments, but excluding mortgage prepayments and debt obligations, including principal and interest, incurred before the onset of flooding.

(C)Any other flooding-related expenses not already covered through grants, forgivable loans, or other relief through state, county, or city programs.

(i)Applicants may apply for relief grants under subdivisions (g) and (h).

(j)(1) Applicants may self-identify race, gender, and ethnicity. Within 30 business days of the close of the application period, the office shall post the aggregate data, as available, including by legislative district. Within 45 business days of the close of the application period, the office shall post information on grant amounts actually awarded as it

becomes available. All information shall be posted on the office’s internet website and the office shall provide an electronic copy of the information to the relevant fiscal and policy committees of the Legislature.

(2)On or before December 31, 2026, the office shall report to the Legislature the number of grants and dollar amounts awarded for each of the following categories:

(A)Race and ethnicity.

(B)Women-owned.

(C)Veteran-owned.

(D)Located in a disadvantaged community pursuant to paragraph (5) of subdivision (h) of Section 12100.83.

(E)Located in a rural area.

(F)County.

(G)State Senate district.

(H)State Assembly district.

(3)Information report to the Legislature pursuant to this subdivision shall be provided in conformance with the requirements of Section 9795.

(k)The fiscal agent, or the office if it does not contract with a fiscal agent, shall issue Internal Revenue Service Forms 1099 to grant recipients and otherwise adhere to tax reporting guidelines, regardless of whether the grants are excluded from gross income for purposes of the Personal Income Tax Law (Part 10 (commencing with Section 17001) of Division 2 of the Revenue and Taxation Code) or the Corporation Tax Law (Part 11 (commencing with Section 23001) of Division 2 of the Revenue and Taxation Code).

§ 12100.104

Added by Stats. 2022, Ch. 570, Sec. 3. (AB 157) Effective September 27, 2022. Repealed as of January 1, 2027, pursuant to Section 12100.105.

The office and the Franchise Tax Board may adopt regulations to implement this article. The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1) shall not apply to any regulation, standard, criterion, procedure, determination, rule, notice, guideline, or any other guidance established or issued by the office or the Franchise Tax Board pursuant to this article.

§ 12100.105

Amended by Stats. 2023, Ch. 45, Sec. 33. (AB 127) Effective July 10, 2023. Repealed as of January 1, 2027, by its own provisions. Note: Repeal affects Article 9.5, commencing with Section 12100.100.

This article shall remain in effect only until January 1, 2027, and as of that date is repealed.