Last winter, Adelita Valentine, owner of Hairfreek barbershop in the Echo Park neighborhood of Los Angeles, discovered that when it rained, it poured — inside the shop.
“The landlord wouldn’t fix the roof, and it was raining inside literally,” Valentine told Capital & Main. By the time the leaks started, the solo entrepreneur had already weathered eight years of problems: roach and rat infestations that the landlord refused to address; surprise maintenance fees; and monthly rent hikes of several hundred dollars without warning. Then came last winter’s leak.
“We had damage to the walls and the equipment,” she said, lamenting that she had to pay for the cleanup. “I couldn’t keep up and I was forced to raise prices, but our customers couldn’t afford higher prices,” Valentine said. Her business, accordingly, began to slow down.
Valentine and other small businesses may soon catch a break under Senate Bill 1103 (SB 1103), which the Assembly is expected to vote on by Aug. 31, the last day of the legislative session. Introduced by Sen. Caroline Menjivar, the bill aims to protect a range of small businesses from the kinds of unexpected rent increases, hidden added fees and unclear lease terms that dogged Valentine. The legislation will cover microenterprises (under five employees including the owner), restaurants with fewer than 10 employees and nonprofit organizations with fewer than 20 employees. If passed, it would be the first state law in the U.S. to give such protections to small business renters, according to Willow Lung-Amam, associate professor at the University of Maryland and director of the Small Business Anti-Displacement Network.
Advocates say the bill’s changes to current law are much needed for small businesses. There is limited availability of retail space, and the national retail vacancy rate hit a 20-year low in the second quarter of 2024 at 5.3%. In Los Angeles, although retail vacancies have slowly risen since 2022, so has the average commercial rent. But throughout California, some retailers have faced an added burden: As pandemic-era rent holidays expired in 2023, many business owners were required to pay back months of temporary deductions.
Advocates for SB 1103 say that the bill’s provision requiring landlords to provide at least 60 days’ notice before any rent increase, even on a month-to-month lease, could ease the squeeze for tenants. Right now, commercial leases can be ended with just 30 days’ notice, said attorney Nadia Segura, director of the small business development program at nonprofit law firm Bet Tzedek, one of the co-sponsors of SB 1103. “It’s horrible for businesses that have been in the community for so long,” she said.
Other changes include a mandate to clearly specify what is covered by the term “maintenance fees”; the clause is intended to protect tenants from getting hit with surprise bills. The legislation also requires landlords to provide leases in the language in which the tenant had negotiated it. These are staples of most residential contracts, said Lung-Amam, but not commercial leases.
“Any number of things can happen in the process of getting a lease,” said Lung-Amam. ”There’s very few resources out there, comparatively to residential tenants, in order to correct for those challenges.”
Opponents of the bill say it could hurt landlords as well as the small businesses who rent from them.
In July, a coalition of three dozen organizations including the California Chamber of Commerce sent a letter to Sen. Menjivar opposing the legislation, citing three specific objections. First, they argue that the bill would limit landlords’ ability to adjust tenants’ share of operating costs, thereby reducing landlords’ “ability to manage unforeseen expenses,” such as replacing roofs or increasing security in response to a rise in crime. They also say that, by increasing tenants’ rights with regard to translation requirements, the bill could create “legal risks and uncertainty” for landlords as tenants could exploit something as minor as a translation error to terminate a lease. Third, they argue that provisions aimed at making the leasing process more transparent to tenants — namely, the disclosure of operating costs and the translation of the text into a tenant’s native language — would be costly for landlords.
Opponents also note that while the bill would affect landlords of every size, any additional paperwork and expense would be harder for small landlords to manage. “You might have an aunt who has a very small piece of commercial property, and is using that as part of her retirement under this bill,” said Matthew Hargrove, president and CEO of the California Business Properties Association, which represents both small and large commercial landlords.
Still, the proposed protections would be a welcome change for Hairfreek’s Valentine, who called her relationship with her old landlord “toxic.” Now, in a new space she found with the help of nonprofit law firm Public Counsel, she recently signed a three-year lease and is grateful for the stability. She also has a sober view of the landscape for tenants if the status quo continues: “There are no protections for business owners renting,” she said.
