Domestic worker Sylvia Lopez, right, joins other domestic workers and… (Anne Cusack, Los Angeles…)
In a landmark step to protect consumers from predatory vehicle loans, Gov. Jerry Brown signed into law two bills regulating specialized used-car dealers known as Buy Here Pay Here lots.
For the first time, the dealers that offer their own in-house financing and target people with damaged credit and low incomes will be required to provide warranties on every car they sell in California. The new laws also oblige Buy Here Pay Here dealers to post fair-market values on their autos while giving customers greater flexibility in making payments.
The governor stopped short of endorsing wholesale restrictions of the controversial industry, however, by vetoing a third bill. It would have capped interest rates the lots could charge and regulated them as finance lenders monitored by the Department of Corporations, an added layer of bureaucracy that gave the governor pause.
FULL COVERAGE: Buy Here Pay Here
In all, Brown signed 65 bills Saturday and vetoed 23. He has until Sunday at midnight to clear his desk of pending legislation.
All three Buy Here Pay Here bills were introduced this year following a series of Times articles last year exploring the business practices of the industry.
"I signed two 'buy-here-pay-here' consumer protection bills this session," Brown wrote in a message that accompanied his veto of SB 956 by state Sen. Ted Lieu (D-Torrance). "If consumers need added protection once those bills are implemented, my administration will work with the Legislature to find appropriate, measured solutions."
Lawmakers celebrated their victories as worried car dealers expressed relief.
Assemblyman Mike Feuer (D-Los Angeles) is the author of AB 1447, which requires a 1,000-mile, 30-day warranty that dealers strongly opposed. "It's a very important day for consumers in California," he said Saturday.
Assemblyman Bob Wieckowski (D-Fremont), whose AB 1534 mandates that dealers post a fair-market valuation on the cars they sell, said the measure will "help level the playing field" for consumers.
Even Billy Dohring, chief lobbyist for the Independent Auto Dealers Assn. of California, which represents used-car dealers and opposed the legislation, found something to celebrate.
"I'm very happy with the results," he said, noting that the measures had sailed through the statehouse with such ease that he expected all three to become law. "I'm batting .333 on this, which is pretty good, considering."
The Lieu bill had been opposed by Brown's Department of Finance. It would have required dealers to register with the Department of Corporations, limited the interest rates they charge to 17% plus the federal funds rate and given consumers a 15-day grace period before repossession.
Lieu said he was "disappointed" by the rejection but would work with the governor to address specific abuses endemic to Buy Here Pay Here lots. They include a practice called "churning," in which the same car is sold multiple times by the same lot to boost profits.
The Times had found that such dealers tailor their business to working families that need cars for work. They charge interest rates that can surpass 30% on vehicles with well over 100,000 miles on the odometer. Many repossess aggressively and put consumers into deals they cannot afford, increasing their chances of default.
Other bills Brown rejected Saturday included several that would have undermined administration policies and his message of fiscal discipline as he campaigns to raise taxes. Having previously ordered the closure of hundreds of redevelopment programs throughout California, Brown vetoed six proposals to give local governments other economic-development authority. He said it is too soon to consider alternatives.
Closing the agencies is freeing up money for the state general fund, helping to close a major budget gap. Among the bills he rejected were measures by Assembly Speaker John Pérez (D-Los Angeles) and Senate President Pro Tem Darrell Steinberg (D-Sacramento). Brown said they could undercut savings budgeted this year from the agencies' closure.
With AB 2144, Pérez wanted to give new powers to municipalities to help develop housing and industrial buildings. "This measure would likely cause cities to focus their efforts on using new tools provided by the measure instead of winding down redevelopment," Brown wrote.
The message was similar for Steinberg's SB 1156, which would have allowed cities to set up new rubrics for economic development.
Brown signed a measure that will end a longtime legislative perk: discounts for vanity license plates.
Current and retired California lawmakers have been able to obtain license plates custom-designed for members of Congress and the Legislature for a one-time fee of $12. The public pays $49 to $98 for a special plate and $38 to $78 for annual renewals — and now lawmakers will too.
"At a time of economic belt-tightening … why should legislators get a special break — even a small one?" Assemblyman Anthony Portantino (D-La Cañada Flintridge) said last month after the Legislature unanimously passed his measure, AB 2068.
FULL COVERAGE: Buy Here Pay Here
Bensinger reported from Los Angeles and McGreevy from Sacramento. Michael J. Mishak contributed to this article.