Existing law, the Permit Streamlining Act, establishes requirements for the review and approval of applications for development projects, as defined, by public agencies, including requiring that a public agency that is the lead agency for the development project approve or disapprove the project within certain time periods, as specified.

This bill would prohibit a city, county, or city and county from approving a building permit for cold storage facilities, as defined, unless the owner of the cold storage facility, or the lessee or operator of the cold storage facility, as specified, establishes a contingency fund, as defined, to be used upon declared national, state, or local emergencies in certain circumstances. The bill would require an owner of a cold storage facility to provide evidence of the contingency fund at the discretion of the city, county, or city and county, as specified, and authorize an owner to require the lessee or operator of the cold storage facility to establish and maintain the contingency fund. The bill would require a cold storage facility to use the contingency fund for, among other things, providing support during the declared state of emergency or local emergency for affected communities, as specified. By imposing additional requirements on cities and counties, the bill would impose a state-mandated local program.

The Personal Income Tax Law and the Corporation Tax Law, in modified conformity with federal income tax law, generally define “gross income” for purposes of the taxes imposed by those laws as income from whatever source derived, except as specifically excluded, and provide various exclusions from gross income.

This bill would, for taxable years beginning on or after January 1, 2027, and before January 1, 2032, exclude from gross income any amount received by a qualified taxpayer, as defined, in settlement for claims relating to the 2026 Boyle Heights fire incident, as defined.

Existing law requires that any bill introduced on or after January 1, 2020, that would authorize certain tax expenditures, as defined, contain, among other things, specific goals that the tax expenditure or exemption will achieve, detailed performance indicators, and data collection requirements.

This bill would include additional information required for any bill authorizing a new tax expenditure.

The bill would include findings that specified changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(a) On June 17, 2026, a large fire occurred at a cold storage facility located in the Boyle Heights community in the City of Los Angeles that resulted in the quick escalation into a major, multioperational period incident.

(b) The ignition of the rooftop solar array, hazardous materials, and lithium-ion batteries onsite resulted in the release of smoke and debris, affecting not only the local community, but the entire City of Los Angeles and surrounding communities. This includes particle pollution advisories affecting residents, schools, businesses, and vulnerable populations throughout Boyle Heights and neighboring communities.

(c) Once the fire was extinguished, the warehouse could not resume operations due to the damage, leaving 85,000,000 pounds of refrigerated or frozen food, including raw meat, to rot. This has resulted in an infestation within the local community of rats, maggots, and flies, all of which pose a significant public health risk.

(d) In a proclaimed state of emergency, local jurisdictions have an obligation to protect the surrounding communities from harm, while holding responsible parties accountable.

(e) The responsible parties also have an obligation to ensure that negative impacts to the surrounding community are minimized and to take all measures to protect and make the surrounding communities whole.

65850.22.

(a) For purposes of this section, both of the following definitions apply:

(1) “Cold storage facility” means a place greater than 20,000 square feet that is artificially refrigerated to a temperature of 45 degrees Fahrenheit or below and that participates in the accidental release prevention program, as described in Section 25533 of the Health and Safety Code, at Program Level 1, 2, or 3.

(2) “Contingency fund” includes any of the following that does not exceed a total value of twenty million dollars ($20,000,000):

(A) A dedicated account managed by a city, county, or city and county to be used for the purposes described in subdivision (d) under the conditions described in subdivision (c). A city, county, or city and county may impose a fee or charge on the development or operation of a cold storage facility to place into the account.

(B) A dedicated account managed by the owner of the cold storage facility to include an amount required by city, county, or city and county for the purposes described in subdivision (d) under the conditions described in subdivision (c).

(C) A surety bond.

(b) (1) A city, county, or city and county shall not approve a building permit for a cold storage facility unless the owner of the cold storage facility, or the lessee or operator of the cold storage facility pursuant to paragraph (3), establishes and maintains a contingency fund for the purposes described in subdivision (d).

(2) An owner of a cold storage facility shall provide evidence of the contingency fund at the discretion of the city, county, or city and county to substantiate the existence or maintenance of the contingency fund.

(3) An owner of the cold storage facility may require the lessee or operator of the cold storage facility to establish and maintain the contingency fund.

(c) The contingency fund shall only be used if both of the following conditions exist:

(1) The President of the United States or the Governor declares a state of emergency, or a local official, board, or other governing body vested with authority to proclaim a local emergency in a city, county, or city and county declares a local emergency, directing an agency to protect the health, safety, and welfare of residents or property.

(2) Either of the following occurs:

(A) The department or the local jurisdiction publishes a formal notification of a health advisory or health alert and, as supported by evidence in the health advisory or health alert, either the cold storage facility is the subject of the health advisory or health alert or the cold storage facility has caused the conditions which created the health advisory or health alert.

(B) The department or the local jurisdiction issues the owner of, and, if applicable, the operator or lessee of, the cold storage facility an official inspection report that includes a violation or citation that was unresolved or outstanding and caused the conditions for the state of emergency or local emergency described in paragraph (1) or a health advisory or health alert.

(d) Upon the conditions in subdivision (c) being satisfied, the contingency fund shall be used to provide support during the declared state of emergency or local emergency for affected communities. The uses shall include all of the following:

(1) Food assistance.

(2) Housing assistance, rental assistance, and housing relocation assistance.

(3) Air quality monitoring.

(4) Vector control.

(5) Health care to address adverse health outcomes related to the state of emergency, local emergency, health advisory, or health alert described in subdivision (c).

17138.10.

(a) For taxable years beginning on or after January 1, 2027, and before January 1, 2032, gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section, the following definitions apply:

(1) “2026 Boyle Heights fire incident” means the fire incident that began on June 17, 2026, proclaimed a state of emergency by the Governor on June 21, 2026, at a Lineage cold storage facility in the City of Los Angeles.

(2) “Qualified amount” means any amount received in settlement by a qualified taxpayer from a settlement entity in connection with the 2026 Boyle Heights fire incident.

(3) “Qualified taxpayer” means any of the following:

(A) A taxpayer who owned real property located in the County of Los Angeles during the 2026 Boyle Heights fire incident who paid or incurred expenses and received amounts from a settlement entity arising out of the 2026 Boyle Heights fire incident.

(B) A taxpayer who resided in the County of Los Angeles during the 2026 Boyle Heights fire incident who paid or incurred expenses and received amounts from a settlement entity arising out of the 2026 Boyle Heights fire incident.

(C) A taxpayer who had a place of business in the County of Los Angeles during the 2026 Boyle Heights fire incident who paid or incurred expenses and received amounts from a settlement entity arising out of the 2026 Boyle Heights fire incident.

(4) “Settlement entity” means an entity making a settlement payment of a qualified amount to a qualified taxpayer.

(c) The settlement entity shall provide, upon request by the Franchise Tax Board, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board.

(d) (1) For purposes of complying with Section 41, regarding the exclusion provided by this section and Section 24309.10, the Legislature finds and declares that the goal of the tax expenditure allowed pursuant to this section is to assist those who relocated from their homes, suffered negative effects from being unable to relocate, or suffered losses to their businesses during the 2026 Boyle Heights fire incident. The purpose and objective is to adequately and economically compensate the victims, which cannot be achieved if they pay taxes on the money paid back to them through settlement. The performance indicator of the success of the tax expenditure is the amount of gross income excluded pursuant to this section and Section 24309.10.

(2) By November 1, 2029, the Franchise Tax Board shall deliver to the Legislature a written report, in accordance with Section 9795 of the Government Code, that states the aggregate dollar amount of payments received in settlement by qualified taxpayers from a settlement entity arising out of the 2026 Boyle Heights fire incident.

(e) This section shall remain in effect only until January 1, 2033, and as of that date is repealed.

24309.10.

(a) For taxable years beginning on or after January 1, 2027, and before January 1, 2032, gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section, the following definitions apply:

(1) “2026 Boyle Heights fire incident” means the fire incident that began on June 17, 2026, proclaimed a state of emergency by the Governor on June 21, 2026, at a Lineage cold storage facility in the City of Los Angeles.

(2) “Qualified amount” means any amount received in settlement by a qualified taxpayer from a settlement entity in connection with the 2026 Boyle Heights fire incident.

(3) “Qualified taxpayer” means either of the following:

(A) A taxpayer who owned real property located in the County of Los Angeles during the 2026 Boyle Heights fire incident who paid or incurred expenses and received amounts from a settlement entity arising out of the 2026 Boyle Heights fire incident.

(B) A taxpayer who had a place of business in the County of Los Angeles during the 2026 Boyle Heights fire incident who paid or incurred expenses and received amounts from a settlement entity arising out of the 2026 Boyle Heights fire incident.

(4) “Settlement entity” means an entity making a settlement payment of a qualified amount to a qualified taxpayer.

(c) The settlement entity shall provide, upon request by the Franchise Tax Board, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board.

(d) This section shall remain in effect only until January 1, 2033, and as of that date is repealed.

The Legislature finds and declares that, due to the increasing presence of large cold storage facilities across the state and their great potential to cause drastic negative health effects on local communities should they catch fire, preventing and mitigating these disasters is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, Section 2 of this act adding Section 65850.22 to the Government Code applies to all cities, including charter cities.

No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.