A New Law Could Be a Lifeline for Los Angeles’s Immigrant-Owned Small Businesses

After 30 years of single-handedly running an Asian boutique store located inside an indoor plaza in Los Angeles called The Shop in LA’s Chinatown, Mai Tu received an eviction notice at the start of 2020 from the building’s new owner, the Santa Monica, California-based Redcar Properties. Tu moved out in March 2020 as the pandemic hit and the stay-at-home order started.

Tu didn’t want to close her store, so she and a dozen other business owners from The Shop packed up and moved to Dynasty Center, the indoor plaza next door on the same street.

But in July 2021, Redcar sealed the deal to purchase Dynasty Center as well. The specter of evictions and forced relocation returned for Tu and dozens of other immigrant business owners whose fate now hangs in the balance.

Debates about gentrification have often focused on residential tenancy, but businesses — especially small businesses — are often victims of gentrification too. Like residential renters, small business owners in urban enclaves are also subject to constant threats of rising rents and displacement. With the compounding impact of the COVID-19 pandemic, small businesses found themselves shutting down in unprecedented numbers with little sustained help from the government. This is especially true in Los Angeles County, which exhibits some of the highest rates of gentrification in the nation. In September, California Gov. Gavin Newsom signed a first-in-the-nation bill that offers qualified small businesses standard protections and increases their negotiating power with commercial property landlords. But will it be enough to save Tu and other longtime business owners in the state?

“A Very Special Place”

Tu’s shop was one of the millions of BIPOC– and immigrant-owned small businesses that were disproportionately affected by the pandemic. Mass layoffs and closures forced a national conversation about the essential place of small businesses in American society, though federal aid for commercial tenants has mostly dried up.

In many low-income immigrant communities like LA’s Chinatown, small businesses have long struggled to survive gentrification, rising rents, and displacement.

Dynasty Center is a nearly 80,000-square-foot indoor swap meet located between Spring and Broadway on the east side of Chinatown. In the neighborhood’s heyday in the 1990s, the mall housed close to 200 businesses and saw a perpetual flow of goods and customers, who hopped between no-longer-existing malls and swap meets. Dynasty Center was one of the most popular shopping destinations in Chinatown, Tu said. Today, it is the only large mall remaining in the area, housing just a few dozen businesses.

Elise Dang and Sophat Phea are co-chairs of the Small Business Committee, a component of the tenant rights group Chinatown Community for Equitable Development (CCED). Both grew up frequenting Chinatown and have parents who are longtime shop owners in the neighborhood.

CCED was founded in 2012 by community members and activists to organize against Walmart moving into Chinatown. A Walmart did open in the area, but the chain store closed in 2016 after only two years. CCED’s work continued after Walmart’s closure, building grassroots power with tenants at multiple residential buildings. The Small Business Committee came together during the COVID-19 pandemic. Dang and Phea told Prism that when they began organizing commercial tenants, they initially found it challenging to find common ground or arouse a sense of urgency.

“Some are planning to retire,” Phea said. “Some still don’t know what they want to do. Some just want to stay there as long as they can. People are a bit split on their goal.”

Dang said that self-protection and fear of retaliation from the landlord also factored in. Additionally, the businesses see each other as competitors, which impedes organizing around collective action.

However, what is shared among the tenants is a desire to know Redcar’s plans.

“Is everyone going to get evicted? Will people have the right to move back? Will it be affordable? How much time do they even have? Just the amount of uncertainty about so many aspects of their livelihoods that are not being answered. It’s very worrying to a lot of people,” Dang said.

After three years of consistent outreach and relationship-building with the tenants of Dynasty Center, the organizers said it’s clear that many tenants regard Dynasty Center as an important place — and one they want to keep in Chinatown.

According to Dang, Dynasty Center was always a place for low-income residents in the city to access necessities like clothing, household items, and cultural and religious goods at affordable prices and in their own languages. The swap meet model was also more accessible to lower-income business owners — literally and figuratively. Previously, multiple swap meets were interconnected through underground tunnels and parking lots.

“​​It is a very special place,” Dang said — one that the community is now at risk of losing.

Most Vulnerable

According to the U.S. Small Business Administration, small businesses — defined as businesses with fewer than 500 employees — make up 99.9% of U.S. firms. Nearly half of them have four employees or less. Studies that emerged after the pandemic showed that while larger firms had the financial, legal, and structural resources to weather economic disruptions, small businesses were significantly more susceptible to permanent losses and closures. The smallest of the small businesses were the most vulnerable.

“There’s a legacy of exclusion baked into our systems,” said Doug Smith, the senior director of policy and legal strategy at the Los Angeles community development nonprofit Inclusive Action for the City (IAC). “Things like redlining, disproportionate lack of access to cash, capital, a history of informal-sector work because of barriers based on immigration status or people impacted by the criminal legal system — all of these things prevent and create barriers to microbusinesses and small nonprofits from being on an equal footing when it comes to negotiating leases and being able to navigate the leasing process.”

Immigrants made up about 14% of the U.S. population, according to the American Immigration Council in 2022, but they constituted roughly 20% of employer and nonemployer small businesses in the U.S., and 17% of the workforce were foreign-born. California has the most immigrants and foreign-born residents in the nation, the vast majority of whom speak languages other than English.

As a Viet-Chinese refugee who came to the U.S. in 1983, Tu, for example, is fluent in four languages with a working understanding of Norwegian, which she learned as a refugee seeking work in Norway before coming to the U.S. Many first-generation immigrants, however, are monolingual.

Miguel Alfaro, the owner of the Mexican restaurant Mi Lindo Guanajuato, located in Boyle Heights in LA, is a monolingual Spanish speaker. Born in Mexico, Alfaro worked as a music teacher before opening his restaurant in March 2020, right when the city went into lockdown. He told Prism that before signing the lease for his restaurant, he relied on his landlord to translate and explain the terms outlined in the document.

“There haven’t been any issues with the contract,” Alfaro said through a Spanish interpreter. “Though I would have preferred to have signed the lease in my preferred language.”

According to a 2020 National Institute of Health study, active immigrant business owners reduced by 36% from February to April 2020. Active Latinx business owners like Alfaro fell by 32%, African-Americans by 41%, and Asians by 26%—compared with 17% for white business owners.

First in the Country

As California’s small business owners scramble to prepare for the incoming Trump administration’s tariffs, in an unusual move this month, Newsom called a special session to “Trump-proof” the Golden State. A bill the governor signed last year is also an outlier, providing new commercial tenant rights to small businesses with up to five employees, restaurants with up to 10 employees, and nonprofit organizations with up to 20 employees.

In September, Newsom signed the Commercial Tenant Protection Act (SB 1103), a first-of-its-kind bill that provides permanent legislative support to the state’s most vulnerable businesses.

The new law provides three key protections to qualified commercial tenants. First, it requires landlords to provide leases in the language that was used during negotiations. Second, it allows the tenants to request documentation from landlords that explains the incurrence of maintenance fees and how they are calculated. Lastly, it requires landlords to issue notices of rent increases or termination earlier, allowing tenants more time to make plans and find new locations for their businesses.

Many of these regulations — including the requirement for translation and the advanced notice for rent increases and lease terminations — have equivalents in residential tenancy laws.

According to Smith, the discrepancy between residential and commercial tenancy legislature is partly a result of the misguided perception that commercial leases are sophisticated business-to-business transactions in which the playing field is equal for the property owner and the leasing business. The goal, Smith said, is to create some baseline protections that correct deep power imbalances.

“It really just brings commercial leasing in line with existing California law that already requires translation for a number of other contracts,” Smith said.

The idea of the bill originated in late 2023. The Small Business Alliance for Equitable Communities (SBAEC) — a coalition of LA-based organizations like IAC that advocate for underserved minority-owned businesses and microenterprises — developed policy proposals based on their shared observations of the obstacles faced by small businesses during the pandemic. Sponsored by state Sen. Caroline Menjivar, the bill was formally introduced in February 2024 and went into effect Jan. 1, 2025.

According to Raymond Fang, an attorney and fellow at Public Counsel, another coalition member and sponsor of the bill, the most substantial part of the law is the disclosure of sources and allocation of maintenance fees.

“When the landlord incurs operating expenses for property tax, property insurance, or [things like] cleaning common areas, electricity, utilities to maintain the common areas of a commercial space, they’re allowed to pass those costs on to the tenant,” Fang explained. “In terms of both defining and regulating how those costs can be allocated, I’m confident that those [terms] are first in the country.”

At Dynasty Center, Tu said the property owner stopped paying for repairs in March when tenants repeatedly complained of broken ceilings, leaks, and malfunctioning air-conditioning during the summer. According to Tu, the owner asked the tenants to pay for repairs out of pocket. Neither Tu nor other tenants Prism spoke to could find a copy of the last lease they signed with the former owner, which would shed light on whether certain terms rolled over to govern their current agreements with Redcar. All were on a month-to-month payment schedule without a renewed lease or any written agreement with Redcar when the company took over. Without a lease, enough knowledge, time, or money to push back, tenants felt forced to either pay out of pocket or endure the damage.

CCED told Prism that Redcar has recently begun paying for some maintenance after the organization’s sustained outreach to the city beginning in July.

Prism reached out to Redcar repeatedly for comment. The company did not respond by publication time.

In June, Tu signed a three-year lease at a storefront on Broadway. She is happy she gets to stay in Chinatown but is pessimistic about the prospect of the remaining tenants at Dynasty Center. Although the new bill won’t apply to the current agreements between the tenants at Dynasty Center and Redcar, Dang said the bill would still have a positive effect on the small business owners by empowering them to obtain and understand leases and advocate for themselves.

Fang’s organization and others from the SBAEC have organized a series of outreach to educate small commercial tenants about SB 1103 to make sure tenants are aware of the law and to ensure it’s properly implemented.

“Rights only have power in so far as people know about them and enforce them,” Fang said. “It really is where the rubber meets the road.”

Editor’s note: Kathy Ou was previously a volunteer with Chinatown Community for Equitable Development.

Prism is an independent and nonprofit newsroom led by journalists of color. We report from the ground up and at the intersections of injustice.