Annual Recap

Legislative article:

 

Reprinted with permission from: The Registry SF

June 2010 pg. 8-9

www.theregistrysf.com

 

There They Go Again ...

State legislators are trying for the seventh time

since 2001 to change California's Proposition 13.

By Sharon Simonson

 

Commercial real estate is again the target of state legislative

attempts to raise public revenue in the face of fallout from

the global correction. San Francisco state Assemblyman

Tom Ammiano has introduced a bill that aims to open more commercial

properties to higher taxes when companies are bought and sold. The

law also would affect single-family housing, apartments and farms,

small businesses and mobile-home parks that are owned by legal entities

rather than individuals.

Removing protections afforded housing from commercial real

estate under California's Proposition 13 has been the subject of legislative interest

as far back as 1991. Change proponents say interpretations

of a key clause in the law open a "loophole" for businesses to evade

justified property taxes. They cite numerous circumstances where

properties have not been reassessed when companies sold, such as

former mortgage lender Washington Mutual's sale to JPMorgan Chase

in 2008. Legislators have tried seven times since 2001, as California's

fiscal crisis has progressively intensified, to modify the law's definition

of "change in ownership" to increase tax receipts. Property taxes are

the largest revenue source for local government.

Opponents to change say current law and regulation functions

well, producing steady government revenue that tempers wilder

swings in sales and capital-gains taxes. "A lot of what they say the bill

does is already covered under current law;' said Matthew Hargrove, a

senior vice president at the California Business Properties Association.

"We don't understand the flaw they are trying to fix:'

The state's Constitution requires that property be reassessed

when there is a "change in ownership;' but it does not define the

phrase, according to the Legislative Counsel, a public agency that,

among other things, prepares digests and opinions on proposed

law. The current legal interpretation was laid out immediately after

Proposition 13 passed and is based on a "separate entity" approach,

whereby the purchase of a company did not trigger re-assessment

of its real estate so long as the legal entity that owned the property

did not change. This arrangement was modified shortly later to say

that whenever a legal entity bought or otherwise acquired more than

50 percent ownership of a corporation or other legal entity, the real

property must be reassessed because a change in company "control"

had occurred.

But in cases where an entire company is sold but no single buyer

attains the 50 percent ownership threshold, property is not reassessed

under the theory that there has been no control change. The Legislative

Counsel suggests this final interpretation is inconsistent with voters'

1978 intent. "It is unlikely that the idea of enabling multiple, affiliated

purchasers of a corporation, each acquiring less than a 50 percent

ownership interest, to completely avoid a reappraisal of the corporations'

underlying property was contemplated by voters when approving

Proposition 13 or by the Legislature ... ;' it concludes in its assessment

of the Ammiano bill.

Economist Bill Hamm, who headed the Legislative Analyst's Office

in 1978 and personally helped prepare the review of Proposition 13

included in voters' handbooks, contests the use of the word "loophole"

in promoting the current change. The word is "pejorative" and

implies questionable intent, he said. He is adamant that Proposition 13

is clear on one point: the equal treatment of all California property with

regard to the two key measures that determine tax burden. "There

was to be one tax rate and one way of determining assessed value;'

he said.

The California Tax Reform Association, the advocates behind

the 1991 attempt to change the law, are behind the current overhaul

attempt as well. The word "loophole" figures in their literature then

and now. San Francisco Assessor Recorder Phil Ting also supports

the change. "California cannot continue to mortgage the future to

protect corporate tax loopholes for commercial properties;' Ting is

quoted as saying at closetheloophole.com.

Ting and the Tax Reform association are joined by labor interests,

public-school teachers and social activists in wanting the law changed.

Business and property interests including CB Richard Ellis, LBA Realty,

the Marin Builders Association, Borelli Investment Co., Pier 39, Ellis

Partners, PS Business Parks and Public Storage oppose modification.

In a 2008 report prepared for two business-supported organizations,

Harnm and a co-author projected economic outcomes if commercial

properties were treated differently under Proposition 13.The same study

analyzed the premise that commercial property owners are paying an

increasingly smaller share of overall property taxes, an assertion that

advocates for change use to buttress their argument.

If commercial property is taxed more heavily, the state will lose

jobs, the Hamm study found. Local governments will have an even

greater incentive to build more commercial real estate and less housing.

Business will push to pass the incremental tax increase on, putting upward

pressure on rents and downward pressure on wages. The incentive

to invest further in California wanes.

To the extent the tax cannot be passed on and new revenues are

not used to improve the state's larger business climate, existing commercial

property values fall. Rather than look at property tax revenue,

Hamm evaluated commercial, industrial and housing's taxable values

relative to their market values.

The purpose of Proposition 13 was to limit annual increases in

properties' taxable value to no more than 2 percent annually, using

the purchase price or initial construction cost as the starting point.

Over time, because market values have risen faster than 2 percent a

year, market value and taxable value diverge. When market values go

down, the taxable value derived from the 2 percent increase formula

can rise above market value. In those tax years, taxable value and

market value are one and the same.

In 2008, Hamm found that commercial and industrial properties

were assessed at 60 percent of market value, while owner-occupied

housing was assessed at 53 percent. In an interview with The Registry,

Hamm cautions that these ratios change as market values fluctuate.

Given the huge declines in commercial and residential property values

in the last several years, it's hard to know where the ratios stand now,

he said.

 

"If commercial property is

taxed more heavily, local

governments will have an

even greater incentive to

build more commercial real

estate and less housing."

 

The Economic Effects of California Adopting A Split Roll Property Tax,

William G. Hamm and Jose Alberro

 

 

In a study released in May, the California Tax Reform Association

evaluated relative tax burdens differently, dividing total property tax

receipts among the property types. The study finds that with the exception

of three counties-Marin, Modoc and Plumas-residential

properties are assuming a greater share of total taxes paid across the

state. In San Francisco County, the percentage of residential property

tax revenue increased from 41 percent of the whole in 1979 to 57

percent in 2009, while the percentage of commercial property tax

revenue decreased from 59 percent to 43 percent in the same time.

In Santa Clara County, residential properties account for 64 percent

of tax receipts in the current fiscal year, up from less than 50 percent

when Proposition 13 passed. In Alameda County, residential properties

pay a whopping 75 percent of all property taxes.

The study's authors concede that properties are not classified

uniformly across the state, with apartments being the most obvious

swing class, categorized as housing in some places and as commercial

properties in others.

Santa Clara County Assessor Larry Stone says the issue in his

mind is practicality. Treating commercial and residential properties

differently under the law amounts to an administrative nightmare, he

says. At the same time, he quarrels with the complaint that commercial

properties are missed en masse for re-assessment, at least in his

county. "We are re-assessing many of these properties that have been

involved in mergers and acquisitions;' he said.

For his part, Marc Intermaggio, executive vice president of the

Building Owners and Managers Association of San Francisco, suggests

the entire debate could be avoided by adopting a different point of

view: Legislators, instead of worrying about how to increase tax

revenues, could cut state expenditures instead .

 

 

San Diego’s Water Submeter Law – What You Need to Know

 

By Michelle Slingerland

Public Affairs Manager, San Diego County Apartment Association

 

On April 5, 2010, the San Diego City Council approved a law requiring the installation of water submeters in all new multifamily and mixed-use development that have three or more residential units.  The law also requires existing construction to be retrofitted with submeters when all interior potable water plumbing is being replaced.  Additionally, the law contains specific requirements for property owners to follow when billing tenants for charges related to submeter service and water usage.  These requirements apply to properties with existing submeters as well, and their practices will have to be modified accordingly.  The law will go into effect on June 1, 2010.

 

Why the need for submeters?

The severe water shortage facing San Diego County has prompted aggressive efforts by local water authorities to make residents conserve water, the most effective of these efforts being those that hit residents where it counts – in their pocketbooks.  Throughout the county, numerous water authorities have adopted tiered rate structures or water allocation schedules, whereby customers are billed at significantly higher rates for usage in excess of what is deemed appropriate for their property. 

 

The problem with this approach to conservation at multi-unit properties served by only one master water meter is that tenants are not billed directly for their water use, and therefore have no idea how much water they’re using or how much it costs.  This interior usage comprises the majority of water use at multi-unit properties.  Typically, the cost of water is factored into the cost of rent.  Only now, water rate increases far outpace what can be realistically passed on through rent increases.  As a result, tenants continue to use as much water as they want and it is the property owner who carries the financial burden for excessive water use.

 

Water submeters create an incentive to conserve water because they allow tenants to know exactly how much water they’re using and to pay an amount equal to that water usage.

 

The development of the submeter ordinance

In early 2009, the City of San Diego formed an ad hoc committee to further explore the use of water submeters in multi-unit buildings.  The San Diego County Apartment Association (SDCAA), along with others in the real estate industry, closely participated in this process.

 

There were issues associated with submeters that needed to be thoroughly considered.  First, most properties were not built to accommodate water submeters, and so the costs to retroactively install them would be tremendous.  Point-of-use meters, which are relatively easy to install, are not yet approved for use in California.  It was therefore argued, and ultimately decided, that any water submeter mandate should apply to new construction only.

 

Second, even in new construction, submeters may be more difficult and costly to install in high rise buildings because of a number of factors.  Despite the industry’s concerns about this, the ordinance requires submeters to be installed in new high rise construction.

 

Third, tenants of affordable housing projects receive predetermined utility allowances, which conflict with the submetering practice of billing tenants directly for their water utilities.  So, the ordinance requires that new affordable housing projects be built to accommodate the installation of submeters in the event that the building one day convert to market rate, but does not require the actual installation or use of submeters.

 

Lastly, water agencies will only read and bill for county-approved, individual water meters.  They do not read submeters and will not bill tenants directly based on that usage.  Rather, the property owner still receives a master water bill, but then recovers the costs by billing tenants directly based on the submeter readings.  Most often, a third party company is employed to carry out these functions.  Most landlords do not want to be in the water business, and would prefer to stay out of the process completely.  However, because the capacity charges for individual water meters ranges in the tens of thousands of dollars per meter, it is unrealistic to install individual water meters for every unit of a building.  Submeters are, for now, the best option available, though the City Council recommended that a review of the city’s meter capacity charges be forwarded to the Natural Resources and Culture Committee.

 

How to comply

All multi-unit properties with three or more residential units currently billing tenants for submeters will need to modify their process to comply with that spelled out in the city’s ordinance by June 1, 2010.  Also, the law will apply to any new construction that does not receive a building permit prior to that date (unfortunately, having discretionary approval prior to that date is not sufficient).

 

The SDCAA is currently developing resources of how to comply with new law for property owners, which will also include information for owners of existing submetered properties about how to modify their billing practices.  These materials will be made available to SDCAA members toward the end of April.  To find out more, please visit www.sdcaa.com or call the SDCAA Public Affairs Department at (858) 751-2214.

 

IREM® Looks Back on 2009 Legislative Victories * * * * * * * * * * (Chicago, Jan. 6, 2010) – The Institute of Real Estate Management (IREM®), strongly committed to legislative advocacy, claimed significant legislative victories in 2009 of benefit to its members, other commercial real estate professionals and allied interest groups.  Among the most notable of these victories, some achieved in collaboration with the National Association Of Realtors® (NAR), are these: Extension and Expansion of TALF – In August 2009, it was announced that the Troubled Asset-backed securities Loan Facility (TALF) program would be extended into 2010 and that it would be expanded to cover commercial mortgage-backed securities (CMBS).  In November, the first new CMBS in 18 months was sold under the TALF program and more loans are in the pipeline. The above actions align with the legislative statement of policy related to the Economic Stimulus Package and the Treasury’s Financial Stability Plan developed by IREM in January 2009. Briefly, the policy calls for Congress and the federal government to make money available for small business loans, short-term loans for capital improvements, and refinancing for mortgages.  It also encourages Congress and the federal government to (1) stabilize and provide liquidity to commercial real estate credit markets – including mortgage-backed securities; (2) maintain or enhance federal tax policies that strengthen the commercial real estate market; and (3) stimulate and support the commercial real estate industry through investment. Permanent Prohibition of Banks in Real Estate – On March 11, 2009, President Obama signed into law the FY2009 Omnibus Appropriations Act that permanently prohibits banks from entering the real estate brokerage and management businesses. IREM had worked to convince Congress that the proposed rule published in January 2001 was inconsistent with banking law, bad for consumers, and bad for banking. House-Passed Energy Bill – This bill originally called for the following provisions which IREM opposed: (1) energy audits of all properties, (2) energy labels for all buildings, and (3) disclosure of all findings at sale or lease of the property. The final version of the House-passed bill, H.R. 2454, does NOT have an audit requirement, and only requires energy labels for new construction. Tenant Protections When Renting Foreclosed Property – A bill known as the Helping Families Save Their Home Act of 2009 ((H.R. 1106 or S. 896), which became law on May 20, 2009, included provisions to protect tenants from eviction as a consequence of a foreclosure affecting the property they have rented.  These provisions align with a statement of policy developed by IREM the prior March -- which it promoted heavily to Congress -- supporting requirements that banks and lending institutions be required to notify tenants of a pending foreclosure on the property in which they reside.  More specifically, the policy expresses support for tenants whose rents are paid and current and are in compliance with all other requirements of their lease.  Most importantly, it calls for tenants to be able remain in the property through the end of their lease – assuming the subsequent owner does NOT intend to use the property as a principal residence. ABOUT THE INSTITUTE OF REAL ESTATE MANAGEMENT The Institute of Real Estate Management (IREM®) has been the source for education, resources, information, and membership for real estate management professionals for more than 75 years. An affiliate of the National Association of Realtors®, IREM is the only professional real estate management association serving both the multi-family and commercial real estate sectors. With 80 U.S. chapters, 12 international chapters, and several other partnerships around the globe, IREM is an international organization that also serves as an advocate on issues affecting the real estate management industry. Membership includes more than 18,000 individual members and 515 corporate members. IREM promotes ethical real estate management practices through its credentialed membership programs, including the Certified Property Manager (CPM) designation, the Accredited Residential Manager (ARM) certification, the Accredited Commercial Manager (ACOM) certification, and the Accredited Management Organization (AMO) accreditation. These esteemed credentials certify competence and professionalism for those engaged in real estate management. In addition, IREM offers Associate, Student, and Academic memberships. Collectively, IREM CPM Members in the United States manage over $1.5 trillion in real estate assets, including 8.4 million residential units and 8.4 billion net square feet of commercial space. An additional 977,400 residential units are managed by IREM ARM Members. IREM Members are employed by some of the most prestigious real estate firms in the world and nearly 70% hold upper-level management positions. Due to their professionalism and vast experience, property owners and investors worldwide continually seek out the management services of IREM Members. To learn more about the Institute of Real Estate Management and its chapter network, call (800) 837-0706, Ext. 4650 (outside the U.S. call (312) 329-6000) or visit www.irem.org.

 

       2009 Legislative Committee Year End Review:

At the beginning of each year, the legislative committee for the San Diego chapter of IREM partners up with local chapters of BOMA and SDCAA to monitor and advocate for protective legislation benefiting our industry.  This year, our committee monitored 77 bills regulating energy rates, land use, common interest development, residential tenancies, employment discrimination, hiring requirements and property taxation.  Most bills negatively impacting our industry and monitored by our committee either failed or were vetoed by the governor.  Bills such as AB 473 Solid Waste for Multifamily Dwelling and AB 793 Employment Discrimination were vetoed by the governor on 10/11/09.   Although the legislative session concluded leaving our industry relatively unscathed, special sessions addressing bills directly impacting our industry remain open. 

 

In October the San Diego Chapter of IREM hosted a legislative update luncheon with Rex Hime, a legislative advocate for IREM, BOMA, ICSC and NAIOP, to review the 20MsoNormalTimes New Romanp class=font color=09 legislative session and highlight current legislative topics impacting our industry.  Some of the topics addressed included split roll taxation and an overview of how property tax would change under new legislation, ADA reform and measures taken for businesses to reduce potential lawsuits by obtaining an ADA certification for their place of business, green building codes and how Title 24 is positively impacting our environment, and the Tax Commission and IREM’s involvement to advocate against split roll taxation.

 

We are looking forward to the new election year approaching.  We encourage everyone to monitor legislation impacting our industry and participate in Call-to-Actions you may receive from IREM.  If you would like more information regarding the background and progress of specific bills, visit http:www.senate.ca.gov.  If you are interested in learning more about current and upcoming legislation being monitored by the San Diego chapter of IREM please contact our Legislative Committee chair Jeff Hickox, CPM® at jhickox@irvinecompany.com.

 

 

LEGISLATIVE NEWS APRIL 2009

 

The California legislature may have difficulty coming up with a budget, but there is no shortage of new laws that they want to enact.  For the current legislative session, there are in excess of 2,500 bills that our state legislators are hard at work on. 

 

Your IREM San Diego Chapter 18, along with the other California IREM chapters, supports and is a member of the California Business Properties Association (CBPA).  CBPA reviews all of the proposed bills and identifies those that may have an impact, either negatively or positively, on California business properties.  Of the current 2,500 bills, CBPA has identified in excess of 500 that may impact commercial property. 

 

On Wednesday, April 8th, representatives from several major real estate professional organizations, including IREM, ICSC, NAIOP, BOMA California, RILA and several industry-leading companies met in Century City for a day long discussion to analyze and debate the current crop of legislative bills and set positions for our industry.  In all, positions were taken on more than 188 bills.

 

Since the CBPA membership represents a fairly broad range of interests, some bills have an impact on one area of the real estate industry, but are not really of concern to others.  For example, bills that effect developers and builders are often not directly related to property management.  With this in mind, the IREM San Diego Legislative Committee divides the bills vetted by DBPA, among the committee members according to their individual areas of expertise and interest, and the bills are then read and reviewed for their potential impact on the property management field.  The Legislative Committee will then take a position as to whether we should 1) support, 2) oppose, 3) monitor or 4) disregard the bill as unrelated to our industry.  These recommendations are then passed on to CBPA and, additionally, each committee member will continue to track their assigned bills as they make their way through the legislative process.

 

During this time, CBPA will be working to try and "fix" or kill bad bills and also encourage passage of positive bills, and will ultimately work to get the Governor to veto bills when needed.

 

A short list of examples of bills that we will be opposing include:

 

            AB 231 (Huffman,D) establishes a schedule of fees to be paid by the sources of greenhouse emissions – provides a way to get into pocket through AB32.

            AB 283 (Chesbro, D) requires a life cycle analysis of all your waste products.

            AB 891 (Berryhill, R) Real Property Gang Abatement establishes a cause of action against the owner of property used by a criminal street gang as a congregation point. Authorizes fines and seizure and forfeiture of property.

            AB 1299 (Coto, D) State Taxes: Vote requirement. This bill seeks to establish "split roll" property taxes, whereby commercial property would no longer be protected by Prop 13 and would be reassessed every year.

            AB 1373 (Skinner, D) Global warming Potential Refrigerant. This is an anti HVAC bill.

            SB 104 (Oropeza, D) Amends the Global Warming Solutions Act of 2006 to add virtually every other gas that you can imagine. CBPA considers this the worst bill of all time.

 

There are also several "parking" bills currently in the legislature that could have a very real impact on property management:

 

            AB519 (Duvall) towing bill of rights

            AB1155 (Strickland) private parking facilities

            AB1186 (Blumenfield) non-residential parking

            AB518 (Lowenthal) parking fees

 

On the surface, many bills may seem relatively benign and certainly boring, but can have a devastating impact on private property in California.

 

If you have any interest or concerns about any specific bills, please contact your IREM Legislative Committee with your input, or you may consider joining the Committee and help work to protect and strengthen the commercial real estate industry.

 

Washington, DC Capitol Hill Visits – Wednesday, April 22nd

 

Your IREM San Diego Chapter 18 will be joining IREM chapters from across the country, as well as CCIM Institute, to meet with all of our congressional representatives and senators in Washington, DC to bring to their attention our position on several issues of concern to the commercial real estate industry.  This year we will be focusing on the following issues:

 

1)         Commercial Mortgage Market Liquidity

 

            IREM and CCIM Institute will urge Congress and the federal government to provide favorable relief to the commercial real estate industry.  We will be recommending the following three provisions be addressed in future legislation:

 

            a)         Availability of small business loans

 

            b)         Short-term loans for capital improvements

 

            c)         Refinancing for mortgages

 

2)         Energy Efficient Buildings

 

            IREM and CCIM Institute strongly support energy tax credits and voluntary programs like Energy Star or LEED.  IREM and CCIM Institute will urge our representatives in Congress to focus on voluntary standards for new construction and existing properties through positive incentives, not through punitive measures.

 

 

 

3)         Taxes – Carried Interest

 

            IREM and CCIM Institute will be urging Congress to oppose any proposal that would eliminate capital gains treatment for any carried interest of a real estate partnership.  Making changes would hinder the flow of capital into real estate markets and delay the recovery of our economy.

 

The Capitol Hill Visit Day is a very exciting and fulfilling experience.  You may not be aware of this excellent opportunity, but as a member of IREM, you are welcome to participate.  It may be too late to get in on this year's trip, but not too early to start thinking of joining us next year.  We would love to have you!

 

 

 

LEGISLATIVE NEWS   2008 – Will AB 32 change the way you live and do business in California?  By:  Doreen A. Reagle, CPM®, CCIM   On September 27, 2006 Governor Schwarzenegger signed AB 32.  This was hailed as a landmark bill that established a “first-in-the-world comprehensive program of regulatory and market mechanisms to achieve real, quantifiable, cost-effective reductions of greenhouse gases.”   Specifically, AB 32, the California Global Warming Solutions Act of 2006, requires California Air Resources Board (“CARB”) to: ·         Establish a statewide greenhouse gas emissions cap for 2020, based on 1990 emissions by January 1, 2008. ·         Adopt mandatory reporting rules for significant sources of greenhouse gases by January 1, 2009. ·         Adopt a plan by January 1, 2font color=/pmargin: 0in 0in 0pt;span style=/font namespaceuri=009 indicating how emission reductions will be achieved from significant greenhouse gas sources via regulations, market mechanisms and other actions. ·         Adopt regulations by January 1, 2011 to achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas, including provisions for using both market mechanisms and alternative compliance mechanisms.  ·         Convene an Environmental Justice Advisory Committee and an Economic and Technology Advancement Advisory Committee to advise CARB. ·         Ensure public notice and opportunity for comment for all CARB actions.  ·         Prior to imposing any mandates or authorizing market mechanisms, CARB must evaluate several factors, including but not limited to impacts on California's economy, the environment and public health; equity between regulated entities; electricity reliability, conformance with other environmental laws and ensure that the rules do not disproportionately impact low-income communities. An update:  The California Air Resources Board (CARB) adopted the AB 32 Scoping Plan this month.  Developing workable and effective CEQA thresholds will be one of the critical steps in working to implement California’s greenhouse gas reduction goals.  Key elements of California’s recommendations for reducing its greenhouse gas emissions to 1990 levels by 2020 include: Expanding and strengthening existing energy efficiency programs as well as building and appliance standards; Achieving a statewide renewables energy mix of 33 percent; Developing a California cap-and-trade program that links with other Western Climate Initiative partner programs to create a regional market system; Establishing targets for transportation-related greenhouse gas emissions for regions throughout California, and pursuing policies and incentives to achieve those targets; Adopting and implementing measures pursuant to existing State laws and policies, including California’s clean car standards, goods movement measures, and the Low Carbon Fuel Standard; and, Creating targeted fees, including a public goods charge on water use, fees on high global warming potential gases, and a fee to fund the administrative costs of the State’s long-term commitment to AB 32implementation.   To read the Draft Scoping Plan, go to: http://www.arb.ca.gov/cc/scopingplan/document/psp.pdf. The independent California Legislative Analyst's Office (LAO) reported on the draft-scoping plan of the California Air Resources Board for implementation of the Global Warming Solutions Act of 2006 (better known as AB 32).  Their conclusion was “In summary, we think that it will be important for the Legislature to exercise oversight as ARB continues to develop the scoping plan’s measures up to and through regulatory development. This will be necessary to ensure that AB 32 is implemented cost effectively and efficiently and that the weaknesses in the economic analysis that we have identified are addressed.”  The LAO's conclusions support the many issues and concerns raised by California Business Properties Association and California Building Industry Association and many other business and taxpayer groups. You can read the full report by visiting:  www.lao.ca.gov/2008/rsrc/ab32/AB32.   Please become informed about AB 32 and the positive and negative effects on development, existing buildings, and conducting business in California.    If you are interested in discussing pending legislation over lunch or would like more information about the Legislative/HUD Committee, please email Jeff Hickox, CPM (jhickox@irvinecompany.com) Chair of the San Diego Chapter 18 Legislative/HUD Committee.

2007 – Summary of Legislative Action 

By:  Doreen A. Reagle, CPM®, CCIM

 

In 2007, the California State Legislature introduced 2,760 separate pieces of legislation!  More than 500 bills were identified that could potentially impact the commercial, industrial and retail real estate industry.  Below is a brief summary of the highest priority bills.

 

Bills signed by the Governor and supported by the real estate industry:

 

AB 542 gives the commercial real estate industry an appointment to the State Historical Building Safety Advisory Board.  This bill adds a voice from BOMA California to this board.  The board advises the State Architect on regulatory issues related to historical buildings.  Prior to this bill, there was no appointee from the private arena.

 

AB 1042 authorizes the clerk of a county board of equalization to accept electronically filed applications for a changed assessment containing an authenticated electronic signature. 

 

SB 223 prohibits a licensed appraiser from engaging in any appraisal activity in connection with the purchase, sale, transfer, financing, or development of real property if his/her compensation is dependent on, or affected by, the value conclusion generated by the appraisal.

 

Bills opposed by the real estate industry through our lobbying group, California Business Properties Association (“CBPA”) and vetoed by the Governor:

 

AB 8 would have created the Cooperative Health Insurance Purchasing Program as a statewide purchasing pool for health care coverage by employers.  Would have required employers to make health care expenditures equivalent to, at a minimum, 7.5% of the employer’s total social security wages or to elect to pay an employer fee of that equivalent amount.

 

AB 35  was proposed to be  a LEED mandate for State Buildings.  This bill would have required a state agency that commences construction of a state building, or renovation of a state building, to design, construct and operate the building to meet US Green Building Council’s Leadership in Energy and Environmental Design (“LEED”) for a gold rating.

 

AB 888 was  a LEED mandate that would have impacted commercial buildings.  This bill mandated that commercial buildings over 50,000 SF be built to LEED “gold” standards.  The bill tried to shift the development of “green building” standards for residential, commercial and government buildings from the Building Standards Commission (which considers cost impacts in its development standards) to other state entities (which do not consider cost impact or have the experience to develop building standards).

 

Many bills were made more palatable to the real estate industry by being amended in a way that either removed or changed opposed language.  The following were signed into law after amendment:

 

AB 715 requires all water closets and urinals sold or installed after XXX date? shall use no more than a specified amount of water per flush.  Requires all water closets and urinals, other than “blow-out” urinals, sold or installed be high efficiency. Requires a nonwater-supplied urinal approved for installation or sold to meet requirements and building standards.

 

AB 1103 requires electric and gas utilities to maintain records on the energy consumption data of all nonresidential buildings to which they provide service, in a specified format, for a specified period. Requires the nonresidential building owner or operator to disclose Energy Star Portfolio Manager benchmarking data and ratings for a specified period, to a prospective buyer, lessee for the entire building or lender that would finance the entire building..

 

If you are interested in learning the status, history and reading the full text of current California bills, visit www.leginfo.ca.gov by accessing “bill information” for the current session.  If you are interested in discussing pending legislation over lunch or would like more information about the Legislative/HUD Committee, please email Jeff Hickox, CPM (jhickox@sbcglobal.net) Chair of the San Diego Chapter 18 Legislative/HUD Committee.