March 26, 2010

SPRING BREAK!

The State Legislature takes the next week off from toiling under the Gilded Dome to rest and relax prior to the first major policy deadline of 2010. In April all bills will get a hearing, making it one of the busiest times of the year. We are currently following 450 measures that will have some impact on your business. We hope that list will be winnowed down a bit come May.

BOMA CALIFORNIA BOARD MEETS TODAY

The BOMA California Board of Directors meets today for a quarterly meeting. The board will review all legislation, regulatory issues, and take final positions on June 2010 Ballot Measures.

This meeting will finalize the direction for policy staff in Sacramento for the remainder of the legislative session. Despite the dire budget situation, legislators have continued to introduce measures impacting almost all areas of the economy, many of which could have a major impact on the commercial real estate industry. BOMA representatives have identified measures on property taxes, energy efficiency of new and existing buildings, solar and photovoltaic policy, 1031 Exchanges, and a whole host of employer issues.

BOMA California is a federation of all eight metropolitan BOMA local associations and serves as the collective membership through its mission of “preserving and promoting the interest of California commercial real estate professionals through legislative and regulatory advocacy.”

BOMA California is headquartered in Sacramento and has a full time presence at the Capitol and regulatory agencies. Each local association nominates up to five of its members to represent that association on the BOMA California Board of Directors. Therefore, every BOMA member in California has a voice in the setting of policies of BOMA California vis-à-vis their local association representation on the state association's governing board.

CREJ LOOKS AT LEGISLATION TARGETING REAL ESTATE

In a wide ranging, comprehensive article, the California Real Estate Journal, assesses the current legislative climate for commercial real estate. Your Sacramento representatives provide insight, and help answer the question of whether or not our industry is being singled-out and/or targeted by policymakers. Commercial real estate is subject to some targeted measures such as split roll property tax, elimination of 1031-Echanges, and energy and environmental measures, but the unfortunate answer is that ALL businesses in California are seen as a potential source of revenue to facilitate spending in Sacramento. Click here to read the article.

OUT-OF-STATE PROPERTY OWNERS TAX BEING ENFORCED

If you manage property on behalf of out of state property owners, the California Franchise Tax Board (FTB) wants to make you aware that unless certain exceptions apply, you are withholding and sending to the FTB seven percent of all payments that exceed $1,500 in a calendar year. (California Revenue and Taxation Code Section 18662). Although this requirement has been on the books for many years, the FTB has recently announced it will begin tighter enforcement.

Although you are highly encouraged to consult your accountant, here is some information from the FTB on Withholding and California Source Income. And here is a story from the San Diego U-T on this issue.

UPDATED AB 32 ECONOMIC ANALYSIS

The California Air Resources Board (CARB) has released and updated economic analysis of California’s Climate Change mandate, AB 32 “Global Warming Solutions Act.” The original economic analysis released last year was met with widespread skepticism from the business community for what many thought was a rosy-scenario, and some thought was flat-out cheerleading.

The new analysis may continue on that same trend, judging by the headline in ARB’s press release: “AB 32 Will Lead To Job Growth, Energy Savings, and Rises In Personal Income.” Click here to read the release.

The business community was quick to respond to the report, through the coalition group AB 32 Implementation Group. “We view that conclusion very skeptically given the fact CARB’s own economic advisers have found that AB 32 would increase the cost of electricity, natural gas and gasoline and could impose a cap-and-trade tax of billions of dollars. The agency appears to be out of step with more mainstream economic impact studies on climate change regulations including those from the UC Berkeley Center for Labor Research and Education which stated that AB 32 would put 3 million blue-collar jobs at risk.” Click here to read the full AB 32 IG Release.

And for another great editorial from the San Diego Union-Tribune, click here to read the editorial entitled,"Finally, common sense / Governor: AB 32 must mesh with rest of nation on climate change."

BILL TO DIVERSIFY ELECTRICITY SOURCES

The Governor has signed a bill to help the state diversify its sources for generating electricity. SBX8 34 (Padilla; D - Los Angeles) expedites permitting of environmentally sound solar thermal and photovoltaic power plants, enabling them to qualify for grants under the American Recovery and Reinvestment Act of 2009 (ARRA). SBX8 34 will help ensure that 11 solar thermal and 4 photovoltaic power plants currently under review with the California Energy Commission remain eligible for the 30 percent project cost grants under the ARRA funds. We support this policy and applaud Senator Padilla and the Governor for working to provide more options for affordable clean energy.

ENERGY DEREGULATION BRIEFING IN SAN FRANCISCO

A special briefing entitled “How Electricity Deregulation could Impact Property Operations & Profitability,” is being offered by BOMA San Francisco. The meeting is open to all BOMA members and will be held in San Francisco on Thursday, April 1, 2010.

This free of charge, lunchtime briefing will educate industry members about the legislative and rule making activity by the State of California that will re-open electricity markets to Direct Access. Presenters will illustrate the value proposition of the Direct Access market to property owners/managers and highlight how selecting the right provider can save money.

Lunch will be provided. An online reservation is required to secure your seat.

WORKWEEK REFORM CONSIDERED

In coalition with the California Chamber of Commerce (CalChamber), we are working to promote the adoption of a simplified process for establishing flexible work schedules such as 4/10s and 9/80s. SB 1335 (Cox and Dutton) provides a process whereby the employee can simply request in writing and the employer may mutually agree to flexible schedules. Currently, the only method for employers to grant employees 9 or 10-hour workdays at straight time is a rigid, complex, and bureaucratic process. Any deviation can void the election and give rise to costly lawsuits. Click here to send a letter to your local legislator.

CALIFORNIA COMMERCIAL REAL ESTATE SUMMIT 2010 – MARK YOUR CALENDAR NOW

The California Commercial Real Estate Summit (CCRES) will be held in Sacramento on June 22 & 23, 2010. This event is the one time of year that industry leaders converge on California's Capitol to discuss with policymakers issues impacting commercial real estate. The summit will give you an opportunity to meet industry leaders from across the nation, high-level staff from Governor Schwarzenegger's Administration, and California State Legislators.

For hotel accommodations, please contact the Hyatt Regency directly, 1-800-233-1234, and ask for the "CBPA" block of rooms. Deadline for Room Reservations is June 1, 2010.

The Commercial Real Estate Summit is organized by California Business Properties Association (CBPA), which is the recognized voice of all aspects of the commercial retail industrial real estate industry in California and is the designated legislative advocate for: International Council of Shopping Centers (ICSC), NAIOP of California, the Commercial Real Estate Development Association (NAIOP of California), Building Owners and Managers Association of California (BOMA California), Retail Industry Leaders Association (RILA), Institute of Real Estate Management (IREM), California Downtown Association (CDA), Commercial Real Estate Women (CREW), the Association of Commercial Real Estate – Southern California (ACRE) and the Certified Commercial Investment Members Institute (CCIM).

18-MONTH BUILDING CODE BILL MOVES FORWARD

AB 1693 (Ma; D – San Francisco), which we strongly support, will proposes to reduce the state’s administrative costs of adopting building codes and raise compliance levels by increasing the amount of time available for education and training of new building standards prior to those standards taking effect. The bill unanimously passed its first policy committee and moves on to fiscal committee. We are following this measure closely and will keep you informed.

ENERGY STAR BENCHMARK REGULATIONS – INPUT PLEASE

Regulations for California’s historic building benchmarking law are in the final process of being prepared by Energy Commission staff for the formal adoption process. We are seeking input from building owners, property managers, and other real estate professionals to make sure the implementation of this historic law is a success. Click here to read the draft regulations. Please send feedback, suggestions, and questions, to Matthew Hargrove.

AB 1103 was originally passed in 2007 and requires non-residential building owners to disclose their Energy Star rating to a buyer, lessee, or lender. This regulation was scheduled to take effect on January 1, 2010; however, due to legal concerns regarding disclosing utility data, and how to deal with certain building types (such as, triple net lease situations), the measure has been delayed to allow the Energy Commission and its Benchmark Workgroup to write implementation regulations. We serve on the workgroup that is helping regulators craft policy, and expect final adoption sometime in Summer 2010, taking effect for buildings larger than 50,000 s.f. no earlier than January 1, 2011.

ZERO ENERGY PATHWAY WORKSHOP

For those of you that have an interest in regulations to mandate the concept known as “Zero Net Energy” for buildings, the CA Public Utilities Commission will hold a workshop at their San Francisco offices on April 7. A webinar/conference line will also be provided with the agenda at a later date.