BOMA California Board of Directors:

The BOMA California Executive Committee meets via telephone every two weeks. As a group we represent each local association providing direction to BOMA California Administration staff in Sacramento, taking care of day-to-day decisions that need Board attention, and discussing strategic issues important to the organization and to commercial real estate. Our call yesterday evidenced the significant, beneficial impact BOMA California is having on the commercial real estate industry. Yesterday's call was so productive, positive, and interesting, that I have summarized the highlights for your review:

Leadership Council:
First of all, I am happy to report that we are well into the planning and execution of the long talked about Leadership Council project. Earlier in the year we set a goal to have two lunches — one in Southern California and one in Northern. Both lunches are set and materials are being produced. As you may recall, the Leadership Council is meant as way to get industry executives at the highest levels involved with BOMA California. 

Our first Leadership Council lunch is scheduled for October 11 th hosted by BOMA Greater Los Angeles. BAE Martha Cox-Nitikman reported today that she already was halfway to her goal of twenty attendees. Board Member Desiree Lavin Glover noted that she had an executive at her company that was interested in attending the Los Angeles luncheon, which was welcomed by GLA. We also heard a report that the luncheon scheduled on November 15 th hosted by BOMA San Francisco is moving along. That event will be attended by BOMA International President Brenna Walraven and will include a discussion of national energy issues. 

Energy Committee:
We moved into a discussion of California energy issues and heard a report from BOMA California Energy Committee Chair Ken Cleaveland and Energy Consultant Bill Roberts.  After many months of fighting in the trenches on the General Rate Case, BOMA California secured a huge victory for commercial real estate in PG&E's service territory by negotiating a at least a 10% rate reduction, and winning support for allowing building owners the ability to submeter tenant's electrical usage.  Ken Cleaveland summed the issue up well earlier in the day when he wrote:

"The recently approved submetering agreement with PG&E is extremely important to all the BOMA members, not just in California, but nationwide. This ruling finally recognizes the part that tenants can play in reducing overall energy consumption, and will allow owners to directly engage their tenants in both understanding and reducing their in-space energy usage. Our industry's efforts to become more energy efficient were given a tremendous boost when the California Public Utilities Commission decided on September 6th to allow building owners to begin submetering tenants, and billing those tenants directly for their actual electrical consumption."

Although we are pleased about this success, the fight is not over — BOMA California must remain at the table to work on other energy issues that are important to the commercial real estate industry including expanding submetering to all areas of California, fighting for rate parity and direct access, and resisting critical peak pricing and mandatory demand response schemes. The discussion now moves to Southern California to the SDG&E service territory. Bill Roberts reported that we are off to a rocky start in these negotiations as SDG&E is doing everything it can to force a critical peak pricing structure into the deal — however, I am confident that Ken, Bill, the Energy Committee, and members of the San Diego ad hoc SDG&E GRC Committee (Ken, Bill, Cybele Thompson, Mary Youngman, and Craig Benedetto) will find a way to negotiate another good deal on our behalf.

Legislative Update:    
Rex Hime led the group in a discussion about the recently ended legislative session. In the last two weeks, he and Matthew Hargrove followed several hundred bills as they went through the final throes of the legislative process. BOMA California saw some direct success this year — two bills we sponsored were signed into law. We were also able to kill many bad bills and negotiate amendments to fix a bunch of others. In one example, AB 1103, a technical error was caught in a late-session amendment that would have given every tenant in every building the mandated right to demand your building's Energy Star Portfolio rating and forced you to provide the information to every tenant anytime you did a major financial transaction on the building. Although this was not the author's intent, they meant the bill to only apply to entities that are leasing an entire building, she initially refused to amend the bill. Our team in Sacramento went to work and ultimately was able to fix the bill at the last minute before it was sent to the Governor. These are the types of everyday actions that we as Board members don't always hear about. To Rex and Matthew, this is just part of doing their job — however, it is exactly why BOMA California needs people to pay attention to issues in Sacramento. A small error like that in statute, could have large implications to someone that has a couple hundred tenants. 

Rex also explained the recent activity of the Governor and Legislature concerning the Special Sessions that have been called — one on "water" and one on "health care."  I sometimes tend to think of health care as one of the "big issues" that I know impacts me, but seems kind of distant. However, as we discussed the back and forth between the Governor and the Legislature it become clear the implications of the plans that are being talked about. A 7% employer tax, such as is being proposed by the Legislative Democrats would have a huge impact to the bottom line of my company. What's more, it could have a huge impact to my real estate portfolio in California — as companies find it too expensive to operate in California and move to other states, I am going to have a lot of vacant floors.

On water, we discussed the dynamics of how a failing levee in the Central Valley would impact businesses in Southern California by stopping the flow of water. Rex quoted a statistic that a major levee failure could take seven months to a year to fix. If several in the system go down you have the spigot spinning shut on the LA Basin. On top of that we discussed the politics of how the threat of flooding is being used against local governments in Northern California by environmentalists to stop growth in certain cities.  Several bills that have been sent to the Governor are tools to further restrict  development by forcing liability onto local governments, restricting development in certain areas, and forcing businesses to buy mandatory flood insurance. Rex is part of the leadership team representing business and working with the Governor's staff — and sometimes directly with the Governor — to strategize about how to solve some of these issues. He was also recently named to the advisory committee that is writing the State Water Plan.

2008 Calendar: The committee then began to finalize the 2008 calendar. Although the Board approved a "framework" calendar at its June meeting, there are several "TBD"'s on the calendar that must be determined.  We agreed to have our March/April meeting in San Francisco and Margo Crosman and Unico Properties has again volunteered to host the meeting, this time at the Embarcadero Center.  We also agreed to have our 20th Anniversary Event next October in Los Angeles, to maximize the number of people that might attend.

Codes Committee:
We then had a brief discussion about the new Codes Consultants as Tom Grochow had recently expressed concern about communication, or lack thereof, from the consultants. At this point Tom was not on the call, but Matthew acknowledged that there had been a slow start with the new codes team, but that issue was being addressed. He reported that after a lengthy discussion with Codes Chair Trish Secor he worked with the codes consultants to "beef up" their written monthly report to include more detail and specifics. We discussed the fact that we need to grow a robust codes committee to support Trish and the consultants and to provide an interface between the industry and our representatives at regulatory and policy meetings, to provide direction and prioritization, and to be a sounding-board as issues arise. The Energy Committee was held up as a good example of how this might be accomplished. 

November Board Meeting Planning:    
Finally we ended the call by running through all of the things that the Board will need to accomplish at its November meeting and what it will take to make sure we are prepared.  Items include: Make appointment to the State Historical Safety Advisory Board; 2007 legislative re-cap and discuss 2008 legislative package; approve 2008 Board of Directors; approve 2008 budget; energy/codes/marketing committee updates. This will be a jammed packed meeting!

As you can see, this was a substantive discussion and I hope you found this brief narrative interesting. Please feel free to let me know if you have any questions, comments, or need more context/information on any issues that BOMA California is tackling. I feel a sense of pride and accomplishment that BOMA California is making a a positive impact and advancing issues important to commercial real estate — and I sense the same in my colleagues on the Executive Committee and the Board at large. I extend my sincere thanks to all those involved to achieve these great results! 

Rob Cord

President, BOMA California
Senior Managing Director
Kennedy Wilson
916-847-6500