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  • Archive for April 18th, 2016

    Apr 18


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    Right now is the busiest time of the year if you follow legislation in Sacramento.  Racing to beat the First House Policy Deadline next Friday, every one of the over 2,500 bills introduced in the Legislature must be heard by that time to remain “alive.”  This means hundreds of bills a day are being analyzed and heard and voted on.

    We want to thank all of our association’s legislative volunteers who have helped us analyze, prioritize, take positions, and work all of these issues impacting our industry!  Below are just a few highlights of some of the bills that are making headline, but just know, we are tracking well over 300 measures right now!

    Apr 18


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    Our industry opposed AB 2538 (Nazarian; D-Sherman Oaks) a bill which seeks to ban a commonly used business-to-business contractual agreement in leasing of commercial space.  This particular bill is focused on retail property spaces but would open the door for going after all types of lease agreements.

    This issue has such an impact on the retail industry that ICSC Vice President Herb Tyson flew out from Washington D.C. for a day of intense meetings to provide first hand accounting of how these lease provisions work.  In addition to ICSC, RILA, the California Retailers, CalChamber, NFIB (and many others, including individual retailers/tenants), have stepped up to oppose this measure as it would create a fundamental shift in the landlord-tenant relationship.

    Called “radius restrictions,” these agreements benefit both the tenant and property owner by assuring that a local area doesn’t get saturated with stores — in exchange the retailer will see lower rent or a percentage rent deal and/or some other agreed upon benefit.

    Additionally, these type of agreements can be used to help local government partners that have worked to see a project come to fruition (through infrastructure, financial incentives, etc.) are able to make sure investment benefits are maximized by working with a retail center that is able to attract – and hold onto – good tenants that bring in customers. It also serves to lessen the potential for “poaching” by nearby entities chasing tax revenue.  Lease radius restrictions can be an important tool for both parties, by ensuring projects are not undercut by another offer down the road (literally).

    The notion of percentage rent and radius clauses is foundational to the retail properties industry. To get rid of it would lessen opportunities for start-ups, expanding merchants, and their local government partners, and inviting the state to start mucking around in contractual agreements of this type is agreed by all, to not be a good idea.

    The bill will be heard on Tuesday in the Assembly Judiciary Committee.

    Apr 18


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    Every commercial lease in the state includes some type of waiver for certain State laws.  A bill that is making its way through the legislature, AB 2667 (Thurmond; D-Richmond) would impact that common practice and a lot more.  Specifically, our industry – along with a huge coalition of like-minded business groups — is opposing the bill because it discriminates against arbitration agreements that waive a right to pursue Civil Rights violations made as a condition of entering into a contract for goods or services and interferes with the fundamental attributes of arbitration, which is likely preempted by the Federal Arbitration Act (FAA). We think AB 2667 will lead to confusion, uncertainty and costly litigation for such contracts. The bill is awaiting hearing in the Assembly Judiciary Committee.

    Apr 18


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    SB 1173 (Hertzberg; D-Los Angeles) is a bill that has many good provisions, including cleaning up some statutory language dealing with the building code that we hope will move forward this year.  We support the bill, but had some of you had concerns with provisions of the bill dealing with trying to figure out how to more quickly replace 1.6 gallon toilets purchased in the 2000’s with the much more efficient 1.28 gallon toilets.  This provision is seen as a tool to help the State continue its drive for water conservation.  There are some practical issues related to the building code that need further thought.  Additionally, we would like to see an incentive-based approach and finding funding for that and/or a process to get that to happen at the local level has been another practical challenge.  We are committed to working with the author and sponsors of the bill and will keep you posted.

    Apr 18


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    We are supporting SB 1414 (Wolk; D-Davis) which requires the California Energy Commission to develop a system to track central heating and air conditioning equipment sales and installations in the state in order to verify compliance with permitting, inspection, and equipment testing requirements.

    As required by previous legislation, AB 758 (Skinner), the California Energy Commission has been pursuing increased levels of energy efficiency in California’s existing residential and commercial building stock.  Part of that effort has focused on the level of compliance, or lack thereof, with the CEC’s minimum energy efficiency standards when an old air conditioning system is replaced in existing residential or commercial buildings.  For example, the CEC requires the HVAC duct system to be checked for leaks prior to installing a new air conditioning system to the older duct system. If the measured leakage rate exceeds the state mandated maximum, the duct system must be repaired.

    During the CEC’s investigation into field compliance, it was reported that only 480 air-conditioning systems had received permits from the local building department out of some 10,000 units sold in the greater Los Angeles basin.  This means that roughly 95% of the air-conditioning systems installed during this time period in LA was done so without the proper permitting.  As such, it is safe to say compliance with the CEC’s minimum energy efficiency standards in these “underground” systems would be in serious question.

    SB 1414 would attempt to address this serious issue by having the CEC establish a tracking system for heating and air conditioning systems from point of purchase to installation.  This action will help our industry continue to reduce greenhouse gases and continue to be world leaders in energy efficiency.

    Apr 18


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    We oppose SB 1387 (de Leon; D-Los Angeles) because the bill would substantially and adversely modify the use of market-based incentive programs and would add state-level appointed positions to the South Coast Air Quality Management District Board (SCAQMD) effectively shifting local control over critical regional air quality planning to state lawmakers in Sacramento.

    This bill was introduced in reaction to a recent personnel decision the board has made.

    California has led the nation in employing state-of-the-art market-based incentive programs, which have succeeded in reducing emissions from hundreds of covered facilities dramatically and reliably for two decades.  SCAQMD and the ARB succeeded in obtaining US EPA approval of the SCAQMD RECLAIM program as part of the California State Implementation Plan under the Clean Air Act.  As amended, SB 1387 would now limit the use of market-based incentive programs like SCAQMD’s RECLAIM to cost-effectively achieve emission reduction in Southern California.

    Additionally, the bill seeks to change the SCAQMD Governing Board which currently consists of 13 members: 10 representing cities and counties in the south coast region and 3 appointed by state officials (Governor, Senate Rules and Assembly Speaker).  This bill would double the number of state appointments from 3 to 6.  By that step alone, SB 1387 would heavily weight the SCAQMD Governing Board with state appointees and dilute local control by those responsible to the communities they were elected to represent.

    We think these are overcorrections that should not be supported and are working with a coalition of groups to oppose the bill.

    Apr 18


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    We are also opposing AB 2002 (Stone; D-Scotts Valley) which seeks to codify unnecessarily strict rules for communicating with members and staff of the Coastal Commission, again, in response to a personnel discussion at the board.  This bill is unnecessary and duplicative of strict lobbying disclosure and communication requirements in the Coastal Act that already impose severe penalties for noncompliance.

    The bill would create a unique rule for the Coastal Commission and conflict with Political Reform Act requirements for all other state agencies. The bill would also discourage applicants for coastal development permits from hiring representation, require even single family homeowners who hire Coastal consultants to register as “lobbyist employers,” and create burdensome paperwork for applicants and their technical consultants.

    We do not have an issue with registration of lobbyists that are working within the system.  However this bill goes far above and beyond what is required at all other state agencies and sets a precedent of making it more difficult to work through permitting and dispute resolution issues.

    We believe the public should be encouraged to communicate directly with public agency representatives, provided this communication is properly disclosed. There is no reason to change the current practice. To limit the free exchange of information by imposing burdensome and costly requirements serves no public good.

    Apr 18


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    In an example of having to engage on an otherwise innocuous bill, but an important reminder of why you must have people in Sacramento reading all of these measures…

    Our industry unfortunately had to push back on a SB 1138 (Hueso; D-San Diego), as introduced, because it would have had a significant negative impact on commercial real estate.

    The bill’s initial language would “require” local cities and counties to adopt an ordinance to mandate every resident, business, and public entity to dim or turn off their lights between 9 p.m. and 10 p.m. on the date designated as “Space Day”. Great idea – turn down the lights so people can see the stars better.

    Well, while we want to support and raise awareness about space science the practical impacts that SB 1138 would have on businesses and the public health and safety could be significant.   Disrupt operations for that single hour of blackout period but, depending on the operation, several hours before and after as companies have to shut down then restart their processes.

    Led by the California Restaurant Association, we explained that diming or eliminating lighting in a workplace or business is not always safe or feasible.  It is not practical and is almost always unsafe to have employees working in dimmed conditions when operating machinery, cooking or preparing food, or using industrial equipment, or simply trying to walk down a flight of stairs.

    Luckily the author understood our concerns and has committed to removing the mandate so the bill will encourage folks to dim lights when safe, reasonable, and feasible.