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1972 – Over 45 years of service to the commercial industrial retail real estate industry – 2018.

July 17th Weekly Update

July 20, 2020

LEGISLATURE OUT ANOTHER WEEK DUE TO COVID-19

 Both Houses of the California State Legislature have delayed the reconvening of session from its short Summer Recess and have announced they will resume activity a week from Monday, on July 27.  That will give the body just five weeks to complete policy and fiscal hearings, and floor sessions for thousands of legislative measures still eligible for votes.  That process normally takes place over a three-month period.

Due to the COVID-19 pandemic, the legislative body had tried to manage with a truncated legislative schedule and now because several legislators and staff members have recently tested positive for coronavirus they will take more time before returning to the Capitol.

The Legislature has until the end of August to deal with thousands of bills that have been introduced this legislative cycle.  August 31 is a Constitutional deadline to end the Regular Session.

The Governor and Legislature could do a Special Session after that, however, that bring tight rule, high vote counts, and will take away from campaigning, so not many believe it will happen.  Though, anything seems possible about now.

CBPA is tracking hundreds of measures on behalf of the industrial, retain, and office sectors of the commercial real estate industry.  As your representatives in Sacramento we are continuing to engage legislators and their staffs on these bills even though the legislature is not currently meeting in person.  We remain active and vigilant and will engage in whatever manner is appropriate to protect your interests.

 

UNLAWFUL DETAINER BILLS

There are three bills alive right now impacting property owners and tenants relating to rent and unlawful detainer issues.  Although they are all currently intended to apply to residential only, we are following very closely and engaging along with partners at the CA Apartment Association.

Two of the three bills are, AB 828 (Ting; D-San Francisco) and AB 1436 (Chiu; D-San Francisco), are opposed by many business and property groups as they would shift the burden of COVID-19 related economic issues solely onto property owners, which put them at jeopardy of going into default and losing their properties.  That approach helps no one and would exacerbate the problem.

While the third, SB 1410 (Caballero; D-Salinas), while not perfect, does take a much more balanced approach as we have been advocating since March.  We have pointed to this bill as a workable framework that recognizes both the property owner and the tenant need assistance, and contracts must be honored.  The language currently is intended to apply to residential only, so we are following closely but remain neutral.

However, the California Apartment Association is working with the author and legislative leadership to address issues in the bill and we are supporting them in those efforts.  Most people in the Capitol believe something legislating in this area will pass and we think SB 1410 has the best chance of actually doing something that will help both property owners and tenants and not just be a symbolic gesture that gets thrown out in court.

We will keep you posted on what happens during the final sprint of session in August.

 

PROP 15 KILLS PROP 13

Proposition 15 is the split roll property tax measure on November ballot that will enact a $12 BILLION tax each year collectively on your properties.  Click here for all the details on the terrible, ill-timed, measure.

 

PROP 15: BEWARE OF SLEIGHT OF HAND

And here is a cautionary op/ed from our friend Joel Fox, Editor and Co-Publisher of Fox and Hounds Daily:

The Yes on Proposition 15 campaign has bandied about all kinds of figures on how many commercial properties will pay a bulk of the new record property tax increase if the measure passes.

First, they showed a study that reported 6% of the properties will pay 78% of the taxes. Next, we heard that 10% of the properties will pay 94% of the taxes. This week there was another study, pretty much all the studies generated from the same campaign-sponsored source, that said 10% of the properties pay 92% of the taxes.

So, which is it?

Correct answer: None of the above. Not when you consider who is actually covering the tax increase….

Click here to read the full story and find out how the proponents of the largest property tax increase in California’s history are trying to hide the real impact.

 

ENERGY CODE:  WHOLE BUILDING AIR LEAKAGE TESTING

The California Energy Commission (CEC) is updating the Title 24 Energy Code, and commercial real estate regulations are the focus of the process.  If you are worried about what is coming and want to help provide input, please read further.

The stage of the process we’re in now is the utilities have finished drafting proposals and the CEC seeking input from stakeholders.  At some point over the next two months the CEC will announce the docket schedule which will open the process for public comments and establish a final timeline for adoption.

Before the schedule is announced and the clock for the official process is started stakeholders are being asked to engage with CEC staff directly and raise early concerns on proposals and provide feedback.

The “Whole Building Air Leakage Testing” proposal is just such an item that has piqued our interest and we are seeking input from you and/or your company’s technical experts.

Currently only Climate Zones 1-9 require an air barrier. For Climate Zones 10-16, there are three ways to meet the prescriptive air barrier requirement: whole building air leakage testing, the use of compliant materials, or compliant assemblies of materials. This measure proposes the following changes:

Expand the air barrier requirement to all climate zones;

  • Require whole building air leakage testing and the use of compliant materials, or compliant assemblies of materials;
  • Require air barrier design and installation details on the construction documents.
  • Lower the maximum permitted whole building air leakage rate from 0.4 to 0.3 cfm/ft2;
  • Require corrective action if the maximum permitted leakage is exceeded; and
  • Apply the air barrier requirements to major alterations.

At first look, these requirements appear to have significant up-front costs, do not seem particularly practical, and applying them to alterations of existing buildings would likely be overly burdensome and would potentially prevent building alterations erasing any potential energy efficiency gains at all.

The details for this specific measure are available here.

Any feedback you have, in terms of the costs of meeting these requirements would be extremely helpful for us in raising the issue with the CEC.  The deadline to provide comments is August 10th.

 

WEAR A MASK – KEEP YOUR PROPERTIES OPEN

Be safe, be healthy be smart.  Wear a mask when you go out.  If your properties are still open, lets do everything we can to keep them that way.

 

ALL THE PROPOSITIONS IN NOVEMBER

For your information, here are all the proposition numbers that will be on the November 2020 ballot.  Although we have not taken formal positions yet, we have noted early support/oppose recommendations on some measures:

Prop 14 – Bonds For Stem Cell/Medical Research

Prop 15 – Split Roll Property Tax – VOTE NO!

Prop 16 – Reinstates Affirmative Action Programs In California (Repeals Prop. 209)

Prop 17 – Allows Parolees To Vote

Prop 18 – Allows Certain 17-Year-Olds To Vote In Primary Elections

Prop 19 – Realtor Measure To Allow Base Property Base Year Value Transfers – VOTE YES!

Prop 20 – Repeals Portions Of Props 47/57 To Add Crimes To The List Of Violent Felonies; Re-categorize Certain Types Of Theft (Shoplifting) And Fraud Crimes As Wobblers; And Require DNA Collection For Certain Misdemeanors – VOTE YES!

Prop 21 — Rent Control – VOTE NO!

Prop 22 – Repeals AB5 And Sets New Rules For Independent Contractors

Prop 23 – Kidney Dialysis Clinic Rules

Prop 24 – Consumer Privacy Rules

Prop 25 – Reinstates The Cash Bail System

Click here to read the language for each initiative:

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