The following voting recommendations are brought to you by the California Business Properties Association (CBPA), in association with AIR CRE.
PROP 3 – WATER BOND: VOTE YES
AUTHORIZES BONDS TO FUND PROJECTS FOR WATER SUPPLY AND QUALITY, WATERSHED, FISH, WILDLIFE, WATER CONVEYANCE, AND 3 GROUNDWATER SUSTAINABILITY AND STORAGE.
Proposition 3 authorizes $8.9 billion in state general obligation bonds for various infrastructure projects related to much needed water projects.
If passed, Proposition 3 – The Water Supply Act and Water Quality Act of 2018 – would free up $8.9 billion in general obligation bonds to fund projects boosting water supply and quality, among other things. “Anyone living in California understands there is never enough water in the state,” comments Rex Hime, President and CEO of California Business Properties Association. “The state is finally on the right track, allocating dollars for reservoirs and ensuring that water continues to flow.”
PROP 5 – PROPERTY TAX TRANSFERS: VOTE YES
CHANGES REQUIREMENTS FOR CERTAIN PROPERTY OWNERS TO TRANSFER THEIR PROPERTY TAX BASE TO REPLACEMENT PROPERTY.
Known as The Property Tax Transfer Initiative, Proposition 5 would amend Proposition 13 to allow homebuyers age 55 or older, who are severely disabled, to transfer tax assessments from a prior home to a new home, no matter the market value or size of the new property. This proposition addresses the fact that, older people might want to downsize, but could face huge property taxes if they buy a new home. Furthermore, if senior citizens sell their houses and move to smaller spaces, it could help alleviate the housing shortage by freeing up modest-priced homes for younger families.
PROP 10 – RENT CONTROL: VOTE NO
EXPANDS LOCAL GOVERNMENTS’ AUTHORITY TO ENACT RENT CONTROL ON RESIDENTIAL PROPERTY.
Proposition 10 repeals Costa-Hawkins Rental Housing Act and would allow rent control across the state. We believe the measure has too many flaws and must be defeated. Prop. 10 allows regulation of single-family homes, places bureaucrats in charge of housing, could cost the taxpayers millions in new costs to local government, and drives up the cost of new housing.
- Allows Regulation of Single-Family Homes
- Places Bureaucrats in Charge of Housing with the Power to Add Additional Fees
- Puts Taxpayers at Risk for Millions in Legal Costs
- Adds Tens of Millions in New Costs to Local Governments
- Drives Up the Cost of Existing Housing
US SENATOR FOR CA: VOTE FOR DIANNE FEINSTEIN (D)
Due to her support of water and land issues, and a solid understanding of the commercial real estate industry. “De Leon has not been a friend to our industry,” Hime said.
LIEUTENANT GOVERNOR: VOTE ELENI KOUNALAKIS (D)
The LG assumes the office and duties of Governor in the case of impeachment, death, resignation, removal from office, or absence from the state, and serves as president of the State Senate and has a tie-breaking vote. The LG Chairs the Commission for Economic Development; is a member of the State Lands Commission, and the Ocean Protection Council; and sits on the boards of the California university systems.
Kounalakis is endorsed by Senator Kamala Harris, Senator Dianne Feinstein, California League of Conservation Voters, National Organization for Women and California Federation of Teachers.
ADDITIONAL VOTING RESOURCES
Contact California Business Properties Association (CBPA) for additional questions.
Rex Hime, President and CEOContact: Rex Hime
Matt Hargrove, Senior VP of Governmental AffairsContact: Matt Hargrove
AIR CRE is best known for its contract forms, resources and networking opportunities. The organization is also outspoken on the political front, being supportive of, or fighting against, legislation that impacts the commercial real estate industry.
On Aug. 8, 2018, AIR CRE partnered with the California Business Properties Association (CBPA) to present an informative webinar. During the 50-minute long presentation, Tim Hayes (AIR CRE Executive Director), Rex Hime (CBPA President and CEO) and Matt Hargrove (CBPA Senior Vice President of Governmental Affairs) provided updates on current legislation, and initiatives for AIR CRE members to watch out for – and to lend support to.
Propositions to Support
Two important CBPA-supported acts will be on the November ballot – Propositions 3 and 5.
If passed, Proposition 3 – The Water Supply Act and Water Quality Act of 2018 – would free up $8.9 billion in general obligation bonds to fund projects boosting water supply and quality, among other things. “Anyone living in California understands there is never enough water in the state,” Hime said. “The state is finally on the right track, allocating dollars for reservoirs and ensuring that water continues to flow.”
Meanwhile, Proposition 5 – The Property Tax Transfer Initiative – would amend Proposition 13 to allow homebuyers age 55 or older, who are severely disabled, to transfer tax assessments from a prior home to a new home, no matter the market value or size of the new property. This proposition addresses the fact that, older people might want to downsize, but could face huge property taxes if they buy a new home. Furthermore, if senior citizens sell their houses and move to smaller spaces, it could help alleviate the housing shortage by freeing up modest-priced homes for younger families.
Also on the Ballot: Candidates
California will have a new governor in November, and it will either be Lieutenant Governor Gavin Newsom or businessman John H. Cox. While Hime didn’t indicate which side CBPA supports, he indicated that the organization and other associations reached out to both candidates to participate in potential events. One such event would be a meeting to analyze position papers; Hime indicated that Newsom is willing and “we should hear back shortly from Cox.”
Meanwhile, on the U.S. Senate side, four-term Democratic incumbent Dianne Feinstein will face Democratic challenger and California State Senator Kevin de Leon. Hime didn’t equivocate here, indicating that Feinstein was the clear choice, due to her support of water and land issues, and a solid understanding of the commercial real estate industry. “De Leon has not been a friend to our industry,” Hime said.
Leave Behinds and Real Estate Separation
Out of the thousands of bills currently in circulation, the CBPA supported two.
AB 2173 addressed what happens to property left behind when a tenant moves out. When this happens, the landlord auctions off the property, but can only receive up to $750 for it. “That’s not enough for clean-up, disposal or the auction process,” Hargrove observed. AB 2173 lifted that threshold to $2,500, “or an amount equal to one month’s rent for the premises the tenant occupied, whichever is greater.”
Noted Hargrove: “This is something that will help us be more effective as to how we do business.”
Then there was AB 2847, an attempt to separate areas of the code in which commercial real estate and residential real estate are lumped together. Hargrove indicated that, as residential tends to be more restrictive, “we want to separate commercial from residential codes. This is a long-term effort, but will help protect our industry, especially as we see more aggressive attempts on things like rent control.”
Then there are bills that could spark some controversy, one of which is SB 937 and lactation rooms. “SB 937 requires businesses to provide lactation facilities for their workers, requires that lactation facilities be built in new construction, and ensures employees receive information about their rights to a safe and comfortable lactation space at work.”
The problem, however, is that the cost for this amenity goes to the building owner, who will likely spend between $30,000-$130,000 for this mandate. “We’re opposing it,” Hargrove said. The CBPA instead is suggesting an alternative, one that places the onus for a lactation room on a business owner, rather than building owner.
Then there is AB 1427, which focuses on ensuring enough adequate housing for veterans. “We’re not trying to throw up roadblocks against veterans, but we want to make sure that we aren’t going to be sued by what’s being passed.”
What is a Broker?
Defining a commercial real estate broker seems to be a regular activity in the California legislature, with AB 749 and AB 1289 two acts geared to clarify the issue. AB 749 redefines the term “salesperson” as one who is retained by a licensed real estate broker to “perform certain real estate activities subject to a broker’s supervision.” Meanwhile, AB 1289 clarifies the definition of an “agent” when it comes to real estate transactions.
Hargrove said that both bills stalled, but might be re-introduced in 2019. Basically, the bills tweak “some of the language in the brokerage area that would define who a broker is, and what you can do more efficiently under the professions act,” he said.
Lurking in the Shadows
In addition to the cache of proposed and passed acts, many important to the CRE industry are lying in wait. The California Schools and Local Communities Funding Act of 2018 will be put on the November 2020 ballot. Hargrove was adamant that the opposition to this bill needed to start now. Known as the “Split-Roll Tax” act, the legislation would re-amend Proposition 13 by separating commercial real estate from residential real estate, and drastically increasing tax assessments among the former.
AB 1059 – the dual agency bill – was successfully stopped in its tracks. “AIR CRE was instrumental in helping us stop it this past year, but we’re still keeping an eye on it,” Hargrove said. AB 1059 put restrictions on brokers from the same company working different sides of the same real estate deal.
Not all issues potentially impacting CRE have to do with legislation, however. The California Supreme Court decision, Dynamex Operations West Inc. v Superior Court of Los Angeles, could have huge ramifications. The case focused on whether workers should be classified as employees or independent contractors for purposes of wage orders adopted by California’s Industrial Welfare Commission – and the California Supreme Court said yes, all workers are employees, unless they can be proved contractors via an “ABC” text.
“I’m not sure how that will play out in the real world,” Hargrove noted. “But any of you who deal with independent contractors will possibly have pressures to treat that person or company as part of your own.”
Then there is the long-established Title 24, the Building Energy Efficiency Standards. These days, pulling a permit for tenant improvements can “trigger” a total rewiring of a tenant space, which is not cheap.
“Environmental groups and contractors are spending several million dollars to ensure the energy code becomes stricter,” Hargrove commented. “We need to be engaged in this upfront, or else we’ll be dealing with it five years from now, and wondering why a light switch is costing $10.”
A Need for Assistance
While CBPA is fighting hard on behalf of CRE, “the CBPA and AIR CRE can only do so much,” said AIR CRE’s Hayes. Ways in which members can assist, he went on to say, include donations and contacting elected officials. “If we all sit by and figure CPBA will handle everything for us,” he added, “We run the risk of getting bills passed that are detrimental to the commercial real estate industry.”