CBPA's California Legislative Update 3/15/19
- SPLIT ROLL –TEACHERS FULLY ENGAGING IN THE BATTLE
- RENT CONTROL MEASURES
- REAL ESTATE BROKERAGE FIRMS – USE OF LLC
- LACTATION BILL REDUX
- DYNAMEX: “THIS COULD RUIN US” SAY INDEPENDENT CONTRACTORS
- PUC OPENS PROCEEDING ON “DECARBONIZATION” INCENTIVES
- 2020 SPLIT ROLL MEASURE MUST BE DEFEATED
- CBPA 2019 CALENDAR
SPLIT ROLL –TEACHERS FULLY ENGAGING IN THE BATTLE
This story from Mother Jones is interesting and ominous as it shows a stepped up presence by Teachers’ Unions in support of the Split Roll Property Tax initiative that has qualified for the November 2020 ballot.
"The recent strikes in Los Angeles and Oakland are over, with teachers winning raises and calls for checks on charter schools, among other things, in negotiations with their school districts. But an even bigger statewide battle—fighting back Proposition 13, the four-decade-old ballot measure that has stripped California of much-needed property tax revenue—is just kicking into gear."
Although not unexpected, this is another clear sign that the coming battle to raise your property taxes by $11B is real. Are you taking the threat serious? Have you thought about contributing to your defense? Contact us or click here to learn how you can contribute.
Click here to read the full Mother Jones story.
RENT CONTROL MEASURES
Yesterday a group of lawmakers made known their intention to push a package of bills that would essentially ignore the will of the voters the overwhelmingly rejected Prop. 10 and enact various levels of rent control in the state.
Allowing rent control in multi-family projects and even putting rent caps on single family homes is not the direction we believe the state should go. Such measures would only make the housing crisis worse.
We remain committed to standing with our colleagues at the Apartment Association and other groups throughout the state that defend the Costa-Hawkins Rental Housing Act. That act prohibits rent controls on units built after 1995 and shields single family homes, individually owned condos and townhouses, from rent restrictions.
Click here to read more about the rent control bills. And click here to see CAA’s response.
REAL ESTATE BROKERAGE FIRMS – USE OF LLC
On behalf of the commercial real estate industry we California Business Properties are pleased to be working with Assemblymember Tom Daly (D-Anaheim) on AB 687 a bill to allow limited liability companies (LLC) to operate as a real estate brokers.
Real estate broker licensing was not extended to LLCs when other types of licensing were extended to LLCs because at that time our industry standard was to operate as corporations and partnerships and our members had little or no familiarity or experience with LLCs. Over time that has shifted and now many companies within the real estate industry use LLCs extensively to hold and operate real property. AB 687 updates the statute to reflect that evolution in the industry.
Enabling brokerage firms to form as an LLC will allow greater flexibility in management and operations which will be particularly helpful for smaller firms and those with an in-house broker. This comports with the less formal operations of smaller businesses. AB 687 also will enable a savings of both time and costs for these firms as operating as an LLC means more streamlined entity reporting and filing requirements than a corporation.
Finally, AB 687 will simplify taxation at the entity level as gains and losses are passed through and taxation occurs at the individual owner level. Although Subchapter S corporations do offer the same income tax pass-through feature, limitations on number and types of owners and other restrictions make the Subchapter S vehicle less readily available.
Under AB 687, LLCs would not receive any favored treatment (over corporations) as to broker licensing. LLC licensees would have the same filing requirements as corporate licensees with respect to licensing; LLC licensees would have the same insurance requirements as corporate licensees; and LLCs would pay property taxes on real property owned at the same rates and using the same valuation principles applicable to corporate real estate owners.
We will keep you posted on AB 687’s progress and thank Assemblymember Daly for working with us on this measure.
LACTATION BILL REDUX
Even after a bill was signed on the issue last year Senator Scott Weiner (D-San Francisco) is back with a bill that would codify a mandate to provide Lactation Rooms into certain buildings, triggered upon a tenant improvement. Last year, our industry worked closely with Assemblymember Monique Limón (D-Santa Barbara) on her AB 1976 which requires employers to provide certain accommodations for lactating employees.
AB 1976 (Limón) last year which established a new mandate regarding lactation accommodations for California employers. The new law requires employers to provide a location other than a “bathroom” for an employee to express breastmilk. See Labor Code § 1031. The location must be private and in close proximity to the employee’s work area.
We oppose this new bill, SB 142 (Wiener), for a number of reasons, but first and foremost we believe the state should give time for AB 1976 to work before layering on more changes and burdensome mandates. In addition, this new bill creates a new private right of action, duplicates liability that already exists in the Fair Employment and Housing Act (FEHA), creates a new avenue for Private Attorneys General Act (PAGA) liability, and delineates specific buildouts.
Although we support lactating employees and want to make sure our building enables them to work, we cannot abide by the onerous terms of SB 142 and are respectfully opposing the measure.
SB 142 is not yet set for hearing. We will keep you posted on its progress.
DYNAMEX: “THIS COULD RUIN US” SAY INDEPENDENT CONTRACTORS
One of the most significant concerns facing employers in California is how to deal with the California Supreme Court’s Dynamex decision. The court adopted an entirely new test for determining whether an individual is an employee, or an independent contractor known as the “ABC Test,” that makes it more difficult for businesses to utilize such contractors and threatens to upend entire industries in California. Although much of the push behind the positioning is targeted to the “gig economy” this will have a major impact on real estate companies that utilize independent contractors on a wide variety of business dealings from landscapers to writers to tax consultants.
Several bills in the legislature are attempting to codify the decision and we are working very closely with an employer’s coalition to negotiate and or oppose the bills when necessary. The most significant is SB 5 (Gonzalez).
Here is a story about how the ruling impacts one independent contractor – in this case a freelance writer – but the experience is happening to many independent contractors that perform various functions within our industry. Click here to read.
We will keep you posted on AB 5.
PUC OPENS PROCEEDING ON “DECARBONIZATION” INCENTIVES
The California Public Utilities Commission has opened a proceeding to investigate ways to incentivize decarbonization efforts in new and existing buildings.
This is in response to last year’s passage of SB 1477 (Stern), industry-supported legislation which requires the PUC and the CEC to develop and administer a “Zero Emissions Building Program” by providing incentives for the deployment of near-zero emission building technologies including electric space and water heating and battery storage technology.
CBPA, BOMA California and CBIA have jointly filed comments with the CPUC and are now a formal party to this proceeding. More information to follow in the coming months.
2020 SPLIT ROLL MEASURE MUST BE DEFEATED
(Note: we are re-running this story because its importance cannot be overstated especially in light of the more aggressive stance several public employee unions are taking in terms of supporting the measure.)
Rex S. Hime, President & CEO California Business Properties Association, has penned the following op/ed regarding the ongoing battle to protect Proposition 13. You are highly encouraged to share this article and/or run it in your own publications:
Proposition 13 has been protecting taxpayers in California since 1978. This measure created by Howard Jarvis is one of the only protections that you have against unimpeded increased in your property taxes – and now it is under serious threat.
Californians are some of the most heavily tax-burdened in the country. Now, special interests want to raise taxes by another $11 billion through this measure, despite record-high revenue, record-high per-pupil spending and $17 billion in budget reserves. A split roll property tax increase isn’t needed and will just make it more difficult to do business in California.
For years public employee unions and far-left wing advocacy groups have wanted to dismantle Proposition 13 in hopes of increasing your taxes to increase revenue for their members and pet spending projects. Those groups have gathered enough signatures to place a measure on the ballot in November 2020.
One of the ONLY protections property owners in this state has is under serious threat and for thirty years – and now -- I remain one of the primary people standing to fight back against this outrageous tax increase.
Under the 2020 proposal, Prop. 13 will be undone by mandating that all non-residential properties be reassessed to 2020 values and be reassessed every three years thereafter. Commercial property will lose certainty about future tax liabilities and one can only imagine the impact and cost to long time property owners that will see massive adjustments.
The proponents of this effort have stated that dismantling Prop 13 will result in an $11 billion tax increase on California’s property owners and employers.
Aside from the direct impact on properties, the State’s own Legislative Analyst’s office has warned that the proposal will introduce volatility into the state’s funding stream that puts everything from school funding to support and health programs for the elderly at risk.
Property taxes have been a reliably predictable revenue source for the state since prop 13 passed which allows for some predictability in budgeting and a reliable revenue stream. The greediness of those that want to transfer property tax revenue to their own pockets threatens a system that has worked for more than 40 years!
As one of the longest standing taxpayer advocates in the state, I am coordinating an effort by taxpayer advocates and business groups alike to implement a statewide strategy and defeat this measure. The campaign will be very costly and will take the efforts of many, but the costs of this tax are much greater. Split roll inflicts a mortal wound on Prop 13 protections for all property owners and must be stopped.
Rex S. Hime has been protecting CA taxpayers his entire career. He has served as the President & CEO of California Business Properties Association for 35 years.
CBPA 2019 CALENDAR
March 28, 2019
CBPA Industrywide Leg Meeting
June 11 – 12, 2019
California Commercial Real Estate Summit
Sacramento
December 5 – 6, 2019
Strategic Issues Conference
Napa Valley
