CBPA's California Legislative Update 5/29/2020
- COMMERCIAL REAL ESTATE UNDER UNPRECEDENTED ATTACK
- SECOND SPLIT ROLL PROPERTY TAX MEASURE QUALIFIES FOR BALLOT
- ACTION ALERT! SB 939 WOULD NEGATE LEASES ACROSS THE STATE!
- SB 939 WOULD CAUSE A COMMERCIAL MORTGAGE DEFAULT CRISIS
- SHOPPING CENTER INDUSTRY DEVASTATED BY COVID-19
- JUDICIAL COUNCIL REVISES/IMPROVES RULE 9 IMPACTING CEQA
- CALIFORNIA COMMERCIAL REAL ESTATE SUMMIT
- CBPA 2020 CALENDAR
COMMERCIAL REAL ESTATE UNDER UNPRECEDENTED ATTACK
The current COVID-19 pandemic is hitting everybody hard. Government mandated shut downs have especially devastated properties with public-facing, non-essential tenants. The shopping center industry alone estimates 1.4 million lost jobs.
While our industry and companies are fighting for survival from a natural disaster, we are also being attacked from extremists that want to fundamentally change your ability to do business.
-- A $12 BILLION Split Roll Property Tax on Commercial Real Estate will be on November’s Ballot
-- SB 939 a bill that will allow tenants to withhold rent for over a year and will allow certain tenants to walk on a lease is moving through the Legislature.
-- Commercial property owners are not being helped like other industries. Commercial real estate has been completely left out of the $2 Trillion in federal stimulus while the State of California leaders have offered no assistance and wouldn’t even waive property tax late fees.
Provisions allowing commercial tenants protections from rent payment and evictions, direct assistance to businesses through state/federal grants and loans are all accessible to business renters.
Property owners are being forced to raise $80 to protect themselves from California’s one property owner protection being destroyed – Proposition 13 – staring at a massive tax increase, being told contracts are no longer valid by government fiat, are being offered no assistance.
You are being pushed to the brink. Are you ready to stand up and fight on behalf of your employees and your rights and the survival of your business and ability to pay employees? You need to act now before it is too late. Respond to the email if you are willing to step up and provide the type of help and resources needed to put up a defense against the outrageous attacks on your profession.
SECOND SPLIT ROLL PROPERTY TAX MEASURE QUALIFIES FOR BALLOT
Backers of the $12.5 billion-a-year property tax hike officially qualified their state proposition today for the November 3, 2020, ballot. Unless defeated by voters, the property tax increase will be the largest in California history. Here is a statement from Californians to Save Prop 13:
The special interests backing the state proposition pursued it despite a declining economy with more than three million Californians already out of work and most businesses closed. A bipartisan coalition of civil rights, social justice, business and community leaders is lining up to oppose the tax hike, citing concerns about a rising cost of living for families and an increased burden on small businesses already fighting to stay afloat.
“We need to get Californians back on their feet, not raise the cost of living even higher. The public employee unions behind the largest property tax increase in state history are willing to spend and do whatever it takes, even if it raises the cost of living for families. Everything from groceries, fuel, clothing, day care and health care will cost more if this massive tax hike is approved,” said Rob Lapsley, president of the California Business Roundtable.
“November's property tax hike will hurt families and small businesses already struggling to make ends meet,” said Reverend Jonathan Moseley of Cedar Grove Baptist Church and president of the National Action Network LAX. “Our community cannot afford anything that raises the cost of living even higher, especially in light of the current COVID-19 crisis and an unpredictable economic recovery.”
In addition to raising the cost of living, the property tax hike includes critical flaws that will hurt all Californians. For example, the state proposition will hurt farmers with skyrocketing property taxes on the improvements needed to bring food from farm to fork – like barns, dairies, processing plants and even mature fruit trees – translating to higher costs for groceries for families.
Click here to read the full Californians to Save Prop 13 press release.
ACTION ALERT! SB 939 WOULD NEGATE LEASES ACROSS THE STATE!
Proposed legislation that could negate all current commercial leases to the benefit of business renters over property owners passed the Senate Judiciary Committee, as expected. However, it had a rough hearing and only garnered the minimum support needed to move forward (vote was 5-1; with two democrats abstaining).
We remain opposed to the bill as the proposed amendments do nothing to fix our issues. Please continue to communicate with members about how bad the bill is; work to get some media on the bill in your local areas; and work to set up discussions with Senators that represent your companies.
Thank you again for everything you have done so far. We will keep you posted.
Find your senator here.
SB 939 WOULD CAUSE A COMMERCIAL MORTGAGE DEFAULT CRISIS
First Goal of COVID-19 Economic Recovery Should be: DO NO HARM!
SB 939 (Wiener) Would Replace a Legitimate Loss in Business Revenue Problem with a Mortgage Default Crisis.
As part of the state’s effort to flatten the curve and slow the spread of COVID-19, businesses statewide have been forced by elected officials to close their doors.
No surprise, many are having trouble paying their rents and others are worried they won’t be able to pay if they aren’t allowed to open their doors soon; and restaurants in particular need to open back up in-person dining soon.
The Governor has issued an Executive Order, and many cities and counties throughout the state have already mandated rent forbearance programs; meaning property owners are no longer receiving rent payments from their tenants but are still obligated to pay their mortgage payments.
All Californians – especially property owners - want business to get back to normal and particularly want restaurants to succeed and thrive.
But SB 939 flies in the face of basic economics and would exacerbate the financial problems imposed on all residents and businesses by COVID-19’s mandated business shut-down.
The Legislature should reject SB 939 in favor of solutions that promote legitimate economic recovery.
But SB 939 flies in the face of basic economics and would exacerbate the financial problems imposed on all residents and businesses by COVID-19’s mandated business shut-down.
The Legislature should reject SB 939 in favor of solutions that promote legitimate economic recovery.
SB 939 is Based on the False Premise that Property Owners Benefit from Evicting Tenants: In Fact, Property Owners Are Far More Motivated to Keep Existing Tenants: Nobody wants an empty building. And trying to find new tenants is far more costly than finding creative ways to keep current tenants.
SB 939 Seeks to Reduce Rent Amounts Paid by Leasees But Does Nothing to Reduce the Mortgage Payment Still Owned by the Property Owner: Property owners, like businesses and restaurant operators come in all shapes and sizes. But the vast majority rely on rent from their tenants to pay their mortgage, just like restaurants rely on customers to pay their food and beverage tabs.
SB 939 Will Trigger a Commercial Mortgage Crisis: By unfairly requiring property owners to carry rent for more than a year, and also giving certain tenants the ability to walk away from a lease contract regardless of fiscal impact, SB 939 trades a short term business revenue problem for a long term commercial property foreclosure crisis.
We hope the legislature will focus on positive solutions such as that recently suggested by Legislative Leadership that will focus assistance to BOTH tenants and property owners.
NO on SB 939
No on a Mortgage Default Crisis
Find your senator here and let them know why you oppose this bill.
SHOPPING CENTER INDUSTRY DEVASTATED BY COVID-19
Our friends at the International Council of Shopping Centers (ICSC) have released economic information that show the extent to which the shopping center industry has been devastated in California due to the pandemic and resulting shelter in place orders.
Nearly 41,000 real estate companies in the California Shopping Center industry have fewer than 20 employees, and the industry generated $46 BILLION IN STATE & LOCAL TAXES.
Since March, the Impact of COVID-19 on the Shopping Center Industry in California is shocking:
* 1.4 MILLION LOST JOBS SINCE MARCH
* $12.2 BILLION LOST SALES SINCE MARCH
* $3.5 BILLION IN LOST RENT SINCE MARCH
*$0 IN FROM STATE/FEDERAL GOVERNMENTS TO COMMERCIAL PROPERTY OWNERS
Current forecasts indicate that retail vacancy rates will not recover before 2026.
Now is not the time devastate this industry even further with SB 939 and Split Roll Property tax.
Click here to see the ICSC infographic.
JUDICIAL COUNCIL REVISES/IMPROVES RULE 9 IMPACTING CEQA
The Judicial Council on April 6 adopted Emergency Rule 9 that tolled the statute of limitations for CEQA and land use legal challenges. Under the original rule, statute of limitations were tolled until 90 days after the Governor’s declaration of an emergency is lifted. Declarations of emergency typically last for years – some up to 8 years – since they are a prerequisite for federal funding. Many shovel-ready projects were being held up by the delay caused by the rule.
Today, the Judicial Council announced that the tolling period will end on August 3. This is a big improvement from the original rule. Attached, please find the staff report and record of the vote.
Click here to read the revised/improved emergency Rule 9.
CALIFORNIA COMMERCIAL REAL ESTATE SUMMIT
California Business Properties Association has changed the format of the 2020 California Commercial Real Estate Summit (CCRES). Traditionally, a two-day meeting, the CCRES will now be a Zoom Webinar with state officials on June 10, from 10am to Noon. This event is the one time of year that industry leaders from all sectors of the commercial, industrial, and retail real estate industry join come together from across the nation and hear from top policymakers and California State Legislators.
Former California Governor Pete Wilson, sitting on the Task Force on Business and Job Recovery, is confirmed as one of the guest speakers. Among those invited are California’s Lieutenant Governor, Eleni Kounalakis, and the Senior Advisor on Business and Economic Development for the Office of the Governor, Che Salinas. All of this in addition to a legislative briefing, an update on the Split Roll Tax battle and current Covid-19 actions.
Due to the fluidity of the current situation and environment, what is of importance to all of us now, may not be as important as what is happening one month from now. For that reason, we will be tailoring the program and discussion as matters develop in the coming weeks. We thank you for your patience in this matter.
Registration is required for the 2020 CCRES Zoom. There will be no registration fee for this event. After registering, you will receive a confirmation email containing information about joining the meeting.
Click here to register for the 2020 California Commercial Real Estate Summit.
CBPA is the designated legislative advocate for the International Council of Shopping Centers (ICSC), the California Chapters of the Commercial Real Estate Development Association (NAIOP), the Building Owners and Managers Association of California (BOMA), the Retail Industry Leaders Association (RILA), the Institute of Real Estate Management (IREM), and the Association of Commercial Real Estate – Northern and Southern California (ACRE) the National Association of Real Estate Investment Trusts (NAREIT), AIR Commercial Real Estate Association (AIR CRE), and the California Association for Local Economic Development (CALED). CBPA currently represents over 10,000 members, making it the largest consortium of commercial real estate professionals in California.
CBPA 2020 CALENDAR
NOTE DUE TO THE COVID-19 PANDEMIC EVENTS ARE BEING ADJUSTED TO TELECONFERENCE OR PENDING SHELTER-IN-PLACE ORDERS BEING LIFTED
Tuesday, June 9: CBPA Annual Board Meeting – via Zoom
Wednesday, June 10: Online California Real Estate Summit – via Zoom
Thursday, November 5: CBPA Board Meeting – via Zoom
For more information on any of our events, please contact Melissa Stevens at 916-443-4676 or mstevens@cbpa.com.
