NAIOP San Francisco Bay Area Chapter: Latest News

CBPA's California Legislative Update 6/12/2020

June 12, 2020 Filed under: Legislative News: California

SB 939 – ABROGATES COMMERCIAL LEASES; ALLOWS ONE PARTY TO UNILATERALLY BREAK A LEASE
CCRES 2020 SUMMARY
SB 939 – MORE INFORMATION
OP/ED SB 939 WOULD HARM BUSINESS, CRIPPLE REAL ESTATE AND CAUSE JOBS LOSS
CBPA JUNE BOARD MEETING
MORE BUSINESS CLOSURES? MORE LOST JOBS? NO THANK YOU! STOP SB 939
CBPA 2020 CALENDAR

SB 939 – ABROGATES COMMERCIAL LEASES; ALLOWS ONE PARTY TO UNILATERALLY BREAK A LEASE

SB 939 (Wiener; D-San Francisco) is set for a hearing next Thursday, June 18^th. We need your help to defeat it.

Here is a link to our opposition webpage – www.stopsb939.com.

In addition to the information about the bill, a current list of opposition and press, you can email your Senator as well as send a tweet.

We are encouraging all of you to do this and hope that you will send a similar note to everyone you know that understands the negative impacts of this bill and how it will make recovery from COVID-19 more difficult and put many of your buildings into default.

The time for action is NOW. Help us defeat this measure.

CCRES 2020 SUMMARY

Wednesday morning, June 10, we held our online California Commercial Real Estate Summit via Zoom and it was a huge success! Over 250 attendees were able to hear from Lieutenant Governor Eleni Kounalakis, Governor Pete Wilson, and Che Salinas of the Governor’s Administration.

CBPA staff gave critical presentations on the Split Roll Tax Ballot Initiative and SB 939 (Wiener). Lieutenant Governor Kounalakis, the highest-ranking government official to come from the real estate world, shared her concern with the Split Roll Tax Ballot Initiative and SB 939 for the group. Governor Pete Wilson, part of Governor Newsom’s Task Force, praised CBPA along with Rex for the long service to the industry, as well as giving great context to Proposition 13 and Split Roll Tax. Che Salinas, Senior Advisor on Business and Economic Development for the Governor, provided insight to the State’s re-opening process and discussed the good working relationship with CBPA.

We would like to thank all the attendees for joining us, Guest Speakers for taking the time to address our industry, and the Event Sponsors for giving us the opportunity to provide this year’s California Commercial Real Estate Summit without any cost.

Thank you! Now, please keep reading and help us defeat SB 939!

SB 939 – MORE INFORMATION

SB 939 bans the use of the Unlawful Detainer, thereby providing no rent revenue for an extended period of time to many property owners, and allows some lessees to break a contract altogether and walk, regardless of how much investment you have made in tenant improvements.

This bill will prolong the economic recovery from COVID-19, abrogate contracts across the state, deny use of properties, chills property owner rights, and ultimately will induce more civil lawsuits.

We SB 939 is the wrong approach. It tries to provide short-term relief for some businesses while creating long-term harm to other businesses and the state’s economy. It will create a commercial mortgage crisis.

SB 939 has two sections and they both are bad news any company that owns, manages, or leases commercial real estate:

Section 1 of SB 939 attempts to allow all California-based commercial tenants in the state to pay no rent for an indeterminate amount of time.

Section 2 of SB 939 attempts to create a special class of commercial renter(bars and restaurants and places of entertainment) and gives them the right to nullify a lease contract; to unilaterally walk away from a lease regardless of the investment put into a space by the building owner.

This bill creates new rights for commercial lessees and removes existing rights from property owners. This imbalance will provide incentive for some tenants to use this law and a health pandemic to force otherwise unreasonable demands onto a property owner.

Help us STOP SB 939 by going here, learning more, and communicating with your State Senators www.stopsb939.com.

OP/ED SB 939 WOULD HARM BUSINESS, CRIPPLE REAL ESTATE AND CAUSE JOBS LOSS

Last week in an editorial that ran across Southern California, David Fleming, the Founding Chair of the Los Angeles County Business Federation (BizFed), had this to say about SB 939. We thank Mr. Fleming, and BizFed for standing up and explaining why this bill would have such a negative impact on the State’s Economy:

We have all seen what the damage of the COVID-19 economic shutdown looks like, and it is not pretty.

Millions of jobs lost. Businesses closed — especially small businesses. Yet, unemployment numbers and business closures do not even begin to provide the complete picture of the personal and economic damage that we need to repair.

So, the first goal of any government should be “Do no harm.”

Unfortunately, that is exactly what a recent bill proposed in the California Senate, Senate Bill 939, would do: make things worse. It would upend the real estate industry and inflict severe harm to our broader economy.

On the surface, SB939 seems like a bill that’s trying to protect businesses from losing space they rent during the COVID-19 emergency. But this falsely assumes that property owners actually want to evict businesses in the first place.

The opposite is true — property owners are very motivated, especially in these unprecedented times, to keep existing tenants. If your business model is to rent space to other businesses, an empty building would be devastating. That is why there has been extensive cooperation between commercial property owners and their tenants throughout the state to provide tenants with necessary relief in a way that protects both parties.

SB939 could also end up harming the businesses it claims it wants to help.

The bill allows businesses not to pay rent, even if they might be able to, until the State of Emergency is lifted — that’s still an indefinite period of time.

The State of Emergency could go on for years (we have been in a State of Emergency for wildfires three years and counting). So, under SB939, property owners would have fewer means to cover basic costs, not to mention pay the additional sanitation costs necessary to prevent the spread of COVID-19 in their buildings. This would prevent tenants from using their building space, spelling harm for the folks SB939 claims to protect.

This isn’t just about commercial properties and the businesses that rent them though.

SB939 will also create a severe economic domino effect. Most importantly, thousands of building employees, especially blue-collar workers such as janitors, security guards, and engineers will lose their jobs. Buildings will limit their contracts with their service providers, many of whom are small businesses, forcing them out of business.

If a business — and let’s be clear, commercial properties are ultimately businesses too — loses its main source of income, job loss follows.

Many buildings will also get pushed into foreclosure, creating a mortgage crisis in the state.

Those of us who lived through the Great Recession know what a mortgage crisis means: Financial markets plummet, property values will go down too, tax revenue dips next, state pension funds dry up, and the spiral of job loss and government deficits will end up many times worse than what we already see today because of COVID-19.

To our Legislature, on behalf of BizFed’s 190 member associations committed to the alleviation of poverty, the creation and retention of jobs, and the general well-being of our economy, we ask “do no harm” and vote down SB939.

Click here to see more news and op/eds on SB 939 and to take action!

CBPA JUNE BOARD MEETING

Tuesday, June 9, CBPA held a successful and educational Board Meeting via Zoom. Among legislative updates and other presentations, a vote was held on new officer positions in CBPA, as well as appointees to the board and advisory board.

Join us in congratulating our new California Business Properties Association Officers:

Chairman: Joseph Markling, USAA Real Estate Group

Vice Chairman: Francisco Uribe, Home Depot

Vice Chairman: Fran Inman, Majestic Realty Co.

Secretary: Allen Lyda, Tejon Ranch

Treasurer: Nicholas Johnson, Target

Legal Counsel: Jo Anne Bernhard, Jo Anne Bernhard Law Offices

Join us in congratulating our new California Business Properties Advisory Board Members:

Henry Avila, Donahue Schriber Realty Group

Paul Bollinger, Inter-Cal Real Estate Company

Heidi Hannaman, Walgreens

Kent Kauss, Sempra Energy

Chris Pearson, Hudson Pacific Properties

CBPA also wants to take a moment of your time to thank Doug Wiele, now the Immediate Past Chairman of the Board to CBPA for his years of effort and enthusiasm fighting for our industry.

MORE BUSINESS CLOSURES? MORE LOST JOBS? NO THANK YOU! STOP SB 939

To educate reporters and other interested parties and to make it easy for our members and your employees to communicate with your local legislators, we created a Stop SB 939 website. You can access it here: WWW.STOPSB939.COM