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NAIOP SFBA ZOOM-IN Webinar Recap: A California State Legislative Update

   Filed under: Chapter

NAIOP SFBA’s hosted its sixth weekly ZOOM-IN webinar on Thursday 5/14: A California Legislative Update featuring Rex Hime, President and CEO, California Business Properties Association (CBPA). The Chapter actively participates in the work of CBPA as NAIOP’s designated legislative advocate in California. Hime provided detailed updates and analysis of CBPA’s efforts to defeat the 2020 split-roll tax initiative as well as two COVID-19 bills currently before the California Legislature.
Here is a  brief overview of key discussion points:

2020 Split-Roll Tax Initiative

The California Schools and Local Communities Funding Act of 2020
    • Qualified for Nov 3rd  Ballot with 1.7 million signatures
    • Proposition number likely announced by early July
    • Requires 50% plus 1 to pass
    • Changes CA constitution to create a split roll property tax system
    • Ends Prop. 13 protections for most commercial/non-residential property
    • Taxes commercial and industrial property at fair-market value (highest & best use)
    • Requires reassessment to fair market value of at least three years
    • Reassess agriculture improvements and fixtures
    • Limits property owner’s due process in the assessment appeals process
    • Raises an estimated $7.5 billion to  $12.5 billion annually
    • Does not include any educational reforms or accountability on spending

Bipartisan Coalition Created by CBPA to Oppose Initiative

Californians to Stop Higher Property Taxes (CSHPT)
    • Focused on overwhelming support for Prop 13 to control debate
    • Message - negative impact on small business / emphasis on minority and women owned
    • Endorsed by diverse groups such as:
       -   CA State Conference of NAACP
       -   CA Black Chamber of Commerce
       -   CA Asian Pacific Chamber of Commerce
       -   CA Hispanic Chamber of Commerce
       -   Coalition of Small and Disabled Veterans Businesses
       -   CA Farm Bureau Federation
       -   Prominent Democrats/current and past legislators
    • Co-Chaired by
       -   California Business Roundtable
       -   California Taxpayers Association
       -   California Chamber of Commerce
    • Will cost approx. $70 M
       -   Has pledges of $35M and approx. $6M reserves
       -   Expects to raise another $35M by end of July

How You Can Help?

      Make a Donation / Get Involved:
    • Calculate annual cost to your company
    • Invest some percentage of annual cost
    • Consider contribution of $500k or more
    • Help reach other donors
    • Spread the word about split roll tax

COVID-19 Legislation Currently Before CA Legislature

AB 828 by Assemblyman Phil Ting, D-San Francisco

    • Forces rental property owners to reduce rents by 25% for residential tenants
    • Allows courts to set rents and change rental agreements already in place
    • Assumes every tenant is facing COVID-19 hardship and must be compensated
    • Protects nuisance tenants
    • Mandates rental property owners demonstrate economic hardship to collect contracted rent

SB 939 by State Senator Scott Weiner, D-San Francisco
    • Makes it illegal to serve notice to terminate a tenancy until a full year after the State’s COVID-19 Emergency Order expires
    • Makes the serving a notice to terminate tenancy a violation of that state’s unfair business practices and creates a $2,000 penalty
    • Allows restaurants, bars and entertainment venues with a decline in revenue of 40% as compared to before shelter in place and facing an ongoing reduction of capacity of 25% or more, to engage in good faith negotiations with their landlord to modify any rent or economic requirement regardless of the term remaining on the lease
    • Gives tenants option to terminate the lease and not be liable for more than three months’ rent from the start of the SIP to cover the entire rest of the lease term
    • States third party guarantees will expire with the lease termination
    • Would be in effect for at least 22 months from March 2020 until December 31, 2021, OR two months after the end of the state of emergency, whichever is longer
    • Does not apply to any publicly-traded company or a company that is owned by or is affiliated with a publicly-traded company (franchisee), creating even more unfair treatment of businesses

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