In This Update:
- ABANDONED COMMERCIAL PROPERTY BILL PASSES ASSEMBLY
- “ELECTRIFICATION” BILLS OPPOSED
- NEGOTIATIONS ON SEISMIC SAFETY BILL LOOKING GOOD
- NEGOTIATIONS ON OTHER SEISMIC SAFETY BILL NOT LOOKING AS GOOD
- EARTHQUAKES: A FIGHT TO PROTECT INFRASTRUCTURE
- WHY UNIONS WANT A REPUBLICAN IN THE GOV’S RACE
- OUT-OF-THE (BIG) BOX THINKING
- CALIFORNIA BENCHMARKING REGULATION RESOURCES
- CBPA 2018 CALENDAR
ABANDONED COMMERCIAL PROPERTY BILL PASSES ASSEMBLY
We are pleased to report a bill that would update laws governing how abandoned commercial property is dealt with has passed the Assembly on a vote of 68-0.
AB 2173 (Santiago; D-Los Angeles) would increase the threshold needed to trigger an official disposition process for abandoned property in a commercial building. The bill does not change the auction nor notification requirements and the law will still mandate that any proceeds above and beyond storage and auction costs go to the County so no monetary benefit accrues to the property owner.
When a business moves out of a commercial property and leaves behind unwanted items, the property owner/manager must hold a public auction if the materials are believed to be $750 or more in value or the equivalent of $1 per square foot of the rental for the property. If a company moves out of a leased space and purposefully leaves behind unwanted property (i.e. an old server rack, a few desks and chairs, or obsolete computer equipment) that low threshold is very easily met.
Under current law, the property owner/manager is then obligated to go through an expensive public notification and auction process for relatively small amounts of money on items that were unwanted to begin with.
AB 2173 will better reflect the practical realities in the commercial real estate industry by setting a new commercial threshold. This proposed new threshold amount more appropriately aligns with the actual costs of storage and disposal of abandoned property in commercial real estate.
“ELECTRIFICATION” BILLS OPPOSED
Our industry, along with a large coalition of other business groups, is opposing two bills moving through the California State Legislature that seek to “electrify” California by doing-away with the latest villain in the War Against GHG’s – natural gas. The bills would also move the goal line on the state’s Zero Net Energy regulations by mandating that buildings become “Zero Net Emissions” by 2030.
Among other things, AB 3001 would require that by 2022 the California Energy Commission (CEC) require all new buildings to be “electric ready” by requiring the installation of the electric infrastructure necessary to enable the building occupants to use only electrical equipment instead of natural gas. This bill would remove natural gas as an energy option despite the fact that many building systems rely on the fuel and many building occupants rely on natural gas to fuel items such as stoves, heaters, and industrial equipment.
AB 3232 (Friedman; D-Glendale) mandates another greenhouse gas GHG emissions control regime that would require all new residential and non-residential construction be ‘zero-emission’ by 2030 and directs the Energy Commission to develop a strategy to reduce GHG emissions by at least 50 percent below 1990 levels.
California has long held ambitious goals to reduce GHG emissions in order to combat global climate change, including landmark legislation AB 32 (2006), SB 350 (2015) and, most recently, AB 398 (2017). These bills set California on a path that includes all sectors of the economy from the energy used at work to the fuels used in our transportation system and the energy consumed at home to goods movement, including specific direction regarding disadvantaged communities.
Because California already has the most-strict GHG rules in the nation we believe that both of these bills are unnecessary. The energy consumed in our homes and businesses and on the road is already accounted for under the existing GHG emissions control programs, including the Cap-and-Trade program and Low Carbon Fuel Standard (LCFS). Another GHG control program – especially one that sets a “stretch goal” such as zero emission buildings — doesn’t bring value to system that is already so highly regulated.
As it relates to buildings, SB 350 calls for a doubling of the energy efficiency of the existing building stock by 2030 that will require more efficient appliances and building improvements of all energy sources. These measures will just layer more complexity on top of an already expensive regime of laws and thicket of regulations.
NEGOTIATIONS ON SEISMIC SAFETY BILL LOOKING GOOD
We are making progress in discussions with the author of AB 1857 (Nazarian; D-North Hollywood) a bill that as currently written would direct the Building Standards Commission (BSC) to adopt emergency building standards increasing by 50% the structural strength and stiffness standards for new multifamily and nonresidential buildings.
Once adopting the new tougher standard, the BSC would then be directed to develop and adopt a statewide structural standard allowing for “immediate occupancy” after a significant seismic event. Once accomplished, this immediate occupancy standard would replace the emergency regulations.
The residential and commercial real estate industries have expressed a number of concerns with the bill as it would overturn how seismic safety standards have successfully been written for many years, increase code from a “life safety” standard to an “immediate occupancy” standard for down-the-road economic factors, and have huge cost implications on existing and future structures, and ignore the national codes process putting requiring California “go it alone” and create a whole new standard.
However, our industry has been conducting very productive discussions with the author and sponsors. As a result, the author’s staff has recently provided us with amendments which address many of our concerns.
There still exists a few fundamental policy concerns we are working through, such as Emergency Egress v. Immediate Occupancy issues and what that actually means in terms of construction, design, cost, etc; we are also asking that the BSC and HCD be given the full range of administrative options as it considers new standards. We are, however, confident we will be able to work out these issues.
NEGOTIATIONS ON OTHER SEISMIC SAFETY BILL NOT LOOKING AS GOOD
Unfortunately, we are not making as good of progress on a second bill relating to seismic issues, AB 2681 (Nazarian; D-North Hollywood) which as currently written would require building departments in the more seismically active regions of the state to create an inventory of “potentially vulnerable buildings” in their jurisdictions no later than January 1, 2020.
Under the bill, local building departments would be required to forward their list of potentially vulnerable buildings to the Office of Emergency Services no later than June 1, 2021. The OES would then be required to maintain a statewide inventory of potentially vulnerable buildings in a searchable database on its public website.
While this bill is well-intended, it represents a significant unfunded state mandate on local governments and would have a huge and negative impact on hundreds of thousands of properties across the state, for little-to-no benefit.
Our industry opposed the bill as it is an unfunded state mandate to locals that can’t happen without a big infusion of dollars. We are also very concerned that this information will be publicly release for no purpose other than to “shame” building owns which will only negatively impact property value and rentability. Finally, it has been noted by a consultant in the Capitol that that this proposal creates a “great roadmap” to for dangerous people to target the most vulnerable buildings.
We are asking that at the very least the current bill language be scrapped, and the author consider setting up a groups of experts consisting of building officials, industry owners/manager, engineers, and state agencies, to come up with a more uniform and simple approach to identifying vulnerable buildings and propose solutions on how to make them more safe.
Our industry supports seismic safety very much. However, we do not think this bill actually does anything do make buildings more safe and could potentially make the situation worse.
EARTHQUAKES: A FIGHT TO PROTECT INFRASTRUCTURE
We appreciate Assemblymember Nazarian’s willingness to take on this important topic and are working with him in a positive manner. The Capitol Weekly did a recent story on the two bills and we present the story here so you can get a better understanding of what the author is trying to accomplish. Click here to read the full story.
WHY UNIONS WANT A REPUBLICAN IN THE GOV’S RACE
Leaders of our association that have heard updates from Sacramento at board meetings and committee calls have heard the notion for quite some time that the big money players in funding Left-wing candidates and causes are hoping for a Republican to make the gubernatorial top-two. It will be a bruising-battle and much more expensive if two Democrats move forward and face each other in November. Our friend Joel Fox over at “Fox & Hounds” has put together a column that explores this notion a little bit. It’s a very interesting read. Click here for the full story.
OUT-OF-THE (BIG) BOX THINKING
Our friends at AIR CRE have penned a great piece exploring how retail – shopping centers and retailers themselves – are adapting to the new state of the real estate market and coming back in a big way. AIR CRE submits that despite the bad news in the headlines, “the basic fact that malls and retail aren’t going extinct.” The story says, “Malls aren’t dead. They are changing.” And they have the facts and numbers to back it up. Read the story here.
CALIFORNIA BENCHMARKING REGULATION RESOURCES
Several weeks ago, the State of California finalized the AB 1103/AB 802 Energy Benchmarking Regulations. This has been a long process and we have been involved every step of the way. The bottom line is that as of June 1, 2018, all buildings over 50,000 square feet – with some exemptions – need to be benchmarked and data shared with the Energy Commission.
However, the rollout of the regulation is still unfolding. The CEC is working on materials and communications to help with compliance, and we are helping them work through the issues and work out the bugs.
We have set up a resource page where you can find a FAQ, the adopted regulations, and a link to the CEC page with more information.
Click here for the CBPA CA Mandatory Benchmarking Resource Page.
Stay tuned for more information and webinars to help you comply by the June 1st deadline.
CBPA 2018 CALENDAR
June 19-20, 2018
California Commercial Real Estate Summit
& Annual Meeting
October 25, 2018
Industry Awards Dinner & Board Meeting
The Duke Hotel, Newport Beach
Please feel free to contact Melissa Stevens at email@example.com should you have any questions or require additional information about our events.