SPLIT ROLL “STUDY” BILL A TROJAN HORSE?

When passed by the voters in 1978, Proposition 13 capped property tax rates – for both residential and non-residential properties -- at 1 percent of assessed value and restricted that value from growing more than 2 percent a year. Properties can only be assessed more than that rate when ownership changes or there is new construction. The idea of assessing residential and non-residential properties at different rates is known as “split-roll” and has been attempted several times in the past, only to be soundly defeated.

As we have reported several times over the past few months, numerous policymakers are looking towards split-roll taxation again as a “solution” to the state’s $16 billion budget deficit. They believe that raising taxes on your properties is a much better idea than reigning in spending, which has ballooned by $25 billion over the past five years.

Then along comes Assembly Bill 2461 (Davis; D-Los Angeles) which would require the State Board of Equalization to conduct a study on the amount of revenue that would have been generated if nonresidential commercial property, had been reassessed at its fair market value and to report the results of the study to the Legislature. Coincidence? We are not sure. But we are concerned that if this bill is actually meant to study the issue, focusing on such a narrow question, “how much money can we raise by re-assessing business properties,” is not going to provide policymakers with an accurate portrait of how our dynamic tax system works.

Proposition 13 has been a very stable property tax structure that is good for the government budget process as it produces a very reliable and knowable income source; it has also been very beneficial for residents and businesses alike as it allows property owners to reliably predict and plan for tax liability many years into the future. It has also been very good for the state’s economy as the tax predictability is one incentive that induces national and international companies to invest in California, which produces jobs, induces business and personal spending which creates more jobs, and spins-off many non-property tax related taxes and fees that are used for local and state services and infrastructure investment. We hope any study commissioned by the state will be a dynamic analysis of how our state’s property taxation system works and investigates the many different impacts of Prop. 13; a simple static analysis of increased taxation on businesses will not produce the type of results that policymakers – and the public – will need to draw accurate conclusions and make future decisions.

Of course, since we have so much history on this topic, we are a little weary that this “study bill” is really just a vehicle waiting to be gut-and-amended into another attempt to change the stable property taxation system we have in this state and put another split roll proposition on a future ballot. Just because you are not paranoid doesn’t mean they aren’t out to get you! We will watch closely and keep you informed.

SPEAKER RACE – DON’T BACK THE WRONG HORSE

 Although the consequences aren’t nearly as severe, the King’s Court drama that is playing out in the California State Assembly, is just as interesting. Two Democrats and one-time candidates for speaker were stripped of their chairmanships of influential standing committees, in what is reported from political insiders as “retribution” for vying for, but ultimately losing, the Assembly Speakership. Although the action can’t be specifically tied to the speakership battle, when asked about the moves a spokesperson for the current Speaker stated he wouldn’t talk about "internal caucus business." Anytime a spokesperson refuses to use the spin-gin, you know the juicy rumors are true.

Assemblymember Hector De La Torre (D-South Gate) was removed as chair of the powerful Assembly Rules Committee and Assemblymember Anthony Portantino, (D-La Cañada Flintridge) was booted from his Higher Education Committee chairmanship. Losing such a post means loss of influence as well as a cut in office budget and staff. Assemblymember Ted Lieu (D-Torrance) has been named as the new chair for the powerful Rules Committee. Several other Assemblymembers were contenders for the post, so it remains to be seen if the long knives are to be sheathed.

AB 1065 – 80% ENERGY REDUCTION MANDATE – THANK YOU FOR ACTION

Last week we put out a call for advocacy to help educate policymakers about the drastic impact that Assembly Bill 1065 (Lieber; D-Mountain View) would have on your businesses. This bill would mandate that all buildings (residential and non-residential) reduce their consumption of energy by twenty percent in 2015, fifty percent by 2020, and a whopping 80 percent no later than 2030.

Thank you to everyone who heeded the call and contacted legislators. In a stunning turn of events, the author chose not to take up the bill due to concerns expressed by her Democratic colleagues. This is a small victory, but a victory nonetheless, and we should take a moment to celebrate. Yay! OK, now back to work. This bill could be set again in as early as two weeks, and we need to continue to work to make sure that legislators understand how such a policy would be expensive, and in many cases, technologically impossible to implement.

Although California companies have long been leaders in the effort to reduce energy consumption, this bill does not seem to acknowledge that fact. New commercial buildings are already 50% more efficient than the national average. And starting in June 2009 new California homes 50% more energy efficient than those built to national standards. Make sure you talk to your legislators and let them know how “green” our industry already is!

BOMA CALIFORNIA ENDORSES 7-POINT ENERGY CHALLENGE

BOMA California and all eight of the state’s local associations have endorsed BOMA International’s Market Transformation Energy Plan and the 7-Point Energy Challenge. In addition, many major companies operating in California including CB Richard Ellis, Cushman & Wakefield, The Irvine Company, Opus, Shorenstein Properties, USAA Real Estate Co. and many others (click here for the full list) have endorsed the energy savings plan.

In short the 7-Point Challenge is a tool to induce companies to help them help themselves reduce energy consumption and implement “green” management practices, which can result in a positive return on investment (ROI), and ultimately increase the bottom line. Whether or not you officially “accept the challenge,” there are some good suggestions that we present here for your information:

The 7-Point Challenge
1. Continue to work towards a goal to decrease energy consumption by 30 percent across your portfolios by 2012 – as measured against an “average building” measuring a 50 on the ENERGY STAR® benchmarking tool in 2007.
2. At least once a year, benchmark your energy performance and water usage through EPA’s ENERGY STAR benchmarking tool;
3. Provide education to your managers, engineers, and others involved in building operations, to ensure that equipment is properly maintained and utilized;
4. Perform an energy audit and/or retro-commissioning of your building, and implement low-risk, low-cost and cost effective strategies to improve energy efficiency with high returns;
5. Extend equipment life by improving the operations and maintenance of building systems and ensure equipment is operating as designed;
6. Through leadership, positively impact your community and your planet by helping to reduce your industry’s role in global warming; and
7. Position yourself and the industry as leaders and solution providers to owners and tenants seeking environmental and operational excellence.

Click here to read the full plan.

UPCOMING EVENT: GREEN CALIFORNIA SUMMIT AND EXPOSITION APRIL 7-9

Builders, property managers, developers, facilities managers and others involved in real estate should not miss the Green California Summit (April 7-9, Sacramento Convention Center). The event, guided by an Advisory Board that includes senior state officials and leaders from the real estate community, combines an exposition featuring hundreds of green products and services with seminars and training. Discover green tools that can save you money, preserve the environment and give you a competitive edge - and find out about regulations and policy that are changing the industry. For more information, click here. BOMA California members (and all local association members) get a special 20% discount – simply enter “BOMA” as a Coupon Code towards the end of the registration.

BOMA CALIFORNIA 2008 CALENDAR

THURSDAY, APRIL 3, 2008  —
BOMA California Board Meeting
11:00 a.m. - 3:00 p.m.
Embarcadero Center #4, Conference Center, Promenade Level
Clay Street between Davis and Drumm Streets
San Francisco

TUESDAY, JUNE 10 & WEDNESDAY, JUNE 11, 2008 —
BOMA California Board Meeting & CA Commercial Real Estate Summit
Sacramento (Hyatt Regency)
Times and locations TBA

OCTOBER/NOVEMBER, 2008 (DATE TBD) —
BOMA California Annual Meeting
Times and location TBD
Los Angeles