2007 STATE BUDGET UPDATE

Sixty-three (63) days after the Constitutional Deadline for a state budget and forty-eight (48) days after the start of the fiscal year the State of California still has no budget. The issues remain the same as they were last week (and the week before, and the week before, and the week before….). Senate Republicans continue to hold-out asking for a balanced budget, while the governor and legislative Democrats apply pressure to try to get two of them to supply the minimum number of votes needed to pass a spending plan. We will keep you posted.

STATE BUDGET IMPACT ON INDUSTRY

Several CBPA members are feeling the impact of the state budget impasse. The state has over 2,800 signed leases for building space in the state, and no funds are forthcoming to pay the rent. This could have a significant impact on cash-flow for small and medium sized property owners that do business with the state. However, industry is torn by the short-term need to conduct business, and the long-term need for the state to get its income in alignment with expenditures. We hear rumours that a deal is near that may help meet both goals…

IRONY OF CEQA EXEMPTION

As we have reported several times in the past few weeks, Senate Republicans, local government officials, and many in the business community think Attorney General Jerry Brown is stretching the limits of the law by using his office to sue local governments over growth management plans that don’t include “greenhouse gas” impacts. People argue that it is somewhat hard to meet standards that have yet to be written and aren’t expected until 2012.

Capitol Insiders have reported that in order to resolve this issue, legislative leaders have suggested exempting infrastructure bond related projects from CEQA lawsuits. And this is where the head-shaking part kicks in… When CEQA was written, it only applied to public works projects and did not apply to private developments. Now, to get the budget passed people are being asked to sign-off on a deal that exempts public projects from CEQA, leaving private developers wide-open to lawsuits on a law that was never meant to apply to them in the first place. What will they think of next?

If you have not yet had the, please take a moment to read the San Diego Union Tribune’s editorial on the issue calling Brown’s actions on this issue “madness” and stating that safeguards built in to AB 32 “have now been trumped by Brown's out-of-left-field decision to appoint himself de facto pollution czar – one whose edicts are enforced by the state's largest law firm.” Read the full editorial by clicking here.

NO LEGISLATION TO BE HEARD….WOO-HOO! PSYCH!

Senate President pro tem Don Perata (D-Oakland) has stated that the Senate will not deal with any legislation until the budget impasse is resolved. This has led to rumours that Monday’s Senate Appropriations hearing will be cancelled. If we weren’t such a skeptical lot, we’d be dancing in the streets at the notion of all those bad bills being stopped for the year. However, Senators love their bills just as much as Assemblymembers, and pressure will build from within the ranks to keep legislation moving in the lemmings march to the Governor’s desk. So we at CBPA are busily preparing for battle in both Appropriations committee next week.

LOTS OF GREEN NEEDED TO GO GREEN

Democratic State Treasurer Bill Lockyer on Tuesday proposed a $5 billion bond measure to combat global warming by getting California's largest building owner -- the state government -- to improve its energy efficiency. Lockyer said he wants the Legislature and Governor to sign-off on a November 2008 ballot measure to retrofit the state's massive building inventory with solar panels and other clean energy technologies to make them more “green”. Click here to read the full story.

AB 35 – PRIVATE INDUSTRY TO PAY FOR GREENING STATE OFFICES

State Assemblymember Ira Ruskin (D-Redwood City) however, has a better idea to finance making state offices more “green”… Have you pay for it directly! His bill, AB 35 requires private property owners who remodel buildings leased by the State of California on or after July 1, 2008 to “design, construct and operate their building in accordance with green building standards that meet the United States Green Building Council’s Leadership in Energy and Environmental Design” gold rating. Such a mandate on facilities occupied, but not owned, by the state is an unreasonable standard without a comprehensive statewide green building policy in place under Title 24 of the California Code of Regulations.

California is already on the cutting-edge of “green” building technology and our industry is at the forefront of building resource efficient buildings. However, since the life-cycle of a building can be 40-50 years or more, there are many perfectly suitable office buildings currently leasing space to the state that were built in a time before many of the new green technologies were invented. According to the Department of General Services the state has more than 2,800 leases statewide. Although building owners are actively retrofitting buildings to make them more efficient, the LEED Gold standard is a high bar that many existing buildings simply will not be able to achieve. Additionally, many privately owned buildings are historical in nature, and occupied through leases to the state -- retrofitting to such a standard would not only be economically unfeasible for these buildings, it would most likely result in destruction of the historical integrity of the building.

We suggest that the state may first want to consider testing the efficacy of green policies on buildings owned and operated by the state on a smaller scale, and/or wait to apply a mandate once the effects of the Governor’s Executive Order, referenced in the bill, and the Building Standards Commissions Green Building Advisory Group’s work is completed.

STRATEGIC ISSUES CONFERENCE: GLOBAL WARMING AND THE BUSINESS OF REAL ESTATE

Four major industry groups are combining forces to sponsor a high level discussion regarding the impacts of “global warming” policy on our industry. From AB 32 greenhouse gas regulations to the legislative focus on “green building” mandates, this conference promises to deliver the most up to date thinking about the politics driving these policies and will offer strategic discussion to set the course on how we can proactively be at the table and positively influence policy.

Click here to see the Strategic Issues Conference Website.

Joint sponsors for this event include: California Business Properties Association (CBPA), California Building Industry Association (CBIA), Building Owners and Managers Association of California (BOMA California), and Retail Industry Leaders Association (RILA),

The event will be held November 1-2, 2007, at the Meritage Resort in Napa Valley. A stellar line-up of policy and decision-makers from Industry, the Schwarzenegger Administration and Legislature, as well as a respected member of the political press corps, is coalescing for the conference. Until we can announce confirmed names of speakers, here is the framework agenda:

THURSDAY, NOVEMBER 1, 2007
4:30 p.m. – 6:00 p.m. Kick-off Reception in the Wine Caves
6:00 p.m. – 8:30 p.m. Dinner with Special Guest Speaker

FRIDAY, NOVEMBER 2, 2007
8:00 a.m. – 9:00 a.m. Breakfast with Special Guest Speaker
9:00 a.m. – 11:30 a.m. Panel Presentations
* Building Green/Green Building Policies
* CEQA / AB 32
11:30 a.m. – 1:00 p.m. Luncheon with Special Guest Speaker

For early-bird registration information and special room rates, please contact Tracy Fujii at CBPA, 916-443-4676, or tfujii@cbpa.com.

Don’t just react – be a leader – participate in this conference and shape important issues that will affect your businesses.

BOMA CALENDAR 2007/2008

November 1 & 2 – BOMA Cal/CBIA/CBPA Fall Joint Legislative Conference
BOMA Cal Annual Meeting
Napa Valley (Meritage Resort)

January 15 – BOMA Cal Board Meeting
Los Angeles
In conjunction with IREM/BOMA GLA Forecast Breakfast

March/April (date TBD) – BOMA Cal Board Meeting
Location TBD

June 10-11 – CA Commercial Real Estate Summit – BOMA Cal Board Meeting
Sacramento (Hyatt Regency)

October/November (date TBD) - BOMA Cal Annual Meeting/20th Anniversary Event
Location TBD