BOMA San Francisco welcomed Rex Hime, President and CEO of the California Business Properties Association (CBPA) to our July member luncheon recently. Mr. Hime spoke about how your BOMA dues are being put to work for you in Sacramento. Specifically, how real estate interests are faring under the new state budget and the grave threat of a split roll property tax. The following are the highlights:
California Business Climate
- The business climate is challenged in California. Indeed, the California electorate is adverse to any new taxes, although the elected leaders in the California Legislature have yet to take notice. Even with recent passage of stopgap budget legislation that closed the $26 billion budget shortfall, commercial real estate interests are still a target for new taxes.
- In addition, the State of California does not have a long-term economic plan and it's employee pension obligation is unsustainable: it is a bomb that will go off in the future.
Split Roll Property Tax
- Your BOMA San Francisco Advocacy Team has been working closely with Mr. Hime to address the threat of California implementing a split roll property tax through a modification of Proposition 13. BOMA is opposed to a split roll property tax.
- There are various changes of the tax that are being considered: a one-time reassessment to market rates for all property in California with commercial properties being annually reassessed after that; or, changing the rate at which commercial properties are taxed to something greater than the current 1%; or, allowing for larger increases in the commercial property tax rates above the current 2% per annum, or all of the above. Any of these split roll proposals would seriously devalue commercial real estate in California, bring greater instability to business, and hurt small commercial property owners disproportionately.
- Two unions, the Service Employees International Union (SEIU) and the American Federation of State, County and Municipal Employees (AFSCME), are leading the charge for a split roll property tax. San Francisco's Assessor/Recorder Phil Ting has also started a movement to puch for a split roll property tax.
- Please click here for CPBA's detailed slide show on a split roll property tax and the implications thereof.
California Green Building Code (Title 24)
- Mr. Hime stated that California's energy efficiency standards, which were adopted in 1978 and have been updated every three years since, are unique to California. Consequently, California's buildings are now (on average) 50% more efficient than comparable buildings in any other state. Mr. Hime stated that President Obama has often alluded to California's Title 24 as a model energy code which he would like to see adopted nationally.
- The Bay Area Council is leading the push for a Constitutional Convention to assuage California's budget woes.
- Mr. Hime feels that a Constitutional Convention would not happen. If it did, the business community would be in jeopardy. Specifically, Hime said a Constitutional Convention would require delegates to be in attendance to discuss and vote the issues placed before them. Hime suggested the business community would not have the time to do so, thus leaving any outcome of the Constitutional Convention to the activists.
On Attorney General (and undeclared California Democratic gubernatorial candidate) Jerry Brown
- If his past performance as California governor is any indication of the future, Mr. Brown is not a friend of business.
- Even so, Mr. Hime feels that Jerry Brown is bright, adventurous and entertaining.
How Do We Fix California?
Mr. Hime feels that if he were 'king for a day' his plan to fix California would include:
- Changing the structure of the State Legislature by going to a 2 year legislative session where the first year would be to discuss and pass the State budget. The second year would be for legislative measures. As it now stands, the current 2 year session is spent on passing a budget (each year) and the consideration of over 5000 legislative proposals, which simply overwhelms legislators and results in a great deal of wasted time and money.
- He would also limit the legislative session to 4 months to encourage more participation by people with private sector jobs. Currently, the 9 month legislative session limits most working people from seriously considering a run for the State Legislature due to time constraints.
- With regard to California's term limits (click here for more information), Mr. Hime would limit the total number of years in the State Legislature to 12 years in either house. Currently, lawmakers are limited to three two-year terms in the Assembly, and two four-year terms in the Senate. He would also lengthen these terms to to 4 years in the Assembly, and 6 years in the Senate to 'get the money out of the system,' i.e., to allow up the legislators to create effective laws instead of focus on fundraising for their next term.
California Business Properties Association is the recognized voice of all aspects of the commercial retail industrial real estate industry in California - representing the largest commercial real estate consortium with almost 12,000 industry members.
CBPA is the designated legislative advocate for BOMA California, ICSC, the California chapters of NAIOP, IREM, CREW, RILA and the California Downtown Association.