COSTA MESA, CA-Like the national midtermelections that GlobeSt.com reported on recently fortheir potential impact on the commercial real estate industry,California’s statewide election Nov. 2 could have far-reachingeffects on the industry. From the governor’s race to ballotpropositions, the election features issues that would have bothdirect bearing on real estate and an indirect impact in that theywould affect the general business climate in the state.

|

According to legislative affairs chair Jim Camp of Naiop, whichmaintains its SoCal Chapter headquarters in Costa Mesa, thegovernor’s contest is the most important vote on the ballot interms of potential impact on the industry. Naiop and the CaliforniaBusiness Property Owners’ Association are supporting Republicanformer eBay CEO Meg Whitman in her race against Democrat JerryBrown, the state’s attorney general, who was governor for two termsin the 1970s. Whitman has the endorsements of numerous businessorganizations, according to her campaign web site, while Brown hasthe support of a number of unions and other organizations,including the Sierra Club and other environmental groups, accordingto his web site.

|

“By far the most important race in California is the governor’srace,” Camp says. He says that whoever is in the governor’s office“impacts real estate directly because the governor is really theonly person who can stop bad legislation from negatively impactingour industry.”

|

Camp explains that every year, the California Legislatureproposes about 3,000 to 3,500 bills, of which around 500 to 1,000“are problematic for the real estate industry.” This year, forexample, about 500 bills were proposed that would have presentedproblems for the industry. Of those 500, most died either incommittee or by vote, but 40 made it to the governor’s desk, andRepublican Gov. Arnold Schwarzenegger vetoed all 40.

|

The reason that so many bills have an impact on real estate isthat anti-growth forces attempt to stop growth through land use,according to Camp. “The goal is to slow the process of developmentand stop new projects from getting built, and a lot of the billschip away at that from various different angles,” he says.

|

Camp cites the example of the zero net energy bill, a proposalthat has been introduced in various versions through the years,which would require that anyone building a new building inCalifornia would have to provide all of the electrical power offthe grid rather than buying it from electricity providers. Anotherexample was AB 1975, which would have required that every unit in amultifamily complex have a separate water meter. With water meterscosting up to $35,000 each, depending on the municipality and thewater company, Camp says that such a requirement would imposeprohibitive costs. Another failed bill would have eliminated 1031exchanges for state income tax purposes in California. Another billwould have required the expiration of all business tax incentivesafter seven years, so that if there was a change in tax law thathelped business, it would disappear after seven years.

|

Another bill that is of concern to Naiop is one that was adoptedby the Legislature in 2006, AB 32. It would require greenhouse gasemissions to be rolled back to 1990 levels by the year 2020.Whitman has called for a one-year moratorium on implementing thebill, saying it is a job killer and needs to be revised; Brown hassaid that rolling back the program “would not only damage theenvironment, it would also jeopardize California's standing as aleader in the green economy.”

|

Naiop’s voter guide does not take a position on Prop. 23 on theNov. 2 ballot, which would suspend the implementation of AB 32until California unemployment, now at 12.4%, drops to 5.5% or lessfor four consecutive quarters. However, the organization supportsProp. 26, which would require that certain state fees be approvedby two-thirds vote of the Legislature as opposed to the simplemajority now required. Camp explains that the lawmakers can’t raisetaxes now without a two-thirds vote, so they have turned tolabeling increases as fees to circumvent the two-thirdsrequirement.

|

Naiop also supports Prop. 22, which would prohibit the statefrom taking tax revenue that belongs to cities and redevelopmentagencies and using it for state purposes. “Many cities are in direstraits now because they have been relying on these funds,” whichthe state has been taking in its efforts to balance the budget,Camp points out. Naiop also supports Prop. 20, Congressionalredistricting, but opposes four of the remaining five propositionsand takes no position on Prop. 21, the vehicle license surchargeproposal.

|

Regarding the outcome of the upcoming election, Camp says,“We’re hopeful that whatever happens, it will lead to morejobs.”

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.