Big Issue? Split Roll Property Tax Future

ORANGE COUNTY, CA—The California Legislature ended the 2014 legislative session after midnight on Friday, August 28.  NAIOP SoCal and our political advocate, the California Business Properties Association (CBPA), worked furiously during the final week meeting with legislators to press our case against a number of bills that challenged the interests of the commercial real estate industry. 

One of the most important successes was the defeat of AB 2416 (Stone), the Wage Lien Bill. This bill would have permitted certain non-exempt employees to record liens on commercial property for alleged unpaid wages, shifting liability for disputes over unpaid wages onto innocent landlords and owners.  If signed into law, the bill would have disrupted real estate and lending transactions, exposing commercial property owners to litigation and extortionate demands.

When the Senate gaveled the 2014 session closed after midnight on August 28, the bill was thankfully stranded without action. A huge thanks for this victory goes to our NAIOP SoCal members who wrote letters and called legislators asking that they oppose the bill.  Scores of NAIOP members responded to the SoCal Chapter's request for action just when the entire California real estate community needed them.

That effort, along with the other work done by our partner organization CBPA in Sacramento, highlights the immense work and value of NAIOP SoCal as an advocate for the healthy future of commercial real estate at the local, state and national level. The work of our NAIOP SoCal Chapter continues.

The phrase “if you're not at the table, you're on the menu” is quite true, especially when it comes to new regulations.  At the local level, our NAIOP political consultants Talley & Associates provide the arms and legs for our chapter in meetings, pushing back against local policy makers that plan and propose the new fees and regulations that make the business climate in California more difficult.  For example, NAIOP is a visible and active participant at the South Coast Air Quality Management District (SCAQMD) and California Air Resources Board (CARB) sessions. Without our chapter's participation, these organizations would create regulations without regard for the commerce and jobs that drive the southern California economy.  As it is, new truck trip generation guidelines and so-called indirect sources of pollution rules contemplated by the AQMD challenge the future of the industrial warehouse development industry in places like the Inland Empire.

At the federal level, NAIOP Corporate is our advocate for commercial real estate interests in Washington, D.C.  The SoCal Chapter leadership annually visits Capitol Hill in February to meet with our region's Congressional members and their staff.  In these meetings we press our industry's concerns on national topics including the federal clean air standards, critical tax extenders such as carried interest, 1031 exchanges, and commercial building energy efficient tax deductions and reauthorization of the Terrorism Risk Insurance Act, among others.

Looking ahead, the biggest issue facing commercial real estate in California is the future of the Split Roll Property Tax, which would increase property taxes on commercial property owners.  Our industry and your NAIOP SoCal chapter works with a network of state organization like Californians to Stop Higher Property Taxes to oppose any attempt to pull commercial real estate out from under the protections of Proposition 13.  We expect to see a 2016 ballot initiative aimed at amending the California constitution to tax commercial real estate more frequently and at higher rates.  

Even now, a San Francisco- based group called Evolve is invading southern California communities calling for resolutions by city councils to support the creation of commercial split roll taxes. NAIOP SoCal has been successful in defeating this effort in Carson, Lomita, Anaheim and Newport Beach. However, this group has been successful in obtaining approval of their resolution in Los Angeles and Santa Monica. Their goal is to try to create the illusion of a broad appeal for split roll at the state level. 

Be prepared to fight this split roll tax initiative in the year ahead when we call on our members and the industry to contribute their time, talent and financial resources to help increase the support we need in the cause to protect the health and prosperity of the commercial real estate industry. 

Whether at the local level working against groups such as Evolve, the state level opposing onerous job-killing legislation or at the federal level to support positive policies such as a new Highway Funding Bill, NAIOP SoCal is an effective voice on behalf of commercial real estate.  We've proven the impact we can have working together to oppose anti-business legislation like the wage lien bill, AB 2416. The future of commercial real estate and the quality of life in southern California requires our continued vigilance and involvement.

Kevin Ivey is Legislative Chair of NAIOP SoCal. For more on NAIOP SoCal's legislative advocacy visit www.naiopsocal.org. The views expressed in this column are the author's own.