At any given moment, numerous governmental agencies are working on regulations, taxes, fees, land use decisions, and other issues that affect commercial real estate. Many of these fees, regulations and land use decisions can and do have a negative impact on the commercial real estate industry and, in turn, the long-term health and retention of the business community at large.

Justin McCusker

NAIOP SoCal’s Legislative Affairs Committee monitors government agencies across Orange and Los Angeles counties while also organizing local grass roots support on state and national issues. The 2019 NAIOP SoCal leadership has outlined a few high profile legislative priorities that demand the industry’s attention in 2019. Check out the insights shared by Justin McCusker, NAIOP SoCal, Legislative Affairs Chair, Senior Executive, C.J. Segerstrom & Sons, in Connect Media’s latest CRE Q&A.

Q: Why is defeat of the Split Roll Initiative issue number one?
A: A split roll tax ballot initiative will be on the 2020 ballot. Under the proposal, businesses would have their properties reassessed to market values every three years or less. This is by far the number one issue for the industry. The State Legislature has two years to come up with its own “better” (more damaging) split roll initiative. The devastating impact of any split roll measure cannot be overstated. The entire industry and its partners must come out strongly and allocate time and money to defeat anything proposed in the Legislature and what will be on the 2020 ballot. The defeat of any split roll measure is an absolute necessity if there is to be any hope of having a commercial real estate industry in California.

Q: Why do the actions of the South Coast Air Quality Management District (SCAQMD) and California Air Resources Board (CARB) matter to the industry?
A: SCAQMD and CARB are aggressively pushing for ever-more restrictive air quality regulations. Their efforts include indirect source rules, whereby they make the property owner responsible for cutting diesel truck emissions over which you have no control, freight facility emission cap provisions, building code changes and more. We are also faced with AB 617 Community Emissions Reduction Plans which shift the focus from regional federal air quality attainment to hyper local air quality plans. These regulations don’t just impact commercial real estate but also severely restrict the operation of industries such as manufacturing and particularly small businesses, further pushing these businesses (tenants) and jobs out of the state.

Q: What does NAIOP SoCal expect to see in the form of new taxes and fees?
A: Parcel taxes will continue to be a target as cities struggle with ways to manage their budgets. We are also monitoring fees and taxes such as linkage fees, sales tax increases, gross receipts taxes, increased local transportation development fees and storm water runoff fees, art in public places taxes and more. More and more cities are placing tax increases on their local ballots, mainly to deal with the increased pension costs. Again these are all actions that impact the cost of doing business for owners as well as further driving tenants out of the area. The cumulative impact of constantly adding new taxes and fees on top of the significant tax burden that already exists has become overwhelming.

Q: What should the industry do?
A: Get involved and be part of NAIOP SoCal. We can’t emphasize enough how important it is for the commercial real estate community to get involved. Our chapter remains at the forefront of these issues. The best thing is to support the chapter and its work. The issues can be complex and overwhelming, but NAIOP SoCal, as one of the few real estate groups with an active legislative affairs commitment, works hard to prioritize what the industry needs to know, and when action must be taken. Contact the chapter for more information – especially as it relates to the potentially devastating impact of split roll.

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