Monthly Report

The September Report
September 3, 2020

Split Roll (Prop 15) MUST Be Defeated – Everyone’s Active Engagement Vital
We are now in the home stretch of the effort to stop the biggest threat to our industry in decades, Prop 15. Although it is said the “election” is on November 3, the truth is the voting starts October 5 when the mail-in ballots go out; essentially one month from now. So, an aggressive grass roots get out the vote effort this month, September, is key, and must continue through October.

While the very well-organized statewide campaign to defeat Prop 15 is extremely active on many fronts, they cannot do it alone. To win we need all of you to get the word out to everyone in your companies, the other companies you do business with , your families, your friends, all of those in your contact lists, etc., that they ALL have to vote NO on Prop 15. How to communicate with employees about legislation or ballot measures that will impact your business is outlined in the California Chamber of Commerce Guidelines for Political Communications with Employees. Some NAIOP SoCal members have been actively reaching out by writing information pieces explaining the damage Prop 15 will do to commercial real estate. For example, Executive Board member and Treasurer Greg May developed a piece and had a very successful call-in meeting to spread the word.

NAIOP SoCal as an organization will also be very active in making sure everyone knows to vote NO on Prop 15. You recently received a letter that went out to all members from current President Pamela Westhoff and several Past Presidents urging you to contribute to the campaign, but it also contained information about the damage Prop 15 will cause. NAIOP will be sending out materials to the membership urging them to get out the vote. Just check the Fact Sheet and Myth versus Fact prepared by the No on Prop 15 campaign that provides you with additional information. You can also keep up to date on the campaign by going to their website, www.noonprop15.org.

As we proved with the recent defeat of SB 939 (Wiener), when we all do fight to protect our industry, we can win in a dramatic fashion. In doing so, it sends a powerful message that commercial real estate cannot be taken for granted, and cannot be viewed as a mere funding source for the largest tax increase in California history.

Thank You Sponsors for Taking on the Fight to Defeat Split Roll!
Each year NAIOP’s generous annual sponsors sign up and pay their dues and sponsorships together and, depending on the level of sponsorship, receive tickets to the chapter’s various events including Night at the Fights as part of their sponsorship. As part of the Night at the Fights ticket price, Sponsors may donate a portion of the ticket price to the Chapter ‘s Issues Political Action Committee.

Those funds were collected at the end of 2019 in anticipation of a very active year with many programs and events and another fabulous Night at the Fights. Unfortunately the Chapter, like all of the State, has been faced with having to cancel social gathering events. However, the funds donated by Sponsors to Fight to Defeat Split Roll are still going to do just that. The $45,100 collected for Night at the Fights has been donated to the NAIOP SoCal Issues PAC to fight Split Roll. Thank you NAIOP’s 2020 Sponsors! Thank you Sponsorship Committee and Night at the Fights Committee. Well done!

City Council Elections Also Important
While Prop 15 and the Federal and State elections appropriately get a lot of attention, you cannot forget your local city council race, both where you live and in all the cities where you do business. As you have seen over the years, and even in today’s report, city councils come up with many anti-business ideas, as well as increased taxes and fees, and other restrictions like eviction moratoriums. It is important to push to elect pro-business candidates and ones who are willing to truly think through issues.

City Council members do not only serve on city councils, but on many regional boards where they make decisions effecting our four county Southern California area. For example, on one Board a person from a small city got elected with 300 or so votes, but is now making decisions that directly impact over 17 million people and the businesses in four counties. Furthermore, City Council members use their City Council seats as spring boards to run for the State Legislature and other higher offices. So, please check to see if there are pro-business, thoughtful candidates in your cities and let Legislative Affairs Director Vicki e Talley know so the NAIOP SoCal Candidates PAC can look to assist those deserving candidates.

Reopening of Businesses and the Economy
The Governor did come out with another re-opening plan that contains four tiers. We are still analyzing all the new documents in detail and will be prepared to discuss this new program in more detail at the Board meeting. You can also go to the State website, covid19.ca.gov/safer-economy/, for additional information. In talking to several representatives of various business sectors there is essentially universal dismay at the new system and it is viewed as not only confusing (“clear as mud”), but a step backwards that will slow down any recovery of the economy. Even Governor Newson called it “more stringent” . You will recall the emergency orders and subsequent restrictions were put in place to make sure the health system, especially the number of hospital and ICU beds, did not get overwhelmed. And they have not even come close to being overwhelmed even with this last “surge”. Yet,the hospital/ICU bed metric has been abandoned. The ONLY metrics that will be looked at to see if a County can move to a better tier, or go back to a more stringent one , is the seven days average of new daily cases and the positivity rate of the COVID tests.

Culver City Ballot Initiative to Increase Transfer Tax – Oppose
Without any outreach or notice, the City Council of Culver City put on a special meeting agenda a dramatic increase in the Transfer Tax charged on residential and commercial real estate when it is sold, and then one-week later at another special meeting placed the tax increase on the November, 2020 ballot. The supposed reason for proposing this tax increase was the City budget had been negatively impacted by the government-imposed shutdown of the economy due to COVID- 19. Yet, the tax does not have a sunset clause. It would last forever . The ballot measure would increase the existing .45% Transfer Tax,which is already the highest in Los Angeles County, on sales of $1.5
million and up as follows:

1.5% on sales of $1.5 to $3 million,
3 % on sales of $3 to $10 million, and
4% on sales of $10 million and above.

Click here to review the letter that NAIOP SoCal submitted opposing the Transfer Tax be placed on the ballot. We noted the City staff and their own Finance Committee had numerous unresolved questions.

Since this measure was placed on the ballot at the last minute, the time frame to submit ballot arguments was very short, 9 days. So, the morning after the Council voted, your Legislative Affairs staff contacted the NAIOP member we had been working with to discuss any next steps, especially the need for ballot arguments to be submitted to preserve any ability to have an opposition campaign. It was agreed that would be a good approach and so we then made the necessary connections to get the ballot arguments completed. We assisted in drafting both the opposition and rebuttal arguments, and they have now been submitted. Additionally , your Legislative Affairs staff reached out to several other organizations to also oppose this tax increase, and they a re on board. There is now an ongoing discussion about what might make up any opposition campaign.

One primary concern about this proposal is the City Council cited as the primary supporting reason for their action a report from UCLA that encourages cities to adopt large Transfer Tax increases as a way to increase tax receipts. We have also learned the City of Los Angeles is also reviewing this same report. In light of this report circulating among the cities, the Culver City election could set a precedent that encourages other cities to try the same thing. Yet, defeating this ballot measure would send a strong message to other cities that such efforts are not appropriate and will meet the opposition.

Los Angeles County Employee Health Councils – Oppose
The Board of Supervisors passed a motion directing County staff to develop plans to create employee health councils in all businesses in the County, did not have enough staff to locate and enforce violations of COVID-19 health orders. Yet, there is no indication any such health councils will have an end date and could last indefinitely. The concept is to require all businesses in the County to allow their employees to form health councils that would identify and report violations, and to probably be involved in deciding at each business what is needed to have a safe workplace. The employee would take time off from his actual job duties to serve on the health council, however long that might take, and the employer would still have to pay the employee as if he worked full-time.

The County would also “certify” third party and community-based organizations to assist the employee health councils, and a list of possible ones has been created. None of these seem to have any background or experience in the health arena, but supposedly have “knowledge and experience communicating with workers”. This means this unidentified third-party organization would visit your business to determine what violations, if any, exist. The third-party organizations will also report perceived violations to the Department of Public Health without specification if the business will have a chance to defend or implement changes without penalty.

The Board of Supervisors has not addressed employee privacy rights or state and federal employee relations procedures and would be improperly empowering the Certified Third Parties to conduct (directly or through their guidance and oversight of the Health Councils) unfettered searches of employer records and information.

Neither the Board motion or the Health Department report contains specifics as to how they will choose the third-party organization, if they are qualified, how they will be trained to identify any potential violations, and how much work time will be required of the employees to monitor, record and implement this new mandate.

A large coalition of Los Angeles business organizations has come together to oppose this effort. This issue is moving along quickly as the County staff is to come back to the Board with an implementation plan on September 29, 2020, so there is nearly daily activity on this issue. In addition, there are formal weekly calls of this coalition as well as calls with the County staff who are working on this proposal. Efforts are ongoing to try to get the Board members to understand the numerous problems and issues surrounding the employee health councils. While acknowledging the numerous issues the business community is raising, there has not yet been a showing that the Board will truly spend the time evaluating the concerns. So, there is a great deal more to do.

City of Irvine Out To Bid On Climate Action Plan
A few years back several cities including Aliso Viejo and the City of Irvine were considering the adoption of very restrictive Climate Action Plans. NAIOP SoCal got involved as an impacted stake holder and the plans were significantly modified in Aliso Viejo and not adopted in the City of Irvine. Now the idea is resurfacing in the City of Irvine’s Green Ribbon Committee. NAIOP is monitoring the committee’s actions.

City of Santa Ana Reduces Inclusionary Zoning Fees
NAIOP SoCal joined with other allied business organizations including the Building Industry Association in supporting a reduction of the City’s Inclusionary Zoning Fees from $15 a square foot to $5 per square foot. The council agreed, which was a huge victory for developers.

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