Legislative Update

In this report … See Legislative Affairs Priority Issues and Focus, the City of Irvine Ballot Planning Initiative, SCAQMD and CARB Indirect Source Rule (ISRs) Update, Information regarding the City of LA Housing Linkage Fee Moving Forward and Another Tax Proposed by LA County. Contact Legislative Affairs Director Vickie Talley for help with your government affairs issues.

Legislative Affairs Priority Issues and Focus

NAIOP members see every day there are no shortage of issues that can impact their businesses, and your Legislative Affairs team is committed to protecting the members’ interests. Yet, there are only so many resources and time in a day, so we have always tried to focus on the priority issues. Legislative Affairs has recently had a series of discussions to review our focus, and have decided on the following as we enter 2018.

 

Split Roll Taxes/Prop 13 – The fight to prevent any effort to create any type of Split Roll Tax has been and will continue to be the highest priority. This is always closely coordinated with CBPA. 

 

Environmental Regulations – This is a broad area covering (1) air quality (i.e., Independent Source Rules), (2) water issues (i.e., supply), and (3) CEQA.  While NAIOP SoCal is often a lead entity in the air and water issues, we are also successful in developing coalition partners. We work in a supportive capacity with CBPA who leads on the CEQA issue. The environmental arena is one where we are becoming a government of the regulator, by the regulator and for the regulator.

 

Taxes and Fees – Here the focus is on local taxes and fees that impact the commercial real estate community (i.e., parcel taxes, linkage fees, public art taxes). While one often hears the argument that whatever new fee is “small,” the piling on of taxes and fees has reached the point of death by a thousand cuts and must be stopped. 

 

Land Use – Here, the focus is on local ballot box planning initiatives and slow growth/no growth efforts.  Furthermore, there are numerous efforts to not allow any greenfield development even in light of the severe housing crisis and need for additional commercial development to meet the needs of an ever-increasing population.

 

Transportation and Goods Movement – The need for a solid transportation system is an evident part of a robust economy. We not only have many NAIOP SoCal members involved in the goods movement system, especially in regard to warehouse development, but it also makes up about one-third of our economy. The recent recession reminded us all that if a large sector of the economy falters, it impacts the economic well-being of us all for many years.  There are several efforts ongoing at the state and local levels to create goods movement plans. 

We are faced with many well-funded, well organized organizations that have significant influence and propose ideas that can be very detrimental to our NAIOP members. They are very aggressive in their tactics, and the voice of business can be completely overshadowed. Thus, the Legislative Affairs Committee believes it will be important to be consistently assertive in our efforts to push forward with a reality-based discussion of balancing the need for jobs and the economy with the other issues that are raised in any given year. 

 

City of Irvine Ballot Box Planning Initiative

A citizens group called Irvine for Responsible Growth intends to place an initiative they call “An Initiative to give the People of Irvine control of their future” on the November, 2018 ballot. The Irvine initiative is identical to the recently passed Costa Mesa ballot box planning measure requiring voter approval of essentially any development project that requires adoption, amendment or any type of change to the General Plan and/or Zoning Code. 

This effort raises significant concerns and shows how these types of measures spread to other areas of the county like a cancer. NAIOP SoCal has a long-standing policy of opposing ballot box planning measures, yet the Legislative Affairs Committee and NAIOP SoCal Board voted to formally oppose this measure to make it very clear that this type of initiative is totally unacceptable.

 

SCAQMD and CARB Indirect Source Rule (ISRs) Update

NAIOP SoCal and the broader NAIOP community have long been leaders in creating more efficient, sustainable developments, including the needed warehouses to provide the 17 million people in Southern California with their daily necessities of life – food, clothing and shelter.  NAIOP members have spent millions, if not billions of dollars, to improve air and water quality. Thus, it has been our focus to try to achieve a balanced approach in enhancing the environment and achieving economic and job growth. Unfortunately, it appears many other organizations are not interested in such a balanced approach.

There have been a series of meetings with residents living near seaports, railyards, warehouses and distribution centers to supposedly discuss ISR “concepts.”  Quite frankly, these meetings seem more designed to get people to come in and complain about anything and everything regarding the goods movement system, especially trucks and warehouses, so CARB can go back and say there is some drastic need for as draconian a set of measures as they can envision. Furthermore, CARB seems to have decided it is all electric vehicles (EV) or else – and soon, maybe by 2040, which is just 23 years. It should be noted that for over 20 years there has been extensive taxpayer money put into getting EV on the street, yet there are only about 300,000 operating in California. Recent news reports have said the state is considering only allowing EV to be registered in the state or driven on the freeways.   Thus, we must expect in March of 2018 that CARB will release “ISR “concepts” that would require warehouses to only allow EV to come to the facility with significant penalties created if you do not comply. This is not a cooperative, balanced approach, but a top- down edict.

 

City of LA Housing Linkage Fee Moves Forward

NAIOP SoCal is on record opposing the City of LA Affordable Housing Linkage Fee and has been following its progress through the LA system. The Planning and Land Uses Management Committee (PLUM) recently unanimously supported the fee and proposed several changes to the program. The primary change to the commercial portion was to not have one fee of $5 a square foot, but 3 fees. The city was divided into three commercial market areas: Low ($3 a square foot), Medium ($4 a square foot), and High ($5 a square foot). The various Community Planning Areas (CPAs) of the City were grouped into the three areas.

The entire linkage fee program will now go to the City Council at some currently unknown date, unless it is also referred to the Housing Committee. There could be further amendments to the linkage fee proposal, but we would expect them to be minimal at best. 

 

But, Speaking of Taxes, Here is Another One Proposed by LA County

This time it is for public art. Supervisor Solis made a motion to require staff to develop a “private developer civic art requirement” to provide “commissioned art or cultural facilities, or, alternatively, contribute to a Civic Art Fund for civic art and cultural resources and facilities in lieu of installation of such art.” This would apply only to commercial development, not residential since it would “increase the cost of housing.” The charge for the art would be 1% of the “project evaluation,” which would include land and construction cost. Not only would there be an additional cost, but an entirely separate permit and approval from the Arts Commission would be required. During the entitlement phase, you would have to finalize how you will meet the art requirement and get approval from the Arts Commission on the actual art piece if you build one. The Arts Commission will have a pre-selected list of artists to choose from. The developer would have three options:

  1. Build art on site;
  2. Build a Cultural Facility on or off-site; or
  3. Pay an in-lieu fee equal to the 1%.

The art component must be BUILT, or the in-lieu fee paid, and a final inspection completed by the Arts Commission BEFORE you get your Certificate of Occupancy. Any in-lieu fees would go into an Arts Fund administered at the discretion of the Arts Commission. Any artwork built on site would be the property of the landowner and the landowner would be responsible for all maintenance and damage repairs. You would not be able to remove the artwork for 25 years unless you get approval from the Arts Commission.

The Legislative Affairs Committee voted to oppose this “fee,” which we believe is actually a tax since this is a public benefit that has no nexus to any impact of a commercial project. We have engaged, and will continue to engage, in numerous efforts to try to defeat this proposal. The Arts tax is supposed to go to the Planning Commission in early 2018, and sometime thereafter to the Board of Supervisors.