BOMA San Diego Legislative Update
Craig Benedetto gives a legislative update on COVID-19 health orders, eviction moratorium ordinances, essential services and more
LEGISLATIVE UPDATE:
Feds fix QIP – Depreciation schedule now at 15 years – Although the federal stimulus bill passed by Congress with billions to help employees and businesses alike, it also included an important fix and one of BOMA’s most important federal issues – the QIP. BOMA, for MANY years has been advocating for a fix to bring the depreciation schedule for tenant improvements to something more reflecting the useful life of those improvements (see explainer HERE). “Qualified Improvement Projects” became known during the discussion of the Tax Cuts and Jobs Act (e.g. the federal tax reform bill of 2017), and in that measure, agreement was made to reduce the depreciation for these improvements to 15 years. It garnered bi-partisan support, BUT, in a drafting error, the QIP fix was not included in the final bill language, and, therefore, never adopted. Earlier this year, BOMA San Diego joined chapters around the Country arguing, again, to fix the fix. And, finally, we can say, it was this year.
City of San Diego Releases Draft Budget; Girds for cuts – The Mayor released his draft FY 2020-2021 budget (HERE) last week which proposes a nearly 10% decline in annual expenditures. The draft budget includes $46 million in General Fund reductions across all branches and almost $15 million in reductions to non-General Fund expenditures to help balance the General Fund budget. Significant reductions in sales, transient occupancy (TOT) and property tax estimated at ~$250 million for the upcoming fiscal year are driving the budget cuts. For now, enterprise fund departments, like Development Services, will continue to operate, but a hiring freeze is proposed and further cuts and reductions in services could be added when the “May revise” budget is published next month.
City of San Diego Launches Electronic Plan Submittal – The City of San Diego announced last week it’s transition to permitting online electronic plan submittal. This has been planned for some time, but the “stay at home” orders have placed a new emphasis on remote work and online resources and accelerated the timeline for implementation. The plan is for applicants to apply on-line through the “Open DSD” portal (HERE) and submit plans in PDF format. The target implementation date for the transition is May 4, 2020, although some beta testing is occurring with some users to work out the bugs in the system.
MTS “Elevate” Sales Tax Measure put on hold – MTS announced last week that they are putting their proposed ballot measure to raise the sales tax to pay for transit improvements and expansion on indefinite hold. The decision was made by the MTS Board of Directors in recognition of the pandemic and the focus on recovery. The Board echoed support for the need and an intention to consider it on a future ballot. You can find out more on Elevate HERE.
Housing Federation Housing Bond status still up in the air – The Housing Federation’s proposal to place a $900 million housing bond on the November ballot is still pending, but its future is uncertain. The original plan was for the San Diego City Council Rules Committee to further consider the language this month. That hearing has been moved to next month, but given the results of the Convention Center Expansion initiative which did not get a two-thirds vote this past election, and the current economic crisis caused by the COVID-19 shut down, it is unclear whether it will be pursued this year or held off for a future election. For more information on the proposal, please follow this link (HERE).
City and County announce planning effort to open up the economy – Consulting with regional business organizations, labor, public health experts and others, Mayor Faulconer and County Board of Supervisors Chair Greg Cox said they will work over the next several weeks to develop a re-opening plan for the local economy (find more information HERE). The effort will be led by the San Diego Regional Chamber of Commerce and the Economic Development Corporation. BOMA San Diego will be a part of the conversation and will be providing input on the right way to protect the public health in commercial properties while ensuring that tenants can continue to operate.
White House proposes “Opening up America Again” Plan – The White House last week issued some proposed guidance to states and local governments on how to slowly open up the American economy. The plan (found HERE) focuses on massive testing capabilities in order to identify, track and contain the COVID virus. The phased approach would provide three two-week gates to move communities beyond the current lock-down to a slow opening up of certain businesses and activities. It also includes some insight into what might be required of businesses (and buildings) in order to reopen. Some of the requirements could include enhanced and maintained sanitation, closure of common areas or congregation points, minimized travel, implementation of some of the “social distancing” protocols being used now for stores and other essential businesses, wearing of face masks, etc. While news reports indicate some areas of the country might get the green light soon due to the limited number of COVID cases they might have, most areas, including cities in California, are likely to not see any relaxation until May.
Governor announces “Roadmap to Modify the Stay at Home Order” plan - presented early last week, Governor Gavin Newsom provided a framework for what would lead to a slow re-opening of the California economy (find it HERE). The focus of the plan is public health and data indicating a decline in new admissions to hospitals and ICU’s as the metric for initiating the slow opening of the economy.
Governor announces Task Force on Business & Jobs Recovery – Governor Newsom also announced late last week the establishment of a task force co-chaired by former presidential candidate Tom Steyer and his Chief of Staff Ann O’Leary. The task force will work to develop a re-opening plan that will get the economy re-started in a way that will protect the public’s health. Steyer discussed a focus on a balanced economy and helping disadvantaged communities, in addition to sustainability and the environment. Find the Governor’s release and a link to the panel’s full membership HERE.
SBA PPP Loan Funds Depleted – The SBA announced last week that the $376 million fund for the “paycheck protection program” or PPP has been depleted and new applications are not being accepted unless new funds are appropriated for the program. Congressional leaders are negotiating for a third stimulus round of potentially $250 million to renew the fund, but it’s unclear if and when that will happen. In the meantime, any tenants or members who were not accepted for the first round should speak with their lenders to be ready for any other round that might get funded, or look at other options that might be available. The SBA website has some resources available HERE.
California State Legislative Update – BOMA San Diego joined other industry leaders to review over 500 bills that could impact commercial real estate this month. The nearly two-hour-long discussion focused on what we can expect with the remainder of the legislative session, as well as updating positions on the measures in play. Here are some of the highlights:
REMINDER - County of San Diego Health Orders STILL in effect AND being enforced – The County of San Diego’s health orders (found HERE), including the requirement for facial coverings for many essential businesses. The County’s health orders, also STILL require that essential businesses that have remained open and allow access to members of the public as of April 7 must create and post a document outlining their protocol on physical distancing and hygiene. A downloadable version of the document can be found HERE.
Eviction Moratorium Ordinances – here is a list of some of the jurisdictions in the County, including the County of San Diego for the unincorporated area, who have adopted eviction moratorium ordinances. BOMA and our coalition partners, NAIOP, BIA and the Southern California Rental Housing Association, and other property owner stakeholders have been successful in educating decision makers on the situation facing landlords in that rent is a part of a system that pays for services like cleaning, sanitation and security, as well as obligations for loans and taxes. This list is not exhaustive, but you can click on each city to find the link to the ordinance or webpage where you can find the ordinance.
For now, at the local, state and federal levels, BOMA International and BOMA CAL, in addition to our local team, are working to make sure our members continue to be seen as essential since our services include building health, safety and our activities as critical to economic resiliency, sustainability and recovery.
Feds fix QIP – Depreciation schedule now at 15 years – Although the federal stimulus bill passed by Congress with billions to help employees and businesses alike, it also included an important fix and one of BOMA’s most important federal issues – the QIP. BOMA, for MANY years has been advocating for a fix to bring the depreciation schedule for tenant improvements to something more reflecting the useful life of those improvements (see explainer HERE). “Qualified Improvement Projects” became known during the discussion of the Tax Cuts and Jobs Act (e.g. the federal tax reform bill of 2017), and in that measure, agreement was made to reduce the depreciation for these improvements to 15 years. It garnered bi-partisan support, BUT, in a drafting error, the QIP fix was not included in the final bill language, and, therefore, never adopted. Earlier this year, BOMA San Diego joined chapters around the Country arguing, again, to fix the fix. And, finally, we can say, it was this year.
City of San Diego Releases Draft Budget; Girds for cuts – The Mayor released his draft FY 2020-2021 budget (HERE) last week which proposes a nearly 10% decline in annual expenditures. The draft budget includes $46 million in General Fund reductions across all branches and almost $15 million in reductions to non-General Fund expenditures to help balance the General Fund budget. Significant reductions in sales, transient occupancy (TOT) and property tax estimated at ~$250 million for the upcoming fiscal year are driving the budget cuts. For now, enterprise fund departments, like Development Services, will continue to operate, but a hiring freeze is proposed and further cuts and reductions in services could be added when the “May revise” budget is published next month.
City of San Diego Launches Electronic Plan Submittal – The City of San Diego announced last week it’s transition to permitting online electronic plan submittal. This has been planned for some time, but the “stay at home” orders have placed a new emphasis on remote work and online resources and accelerated the timeline for implementation. The plan is for applicants to apply on-line through the “Open DSD” portal (HERE) and submit plans in PDF format. The target implementation date for the transition is May 4, 2020, although some beta testing is occurring with some users to work out the bugs in the system.
MTS “Elevate” Sales Tax Measure put on hold – MTS announced last week that they are putting their proposed ballot measure to raise the sales tax to pay for transit improvements and expansion on indefinite hold. The decision was made by the MTS Board of Directors in recognition of the pandemic and the focus on recovery. The Board echoed support for the need and an intention to consider it on a future ballot. You can find out more on Elevate HERE.
Housing Federation Housing Bond status still up in the air – The Housing Federation’s proposal to place a $900 million housing bond on the November ballot is still pending, but its future is uncertain. The original plan was for the San Diego City Council Rules Committee to further consider the language this month. That hearing has been moved to next month, but given the results of the Convention Center Expansion initiative which did not get a two-thirds vote this past election, and the current economic crisis caused by the COVID-19 shut down, it is unclear whether it will be pursued this year or held off for a future election. For more information on the proposal, please follow this link (HERE).
City and County announce planning effort to open up the economy – Consulting with regional business organizations, labor, public health experts and others, Mayor Faulconer and County Board of Supervisors Chair Greg Cox said they will work over the next several weeks to develop a re-opening plan for the local economy (find more information HERE). The effort will be led by the San Diego Regional Chamber of Commerce and the Economic Development Corporation. BOMA San Diego will be a part of the conversation and will be providing input on the right way to protect the public health in commercial properties while ensuring that tenants can continue to operate.
White House proposes “Opening up America Again” Plan – The White House last week issued some proposed guidance to states and local governments on how to slowly open up the American economy. The plan (found HERE) focuses on massive testing capabilities in order to identify, track and contain the COVID virus. The phased approach would provide three two-week gates to move communities beyond the current lock-down to a slow opening up of certain businesses and activities. It also includes some insight into what might be required of businesses (and buildings) in order to reopen. Some of the requirements could include enhanced and maintained sanitation, closure of common areas or congregation points, minimized travel, implementation of some of the “social distancing” protocols being used now for stores and other essential businesses, wearing of face masks, etc. While news reports indicate some areas of the country might get the green light soon due to the limited number of COVID cases they might have, most areas, including cities in California, are likely to not see any relaxation until May.
Governor announces “Roadmap to Modify the Stay at Home Order” plan - presented early last week, Governor Gavin Newsom provided a framework for what would lead to a slow re-opening of the California economy (find it HERE). The focus of the plan is public health and data indicating a decline in new admissions to hospitals and ICU’s as the metric for initiating the slow opening of the economy.
Governor announces Task Force on Business & Jobs Recovery – Governor Newsom also announced late last week the establishment of a task force co-chaired by former presidential candidate Tom Steyer and his Chief of Staff Ann O’Leary. The task force will work to develop a re-opening plan that will get the economy re-started in a way that will protect the public’s health. Steyer discussed a focus on a balanced economy and helping disadvantaged communities, in addition to sustainability and the environment. Find the Governor’s release and a link to the panel’s full membership HERE.
SBA PPP Loan Funds Depleted – The SBA announced last week that the $376 million fund for the “paycheck protection program” or PPP has been depleted and new applications are not being accepted unless new funds are appropriated for the program. Congressional leaders are negotiating for a third stimulus round of potentially $250 million to renew the fund, but it’s unclear if and when that will happen. In the meantime, any tenants or members who were not accepted for the first round should speak with their lenders to be ready for any other round that might get funded, or look at other options that might be available. The SBA website has some resources available HERE.
California State Legislative Update – BOMA San Diego joined other industry leaders to review over 500 bills that could impact commercial real estate this month. The nearly two-hour-long discussion focused on what we can expect with the remainder of the legislative session, as well as updating positions on the measures in play. Here are some of the highlights:
- The state legislature extended its suspension of hearings until May 4. It’s possible the session is further delayed, but given statutory deadlines for the state budget, they will likely need to start hearings on the budget soon
- The Legislative Desk (where bills are officially drafted and amended) is open and amendments are being processed
- Some Committee Chairs in both the Assembly and the Senate are asking their members to reduce their bills with a focus on COVID related measures
- The Assembly and Senate Leadership may well issue guidance on bill packages with the intent of reducing everything to COVID or housing related and carry over other measures to the next session
- COVID-19 - there are a whole new slate of bills, including funding, statewide codification of some of the Governor’s Executive Orders (like eviction moratoriums - SB 939 Weiner), etc. that we will be closely monitoring and acting on since they will likely be the focus when the legislature reconvenes and perhaps for the rest of the session
- Split Roll – proponents of the second potential measure to split the property tax rolls and reassess commercial properties at a higher level submitted 1.7 million signatures a month before the deadline to the various Registrar of Voters in California. They need approximately 1 million signatures to qualify. Validation is now commencing but is slowed by getting workers to sites to verify the signatures. Notable new allies in the fight to protect Prop 13 are farmers and the NAACP. On the opposition side, the unions representing California teachers put another $2.5 million into campaign to support split roll last week.
REMINDER - County of San Diego Health Orders STILL in effect AND being enforced – The County of San Diego’s health orders (found HERE), including the requirement for facial coverings for many essential businesses. The County’s health orders, also STILL require that essential businesses that have remained open and allow access to members of the public as of April 7 must create and post a document outlining their protocol on physical distancing and hygiene. A downloadable version of the document can be found HERE.
Eviction Moratorium Ordinances – here is a list of some of the jurisdictions in the County, including the County of San Diego for the unincorporated area, who have adopted eviction moratorium ordinances. BOMA and our coalition partners, NAIOP, BIA and the Southern California Rental Housing Association, and other property owner stakeholders have been successful in educating decision makers on the situation facing landlords in that rent is a part of a system that pays for services like cleaning, sanitation and security, as well as obligations for loans and taxes. This list is not exhaustive, but you can click on each city to find the link to the ordinance or webpage where you can find the ordinance.
- County of San Diego – unincorporated area – March 24
- City of San Marcos – March 24
- City of San Diego – March 25
- City of Oceanside – March 25
- City of Encinitas – April 1
- City of Del Mar – April 6 (Item 8 on the agenda through the link)
- City of Carlsbad – April 7
- City of Poway – April 7 (Item 10 on the agenda through the link)
- City of Chula Vista – April 7
- National City – April 7
- City of Escondido – April 8
- City of Vista – April 14
For now, at the local, state and federal levels, BOMA International and BOMA CAL, in addition to our local team, are working to make sure our members continue to be seen as essential since our services include building health, safety and our activities as critical to economic resiliency, sustainability and recovery.