Volume 10, Number 1, February 24, 2004

This issue of the BOMA San Francisco Advocate is brought to you by

Mack-Cali Realty Corporation

Vote Yes on Prop J: Workforce Housing - Endorsed by Bay Area Council and BOMA!
The Bay Area Council, the leading voice for regional public policy and economic development, recently gave its thumbs-up to Prop J, the Workforce Housing Initiative. The significance of this endorsement cannot be overstated: The Bay Area Council only takes positions on county or local measures deemed to have a measurable impact on the entire region. Of the many local and county measures on the ballot this March in the nine-county Bay Area, the San Francisco Workforce Housing Initiative is the only measure deemed critical enough for the Bay Area Council to recommend a "yes" vote. The Workforce Housing Initiative was written by the San Francisco Chamber of Commerce and is pioneering legislation designed  to address the housing needs of those who have been left out of the current housing debate, namely the region's working and middle-class families who want to own their own home.

Prop J will spur the development of 10,000 new homeownership units in San Francisco. The new homes will be built only in areas best served by public transit (downtown, along the central waterfront, and along the Third Street corridor) and away from existing neighborhoods. The city will benefit from an increase in much-needed tax revenue. Residents and others will benefit from a decrease in traffic as more people live closer to where they work. Building housing in the city will lessen the burden of development on surrounding suburban greenbelts. Prop J will bring more than 10,000 well-paying construction jobs to San Francisco, and it will help countless San Franciscans afford their first home, without using a penny of public subsidy.

Prop J is good, well-reasoned, well-supported public policy. Senator Dianne Feinstein and Mayor Gavin Newsom have endorsed it. It will allow for the building of new housing where it is most appropriate, and will require developers to build 39 percent of their units at below-market-rate prices, while requiring the highest environmental building standards. This is much needed housing legislation in San Francisco, and will help build the homeowner tax base so critically needed in the City. BOMA urges its members to support Proposition J!

Mayor Gavin Newsom Needs Help Retiring Campaign Debt
Mayor Gavin Newsom may have had the most expensive campaign for the office in city history, spending over $5 million to gain his office in Room 200 at City Hall. Unfortunately, he has about $300,000 in debts still outstanding, and has asked for help from BOMA, and others in the business community to retire it. Each contributor can donate up to $750 (if he or she has given nothing to the campaign). New city aggregation rules also limit the amount a person can contribute, and combines contributions from all entities whose contributions are "controlled" or majority-owned by the same person to the $750 limit.  If you wish to donate online, please go to www.acteva.com/go/gavinnewsom.  Contributions may be mailed to Newsom for Mayor, 4104 24^th Street, #766, San Francisco, CA 94114. Questions? Contact Chris Gruwell, Finance Chair, at 415-608-6583 or Laurence Pelosi, Campaign Treasurer, at 415-999-7273.

2004 Disabled Access Valuation Threshold Announced for San Francisco Projects
The Department of Building Inspection has announced the threshold for disabled access upgrade "small projects" exemptions is now $101,198.98. Projects below this amount can be considered to be an unreasonable hardship on owners should disabled access upgrades be required. This amount was determined by the State Architect's office, and based upon the January 2004 ENR Index values.

Susan Leal's Mayoral Bid Debt Retirement Breakfast March 4^th
San Francisco's very capable City Treasurer, Susan Leal, is trying to retire her $60,000 debt from her bid to become the city's Mayor last year, and is seeking help from BOMA members. Doug Shorenstein is hosting a breakfast reception for her on March 4^th, from 7:30 - 8:30 a.m. in his offices at 555 California Street, 49^th Floor. Anyone interested in attending is encouraged to contact Kimbely Haleck at the Shorenstein Company at 415-352-7247 or email her at khaleck@shorenstein.com. Checks should be made payable to Susan Leal for Mayor. (FPPC ID# 251900)

New State No Smoking Law Affects State-Owned and State-Occupied Buildings
Did you know a new state law went into effect prohibiting smoking inside or within 20' of any entrance or operable window of a public building or private office building with state government agencies as tenants? AB 846 was passed last year and became effective January 1, 2004. It also allows local governments to enact even more restrictive anti-smoking regulations, if desired. San Francisco code also requires that smoking receptacles be placed outside buildings where smokers congregate.  

Sacramento Awash in Legislation Affecting Commercial Real Estate
In a February 19^th telephone conference call with BOMA California Lobbyist Les Spahnn, a number of bills affecting commercial real estate were discussed. The deadline for bills to be introduced was February 20^th. BOMA is supporting several bills: AB 1772, which would authorize the PUC to refund bond monies giving PG & E customers lower energy rates. This is particularly important for BOMA members in the PG & E service territory, as the reduction will be proportionately larger (+/- 10%) for commercial and industrial customers, as their rates were raised dramatically during the energy crisis several years ago. Another bill (AB 1447) would allow for negotiated settlements on Prop 65 violations and would reduce the need for litigation, something BOMA favors. SB 1205 would extend protection to owners who install AEDs and make the vandalism or theft of such devices a crime. AB 1707 would be bad legislation, and would raise the fine from $1,000 to $4,000 a day for disabled access violations. AB 2006 is very bad legislation, and would effectively reverse energy deregulation in California by allowing Southern California Edison to purchase and operate generation facilities with a guaranteed rate of return on their investments, thus essentially returning that utility to pre-AB 1890 (1998) regulated market rules. Several of the bills BOMA is monitoring include AB 1699, which would raise the fees for recycling of fluorescent light bulb disposal, and AB 1684, which would allow two more years for the installation of distributed generation (DG) units,  but would also make the air quality standards a lot stricter for owners of such units.

City Enacts Fire Code Amendment Requiring Self-Contained Breathing Replenishment Systems in New High Rise Buildings
An ordinance was passed last month requiring self-contained breathing replenishment systems to be installed in new high rise buildings (75' high or more) where permits have been issued after June 30, 2004. This self-contained breathing air replenishment system will provide a supply of pressurized breathing air through a permanently installed piping distribution system for the replenishment of portable breathing air equipment. The ordinance also applies to all new underground transportation or pedestrian tunnels exceeding 300 feet. The cost estimates in new buildings was presented as approximately $1,000 per floor, with air outlets on every third floor. The impetus for this code change came from the firefighters, who wanted a means of replenishing air in their portable tanks without having to go back down to the ground floor, or other staging area, thus saving time for extinguishing fires, and other related tasks such as search and rescue. This code change is not intended to apply to existing buildings, and is not retroactive. 

BOMA's 2004 National Legislative Priorities
At the annual BOMA Winter Business meeting held last month, a number of issues were discussed that formed the priority list for the national association. At the top was a continued push to permanently reform the leasehold improvements depreciation schedule, reducing it from 39 years, to the reality of the marketplace (10 or fewer years). Property owners in 2004 can now take an accelerated 50% depreciation deduction for leasehold improvements in the first year and then depreciate the rest of the basis over 39 years for property purchased after 5/5/2003 or placed into service before 1/1/2005. Another is tort reform. A policy was passed at the January 2004 Board of Governors meeting calling upon Congress to pass legislation that would move class action suits to federal court if members of the suit are from different states, settle ongoing legal issues by creating a compensation fund for settlement of asbestos-related claims, limit punitive damage awards, and ensure the bulk of compensation for damages goes to the victims, not attorneys. A third is the adoption of a national energy policy by Congress that would give federal tax credits for sprinkler retrofits in high rise office buildings nationwide.

Got Mold? Get More Information on How To Remediate It!
Mold is certainly in the news of late, and is of particular concern for building owners in many more humid parts of the country. The EPA has an excellent set of guidelines available online for mold remediation in schools and commercial buildings. Check it out at www.epa.gov/iaq. New York City also has an excellent model. Check it out at www.ci.nyc.ny.us.

Supervisor Gerardo Sandoval Meets with BOMA Government Affairs Committee
On February 10^th San Francisco Gerardo Sandoval, District 11 Supervisor (Outer Mission, Excelsior, Ingleside) met with BOMA's members of the Government and Public Affairs Committee to discuss issues at City Hall, and his perspective on them. Sandoval stated he wanted to work with the new Mayor, and suggested he has established a record over the past 3 years that has benefited the business community, including approval of a number of new development projects. He mentioned about $50-60 million in Prop K funding for transportation improvements was going to be available, and asked BOMA to suggest a downtown transportation improvement that could be funded. He also stated his support for increasing homeownership opportunities in the City, and his recent legislation that would help first-time homebuyers with down payment assistance. Sandoval also shares a frustration with the city's planning department, and stated the new director must be a planning professional, not a political payback appointment. He also supported returning to a higher standard for Board of Supervisor review of Planning Commission decisions, even in the face of a new state law that guarantees residents a "final appeal" before the Board on planning issues. He supports the expansion in number of business or community improvement districts throughout the city, and opposes outright bans on chain store outlets in his district. However, he acknowledged that in the new era of district elections, it is difficult to oppose them in districts where the local supervisor supports such bans. He did not believe Proposition J (March 2 workforce housing initiative) would have much impact or value for his districts' residents. He also believed the anti-demolition ban proposed by Supervisor Daly would pass the Board unless the tenants affected in the Trinity Plaza apartment building were fully accommodated by the building owner first. On the issue of city taxes, he believed that BOMA and other business organizations must let their views be heard and that every sector of the city was going to have to pull together to bridge the estimated $300+ million deficit this year. He would like to see a structural change in the way the budget is put together so "we won't be back at the same place next year".

In conclusion, Supervisor Sandoval voiced his top five current concerns:

1.      Quality of life in his district, and the city at large, including clean parks, well-stocked libraries, better streets, more greenery and trees, and increased services for the homeless.

2.      Creating more jobs, and his hope to get the work started immediately on rebuilding the Hetch-Hetchy system to put many city residents back to work.

3.      Traffic - "It's a mess in my district."

4.      Quality of public education in my district, which has the most children of any district in city.

5.      High density housing around BART stations. Push the development of same at Balboa station.

BOMA Members Meet with SF Assessor-Recorder Mabel Teng
On February 17^th, BOMA members had an opportunity to hear from San Francisco's Assessor-Recorder on the current challenges facing her department, and how property owners can best work with her when issues such as assessment appeals come up. Her best advice was for property owners to understand how they wish to have a building valued, and to stick to one method, rather than changing it from year to year. Her office recently contracted with CB Richard Ellis to use their personnel to assist in doing commercial appraisals as her office did not have the expertise on staff. From January to September, 2003, $2,138,804,150 worth of commercial properties changed hands in San Francisco resulting in a gain of nearly $24 million in property taxes, with half going to the city's general fund, and the other half to schools. There were over 1,700 applications filed for re-assessments in 2003, with 174 of them by office building owners with values in excess of $50 million each. As of November 30, 2003, a total of 1,349 cases from 2002 have been decided, with an average reduction of 39.3% in individual assessments. Average assessed values in the city for all properties went up 6% from July 2002 to July 2003. A special lunchtime brown bag is being held March 3^rd with appraisal expert Mark Ong, of PriceWaterhouseCoopers talking about the property tax assessment appeals process in San Francisco. Contact Mary Anne Bogue (BOMA) at 415-362-8567 to attend.

BOMA Members Meet with California Assembly Member Mark Leno
February 6^th, several members of BOMA San Francisco's Political Action Committee and BOMA Government Affairs Director Ken Cleaveland met with Assembly Member Mark Leno. The discussion revolved around the state's budget deficit, and how Leno thought it needed to be handled. He was reluctantly supporting Governor Schwarzenegger's $15 billion bond measure on the upcoming March 2 ballot because without it Draconian cuts in state programs would have to be made. BOMA members expressed concerns with the possible passage of legislation that would treat commercial properties differently for the purposes of taxation, and a November state ballot measure being pushed by Rob Reiner, the movie/tv star, and the California Teachers Association, which would open up Proposition 13 and allow commercial properties to be taxed locally at 1.55%, instead of the 1% rate now in effect for all types of properties. Leno suggested that commercial property owners might want to suggest a five year re-assessment for their properties as a means of sidetracking such initiatives. The BOMA representatives stressed the fact that raising taxes on commercial properties does not help California's small businesses, and gets passed down in higher prices for goods and services produced in the state. BOMA members also discussed energy and labor issues, and the need to clarify the state law governing return of commercial lease deposits to tenants.

City Leaders Mulls New/Higher Taxes To Bridge Budget Deficit
As part of the search for new revenue sources, Supervisor Fiona Ma's Revenue Advisory Panel is considering a number of new taxes for the City's businesses and residents. Among those are an annual  parcel tax of $250 per residential and $1,000 per commercial property, increasing the property transfer tax, increasing the payroll tax from 1.5% to 1.6% (and redefining payroll to include partnership compensation) enacting a commercial square footage tax, re-enacting a gross receipts tax for selected industries, enacting a net receipts tax, enacting a commercial rents tax, increasing the sales tax from 8.5% to 9.0%, applying the local utility tax to residential users, raising the local vehicle registration license (if granted the ability by state legislature) and increasing neighborhood parking permits. The tax panel is not looking at city budget reductions, as that is not its charge, although several business organizations have complained (including BOMA) that studying revenue enhancements without commensurate expense reviews cannot succeed in winning business community support. Any tax increase proposals must be voted upon by city residents before they can take effect. In a timely article published by SPUR, San Francisco was far and away the highest taxing jurisdiction of any in the Bay Area, and was only exceeded nationally by Philadelphia, New York, and Washington, DC. On a prototypical general office business that netted $10 million in receipts or had 100 employees, whichever was applicable, the business taxes in San Francisco totaled $60,500 per year. The second highest in the Bay Area was the city of Concord, at $7,775 per year.

California's Workers' Compensation Rates Highest in Nation
As if you didn't know this already, but California employers are paying the highest workers' compensation rates in the country, while victims of accidents receive less than the national average for benefits. What is the problem? That is just what Governor Schwarzenegger has asked the Legislature, and why he has proposed additional reform measures beyond what was enacted last year. Here is a comparison of California's rates with other states (average, per $100 of payroll, all classes of workers): National Average: $2.46

Most Expensive                                Least Expensive
California - $5.85                              Arizona - $1.63
Florida - $4.50                                  Washington - $1.65
Texas - $3.29                                    Oregon - $2.06
Nevada - $3.02           

19 Buildings/15 Hotels Enter 2004 Commercial Recycler of the Year Awards Contest
Anne Miller, Chair of the 2004 BOMA Recycler of the Year awards (the CoRys) announced this week that 19 BOMA office buildings have entered the contest, in three categories: small buildings under 300,000 square feet, medium-sized buildings between 300,000 and 600,000 square feet, and large-sized buildings over 600,000 square feet. The entrants are:

Small Buildings: 260 Townsend, 49 Stevenson, 555 Montgomery, The Ferry Building, 353 Sacramento, and 456 Montgomery.

Medium Buildings: 101 2^nd Street, the Metreon Ctr, 100 Pine, 95 7^th Street, 220 Montgomery, 555/575 Market, and 235 Montgomery

Large Buildings: Post Montgomery Center (1 Post), Levi's Plaza, 525 Market, The Gap Headquarters, and 1 Market Street.

Large Hotels: San Francisco Hilton, and Marriott. Medium Hotel: the Argent, the Fairmont, and the Sir Francis Drake

Small Hotel: BW Tuscan Inn, Hotel Cosmo, the Galleria Park, the Juliana, Monticello Inn, Hotel Orchard, Prescott Hotel, Serrano Hotel, Hotel Triton, and the Villa Florence Hotel

All buildings and hotels will be judged by site visits, as well as their applications. The CoRY awards will be announced at the April 22 BOMA luncheon at the Palace Hotel. Noted U.S. Green Buildings Council founder David Gottfried will be the speaker. San Francisco Supervisor Sophie Maxwell will present the awards to each winning property.

Need to Hire Someone? Contact Veteran Industries!
Veteran Industries (VI) is a Department of Veterans Affairs vocational program that assists American veterans in securing competitive employment in their respective communities.  VI can address your labor shortfall, job match employees and reduce overhead in Human Resource costs. Through a program called Transitional Work Experience (TWE), veteran skills, abilities and interests are job matched to the specific needs within the participating company. Veteran Industries works with your business and the veteran to ensure a mutually beneficial placement is made. The benefits to your business include:

*       Eliminates taxes, insurance, unemployment benefits, worker's compensation, etc.

*       Eliminates payroll processing

*       Offers reliable help at an affordable cost

*       Reduces hiring costs

*       Partners you with a veteran organization

*       Only places pre-screened veterans and is risk free

*       Permanent employment tax savings available 

For more information, call Anita Yoskowitz, Veteran Industries Program Coordinator at (415) 551-7360.

San Francisco Garbage & Recycling Directory Information (Clip & Save!)

Golden Gate Disposal & Recycling Company:
Garbage and recycling collection - main number - 415-626-4000
Compactor sales and service - to buy, rent, or service a compactor - 415-621-3841
Debris box service - for large quantities of materials - 415- 621-3841
Bin-by-the-day - for smaller clean-up or move out jobs - 415-621-3841

Sunset Scavenger Company:
Garbage and recycling collection - main number - 415-330-1300
Large commercial services - customers with metal bins - 415-330-1315
Debris box service - For large quantities of materials - 415-330-1315

For the record: (Source: www.Opensecrets.org., June 30, 2003 Report)NANCY PELOSI (D-CA)
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