June 22, 2005, Volume 11, Number 5

This Issue of the BOMA-San Francisco Advocate Is Brought To You By

Hanson, Bridgett, Marcus, Vlahos & Rudy

Ken Cleaveland
Director of Government & Public Affairs

BOMA International Conference Begins June 24 in Anaheim: Key Federal Issues To Be Debated
The annual BOMA International Conference and Trade Show will kick off this Friday in Anaheim with a number of important national committee meetings. Of particular interest to our advocacy efforts will be the Government Affairs Committee meeting on June 24th that will review and take positions on a number of key federal bills. A short recap:

• Terrorism Insurance Re-authorization: Congress needs to re-authorize this historic legislation that was necessitated by the terrorist attacks on the World Trade Center buildings in 2001. Essentially, this legislation will put the Federal Government behind private insurers as a re-insurer on losses over $100 billion in the event of another such catastrophe.
• Energy legislation: This legislation has been a long time in coming. BOMA’s interest in the legislation is clear: we need a concise, consistent national policy on energy, that includes plans for enhancing the reliability of the national power grids, provides assistance in the exploration and deployment of new internal energy sources, and that provides incentives (tax deductions, rebates, etc.) for energy conservation efforts. Legislation is currently pending and may be passed in the next several months.
• Community Choice in Real Estate Act: HR 111, S 98 would amend the Bank Holding Act of 1956 to prohibit financial holding companies and national banks from engaging, directly or indirectly, in real estate brokerage or real estate management activities. HR 111 has 231 co-sponsors in the House (135 Democrats, 95 Republicans, 1 Independent) and S 98 has 24 co-sponsors (12 Democrats, and 12 Republicans). The legislation clarifies that financial institutions could continue to dispose of real property acquired in foreclosure and to continue fiduciary and trust activities involving real estate, as well as manage property they use for their own occupancy. An opposing piece of legislation (HR 2660) was introduced on May 26, 2005 by Representative Mike Oxley (R, Ohio) which would specifically allow banks to engage in real estate brokerage and management activities.
• Small Business Health Fairness Act of 2005: HR 525, S 406 would amend Title 1 of the Employee Retirement Security Act of 1974 to improve access and choice for entrepreneurs with small businesses to obtain health coverage for their employees via association health plans. (AHPs). It would exempt such health plans from state regulations and would provide small employers with the same kinds of protections as plans offered by labor unions and national corporations. It is expected that HR 525 will pass the House of Representatives, but Senate action is less certain. Both President Bush and Senate Majority Leader Bill Frist (R, TN) support this legislation.
• Fire Sprinkler Incentive Act of 2005: HR 1131 and S 512 would provide tax incentives for buildings which retrofit their properties with sprinkler systems. The National Fire Sprinkler Association estimates that it costs on average $2 - $3 a square foot to retrofit an existing building with an automatic sprinkler system. A tax incentive would encourage the installation of sprinklers by allowing building owners to depreciate such systems over 5 years, rather than the current 39 years for other building enhancements.
• Secret Ballot Protection Act of 2005: HR 874 and S 1173 would amend the National Labor Relations Act to ensure the right of employees to a secret ballot election conducted by the NRLB. It would make it an unfair labor practice for an employer to recognize or bargain collectively with a labor organization that has not been selected by a majority of the employees in a secret ballot election held under the aegis of the National Labor Relations Board. It would not apply to such collective bargaining relationships that were recognized before the date of enactment of this bill. The bill has 58 co-sponsors in the House, and was introduced into the Senate on June 7, 2005 by Senator DeMint (R, SC).
• Final BOMA International positions will be decided at the meeting in Anaheim on each of the above bills.

BOMA “Green Buildings/Sustainability” Policy Up For Adoption 
Also at the BOMA International Conference, the first official “green buildings” policy will be debated and probably adopted. Its draft, approved by the Environment Committee on June 7, 2005, would call upon BOMA to lead the real estate industry in adopting “green” technologies by educating our membership on the advantages of doing so both to the bottom line and to the environment. The policy calls for monitoring and advocating in the regulatory and codes arenas to ensure that such policies are voluntary and use incentives rather than mandates to accomplish the ultimate goals of better environmental stewardship.

City Public Health Drives City Budget (and Deficit)
In a very revealing opinion piece recently published by Pat Murphy of the San Francisco Sentinel online newsletter, it was pointed out that the San Francisco’s discretionary 2005-6 budget of approximately $1.5 billion contains within it $986 million which are dedicated to the city’s Department of Public Health, or almost 2/3 of the city’s discretionary budget. The larger $5.3 billion annual city budget is primarily made up of voter-approved set-asides for schools, libraries, parks, police and other such mandates. Only about $1.5 billion is actually modifiable by the Mayor and Board of Supervisors. Ironically, an audit of the entire DPH operation has never been done, at least according to City Controller Ed Harrington or Budget Analyst Harvey Rose, who took office in 1971!  Although it would take several years to complete, Mr. Harrington stated there would be value in doing whatever number of individual audits it may take to cover all of DPH’s functions. “Over five years you’d have an entire overview of the department. I don’t think there is a risk in doing multiple incremental audits.” Unspoken is the fact that Mr. Harrington’s office does not have the staff to complete such an audit of DPH. More interesting, Mr. Murphy stated that “union influence in shaping DPH’s budget is omnipresent. Union influence of city government is also free of the restrictions and transparency laws required of business interests.

San Francisco Fees and Fines Study Released by Committee on Jobs, Chamber, BOMA and GGRA
At a recent meeting of the BOMA Government and Public Affairs Committee, Baha Hariri, a policy analyst (B.S., UC Berkeley; MA in Public Policy, Harvard) for the Committee on Jobs reported on a recent study funded by four business organizations: the Committee on Jobs, the Chamber of Commerce, BOMA and the Golden Gate Restaurant Association. The study focused on the city fees and fines and the fact that there is no master list within the city of all such fees and fines, nor are they necessarily set based on the cost to provide the service, as is required under state law. Further the city has no internal controls that would provide accountability for regularly reviewing the fees set by various departments to ensure they are correct. In his presentation to BOMA, Mr. Hariri stated that all California cities have looked to fees to enhance their revenues following the passage of Proposition 13 in 1978. This became even more urgent with the passage of Proposition 218 in 1996 which required a 2/3 voter approval for any new dedicated taxes. San Francisco collected approximately $343 million in fees in budget year 2003-4, or about 12% of the total revenues for the city. Although the population for San Francisco has declined since 2000 (by 4.2% or 32,400 people), the fees have steadily increased. San Franciscans pay, on a per capita basis, $461 per year in fees, compared to residents in San Jose, who pay $222 per capita. The report calls on the Mayor and Board of Supervisors to revamp the fee structure in San Francisco, and to do the following things:

• Complete a Master Fee Schedule – This should be done immediately, and all city departments must cooperate. It was recommended that if a fee is not listed on the Master Schedule, it can’t be collected.
• Develop and Implement a System that clearly communicates the city’s master fee schedule.
• Conduct an immediate audit and review of all individual fees, eliminating duplicative or obsolete fees, and institute a system for an annual (or every other year) review of fees.
• Review all fees to ensure they are compliant with the CA Supreme Court decision in Sinclair Paint Co. vs. State Board of Equalization (1997) which mandated that fees cannot be charged that exceed the cost of providing the service for which the fee is charged. The study pointed out that the city’s 911 emergency system may be charging far more than is legal.
• Develop and Implement a process for creating new fees and altering existing fees that uses precise cost of service measures and benchmarking to ensure fees are reasonable and accurate.
• Create an online one-stop payment system for all fees that will serve to make it easier and more efficient to pay them. 

For a complete copy of the study, go to our website: www.bomasf.org

Supervisor Sean Elsbernd Introduces Charter Amendment to Support Infrastructure Improvements
Supervisor Sean Elsbernd has drafted and introduced a charter amendment, requiring voter approval, which would designate so-called “one-time revenues”, either proposed in the Mayor’s budget or received later in the year, for “one-time uses”. One-time revenue sources would include proceeds from the sale of surplus property, settlement proceeds from legal claims or litigation, or unexpectedly high tax revenues that are not expected to recur in the following years. (An example of the last item would be the $43 million above budget the city received from property transfer taxes due to the high volume of commercial office building sales in the last 12 months.)  The Controller would identify such one-time revenue sources in both the Mayor’s budget as well as through actual receipts. One-time uses for such one-time monies would be things such as technology upgrades, infrastructure improvements, expenditures on deferred maintenance of the city’s streets, parks and recreation centers, or simply placing the funds in the city’s Rainy Day Fund. The charter amendment would be in effect for 10 years, unless the Board of Supervisors extends it, and it would take a 2/3 majority of the Board of Supervisors to re-direct any one-time revenues to normal city operating expenses. The San Francisco Planning and Urban Research Association (SPUR) is spearheading a city-wide effort to upgrade the city’s infrastructure by calling upon local elected leaders to champion some type of set-aside for the maintenance and improvement of our city’s basic facilities, many of which have fallen into abysmal disrepair. This charter amendment is a creative variation on the idea of a mandated set-aside to correct these problems.

Building Inspection Commission Approves Funding To Finish City Earthquake Preparedness Plan
San Francisco’s Building Inspection Commission approved June 20 the proposal to complete the program entitled “Community Action Plan for Seismic Safety” or CAPSS, with the mission to develop and implement a work plan for reducing earthquake risks in the City. Reversing an earlier decision to table the study, the Commission wisely decided to finish the 2 ½ year study, which at that time was 80% completed. According to a SPUR report last year, San Francisco is the most vulnerable American city to catastrophic disaster resulting from an earthquake. In the report, the reasons behind that statement included the fact that San Francisco’s housing stock is the oldest in the West, that much of the City is built on landfill, sand, and other non-compacted soils, which are subject to liquefaction, and with 75% of the rental housing stock covered by rent control, much of the housing stock is poorly maintained. Of course, the chief reason is our position between two major fault lines, the San Andreas and Hayward faults. The 1906 Earthquake (estimated magnitude of 7.8) and the Fire that followed caused 3,000 deaths, $400 million in property damage (in 1906 dollars) and left 250,000 people without shelter. The economic loss from the next big earthquake to hit the urbanized Bay Area is likely to surpass the ten most expensive disasters in the United States’ history combined, according to the report. The CAPSS study has already identified buildings built on brick foundations, and non-ductile concrete buildings as especially vulnerable, as well as wood frame buildings in the Sunset and Richmond areas of town. The city’s older sections of town, including downtown neighborhoods (Chinatown, South of Market, Tenderloin) are expected to suffer disproportionate consequences from future earthquakes as well. The Association of Bay Area Governments (ABAG) estimates that 37,600 housing units would be rendered uninhabitable by a magnitude 7.1 earthquake on the Hayward fault. Other ABAG scenarios show a loss up to 83,000 housing units in San Francisco, depending on the location and severity of the earthquake. BOMA supports the commission’s decision to move forward on completing the CAPSS study so that San Francisco can fully understand its seismic risk, and be prepared to implement the study’s recommendations to reduce that risk.

Do You Know About California’s Universal Waste Rule?
In 2000, California adopted a new “universal waste rule” to manage how the state deals with the most common hazardous wastes. The Department of Toxic Substances Control (DTSC) has developed a fact sheet that describes what is considered common “universal” hazardous waste in CA, and how they are supposed to be handled, recycled, or disposed. The rules are less stringent for these items than they are for more toxic substances. Examples of “universal waste” are: mercury thermostats/thermometers, batteries (except automobile-type lead acid batteries which are considered more hazardous), fluorescent tubes, high intensity discharge lamps, sodium vapor lamps, non-empty aerosol cans, mercury switches (both motor vehicle light switches, and non-automotive switches such as used in portable heaters, washing machines), pressure gauges containing mercury, dilators blood pressure meters, and other medical devices containing mercury. Rubber flooring that contains mercury, novelties including such items as singing greeting cards, flashing athletic shoes, jewelry, and other such devices. Of course, consumer electronics such as cell phones, game consoles, and computers are included as well as cathode ray tubes. Disposal requirements kicked in effective February 9, 2004, for most commercial office buildings. Until February 8, 2006, no more than 30 universal waste lamps and no more than 20 pounds of universal waste batteries can be placed in the regular trash in any calendar month. Mercury thermostats must be recycled or disposed of as hazardous waste. Many universal waste items must be recycled including: lamps, mercury switches, mercury thermometers, mercury gauges, dialators, and weighted tubing, gal flow regulators, counterweights and dampers, and cathode ray tubes (TV and computer glass).  For the complete rules on disposal or recycling of such materials, check out the DTSC’s website www.dtsc.ca.gov or contact their regional Public and Businiess Liaison office in Berkeley at 510-540-3739.

2005 Jobs for Youth Program Announced
Mayor Gavin Newsom, the San Francisco Chamber of Commerce, the Private Industry Council, the Small Business Network and others have joined together to promote a summer employment program for young people in the City. The intent is to create summer jobs and high school internships to provide professional work experience and earning opportunities for youth. The Jobs for Youth program will assist employers with payroll services, worker’s compensation, bonding, hiring tax credits, and work permit information for any referees hired. To obtain 1-3 pre-screened applicants for a position in your company, call 415-861-JOBS or www.jobsforyouth.net.

City Building Department Issues New Disabled Access Compliance Checklist
Complying with disabled access code requirements is state and local law, and requires building owners to carefully assess any improvements for their potential to trigger disabled access upgrades. To assist in complying with this requirement the City’s Building Department has issued a new updated checklist which should be helpful to all commercial property managers. To access this document, log on to www.sfgov.org/dbi and go to the forms/checklists section. BOMA supports and appreciates the Department’s efforts in creating such documents as they provide consistent and clear direction on how property owners must comply with all accessibility requirements.

Upcoming Events of Interest -

• BOMA SF Luncheon with Jim Wunderman, President and CEO, Bay Area Council July 21, 2005 @ Palace Hotel – 11:30 a.m. – 1:30 p.m.

The Bay Area Council, a business-sponsored public policy organization, comprised of 275 of the region’s largest employers, is widely respected for helping to shape critical regional policies affecting business vitality, education, housing, transportation, energy and natural resource management. Jim Wunderman will give a presentation on the Bay Area Council’s top priorities, and will share with us how BOMA and its members can become more instrumental in helping the Council achieve its objectives. Jim Wunderman was a former special assistant to Mayor Dianne Feinstein, former chief of staff to Mayor Frank Jordan, and most recently head of public affairs for Providian Financial. Sign up online at www.bomasf.org. Cost: $45 per person.

• Building San Francisco July 27, 2005 @ SF Marriott – 8 -10 a.m.

This annual review of “things to come” hosted by the San Francisco Business Times and co-sponsored by BOMA San Francisco, SPUR and Commercial Real Estate Women (CREW) will be a breakfast meeting featuring Mayor Gavin Newsom, Joel Marcus, CEO for Alexandria Real Estate Equities (a biotech REIT) and Monique Moyer, Executive Director for the San Francisco Port Authority. The cost is $50 per person or tables of 10 at $450. The focus will be on biotech being attracted to the Mission Bay UCSF research campus, new developments at the Presidio, and the renaissance occurring along the southern waterfront of the city. To attend, contact Felicia Brown at 415-288-4936 or online at www.sanfrancisco.bizjournals.com/ sanfrancisco/event/1552.

Factoid: BOMA San Francisco members and other commercial building owners pulled 1,299 office tenant improvement permits in 2004, for an estimated value of $213 million! Source: DBI.