Top 40 Government and Industry Affairs issues BOMA is Engaged on at Local, State & Federal Levels

Key BOMA Government and Industry Affairs Issues for the 2022 - January 18, 2022

Washington State

BOMA Washington State Key Wins in 2021

1. HB 1189/SB 5211 – Tax Increment Financing (TIF) – Broad tool that allows a local government to finance public improvements using tax increment financing. TIF is allowed in more than 40 states and is supported by a wide coalition. (PASSED)
2. SB 5096 – Exempting Real Estate from State Capital Gains Tax – Precursor to a State Income Tax, passed at 7%.While in opposition to this bill completely, we were able to exempt ALL real estate from the State Capital Gains Tax.Therefore, the tax does NOT apply to commercial or residential real estate. (PASSED, but ALL Real Estate Exempted)
3. HB 1332 – COVID Property Tax Deferral – This bill suspends interest and penalties on property tax payments during the Coronavirus Disease 2019 (COVID-19) state of emergency and for 12 months thereafter. Allows cities and counties to apply for loans from the COVID-19 Property Tax Deferral Loan Account.
4. Gov’s Office – Commercial Eviction Moratorium – A commercial eviction moratorium like the residential moratorium, was proposed by the governor’s office.After many meetings and a ton of work by BOMA, NO commercial eviction moratorium occurred. (PREVENTED)

BOMA Washington State Issues for the 2022 Legislative Session

1. SB 5354 – Traffic Control Officers – Once amended, this bill would allow a flagger or flaggers to assist cars with egress from buildings in select cities when approved by the city as part of their traffic control plan. (Needs to be Amended in 2022)
2. HB 1774/SB 5722 – Performance Standards for Buildings Under 50,000 feet – This bill would apply many of the provision of building energy performance standards from HB 1257 (2019) to buildings from 20,000-50,000 square feet.The following issues with the bill need to be addressed:
3. HB 1494 – Split-Roll Property Tax – Raises Property Tax rates on Commercial property to give a property tax exemption on primary residences up to $250k of assessed value. (Alive again in 2022)
4. HB 1767/SB 5666 – Electrification, Banning Natural Gas – Bans natural gas use in residential and commercial real estate and even requires retrofit potentially at sale. (Alive again in 2022)
5. SB 5862 – C-PACER Financing Fix – Counties are taking a strict interpretation of the law that could render it unenforceable, so we need to fix this issue to have a working program in WA State.
6. HB 1971 – Smoke & Fire Damper Fix – Counties are taking a strict interpretation of the law that could render it unenforceable, so we need to fix this issue to have a working program in WA State.
7. SB 5282 – COVID Property Value Reassessment – This bill allows for revaluation of property taxes (up to 3 years to petition) if the property value has been reduced by at least 20% due to COVID. Also waives interest and penalties when the business is in a payment plan.
8. SB 5139 – Rent Control – We are part of a broad coalition opposing this bill including the rental housing coalition, the bill would not allow rent increase for the first six months after the moratorium ends. (Alive again in 2022)

Gov. Jay Inslee is hoping to build on last spring’s passage of two major climate measures: 1) Cap-and-trade program for industrial carbon emissions  and 2) Low-carbon fuel standard. The bulk of that framework rests in three Washington laws:

1. A 2008 law that sets carbon-reduction targets
2. A law passed last spring that ordered cuts in carbon emissions from gasoline and diesel fuel sold in Washington
3. and the creation of the nation's second state-level cap-and-trade system, following California's.

Gov. Jay Inslee sponsored climate measures Environmental debate during the 2022 session. Top section most important to Commercial Real Estate:

1. Get rid of the natural gas industry, a plan to require natural gas utilities to submit decarbonization plans to the Washington Utilities and Transportation Commission every four years. These plans would include emission reduction strategies and how they would support renewable hydrogen and electrification efforts to cut their carbon emissions.
2. The governor wants to trim carbon emissions from buildings - decarbonize buildings – lower reporting and carbon emissions reduction requirements to buildings of 20,000 square feet and higher.
3. A proposal to incorporate climate change considerations into Washington’s master land-use law is expected to be resurrected this session.
4. A new fee on banks that finance fossil fuel projects.
5. Help smokestack industries compete with foreign corporations not facing Washington’s stricter carbon requirements.
6. Provide tax rebates for people buying electric vehicles.
7. Repair frayed relations with the state’s tribes.
8. Convert state ferries from diesel fuel to hybrid electric engines.
9. Revive a dormant aluminum smelter in Whatcom County with equipment that would decrease pollution and give some financial help. A state grant to help build a solar panel manufacturing plant in Grant County in Central Washington.

The price tag for this wish list: $626 million. Inslee contended that he can find the money without raising taxes or fees. 

Issues on BOMA’s Watch List if They Come Up in the 2022 Session

1. Dual Agency Ban – While 42 states allow dual agency representation, this bill would increase costs by prohibiting a broker from representing both parties in a transaction. (Should it be proposed)
2. Sales Tax on Leases/Rent – (should it be proposed)
3. Commercial Rent Waiver/Commercial Eviction Ban – BOMA headed this issue off with the Governor’s Office in 2021 but lawmakers have already spoken about their interest in giving “small business relief” including rent abatement and eviction prohibition for months or years.
4. 07 Electrical Licensing for Building Engineers – Building Engineers (those who repair and maintain equipment and systems in commercial buildings) need a more reasonable path to qualify to take the 07 L&I electrical licensing exam.The number of 07 electrical license holders has been declining for several years.The training hours requirements are too rigid. Legislation is needed to provide a more reasonable pathway for exam qualification.It creates alternative certification qualifications for: HVAC/refrigeration specialty electricians; HVAC/refrigeration restricted specialty electricians; restricted, nonresidential maintenance specialty electricians; and nonresidential maintenance specialty electricians. Authorizes military electronics rating applicants and military generator rating applicants, upon completing continuing education unit requirements, to take the examination for the EL06 or EL07 specialty electrician certification, as appropriate. (BOMA should propose this bill)
5. Transportation Package – BOMA has been involved with prior Transportation packages to ensure that they include BOMA’s priorities (will be proposed)
6. Removal of Sales Tax Exemption on Janitorial Services – (should it be proposed)
7. State Payroll Tax – Proposed Seattle-style payroll expense tax on persons engaging in business in WA State. (should it be proposed)

Not specifically BOMA Issues – monitoring with interest

1. HB 1594 – Repealing the Long-Term Care Act – The legislature passed the Long-Term Care Act including a payroll tax that begins in January 2022.There is widespread displeasure with this new tax and the legislature is looking at delaying or repealing the tax.

Local

BOMA Seattle King County Local Government Affairs

Seattle

1. URM legislation supported and passed last year: The resolution declared the City Council’s and the Mayor’s intent to consider strategies to ensure that all unreinforced masonry buildings in Seattle are seismically retrofitted. First staff report due August 2022.
2. Eviction moratorium: Non-Profit and Small Business set to expire Jan 15, 2022; Sawant asking for another eviction moratorium extension that would include commercial.Update: Seattle Mayor Bruce Harrell announced a 30-day extension to February 14, 2022 of the city’s eviction moratorium. https://mynorthwest.com/3309546/mayor-harrell-extends-seattle-eviction-moratorium-another-30-days/
3. Mayor Durkin’s Executive Order Carbon Emissions Reduction Commercial Buildings: Directs the Office of Sustainability & Environment to create legislation for Carbon-based Building Performance Standards for existing commercial and multifamily buildings 20,000 sq ft or larger in 2022. This standard is estimated to reduce building greenhouse gas emissions 27% by 2050.
4. Land Use Proposal Update rooftop features rules. SDCI is proposing land use legislation to update rooftop features rules, to better accommodate mechanical equipment (like heat pumps) needed to meet new Energy Code requirements. The proposal also facilitates building renovations in Pioneer Square, supporting new penthouse uses on rooftops to aid neighborhood economic recovery.
5. Public Safety Efforts: Council Budget Process did not respond to SPD needs; BOMA will continue to advocate for public safety resources and legislative changes.
6. Fire Marshall Inspectors: Causing delay to tenant move-in.Inspections lagging due to shortage of staff; department rules.

King County

1. C-PACER. Track implementation by King County and support fix in 2022 legislative session.
2. Ban on Natural Gas: Legislation proposed by Executive Constantine is modeled after legislation passed by Seattle last year, to primarily be to reduce natural gas expansion in all commercial and multifamily buildings over three stories tall. Additionally, the proposed ordinance anticipates the increasing need for clean energy generation to offset electricity use by requiring installation of solar panels for commercial buildings.

Other Cities

1. Natural Gas Ban: Expect other cities in King County to follow lead of the King County government by putting codes in place that similarly reduce natural gas use.
2. All cities in King County are required by the Growth Management Board to update their Comprehensive Plans in 2022.

Federal

BOMA International Key Issues and Policy Positions

SUPPORT

1. Green Energy Loan Enhancement Act

• Sponsored by Rep. Jason Crow (D-CO-6), the Green Energy Loan Enhancement Act proposes an increase to the borrowing cap for loans granted through the Small Business Administration's (SBA) 504/CDC Loan Program for energy efficient building upgrades, renovations, and retrofits. The SBA caps most loans at $5 million. However, certain projects that increase the energy efficiency of buildings and/or meet energy reduction goals may qualify for a loan up to $5.5 million, an expansion of $500,000.
• BOMA International strongly endorses the proposed legislation and encourages Members of Congress to co-sponsor the legislation upon its introduction.

2. Growing Renewable Energy and Efficiency Now (GREEN) Act

• Increases the Section 179-D deduction to $3.00 for the current $1.80 per square foot.
• The GREEN Act of 2021 is one of the only federal energy efficiency incentives available to the Commercial Real Estate industry.

3. Efficient Qualified Improvement Property (E-QUIP) Act

• Applies a uniform, 10-year depreciation schedule to energy efficient qualified improvement property and investments.
• Incentive is available to replace or retrofit systems and/or components in buildings 10 years or older.
• The bill would create 130,000 net additional jobs, generate $15 billion in energy savings, add $11 billion of business and federal investment to the economy, and avoid 100 million tons of carbon dioxide emissions.

4. Filtering and Retrofitting the Environment for Safe and Healthy Activities Indoors and Revenue (FRESH AIR) for Businesses Act

• The FRESH AIR for Businesses Act allows a tax credit for businesses to upgrade their ventilation, air filtration and HVAC systems.
• The bill allows employers a quarterly payroll tax credit equal to 50 percent of the expenses incurred.
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5. Commercial Real Estate Tax Provisions

• Section 1031 Like-Kind Exchanges
• Carried Interest Provisions
• Various green tax incentives
• Interest deductibility

OPPOSE Unless Modified

1. Climate Leadership and Environmental Action for our Nation’s (CLEAN) Future Act

• The CLEAN Future Act would federally mandate energy and water benchmarking for all buildings with more than 50,000 square feet of gross floor area.
• This bill develops a model building energy code to increase building energy performance standards.
• Energy data from utilities is required to develop benchmarking standards, but the bill does not contain a requirement for the utility companies to provide data. This shifts the burden of collecting and providing that data onto building owners and managers.