Washington, D.C. – After a few months of harmony in Congress following the September 11 terrorism attack, the slim majorities in both the House and Senate and competitive election races have revived the rancor. While a logjam of legislation and partisan battles promise to clog the U.S. Congress throughout the summer, all eyes shift to the states, where, with little fanfare, real estate’s issues of concerns are becoming much more predominant.
In January, BOMA International created a new state advocacy program designed to assist its local associations address legislative, regulatory, and code initiatives; create an information clearinghouse; and encourage the formation of state associations to effectively identify and impact state issues – before they become law. BOMA’s federated structure, which combines 87 local U.S. associations and 10 state associations with BOMA International, is uniquely qualified to address state and local issues facing the commercial real estate industry. Likewise, in Canada, local and provincial associations take a strong stance on local legislative and regulatory initiatives, with some assistance and coordination from BOMA Canada. Some of the issues that are presently under debate in several states follow.
Several states have considered legislation that would establish a task force to examine health issues involving mold and determine if standards need to be set. Arizona, Illinois, New York, Pennsylvania, and Washington have legislation pending. Indiana’s legislation died this session, and West Virginia’s legislation only focused on mold in schools. California and Maryland have enacted such legislation. Some state-focused public policy groups have also begun to examine the mold issue. BOMA International believes that until scientific data is available, legislative and regulatory initiatives are premature.
Twenty-nine states and over 350 local jurisdictions have adopted the International Codes. Many other states and local jurisdictions are currently considering adoption. BOMA International supports the development and implementation of a single set of model building codes, and believes the International Codes are a means of achieving more consistent and more reasonable regulation of the commercial real estate industry.
In Colorado, it’s known as the Colorado Construction Reform Act. In Missouri, it’s simply SB 911. Both pieces of legislation seek to limit the amount of retainage withheld or enable contractors to substitute retainage for alternate securities in private building contracts. The American Subcontractors Association developed a campaign to promote such limitations through state legislation in 2000. They were successful in passing legislation in New Mexico last year and are continuing their push in other states this year. BOMA is opposed to this retainage legislation because it characterizes retainage as property of the contractor rather than an assurance that the contractor will complete the work it was contracted to do. It also specifies the reduction in retainage without regard to the specific needs of a project to assure completion. This bill would impose legislative restrictions on the way retainage is held and interferes with private construction contract language.
The Missouri Senate is considering adding forced access language in the form of an amendment to another active telecommunications bill.
In Texas, the constitutionality of an existing law is being vigorously challenged in the courts. In Texas Building Owners and Managers Association Inc., et al. v. Public Utility Commission of Texas, et al., BOMA is striving to overturn the state law on building access and the Public Utility Commission’s (PUC) regulations based on it. The legislature enacted the law in 1995 in a misguided attempt to assist telecommunications providers. Until Time Warner brought a complaint to the PUC about access to a building in Houston, the law and regulations were not enforced.
This forced access case presents an ideal opportunity for the commercial real estate industry to firmly establish that such activities are not only a violation of the Texas Constitution, but also the U.S. Constitution. Texas BOMA and BOMA International believe that this will be a landmark case on forced access.
State Service Tax
States across the country have experienced budget crunches due to a weakened economy. As legislators look for ways to manage their budget issues, some have considered alternate sources through tax reform. Florida, Indiana, Minnesota, and Oklahoma have considered a new plan that would impose taxes on a range of services including real estate commissions, leasing fees, and other professional services. Although the bills vary in the scope of services included, they all will impact real estate value. Currently, Hawaii, New Mexico, and Washington have similar taxes in place.
Currently, 19 states have adopted broker lien laws that allow a commercial broker to place a lien on property for an unpaid commission. These laws vary from state to state and contain few similarities. For example, not all states require a written brokerage agreement, definitions of commercial properties differ, and transactions may or may not include leases along with sales. BOMA opposes legislation that would provide real estate brokers the right to file a lien against real property for unpaid real estate commissions.These issues and more will be discussed in detail at BOMA International’s upcoming 95th Annual Convention and Office Building Show®. This year’s convention will be held June 23-25 in Chicago (www.boma.org).