January 11, 2016

West Coast Real Estate Update: Jan. 11, 2016

Holland & Knight Update
Douglas A. Praw | Susan Jennifer Booth | Stacie Andra Goeddel | Karl J. Lott

Hit Pause on Energy Use Disclosure

Pursuant to California Assembly Bill (AB) 1103, the Nonresidential Building Energy Use Disclosure Program required an owner (or an agent authorized to act on behalf of an owner) of a nonresidential building within California to benchmark the building's energy use via the U.S. Environmental Protection Agency (EPA) ENERGY STAR® Portfolio Manager system and to disclose documents regarding the building's energy usage to the following parties:

  • a prospective buyer of the building, no later than 24 hours prior to execution of the sales contract
  • a prospective lessee of the entire building, no later than 24 hours prior to execution of the lease
  • a prospective lender financing the entire building, no later than submittal of the loan application

However, starting on Jan. 1, 2016, there will be no statewide energy use disclosure requirement. Between now and 2017, California Energy Commission staff will engage in a public process to develop regulations and establish the infrastructure for the new statewide benchmarking program mandated by AB 802. Energy Commission staff anticipates that regulations for the new program will become effective in 2017, meaning – at least for now – that there is one less task for commercial building owners to perform at closing.

New CEQA Ruling: CBIA v. Bay Area Air Quality Management District

In the Dec. 17, 2015, published opinion for California Building Industry Association v. Bay Area Air Quality Management District, the California Supreme Court unanimously held that the California Environmental Quality Act (CEQA) does not require a public agency to consider the impact of existing environmental conditions on future project users except in limited circumstances. Unless a project is subject to specific statutory requirements, or unless a project would exacerbate existing environmental hazards or conditions that already exist, the potential impact of existing hazards on future users is not a significant environmental impact for CEQA purposes. For suggestions on how to implement the Supreme Court's decision, see Holland & Knight's alert, "Practical Recommendations for Implementing California Supreme Court's Latest CEQA Decision," Jan. 11, 2016.

They're Ba-ack: AB 2 Brings a New Form of Redevelopment

When Gov. Jerry Brown dissolved California redevelopment agencies and community development agencies as of Feb. 1, 2012, the development community and municipal government lost an important tool for economic growth and community revitalization. Now AB 2 – approved by Gov. Brown on Sept. 22, 2015, and effective January 1, 2016 – brings a newer version of that financing tool back. The legislation authorizes certain local agencies to form a community revitalization authority within a community revitalization and investment area to carry out certain provisions of the existing Community Redevelopment Law for the financing of infrastructure, affordable housing and economic revitalization through tax-exempt bonds serviced by tax increment revenues. This is a positive step for infill and urban development.

More Private Activity Bonds

Those curious about the volume cap for private activity bonds (PABs) should know that all states – with the exception of Illinois, Connecticut and the Commonwealth of Puerto Rico – will be able to issue more PABs in 2016. PABs generally are issued by state and local governments or authorities to provide low-cost financing for the projects of nonprofit organizations or companies that serve a public purpose. The formula for the PAB cap for 2016, published by the Internal Revenue Service (IRS), is $100 per capita or $302.88 million, whichever is higher. California has the largest volume cap, followed by Texas and Florida. Qualified PABs can be used for docks and wharves, environmental enhancements of hydroelectric generating facilities and government-owned solid waste facilities. Also included in this category are qualified 501(c)(3) bonds and veterans' mortgage revenue bonds, which are not subject to the volume cap.


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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