The Terrible Two’s Threatening Our Industry: AB 2364 and SB 1103
The legislature is back from its summer recess, and the fate of the remaining legislation will be determined in the next four weeks.
While we are following numerous bills, two stand out as particularly damaging for our industry: AB 2354 and SB 1103.
AB 2364 Creates Costly New Regulations
AB 2364 would potentially double janitorial costs for your properties and create new operational headaches for property managers responsible for meeting tenant needs and complying with new janitorial rules.
Our recent Operating Benchmark Report survey showed that the average janitorial cost is $1.37 per square foot. For a sample property with 500,000 square feet of space, costs would jump from $685,000 to $1.4 million!
(Square Footage x My Janitor Costs) x 2 = New Janitorial Cost After AB 2364 (est.)
Of course, these costs assume there is a workforce to match the need once new workload limits are in place.
The reality is that this bill will force property managers and brokers to secure leases with tenants that place more of the cleaning burden on tenants.
AB 2364 proposes creating a council, similar to the controversial Fast-Food Council, to oversee the janitorial industry.
This council would implement unrealistic cleaning quotas and other rigid rules, which could lead to a bureaucratic nightmare.
These one-size-fits-all regulations ignore the unique aspects of janitorial work, potentially harming efficiency and increasing expenses without clear benefits.
The bill sits in the Senate Appropriations suspense file and could be voted on anytime.
Why SB 1103 Is a Problem
Senate Bill 1103 aims to protect small businesses and nonprofits, which the bill calls "qualified tenants."
However, this bill's mandates imposed on property owners may make these tenant types face difficulty finding space.
Under this bill, a qualified tenant includes:
- Microenterprises.
- Restaurants with fewer than ten employees.
- Nonprofits with fewer than 20 employees.
Key points:
- Translation requirements for leases could cost $10,000 per translation.
- Landlords would have a strict and inflexible timeframe for providing operating cost records, no matter what the lease agreement states.
- Removed flexibility in lease negotiations by voiding any waiver of rights by qualified tenants.
To comply with this law, landlords may increase rents or fees for tenants.
It also could mean landlords will be less likely to rent out to these tenants.
SB 1103 is currently awaiting a floor vote on the Assembly.
What You Can Do
Our advocacy team here and in Sacramento is working to oppose these bills. But we need your help!
Our Government Affairs Committee chair led a group to speak with Senator Bradford's team regarding AB 2364.
Still, you don't need to attend a meeting to make a difference in advocacy.
Visit our action center here to contact your legislators and tell them you oppose these damaging bills.
Stay connected with BOMA on the Frontline for updates and advocacy efforts.
