The latest mile marker on California’s road toward a clean air future came in the form of legislation encouraging the growth of the electric vehicle market.

Last year, Gov. Jerry Brown signed Assembly Bill 2565 – codified in California Civil Code Sections 1947.6 and 1952.7 – setting the stage for the continued development of electric vehicle infrastructure by permitting the addition of electric vehicle charging stations in commercial properties. California already accounts for 40 percent of all electric vehicles sold in the nation, so the impact of AB 2565 will reach across the state and across industries. Moreover, Brown wants California to put 1.5 million electric vehicles on the road by 2025.

With the rapid increase in the number of electric vehicles in the state and mounting pressure for commercial enterprises to be green, AB 2565 creates important new territory for commercial landlords – and their attorneys.

The law notably voids and makes unenforceable any provision in a lease for commercial property that prohibits or unreasonably restricts the installation of an electric vehicle charging station. It also provides a framework of rules governing the rights of tenants to install a charging station and their obligations regarding the operation, maintenance and removal of a charging station.

While there are some nuanced differences between Sections 1947.6 and 1952.7 regarding their specific applicability to commercial and residential real estate leases, there are relevant provisions of both statutes that may impact commercial properties such as office, retail, multifamily and industrial buildings. As a result, both commercial landlords and tenants should carefully consider the key provisions of the law early in the lease negotiation process:

Prohibitions to Charging Stations

Most importantly, any provision in a commercial lease signed, renewed or extended on or after Jan. 1, 2015, that either prohibits or unreasonably restricts the installation or use of a charging station is unenforceable. This prohibition does not apply to commercial properties with less than 50 parking spaces or which already have existing charging stations for tenant use at a ratio of 2 charging stations per 100 parking spaces.

Landlord Delay

Landlords may not willfully avoid or delay a tenant request for the installation of a charging station. In fact, landlords must approve a tenant’s written request to install a charging station so long as it complies with the Civil Code and the landlord’s reasonable procedures governing the making alterations to the property.

Locating the Charging Station

If the lease does not provide a tenant with a reserved parking space, and if the circumstances surrounding the installation of a charging station effectively provide the tenant with a reserved parking space, then the landlord may charge a reasonable monthly rent for that reserved space. But if an additional parking space is not available, then landlords are not obligated to provide a designated parking space to accommodate the installation of a charging station. Finally, a tenant does not have the right to install a charging station in more parking spaces than are allocated to the tenant under its lease.

Costs of the Charging Station

The tenant is responsible for all of the costs related to the design, installation, operation, maintenance and removal of a charging station (including reimbursing the landlord for the reasonable costs incurred by landlord in connection with the installation of the charging station, such as the cost of permits or supervision). These costs also include the obligation to pay the related electrical usage as additional rent.

Written Agreement

AB 2565 contemplates that the landlord and tenant will enter into a written agreement (presumably by way of an amendment with respect to leases in effect prior to the effective date of the statute) that incorporates, among other things, (a) the terms and conditions regarding the installation, operation, maintenance and removal of a charging station, (b) the tenant’s obligation to pay the costs associated with the installation, operation, maintenance and removal of a charging station, and (c) representation by the tenant that it is in compliance with applicable government requirements.

As landlords face a surge in tenant requests to install electric vehicle charging stations on their properties, alternative provisions must be incorporated into all legal forms regarding the charging stations. Such provisions and related agreements should be drafted in consultation with the landlord’s design, development, property management, and legal teams.

Plug-in vehicle sales currently represent about 3% of personal vehicle sales in California.

Electric cars and the infrastructure to support them are an important part of our transportation future. In fact, plug-in vehicle sales in California passed the 100,000 mark earlier this year, and currently represent about 3 percent of personal vehicle sales in the state.

With electric vehicle sales soaring, the National Renewable Energy Laboratory estimates that up to 1.2 million residential and workplace charging stations will be needed statewide by 2020. As the drive toward electric vehicles continues, attorneys – as well as tenants, landlords, property managers, and developers – need to stay abreast of the nuances and implications of this important new legislation.

Sources:

Sean W. Southard & Van Nguyen, CGS3

Sean W. Southard is a partner and Van Nguyen is an attorney with San Diego-based Crosbie Gliner Schiffman Southard & Swanson LLP – aka CGS3 – a law firm specializing in commercial real estate law.

Disasters are inevitable. They come on suddenly, in a variety of forms, and cause significant damage – earthquakes, floods, fires, power outages, broken pipes – and can be man-made or natural. So how can you prepare your building, your tenants, your staff, and your stakeholders for the unknown?

Calculate Risk

Your first step should be to calculate the financial risk across the entire business and prioritize your business continuity plan accordingly.

Your plan should start by first addressing the most critical components that will need to get up and running after a catastrophic event. It’s likely that communications will top that list, but what comes next may be unique to your business and building. The list must also factor in outside invested organizations and the surrounding community public service entities.

Business Crisis Management Checklist

What does a basic business crisis management checklist consist of?

Keep it Uncomplicated

• Documentation is key and should include standards, policies, flowcharts, equipment, manuals, and crisis management trees per location or business unit.
• Take a principles-based approach by using outlines
  • Identify and define a range of emergencies and how to respond to each
• Align the plan with the culture of your organization
  • Keep in mind that some individuals respond to written material, while others favor verbal or hands-on demonstrations and incorporate all of these styles into your plan

Supply Chain

• Define and identify the critical suppliers to your business and the possible problems they may have in servicing your organization.
  • What would be the impact if they could not supply you with the goods and services you need to keep your business operating?
  • Where else can you obtain what you need to effectively operate?
  • How can you make sure you will have access to the specialized machinery or facilities essential to run your business (off-site storage, systems redundancy, emergency services, etc.)?
  • Do you have systems in place to ensure that suppliers get paid no matter what?
  • What is the continuity of supplies from utility service providers (fuel, gas, electricity, water)?

Contingency Plan

• Identify the key components of your organization that are crucial to keep it running.
  • What components can be halted, relocated or delayed?
  • What data is most critical to the business and how can you protect it?
  • What back-up arrangements do you have in place for your most critical resources (IT systems, communication systems, contractors, power supply etc.)?
  • Do your employees have the ability to work remotely if necessary?
  • Who have you identified as your key staff who will keep the most critical elements of the business going?

Crisis Team Design

• Find a champion (Executive Level Leadership or Management Team) to help reinforce business continuity planning across the organization.
• Appoint an emergency team and assign roles and responsibilities.
  • The team should meet on a regular basis – not just during an emergency.
  • Together they should determine:
    • Clear cut recovery operations within defined timeframes and processes.
    • Assessment of the condition of the staff, the building, any product and/or service, and how quickly the organization can resume operations.

Communication

• Identify the stakeholders in your organization and how you can work with them to support each other in times of crisis.
  • These can include key clients, employees, the property management firm, vendors, insurance providers, community organizations, and industry/business associations.
• Consider involving the news media when the event involves potential threat to surrounding areas or physicals injuries – Appoint and train a company spokesperson who understands how to work with the media.
• Determine a method of contact and communication on and off site

Training

• Train staff in basic emergency preparedness and schedule regular training exercises
• Run practice scenarios
• Develop debriefs after incidents (real or simulated)
• Become actively involved  in community response groups

Insurance

• Check your insurance coverage to ensure that business interruption and supply chain disruption are covered
• Make sure your data is also insured

Building Crisis Management Checklist

Preventative Maintenance

• Have specialized professionals perform building inspections on a regular basis, including review of such systems as:
  • Roofs
  • Walkways
  • Parking lots and structures
  • Windows and doors
  • HVAC
  • Wiring and electrical
  • Plant machinery
  • Back up generators
  • Redundancy systems

Prepare Occupants

• If they need to evacuate the building, make sure they know:
  • How much time they will likely have,
  • What they should (and should not) take with them,
  • What the preferred emergency exit route is,
  • Where they should go once they have left the building,
  • Who will be directing them (fire officials, police, company-appointed individuals),
  • What plans are in place for their return

• If they cannot safely evacuate, make sure they know the following:
  • Where all medications and first aid materials are located (should be placed in waterproof bags and kept in a low-humidity, cool location),
  • Where emergency supplies can be found.

Identify an Emergency Shelter

An emergency shelter should be designated and/or designed either in a lower level of the building or off premises (in the case of a catastrophic disaster).

• Make sure it:
  • Is easily accessible for all building occupants,
  • Contains all supplies as recommended by FEMA and The Red Cross,
  • Has a communication system setup,
  • Serves as a place for the community and the media to gather.

Crisis Management

The good news is that business owners and property operators don’t need to navigate disaster preparedness or recovery alone. Your commercial property management team should be a key participant in the planning and – when needed – execution of your successful crisis management strategy.

Meissner Jacquét Commercial Real Estate Services, a San Diego-based commercial property management company, employs crisis and risk management techniques to ensure that our clients and their commercial real estate assets are protected. Tim Meissner states that, “Each property management team verifies that all tenants, vendors and contractors are appropriately insured in accordance with the property business plan.  In addition, Meissner Jacquét maintains appropriate levels of corporate liability insurance and employee insurance.”

When a disaster occurs, ensure you are not found unprepared to respond to basic emergencies and – in the worst case – crippling catastrophes. Your business and your property simply cannot afford it.

Sources:

• Meissner Jacquét Commercial Real Estate Services
• FEMA
• Be Prepared California
• SBA
• Red Cross

California is currently in a pervasive, 4-year long drought. The historically low precipitation affecting the state and the dire predictions are now the new normal.

The state’s plumbing structure relies heavily on runoff from the Sierra’s snow, and this year that crucial snowpack is only 5% of its normal rate. This past winter was the driest winter on California record – EVER.

On April 1, California’s Governor, Jerry Brown, announced a mandatory 25% reduction in water use, going into effect July 2015. Potentially alleviating measures are in the works – from the $35 billion that passed the House to mitigate California’s situation, to the numerous desalination projects in discussion, to the entrepreneur  who is putting a plan in place to deliver 10 million gallons of Alaskan water to a buyer in California.

More locally, the San Diego County Water Authority (SDCWA) is focused on stabilizing the constancy of the region’s water supply and distributing those supplies in a cost effective and environmentally responsive manner. A statement from SDCWA’s website, “ To maximize the reliability of the region’s water supply, the Water Authority is executing a long-term strategy to diversify the region’s supply sources, make major investments in the region’s water delivery and storage system, and improve water-use efficiency.”

But the measures that may hold the most water for the commercial real estate market is the commitment by all leaders in California government and water organizations to adopt an intensive water conservation program that incorporates not just an across-the-board awareness and restrictions enforcement, but also includes rebates and incentives.

What’s Available in the Rebate/Incentives Pipeline

• City of San Diego

Grass Replacement and Micro-Irrigation Rebate Programs for commercial landscaping were opened up to businesses a few months ago and had an overwhelming response. More than 350 residents and businesses will receive rebates to replace more than 500,000 square feet of turf. While the funds have been depleted for these programs, the City will once again start accepting applications on July 1, 2015.

Offer Details:

• San Diego County Water Authority

The 20-Gallon Challenge offers free landscape surveys and has rebates for weather-based irrigation controllers (from $230), synthetic turf (50 cents per sq. ft.), and rotating nozzles (up to $4 each).

• SoCal Water$mart

SoCal Water$mart offers rebates for weather-based irrigation controllers (from $80 per controller for an acre or less; $25 per irrigation station for larger sites), rotating sprinkler nozzles (from $4 per nozzle), and synthetic turf (from 30 cents per sq. ft.), high-efficiency toilets, washers, WBICs (Smart Controllers), grass replacement, rotating sprinkler nozzles, rain barrels and other devices.

• California American Water

California American Water provides water surveys for their CII and Large Landscape customers at no cost. The organization’s website states, “The surveys are for businesses, institutional facilities, or non-residential customers with dedicated irrigation or mixed-use meters to improve water use efficiency. A certified conservation expert will find water and money saving opportunities by evaluating the property’s current water operating equipment and recommending high efficiency water and energy saving equipment where applicable.”

In addition, California American Water lists these commercial products that qualify for a rebate:

• High Efficiency Toilets – (Toilets must be water-sense certified to qualify)
  • $50/multifamily toilet
  • $100/Commercial Toilet
• High Efficiency Toilet Flushometer
  • $100
• High Efficiency  Clothes Washers
  • $250
• High Efficiency Urinal
  • $200
• Weather-based Irrigation Controller
  • $25/station
• Pop-up Spray Heads or Rotating Nozzles
  • $4/nozzle (Minimum of 15)
  • $13/set Large Rotary Nozzles (Minimum of 8)
• Turf Rebates
  • $1.50/per square foot (synthetic turf does not qualify)
• Connectionless Food Steamers
  • $485/compartment
• Air-cooled Ice Machines
  • $1,000
• Cooling Tower Connectivity Controllers
  • $625
• Cooling Tower pH Controllers
  • $1750
• Dry Vacuum Pumps
  • $125/0.5 HP; maximum of 2HP
• Laminar Flow Restrictor
  • $10
• In-Stem Flow Regulator
  • $1/each; minimum qty is 25 regulators
• Soil Moisture Sensor System
  • $25/sensor
• Plumbing Flow Control Valves
  • $5/valve; minimum of 20
• Pool Cover
  • Manual $50
  • Mechanical $200

All of these offers require applications and/or registration – be sure to reach out to the organizations directly to get more information.

Go with the Flow

How does this affect commercial property owners and operators?

Meissner Jacquet Commercial Real Estate Services, a San Diego-based company, participates with NAIOP and BOMA, two leading commercial real estate organizations, to further their efforts in educating and spreading awareness of water reduction to clients, tenants, vendors and employees.

Jerry Jacquet, a Principal at Meissner Jacquét, says that, “the commercial real estate industry plays a key role in adopting and encouraging a water conservation culture amongst property owners and occupiers.  By following the path set by authorities and experts and taking advantage of available rebates and incentives, seemingly costly water-use reduction improvements performed proactively can positively affect the future bottom line.” Plus, it will showcase a commitment and dedication to environmental best practices.

Sources :

• Meissner Jacquet Commercial Real Estate Services
• Water Education Foundation
• The San Diego Water Authority
• City of San Diego
• California American Water
• Metropolitan Water District of Southern California
• World Economic Forum