JOHN CONDAS, LAND USE PARTNER
“We have represented several clients who are looking to acquire and reposition warehouse properties. Today, these properties are not being used for ‘logistics uses,’ the term used in AB 98. For example, one of our clients has acquired a property that has a warehouse building, but the property is being used as a truck driving school. Our client and the local government where this property is located face uncertainty regarding interpreting AB 98. Will AB 98 be triggered if our client commences a ‘logistics use?’ Does it matter if our client improves the warehouse? What if our client merely applies for a business license? The intent of AB 98 was to regulate the siting of warehouses, and thus it should only apply to new warehouses, not pre-existing facilities which predate AB 98, which were not being used as a logistics use when AB 98 was adopted.”
JONATHAN SHARDLOW, LAND USE PARTNER
“AB 98 has significantly decelerated the financing and development of industrial projects due to the uncertainty created by the bill’s language. The bill’s co-authors, Assemblymember Juan Carrillo (D-Palmdale) and Senator Eloise Gómez Reyes (D-Colton) have announced a commitment to ‘clean-up’ language to provide more certainty to the language. Given the significant ambiguity in the language and cities’ inability to uniformly decipher the obligations intended by AB 98, most developers have not speculated in committing to new industrial projects that could be triggered by AB 98. Developers have stayed clear from new infill projects with a focus on development further from the ports, such as jurisdictions in the high and low desert, and have hastened industrial development in the Las Vegas and Phoenix markets. Ironically, AB 98 has increased the time, length, and emissions of trucks from California ports.”
BENJAMIN PATTERSON, LAND USE ASSOCIATE
“I would say that we are certainly seeing developers proceeding cautiously. It seems to be on everyone’s radar, even if they don’t fully understand how it works. One thing that will be interesting is the valuation of industrial land with existing entitlements. Land bankers or speculators who entitled land for industrial use before AB 98 became effective may be under a deadline to sell the property. If they don’t offload the property in time, their exemption from AB 98 might expire, and the site may become undevelopable with a logistics use.”
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