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Bill to let workers report alleged hotel REIT mismanagement advances amid industry warnings
Summary
AB 18 69 would define when hotel REITs cross the line from passive investor into management, create a reporting pathway to the labor commissioner, and require the Labor Commissioner to report findings to the Franchise Tax Board; labor witnesses urged enforcement, while hotel and REIT groups warned the bill upends federal conformity and could risk investment.
Assemblymember Haney introduced AB 18 69, which would clarify what constitutes direct or indirect management by a real‑estate investment trust (REIT) of hotel operations and create a reporting mechanism so hotel workers and their representatives can raise concerns with the labor commissioner.
Haney said REITs have increasingly intervened in day‑to‑day hotel operations and that current federal tax tests designed for passive investors do not provide a clear process for workers to report violations. "If a REIT wants to act like a hotel operator, it should play by the same rules," Haney said.
Supporters including Unite Here and other labor groups argued that when REITs effectively manage hotels they should not receive tax advantages reserved for passive investors; they urged a reporting and enforcement pathway through the labor commissioner. Matt Broad (Unite Here) said the measure provides reporting and a review process but does not itself require the Franchise Tax Board to revoke REIT tax status.
Opposition from the California Hotel & Lodging Association, the California Business Properties Association, REIT trade groups and other commercial property interests said AB 18 69 would break from longstanding federal conformity tests and create state evidentiary standards that could destabilize REIT investment in California properties, potentially harming pension funds and retirement investments held widely by Californians.
The committee debated the bill’s scope and whether the proposal simply creates a reporting mechanism or effectively changes the legal standard for REIT treatment. Members said they were open to amendments but many voiced district concerns about investment impacts. The committee filed AB 18 69 and referred it to Appropriations; some members voted no and the roll was left open for absent members.
