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SB-381 Surplus residential property: priorities and procedures: City of South Pasadena.(2021-2022)

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Date Published: 03/09/2021 09:00 PM
SB381:v98#DOCUMENT

Amended  IN  Senate  March 09, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 381


Introduced by Senator Portantino

February 10, 2021


An act to amend Section 54236 of the Government Code, relating to local government. An act to amend Section 54237 of, and to add Section 54239 to, the Government Code, relating to local government, and declaring the urgency thereof, to take effect immediately.


LEGISLATIVE COUNSEL'S DIGEST


SB 381, as amended, Portantino. Surplus residential property. Surplus residential property: priorities and procedures: City of South Pasadena.
(1) Existing law establishes priorities and procedures that any state agency disposing of surplus residential property is required to follow. Under existing law, specified single-family residences must first be offered to their former owners or present occupants, as specified. Existing law then requires the property to be offered to housing-related entities, as provided, prior to placing the property up for sale for fair market value, subject to specified priorities.
This bill would, with respect to surplus residential properties located within the State Route 710 corridor in the City of South Pasadena, require surplus single-family residential properties to be offered to the City of South Pasadena after the properties are offered to present occupants pursuant to the provisions described above and the present occupants either decline to purchase or do not qualify and close on the property within 180 days of the effective date of the bill’s provisions. The bill would also require all other occupied, unoccupied, and unimproved surplus residential properties in the State Route 710 corridor area of the City of South Pasadena to first be offered to the city. The bill would set forth procedures that apply to properties under the bill’s provisions, including that each property be subject to a recorded covenant requiring the property remain available and affordable for ownership or rental by persons and families of low or moderate income and that the city close on all properties purchased pursuant to a single closing transaction. The bill would require all proceeds from the city’s sale of any property purchased pursuant to the bill’s provisions to be reinvested into low- or moderate income housing within its jurisdiction. The bill would require, following an offer of these properties to the City of South Pasadena, the properties to then be offered in accordance with the priorities and procedures in existing law relating to the sale of the property to a private housing-related entity or housing-related public entity and sale for fair market value.
(2) Existing law, known as the Administrative Procedure Act, governs the procedures for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law. Existing law establishes procedures for the adoption of emergency regulations, including requiring that the state agency make a finding that the adoption of a regulation or order of repeal is necessary to address an emergency, as defined. Under existing law, a regulation, amendment, or repeal adopted as an emergency regulatory action may only remain in effect for up to 180 days, unless the adopting agency complies with specified requirements relating to notice of regulatory action and public comment.
This bill would require the Department of Transportation to adopt emergency regulations within 60 days of the effective date of the bill’s provisions, to implement the above-described requirements relating to the disposal of surplus property. The bill would include findings that an emergency exists for purposes of specified provisions of the Administrative Procedure Act. The bill, notwithstanding the 180-day limit for emergency regulations, would provide that emergency regulations adopted under its provisions would remain in effect for 2 years after adoption, or until the adoption of permanent regulations, whichever occurs sooner.
(3) This bill would make legislative findings and declarations as to the necessity of a special statute for the City of South Pasadena.
(4) This bill would declare that it is to take effect immediately as an urgency statute.

Existing law declares the intent of the Legislature to preserve, upgrade, and expand the supply of housing to persons and families of low or moderate income, through the sale of specified surplus residential property owned by public agencies. Existing law establishes priorities and procedures that any state agency disposing of that surplus residential property is required to follow, and defines relevant terms for these purposes.

This bill would make nonsubstantive changes to those provisions.

Vote: MAJORITY2/3   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 54237 of the Government Code is amended to read:

54237.
 (a) Notwithstanding Section 11011.1, an agency of the state disposing of surplus residential property shall do so in accordance with the following priorities and procedures:
(1) First, all single-family residences presently occupied by their former owners shall be offered to those former owners at the appraised fair market value.
(2) Second, all single-family residences shall be offered, pursuant to this article, to their present occupants who have occupied the property for two years or more and who are persons and families of low or moderate income.
(3) Third, all single-family residences shall be offered, pursuant to this article, to their present occupants who have occupied the property for five years or more and whose household income does not exceed 150 percent of the area median income.
(4) Fourth, notwithstanding paragraphs (2) and (3), a single-family residence shall not be offered, pursuant to this article, to present occupants who are not the former owners of the property if the present occupants have had an ownership interest in real property in the last three years.
(b) Single-family residences offered to their present occupants pursuant to paragraphs (2) and (3) of subdivision (a) shall be offered to those present occupants at an affordable price. The price shall not be less than the price paid by the agency for original acquisition, unless the acquisition price was greater than the current fair market value, and shall not be greater than fair market value. When a single-family residence is offered to present occupants at a price that is less than fair market value, the selling agency shall impose terms, conditions, and restrictions to ensure that the housing will remain available to persons and families of low or moderate income and households with incomes no greater than the incomes of the present occupants in proportion to the area median income. The Department of Housing and Community Development shall provide to the selling agency recommendations of standards and criteria for these prices, terms, conditions, and restrictions. The selling agency shall provide repairs required by lenders and government housing assistance programs, or, at the option of the agency, provide the present occupants with a replacement dwelling pursuant to Section 54237.5.
(c) If single-family residences are offered to their present occupants pursuant to paragraphs (2) and (3) of subdivision (a), the occupants shall certify their income and assets to the selling agency. When a single-family residence is offered to present occupants at a price that is less than fair market value, the selling agency may verify the certifications, in accordance with procedures used for verification of incomes of purchasers and occupants of housing financed by the California Housing Finance Agency and with regulations adopted for the verification of assets by the United States Department of Housing and Urban Development. The income and asset limitations and term of residency requirements of paragraphs (2) and (3) of subdivision (a) shall not apply to sales that are described as mitigation measures in an environmental study prepared pursuant to the Public Resources Code, if the study was initiated before this measure was enacted.
(d) All (1) Except as otherwise provided in paragraph (2), all other surplus residential properties and all properties described in paragraphs (1), (2), and (3) of subdivision (a) that are not purchased by the former owners or the present occupants shall be then offered as follows:

(1)

(A) Except as required by paragraph (2), subparagraph (B), the property shall be offered to a housing-related private or public entity at a reasonable price, which is best suited to economically feasible use of the property as decent, safe, and sanitary housing at affordable rents and affordable prices for persons and families of low or moderate income, on the condition that the purchasing entity shall cause the property to be rehabilitated and used as follows:

(A)

(i) If the housing-related entity is a public entity, the entity shall dedicate profits realized from a subsequent sale, as specified in subdivision (b) of Section 54237.7, to the construction of affordable housing within the Cities of Pasadena, South Pasadena, Alhambra, La Cañada Flintridge, and the 90032 postal ZIP Code.

(B)

(ii) If the entity is a private housing-related entity or a housing-related public entity, the entity shall cause the property to be developed as limited equity cooperative housing with first right of occupancy to present occupants, except that where the development of cooperative or cooperatives is not feasible, the purchasing entity shall cause the property to be used for low and moderate income rental or owner-occupied housing, with first right of occupancy to the present tenants. The price of the property in no case shall be less than the price paid by the entity for original acquisition unless the acquisition price was greater than current fair market value and shall not be greater than fair market value. Subject to the foregoing, it shall be set at the level necessary to provide housing at affordable rents and affordable prices for present tenants and persons and families of low or moderate income. When residential property is offered at a price that is less than fair market value, the selling agency shall impose terms, conditions, and restrictions that will ensure that the housing will remain available to persons and families of low or moderate income. The Department of Housing and Community Development shall provide to the selling agency recommendations of standards and criteria for prices, terms, conditions, and restrictions.

(2)(A )

(B) (i) If the property is a historic home, the property shall be offered first to a housing-related public entity subject to subparagraph (A) clause (i) or (B) (ii) of paragraph (1) subparagraph (A) or to a nonprofit private entity dedicated to rehabilitating and maintaining the historic home for public and community access and use subject to subparagraph (B) of paragraph (1). clause (ii) of subparagraph (A).

(B)

(ii) For purposes of this subdivision, “historic home” means single-family surplus residential property that is listed on, or for which an application has been filed for listing on, at least one of the following by January 1, 2015:

(i)

(I) The California Register of Historical Resources, as established pursuant to Article 2 (commencing with Section 5020) of Chapter 1 of Division 5 of the Public Resources Code.

(ii)

(II) The National Register of Historic Places, as established pursuant to Chapter 3021 of Title 54 of the United States Code.

(iii)

(III) The National Register of Historic Places, as previously established pursuant to the federal National Historic Preservation Act (54 U.S.C. Sec. 300101 et seq.).
(2) This subdivision shall not apply to properties offered for sale pursuant to Section 54239, except as provided in that section.
(e) A surplus residential property not sold pursuant to subdivisions (a) to (d), inclusive, or Section 54239, as applicable, shall then be sold at fair market value, with priority given first to purchasers who are present tenants in good standing with all rent obligations current and paid in full, second to former tenants who were in good standing at the time they vacated the premises, with priority given to the most recent tenants first, and then to purchasers who will be owner occupants. The selling agency may commence the sale of property that former tenants may possess a right to purchase as provided by this subdivision 30 days after the selling agency has done both of the following:
(1) Posted information regarding the sale under this subdivision on the selling agency’s internet website.
(2) Made a good faith effort to provide written notice, by first-class mail, to the last known address of each former tenant.
(f) (1) Tenants in good standing of nonresidential properties shall be given priority to purchase, at fair market value, the property they rent, lease, or otherwise legally occupy.
(2) (A) A tenant in good standing of a nonresidential property shall be given priority to purchase, at the lesser of fair market value or value in use, if the tenant is a city or a nonprofit organization qualified as exempt under Section 501(c)(3) of the Internal Revenue Code.
(B) The Department of Transportation shall not sell a nonresidential property to a tenant described in subparagraph (A) at a value below the minimum sales price, as defined by Section 1476 of Title 21 of the California Code of Regulations as that regulation read on July 1, 2019.
(C) If a nonresidential property is offered at a price that is less than fair market value, the selling agency shall impose appropriate terms, conditions, and restrictions.
(D) As used in this paragraph, “value in use” means the value of a nonresidential property assuming a specific use, that may or may not be the property’s highest and best use on the effective date of the property’s appraisal.

SEC. 2.

 Section 54239 is added to the Government Code, to read:

54239.
 (a) Notwithstanding Sections 54235 to 54237.8, inclusive, and Section 118 of the Streets and Highways Code, the following priorities and procedures shall apply:
(1) (A) After a surplus single-family residential property located within the State Route 710 corridor in the City of South Pasadena is offered for sale pursuant to subdivisions (a) to (c), inclusive, of Section 54237, and the present occupants in the property either decline to purchase or do not qualify and close on the property within 180 days of the effective date of this section, the surplus single-family residential property shall be offered to the City of South Pasadena in accordance with the procedures in paragraph (2) prior to being offered pursuant to paragraph (3).
(B) All other occupied, unoccupied, and unimproved surplus residential property not subject to the priorities and procedures in subdivisions (a) to (c), inclusive, of Section 54237, and thus not subject to subparagraph (A) of this paragraph, shall be offered to the City of South Pasadena in accordance with the procedures in paragraph (2) prior to being offered pursuant to paragraph (3).
(2) The following procedures shall apply to properties offered and sold to the City of South Pasadena pursuant to paragraph (1):
(A) The property shall be offered to the City of South Pasadena for the original acquisition price, not adjusted for inflation, paid by the Department of Transportation.
(B) Property sold pursuant to this paragraph shall be sold in the existing “as is” condition.
(C) For each property purchased under paragraph (1), the city shall do all o the following:
(i) (I) Cause the property to be used for low- or moderate income ownership or rental housing for a term of at least 55 years. The purchase and operation of the property shall be subject to a covenant recorded against the property that requires the property to remain available and affordable for ownership or rental by persons and families of low or moderate income, as defined in Section 50093 of the Health and Safety Code, for a term of at least 55 years.
(II) In the event that the property is sold prior to the expiration of the covenant, the covenant shall remain in effect until the time at which it expires. In the event that the property is sold to a housing-related private or public entity, pursuant to subparagraph (D), and that entity is no longer able to maintain, provide, or otherwise operate the property pursuant to this section, the entity shall sell and transfer title for the property to the City of South Pasadena, or to another city-approved housing-related private or public entity, that will maintain, provide, or otherwise operate the property in compliance with the covenant. The sale and transfer to the city or to another entity, as provided in this subclause, shall be for the cost the entity originally paid to the city for the property, not adjusted for inflation, plus the cost of rehabilitation or improvements made to the property.
(ii) Cause any additional new units added to the property to be used only for ownership or rental by persons and families of low or moderate income, as defined by Section 50093 of the Health and Safety Code, for a term of at least 55 years.
(iii) Construct one unit of new residential housing that meets the requirements of clauses (i) and (ii) on a site that is outside of the State Route 710 corridor in the County of Los Angeles but within the city’s jurisdiction, if either of the following apply to the property:
(I) The purchase and use of the property pursuant to paragraph (1) and this paragraph requires the demolition of existing structures on the property, and the city determines by resolution that it is cost prohibitive for the city to construct a new residential structure on the property that meets the requirements of this paragraph.
(II) The property purchased pursuant to paragraph (1) is unimproved property that was planned to be used for the public benefit, such as a park, community garden, or open space.
(D) (i) A city purchasing any property under paragraph (1) shall close on all those properties pursuant to a single closing transaction. A city shall not close on the properties earlier than 180 days after the effective date of this section.
(ii) The city is authorized to sell any property purchased under paragraph (1), for the cost paid by the city to acquire and, if applicable, to rehabilitate the property, to a city-approved housing-related private or public entity that will maintain the property and the operation of the property in compliance with the covenant required in subparagraph (C). The city is also authorized to concurrently close on the properties to be transferred to a city-approved housing-related private or public entity.
(E) Notwithstanding any law, including Section 54237.7, the City of South Pasadena shall reinvest all proceeds from the city’s sale of any property purchased under paragraph (1) and this paragraph into housing for persons and families of low or moderate income, as defined in Section 50093 of the Health and Safety Code, within its jurisdiction.
(F) For purposes of this paragraph, both of the following definitions apply:
(i) “Housing-related private entity” means any individual, joint venture, partnership, limited partnership, trust, corporation, cooperative, or other legal entity, or any combination thereof, approved by the city as qualified to either own, construct, acquire, or rehabilitate a housing development or a residential structure pursuant to this section, whether for-profit, nonprofit, or limited profit.
(ii) “Housing-related public entity” means any county, city, city and county, the duly constituted governing body of an Indian reservation or rancheria, or housing authority organized pursuant to Chapter 1 (commencing with Section 34200) of Part 2 of Division 24 of the Health and Safety Code, and includes any state agency, public district, or other political subdivision of the state, and any instrumentality thereof, which is authorized to engage in or assist in the development or operation of housing for persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code. “Housing-related public entity” also includes two or more housing-related public entities acting jointly.
(3) After the surplus residential property is offered for sale pursuant to subdivisions (a) to (c), inclusive, of Section 54237, and paragraphs (1) and (2) of this subdivision, the property shall then be offered in accordance with the priorities and procedures specified in subparagraphs (A) and (B) of paragraph (1) of subdivision (d) and subdivision (e) of Section 54237.
(b) (1) The Legislature finds and declares that the state’s homelessness crisis has compounded the need for affordable housing described in Section 54235. To help mitigate the need for affordable housing and to speed up sales pursuant to this article, the Legislature further finds and declares that an emergency exists for purposes of Sections 11342.545, 11346.1, and 11349.6.
(2) The Department of Transportation shall adopt, within 60 days of the effective date of this section, emergency regulations to implement this section.
(3) Notwithstanding Section 11346.1, the emergency regulations adopted pursuant to paragraph (2) shall remain in effect for two years after adoption or until permanent regulations are adopted, whichever is sooner.

SEC. 3.

 The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances in the State Route 710 corridor in the City of South Pasadena.

SEC. 4.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to address the shortage of affordable housing and make surplus residential properties owned by the state available as soon as possible, it is necessary that this act take effect immediately.
SECTION 1.Section 54236 of the Government Code is amended to read:
54236.

(a)As used in this article, “offer” means to solicit proposals prior to sale in a manner calculated to achieve a sale under the conditions specified, and to hold the offer open for a reasonable period of time, which shall be no more than one year, unless the time is extended by the selling agency at its discretion, for a period to be specified by the selling agency.

(b)As used in this article, “affordable price” means, in the case of a purchaser, other than a lower income household, the price for residential property for which the purchaser’s monthly payments will not exceed that portion of the purchasing household’s adjusted income as determined in accordance with the regulations of the United States Department of Housing and Urban Development, issued pursuant to Section 235 of the National Housing Act; and, in the case of a purchaser that is a lower income household, the price for residential property for which the purchaser’s monthly payments will not exceed that portion of the purchasing household’s adjusted income as determined in accordance with the regulations of the United States Department of Housing and Urban Development issued pursuant to Section 8 of the United States Housing Act of 1937.

(c)As used in this article, “single-family residence” means a real property improvement used, or intended to be used, as a dwelling unit for one family.

(d)As used in this article, “surplus residential property” means land and structures owned by any agency of the state that is determined to be no longer necessary for the agency’s use, and that is developed as single-family or multifamily housing, except property being held by the agency for the purpose of exchange.

Surplus residential properties shall only include land and structures that, at the time of purchase by the state, the state had intended to remove the residences thereon and to use the land for state purposes.

(e)As used in this article, “displacement” includes, but is not limited to, persons who will have to move from surplus residential property that they occupy when it is sold by a state agency because they are unable to afford to pay the price that the state agency is asking for the residential property.

(f)As used in this article, “fair market value” shall mean fair market value as of the date the offer of sale is made by the selling agency pursuant to the provisions of this article and shall reflect the existing “as is” condition of the property, taking into account any repairs required to make the property safe and habitable. This definition shall not apply to terms of sale that are described as mitigation measures in an environmental study prepared pursuant to the Public Resources Code if the study was initiated before this measure was enacted.

(g)As used in this article, “affordable rent” means, in the case of an occupant person or family, other than a person or family of low or moderate income, rent for residential property that is not more than 25 percent of the occupant household’s gross monthly income, and in the case of an occupant person or family of low or moderate income, rent for residential property that is not more than the percentage of the adjusted income of the occupant person or family as permitted under regulations of the United States Department of Housing and Urban Development issued pursuant to Section 8 of the United States Housing Act of 1937, but not in excess of the market rental value for comparable property.

(h)As used in this article, “area median income” means median household income, adjusted for family size as determined in accordance with the regulations of the United States Department of Housing and Urban Development issued pursuant to Section 235 of the National Housing Act, as amended (Public Law 90-448), for the standard metropolitan statistical area (SMSA), in which surplus residential property to be disposed of pursuant to this article is located, or the county in which the property is located, if it is outside an SMSA.

(i)As used in this article, “persons and families of low or moderate income” means persons and families who meet both of the following conditions:

(1)Meet the definition of persons and families of low or moderate income set forth in Section 50093 of the Health and Safety Code.

(2)Have not had an ownership interest in real property in the last three years.

(j)As used in this article, “lower income households” means lower income households as defined in Section 50079.5 of the Health and Safety Code.