BILL ANALYSIS AB 113 Page 1 Date of Hearing: April 27, 2009 ASSEMBLY COMMITTEE ON TRANSPORTATION Mike Eng, Chair AB 113 (Portantino) - As Introduced: January 13, 2009 SUBJECT : Department of Transportation: surplus property: State Route 710 SUMMARY : Requires the California Department of Transportation (Caltrans) to sell real property it owns in the unconstructed portion of the State Route (SR) 710 corridor in Los Angeles County. Specifically, this bill : 1)Makes legislative findings and declarations, including the following: a) Caltrans owns over 500 residential properties in the unconstructed portion of the SR 710 corridor, some of which it bought as early as the 1950's; b) Media reports and legislative hearings have indicated that Caltrans has been negligent in its maintenance of the properties; c) A 2006 legislative audit found that Caltrans had been negligent in its maintenance of the properties and lacked a comprehensive and accurate surplus property inventory; and d) An estimate by the Southern California Association of Governments (SCAG) suggests that the sale of the properties in the SR 710 corridor could generate $500 million and could fund vital state programs. 2)Requires Caltrans, notwithstanding any other provision of law, to sell real property that it owns within the unconstructed portion of the SR 710 corridor, north of SR 10. 3)Requires Caltrans, when selling residential properties, to do so according to existing law, commonly referred to as the "Roberti bill," with one exception. 4)Provides an exception from this requirement for property occupied prior to January 1, 2004, by a school or a nonprofit organization. For this property, Caltrans is required to AB 113 Page 2 offer the occupant the right of first refusal to purchase the property. 5)Directs the proceeds from the sale of each parcel as follows: a) An amount equal to Caltrans' acquisition price to be deposited into the State Highway Account; and b) Remaining proceeds to be deposited into the General Fund and are to be available upon appropriation for higher education in California. This bill is an urgency measure. EXISTING LAW : 6)Allows Caltrans to acquire any real property that it considers necessary for state highway purposes. 7)Allows Caltrans, whenever it determines that any real property acquired by the state for highway purposes is no longer necessary for those purposes, to sell or exchange it in the manner and upon terms, standards, and conditions established by the California Transportation Commission (CTC). 8)Requires Caltrans, to the greatest extent possible, to offer to sell or exchange excess real property within one year from the date that it determines the property to be excess. 9)Generally requires state and local agencies, prior to disposing of surplus lands, first to offer property for sale or lease to local public agencies, housing authorities, or redevelopment agencies within whose jurisdiction the property is located. Requires Caltrans to give priority first to entities agreeing to use the land for low- or moderate-income housing, then to entities for open-space purposes, school facilities construction, enterprise zone purposes, and infill opportunities, in that order. 10)Provides an exception from these provisions for the disposal of surplus residential properties in the unconstructed portion of the SR 710 corridor. According to this exception, referred to as the "Roberti bill," surplus properties in this corridor are to be sold as follows: AB 113 Page 3 a) First, homes presently occupied by their former owners must be offered for sale to the occupant at fair market value. (Caltrans reports that there are no longer any properties in the SR 710 corridor occupied by previous owners.); b) Second, homes are to be offered to present occupants that have lived in the property for at least two years and who are persons and families of low or moderate income; c) Third, homes must be offered for sale to present occupants that have lived in the home for more than five years and whose household income does not exceed 150% of the area median income; d) Homes are not to be offered to present occupants if the present occupant has had an ownership interest in real property in the last three years; e) Homes offered pursuant to b) and c) above are to be offered at an affordable price, but not less than the acquisition price or more than fair market value. Homes sold at less than fair market value must have deed restrictions to assure that the house remains available to families and households of low or moderate income; f) Prior to selling these properties, Caltrans must provide repairs required by lenders and government housing assistance programs; g) Homes not sold under these terms must then be offered to housing-related private and public entities for a price which is best suited economically to using the property for low- or moderate-income housing; and h) Any surplus homes not sold pursuant these provisions are then to be sold at fair market value with first priority given to purchasers who are present occupants and then to purchasers who will be owner occupants. 11)Proceeds from the sale of surplus property are deposited first to the State Highway Account (SHA) and then transferred to the Public Transportation Account, with few exceptions. AB 113 Page 4 FISCAL EFFECT : Unknown COMMENTS : According to the author, "AB 113 will improve the neighborhoods of my constituents, generate millions of dollars annually in property tax revenue, and give many long-term residents of the City and County of Los Angeles their long awaited opportunity for home-ownership." The author contends that this bill will accomplish this without eliminating any future transportation options (such as a tunnel) that are currently under consideration by the Los Angeles County Metropolitan Transportation Authority (Metro). SR 710 serves as a major north-south link in the Los Angeles County transportation network. It is heavily traveled and congestion is increasing within the corridor. Additional congestion is created on surface streets by a 4.5 mile gap that begins where the SR 710 ends on Valley Boulevard near the Los Angeles/Alhambra border. Motorists who wish to continue traveling north must drive on local streets through the cities of Alhambra, Los Angeles, South Pasadena, and Pasadena. SR 710 resumes at Del Mar Boulevard in the City of Pasadena and continues 0.6 miles north where it meets the Foothill Freeway (Interstate 210). In 1953, the California Highway Commission, the predecessor to the CTC, adopted the location for the freeway gap closure project, and Caltrans began using both standard and advance acquisition procedures to acquire properties for the right-of-way. During the 20-year period that followed adoption of the route, Caltrans acquired more than 400 properties with the intent to raze them to make way for a freeway. The proposed extension project, however, engendered considerable controversy, evoking strong opposition and equally strong support. Embroiled in one lawsuit after another for decades, Caltrans, with its hundreds of parcels of property in the corridor, become a reluctant long-term property manager. Proponents of AB 113 argue that, after decades of waiting, it is time to sell these properties and use the proceeds to resolve some of California's revenue problems. Moreover, many of the supporters AB 113 urge an end to problems they have reportedly encountered with Caltrans' property management policies and practices. AB 113 Page 5 Opponents to this bill, however, assert that AB 113 is an attempt to thwart completion of the SR 710 freeway gap closure project by requiring that long-held properties purchased to build the freeway be sold. They cite regional traffic congestion and resultant hazardous health issues as reasons why the project should be completed. Furthermore, opponents argue that proceeds from the sale of surplus property should not be diverted away from transportation to pay for higher education costs. Writing in opposition to this bill, the City of Monterey Park states that AB 113 is a "blatant attempt to stop the completion of the 710 freeway." The city further asserts that "closing the 710 freeway gap is an indispensable component of any effort to expand and efficiently move national goods through the I-710 corridor and address the transportation needs of the region." Committee concerns: 12)Currently, Caltrans and Metro have commissioned a technical study to examine the possibility of extending the SR 710 using a tunnel. Information gathered throughout the study will describe soil and sub-surface conditions and will determine the feasibility of building a tunnel to complete SR 710. Should the study findings suggest construction of a tunnel is viable, the next step for project proponents will be to initiate environmental review studies. Also, in November 2008, Los Angeles County voters approved Measure R, a half-cent county-wide sales tax to fund transportation. The expenditure plan that accompanied that measure included $780 million in funding for the SR 710 gap closure tunnel. The SR 710 project is not dead--far from it, in fact. Consequently, forcing Caltrans to sell properties that, after all these years, might actually be needed for the purpose for which they were bought, would be imprudent. 13)As the project continues to move forward, and if the tunnel option continues to prevail, Caltrans should be urged to declare as surplus as many of the properties as possible, without jeopardizing the project in any way or without putting itself in inexcusable position of having to purchase properties back. Until the initial environmental studies are AB 113 Page 6 complete, however, and at least preliminary alignments sited, Caltrans should hold on to the properties. 14)When it is time to sell the properties, Caltrans already has the authority it needs to declare the properties surplus and to dispose of them. Legislation is not necessary. 15)Any proceeds realized from the sale of surplus property should be returned to the SHA and used for transportation-related purposes. REGISTERED SUPPORT / OPPOSITION : Support Caltrans Tenants of the 710 Corridor City of La Canada Flintridge City of South Pasadena Los Angeles Conservancy South Pasadena Preservation Foundation, Board of Directors The Waverly School 77 Individuals Opposition 710 Freeway Coalition Alhambra Chamber of Commerce Alhambra Unified School District Caltrans City of Alhambra City of Monterey Park City of Rosemead Eugene Sun, Mayor, City of San Marino Mary Cammarano, Director, San Gabriel County Water District Southern California Association of Governments 2 Individuals Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093