Senate Bill No. 416

Introduced by Senator Liu

February 20, 2013

An act to amend Sections 54236, 54237, and 54237.5 of the Government Code, relating to local government.

LEGISLATIVE COUNSEL’S DIGEST

SB 416, as introduced, Liu. Local government: surplus residential property.

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 surplus residential property owned by public agencies. Existing law establishes priorities and procedures that any local public agency disposing of surplus residential property is required to follow, and defines relevant terms for these purposes, including “fair market value.”

This bill would revise the definition of “fair market value” for purposes of the sale of surplus residential property, to reflect the existing “as is” condition of the property, taking into account any needed repairs.

Existing law requires single-family residences to be first offered to their present occupants, at an affordable price, as defined. Under existing law, the selling agency has the option of making repairs to the property required by lenders or government assistance programs, or providing the occupants with a replacement dwelling, pursuant to a specified provision of law.

This bill instead would give the selling agency general authority to offer a replacement dwelling, and would delete the option of making repairs to the premises.

This bill would revise the procedures applicable to the sale of surplus residential properties not otherwise sold pursuant to existing procedures, to be offered to current and former tenants in good standing, respectively, and to purchasers who will be owner occupants. The bill additionally would require the selling agency to offer tenants in good standing of nonresidential properties to be offered the right of first refusal to purchase the property they occupy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

Section 54236 of the Government Code is
amended to read:

54236.  

(a) As used in this article, the term “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, the term “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, the term “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, the term “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, the term “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, the term “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 begin insert , and
shall reflect the existing “as is” condition of the property, taking
into account any repairs required to make the property safe and
habitable end insert . 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, the term “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, the term “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 (P.L. 90-448), for
the Standard Metropolitan Statistical Area (S.M.S.A.), 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 S.M.S.A.

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

SEC. 2.  

Section 54237 of the Government Code is amended
to read:

54237.  

(a) Notwithstanding Section 11011.1, any 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 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 five years or more and whose household income does not
exceed 150 percent of the area median income.

(4) Fourth, 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, which
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 single-family residences are offered to present occupants
at a price that is less than fair market value, the selling agency
shall impose terms, conditions, and restrictions to assure 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. begin delete 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. end delete

(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 single-family residences are 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
utilized 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 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 to housing-related private and public entities 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 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 agency 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 agency 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 as
will assure 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.

(e) Any surplus residential properties not sold pursuant to
subdivisions (a) to (d), inclusive, shall then be sold at fair market
value, with priority given first to purchasers who are present
begin delete occupants end delete begin insert tenants in good standing with all rent obligations current
and paid in full, second to form end insert begin insert er tenants who were in good
standing at the time they vacated the premises, end insert and then to
purchasers who will be owner occupants.

begin insert

(f) Tenants in good standing of nonresidential properties shall
be offered a right of first refusal to purchase, at fair market value,
the property they rent, lease, or otherwise legally occupy.

end insert

SEC. 3.  

Section 54237.5 of the Government Code is amended
to read:

54237.5.  

begin delete Notwithstanding the requirement to provide repairs
in subdivision (b) of Section 54237, the selling agency may, at its
option, provide end delete begin insert The selling agency may, at its option, offer end insert the
present occupants begin delete with end delete a replacement dwelling if begin delete all end delete begin insert both end insert of the
following conditions exist:

begin delete

(a) Providing a replacement dwelling is less expensive than
providing the repairs required by subdivision (b) of Section 54237.

end delete begin delete

(b)

end delete

begin insert (a) end insert  The replacement dwelling is determined to have all of the
following characteristics:

(1) Is decent, safe, and sanitary.

(2) Is suitable to the occupancy needs of the household as
provided 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.

(3) Is open to all persons regardless of race, color, religion, sex,
or national origin and consistent with requirements of Title 8 of
the Civil Rights Act of 1978.

(4) Is in an area not generally less desirable than the dwelling
to be acquired in regard to public utilities and public and
commercial facilities.

(5) Is reasonably accessible to the displaced person’s place of
employment.

(6) Is in an equal or better neighborhood.

(7) Is affordable, as defined in subdivision (a) of Section 54236,
to the displaced person.

begin delete

(c)

end delete

begin insert (b) end insert  The offer is made at an affordable price that is not less than
the price paid by the agency for original acquisition of the unit
now occupied by the displaced person or the replacement unit,
whichever is less, and is not more than market value.

begin delete

(d)

end delete

begin insert (c) end insert  The replacement dwelling is a newly constructed or a vacant
residential unit. No resident shall be displaced pursuant to Section
7260 for the purpose of creating a replacement unit.