Amended in Assembly August 7, 2013

Amended in Assembly June 24, 2013

Amended in Senate May 28, 2013

Amended in Senate May 1, 2013

Amended in Senate April 17, 2013

Senate BillNo. 416


Introduced by Senator Liu

(Coauthor: Assembly Member Holden)

February 20, 2013


An act to amend Sections 54236 and 54237 of, and to add Sections 54237.3 and 54237.7 to, the Government Code, relating to surplus residential property, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

SB 416, as amended, Liu. 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 ofbegin insert specifiedend insert surplus residential property owned by public agencies. Existing law establishes priorities and procedures that any state agency disposing ofbegin insert thatend insert 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 ofbegin insert thisend insert surplus residential property, to reflect the existing “as is” condition of the property, taking into account any needed repairs.

Existing law requiresbegin insert specifiedend insert 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 would revise the procedures applicable to the sale ofbegin insert theseend insert 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 given priority to purchase the property they occupy. The bill would authorize the Department of Transportation to offer a residence or property in an “as is” condition, at the request of a person with priority to purchase the residence or property in accordance with existing law.

This bill would require proceeds from sales of surplus residential property to be placed in the SR-710 Rehabilitation Account, created by the bill, and would continuously appropriate these funds for the purpose of providing specified repairs to the properties until the last of the properties is repaired, at which time the fundsbegin insert, less any reimbursements due to the federal government,end insert would be transferred to the State Highway Account,begin insert for allocation by the California Transportation Commission,end insert as specified.

Vote: 23. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

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

P2    1

SECTION 1.  

Section 54236 of the Government Code is
2amended to read:

3

54236.  

(a) As used in this article, the term “offer” means to
4solicit proposals prior to sale in a manner calculated to achieve a
5sale under the conditions specified, and to hold the offer open for
6a reasonable period of time, which shall be no more than one year,
7unless the time is extended by the selling agency at its discretion,
8for a period to be specified by the selling agency.

9(b) As used in this article, the term “affordable price” means,
10in the case of a purchaser, other than a lower income household,
11the price for residential property for which the purchaser’s monthly
P3    1payments will not exceed that portion of the purchasing
2household’s adjusted income as determined in accordance with
3the regulations of the United States Department of Housing and
4Urban Development, issued pursuant to Section 235 of the National
5Housing Act; and, in the case of a purchaser that is a lower income
6household, the price for residential property for which the
7purchaser’s monthly payments will not exceed that portion of the
8purchasing household’s adjusted income as determined in
9accordance with the regulations of the United States Department
10of Housing and Urban Development issued pursuant to Section 8
11of the United States Housing Act of 1937.

12(c) As used in this article, the term “single-family residence”
13means a real property improvement used, or intended to be used,
14as a dwelling unit for one family.

15(d) As used in this article, the term “surplus residential property”
16means land and structures owned by any agency of the state that
17is determined to be no longer necessary for the agency’s use, and
18that is developed as single-family or multifamily housing, except
19property being held by the agency for the purpose of exchange.

20Surplus residential properties shall only include land and
21structures that, at the time of purchase by the state, the state had
22intended to remove the residences thereon and to use the land for
23state purposes.

24(e) As used in this article, the term “displacement” includes,
25but is not limited to, persons who will have to move from surplus
26residential property that they occupy when it is sold by a state
27agency because they are unable to afford to pay the price that the
28state agency is asking for the residential property.

29(f) As used in this article, the term “fair market value” shall
30mean fair market value as of the date the offer of sale is made by
31the selling agency pursuant to the provisions of this article and
32shall reflect the existing “as is” condition of the property, taking
33into account any repairs required to make the property safe and
34habitable. This definition shall not apply to terms of sale that are
35described as mitigation measures in an environmental study
36prepared pursuant to the Public Resources Code if the study was
37initiated before this measure was enacted.

38(g) As used in this article, the term “affordable rent” means, in
39the case of an occupant person or family, other than a person or
40family of low or moderate income, rent for residential property
P4    1that is not more than 25 percent of the occupant household’s gross
2monthly income, and in the case of an occupant person or family
3of low or moderate income, rent for residential property that is not
4more than the percentage of the adjusted income of the occupant
5person or family as permitted under regulations of the United States
6Department of Housing and Urban Development issued pursuant
7to Section 8 of the United States Housing Act of 1937, but not in
8excess of the market rental value for comparable property.

9(h) As used in this article, the term “area median income” means
10median household income, adjusted for family size as determined
11in accordance with the regulations of the United States Department
12of Housing and Urban Development issued pursuant to Section
13235 of the National Housing Act, as amended (Public Law 90-448),
14for the standard metropolitan statistical area (SMSA), in which
15surplus residential property to be disposed of pursuant to this article
16is located, or the county in which the property is located, if it is
17outside an SMSA.

18(i) As used in this article, the term “persons and families of low
19or moderate income” means persons and families who meet both
20of the following conditions:

21(1) Meet the definition of persons and families of low or
22moderate income set forth in Section 50093 of the Health and
23Safety Code.

24(2) Have not had an ownership interest in real property in the
25last three years.

26(j) As used in this article, the term “lower income households”
27means lower income households as defined in Section 50079.5 of
28the Health and Safety Code.

29

SEC. 2.  

Section 54237 of the Government Code is amended
30to read:

31

54237.  

(a) Notwithstanding Section 11011.1, any agency of
32the state disposing of surplus residential property shall do so in
33accordance with the following priorities and procedures:

34(1) First, all single-family residences presently occupied by
35their former owners shall be offered to those former owners at the
36appraised fair market value.

37(2) Second, all single-family residences shall be offered,
38pursuant to this article, to their present occupants who have
39occupied the property two years or more and who are persons and
40families of low or moderate income.

P5    1(3) Third, all single-family residences shall be offered, pursuant
2to this article, to their present occupants who have occupied the
3property five years or more and whose household income does not
4exceed 150 percent of the area median income.

5(4) Fourth, a single-family residence shall not be offered,
6pursuant to this article, to present occupants who are not the former
7owners of the property if the present occupants have had an
8ownership interest in real property in the last three years.

9(b) Single-family residences offered to their present occupants
10pursuant to paragraphs (2) and (3) of subdivision (a) shall be
11offered to those present occupants at an affordable price, which
12price shall not be less than the price paid by the agency for original
13acquisition, unless the acquisition price was greater than the current
14fair market value, and shall not be greater than fair market value.
15When single-family residences are offered to present occupants
16at a price that is less than fair market value, the selling agency
17shall impose terms, conditions, and restrictions to ensure that the
18housing will remain available to persons and families of low or
19moderate income and households with incomes no greater than
20the incomes of the present occupants in proportion to the area
21median income. The Department of Housing and Community
22Development shall provide to the selling agency recommendations
23of standards and criteria for these prices, terms, conditions, and
24restrictions. The selling agency shall provide repairs required by
25lenders and government housing assistance programs, or, at the
26option of the agency, provide the present occupants with a
27replacement dwelling pursuant to Section 54237.5.

28(c) If single-family residences are offered to their present
29occupants pursuant to paragraphs (2) and (3) of subdivision (a),
30the occupants shall certify their income and assets to the selling
31 agency. When single-family residences are offered to present
32occupants at a price that is less than fair market value, the selling
33agency may verify the certifications, in accordance with procedures
34utilized for verification of incomes of purchasers and occupants
35of housing financed by the California Housing Finance Agency
36and with regulations adopted for the verification of assets by the
37United States Department of Housing and Urban Development.
38The income and asset limitations and term of residency
39requirements of paragraphs (2) and (3) of subdivision (a) shall not
40apply to sales that are described as mitigation measures in an
P6    1environmental study prepared pursuant to the Public Resources
2Code, if the study was initiated before this measure was enacted.

3(d) All other surplus residential properties and all properties
4described in paragraphs (1), (2), and (3) of subdivision (a) that are
5not purchased by the former owners or the present occupants shall
6be then offered to housing-related private and public entities at a
7reasonable price, which is best suited to economically feasible use
8of the property as decent, safe, and sanitary housing at affordable
9rents and affordable prices for persons and families of low or
10moderate income, on the condition that the purchasing entity shall
11cause the property to be rehabilitated and developed as limited
12equity cooperative housing with first right of occupancy to present
13occupants, except that where the development of cooperative or
14cooperatives is not feasible, the purchasing agency shall cause the
15property to be used for low and moderate income rental or
16owner-occupied housing, with first right of occupancy to the
17present tenants. The price of the property in no case shall be less
18than the price paid by the agency for original acquisition unless
19the acquisition price was greater than current fair market value
20and shall not be greater than fair market value. Subject to the
21foregoing, it shall be set at the level necessary to provide housing
22at affordable rents and affordable prices for present tenants and
23persons and families of low or moderate income. When residential
24property is offered at a price that is less than fair market value, the
25selling agency shall impose terms, conditions, and restrictions as
26will ensure that the housing will remain available to persons and
27families of low or moderate income. The Department of Housing
28and Community Development shall provide to the selling agency
29recommendations of standards and criteria for prices, terms,
30conditions, and restrictions.

31(e) Any surplus residential properties not sold pursuant to
32subdivisions (a) to (d), inclusive, shall then be sold at fair market
33value, with priority given first to purchasers who are present tenants
34in good standing with all rent obligations current and paid in full,
35second to former tenants who were in good standing at the time
36they vacated the premises,begin insert with priority given to the most recent
37tenants first,end insert
and then to purchasers who will be owner occupants.
38begin insert The selling agency may commence the sales of properties that
39former tenants may possess a right to purchase as provided by
P7    1this subdivision 30 days after the selling agency has done both of
2the following:end insert

begin insert

3(1) Posted information regarding the sales under this subdivision
4on the selling agency’s Internet Web site.

end insert
begin insert

5(2) Made a good faith effort to provide written notice, by first
6class mail, to the last known address of each former tenant.

end insert

7(f) Tenants in good standing of nonresidential properties shall
8be given priority to purchase, at fair market value, the property
9they rent, lease, or otherwise legally occupy.

10

SEC. 3.  

Section 54237.3 is added to the Government Code, to
11read:

12

54237.3.  

Notwithstanding the requirement to provide repairs
13in subdivision (b) of Section 54237, the Department of
14Transportation may offer a residence or property in an “as is”
15condition at the request of a person given priority to purchase
16pursuant to paragraphs (2) and (3) of subdivision (a) of Section
1754237.

18

SEC. 4.  

Section 54237.7 is added to the Government Code, to
19read:

20

54237.7.  

begin deleteThe end deletebegin insertNotwithstanding Section 183.1 of the Streets and
21Highways Code, theend insert
begin insert end insertDepartment of Transportation shall deposit
22proceeds from sales pursuant to this article into the SR 710
23Rehabilitation Account, which is hereby created. Notwithstanding
24Section 13340, funds in the account are hereby continuously
25appropriated to the department without regard to fiscal years for
26the purpose of providing repairs required pursuant to subdivision
27(b) of Section 54237. The total funds maintained in the account
28shall not exceed five hundred thousand dollars ($500,000). Funds
29exceeding that amountbegin insert, less any reimbursements due to the federal
30government,end insert
shall be transferred to the State Highway Account in
31the State Transportation Fund to be usedbegin insert for allocation by the
32California Transportation Commission, after consultation with
33the Los Angeles County Metropolitan Transportation Authority,end insert

34 exclusively to fundbegin delete eligibleend delete projects located in Pasadena,begin insert South
35Pasadena,end insert
Alhambra, La Canada Flintridge,begin delete and the community
36of El Sereno in the City of Los Angelesend delete
begin insert and the 90032 postal ZIP
37Code. Projects eligible to be funded are sound walls; transit; rail
38capital improvements; bikeways; pedestrian improvements;
39streetscapes; signal synchronization; left turn signals; and major
40street resurfacing, rehabilitation, and reconstructionend insert
. The funds
P8    1shall not be used to advance or construct begin deletetheend deletebegin insert anyend insert proposed North
2State Route 710 tunnel. Any funds remaining in the SR-710
3Rehabilitation Account on the date that final payment due for the
4last of the properties repaired has been madebegin insert, less any
5reimbursements due to the federal government,end insert
shall be transferred
6to the State Highway Account in the State Transportation Fundbegin insert,
7to be used exclusively for the purposes described in this sectionend insert
.



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