BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 416
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: Liu
VERSION: 4/17/13
Analysis by: Mark Stivers FISCAL: yes
Hearing date: April 23, 2013
SUBJECT:
Surplus properties in the State Route 710 corridor
DESCRIPTION:
This bill makes a number of changes to the Roberti Act governing
the sale of surplus properties in the State Route (SR) 710
corridor.
ANALYSIS:
Current law identifies the California state highway system
through a description of segments of the state's regional and
interregional roads that the Department of Transportation
(Caltrans) owns and operates. Under current law, whenever
Caltrans determines that any real property acquired for highway
purposes is no longer necessary, it may sell or exchange the
property upon terms, standards, and conditions established by
the California Transportation Commission (CTC). Proceeds from
the sale are returned to the State Highway Account.
For decades, Caltrans has proposed the SR 710 extension project
to close a roughly 4.5-mile unconstructed gap in the freeway
from just north of SR 10 in Los Angeles to SR 210 in Pasadena.
This gap affects the cities of Alhambra, Pasadena, South
Pasadena, and a portion of Los Angeles. The project has been in
the planning stage since 1953 for a variety of reasons related
to the federal environmental review process. Caltrans is
currently considering several options for moving forward,
including building a tunnel instead of a freeway or not building
anything at all. By 2014, Caltrans plans to identify how it
intends to proceed. Caltrans currently owns 460 properties with
the originally proposed right-of-way, which include 330
single-family homes and 103 multifamily housing units.
Current law, known as the Roberti Act, establishes priorities
and procedures for the disposition of surplus residential
properties in the SR 710 corridor. Under the act, Caltrans must
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offer surplus property in the following priority order:
First, at market rate to a former owner who currently occupies
the property.
Second, at an affordable price to a current low- or
moderate-income occupant who meets minimum length of occupancy
thresholds. For these income-qualified buyers, Caltrans must
provide repairs required by lenders and government housing
assistance programs or provide the occupants with a
replacement dwelling.
Third, to entities that provide affordable housing at a price
necessary to make the housing affordable to present tenants
and households of low or moderate income.
Fourth, at market rate to occupants and then to persons who
intend to be owner-occupants.
This bill makes a number of changes to the Roberti Act governing
the sale of surplus properties in the SR 710 corridor.
Specifically, the bill:
Requires the fair market value price that Caltrans offers to
non-income-qualified buyers to reflect the "as-is" condition
of the property, taking into account any repairs required to
make the property safe and habitable.
Allows Caltrans, at the request of an income-qualified person,
to offer the residence in an "as-is" condition.
Alters the fourth priority relating to market-rate sales to
give priority only to tenants in good standing with the rent,
rather than any tenant, and then to former occupants who were
in good standing at the time they left the home, before the
home is offered to persons who intend to be owner-occupants.
With respect to non-residential properties, gives tenants in
good standing a right of first refusal to purchase the
property at fair market value.
Requires Caltrans to deposit proceeds from sales of SR 710
properties into a newly-created SR 710 Rehabilitation Account,
which the bill continuously appropriates for the purpose of
making repairs required by the Roberti Act to homes being
purchased by income-qualified residents. When the last of
these properties is repaired, Caltrans shall transfer funds in
this account to the State Highway Account.
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COMMENTS:
1.Purpose of the bill . According to the author, the Bureau of
State Audits has cited Caltrans a number of times over the
years for poor performance as a real estate manager and
landlord. The author believes this is a role outside of the
Caltrans' primary mission and one that Caltrans is not anxious
to continue. Given that a surface route is no longer under
consideration, the most expeditious means of taking Caltrans
out of the real estate management business is to sell the
properties. This will restore community integrity and have
the added advantage of returning the properties to private
ownership and to the local tax rolls.
2.Status of project . On behalf of Caltrans, the Los Angeles
County Metropolitan Transportation Authority is preparing a
draft environmental impact report to assess alternatives for
ameliorating traffic congestion in the SR 710 gap. The
alternatives under consideration include a tunnel, light rail,
bus rapid transit, and transportation demand and traffic flow
management. The originally proposed surface route is not
under consideration.
3.Directing sale proceeds first to repairs . Current law
requires Caltrans to fix up homes sold to income-qualified
residents as required by lenders and government housing
assistance programs. Recognizing that Caltrans may not have
funding to make these repairs in a timely manner, this bill
directs proceeds from the sale of any SR 710 properties first
to repairing these homes for sale.
4."As-is" for market sale may lead to investor purchases . With
respect to homes sold to non-income-qualified persons, nothing
in current law or this bill requires the homes to be fixed up
prior to sale or sold in an "as-is" condition. Caltrans may
do either. By clarifying that a market-rate price must take
into account needed repairs, the author hopes to encourage
Caltrans to sell the homes in an "as-is" condition in order to
expedite the sales process. It can be very difficult,
however, for regular homebuyers to buy a fixer-upper. Buyers
may not be able to get credit to buy the home at all. The
Federal Housing Administration, for example, will not make a
loan on a house that needs repairs, so then the buyer either
must have significant cash available for the repairs or have
access to credit that is unrelated to the property. Moreover,
buyers may have to pay for housing elsewhere while the
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property is rehabilitated. It is more likely that if Caltrans
offers properties in "as-is" condition, investors or flippers
will purchase the properties. It is not clear that this meets
the author's goal of restoring community integrity.
POSITIONS: (Communicated to the committee before noon on
Wednesday, April 17,
2013.)
SUPPORT: None received.
OPPOSED: None received.