BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  SB 416
          Author:   Liu (D), et al.
          Amended:  5/28/13
          Vote:     27

           
           SENATE TRANSPORTATION & HOUSING COMMITTEE  :  11-0, 4/23/13
          AYES:  DeSaulnier, Gaines, Beall, Cannella, Galgiani, Hueso,  
            Lara, Liu, Pavley, Roth, Wyland

           SENATE APPROPRIATIONS COMMITTEE  :  7-0, 5/23/13
          AYES:  De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg


           SUBJECT  :    Surplus residential property

           SOURCE  :     Author


           DIGEST  :    This bill makes a number of changes to the Roberti  
          Act, which governs the sale of surplus property in the SR 710  
          corridor, including authorization for Caltrans to sell  
          properties in an as-is condition to specified income-qualified  
          persons.  The bill also requires the proceeds from the sale of  
          those properties to be deposited into a newly created  
          continuously appropriated fund, rather than the State Highway  
          Account, for purposes of providing repairs to remaining  
          properties until the last property is sold.  

           ANALYSIS  :    Existing 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,  
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          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.  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.   

          Existing 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  
          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:

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          1.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.

          2.Allows Caltrans, at the request of an income-qualified person,  
            to offer the residence in an "as-is" condition.

          3.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.

          4.With respect to non-residential properties, gives tenants in  
            good standing a right of first refusal to purchase the  
            property at fair market value.

          5.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.  Requires any funds  
            exceeding the cost of repairs, and any remaining funds after  
            the last repair is made, be transferred to the State Highway  
            Account.

          6.Prohibits any of the proceeds from the sales of SR 710  
            properties be used to advance or construct the proposed North  
            State Route 710 tunnel.

           Comments
           
          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.

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           FISCAL EFFECT  :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee:

           Diversion of over $200 million in SR 710 home sales proceeds  
            from the State Highway Account to the SR 710 Rehabilitation  
            Account, likely beginning in 2014-15 and ending when all  
            surplus residential properties in the corridor are sold.  The  
            total magnitude of the diversion depends upon how much is  
            needed annually for home repairs.  Senate Appropriations  
            Committee staff assumes that approximately $500,000 annually  
            could be dedicated for repairs, and the remainder would be  
            used to fund unspecified "eligible projects" in cities of the  
            SR 710 corridor.  Absent the bill, all proceeds from the sale  
            of surplus properties are deposited in the State Highway  
            Account for use on other state highway system projects.

           Indeterminable fiscal impact related to the authorization to  
            sell properties to income-qualified persons in an "as-is"  
            condition.  Caltrans indicates that each home sold "as-is"  
            would result in up-front cost avoidance of approximately  
            $68,000 related to avoided repairs, but also result in a lower  
            property value and sale price.  Since the number of homes that  
            will be sold in an "as-is" condition and the resulting  
            decrease in property value at the time of sale is unknown, the  
            overall fiscal impact is indeterminable.


          JA:nl  5/28/13   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  NONE RECEIVED

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