BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 416| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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, CONTINUED SB 416 Page 2 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: CONTINUED SB 416 Page 3 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. CONTINUED SB 416 Page 4 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 **** END **** CONTINUED