BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 416 (Liu) - State route 710 corridor: surplus properties.
Amended: May 1, 2013 Policy Vote: T&H 11-0
Urgency: No Mandate: No
Hearing Date: May 23, 2013 Consultant: Mark McKenzie
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: SB 416 would make 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 would also require 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. The amounts not
needed for home repairs would be deposited into the State
Highway Account.
Fiscal Impact (as approved on May 23, 2013):
Diversion of approximately $500,000 to $1 million annually 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.
Staff assumes that approximately $500,000 annually could be
dedicated for repairs. The remainder would be deposited in
the State Highway Account on an annual basis.
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.
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Background: Under existing law, whenever Caltrans determines
that real property acquired for highway purposes is no longer
necessary, that property may be sold or exchanged upon terms,
standards, and conditions established by the California
Transportation Commission (CTC). Proceeds from the sale are
returned to the State Highway Account. If a proposed state
highway route location is rescinded, existing law requires
Caltrans to sell any excess real property acquired for the
rescinded route location and use the proceeds to fund the state
highway project that is proposed as the alternative to the
rescinded route.
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.
Beginning in 1953, when the location of the SR 710 Gap Closure
Project was originally identified, Caltrans acquired nearly 600
properties in the corridor with the intent to eventually remove
structures and construct the freeway project. The proposed
project has engendered considerable and ongoing controversy over
the years, evoking both strong support and opposition from
various parties, and has been the subject of numerous lawsuits.
Caltrans has been an unwilling long-term property manager for
years, which was the subject a Bureau of State Audits report
last year that criticized Caltrans' management of over 400
rental properties.
Over the past forty years, alternative concepts have been
proposed and evaluated to complete the SR 710 freeway and close
the 4.5 mile gap in the corridor. To date, none of the
previously proposed alternatives have been successful in
satisfying the regional mobility needs and
community/environmental concerns because they would traverse
highly developed urbanized neighborhoods and require substantial
amounts of right-of-way along the alignments. In response to
negative reactions, and to decrease the potential impact of
completing the SR 710, a tunnel concept was proposed for
assessment as an option to the surface alternatives. The Los
Angeles County Metropolitan Transportation Authority (MTA) has
completed the feasibility assessment of a tunnel alternative to
extend the SR 710 from its current terminus in the City of Los
Angeles to Interstate 210 in Pasadena. Generally, the study
concluded that the tunnel concept is feasible. MTA is currently
in the midst of an environmental review of the SR 710 study
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area. Caltrans projects that completion of the draft
environmental impact report and selection of a locally preferred
alternative to the surface gap closure project is at least a
year away. Consideration of the surface construction
alternative has not been eliminated to date, but it is not
likely to be considered among the final options.
Existing law, 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 single-family residences in the following priority
order:
First, at the appraised fair market value to a former owner
who currently occupies the residence.
Second, at an affordable price to a current low- or
moderate-income occupant who has occupied the property for at
least two years.
Third, at an affordable price to a current occupant with
household income of up to 150% of the area median income who
has occupied the property for at least five years.
Fourth, to housing-related public and private entities that
provide affordable housing at a price necessary to make the
housing affordable to present tenants and households of low or
moderate income.
Lastly, at fair market value to occupants and then to persons
who intend to be owner-occupants.
With respect to properties offered to income-qualified buyers,
as noted in the second and third priorities above, Caltrans must
provide repairs required by lenders and government housing
assistance programs prior to the sale or provide the occupants
with a replacement dwelling.
Proposed Law: SB 416 would make a number of changes to the
Roberti Act governing the sale of surplus properties in the SR
710 corridor. Specifically, this bill would:
Require the assessment of "fair market value" to reflect the
existing "as-is" condition of the property, taking into
account any repairs required to make the property safe and
habitable.
Authorize Caltrans to offer a residence in an "as-is"
condition at the request of an income-qualified person.
Current law requires residences sold to these persons to be
repaired prior to sale.
For residences sold at fair market value, give priority to
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tenants in good standing with rent obligations, rather than
any present occupant, then to former tenants who were in good
standing when they vacated the residence, before the home is
offered to persons who intend to be owner-occupants.
Adds a provision for non-residential properties, providing
tenants in good standing a right of first refusal to purchase
a property at fair market value that they rent, lease or
otherwise legally occupy.
Require Caltrans to deposit proceeds from sales of SR 710
properties into the SR 710 Rehabilitation Account, a
continuously appropriated fund created by the bill. Proceeds
deposited into the fund would be used to make repairs required
by the Roberti Act to homes being purchased by
income-qualified residents.
Require Caltrans to transfer any funds remaining in the
account to the State Highway Account after the last of the
properties is repaired.
Related Legislation: SB 204 (Liu), which was vetoed by Governor
Brown last year, would have required CTC and Caltrans to declare
properties in the SR 710 corridor as excess property, and
require Caltrans to sell those properties, as specified.
Proceeds from the sale would be used for specified local
transportation projects in the SR 710 corridor. The Governor's
veto message indicated that SB 204 was premature because
Caltrans was in the midst of a review of options for managing
the SR 710 properties, and because the environmental review
being conducted by MTA has not been completed. The veto message
also conveyed a commitment to the author to work together on a
solution over the property management issues and long-standing
controversy over closing the SR 710 freeway gap.
Staff Comments: The fiscal impact of the bill's requirement that
an assessment of "fair market value" reflect the existing
"as-is" condition of the property, taking into account any
repairs required to make the property safe and habitable is
unknown. Staff assumes that an appraisal of a given property
would reflect the actual value of the home, whether or not it
needs repairs.
Under the Roberti Act, Caltrans is required to make repairs to a
home prior to sale to specified income-qualified purchasers. SB
416 would authorize Caltrans to offer a property in an "as-is"
condition at the request of a purchaser that meets specified
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income thresholds (current occupants that meet either a standard
of low or moderate income, or that have a household income of
150% of the regional average income or less). Caltrans
estimates that any surplus property sold in an "as-is" condition
to these income-qualified persons would result in repair cost
savings of $67,588 on the front end, but any initial savings
would likely be offset by a lower property value and sale price.
Since the option to sell a property in "as-is" condition may
only occur upon request of a prospective buyer who is a current
occupant, it is unknown how many of the approximately 470 homes
in the SR 710 corridor will be sold "as-is." As such, any
fiscal impacts related to this provision are indeterminable.
SB 416 would establish the SR 710 Rehabilitation Account and
require Caltrans to deposit the proceeds of property sales in
the SR 710 corridor into the account. The funds would be
continuously appropriated to Caltrans, without regard to fiscal
years, for the purpose of providing any necessary repairs to
properties offered to specified income-qualified buyers, as
required by lenders and government housing assistance programs.
Caltrans indicates that the new account would require an initial
appropriation of $1.5 million from the State Highway Account to
pay for initial repairs to approximately 20 homes. The account
would be replenished for future repairs as homes are sold.
According to a March 1, 2012 estimate by Caltrans, the market
value of the SR 710 parcels is approximately $279 million,
although this estimate is not based on an official appraisal.
Staff notes that absent the bill, all proceeds from the sales of
surplus properties would be deposited into the State Highway
Account and available for projects on the state highway system.
The requirements of SB 416 would result in a major diversion of
revenues from the State Highway Account to the SR 710
Rehabilitation Account for a period of years, likely beginning
in 2014-15 and continuing until the last property in the
corridor is sold. The draft environmental documents will not be
completed for at least another year, and properties will not be
declared surplus until a surface option is removed from
consideration. Information is not currently available
concerning the projected length of time it will take to complete
the sale of all of the approximately 470 properties in the
corridor. The magnitude of the amounts diverted from the State
Highway Account over this period of years is unknown, but could
exceed $200 million in the aggregate. Since the funds in the
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account will be used for property repairs, such as those
required by lenders and the federal government when homes are
sold to income-qualified occupants, it appears that the majority
of the amounts diverted from the State Highway Account is not
necessary to achieve the goals of the bill.
PROPOSED AUTHOR AMENDMENTS would require any funds in excess of
the amount needed to provide repairs would be transferred to the
State Highway Account to be used exclusively for eligible
projects in the cities of the SR 710 corridor, as specified.
The amendments prohibit the use of any proceeds from the sales
of corridor homes to advance or construct the proposed SR 710
tunnel.
PROPOSED COMMITTEE AMENDMENTS would make the same changes as the
proposed author amendments, but would delete the proposed
requirement that funds exceeding the amount needed for repairs
be used exclusively for eligible projects in the cities of the
SR 710 corridor. Instead any excess funds would be transferred
to the State Highway Account, pursuant to the requirements in
existing law.