BILL ANALYSIS Ó SB 416 Page 1 Date of Hearing: July 3, 2013 ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT Ed Chau, Chair SB 416 (Liu) - As Amended: June 24, 2013 SENATE VOTE : 39-0 SUBJECT : Surplus residential property. SUMMARY : Makes a number of changes to the Roberti Act governing the sale of surplus properties in the State Route (SR) 710 corridor. Specifically, this bill : 1)Requires the fair market value price that the Department of Transportation (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 a residence or property for sale in an "as-is" condition. 3)With respect to market-rate residential sales, gives first priority only to tenants in good standing with all rent current and paid in full, rather than any tenant, and second priority to former occupants who were in good standing at the time they left the home, before the home can be offered to purchasers who intend to be owner-occupants. 4)With respect to non-residential properties, gives tenants in good standing priority to purchase the property at fair market value. 5)Creates the SR 710 Rehabilitation Account and requires Caltrans to deposit proceeds from sales of SR 710 properties into the account. 6)Limits the total funds that can be maintained in the account to $500,000, and specifies that funds exceeding that amount shall be transferred to the State Highway Account to be used exclusively to fund eligible projects located in Pasadena, Alhambra, La Canada Flintridge, and the community of El Sereno in the City of Los Angeles. SB 416 Page 2 7)Continuously appropriates funds in the SR 710 Rehabilitation Account for the purpose of making required repairs to homes being purchased by income-qualified residents, and requires any funds exceeding the amount needed for repairs to be transferred to the State Highway Account. 8)Prohibits funds from the sale of surplus properties in the SR 10 corridor from being used to advance or construct the proposed North State Route 710 tunnel. 9)Requires that any funds remaining in the SR 710 Rehabilitation Account after the last property is repaired be transferred to the State Highway Account. EXISTING LAW: Pursuant to 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: 1)First, at market rate to a former owner who currently occupies the property. 2)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. 3)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. 4)Fourth, at market rate to occupants and then to persons who intend to be owner-occupants. (Government Code Section 54237) FISCAL EFFECT : Unknown. COMMENTS : For decades, Caltrans has proposed the SR 710 extension project SB 416 Page 3 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. The Los Angeles County Metropolitan Transportation Authority (LCMTA), on behalf of Caltrans, is currently preparing a Draft Environment Impact Report to assess alternatives for ameliorating traffic congestion in the area between the current terminus of SR 710 and SR 210 in Pasadena. At this point in the process, the originally proposed surface route has been eliminated from further consideration. Alternatives remaining under consideration include a tunnel, light rail, bus rapid transit, and transportation demand and traffic flow management. By 2014, Caltrans plans to identify how it intends to proceed. Caltrans currently owns 460 properties within the originally proposed right-of-way, including 330 single-family homes and 103 multifamily housing units. 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. SB 416 makes a number of changes to the Roberti Act governing the sale of surplus properties in the SR 710 corridor aimed at expediting the sale of Caltrans-owned properties in the corridor that are no longer needed to construct the freeway extension. The bill does the following: 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. SB 416 Page 4 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. SB 416 additionally creates the SR 710 Rehabilitation Account and requires that Caltrans deposit proceeds from the sale of SR 710 properties into the account for the purposes of making repairs required by the Roberti Act to homes being purchased by income-qualified residents. The bill limits the account to having a maximum of $500,000 on deposit at any one time. Funds in excess of $500,000 would be deposited into the State Highway Account to be used to fund eligible projects in Pasadena, Alhambra, La Canada Flintridge, and the community of El Sereno in the City of Los Angeles. The bill 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. Double-referral : This bill was also referred to the Transportation Committee, where it will be heard should it pass out of this committee. REGISTERED SUPPORT / OPPOSITION : Support / Opposition None on file. Analysis Prepared by : Anya Lawler / H. & C.D. / (916) 319-2085