BILL ANALYSIS Ó
AB 2697
Page 1
Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, Chair
AB 2697
(Bonilla) - As Amended April 14, 2016
SUBJECT: Redevelopment dissolution: successor agencies:
disposal of assets and properties.
SUMMARY: Requires successor agencies to create a first right of
refusal process for the disposal of land for the purpose of
developing low- and moderate- income housing. Specifically, this
bill:
1)Requires the successor agency to a former redevelopment agency
to send to any "local public entity," within whose
jurisdictions the land is located, a written offer to sell
land belonging to the former redevelopment agency for the
purpose of developing the land into low- and moderate-income
housing.
2)Requires the successor agency to send "housing sponsors," upon
written request, a written offer to sell land for the purpose
of developing low- and moderate-income housing.
3)Requires all notices to be sent by first class mail and to
include the location and description of the property.
AB 2697
Page 2
4)Requires priority to be given to offers to purchase the land
by entities that agree to development affordable housing for
lower-income households.
5)Requires preference to be given to an entity that proposes to
make at least 25% of the units affordable, by sale or rent, to
lower-income households and that agrees to record an
affordability covenant restricting the property for a period
of at least 55 years.
6)Provides that if the successor agency receives more than one
offer for the land that priority be given to the entity that
proposes the greatest number of units at the highest level of
affordability.
7)Provides that if land is not sold to an entity that agrees to
include affordable housing on site but is sold for a
residential use that includes at least 10 units, then at least
15% of the units must be provided at an affordable housing
cost to low-income households. Rental units must remain
affordable and occupied by eligible households for 55 years.
Ownership units must be subject to an equity sharing
agreement. These requirements must be recorded against the
property and are enforceable by the local government or
eligible residents.
8)Defines a "local public entity" to mean any county, city, city
and county, Indian reservation or rancheria, redevelopment
agency, housing authority, state agency, public district or
other political subdivision of the state that is authorized to
engage in or assist in the development or operation of housing
for persons or families of low or moderate income.
AB 2697
Page 3
9)Defines "housing sponsor" to mean an individual, joint
venture, partnership, limited partnership, trust, corporation,
limited equity housing cooperative, cooperative, local public
entity, duly constituted governing body of an Indian
reservation or rancheria, or other legal entity, certified by
the agency, pursuant to rules and regulations of the agency as
qualified to either own, construct, acquire or rehabilitate a
housing development, whether for profit, nonprofit, or
organized for limited profit, and subject to the regulatory
powers of the agency, pursuant to rules and regulations of the
agency and other terms and conditions set forth in this
division.
10)Clarifies that a successor agency is not required to sell a
property at less than fair market rate to a developer who
agrees to include units affordable to lower-income households.
11)Provides that reimbursement to local agencies shall be made,
if the Commission on State Mandates determines that this act
contains costs mandated by the state.
EXISTING LAW:
1)Requires an oversight board to direct the successor agency to
a redevelopment agency to dispose of all assets and properties
of the former redevelopment agency expeditiously and in a
manner that maximizes value.
2)Defines "local agency" for purposes of the surplus land
disposal procedures as every city, whether organized under
general law or by charter, county, city and county, and
district, including school districts of any kind or class,
empowered to acquire and hold real property.
AB 2697
Page 4
3)Defines "housing sponsor" to mean an individual, joint
venture, partnership, limited partnership, trust, corporation,
limited equity housing cooperative, cooperative, local public
entity, duly constituted governing body of an Indian
reservation or rancheria, or other legal entity, certified by
the agency pursuant to rules and regulations of the agency as
qualified to either own, construct, acquire or rehabilitate a
housing development, whether for profit, nonprofit, or
organized for limited profit, and subject to the regulatory
powers of the agency pursuant to rules and regulations of the
agency and other terms and conditions set forth in this
division.
4)Defines "surplus land" as land owned by any local agency that
is determined to be no longer necessary for the agency's use,
except property being held by the agency for the purpose of
exchange or property meeting other exemptions.
5)Requires that a local agency must provide a written offer to
sell or lease surplus land for the purpose of developing low-
or moderate-income housing to "housing sponsors" upon written
request, as well as any local public entity within the
jurisdiction where the surplus land is located.
6)Provides that a local agency wishing to dispose of surplus
land must also provide a written offer to additional entities,
depending on the type of proposed usage, for park and
recreational purposes, school facilities construction or use
by a school district for open-space purposes, enterprise
purposes, and infill opportunity zones or transit village
AB 2697
Page 5
plans.
7)Provides that, if a notified entity desires to purchase or
lease the surplus land, it must notify the local agency of its
intent within 60 days after receipt of the agency's intent to
sell or lease the land.
8)Provides that, if a local agency receives notice from an
entity provided with a written offer desiring to purchase or
lease the land, the local agency and the entity must enter
into good faith negotiations. If the price or terms cannot be
agreed upon after a period of not less than 60 days, the land
may be disposed of without further regard to the disposal
procedures.
9)Provides that any public agency selling surplus land to a
notified entity for park or recreation purposes, for
open-space purposes, for school purposes, or for low- and
moderate- income housing purposes, may provide for a payment
period of up to 20 years in any contract of sale or sale by
trust deed.
10)Provides that nothing in the disposal procedure limits the
power of any local agency to sell or lease surplus land at
fair market value or at less than fair market value, and
nothing shall be interpreted to empower any local agency to
sell or lease surplus land at less than fair market value.
11)Provides that, with respect to any offer to purchase or lease
AB 2697
Page 6
from a notified entity for the purpose of low- or
moderate-income housing development, priority shall be given
to development of the land for affordable housing for lower
income, elderly, or disabled persons or households, and other
lower-income households.
12)Specifies that, in the event that a local agency receives
multiple offers for the purchase or lease of surplus land from
more than one of the notified entities, the local agency shall
give first priority to the entity that agrees to use the site
for housing for persons and families of low- or
moderate-income, except that first priority shall be given to
an entity that agrees to use the site for park or recreational
purposes, if the land being offered is already being used and
will continue to be used for park or recreational purposes, or
if the land is designated for park and recreational use in the
local general plan and will be developed for that purpose.
FISCAL EFFECT: This bill is keyed fiscal.
COMMENTS:
1)Bill Summary. This bill requires successor agencies to create
a first right of refusal process for the disposal of land for
the purpose of developing low- and moderate- income housing.
This bill is an author-sponsored measure.
2)Author's Statement. According to the author, "California has
a lack of housing which has spurred increased housing prices
across the state. A key issue with supply is lack of easily
identifiable and affordable sites on which to build new
AB 2697
Page 7
structures. Although local governments are obligated to
identify housing sites in their housing elements on which
residential housing can be constructed, these identified sites
often are insufficient - some do not shift as anticipated from
prior uses to residential uses, their cost is prohibitive, or
they are dually zoned to accommodate commercial and
residential use, with the commercial use winning out. Housing
developers also have a hard time identifying sites on which to
build. Affordable housing developers are at a special
disadvantage because they cannot compete with market
developers when it comes to buying land. Land is one of the
most costly parts of a project, especially in California.
"AB 2697 will allow affordable housing developers to have
first right of refusal to purchase any properties currently in
possession of redevelopment successor agencies. This small
step will give these developers a leg up in the process to
locate and acquire properties on which to build affordable
housing.
"With the current dissolution of redevelopment agencies and
the requirement for successor agencies to liquidate their
assets, we have a good opportunity to shift those properties
towards the development of affordable housing. There is no
current requirement that successor agencies give first right
of refusal to affordable housing developers when liquidating
agency assets."
3)Background. Local agencies are required to inventory the land
they own every year. If land is no longer needed, a local
agency must follow certain procedures prior to disposal of
this "surplus" land. The intent behind the disposal
procedures is to promote the use of surplus land towards
affordable housing, parks and recreation purposes, open-space
purposes, and transit-oriented development. The disposal
procedures provide a Right of First Refusal to entities
AB 2697
Page 8
agreeing to use the land for, amongst other things, affordable
housing.
Prior to disposing of surplus land, local agencies must make a
written offer to sell or lease surplus land for the purpose of
developing low- or moderate-income housing to "housing
sponsors" upon written request, as well as any local public
entity within the jurisdiction where the surplus land is
located. A local agency wishing to dispose of surplus land
must also provide a written offer to additional entities,
depending on the type of proposed development, for park and
recreational purposes, school facilities construction or use
by a school district for open space purposes, enterprise
purposes, and infill opportunity zones, or transit village
plans.
If one of these entities is interested in buying or leasing
the land, it must notify the local agency within 60 days of
receipt of the offer. If a notified entity is interested, but
cannot agree with the agency upon the price or terms, the
local agency must enter into good faith negotiations with the
entity for at least 60 days. If 60 days have passed without
an agreement, then the local agency may sell or lease the land
without further regard to the Right of First Refusal
requirements under the disposal procedures.
If the land is going to be used for residential development
and a local agency receives multiple offers from notified
entities, the local agency is required to give first priority
AB 2697
Page 9
to the entity that agrees to use the site for affordable
housing for low- or moderate-income individuals and families.
In the event that a local agency enters into a contract to
sell or lease the land to a notified entity for park or
recreation purposes, open-space purposes, school purposes, or
for low- and moderate-income housing purposes, that contract
may provide for a payment period of up to 20 years. While
nothing in the disposal procedure limits the power of a local
agency to sell or lease surplus land at fair market value or
at less than fair market value, it also provides that nothing
in the procedure shall be interpreted to empower any local
agency to sell or lease surplus land at less than fair market
value.
AB 2135 (Ting), Chapter 677, Statutes of 2014, amended the
procedure for the disposal of surplus land by local agencies
and expanded the provisions relating to the prioritization of
affordable housing development if the surplus land would be
used for residential development.
4)Policy Considerations. The Committee may wish to consider the
following:
a) Land Appropriate for Residential. The Committee may
wish to consider whether all properties are suitable for
residential development. What if the local agency does not
have the land zoned appropriately for residential use?
b) Cross Reference to "Local Public Entity". The cross
reference the bill includes to the definition of "local
public entity" is as follows:
"Local public entity" means any county, city, city and
county, Indian reservation or Rancheria, redevelopment
AB 2697
Page 10
agency, housing authority, state agency, public district or
other political subdivision of the state?
However, the definition in the surplus lands statute (used
in AB 2135 (Ting)) defines "local agency" for purposes of
the surplus land disposal procedures as every city, whether
organized under general law or by charter, county, city and
county, and district, including school districts of any
kind or class, empowered to acquire and hold real property.
5)Arguments in Support. Supporters argue that this bill will
allow successor agencies to utilize their remaining property
as was intended and help to develop a significant amount of
affordable homes.
6)Arguments in Opposition. Opponents argue that "imposing new
procedural and substantive requirements for the disposition of
former RDA properties at this time would no doubt complicate
and delay the wind down process. Additionally, it would work
to the disadvantage of the local taxing entities which have an
interest in obtaining maximum value for the properties to be
sold and or get the benefit of increased valuations from the
properties that are to be used for economic development."
7)Double-Referral. This bill was heard by the Housing and
Community Development Committee on April 13, 2016, where it
passed with a 6-1 vote.
REGISTERED SUPPORT / OPPOSITION:
AB 2697
Page 11
Support
California Housing Consortium
Non-Profit Housing Association
Opposition
Cities of Palmdale, San Carlos, and Torrance
League of California Cities
Analysis Prepared by:Debbie Michel / L. GOV. / (916) 319-3958