BILL ANALYSIS Ķ
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 580 (Liu) - Surplus residential property: affordable
housing: historic buildings
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|Version: February 26, 2015 |Policy Vote: T. & H. 10 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 4, 2015 |Consultant: Mark McKenzie |
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This bill does not meet the criteria for referral to the
Suspense File.
Bill
Summary: SB 580 would make changes to the Roberti Act, which
governs the sale of surplus property in the corridor of state
highway route (SR) 710, to specify procedures for the sale of
historic homes, and to allow for the resale of certain
properties purchased by a public housing entity, under specified
circumstances.
Fiscal
Impact:
Minor one-time costs to the Department of Transportation
(Caltans) to update regulations regarding the sale of surplus
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property in the SR 710 corridor. (State Highway Account)
Unknown secondary fiscal impacts related to the authority for
public housing-related entities to resell properties purchased
at less than fair market value. See staff comments.
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location is rescinded, existing law requires Caltrans to sell
any excess real property acquired for the rescinded route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that is proposed as the alternative to the rescinded route.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 2012 Bureau of State Audits
report that criticized Caltrans' management of over 400 rental
properties. Among the over 460 homes that Caltrans currently
owns in the corridor, 97 have been declared to be of federal or
state historical significance.
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
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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, on the condition that the purchasing entity
rehabilitate and develop the property as limited-equity
cooperative housing with first right of occupancy to present
tenants. If cooperative housing is not feasible, the
purchasing entity must use the property for low- and
moderate-income rental or owner-occupied housing, with the
first right of occupancy to present tenants.
Lastly, at fair market value with priority given to occupants,
then to previous 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.
The Roberti Act requires that proceeds from the sale of surplus
residential properties in the SR 710 corridor must be used for
providing repairs to other properties in the corridor prior to
sale and for allocation by the CTC to fund projects located in
Pasadena, South Pasadena, Alhambra, La Canada Flintridge, and
the 90032 postal ZIP Code, as specified. The Los Angeles County
Metropolitan Transportation Authority must submit a proposed
program of projects to be funded with these proceeds, and CTC
has final authority to approve these local projects. No funds
can be used to advance or construct any proposed SR 710 tunnel.
Proposed Law:
SB 580 would make changes to the Roberti Act. After offering
surplus single-family residences at fair market value to current
occupants, or at an affordable price to current occupants (as
noted in priorities 1-3 above), this bill would:
Authorize a public housing-related entity who purchases a
property (under the 4th priority noted above) to resell that
property and dedicate any profits from the sale to the
construction of affordable housing within its jurisdiction.
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Specify that surplus historic homes that are sold pursuant to
the 4th priority noted above must first be offered to public
housing-related entities for affordable housing purposes (who
may subsequently resell the property pursuant to the bill) or
to a nonprofit private entity dedicated to rehabilitating and
maintaining the historic home for public and community access
and use.
Define historic home as surplus residential property that is
listed on, or for which an application has been filed for
listing on, at least one of the following by January 1, 2015:
o The California Register of Historic Places.
o The National Register of Historic Places, as
specified.
o The National Register of Historic Places, as
previously established pursuant to the National
Historic Preservation Act.
Related
Legislation: SB 416 (Liu), Chap 468/2013, revised the Roberti
Act to expedite the sale of surplus residential properties in
the SR 710 corridor, including an authorization for Caltrans to
sell certain properties in "as-is" condition rather than
rehabilitating prior to sale, and giving priority to tenants in
good standing with rent obligations. The bill also removed the
surface option for closing the SR 710 gap from consideration and
required that proceeds from the sale of surplus property must be
used for rehabilitation of properties prior to sale, as
specified for allocation by the CTC exclusively to fund projects
located in Pasadena, South Pasadena, Alhambra, La Caņada
Flintridge, and the 90032 postal ZIP Code.
Staff
Comments: Apart from the minor state fiscal impact on Caltrans
to update Roberti Act regulations regarding the sale of surplus
SR 710 residential properties, the remaining fiscal impacts are
indirect and unquantifiable. Caltrans has published draft
regulations, which authorize a buyer to resell the surplus
property during the term of use and resale restrictions, subject
to certain terms and conditions. Regarding the circumstances in
which the buyer was a private or public housing-related entity
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(which would be affected by this bill), the draft regulations
require:
1) Any "net equity" (the difference between the original
fair market value and sale price) must be divided evenly
between the entity and the California Housing Finance
Agency (CalHFA), which is the state's affordable housing
bank.
2) Any "net appreciation" (the difference between the sales
price upon resale and the sum of the net equity, remaining
principal loan balance, and other charges) must be divided
between the entity and CalHFA pursuant to a proportionate
share schedule over a period of years. Essentially, the
more time that has passed between original sale and resale,
the more funds the purchasing entity may keep. The entity
may retain all appreciation if the resale occurs after five
years.
3) All net proceeds retained by the original purchasing
entity must be used to preserve, upgrade, and expand the
supply of affordable housing in the jurisdiction of the SR
710 corridor.
Final regulations may include revisions to this section, but
they illustrate what may occur upon resale under current law.
SB 580 would instead require that all proceeds from the resale
of a property originally sold to a public housing -related
entity at a "reasonable price" may be retained by that entity
for the construction of affordable housing within its
jurisdiction. It should be noted that these provisions would
not have a direct impact on state funds. Under current law, and
this bill, proceeds from the original sale of surplus properties
to public and private housing entities must be used to
rehabilitate other properties in the corridor and for local
transportation projects in the surrounding communities. To the
extent that draft regulations envision the payment of some share
of funds from the resale of property originally purchased by a
public housing -related entity to CalHFA, this bill could result
in a redirection of some of the proceeds away from CalHFA.
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Staff notes that CalHFA is not supported by state funds, and
typically functions by making low interest rate loans for
affordable housing through the sale of tax exempt bonds. It is
impossible to quantify or predict the amount of revenues that
could be directed away from CalHFA as a result of the bill, as
the impacts are entirely dependent upon the future behavior of
public housing-related entities regarding the sale of a subset
of SR 710 surplus properties. In either case noted here, the
proceeds in question would be used to supply more affordable
housing, and would not be available for other state uses.
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