BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 580| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 580 Author: Liu (D) Introduced:2/26/15 Vote: 21 SENATE TRANS. & HOUSING COMMITTEE: 10-0, 4/21/15 AYES: Beall, Cannella, Allen, Bates, Galgiani, Leyva, McGuire, Mendoza, Roth, Wieckowski NO VOTE RECORDED: Gaines SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/4/15 AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen SUBJECT: Surplus residential property: affordable housing: historic buildings SOURCE: Author DIGEST: This bill makes changes to the Roberti Act (Act) governing the sale of surplus properties in the State Route (SR) 710 corridor. ANALYSIS: Existing law: 1) 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, whenever Caltrans determines that any real property acquired for highway purposes is no longer necessary, it may sell or SB 580 Page 2 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 extending SR 710 to close a roughly 4.5-mile unconstructed gap in the freeway between SR 10 in Los Angeles and SR 710 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 currently owns over 460 homes within the original surface route corridor, 97 of which are declared to be of federal or state historical significance. More than 400 homes are occupied by tenants for whom Caltrans serves as landlord. 2) Establishes, pursuant to the Act, 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 fair-market value (market rate) to all single-family residences presently occupied by the former owners. Second, at an affordable price to current low- or moderate-income occupants who meet minimum length-of-occupancy standards. Third, to public or private housing-related entities at a price necessary to make the housing affordable to present tenants and households of low or moderate income. The sale is conditioned upon the entity rehabilitating and developing the property as a limited-equity cooperative housing with first right of occupancy to present tenants. If cooperative housing is not feasible, the purchasing agency shall use the property for low- and moderate-income rental or owner-occupied housing, with the first right of occupancy to present tenants. SB 580 Page 3 Fourth, at market rate to present occupants in good standing, next to former tenants, and lastly to persons who intend to be owner-occupants. 3) Expedites, pursuant to SB 416 (Liu, Chapter 468, Statutes of 2013), the sale of surplus residential properties in the cities of Los Angeles, South Pasadena, and Pasadena that do not fall within the boundaries of any alternate route being considered in the North Route 710 Project Draft Environmental Impact Report/Environmental Impact Statement. SB 416 also removed the originally proposed surface route from further consideration and increased opportunities for current and former tenants to purchase surplus properties owned by Caltrans. Caltrans recently published and is presently receiving public comments on draft regulations that set forth procedures to dispose of surplus residential properties originally acquired for the SR 710 extension in accordance with the Act. This bill: Makes changes to the Act governing the sale of surplus properties in the SR 710 corridor. Specifically, this bill: 1)Requires all non-historic surplus residential properties that are not purchased by former owners or the present occupants to be offered to a public or private housing-related entity at a reasonable price to allow the property to be used as affordable housing for low- and moderate-income individuals. If that housing entity is a public entity, the entity may resell the property, and the profits realized from the sale must be used for the construction of affordable housing within its jurisdiction. If the housing entity is a private entity, the property must be developed as limited-equity cooperative housing, with first right of occupancy to present occupants. If development of a cooperative is not feasible, the purchasing entity shall use the property for low- and moderate-income rental or owner-occupied housing, with first right of occupancy to the present tenants. 2)Requires all historic surplus residential properties that are not purchased by former owners or the present occupants to be SB 580 Page 4 offered first to a housing-related public entity or a nonprofit private entity dedicated to rehabilitating and maintaining the home for public and community access and use. Comments Purpose. According to the author, the purpose of the Act was to preserve thousands of mostly low- to moderate-income homes. Caltrans published regulations in April 2014 to implement the amended Act (pursuant to SB 416, Chapter 468, Statutes of 2013) and expedite the sale of homes in the SR 710 corridor. After substantial input from current tenants and the impacted cities, stakeholders, and elected officials, earlier this year Caltrans issued revised regulations. The revised regulations address major concerns with the originally proposed regulations. One issue remains, however, that requires legislative action to resolve: disposition and preservation of designated historical homes. Many of these historical homes remained vacant and boarded up for decades and require substantial restoration. Even then, they may be too large and costly for conversion into affordable housing or for an affordable-housing owner to maintain. Amending the bill to allow cities to buy and sell homes, both historical and otherwise, will provide a financial incentive to generate more affordable housing and preserve neighborhoods and community historical assets. Priority of sale for non-historic homes. The Act establishes a priority of sales for the disposal of surplus rental property within the SR 710 corridor. The Act states that after a non-historic surplus property has been offered to former owners and present occupants, it shall then be offered to a public or private housing-related entity at a reasonable price to establish affordable housing for low- and moderate-income people. This bill also allows a public housing-related entity to resell the property and requires profits realized from that sale to fund the construction of affordable housing within its jurisdiction. If the housing entity is a private entity, this bill states that the property shall be developed as a cooperative with first right of occupancy to the present tenants. If the development of a cooperative is not feasible, the private entity shall use the property for low- and moderate-income rental or owner-occupied housing with first SB 580 Page 5 right of occupancy to the present tenants. This bill seeks to realize the original intent of the Act by preserving and creating affordable housing for low- and moderate-income individuals. The changes to the Act will allow a public housing entity to purchase, rehabilitate, and resell a home and requires the profits from that sale to be used for building affordable housing in the same area. Historic home sales. This bill establishes a priority of sale of surplus historic homes in the SR 710 corridor. After historic surplus property has been offered to former owners and present occupants, that property shall be offered first to a public housing-related public entity or other public entity at a reasonable price for purposes of rehabilitating and reselling the home at fair market value. This bill requires profits from that sale to be dedicated to the construction of affordable housing in that area. Next, the home will be offered to a non-profit dedicated to rehabilitating and maintaining the home for public and community access. As noted above, this bill seeks to realize the original intent of the Act. Many of these historic homes are in such a state of disrepair that rehabilitation of the existing structure may not be economically feasible. Where possible, this bill gives priority to public entities to rehabilitate the home for resale and use the profits to construct affordable housing in the entities' jurisdiction. Alternatively, this bill will allow nonprofit entities to purchase and convert an otherwise dilapidated home into a community park or other neighborhood use. Caltrans regulations. Caltrans issued revised draft regulations earlier this year to accommodate public input and is presently receiving feedback from the public on those regulations. This bill is a work in progress; once the public comment period has ended, the author is committed to working with Caltrans to make any necessary changes to the bill to address outstanding issues raised from the public feedback. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No SB 580 Page 6 According to the Senate Appropriations Committee: Minor one-time costs to Caltrans to update regulations regarding the sale of surplus 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 SUPPORT: (Verified5/4/15) None received OPPOSITION: (Verified5/4/15) None received Prepared by:Alison Dinmore / T. & H. / (916) 651-4121 5/6/15 16:49:50 **** END ****