BILL ANALYSIS                                                                                                                                                                                                    




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          |SENATE RULES COMMITTEE            |                        SB 580|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                   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  








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            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.









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                 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  








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            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  








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          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








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          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


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