BILL ANALYSIS                                                                                                                                                                                                    



                                                                     SB 580


                                                                    Page  1





          Date of Hearing:  July 1, 2015


               ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT


                                   Ed Chau, Chair


          SB  
          580 (Liu) - As Introduced February 26, 2015


          SENATE VOTE:  36-0


          SUBJECT:  Surplus residential property: affordable housing:  
          historic buildings.


          SUMMARY:  This bill makes changes to the Roberti Act (Act)  
          governing the sale of surplus properties in the State Route (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,  
            subject to the following: 


               a)     Provides that 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.  









                                                                     SB 580


                                                                    Page  2






               b)     Provides that 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 surplus historic homes that are not purchased by  
            former owners or the present occupants to be offered first to  
            a housing-related public entity, for purposes of  
            rehabilitating and reselling the home at fair market value, or  
            a nonprofit private entity dedicated to rehabilitating and  
            maintaining the home for public and community access and use.


          3)Defines "historic home" as 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:





               a)      The California Register of Historical Resources, as  
                 established pursuant to Article 2 of Chapter 1 of  
                 Division 5 of the Public Resources Code;



               b)     The National Register of Historic Places, as  
                 established pursuant to Chapter 3021 of Title 54 of the  
                 United States Code; or











                                                                     SB 580


                                                                    Page  3





               c)     The National Register of Historic Places, as  
                 previously established pursuant to the National Historic  
                 Preservation Act (16 U.S.C. Sec. 470 et seq.).









          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 (Streets and Highways Code  
            Section 230 et seq.).


          2)Provides that, whenever Caltrans determines that any real  
            property acquired for highway purposes is no longer necessary,  
            it may sell or exchange the property upon terms, standards,  
            and conditions established by the California Transportation  
            Commission (CTC).  Proceeds from the sale are returned to the  
            State Highway Account (Streets and Highways Code Sections  
            118-118.6).


          3)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:


               a)     First, at fair-market value (market rate) to all  
                 single-family residences presently occupied by the former  








                                                                     SB 580


                                                                    Page  4





                 owners. 


               b)     Second, at an affordable price to current low- or  
                 moderate-income occupants who meet minimum  
                 length-of-occupancy standards.


               c)     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.


               d)     Fourth, at market rate to present occupants in good  
                 standing, next to former tenants, and lastly to persons  
                 who intend to be owner-occupants. 


                 (Government Code Section 54237)


          4)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.  Removes the  
            originally proposed surface route from further consideration  
            and increased opportunities for current and former tenants to  
            purchase surplus properties owned by Caltrans (Government Code  
            Sections 54236-54237.8).









                                                                     SB 580


                                                                    Page  5








          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee:


          1)Minor one-time costs to Caltrans to update regulations  
            regarding the sale of surplus property in the SR 710 corridor  
            (State Highway Account).

          2)Unknown secondary fiscal impacts related to the authority for  
            public housing-related entities to resell properties purchased  
            at less than fair market value.





          COMMENTS:  


           Background:   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. 
           Purpose of this bill:   The author points out that, according to  
          Senator Roberti, the Act was intended both to preserve  
          neighborhoods and provide affordable housing.  According to the  








                                                                     SB 580


                                                                    Page  6





          author, "Caltrans revised regulations to implement the Act as  
          amended by SB 416 (Liu) to a great extent addressed major  
          concerns with the originally proposed regulations.  However, one  
          issue remains that requires legislative action to resolve:  
          disposition and preservation of the historical homes.  Many of  
          these homes have remained vacant and boarded up for decades.   
          They require substantial restoration in accordance with  
          historical designation protocols.  Even if it were economically  
          feasible to restore and convert a property into affordable  
          housing, it would likely be too expensive for an affordable  
          housing owner to maintain. Amending the Act to allow cities to  
          buy and flip homes, both historical and otherwise, will provide  
          a financial incentive to 'do it right,' generate more affordable  
          housing than might otherwise be created, and preserve  
          neighborhoods and community historical assets."


           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 must 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, or to a non-profit dedicated to  
          rehabilitating and maintaining the home for public and community  
          access.  If the home is sold by a public-housing-related public  
          entity, profits from that sale must be dedicated to the  
          construction of affordable housing in that area.  


          The author notes that many of these historic homes are in such a  
          state of disrepair that rehabilitation of the existing structure  
          may not be economically feasible.  After the property has been  
          offered to former owners and present occupants, 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  








                                                                     SB 580


                                                                    Page  7





          use.  


           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 requires the property to 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  
          must use the property for low- and moderate-income rental or  
          owner-occupied housing with first right of occupancy to the  
          present tenants.  


          Caltrans regulations:   Caltrans issued revised draft regulations  
          earlier this year to accommodate public input.  The author has  
          indicated that this bill is a work in progress, and is committed  
          to working with Caltrans to make any necessary changes to the  
          bill to address outstanding issues raised from the public  
          feedback.  


           Related legislation:


           SB 416 (Liu), Chapter 468, Statutes of 2013: Expedited 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  
          State Route 710 Project Draft Environmental Impact  
          Report/Environmental Impact Statement.








                                                                     SB 580


                                                                    Page  8







          SB 204 (Liu), 2012: Would have required the sale of  
          Caltrans-owned surplus properties in the North Route 710  
          Project.  This bill was vetoed by the Governor.


          AB 1617 (Liu), 2006: Would have given cities priority over  
          affordable housing entities to purchase, rehabilitate, and  
          resell Caltrans-owned surplus residential properties in the  
          North State Route 710.  This bill failed passage in the Senate  
          Transportation and Housing Committee. 


           


           REGISTERED SUPPORT / OPPOSITION:




          Support


          None on file




          Opposition


          None on file




          Analysis Prepared by:Rebecca Rabovsky / H. & C.D. / (916)  








                                                                     SB 580


                                                                    Page  9





          319-2085