BILL ANALYSIS Ķ SB 580 Page 1 SENATE THIRD READING SB 580 (Liu) As Amended August 15, 2016 2/3 vote. Urgency SENATE VOTE: 36-0 -------------------------------------------------------------------- |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+-----------------------+---------------------| |Housing |7-0 |Chau, Steinorth, | | | | |Burke, Chiu, Beth | | | | |Gaines, Lopez, Mullin | | | | | | | |----------------+-----+-----------------------+---------------------| |Appropriations |14-0 |Gomez, Bigelow, Bloom, | | | | |Bonta, Calderon, | | | | |Chang, Eggman, | | | | |Gallagher, Eduardo | | | | |Garcia, Jones, Quirk, | | | | |Rendon, Weber, Wood | | | | | | | | | | | | -------------------------------------------------------------------- SUMMARY: Makes changes to the Roberti Act (Act) governing the SB 580 Page 2 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. 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: SB 580 Page 3 a) The California Register of Historical Resources, as established pursuant to Public Resources Code Division 5 Chapter 1 Article 2; b) The National Register of Historic Places, as established pursuant to 54 United States Code (U.S.C.) Chapter 3021; or c) The National Register of Historic Places, as previously established pursuant to the National Historic Preservation Act (16 U.S.C. Sections 470 et seq.). 4)Creates the Affordable Housing Trust Account within the Housing Finance Fund. 5)Provides that net proceeds from a subsequent market sale of surplus residential property sold pursuant to regulations implementing the Roberti Act at an affordable or reasonable price, as specified in regulations adopted by the Department of Transportation (Department), shall be deposited into the Affordable Housing Trust Account and continuously appropriated to the California Housing Finance Agency (CalHFA) to carry out any authorized activities for the benefit of persons and families of low and moderate income residing exclusively in Pasadena, South Pasadena, Alhambra, La Caņada Flintridge, and the 90032 postal ZIP Code. The priority for distribution of proceeds from subsequent sales shall be established pursuant to regulations adopted by the Department. 6)Provides that this act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. SB 580 Page 4 FISCAL EFFECT: According to the Assembly Appropriations Committee, minor one-time costs to the Department of Transportation (Caltrans) to update regulations regarding the sale of surplus property in the SR 710 corridor. (State Highway Account) 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 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 SB 580 Page 5 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 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 SB 580 Page 6 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. Affordable Housing Trust Account: This bill creates the Affordable Housing Trust Account within the Housing Finance Fund. Net proceeds from a subsequent market sale of surplus residential property sold pursuant to regulations implementing the Roberti Act at an affordable or reasonable price must be deposited into the Affordable Housing Trust Account. These funds will be continuously appropriated to CalHFA to carry out any authorized activities for the benefit of persons and families of low and moderate income residing exclusively in Pasadena, South Pasadena, Alhambra, La Caņada Flintridge, and the 90032 postal ZIP Code. The priority for distribution of proceeds from subsequent sales will be established pursuant to regulations adopted by the Department. 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 204 (Liu) of 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) of 2006: Would have given cities priority over SB 580 Page 7 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. Analysis Prepared by: Rebecca Rabovsky / H. & C.D. / (916) 319-2085 FN: 0003998