Senate Bill No. 1170

Introduced by Senator Liu

February 20, 2014

An act to amend Section 54237 of the Government Code, relating to property.

LEGISLATIVE COUNSEL’S DIGEST

SB 1170, as introduced, Liu. Surplus nonresidential property.

Existing law declares the intent of the Legislature to preserve, upgrade, and expand the supply of housing to persons and families of low or moderate income, through the sale of specified surplus residential property owned by public agencies. Existing law establishes priorities and procedures that any state agency disposing of that surplus residential property is required to follow, and defines relevant terms for these purposes, including “fair market value.” Existing law defines “fair market value” as the fair market value as of the date the offer of sale is made by the selling agency and to reflect the existing “as is” condition of the property, taking into account any needed repairs, as specified. Existing law requires tenants in good standing who legally occupy nonresidential properties to be given priority to purchase the property at fair market value.

This bill would require that fair market value be determined relative to current use for the purchase by those tenants of nonresidential properties of the properties they occupy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 54237 of the Government Code is
amended to read:

54237.  

(a) Notwithstanding Section 11011.1, any agency of
the state disposing of surplus residential property shall do so in
accordance with the following priorities and procedures:

(1) First, all single-family residences presently occupied by
their former owners shall be offered to those former owners at the
appraised fair market value.

(2) Second, all single-family residences shall be offered,
pursuant to this article, to their present occupants who have
occupied the property two years or more and who are persons and
families of low or moderate income.

(3) Third, all single-family residences shall be offered, pursuant
to this article, to their present occupants who have occupied the
property five years or more and whose household income does not
exceed 150 percent of the area median income.

(4) Fourth, a single-family residence shall not be offered,
pursuant to this article, to present occupants who are not the former
owners of the property if the present occupants have had an
ownership interest in real property in the last three years.

(b) Single-family residences offered to their present occupants
pursuant to paragraphs (2) and (3) of subdivision (a) shall be
offered to those present occupants at an affordable price, which
price shall not be less than the price paid by the agency for original
acquisition, unless the acquisition price was greater than the current
fair market value, and shall not be greater than fair market value.
When single-family residences are offered to present occupants
at a price that is less than fair market value, the selling agency
shall impose terms, conditions, and restrictions to ensure that the
housing will remain available to persons and families of low or
moderate income and households with incomes no greater than
the incomes of the present occupants in proportion to the area
median income. The Department of Housing and Community
Development shall provide to the selling agency recommendations
of standards and criteria for these prices, terms, conditions, and
restrictions. The selling agency shall provide repairs required by
lenders and government housing assistance programs, or, at the
option of the agency, provide the present occupants with a
replacement dwelling pursuant to Section 54237.5.

(c) If single-family residences are offered to their present
occupants pursuant to paragraphs (2) and (3) of subdivision (a),
the occupants shall certify their income and assets to the selling
agency. When single-family residences are offered to present
occupants at a price that is less than fair market value, the selling
agency may verify the certifications, in accordance with procedures
utilized for verification of incomes of purchasers and occupants
of housing financed by the California Housing Finance Agency
and with regulations adopted for the verification of assets by the
United States Department of Housing and Urban Development.
The income and asset limitations and term of residency
requirements of paragraphs (2) and (3) of subdivision (a) shall not
apply to sales that are described as mitigation measures in an
environmental study prepared pursuant to the Public Resources
Code, if the study was initiated before this measure was enacted.

(d) All other surplus residential properties and all properties
described in paragraphs (1), (2), and (3) of subdivision (a) that are
not purchased by the former owners or the present occupants shall
be then offered to housing-related private and public entities at a
reasonable price, which is best suited to economically feasible use
of the property as decent, safe, and sanitary housing at affordable
rents and affordable prices for persons and families of low or
moderate income, on the condition that the purchasing entity shall
cause the property to be rehabilitated and developed as limited
equity cooperative housing with first right of occupancy to present
occupants, except that where the development of cooperative or
cooperatives is not feasible, the purchasing agency shall cause the
property to be used for low and moderate income rental or
owner-occupied housing, with first right of occupancy to the
present tenants. The price of the property in no case shall be less
than the price paid by the agency for original acquisition unless
the acquisition price was greater than current fair market value
and shall not be greater than fair market value. Subject to the
foregoing, it shall be set at the level necessary to provide housing
at affordable rents and affordable prices for present tenants and
persons and families of low or moderate income. When residential
property is offered at a price that is less than fair market value, the
selling agency shall impose terms, conditions, and restrictions as
will ensure that the housing will remain available to persons and
families of low or moderate income. The Department of Housing
and Community Development shall provide to the selling agency
recommendations of standards and criteria for prices, terms,
conditions, and restrictions.

(e) Any surplus residential properties not sold pursuant to
subdivisions (a) to (d), inclusive, shall then be sold at fair market
value, with priority given first to purchasers who are present tenants
in good standing with all rent obligations current and paid in full,
second to former tenants who were in good standing at the time
they vacated the premises, with priority given to the most recent
tenants first, and then to purchasers who will be owner occupants.
The selling agency may commence the sales of properties that
former tenants may possess a right to purchase as provided by this
subdivision 30 days after the selling agency has done both of the
following:

(1) Posted information regarding the sales under this subdivision
on the selling agency’s Internet Web site.

(2) Made a good faith effort to provide written notice, by
first-class mail, to the last known address of each former tenant.

(f) Tenants in good standing of nonresidential properties shall
be given priority to purchase, at fair market value begin insert as determined
relative to current use end insert , the property they rent, lease, or otherwise
legally occupy.