BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1170 (Liu) - Surplus Nonresidential Property Sales: SR 710
Corridor.
Amended: April 3, 2014 Policy Vote: T&H 11-0
Urgency: No Mandate: No
Hearing Date: April 28, 2014
Consultant: Mark McKenzie
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1170 would require the Department of
Transportation (Caltrans) to offer surplus nonresidential
property in the State Route (SR) 710 corridor to nonprofit
tenants in good standing at a fair market value based on its
current use.
Fiscal Impact: Potential revenue losses of approximately $10
million to $15 million (State Highway Account) by requiring
Caltrans to offer nonresidential properties in the SR 710
corridor for sale to nonprofit tenants at less than fair market
value. Caltrans estimates that the current use limitation would
reduce the value on six nonresidential properties currently
legally occupied by nonprofit tenants.
Background: Under existing law, whenever Caltrans determines
that real property acquired for highway purposes is no longer
necessary, that property may be sold or exchanged upon terms,
standards, and conditions established by the California
Transportation Commission (CTC). Proceeds from the sale are
returned to the State Highway Account. If a proposed state
highway route location is rescinded, existing law requires
Caltrans to sell any excess real property acquired for the
rescinded route location and use the proceeds to fund the state
highway project that is proposed as the alternative to the
rescinded route.
Caltrans currently owns 460 properties in the SR 710 corridor,
including 330 homes and 103 mutifamily housing units. These
properties were originally purchased in the corridor with the
intent to eventually remove the structures and construct an
extension to the existing SR 710 freeway to close 4.5 mile
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unconstructed gap in Pasadena, but the surface freeway project
was never built. Caltrans is in the process of reviewing
options for addressing congestion in the area, and is expected
to determine an alternative to the surface SR 710 gap closure in
2015.
Existing law, the Roberti Act, establishes priorities and
procedures for the disposition of surplus residential properties
in the SR 710 corridor, giving priority to current owners at
fair market value, current occupants that meet certain
income-qualifications "at an affordable price," housing-related
public and private affordable housing entities at a price
necessary to maintain affordability, as specified, and then to
occupants and persons who intend to be owner occupants at fair
market value. With respect to properties offered to specified
income-qualified buyers, Caltrans must provide repairs required
by lenders and government housing assistance programs prior to
the sale or provide the occupants with a replacement dwelling.
The Roberti Act also requires Caltrans to give priority to
purchase surplus nonresidential property at fair market value to
tenants in good standing who currently rent, lease, or otherwise
legally occupy the property.
Proceeds from the sale of property pursuant to the Roberti Act
are deposited into the SR 710 Rehabilitation Account, which is
used to fund the rehabilitation of surplus SR 710 single-family
homes being sold to certain low- and moderate-income occupants.
Once the balance in that Account reaches $500,000, additional
proceeds are deposited into the State Highway Account for
projects in the following geographical areas: Pasadena, South
Pasadena, Alhambra, La Canada Flintridge, and the 90032 postal
ZIP Code (El Sereno).
Proposed Law: SB 1170 would require Caltrans to offer surplus
nonresidential property in the SR 710 corridor to nonprofit
organization tenants in good standing at fair market value as
determined relative to the current use of the property.
Staff Comments: Caltrans has identified six properties to date
that would be subject to the "current use" limitations on the
fair market value. To the extent the current use of these
properties do not represent the highest and best use, there
would be a corresponding loss in revenues to the State Highway
Account at the time of sale equal to the difference between the
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value of the property at current use and the fair market value
at the property's highest and best use. The properties affected
by the bill, as well as the estimated potential loss in revenues
as a result of the current-use limitation, are noted below:
Arlington Garden; potential loss in the range of $5
million to $10 million
Ronald McDonald House; potential loss of approximately
$500,000
Cottage Co-op Nursery; potential loss of approximately
$100,000
Sequoyah School; potential loss of approximately $3
million
Waverly Schools and Garden; potential loss of $1 million
Pasadena Avenue Community Garden; potential loss in the
range of $500,000 to $750,000