CITY OF COMMERCEAGENDA REPORTCITY OF COMMERCEAGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
TO: Honorable City Council
FROM: City Manager
SUBJECT: Surplus Land Act Legislative Update
Meeting Date: June 27, 2023
RECOMMENDATION:
The City Council will consider the staff’s recommendation to declare a position for the proposed bills AB 480 (Ting) (Oppose) and SB 747 (Caballero) (Support) during the 2023 California Legislative session.
BACKGROUND:
The Surplus Lands Act (“SLA”) (codified under Government Code section 54221) requires that before a local agency such as the City takes any action to dispose of (sell or lease) property, it must declare the property to be either “surplus land” or “exempt surplus land”. As a response to the statewide housing shortage, the State Legislature passed AB 1486 (SLA) to address this concern and to target agency-owned property for affordable housing.
Each local agency is required on or before December 31st of each year to make an inventory of all lands held, owned, or controlled by it or any of its departments, to determine what land is more than its foreseeable needs. Requires a description of each parcel found to be more than what needs to be made a matter of public record and requires the agency to report this information to HCD no later than April 1st.
Unless the surplus land is exempt, the agency must give written notice of its availability to any local public entity, including schools. The notice of availability must be given before the agency “participates in negotiations to dispose of the property.” An entity receiving notice from the agency has 60 days to notify the agency of its interest in purchasing the property, and the agency is required to negotiate in good faith for not less than 90 days with any entity that has responded. Notwithstanding the obligation to negotiate in good faith, the local agency is not required to sell or lease the property to the agency, or to do so for less than fair market value. Should a local agency not be able to negotiate a mutually satisfactory price after 90 days, any project that includes residential uses must ensure that at least 15% of the units are affordable to low-income households.
The SLA’s definition of “exempt surplus property” is divided into the following four categories. Grandfathering exceptions are where a local agency entered into a legally binding agreement to dispose of the property as of September 30, 2019. Or if before January 30, 2019, a total of at least 100 units with at least 25% of the total residential units are restricted to lower-income households and will then enter into a disposition and development agreement by December 31, 2024.
Second is Affordable Housing Exemptions, where land that is destined for affordable housing, where the land includes residential units restricted and affordable to lower-income households. Such as if at least 80% of the property’s area is used for housing and at least 40% of the units are affordable to households at or below 60% of AMI and at least half of the affordable units are affordable to very low-income households and affordable units are subject to at least a 30-year regulatory agreement. Or at least 75% of the residential units are restricted and affordable to lower-income families and the remaining units are restricted to moderate-income families. Or at least 25% of the residential units in a mixed-use development are restricted and affordable to lower-income households and the development includes at least 300 residential units as is more than one acre in area. Or if the land carries a minimum planned residential density of at least 100 units per acre and is restricted to certain affordable to low or moderate-income households and 80% of the households are restricted to low-income households.
Third, the Public Use exemption category will allow land to be transferred or exchanged to another local, state, or federal agency for that agency’s use.
Fourth, the Unsuitable Parcel Exemption Category will allow land to be deemed exempt if it is unlikely to be a suitable site for affordable housing such as property that is subject to a valid legal restriction not imposed by the local agency that would prohibit housing (non-residential zoning is not a valid legal restriction) Any time a local agency disposes of land, it must follow the SLA unless the land qualifies as exempt surplus land Dispositions include property that is licensed or leased for less than five years, where no demolition or development will occur during the term or less. The SLA only allows exemptions for legal restrictions that would make housing prohibited unless there is a feasible method to satisfactorily mitigate or avoid the prohibition on the site. The SLA also allows for exemptions for parcels owned by local agencies that are subject to legal restrictions that are not imposed by the local agency (not imposed by the local agency’s zoning code).
In 2019, the State legislature revised the SLA to increase the emphasis on affordable housing and address concerns that some local agencies were bypassing the SLA’s requirements. AB 1486 (Ting) broadened the definition of surplus land and required land to be designated as surplus before the local agency sells the land, ensuring that local agencies comply with the SLA.
AB 1486 requires that if a property sold as surplus is not sold to a housing sponsor, but housing is developed on it late, 15% of the units must be sold or rented at an affordable cost to lower-income households. Penalties on local agencies that dispose of surplus land in violation of the SLA total 30% of the sales price of land disposed of in violation of the SLA for a first violation and 50% of the price of the land for subsequent violations.
This year, several authors introduced measures that seek to amend the SLA. Due to certain limitations found in the codified SLA, the legislature has proposed measures meant to modify the existing SLA. The analysis outlines the current proposed bills the State Legislature has introduced.
ANALYSIS:
OPPOSE
AB 480 (Ting, D) Surplus Land
The proposed bill would recast that provision and would authorize, in specified instances that local agencies administratively declare land as “exempt surplus land” if the declaration and findings are published and available for public comment at least 30 days before the declaration takes effect. The local agency would need to provide written notification to the Department of Housing and Community Development of its declaration and findings 3 days before disposing of land declared “exempt surplus land”.
This bill will create an exception for noticing requirements for sites whose exemption status is objective, such as the site being too small, housing prohibited, the future use of affordable housing, or the land being utilized for specified purposes by a local education agency. This bill will also allow penalties for violations of the SLA to be linked to the appraised value of the land at the time it is disposed of if the appraised value is greater than the sales price of the land.
Reason:
The proposed bill includes language that adds a thirteenth exemption for land owned by a public-use airport on which residential use is already prohibited. This bill would also add a requirement for local agencies to host a public meeting should they plan to dispose of exempt surplus land at least 30 days prior. The SLA has codified requirements for local agencies that declare land to be exempt from surplus land as supported by written findings.
The requirement of a meeting would be an added strain on the exemption process, local agencies would need to coordinate despite proving the exemption through written findings. AB 480 has the potential to undermine projects on publicly owned land and threatens the ability of a local agency to conduct appropriate economic development within their jurisdiction.
SUPPORT
SB 747 (Caballero D) Land Use: Economic Development: Surplus Land This bill would redefine the term “agency’s use” to include use for transit or transit-oriented development, property owned by a port to support logistics uses, airports, state tidelands, sites for broadband equipment or wireless facilities, and waste disposal sites. This bill would define a district relative to an “agency’s use” to include infrastructure financing districts, enhanced infrastructure financing districts, community revitalization, and investment authorities, affordable housing authorities, transit village development districts, and climate resilience districts. This bill would authorize a city, county, or city and county, in addition to a sale or lease, to transfer property to create an economic opportunity. The bill would additionally state the intent is to ensure residents have access to jobs that allow them to afford housing without the need for public subsidies.
Reason:
The SLA has limited the authority of local governments to develop affordable housing and pursue economic opportunities best suited for communities. This bill continues to prioritize affordable housing production while also providing clarity for local agencies on how to dispose of and develop surplus land through a tailored and community-driven approach.
This bill will modify the definition of “exempt surplus land” and provide agencies with more opportunities to retain land for agency use and declare it as exempt for economic development opportunities. By utilizing the Economic Opportunity Law as an alternative to disposing of surplus land through SLA, local agencies can have more flexibility in selecting opportunities that would be beneficial for their financial health.
If a local agency is a district, commercial or industrial uses are allowed only if as specified by the agency’s governing body in a public meeting to declare that the site will directly further the purpose of the agency’s work or operations or be expressly authorized by a statute provided that the district complies with specified affordable housing requirements.
ALTERNATIVES:
Approve staff recommendation; or
Provide further direction to staff
FISCAL IMPACT:
No fiscal impact.
RELATIONSHIP TO STRATEGIC GOALS:
This agenda item relates to the 2016 Strategic Plan – Goal #6: "Enhance Quality of Life Goal", This item seeks to continue providing the necessary regulations to our street vendors that help keep our community safe and healthy.
Respectfully submitted: Edgar P. Cisneros, City Manager Prepared by: Gisselle S. Delgado, Management Analyst
Approved as to form: Noel Tapia, City Attorney
ATTACHMENTS:
Attachment 1: Letter of Opposition for AB 480
Attachment 2: Letter of Support for AB 747