Existing law vests the Department of Transportation with full possession and control of the state highway system, including associated property. Existing law authorizes the department to lease certain property, including the area above or below a state highway, and certain property held for future highway purposes, to public agencies under specified terms and conditions. Existing law also authorizes the department to lease airspace under a freeway, or real property acquired for highway purposes, located in various cities and counties, that is not excess property, to specified entities for certain purposes, including for purposes of an emergency shelter or feeding program, subject to certain conditions.

This bill would authorize the department to offer for lease to a city, county, political subdivision of a city or county, or state agency airspace and real property acquired for highway purposes that meets certain requirements for purposes of a temporary emergency shelter or feeding program. The bill would require the entity that enters into the lease to pay certain costs to the department including $1 per month for the lease and an annual administrative fee of up to $5,000, or no more than the departments cost of administering the lease, not to exceed $15,000. The bill would authorize the lease to be terminated without penalty if the department determines the airspace or real property is needed for departmental purposes, as specified. The bill would require the lease to contain other specified terms and conditions. The bill would repeal these provisions on January 1, 2029.

 UNFINISHED BUSINESS  

Bill No: SB 211

Author: Beall (D), et al.

Amended: 8/15/19

Vote: 21

SENATE TRANSPORTATION COMMITTEE: 12-0, 4/9/19

AYES: Beall, Bates, Dodd, Galgiani, McGuire, Morrell, Roth, Rubio, Skinner, Stone, Umberg, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/16/19

AYES: Portantino, Bates, Bradford, Hill, Jones, Wieckowski

SENATE FLOOR: 38-0, 5/23/19

AYES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

ASSEMBLY FLOOR: 76-2, 9/9/19 - See last page for vote

SUBJECT: State highways: leases

SOURCE: Author

DIGEST:

This bill authorizes the State Department of Transportation (Caltrans) to enter into lease agreements with a local entity for purposes of establishing an emergency shelter or feeding program, as specified.

Assembly Amendments add a number of eligibility and administrative provisions pertaining to the lease agreements between Caltrans and local entities.

ANALYSIS:

Existing law:

1. Grants Caltrans broad authority to acquire by eminent domain any property necessary for state highway purposes.
2. Authorizes Caltrans to lease to public agencies or private entities the use of areas above or below state highways (known as “airspace”). Generally, leases to private entities are required to be made on the basis of competitive bids and at fair market value.
3. Authorizes Caltrans to make land or airspace available, with or without charge, to a public entity to accommodate needed passenger, commuter, or high-speed rail; magnetic levitation systems; and highway and non-highway mass transit facilities.
4. Authorizes $1 per month leases of Caltrans airspace parcels to the City and County of San Francisco, Santa Barbara County, the City of San Diego, City of Oakland, City of San Jose, City of Los Angeles, and San Joaquin County for specified emergency shelter or feeding purposes.

This bill:

1. Authorizes Caltrans to make available for lease to a local or state agency airspace or real property for the purpose of conducting a temporary emergency shelter or feeding program for $1 per month, based on Caltrans' sole discretion of availability and identification of specific parcels.
2. Restricts any improvements to the leased property in the following ways:
   1. All structures constructed or modified must meet minimum building standards, as specified;
   2. No improvements may be permanent in nature;
   3. Any improvements in which people live, eat, recreate, receive services, or otherwise occupy may not be underneath or within 20 feet of a transportation structure.
3. Requires the lessee to pay an annual administrative fee of up to $5,000, unless actual costs are higher in which case the fee will be the actual costs not to exceed $15,000.
4. Identifies the lessee as the lead agency for any action related to the California Environmental Quality Act undertaken on a leased parcel.
5. Finds that the lease of property authorized under this bill serves a public purpose, and that the $1 per month rental rate constitutes fair market value for these parcels.
6. Sunsets these provisions on January 1, 2029.

Comments

1. Author’s statement. According to the author, “Caltrans currently has authority in a handful of numerous jurisdictions throughout the state to lease property for homeless shelter programs at below market rate. This authority gives these cities and counties a helpful tool to address California’s significant homelessness crisis. Existing law generally obligates Caltrans to secure fair market value lease rates for airspace under freeways or other available parcels, based on the estimated highest and best use of the property. Exceptions to the fair market value requirement authorize Caltrans to lease unused parcels of land below market rates to various cities and counties for the purposes of emergency shelters and feeding programs. In each of these exceptions, the Legislature has found that below-market rate leases for these particular uses serve a public purpose. California has made it clear that addressing homelessness is a top priority. The time is now to allow for this solution statewide.

“SB 211 will allow Caltrans to lease real property to cities and counties statewide for the purposes of establishing an emergency shelter or feeding program, for $1 per month. It caps administrative fees at $500. This will give these local jurisdictions the ability to leverage state and local assets to take bold and aggressive actions to address the state’s homelessness crisis. SB 211 also protects the existing authority granted to jurisdictions in the past, allowing them to continue serving their communities without new administrative burdens.”

1. Special treatment for shelter/feeding programs. The authority for Caltrans to enter into airspace leases is in existing law and Caltrans is generally obligated to secure fair market value lease rates for airspace under freeways or other available parcels, based on the estimated highest and best use of the property. Notable exceptions to the fair market value requirement authorize Caltrans to lease unused parcels of land below market rates to various cities and counties for the purposes of emergency shelters and feeding programs. In each of these exceptions, the Legislature has found that below-market rate leases for these particular uses serve a public purpose.
2. Statewide remedy? The author asserts that while cities and counties are experiencing an increase in homeless population, state and local governments will need to be provided every resource available to offer critical services to individuals in the homeless community. By taking the existing leasing authorization framework provided to various cities in California and offering the authorization statewide to local public entities, the author aims to provide cities and counties with the tools to develop additional resources to assist the homeless population.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Assembly Appropriations Committee:

1. Potential General Fund revenue loss in foregone lease revenue, possibly in range of hundreds of thousands to millions of dollars. The actual amount of lost revenue is speculative, as it will depend upon the actual below-market-rate leases, if any, Caltrans enters into and the value Caltrans would have realized by issuing those leases at market value.

At the time this analysis was written, Caltrans had not provided the committee with an estimate of the revenue loss likely to result from this bill.

1. Potential for saving to Caltrans as an indirect result of this bill, to the extent use of airspace leases alleviate the need for Caltrans to use funds to clean up homeless camps.

SUPPORT: (Verified 9/10/19)

California State Association of Counties

City of Sacramento

City of San Jose

Santa Clara County

OPPOSITION: (Verified 9/10/19)

None received

ASSEMBLY FLOOR: 76-2, 9/9/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mayes, McCarty, Medina, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Weber, Wicks, Wood, Rendon

NOES: Melendez, Waldron

NO VOTE RECORDED: Mathis

Prepared by: Manny Leon / TRANS. / (916) 651-4121

9/10/19 10:43:46

**** END ***

SENATE THIRD READING

STR Bill Id:SB 211

Author:(Beall)

As Amended Ver:August 15, 2019

Majority vote

SUMMARY:

Authorizes the California Department of Transportation (Caltrans) to make available for lease to a local or state agency airspace or real property for the purpose of conducting a temporary emergency shelter or feeding program.

Major Provisions

1. Authorizes Caltrans to make available for lease to a local or state agency airspace or real property for the purpose of conducting a temporary emergency shelter or feeding program for $1 per month, based on Caltrans' sole discretion of availability and identification of specific parcels
2. Restricts any improvements to the leased property in the following ways:
   1. All structures constructed or modified must meet minimum building standards, as specified;
   2. No improvements may be permanent in nature;
   3. Any improvements in which people live, eat, recreate, receive services, or otherwise occupy may not be underneath or within 20 feet of a transportation structure.
3. Requires the lessee to pay an annual administrative fee of up to $5,000, unless actual costs are higher in which case the fee will be the actual costs not to exceed $15,000.
4. Identifies the lessee as the lead agency for any action related to the California Environmental Quality Act undertaken on a leased parcel.
5. Finds that the lease of property authorized under this bill serves a public purpose, and that the $1 per month rental rate constitutes fair market value for these parcels.
6. Sunsets these provisions on January 1, 2029.

COMMENTS:

The authority for Caltrans to enter into airspace leases is in existing law, but Caltrans is generally obligated to secure fair market value lease rates for airspace under freeways or other available parcels, based on the estimated highest and best use of the property. Notable exceptions to the fair market value requirement authorizes Caltrans to lease unused parcels of land below market rates to various cities and counties for the purposes of emergency shelters and feeding programs. In each of these exceptions, the Legislature has found that submarket rate leases for these particular uses serves a public purpose.

Committee comments. This bill is not without precedence. Existing law provides a number of examples wherein Caltrans is authorized to lease airspace at below market rate, and there are a number of instances where these leases exist. In the instances where Caltrans has entered into below market rate leases for emergency shelters, feeding programs, or other public purposes, statute authorizing them to do so has led Caltrans to provide the designated airspace lease to the local community. While this bill may provide much needed emergency housing or space for feeding programs across the state, it may result in some lost state revenue. It is worth noting that the revenue generated by airspace leases currently flows to the General Fund, and therefore this bill could result in reducing resources for programs that currently benefit the very communities the bill aims to help.

In addition, when signing a number of these specific authorizations in 2018, Governor Brown issued the following signing message: "These bills authorize the Department of Transportation to lease properties in different cities for one dollar a month, if they are used to provide homeless services. It is important to remember that these properties were never meant to be places for people to live and are generally not suitable for those purposes. The cities outlined in these bills wish to erect temporary shelters on these properties, as emergency measures. Accordingly, I am directing the Department of Transportation, the Department of Housing and Community Development, and the Office of the State Fire Marshal to work in collaboration with these local governments to ensure, through lease agreements, that emergency housing for the homeless is safe, that fire and life safety standards are met, and that such habitations are temporary, not permanent."

To the Governor's point, it is critical that these leases serve an immediate, emergency purpose and do not become an acceptable place to simply sweep away the state's homelessness problem.

According to the Author:

"Caltrans currently has authority in a handful of jurisdictions throughout the state to lease property for homeless shelter programs at below market rate. This authority gives these cities and counties a helpful tool to address California's significant homelessness crisis. California has made it clear that addressing homelessness is a top priority. The time is now to allow for this solution statewide."

Arguments in Support:

Writing in support, California State Association of Counties states that "By allowing Caltrans to lease its property to local jurisdictions at below market rate statewide, SB 211 will make it more feasible for counties to access Caltrans property, and provides counties with an important tool to address the homelessness crisis."

Arguments in Opposition:

None on file.

FISCAL COMMENTS:

According to the Assembly Appropriations Committee,

1. Potential General Fund revenue loss in foregone lease revenue, possibly in range of hundreds of thousands to millions of dollars. The actual amount of lost revenue is speculative as it will depend upon the actual below-market-rate leases, if any, Caltrans enters into and the value Caltrans would have realized by issuing those leases at market value.
2. Potential for saving to Caltrans as an indirect result of this bill, to the extent use of airspace leases alleviate the need for Caltrans to use funds to clean up homeless camps.

VOTES:

SENATE FLOOR: 38-0-0

YES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

ASM TRANSPORTATION: 15-0-0

YES: Frazier, Fong, Aguiar-Curry, Berman, Bigelow, Chu, Cunningham, Daly, Diep, Friedman, Gipson, Grayson, Medina, Nazarian, O'Donnell

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

UPDATED:

VERSION: August 15, 2019

CONSULTANT: Eric Thronson / TRANS. / (916) 319-2093 FN: 0001651

Date of Hearing: August 21, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 211

Author:(Beall) – As Amended Ver:August 15, 2019

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill authorizes the Department of Transportation (Caltrans) to lease to a local government or a state agency any airspace or real property Caltrans determines to be available for rent for purposes of a temporary emergency shelter or feeding program.

The bill limits the availability of such a lease to any qualifying property that has independent site access separate from an access-controlled highway or highway structure and conditions such a lease upon an agreement the property will not be used as childcare facilities and no playground equipment be placed upon the property. The bill also makes the lessee responsible for enforcement of compliance with all applicable building standards.

The bill limits to $1 per month a lease entered into pursuant to the provisions of this bill and authorizes Caltrans to charge the lessee an annual administrative fee of up to $5,000 to cover its administrative fees, unless Caltrans determines a higher fee is needed. The bill provides for termination of such a lease and specifies other conditions applicable to them.

FISCAL EFFECT:

1. Potential General Fund revenue loss in foregone lease revenue, possibly in range of hundreds of thousands to millions of dollars. The actual amount of lost revenue is speculative as it will depend upon the actual below-market-rate leases, if any, Caltrans enters into and the value Caltrans would have realized by issuing those leases at market value.

At the time this analysis was written, Caltrans had not provided the committee with an estimate of the revenue loss likely to result from this bill.

1. Potential for saving to Caltrans as an indirect result of this bill, to the extent use of airspace leases alleviate the need for Caltrans to use funds to clean up homeless camps.

COMMENTS:

Background and Purpose. State law authorizes Caltrans to lease the space underneath elevated highways and overpasses—known as airspace leases—at market rate. Additionally, Caltrans is authorized in state law to provide airspace leases in certain areas for $1 per month and an administrative fee of up to $500 annually if the lease serves a public benefit. In recent years, the Legislature has authorized Caltrans to lease such spaces, in certain jurisdictions only, at below-market rates for use as temporary shelters. The author intends this bill to make this authorization general throughout California. According to the author:

Caltrans currently has authority in a handful of jurisdictions throughout the state to lease property for homeless shelter programs at below market rate. This authority gives these cities and counties a helpful tool to address California’s significant homelessness crisis. California has made it clear that addressing homelessness is a top priority. The time is now to allow for this solution statewide. SB 211 will allow Caltrans to lease real property to cities and counties statewide for the purposes of establishing an emergency shelter or feeding program, for $1 per month. It caps administrative fees at $500. This will give these local jurisdictions the ability to leverage state and local assets to take bold and aggressive actions to address the state’s homelessness crisis. SB 211 also protects the existing authority granted to jurisdictions in the past, allowing them to continue serving their communities without new administrative burdens.

This bill leaves much to the discretion of Caltrans. Generally, airspace lease revenues go to the General Fund. The Legislature, should it pass this measure, will need to oversee Caltrans’ implementation of the bill to ensure it makes airspace lease decisions that are in the best financial interest of the state. For example, it might make fiscal sense for Caltrans to lease an airspace at market rate, despite a need for the space as an emergency shelter for the homeless, if the market-rate revenue were particularly significant. Such revenue would be available to the Legislature to appropriate to any of its priorities, including services and supports for the homeless.

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: July 8, 2019

ASSEMBLY COMMITTEE ON TRANSPORTATION

Jim Frazier, Chair

SBPCA Bill Id:SB 211

Author:(Beall) – As Amended Ver:March 19, 2019

SENATE VOTE: 38-0

SUBJECT: State highways: leases

SUMMARY: Authorizes the California Department of Transportation (Caltrans) to lease at a discount to a city or county any airspace under a freeway or other real property for purposes of an emergency shelter or feeding program, under specific terms and conditions. Specifically, this bill:

1. Authorizes Caltrans to lease for $1 per month, on a right of first refusal, up to 10 parcels of airspace or real property in any city or county for emergency shelter or feeding programs.
2. Declares that a lease let under this authority serves a public purpose.
3. Requires Caltrans to include in a lease let under this authority an administrative fee not to exceed $500 per year unless Caltrans determines a higher fee is necessary.
4. Authorizes the lessee to pay the lease amount in advance in order to reduce the administrative costs associated with the payment of a monthly rental fee.
5. Declares that this authorization does not affect any other lease or lease authorization for purposes of an emergency shelter or feeding program already in existing law.

EXISTING LAW:

1. Grants Caltrans broad authority to acquire by eminent domain any property necessary for state highway purposes.
2. Authorizes Caltrans to lease to public agencies or private entities the use of areas above or below state highways. Generally, leases to private entities have to be made on the basis of competitive bids and at fair market value.
3. Authorizes Caltrans to make land or airspace available, with or without charge, to a public entity to accommodate needed passenger, commuter, or high-speed rail, magnetic levitation systems, and highway and non-highway mass transit facilities.
4. Authorizes Caltrans to lease to a local agency for park purposes all or any portion of land outside the boundary of a highway system when such use will preserve its view, appearance, light, air, and usefulness.
5. Authorizes Caltrans to lease to many specified municipalities, including San Francisco, San Jose, Oakland, and Los Angeles, any airspace under a freeway or property for an emergency shelter or feeding program at a rate of $1 per month.
6. Directs Caltrans to lease to San Francisco, or a political subdivision, up to 10 parcels of airspace under a freeway or property at 30% of fair market lease value for park, recreational, or open-space purposes.
7. Authorizes Caltrans to lease non-operating right-of-way areas to municipalities or other local agencies for public purposes, and allows Caltrans to contribute toward the cost of developing local parks and other recreational facilities on such areas. The lease may provide that the municipality or other local agency can offset the cost of the lease by providing maintenance or landscaping that would otherwise be the responsibility of the state.

FISCAL EFFECT: According to the Senate Appropriations Committee, unknown future loss of Caltrans lease revenues, potentially in the high hundreds of thousands to low millions of dollars annually. Actual lease revenue losses would depend upon the number of lease agreements entered into, the fair market lease value of the specific properties in question, and lease terms. Appropriation staff notes that these revenue losses would be a General Fund impact because lease revenues are currently used to partially offset General Fund payments for transportation-related debt service.

COMMENTS: The authority for Caltrans to enter into airspace leases is in existing law, but Caltrans is generally obligated to secure fair market value lease rates for airspace under freeways or other available parcels, based on the estimated highest and best use of the property. Notable exceptions to the fair market value requirement authorizes Caltrans to lease unused parcels of land below market rates to various cities and counties for the purposes of emergency shelters and feeding programs. In each of these exceptions, the Legislature has found that submarket rate leases for these particular uses serves a public purpose.

According to the author, “Caltrans currently has authority in a handful of jurisdictions throughout the state to lease property for homeless shelter programs at below market rate. This authority gives these cities and counties a helpful tool to address California’s significant homelessness crisis. California has made it clear that addressing homelessness is a top priority. The time is now to allow for this solution statewide. SB 211 will allow Caltrans to lease real property to cities and counties statewide for the purposes of establishing an emergency shelter or feeding program, for $1 per month. It caps administrative fees at $500. This will give these local jurisdictions the ability to leverage state and local assets to take bold and aggressive actions to address the state’s homelessness crisis. SB 211 also protects the existing authority granted to jurisdictions in the past, allowing them to continue serving their communities without new administrative burdens.”

Writing in support, California State Association of Counties states that “By allowing Caltrans to lease its property to local jurisdictions at below market rate statewide, SB 211 will make it more feasible for counties to access Caltrans property, and provides counties with an important tool to address the homelessness crisis.”

Committee comments. This bill is not without precedence. Existing law provides a number of examples wherein Caltrans is authorized to lease airspace at below market rate, and there are a number of instances where these leases exist. In the instances where Caltrans has entered into below market rate leases for emergency shelters, feeding programs, or other public purposes, statute authorizing them to do so has led Caltrans to provide the designated airspace lease to the local community. While this bill may provide much needed emergency housing or space for feeding programs across the state, it may result in some lost state revenue. It is worth noting that the revenue generated by airspace leases currently flows to the General Fund, and therefore this bill could result in reducing resources for programs that currently benefit the very communities the bill aims to help.

In addition, when signing a number of these specific authorizations in 2018, Governor Brown issued the following signing message: “These bills authorize the Department of Transportation to lease properties in different cities for one dollar a month, if they are used to provide homeless services. It is important to remember that these properties were never meant to be places for people to live and are generally not suitable for those purposes. The cities outlined in these bills wish to erect temporary shelters on these properties, as emergency measures. Accordingly, I am directing the Department of Transportation, the Department of Housing and Community Development, and the Office of the State Fire Marshal to work in collaboration with these local governments to ensure, through lease agreements, that emergency housing for the homeless is safe, that fire and life safety standards are met, and that such habitations are temporary, not permanent.”

To the Governor’s point, it is critical that these leases serve an immediate, emergency purpose and do not become an acceptable place to simply sweep away the state’s homelessness problem.

Related legislation. AB 246 (Mathis, 2019) authorizes Caltrans to lease at a discount to a city or county any airspace under a freeway or other real property in a disadvantaged community for various purposes, under specific terms and conditions. This bill is pending in this committee.

Previous legislation. AB 1898 (Mathis, 2018) would have required Caltrans to lease at a discount to a city or county any airspace under a freeway or other real property in a disadvantaged community for various purposes. AB 1898 was held on Suspense in the Assembly Appropriations Committee.

AB 2629 (Eggman), Chapter 436, Statutes of 2018, eliminated the renewal restrictions for an existing airspace lease between Caltrans and the City of Stockton in San Joaquin County under the interchange of State Route 4 and Interstate 5 for an emergency shelter or feeding program.

AB 3139 (Bonta), Chapter 443, Statutes of 2018, authorized Caltrans to lease at a discount up to 10 parcels of airspace under a freeway or other real property to the City of Oakland for emergency shelter or feeding programs.

SB 519 (Beall), Chapter 444, Statutes of 2018, authorized Caltrans to lease at a discount up to 10 parcels of airspace under a freeway or other real property to the City of Los Angeles and the City of San Jose for emergency shelter or feeding programs.

AB 857 (Ting), Chapter 822, Statutes of 2017, directed Caltrans to lease to San Francisco up to 10 parcels of airspace under a freeway at 30% of fair market lease value for park, recreational, or open-space purposes.

SB 120 (Kopp), Chapter 750, Statutes of 1993, authorized Caltrans to lease to San Francisco any airspace under a freeway or property for an emergency shelter or feeding program at a rate of $1 per month.

REGISTERED SUPPORT / OPPOSITION:

Support

Alameda County Transportation Commission

California State Association of Counties

City of Sacramento

Silicon Valley @ Home

Working Partnerships USA

Opposition

None on file

Analysis Prepared by: Eric Thronson / TRANS. / (916) 319-2093

 THIRD READING  

Bill No: SB 211

Author: Beall (D)

Amended: 3/19/19

Vote: 21

SENATE TRANSPORTATION COMMITTEE: 12-0, 4/9/19

AYES: Beall, Bates, Dodd, Galgiani, McGuire, Morrell, Roth, Rubio, Skinner, Stone, Umberg, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/16/19

AYES: Portantino, Bates, Bradford, Hill, Jones, Wieckowski

SUBJECT: State highways: leases

SOURCE: Author

DIGEST:

This bill authorizes the State Department of Transportation (Caltrans) to enter into lease agreements with a local entity for purposes of establishing an emergency shelter or feeding program, as specified.

ANALYSIS:

Existing law:

1. Grants Caltrans broad authority to acquire by eminent domain any property necessary for state highway purposes.
2. Authorizes Caltrans to lease to public agencies or private entities the use of areas above or below state highways (known as “airspace”). Generally, leases to private entities are required to be made on the basis of competitive bids and at fair market value.
3. Authorizes Caltrans to make land or airspace available, with or without charge, to a public entity to accommodate needed passenger, commuter, or high-speed rail; magnetic levitation systems; and highway and non-highway mass transit facilities.
4. Authorizes $1 per month leases of Caltrans airspace parcels to the City and County of San Francisco, Santa Barbara County, the City of San Diego, City of Oakland, City of San Jose, City of Los Angeles, and San Joaquin County for specified emergency shelter or feeding purposes.

This bill:

1. Makes findings and declarations that the provisions specified in this bill serve a public purpose.
2. Authorizes Caltrans to lease on a right of first refusal any airspace or real property acquired for highway purposes to a city, county, or political subdivision to be used for emergency shelter or feeding purposes, as specified.
3. Authorizes Caltrans to enter lease agreements for up to ten parcels in each city, county, or political subdivision at a monthly rate of no more than one-dollar and an annual administrative fee of no more than $500.

Comments

1. Author’s statement. According to the author, “Caltrans currently has authority in a handful of numerous jurisdictions throughout the state to lease property for homeless shelter programs at below market rate. This authority gives these cities and counties a helpful tool to address California’s significant homelessness crisis. Existing law generally obligates Caltrans to secure fair market value lease rates for airspace under freeways or other available parcels, based on the estimated highest and best use of the property. Exceptions to the fair market value requirement authorize Caltrans to lease unused parcels of land below market rates to various cities and counties for the purposes of emergency shelters and feeding programs. In each of these exceptions, the Legislature has found that below-market rate leases for these particular uses serve a public purpose. California has made it clear that addressing homelessness is a top priority. The time is now to allow for this solution statewide.

SB 211 will allow Caltrans to lease real property to cities and counties statewide for the purposes of establishing an emergency shelter or feeding program, for $1 per month. It caps administrative fees at $500. This will give these local jurisdictions the ability to leverage state and local assets to take bold and aggressive actions to address the state’s homelessness crisis. SB 211 also protects the existing authority granted to jurisdictions in the past, allowing them to continue serving their communities without new administrative burdens.”

1. Special treatment for shelter/feeding programs. The authority for Caltrans to enter into airspace leases is in existing law and Caltrans is generally obligated to secure fair market value lease rates for airspace under freeways or other available parcels, based on the estimated highest and best use of the property. Notable exceptions to the fair market value requirement authorize Caltrans to lease unused parcels of land below market rates to various cities and counties for the purposes of emergency shelters and feeding programs. In each of these exceptions, the Legislature has found that below-market rate leases for these particular uses serve a public purpose.
2. Statewide remedy? The author asserts that while cities and counties are experiencing an increase in homeless population, state and local governments will need to be provided every resource available to offer critical services to individuals in the homeless community. By taking the existing leasing authorization framework provided to various cities in California and offering the authorization statewide to local public entities, the author aims to provide cities and counties with the tools to develop additional resources to assist the homeless population.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee, unknown future loss of Caltrans lease revenues, potentially in the high hundreds of thousands to low millions of dollars annually. Actual lease revenue losses would depend upon the number of lease agreements entered into, the fair market lease value of the specific properties in question, and lease terms. Staff notes that these revenue losses would be a General Fund impact because lease revenues are currently used to partially offset General Fund payments for transportation-related debt service.

SUPPORT: (Verified 5/16/19)

California State Association of Counties

City of Sacramento

City of San Jose

Santa Clara County

OPPOSITION: (Verified 5/16/19)

None received

Prepared by: Manny Leon / TRANS. / (916) 651-4121

5/18/19 11:39:09

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 211 (Beall) - State highways: leases

Bill Summary:

SB 211 would authorize the Department of Transportation (Caltrans) to lease any airspace under a freeway or real property acquired for highway purposes to a city or county for an emergency shelter or feeding program, as specified.

Fiscal Impact:

Unknown future loss of Caltrans lease revenues, potentially in the high hundreds of thousands to low millions of dollars annually. Actual lease revenue losses would depend upon the number of lease agreements entered into, the fair market lease value of the specific properties in question, and lease terms. Staff notes that these revenue losses would be a General Fund impact because lease revenues are currently used to partially offset General Fund payments for transportation-related debt service.

Background:

Existing law authorizes Caltrans to lease areas above or below state highways (airspace) to public or private entities, and generally requires leases to private entities to be competitively bid and at fair market value.

Existing law authorizes Caltrans to lease specified parcels of property in the City of San Diego and the Counties of Santa Barbara and San Joaquin for emergency shelter or feeding program purposes. Existing law also provides more general authority for Caltrans to lease on a first right of refusal basis airspace or property acquired for highway purposes to the City and County of San Francisco and the Cities of Los Angeles, Oakland, and San Jose for emergency shelter or feeding programs. These provisions generally limit the lease amount to $1 per month and an administrative charge of up to $500 per year, unless Caltrans determines that a higher administrative fee is necessary to cover its costs.

Proposed Law:

SB 211 would authorize Caltrans to lease on a first right of refusal basis to a city or county any airspace under a freeway or real property acquired for highway purposes, that is not excess property, to a city or county for purposes of an emergency shelter or feeding program. For up to ten parcels in the city or county, the lease amount would be limited to $1 per month, plus an administrative fee of up to $500 per year, unless Caltrans determines that a higher fee is necessary to cover its administrative costs. The bill would not affect previously authorized leases of airspace or real property for emergency shelter or feeding program purposes.

Related Legislation:

SB 519 (Beall), Chap. 444/2018, authorized Caltrans to lease on a first right of refusal basis to the Cities of Los Angeles and San Jose any airspace under a freeway or real property acquired for highway purposes for an emergency shelter or feeding program for a lease amount of $1 per month, plus a $500 administrative fee, for up to ten parcels.

SB 3139 (Bonta), Chap. 443/2018, authorized Caltrans to lease on a first right of refusal basis to the City of Oakland any airspace under a freeway or real property acquired for highway purposes for an emergency shelter or feeding program for a lease amount of $1 per month, plus a $500 administrative fee, for up to ten parcels.

Staff notes that Governor Brown issued the following signing message with a number of bills authorizing Caltrans leases for emergency shelter and feeding programs last year (AB 2629, AB 3061, AB 3139, and SB 519):

“These bills authorize the Department of Transportation to lease properties in different cities for one dollar a month, if they are used to provide homeless services.

It is important to remember that these properties were never meant to be places for people to live and are generally not suitable for those purposes. The cities outlined in these bills wish to erect temporary shelters on these properties, as emergency measures. Accordingly, I am directing the Department of Transportation, the Department of Housing and Community Development, and the Office of the State Fire Marshal to work in collaboration with these local governments to ensure, through lease agreements, that emergency housing for the homeless is safe, that fire and life safety standards are met, and that such habitations are temporary, not permanent.”

Staff Comments:

Caltrans currently leases 1,302 numerous parcels to public and private entities throughout the state for various purposes. These leases generate approximately $47 million annually, which is used to partially offset General Fund payments for transportation-related debt service. By authorizing Caltrans to lease airspace and real property to local governments at below market-rates, this bill would result in unquantifiable future revenue losses, and increased General Fund payments for transportation-related debt. Actual revenue losses would depend upon the number of leases that cities and counties opt to pursue as a result of the bill and the market rate of specific parcels chosen for emergency shelter or feeding programs.

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SENATE COMMITTEE ON TRANSPORTATION

Senator Jim Beall, Chair

2019 - 2020 Regular

Bill No: SB 211 Hearing Date: 4/9/2019

SUBJECT: State highways: leases.

DIGEST: This bill authorizes the State Department of Transportation (Caltrans) to enter into lease agreements with a local entity for purposes of establishing an emergency shelter or feeding program, as specified.

ANALYSIS:

Existing law:

1. Grants Caltrans broad authority to acquire by eminent domain any property necessary for state highway purposes.
2. Authorizes Caltrans to lease to public agencies or private entities the use of areas above or below state highways (known as “airspace”). Generally, leases to private entities are required to be made on the basis of competitive bids and at fair market value.
3. Authorizes Caltrans to make land or airspace available, with or without charge, to a public entity to accommodate needed passenger, commuter, or high-speed rail; magnetic levitation systems; and highway and non-highway mass transit facilities.
4. Authorizes $1 per month leases of Caltrans airspace parcels to the City and County of San Francisco, Santa Barbara County, the City of San Diego, City of Oakland, City of San Jose, City of Los Angeles, and San Joaquin County for specified emergency shelter or feeding purposes.

This bill:

1. Makes findings and declarations that the provisions specified in this bill serve a public purpose.
2. Authorizes Caltrans to lease on a right of first refusal any airspace or real property acquired for highway purposes to a city, county, or political subdivision to be used for emergency shelter or feeding purposes, as specified.
3. Authorizes Caltrans to enter lease agreements for up to ten parcels in each city, county, or political subdivision at a monthly rate of no more than one-dollar and an annual administrative fee of no more than $500.

COMMENTS:

1. Author statement. According to the author, “Caltrans currently has authority in a handful of numerous jurisdictions throughout the state to lease property for homeless shelter programs at below market rate. This authority gives these cities and counties a helpful tool to address California’s significant homelessness crisis. Existing law generally obligates Caltrans to secure fair market value lease rates for airspace under freeways or other available parcels, based on the estimated highest and best use of the property. Exceptions to the fair market value requirement authorize Caltrans to lease unused parcels of land below market rates to various cities and counties for the purposes of emergency shelters and feeding programs. In each of these exceptions, the Legislature has found that below-market rate leases for these particular uses serve a public purpose. California has made it clear that addressing homelessness is a top priority. The time is now to allow for this solution statewide.

SB 211 will allow Caltrans to lease real property to cities and counties statewide for the purposes of establishing an emergency shelter or feeding program, for $1 per month. It caps administrative fees at $500. This will give these local jurisdictions the ability to leverage state and local assets to take bold and aggressive actions to address the state’s homelessness crisis. SB 211 also protects the existing authority granted to jurisdictions in the past, allowing them to continue serving their communities without new administrative burdens.”

1. Special treatment for shelter/feeding programs. The authority for Caltrans to enter into airspace leases is in existing law and Caltrans is generally obligated to secure fair market value lease rates for airspace under freeways or other available parcels, based on the estimated highest and best use of the property. Notable exceptions to the fair market value requirement authorize Caltrans to lease unused parcels of land below market rates to various cities and counties for the purposes of emergency shelters and feeding programs. In each of these exceptions, the Legislature has found that below-market rate leases for these particular uses serve a public purpose.
2. Statewide remedy? The author asserts that while cities and counties are experiencing an increase in homeless population, state and local governments will need to be provided every resource available to offer critical services to individuals in the homeless community. By taking the existing leasing authorization framework provided to various cities in California and offering the authorization statewide to local public entities, the author aims to provide cities and counties with the tools to develop additional resources to assist the homeless population.

Related Legislation:

SB 519 (Beall, Chapter 444, Statutes of 2018) — Authorized Caltrans to offer leases to the Cities of Los Angeles and San Jose on a right of first refusal basis for any airspace under a freeway or certain real property acquired for highway purposes located in each city for purposes of an emergency shelter or feeding program for a lease amount, for up to 10 parcels, of $1 per month, as specified.

AB 3139 (Bonta, Chapter 443, Statutes of 2018) — Authorized Caltrans to offer leases to the City of Oakland on a right of first refusal basis for any airspace under a freeway or certain real property acquired for highway purposes located in each city for purposes of an emergency shelter or feeding program for a lease amount, for up to 10 parcels, of $1 per month, as specified.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

POSITIONS: (Communicated to the committee before noon on Wednesday,

April 3, 2019.)

SUPPORT:

California State Association of Counties

City of Sacramento

Santa Clara County

OPPOSITION:

None received.

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