Existing law requires land to be declared surplus land or exempt surplus land, as supported by written findings, before a local agency takes any action to dispose of it consistent with the agencys policies or procedures. Existing law sets forth procedures for the disposal of surplus land, including, but not limited to, specified notice requirements, and provides that these procedures do not apply to exempt surplus land.

This bill, until January 1, 2034, would specify that land disposed of by a city with a population exceeding 2,500,000 for certain purposes, including low barrier navigation centers, supportive housing, transitional housing for youth and young adults, or affordable housing, as described, is not subject to the above-described requirements, if the city meets certain prescribed requirements and specified construction or development work meets prescribed requirements. The bill would require a city that disposes of land pursuant to these provisions to include prescribed information in a specified annual report. The bill would make a local agency that disposes of land in violation of these provisions liable for a civil penalty, as specified.

Existing law requires land to be declared surplus land or exempt surplus land, as supported by written findings, before a local agency takes any action to dispose of it consistent with the agencys policies or procedures. Existing law sets forth procedures for the disposal of surplus land, including, but not limited to, specified notice requirements, and provides that these procedures do not apply to exempt surplus land.

This bill, until January 1, 2034, would specify that land disposed of by a city with a population exceeding 2,500,000 for certain purposes, including low barrier navigation centers, supportive housing, transitional housing for youth and young adults, or affordable housing, as described, is not subject to the above-described requirements, if the city meets certain prescribed requirements and specified construction or development work meets prescribed requirements. The bill would require a city that disposes of land pursuant to these provisions to include prescribed information in a specified annual report. The bill would make a local agency that disposes of land in violation of these provisions liable for a civil penalty, as specified.

Existing law requires land to be declared surplus land or exempt surplus land, as supported by written findings, before a local agency takes any action to dispose of it consistent with the agencys policies or procedures. Existing law sets forth procedures for the disposal of surplus land, including, but not limited to, specified notice requirements, and provides that these procedures do not apply to exempt surplus land.

This bill bill, until January 1, 2034, would specify that land disposed of by a local agency city with a population exceeding 2,500,000 for certain purposes, including low barrier navigation centers, supportive housing, transitional housing for youth and young adults, or affordable housing, as described, is not subject to the above-described requirements, if the local agency city meets certain prescribed requirements, including, among others, having declared a local emergency related to homelessness, as specified. requirements and specified construction or development work meets prescribed requirements. The bill would require a local agency city that disposes of land pursuant to these provisions to submit include prescribed information in a specified annual report to the Department of Housing and Community Development. report. The bill would make a local agency that disposes of land in violation of these provisions liable for a civil penalty, as specified.

Existing law requires land to be declared surplus land or exempt surplus land, as supported by written findings, before a local agency takes any action to dispose of it consistent with the agencys policies or procedures. Existing law sets forth procedures for the disposal of surplus land, including, but not limited to, specified notice requirements, and provides that these procedures do not apply to exempt surplus land.

This bill would specify that land disposed of by a local agency for certain purposes, including emergency shelters, low barrier navigation centers, supportive housing, transitional housing, housing for youth and young adults, or affordable housing, as described, is not subject to the above-described requirements, if the local agency meets certain prescribed requirements, including, among others, having received designation as prohousing. declared a local emergency related to homelessness, as specified. The bill would require a local agency that disposes of land pursuant to these provisions to submit a specified annual report to the Department of Housing and Community Development. The bill would make a local agency that disposes of land in violation of these provisions liable for a civil penalty, as specified.

Existing law requires land to be declared surplus land or exempt surplus land, as supported by written findings, before a local agency takes any action to dispose of it consistent with the agencys policies or procedures. Existing law sets forth procedures for the disposal of surplus land, including, but not limited to, specified notice requirements, and provides that these procedures do not apply to exempt surplus land.

This bill would specify that land disposed of by a local agency for certain purposes, including emergency shelters, supportive housing, transitional housing, or affordable housing, as described, is not subject to the above-described requirements, if the local agency meets certain prescribed requirements, including, among others, having received designation as prohousing. The bill would require a local agency that disposes of land pursuant to these provisions to submit a specified annual report to the Department of Housing and Community Development. The bill would make a local agency that disposes of land in violation of these provisions liable for a civil penalty, as specified.

Existing law requires each salaried officer of a county to charge and collect for the use of their county and pay into the county treasury on or before the 5th day of each month the fees allowed by law in all cases, except as specified. Existing law requires each officer of a county authorized to collect money to pay into the county treasury all money collected by the officer, or under their control, that is payable into the treasury in a timely manner, and to remit fee, fine, and forfeiture data within 35 days after the end of the month in which they are collected to the county auditor and treasurer in the form they require. Existing law requires the auditor to file in their office the forms required for these provisions, among others, and authorizes the auditor to dispose of the forms after 5 years, as specified.

This bill would make a nonsubstantive change to those provisions.

 THIRD READING  

Bill No: AB 1734

Author: Jones-Sawyer (D)

Amended: 9/8/23 in Senate

Vote: 21

SENATE GOVERNANCE & FIN. COMMITTEE: 8-0, 7/5/23

AYES: Caballero, Seyarto, Blakespear, Dahle, Durazo, Glazer, Skinner, Wiener

SENATE HOUSING COMMITTEE: 11-0, 7/10/23

AYES: Wiener, Ochoa Bogh, Blakespear, Caballero, Cortese, McGuire, Padilla, Seyarto, Skinner, Umberg, Wahab

SENATE APPROPRIATIONS COMMITTEE: 7-0, 9/1/23

AYES: Portantino, Jones, Ashby, Bradford, Seyarto, Wahab, Wiener

ASSEMBLY FLOOR: 79-0, 5/31/23 - See last page for vote

SUBJECT: Local Government: Surplus Land Act: exemptions

SOURCE: Mayor of Los Angeles Karen Bass

DIGEST:

This bill exempts, until January 1, 2034, certain housing and homelessness projects from the Surplus Land Act (SLA) in local agencies that have declared a local homelessness emergency and meet other requirements.

Senate Floor Amendments of 9/8/23 establish a 10-year sunset, narrow the bill to the City of Los Angeles; requires labor protections for projects that benefit from the bill’s exemptions, and revise the informational and penalty requirements in the bill.

ANALYSIS:

Existing law:

1. Establishes procedures for the disposal of publicly-owned land that is surplus to the needs of local agencies, under SLA.
2. Requires local officials that want to dispose of public property to declare that the land is no longer needed for the agency’s use in a public meeting and declare the land either “surplus land” or “exempt surplus land.”
3. Requires local agencies to follow the procedures laid out in the SLA before surplus land can be sold, including, but not limited, to:
   1. Send a written notice of availability to various public agencies and nonprofit groups, referred to as “housing sponsors,” notifying them that land is available for the following purposes:
      1. Low- and moderate-income housing;
      2. Park and recreation, and open space;
      3. School facilities; or
      4. Infill opportunity zones or transit village plans.
4. Requires local agencies to negotiate in good faith for 90 days with housing sponsors that respond.
5. Allows the local agency to dispose of the property on the private market if agreement is not reached with a housing sponsor.
6. Requires that, if a property sold as surplus is not sold to a housing sponsor, but housing is developed on it later, 15% of the units must be sold or rented at an affordable cost to lower income households.
7. Imposes penalties of 30% of the sale price of the land for a first violation and 50% of the sale price for any subsequent violation for selling land in violation of the SLA. Establishes an enforcement process, which provides, among other things, that a local agency cannot be liable for a penalty if it is not notified by the Department of Housing and Community Development (HCD) that it is in violation of the act.
8. Designates certain types of land as “exempt surplus land” and provides that the entirety of the SLA does not apply to exempt surplus land.
9. Defines “Low Barrier Navigation Center” to mean a Housing First, low-barrier, service-enriched shelter focused on moving people into permanent housing that provides temporary living facilities while case managers connect individuals experiencing homelessness to income, public benefits, health services, shelter, and housing.
10. Defines “supportive housing” as housing with no limit on length of stay, that is occupied by the target population, and that is linked to onsite or offsite services that assist the supportive housing resident in retaining the housing, improving their health status, and maximizing their ability to live and, when possible, work in the community.
11. Defines, federally, “transitional housing” to mean buildings configured as rental housing developments, but operated under program requirements that require the termination of assistance and recirculating of the assisted unit to another eligible program recipient at a predetermined future point in time that shall be no less than six months from the beginning of the assistance.

This bill:

1. Provides that the SLA does not apply to the disposal of land by a city with a population exceeding 2.5 million for:
   1. Low-barrier navigation centers;
   2. Supportive housing;
   3. Transitional housing; or
   4. Affordable housing where 100% of the units are affordable to lower-income households, 20% of which can be for moderate-income households.
2. Authorizes a city to dispose of land pursuant to this bill, if it:
   1. Has a compliant housing element; and
   2. Is designated pro-housing by HCD.
3. Requires all construction workers, except apprentices, on construction or rehabilitation work on the land to be paid prevailing wage, as specified;
4. Requires any project involving construction or rehabilitation of 40 or more housing units, excluding low barrier navigation centers, to be subject to a public labor agreement.
5. Requires a city that disposes of land pursuant to this bill to include in their existing annual progress report to HCD, the status of a development of land disposed of pursuant to this section, as specified.
6. Authorizes HCD to request additional information on land disposed of pursuant to the bill.
7. Sets civil penalties on a city if it disposes land in violation of this bill’s requirements:
   1. For the first violation, 30% of the greater of the final sale price or fair market value of the land at time of disposition, or, in the case of leases, of the net present value of the lease at the time of disposition; and
   2. For any additional violations, 50% of the applicable value.
8. Requires that an independent appraisal of the land must determine the fair market value.
9. Allows any of the following can bring an action to enforce these penalties:
   1. Entities entitled to receive notices of availability under the SLA;
   2. A person who would have been eligible to apply for residence in affordable housing had the agency not violated the provisions of this bill;
   3. A housing organization;
   4. A beneficially interested person or entity; or
   5. HCD.
10. Mandates penalties to be deposited into a local housing trust fund, or certain state affordable housing funds, as specified.
11. Provides that, notwithstanding the penalty provisions, a city that responds to HCD’s request for information shall not be liable for the civil penalty if the city is not notified by HCD that the proposed disposal would violate this section within 30 days of receiving the requested information.
12. Grants a city 60 days to cure or correct a violation before an action can be brought under the bill.
13. Provides that the bill shall not be construed to impose or affect any requirement applicable to disposals of land under any other provision of the SLA, including, but not limited to, any requirement for notice.
14. Sunsets the bill’s provisions on January 1, 2034.

Background

Surplus Land Act. Public agencies are major landlords in some communities, owning significant pieces of real estate. When properties become surplus to their needs, public officials want to sell the land to recoup their investments. The SLA spells out the steps local agencies must follow when they want to dispose of land. It requires local governments to give a “first right of refusal” to other governments and nonprofit housing developers, and to negotiate in good faith with them to try to come to agreement.

Before local officials can dispose of property, they must declare that the land is no longer needed for the agency’s use in a public meeting and declare the land either “surplus land” or “exempt surplus land.” Agency use includes land that is being used, or is planned to be used pursuant to a written plan the local agency’s governing board adopts, or is disposed of to support agency work or operations.

The SLA designates certain types of land as “exempt surplus land,” and specifically provides that the entire law does not apply to exempt surplus land. All other surplus land must follow the procedures laid out in the SLA before a local agency can sell it. Before agencies can enter into negotiations to sell surplus land, they must send a written notice of availability to various public agencies and nonprofit groups, referred to as “housing sponsors,” notifying them that land is available for the following purposes:

• Low- and moderate-income housing;
• Park and recreation, and open space;
• School facilities; or
• Infill opportunity zones or transit village plans.

Housing sponsors can notify the HCD that they are interested in acquiring surplus land to develop affordable housing. HCD maintains a list of notices of availability on its website.

If another agency or housing sponsor wants to use the surplus land for one of these purposes, it must tell the disposing agency within 60 days, and if multiple entities want to purchase the land, the housing sponsor that proposes to provide the greatest level of affordable housing gets priority. The agency and the housing sponsor then have an additional 90 days to negotiate a mutually satisfactory price and terms in good faith. If they cannot agree, the agency that owns the surplus land can sell the land on the private market. The SLA says that nothing in its provisions prevents a local agency from disposing of the land at or below fair market value, where not in conflict with other law.

AB 1486 (Ting, 2019). In 2019, the Legislature substantially 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, Chapter 664, Statutes of 2019). Among other changes, AB 1486 broadened the definition of surplus land and required land to be designated as surplus prior to the local agency selling the land, which ensures that local agencies must comply with the SLA. AB 1486 prohibited local agencies from counting the sale of land for economic development purposes as being “for the agency’s use.” This means local agencies must open their properties up to affordable housing developers first, even if they have different purposes in mind for the property. Additionally, AB 1486 instituted a requirement that if a property sold as surplus is not sold to a housing sponsor, but housing is developed on it later, 15% of the units must be sold or rented at an affordable cost to lower income households.

City of Los Angeles. The City of Los Angeles is California’s largest city with approximately 3.8 million residents. While the City of Los Angeles represents less than 10% of the State’s total population, it is home to almost 25% of the state’s unsheltered population. According to the 2022 Greater Los Angeles Homeless Count, there are nearly 42,000 unhoused Californians in Los Angeles alone. Housing availability is a key contributing factor. In 2019, the City of Los Angeles had a higher percentage of cost-burdened renter households than any other major American city, at nearly 60%. Over one-quarter of residents are severely cost-burdened, contributing to the homelessness emergency in the City.

Since taking office in December 2022, Los Angeles Mayor Karen Bass has taken steps to address the housing and homelessness crises. The Mayor declared, and the city council ratified, a citywide state of emergency to address homelessness. Under the state of emergency, the City can take steps to lift rules and regulations that slow housing production, expedite housing contracts, and allow the City to acquire rooms, properties, and land to provide housing.

The Mayor also issued the following executive directives:

• No. 1, which required all affordable housing projects to be approved within 60 days and permitted within five days.
• No. 3, which expedited the identification and disposition of city-owned land that is vacant, surplus, or underutilized.

Los Angeles Mayor Karen Bass wants to allow local agencies that declare a local emergency related to homelessness, have a compliant housing element, and are designated pro-housing by HCD to exclude land that is disposed of for the following purposes from the SLA.

Comments

1. Purpose of the bill. According to the author, “California has the largest population of people experiencing homelessness in the nation, yet only builds a fraction of the affordable housing needed. Like most of the state, the City of Los Angeles is experiencing a housing crisis. Just last year, there were nearly 42,000 unhoused individuals in LA alone. Under Mayor Karen Bass’ leadership, LA has taken critical steps to address homelessness and expedite affordable housing production. Unfortunately, though the Surplus Land Act was designed to promote an increase in the supply of affordable housing, existing exemptions for affordable housing projects often lead to a prolonged process and unfulfilled projects. AB 1734 will enable pro-housing jurisdictions that have declared a local emergency on homelessness and are compliant with state housing law more quickly dispose of publicly owned property to develop emergency shelters and transitional supportive or affordable housing.”
2. To notice, or not to notice? There is an ongoing debate regarding whether agencies that dispose of exempt surplus land need to notify HCD prior to disposing of the land. The Surplus Land Act states that the entirety of the Act does not apply to disposals of exempt surplus land. Nonetheless, HCD, through its guidelines for the SLA, has required local agencies that are disposing of exempt surplus land to provide notice to HCD 30 days prior to disposal. AB 1734 allows HCD to request information on properties that are disposed of under the provisions of the bill, and provides a safe harbor from penalties for the city if it responds to that request. But it stops short of directly requiring notice prior to disposal. In any case, the bill provides that it does not change anything about whatever requirements on other disposals of land (such as exempt surplus land) apply under the SLA.

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

According to the Senate Appropriations Committee:

• Unknown, potentially moderate court workload cost pressures for trial courts to hear and adjudicate new civil actions for alleged violations of the specified exemptions to the SLA that are brought under the provisions of this bill (Trial Court Trust Fund, General Fund). See Staff Comments.
• HCD indicates that costs associated with this bill would be minor and absorbable, but notes that, to the extent multiple bills are enacted that create exemptions to the SLA, HCD may need to request additional resources to absorb the cumulative workload for additional monitoring and enforcement, updating guidelines, and providing technical assistance to local agencies. (General Fund)

SUPPORT: (Verified 9/11/23)

Mayor of Los Angeles Karen Bass (source)

City of Long Beach

LA Family Housing

Los Angeles Unified School District

St. Joseph Center

State Building and Construction Trades Council of California

The United Way of Greater Los Angeles

OPPOSITION: (Verified 9/11/23)

California Coalition for Rural Housing

California Housing Consortium

California Housing Partnership Corporation

Housing California

ASSEMBLY FLOOR: 79-0, 5/31/23

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wood, Zbur, Rendon

NO VOTE RECORDED: Wilson

Prepared by: Anton Favorini-Csorba / GOV. & F. / (916) 651-4119

9/14/23 14:19:52

**** END ****

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1734

Author:(Jones-Sawyer)

As Amended Ver:September 08, 2023

Majority vote

SUMMARY

Creates, until January 1, 2034, a specific process under the Surplus Lands Act (SLA) for the disposition of land in the City of Los Angeles for affordable housing and low barrier navigation centers.

Senate Amendments

1. Add a sunset date of January 1, 2034, after which the provisions of this bill are repealed.
2. Amend the criteria that a local agency must meet for this bill to apply, including:
   1. Specifying that this bill only applies to a city with a population exceeding 2.5 million. The only city in California that meets this threshold is the City of Los Angeles; and
   2. Removing the requirement that the local agency has declared a local emergency related to homelessness.
3. Add labor provisions to this bill. Specifically, for land disposed of by the city pursuant to this bill, all of the following must occur for construction and rehabilitation projects that are not public works:
   1. All construction workers must get paid the prevailing wage;
   2. All projects over 40 units must be subject to a project labor agreement; and
   3. The provisions of this bill are enforceable by the Labor Commissioner, a joint labor-management committee, or an underpaid worker.
4. Amend the city's annual reporting requirements to the Department of Housing and Community Development (HCD) to include the total square footage of development and the depth of affordability of the units created.
5. Amend the penalty provisions of the bill, including that:
   1. If the city responds to an HCD request for more information, and the city is not notified by HCD that the proposed disposal would be a violation within 30 days of receiving the requested information, then the city is not liable for a civil penalty;
   2. The city has 60 days to cure or correct an alleged violation before an action may be brought to enforce this section; and
   3. That a violation regarding leases will be measured based on the discounted net present value of the fair market value of the lease as of the date the lease was entered into.
6. Specify that the rent levels for the affordable units must be consistent with those established by the California Tax Credit Allocation Committee, instead of those established in the Health Code.
7. Specify the kind of project to which the provision of this bill apply, as follows:
   1. That the only emergency shelters to which the bill applies are low barrier navigation centers; and
   2. That the only transitional housing to which the bill applies is transitional housing for youth and young adults.

COMMENTS

Local Surplus Lands: The SLA prioritizes the use of a local agency's surplus land for the development of affordable housing. It spells out the steps local agencies must follow when they dispose of land they no longer need. It gives first priority to housing projects that provide the greatest number of affordable units and the deepest levels of affordability. The exception to this is if the surplus land meets specified criteria that enables it to be considered "exempt surplus land."

To dispose of exempt surplus land, such as for production of affordable housing, the SLA, as interpreted by HCD, requires local agencies to make written findings. It may be difficult for local agencies to write such findings in cities where the utilization of public land for affordable housing is politically contentious. Additionally, there is no exemption in the SLA for the disposal of for the creation of Low Barrier Navigation Centers. As such, such projects need to go through the SLA's proscribed competitive bidding process.

This bill removes, for 10 years, the provisions of SLA for the City of Los Angeles for the disposal of land for the construction or rehabilitation of affordable housing (including supportive housing and transitional housing for youth and young adults) and Low Barrier Navigation Centers. To use the provisions of this bill, the city would need to maintain its status as having a compliant housing element and its being designated by HCD as a pro-housing jurisdiction. The bill also requires labor provisions on any affordable housing or low barrier navigation centers constructed or rehabilitated on sites disposes of by the city. These include payment of prevailing wages and, for projects over 40 units, utilization of a project labor agreement (PLA). Such a PLA already exists for many of Los Angeles' local funding sources for affordable housing.

According to the Author

"California has the largest population of people experiencing homelessness in the nation, yet only builds a fraction of the affordable housing needed. Like most of the state, the City of Los Angeles is experiencing a housing crisis. Just last year, there were nearly 42,000 unhoused individuals in LA alone. Under Mayor Karen Bass' leadership, LA has taken critical steps to address homelessness and expedite affordable housing production. Unfortunately, though the Surplus Land Act was designed to promote an increase in the supply of affordable housing, existing exemptions for affordable housing projects often lead to a prolonged process and unfulfilled projects. AB 1734 will enable pro-housing jurisdictions that have declared a local emergency on homelessness and are compliant with state housing law more quickly dispose of publicly owned property to develop emergency shelters and transitional supportive or affordable housing."

Arguments in Support

Supporters of the bill argue that, while well intentioned, the SLA could actually slow down the development of affordable housing. According to City of Los Angeles Mayor Karen Bass, "My Administration is acting with urgency to meet the moment, in partnership with the State, to build more housing, faster. To save lives, restore our neighborhoods, and house Angelenos immediately, we must urgently prioritize underutilized existing publicly owned property. Unfortunately, the Surplus Land Act has proven to be an impediment to utilizing City-owned property."

Arguments in Opposition

None on file.

FISCAL COMMENTS

According to the Assembly Appropriations Committee:

1. Cost pressures (Trial Court Trust Fund) in the mid- to high-hundreds of thousands of dollars annually for trial courts to hear and adjudicate additional civil actions for alleged violations of the exemptions to the state SLA provided pursuant to this bill. This bill allows HCD, various local entities, housing organizations, as well as beneficially interested and potentially harmed individuals to sue local agencies for violations. If ten cases are filed in civil court annually requiring seven to ten days (56 to 80 hours) of court time, at an average cost per hour of $1,000 in workload costs, the cost to the trial courts would be between $560,000 and $800,000 annually. Actual costs would vary depending on the number of cases filed and the amount of court time required in each case. Although courts are not funded on the basis of workload, increased pressure on the courts and staff may create a need for increased funding for courts to perform existing duties.
2. Minor and absorbable costs to HCD. However, HCD notes there are multiple bills moving through the legislature impacting the SLA. While many of these bills in isolation would have a minor and absorbable fiscal impact, were multiple of these bills to be chaptered, HCD anticipates an increased workload comprising additional monitoring and enforcement efforts, training for existing staff, updating guidelines and technical assistance materials, and providing technical assistance to local agencies directly impacted by these bills. Additional staffing would be required to absorb this cumulative workload.

VOTES:

ASM HOUSING AND COMMUNITY DEVELOPMENT: 7-0-1

YES: Wicks, Wendy Carrillo, Zbur, Kalra, Quirk-Silva, Sanchez, Ward

ABS, ABST OR NV: Joe Patterson

ASM LOCAL GOVERNMENT: 8-0-0

YES: Aguiar-Curry, Dixon, Boerner, Pacheco, Ramos, Robert Rivas, Waldron, Wilson

ASM APPROPRIATIONS: 15-0-1

YES: Holden, Megan Dahle, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Sanchez, Weber, Ortega

ABS, ABST OR NV: Robert Rivas

ASSEMBLY FLOOR: 79-0-1

YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones‑Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wood, Zbur, Rendon

ABS, ABST OR NV: Wilson

UPDATED

VERSION: September 8, 2023

CONSULTANT: Steve Wertheim / H. & C.D. / (916) 319-2085 FN: 0002412

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

AB 1734 (Jones-Sawyer) - Local Government: Surplus Land Act: exemptions

Bill Summary:

AB 1734 would exempt land disposed of by a local agency for certain affordable housing and homelessness project purposes from the requirements of the Surplus Land Act (SLA) if the local agency has declared a local homelessness emergency and meets other specified requirements. The bill would also specify civil penalty provisions for a local agency that violates the requirements of the bill.

Fiscal Impact:

• Unknown, potentially moderate court workload cost pressures for trial courts to hear and adjudicate new civil actions for alleged violations of the specified exemptions to the SLA that are brought under the provisions of this bill (Trial Court Trust Fund, General Fund). See Staff Comments.
  
• The Department of Housing and Community Development (HCD) indicates that costs associated with this bill would be minor and absorbable, but notes that, to the extent multiple bills are enacted that create exemptions to the SLA, HCD may need to request additional resources to absorb the cumulative workload for additional monitoring and enforcement, updating guidelines, and providing technical assistance to local agencies. (General Fund)

Background:

Existing law, the Surplus Land Act, requires local agencies to compile an inventory of all lands under the agency’s control that are in excess of its foreseeable needs at the end of each calendar year, and to include specified information related to surplus lands in annual progress reports to HCD. Existing law prescribes a process for disposing of surplus property that is no longer necessary for a local agency’s use to certain entities for preferred purposes prior to offering the land on the open market. Existing law requires any local agency disposing of surplus land to first offer it for sale or lease for the purpose of developing low- and moderate-income housing. Prior to disposing of surplus property, the local agency must send a written offer to sell or lease the property to specified entities, such as housing authorities, affordable housing developers, specified parks and recreation entities, school districts, and transportation entities, depending on the proposed use of the land. An interested agency must notify the disposing agency in writing of its intent to purchase the land within 60 days. An entity proposing to use the surplus land for development of low- and moderate-income housing must agree to designate at least 25% of the units as lower-income. If the local agency receives a notice of interest from multiple entities, it must give first priority to the proposal that would provide the deepest average level of affordability for the affordable units. Existing law designates certain types of land as “exempt surplus land” that may be disposed of without following the general requirements of the SLA.

Existing law requires HCD to make educational resources and materials to inform local agencies of their obligations under the SLA, and requires the department to maintain an up-to-date listing of all notices of availability of local surplus properties on its website. Existing law requires a local agency, prior to agreeing to the terms for the disposition of surplus land, to provide specified information about its disposition process to HCD, which must provide written findings within 30 days that note any process violations that have occurred. The local agency would have 60 days to correct the violations or adopt a resolution with findings explaining why the process is not in violation. A local agency that disposes of land in violation of the SLA is liable for a penalty of 30% of the final sale price for a first violation and 50% for subsequent violations. HCD is also authorized to notify the Attorney General of local Surplus Land Act violations.

Existing law, as enacted by AB 101 (Budget Committee), Chap. 159/2019, defines a “low-barrier navigation center” as a high-quality, low-barrier, service-enriched shelter focused on moving people into permanent housing while connecting them with services. Until January 1, 2027, AB 101 requires low-barrier navigation center developments to be a use by-right, as defined, in areas zoned for mixed uses and nonresidential zones permitting multifamily uses if the development meets certain requirements. A navigation center is low barrier if it includes best practices to reduce barriers to entry, such as allowing tenants to have partners, pets, possessions, and privacy. Local agencies must notify a developer within 30 days of receiving an application for a low barrier navigation center whether the application is complete, and must act upon its review of a completed application within 60 days.

On January 8, 2020, Governor Newsom issued Executive Order N-23-20, which declared, among other provisions, that “…reducing the population of homeless individuals in California is a matter of critical statewide importance, the state can and needs to do more to help local communities act with urgency to address street homelessness and the society-wide problems associated with the homelessness crisis.” Among other things, the executive order declared that a shelter crisis is in effect. State law authorizes certain local jurisdictions that have declared a shelter crisis to allow homeless individuals to occupy public facilities designated as emergency housing, for the duration of the crisis. It also allows a locality to adopt an ordinance that provides reasonable local standards for design, site development, and operation of shelters, but HCD must review ordinances to ensure minimum health and safety standards.

Proposed Law:

AB 1734 would exempt land disposed of by a local agency for certain affordable housing and homelessness project purposes from the requirements of the SLA. Specifically, this bill would authorize a local agency that has a compliant housing element and has declared a local emergency related to homelessness, as specified, to dispose of land for any of the following purposes without following the requirements of the SLA:

• A Low Barrier Navigation Center, as specified.
• Supportive housing, as specified.
• Transitional housing for youth and young adults (persons between 12 and 24 years of age, inclusive, and including persons who are pregnant and parenting).
• Affordable housing developments that are 100% affordable for lower income households, except that up to 20% of the units may be for moderate-income households, as specified.

A local agency that disposes of land pursuant to the bill must submit an annual report to the Legislature that includes the location of any disposed land, the number of low barrier navigation center beds and housing units approved and produced on the land, and any other information HCD may request from the local agency.

The bill would make a local agency that disposes of land in violation of the bill’s requirements liable for a civil penalty of 30% of the greater of the final sale price or fair market value at the time of disposition for a first violation, and 50% of the final sale price or fair market value at the time of disposition, whichever is greater, for a second or subsequent violation. An action to enforce these penalty provisions may be brought by any of the following parties: entities entitled to receive notices of availability under the SLA, a person who would have been eligible for residency in affordable housing had the agency not violated the bill’s provisions, a housing organization, a beneficially interested person or entity, and HCD. Any penalties assessed under the bill would be deposited into a local housing trust fund, the Building Homes and Jobs Trust Fund, or the Housing Rehabilitation Fund, as specified. If funds deposited into a local housing trust fund have not been expended within five years, they would revert to the state for deposit into either of the two specified funds for the financing of new affordable housing units located in the jurisdiction where the surplus land is located.

Related Legislation:

AB 480 (Ting), which is currently pending in this Committee, would change the penalty provisions or violations of the SLA and make procedural changes to noticing provisions that apply to “surplus land” and “exempt surplus land” disposed of by local agencies subject to the SLA.

AB 747 (Caballero), which is currently pending in the Assembly Appropriations Committee, would make numerous changes to the SLA, including expanding the definition of agency use and exempt surplus land, to facilitate disposal of public land for purposes besides the development of affordable housing.

Staff Comments:

Currently, the bill appears to apply only in the City of Los Angeles, but more cities are actively being designated as pro-housing by HCD and are declaring states of emergency related to homelessness. It is unknown how many additional civil actions will be brought as a result of AB 1734. Staff notes, however, that an action may be brought by numerous persons and agencies, including entities entitled to receive notices of availability under the SLA, a person who would have been eligible for residency in affordable housing, a housing organization, a beneficially interested person, and HCD. It generally costs about $8,000 to operate a courtroom for one eight-hour day. If civil cases brought as a result of this bill take an additional 50 hours of court time in the aggregate in a given year, the cost pressures to the courts would surpass the Suspense File threshold. Although courts are not funded on the basis of workload, increased staff time and resources may create a need for increased funding for courts from the General Fund to perform existing duties. Numerous trial court operations are funded through the imposition and collection of criminal fines and fees. However, the Legislature has reduced and eliminated criminal fines and fees over the past decade. As a result, the 2023-24 Budget includes an ongoing annual allocation of $105.1 million from the GF to backfill declining revenue to the Trial Court Trust Fund.

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SENATE COMMITTEE ON HOUSING

Senator Scott Wiener, Chair

2023 - 2024 Regular

Bill No: AB 1734 Hearing Date: 7/10/2023

SUBJECT: Local Government: Surplus Land Act: exemptions

DIGEST: This bill exempts certain housing and homelessness projects from the Surplus Land Act (SLA) in local agencies that have declared a local homelessness emergency and meet other requirements.

ANALYSIS:

Existing law:

1. Establishes procedures for the disposal of publicly-owned land that is surplus to the needs of local agencies, under the SLA, including to:
   1. Require local officials that want to dispose of public property to declare that the land is no longer needed for the agency’s use in a public meeting and declare the land either “surplus land” or “exempt surplus land.”
   2. Designate certain types of land as “exempt surplus land,” which do not have to meet the requirements of the SLA.
   3. Require local agencies to follow the procedures laid out in the SLA before surplus land can be sold, including, but not limited, to:
      1. Send a written notice of availability to various public agencies and nonprofit groups, referred to as “housing sponsors,” notifying them that land is available for the following purposes:
         1. Low- and moderate-income housing;
         2. Park and recreation, and open space;
         3. School facilities; or
         4. Infill opportunity zones or transit village plans.
      2. Negotiate in good faith for 90 days with housing sponsors that respond.
   4. Allows the local agency to dispose of the property on the private market if agreement is not reached with a housing sponsor.
   5. Requires that, if a property sold as surplus is not sold to a housing sponsor, but housing is developed on it later, 15% of the units must be sold or rented at an affordable cost to lower income households.
   6. Imposes specified penalties for violations of the SLA.
2. Defines “Low Barrier Navigation Center” to mean a Housing First, low-barrier, service-enriched shelter focused on moving people into permanent housing that provides temporary living facilities while case managers connect individuals experiencing homelessness to income, public benefits, health services, shelter, and housing.
3. Defines “supportive housing” as housing with no limit on length of stay, that is occupied by the target population, and that is linked to onsite or offsite services that assist the supportive housing resident in retaining the housing, improving their health status, and maximizing their ability to live and, when possible, work in the community.
4. Defines, federally, “transitional housing” to mean buildings configured as rental housing developments, but operated under program requirements that require the termination of assistance and recirculating of the assisted unit to another eligible program recipient at a predetermined future point in time that shall be no less than six months from the beginning of the assistance.
5. Requires cities and counties to prepare and adopt a general plan, including a housing element, to guide the future growth of a community. The housing element shall consist of an identification and analysis of existing and projected housing needs and a statement of goals, policy objectives, financial resources, and scheduled programs for the preservation, improvement, and development of housing. Requires the housing element to contain an assessment of housing needs and an inventory of resources and constraints relevant to meeting those needs.
6. Provides that each community’s fair share of housing be determined through the regional housing needs allocation (RHNA) process, which is composed of three main stages: (a) the Department of Finance and HCD develop regional housing needs estimates; (b) councils of government (COGs) allocate housing within each region based on these estimates (where a COG does not exist, HCD makes the determinations); and (c) cities and counties incorporate their allocations into their housing elements.
7. Establishes the pro-housing program at HCD, which create incentives for jurisdictions that are compliant with housing element requirements and have enacted pro-housing local policies.
8. Allows a local government to declare an emergency related to homelessness, where the local government, or officials designated thereby, may promulgate orders and regulations necessary to provide for the protection of life and property.

This bill:

1. Exempts, from the SLA, land disposed of for:
   
   1. Emergency shelters that are low-barrier navigation centers;
   2. Supportive housing;
   3. Transitional housing; or
   4. Affordable housing where 100% of the units are affordable to lower-income households, 20% of which can be for moderate-income households.
2. Authorizes a local agency to dispose of land pursuant to this bill, if it:
   
   1. Has a compliant housing element;
   2. Is designated prohousing; and
   3. Declares a local homelessness emergency.
3. Requires a local agency that disposes of land pursuant to this bill to submit an annual report to HCD that includes:
   
   1. Location of disposed land; and
   2. Number of emergency shelter beds and housing units approved and produced on the land.
4. Authorizes HCD to request additional information on annual reports, as specified.
5. Sets civil penalties on a local agency if it disposes land in violation of this bill’s requirements:
   
   1. For the first violation, 30% of the greater of the final sale price or fair market value of the land at time of disposition; and
   2. For any additional violations, 50% of the greater of the final sale price or fair market value of the land at time of disposition.
6. Requires that an independent appraisal of the land must determine the fair market value. Any of the following can bring an action to enforce these penalties:
   
   1. Entities entitled to receive notices of availability under the SLA
   2. A person who would have been eligible to apply for residence in affordable housing had the agency not violated the provisions of this bill
   3. A housing organization
   4. A beneficially interested person or entity
   5. HCD
7. Mandates penalties to be deposited into a local housing trust fund, or certain state affordable housing funds, as specified.

COMMENTS:

1. Author’s statement. “California has the largest population of people experiencing homelessness in the nation but builds only a fraction of the affordable housing needed. Though the Surplus Land Act was designed to promote an increase in the supply of affordable housing, existing exemptions for affordable housing projects often lead to a prolonged process and unfulfilled projects. AB 1734 will enable pro-housing government and transit agencies to dispose of publicly owned property for the development of shelters, transitional housing, supportive housing, or affordable housing.”
2. California’s housing crisis. California’s housing crisis is a half century in the making. Decades of underproduction underscored by exclusionary policies have left housing supply far behind need and costs soaring. During the 1990’s, California averaged only 110,000 new housing units per year. During the early 2000’s, production increased significantly, reaching a peak of 212,000 units in 2004 before plummeting to historic lows during the recession. Unfortunately, the downward trend continues; the fact is that California has under-produced housing every single year since 1989.

A lack of affordable housing is the biggest contributor to homelessness. As housing costs continue to rise, rent becomes less affordable for lower-income households, who are forced to live beyond their means (paying more than 30% of income on housing costs) or are pushed out of their homes, leading to rapid increases in homelessness. Variation in rates of homelessness cannot be explained by variation in rates of individual factors such as poverty or mental illness, however, cities with higher rents and lower rental vacancy rates (i.e., tighter housing markets) are directly linked to higher per capita rates of homelessness. Additionally, the data show that many people experiencing homelessness are employed; the problem is that their income alone often isn’t enough to maintain stable housing. This can result in financial insecurity, which is both a main cause and a prolonging factor of homelessness.

According to the most recent point in time (PIT) count, 171,521 people were experiencing homelessness in California—representing 30% of the nation’s homeless population. Two-thirds of the homeless population in California is unsheltered. Over half (51%) of all unsheltered people in the US were in California. California has the largest concentration of severely unaffordable housing markets in the nation and the statewide average home value reached a new record in June 2022 at $793,300. Over three quarters (78%) of extremely low-income households in California are paying more than half of their income on housing costs compared to just 6% of moderate-income households.

According to the 2022 Statewide Housing Plan, published by HCD, California must plan for more than 2.5 million homes over the next eight-year cycle, and no less than one million of those homes must meet the needs of lower-income households.^[1]

1. City of Los Angeles. Los Angeles (LA) is California’s largest city, with approximately 3.8 million residents. While LA represents less than 10% of the State’s total population, it is home to almost 25% of the State’s unsheltered population. According to the 2022 Greater Los Angeles Homeless Count, there are nearly 42,000 unhoused Californians in LA alone. Housing availability is a key contributing factor. In 2019, LA had a higher percentage of cost-burdened renter households than any other major American city, at nearly 60%. Over one-quarter of residents are severely cost-burdened, contributing to the homelessness emergency in LA.

A major cause of the housing crisis is the mismatch between the supply and demand of affordable housing. Through the RHNA process, the Southern California Association of Governments (SCAG) has determined that LA needs to plan for 184,721 homes by 2029 that are affordable to lower income households. However, if the production rates from the previous RHNA cycle continue, LA would create just 8% (14,200) of these units in the next eight years.

Since taking office in December 2022, LA Mayor Karen Bass has taken steps to address the housing and homelessness crises. The Mayor declared, and the city council ratified, a citywide state of emergency to address homelessness. Under the state of emergency, LA can take steps to lift rules and regulations that slow housing production, expedite housing contracts, and allow LA to acquire rooms, properties, and land to provide housing.

This bill would allow the Mayor to execute her directives—i.e., allow local agencies that declare a local emergency related to homelessness, have a compliant housing element, and are designated pro-housing by HCD to exclude publically owned local land from the SLA that is disposed of for specified purposes.

1. Public lands for affordable housing development. One of the limiting factors in building new affordable homes is land—the high cost and acquisition of land suitable for housing. Public agencies own a significant amount of lands located in or near urban areas, some of which exceed those agencies’ foreseeable needs, which could be used for housing.

The SLA provides affordable housing developers notification when local agencies make land available for reasons other than the agency’s use, and requires local agencies to negotiate in good faith with them for these parcels. The goal is to help valuable pubic land develop into affordable housing, but this could be at the expense of a local agencies’ economic development opportunities.

This bill removes the applicability of the SLA in qualified jurisdictions for the production of specified residential uses—i.e., Low Barrier Navigation Centers, supportive housing, transitional housing, and affordable housing. To qualify, the jurisdictions must have a declared local emergency related to homelessness, have a state-compliant housing element, and have been designated as a pro-housing jurisdiction by HCD. Currently, it is believed that the only jurisdiction to meet that requirement is the City of Los Angeles. However, that could change at any moment, as jurisdictions are actively being added to the list of pro-housing jurisdictions and/or declare states of emergency related to homelessness.

1. Local surplus lands. Public agencies are major landlords in some communities, owning significant pieces of real estate. When properties become surplus to their needs, public officials want to sell the land to recoup their investments. SLA spells out the steps local agencies must follow when they want to dispose of land. It requires local governments to give a “first right of refusal” to other governments and nonprofit housing developers, and to negotiate in good faith with them to try to come to agreement.

Before local officials can dispose of property, they must declare in a public meeting that the land is no longer needed for the agency’s use and declare the land either “surplus land” or “exempt surplus land.” Agency use includes land that is being used, or is planned to be used pursuant to a written plan the local agency’s governing board adopts, or is disposed of to support agency work or operations, including, but is not limited to, utility sites, watershed property, land being used for conservation purposes, land for demonstration, exhibition, or education purposes related to greenhouse gas emissions, and buffer sites near sensitive governmental uses.

Agency use cannot include commercial or industrial uses or activities. However, if the local agency is a district, “agency use” can include commercial or industrial uses as specified if the agency’s governing body takes action in a public meeting that the use of the site will directly further the express purpose of agency work or operations, or be expressly authorized by a statute provided that the district complies with specified affordable housing requirements.

1. Exempt surplus lands. The SLA designates certain types of land as “exempt surplus land,” which does not have to meet the requirements of the SLA. All other surplus land must follow the procedures laid out in the SLA before a local agency can sell it. Exempt surplus land includes, but is not limited to, public land transfers for less than fair market value to provide affordable housing, land that a local agency is exchanging for another property necessary for the agency’s use, and land that is a former street, right-of-way, or easement, and the local agency conveys to an owner of an adjacent property.

There is no exemption in the SLA for the disposal of land for the creation of housing types for people experiencing homelessness. As such, such projects need to go through the SLA's proscribed competitive bidding process. This process requires noticing the availability of the land to local public entities and any housing developers that have conveyed to HCD their interest in being noticed. The noticed entities have 60 days to respond to the notice, after which the local agency could enter into negotiations with an entity that meets the proposed specifications. This negotiation process can also take several months. This bill would enable qualified jurisdictions to bypass this process and directly dispose of land for the creation of housing types for people experiencing homelessness (i.e., supportive housing, shelters, Low Barrier Navigation Centers).

1. Removing outdated references. This bill exempts certain housing and homelessness projects from the SLA, including “transitional housing” which is generally a housing type/term no longer funded by federal and state programs. The committee may wish to consider narrowing the focus of the exemption for transitional housing to projects serving transition-aged youth, or instead include an exemption for low barrier navigation centers, or both.
2. Competing Measures. Several authors introduced measures that seek to amend the SLA this year. The author and sponsors of this bill may wish to coordinate their efforts with other measures amending the SLA to avoid conflict and duplication.
3. Double-referral. This bill was first referred to the Senate Governance and Finance Committee, where it passed on an 8-0 vote on July 5.

Related Legislation:

SB 747 (Caballero, 2023) — amends the SLA to increase the ability for local agencies to dispose of the land for economic development opportunities. This bill is currently in the Assembly Housing and Community Development Committee.

AB 480 (Ting, 2023) — amends the noticing provisions that apply to “surplus land” and “exempt surplus land” disposed of by local agencies subject to the SLA, among other provisions. This bill is being heard at this same committee hearing.

AB 1607 (Wendy Carrillo, 2023) — declares that the SLA does not apply to the transfer of land within Los Angeles County to the Los Angeles County Affordable Housing Solutions Agency, and from within the San Francisco Bay Area to the Bay Area Housing Finance Authority. This bill is currently in the Senate Governance and Finance Committee.

SB 1373 (Kamlager, Chapter 724, Statutes of 2022) — extended the authority for the City of Los Angeles to complete disposition of certain surplus property in accordance with the SLA as it read on December 31, 2019.

AB 2319 (Bonta, Chapter 963, Statutes of 2022) — created an exemption from the SLA for the Alameda Naval Air Station (Alameda Point).

AB 1486 (Ting, Chapter 664, Statutes of 2019) — expanded the scope of local agencies subject to the SLA, revised the definitions of “surplus land” and “exempt surplus land,” revised the noticing requirements relative to local agencies, housing sponsors and HCD, and added penalties for local agencies that sell land in violation of the SLA.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

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

July 5, 2023.)

SUPPORT:

Mayor Karen Bass, City of Los Angeles (Sponsor)

Central City Association

City of Long Beach

Downtown Women's Center

John Burton Advocates for Youth

LA Family Housing

Los Angeles Unified School District

Safe Place for Youth

The People Concern

The United Way of Greater Los Angeles

OPPOSITION:

None received.

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1. 2022 Statewide Housing Plan: A Home for Every Californian (arcgis.com) ↑

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Anna M. Caballero, Chair

2023 - 2024 Regular

Local Government: Surplus Land Act: exemptions

Exempts certain housing and homelessness projects from the SLA in local agencies that have declared a local homelessness emergency and meet other requirements.

Background

Surplus Land Act. Public agencies are major landlords in some communities, owning significant pieces of real estate. When properties become surplus to their needs, public officials want to sell the land to recoup their investments. The Surplus Land Act (SLA) spells out the steps local agencies must follow when they want to dispose of land. It requires local governments to give a “first right of refusal” to other governments and nonprofit housing developers, and to negotiate in good faith with them to try to come to agreement.

Before local officials can dispose of property, they must declare in a public meeting the land is no longer needed for the agency’s use and declare the land either “surplus land” or “exempt surplus land.” Agency use includes land that is being used, or is planned to be used pursuant to a written plan the local agency’s governing board adopts, or is disposed of to support agency work or operations. This includes, but is not limited to:

• Utility sites;
• Watershed property;
• Land being used for conservation purposes;
• Land for demonstration, exhibition, or education purposes related to greenhouse gas emissions; and
• Buffer sites near sensitive governmental uses, including, waste water treatment plants.

Agency use cannot include commercial or industrial uses or activities. However, if the local agency is a district, agency use can include certain commercial or industrial uses if the agency’s governing body takes action in a public meeting that the use of the site will directly further the express purpose of agency work or operations, or be expressly authorized by a statute provided the district complies with specified affordable housing requirements.

The SLA designates certain types of land as “exempt surplus land,” which does not have to meet the requirements of the SLA. All other surplus land must follow the procedures laid out in the SLA before a local agency can sell it. Exempt surplus land includes:

• Land a city or county transfers for less than fair market value to provide affordable housing subject to various requirements.
• Land less than 5,000 sq. ft. in area or the minimum legal residential building lot size for the jurisdiction, whichever is less, that is not contiguous to land a state or local agency uses for open-space or affordable housing, and sold to an owner of contiguous land.
• Land a local agency is exchanging for another property necessary for the agency’s use, or transferring to another public entity or a federally recognized California Indian tribe.
• Land that is a former street, right-of-way, or easement, and the local agency conveys to an owner of an adjacent property.
• Land that is put out to open, competitive bid by a local agency, provided it invites other governments and nonprofit housing developers to participate in the competitive bid process, for specified affordable housing projects.
• Land subject to valid legal restrictions that would make housing a prohibited use, unless the restrictions can be mitigated or avoided. This does not include nonresidential land use designations.
• Land the state granted in trust to a local agency, or that a local agency acquired for trust purposes, where statutory provisions apply.
• Land school entities own that is subject to specified statutory exemptions;
• Certain former military bases the federal government conveyed to a local agency.
• Real property a district uses for an agency’s use.
• Specified land the state transferred to a local agency before January 30, 2019, with at least 100 units per acre that meets certain affordability requirements.

Before agencies can enter into negotiations to sell surplus land, they must send a written notice of availability to various public agencies and nonprofit groups, referred to as “housing sponsors,” notifying them land is available for the following purposes:

• Low- and moderate-income housing;
• Park and recreation, and open space;
• School facilities; or
• Infill opportunity zones or transit village plans.

Housing sponsors can notify the Department of Housing and Community Development (HCD) that they are interested in acquiring surplus land to develop affordable housing. HCD maintains a list of notices of availability on its website.

If another agency or housing sponsor wants to buy or lease the surplus land for one of these purposes, it must tell the disposing agency within 60 days, and if multiple entities want to purchase the land, the housing sponsor that proposes to provide the greatest level of affordable housing gets priority. The agency and the housing sponsor then have an additional 90 days to negotiate a mutually satisfactory price and terms in good faith. If they cannot agree, the agency that owns the surplus land can sell the land on the private market. The SLA says nothing in its provisions prevents a local agency from disposing of the land at or below fair market value, where not in conflict with other law.

AB 1486 (Ting, 2019). In 2019, the Legislature substantially 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). Among other changes, AB 1486 broadened the definition of surplus land and required land to be designated as surplus prior to the local agency selling the land, which ensures local agencies must comply with the SLA. AB 1486 prohibited local agencies from counting the sale of land for economic development purposes as being “for the agency’s use.” This means local agencies must open their properties up to affordable housing developers first, even if they have different purposes in mind for the property. Additionally, AB 1486 instituted a requirement that if a property sold as surplus is not sold to a housing sponsor, but housing is developed on it later, 15% of the units must be sold or rented at an affordable cost to lower income households.

Finally, AB 1486 imposed penalties on local agencies that dispose of surplus land in violation of the SLA totaling 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. These penalty revenues must be deposited in a local housing trust fund, or certain state affordable housing funds. AB 1486 established an enforcement process, as follows:

• Prior to agreeing to terms for the disposition of surplus land, a local agency must provide HCD a description of the notices of availability sent, and negotiations conducted with any responding entities, in regard to the disposal of the parcel of surplus land and a copy of any restrictions to be recorded against the property, in a form prescribed by HCD.
• HCD must submit written findings to the local agency within 30 days of receipt of the description of the disposal if the proposed disposal of the land will violate SLA.
• A local agency has at least 60 days to respond to the findings before HCD may take further action. The local agency must consider findings made by HCD and then either correct any issues found by HCD or respond in writing why the disposal complied with the SLA.
• If the local agency does not respond or does not address the issues, HCD must notify the local government and may notify the Attorney General the disposal violates the SLA.
• A local agency cannot be held liable for the penalties under the SLA if does not notify the agency it is in violation within 30 days of receiving the description.

AB 1486 also provided that certain projects could use the previous version of the SLA before AB 1486 amended it, if the local agency, as of September 30, 2019, entered into an exclusive negotiating, or legally binding, agreement to dispose of property, provided the local agency completed the disposition by December 31, 2022. AB 1486 included a similar provision for land held in a Community Redevelopment Property Trust Fund, or designated in a long-range property management plan, for sale or retained for future development, so long as the local agency entered into the exclusive negotiating, or legally binding, agreement by December 31, 2020, and completed the disposition by December 31, 2022.

Subsequent measures have added additional projects that could use the previous version of the SLA before AB 1486 amended it, including:

• SB 51 (Durazo, 2021) provides that if a local agency issued a competitive request for proposals as of September 30, 2019, that included at least 100 residential units and at least 25% of the total units are restricted to lower income housing, and other factors specified, then the property is not subject to changes made to the Surplus Land Act made by AB 1486 (Ting).
• AB 175 (Committee on Budget, 2021) allowed a similar exemption for land entered into an exclusive negotiating agreement to dispose of property related to the Metro North Hollywood Joint Development Project, provided it completes disposition no later than December 31, 2024.
• SB 1373 (Kamlager, 2021) extends by two years (until December 31, 2024) the deadlines in the Surplus Land Act to complete disposition of a property subject to an exclusive negotiating agreement for a charter city with a population of over two million people.

California’s homelessness crisis. According to the most recent point in time (PIT) count, 171,521 people were experiencing homelessness in California—representing 30% of the nation’s homeless population. Two-thirds of the homeless population in California is unsheltered. Over half (51%) of all unsheltered people in the U.S. were in California. Existing homelessness counts are imperfect for a variety of reasons. They likely underestimate the number of individuals experiencing homelessness because the federal PIT count only measures the homeless population on one day of the year. Moreover, the PIT count does not capture everyone experiencing homelessness, as some do not wish to be counted and others cannot be counted because their location is unknown to those counting. California has the largest concentration of severely unaffordable housing markets in the nation and the statewide average home value reached a new record in June 2022 at $793,300. Over three-quarters (78%) of extremely low-income households in California are paying more than half of their income on housing costs compared to just 6% of moderate-income households.

The Committee has held two homelessness informational hearings over the past two years. In the joint hearing held by this Committee and four others on February 24, 2021, titled “A Perfect Storm: Confronting California’s Homelessness Crisis during the Pandemic,” the Committees examined the impact of homelessness on the state, and found that the way the homelessness crisis has evolved because of the pandemic is relatively unknown because the available data predates the pandemic.

Recent state expenditures to address homelessness. To help address the persistent crisis, in recent years the state has increased funding for various homelessness programs. From 2018-19 to 2021-22, the state has allocated $2.65 billion to California Interagency Council on Homelessness (Cal ICH) homelessness programs. The largest of these programs is the Homeless Housing, Assistance, and Prevention Program (HHAPP), which provides block grants to large cities, counties, continuums of care (CoCs), and tribal governments, for a variety of solutions for those experiencing homelessness or at risk of homelessness. These solutions can include rapid rehousing, operating subsidies, street outreach, services coordination, delivery of permanent and innovative housing solutions, and homelessness prevention. The state has also invested billions more for other housing and homelessness programs in other state agencies. This includes Project Homekey, a program HCD administers to purchase and rehabilitate housing, including hotels, motels, vacant apartment buildings, and other types of housing, and convert them into permanent, long-term housing for people experiencing or at-risk of homelessness. The state allocated $2.25 billion to Project Homekey between 2018-19 and 2021-22.

Low-barrier navigation centers. Presently there are two main options to streamline the development of shelters, interim interventions, and low barrier navigation centers. The first is through the housing element, which requires local governments to identity at least one zoning designation (that allows residential including mixed uses) where shelters and other interim interventions are allowed as a permitted use without a conditional use or other discretionary permit. The local government may impose specified objective standards to these shelters and interim interventions. The second is through a specific streamlining approval process for low-barrier navigation centers.

AB 101 (Committee on Budget, 2019) streamlines approval of low-barrier navigation centers. Specifically, this bill defines low-barrier navigation centers as high-quality, low-barrier, service-enriched shelters focused on moving people into permanent housing while connecting them with services. Until January 1, 2027, AB 101 requires low-barrier navigation center developments to be a use by-right, as defined, in areas zoned for mixed uses and nonresidential zones permitting multifamily uses if the development meets certain requirements. A navigation center is low barrier if it includes best practices to reduce barriers to entry, such as allowing tenants to have partners, pets, possessions, and privacy.

City of Los Angeles. The City of Los Angeles is California’s largest city with approximately 3.8 million residents. While the City of Los Angeles represents less than 10% of the State’s total population, it is home to almost 25% of the State’s unsheltered population. According to the 2022 Greater Los Angeles Homeless Count, there are nearly 42,000 unhoused Californians in Los Angeles alone. Housing availability is a key contributing factor. In 2019, the City of Los Angeles had a higher percentage of cost-burdened renter households than any other major American city, at nearly 60%. Over one-quarter of residents are severely cost-burdened, contributing to the homelessness emergency in the City.

A major cause of the housing crisis is the mismatch between the supply and demand of affordable housing. Through the Regional Housing Needs Assessment process (RHNA), the Southern California Association of Governments (SCAG) has determined that the City of Los Angeles needs to plan for 184,721 homes by 2029 that are affordable to lower income households. However, if the production rates from the previous RHNA cycle continue, the City of Los Angeles would create just 8% (14,200) of these units in the next eight years.

On May 27, 2022, HCD certified the City’s housing element was compliant, meaning it complied with the requirements of state housing laws.

On March 10, 2023, Los Angeles received its pro-housing designation from HCD acknowledging the City had taken efforts to streamline multifamily developments, upzone near jobs and transit, and create affordable housing in areas that have excluded lower-income households and people of color.

Since taking office in December 2022, Los Angeles Mayor Karen Bass has taken steps to address the housing and homelessness crises. The Mayor declared, and the city council ratified, a citywide state of emergency to address homelessness. Under the state of emergency, the City can take steps to lift rules and regulations that slow housing production, expedite housing contracts, and allow the City to acquire rooms, properties, and land to provide housing.

The Mayor also issued the following executive directives:

• No. 1, which required all affordable housing projects to be approved within 60 days and permitted within five days.
• No. 3, which expedited the identification and disposition of city-owned land that is vacant, surplus, or underutilized.

Los Angeles Mayor Karen Bass wants to allow local agencies that declare a local emergency related to homelessness, have a compliant housing element, and are designated pro-housing by HCD to exclude land that is disposed of for the following purposes from the SLA.

Proposed Law

Assembly Bill 1734 exempts from the SLA land disposed of for:

• Emergency shelters that are low-barrier navigation centers;
• Supportive housing;
• Transitional housing; or
• Affordable housing where 100% of the units are affordable to lower-income households, 20% of which can be for moderate-income households.

Before a local agency disposes of land described above, it must:

• Have a compliant housing element;
• Be designated prohousing; and
• Declare a local homelessness emergency.

A local agency that disposes of land pursuant to AB 1734 must submit an annual report to HCD that includes:

• Location of disposed land; and
• Number of emergency shelter beds and housing units approved and produced on the land.

HCD may request additional information, but is not authorized to require this data to be submitted as a disposition precondition.

If the local agency’s disposal of this land violates these requirements, the local agency is liable for the following civil penalties:

• For the first violation, 30% of the greater of the final sale price or fair market value of the land at time of disposition; and
• For any additional violations, 50% of the greater of the final sale price or fair market value of the land at time of disposition.

An independent appraisal of the land must determine the fair market value. Any of the following can bring an action to enforce these penalties:

• Entities entitled to receive notices of availability under the SLA;
• A person who would have been eligible to apply for residence in affordable housing had the agency not violated AB 1734;
• A housing organization;
• A beneficially interested person or entity; and
• HCD.

These penalties musts be deposited into a local housing trust fund, or certain state affordable housing funds. Local agencies cannot pay these penalties out of funds dedicated to affordable housing. The local agency must commit to spending the penalties deposited into a local housing trust fund within five years of deposit for the sole purpose of financing new affordable housing units. After five years, the funds revert to the state to deposit in existing state affordable housing funds for the sole purpose of building new affordable housing units in the same jurisdiction.

The measure defines its terms.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “California has the largest population of people experiencing homelessness in the nation, yet only builds a fraction of the affordable housing needed. Like most of the state, the City of Los Angeles is experiencing a housing crisis. Just last year, there were nearly 42,000 unhoused individuals in LA alone. Under Mayor Karen Bass’ leadership, LA has taken critical steps to address homelessness and expedite affordable housing production. Unfortunately, though the Surplus Land Act was designed to promote an increase in the supply of affordable housing, existing exemptions for affordable housing projects often lead to a prolonged process and unfulfilled projects. AB 1734 will enable pro-housing jurisdictions that have declared a local emergency on homelessness and are compliant with state housing law more quickly dispose of publicly owned property to develop emergency shelters and transitional supportive or affordable housing.”

2. Bigger changes needed? Prior to the enactment of AB 1486, state law did not require local agencies to always designate land as surplus prior to disposing of it, which meant they could enter into negotiations to dispose of land to further local priorities such as economic development without going through the Surplus Land Act process. AB 1486 excluded economic development from being considered “agency’s use”; made changes that complicate the ability of local governments to dispose of large parcels that need infrastructure investments to support other uses; and otherwise clamped down on the ability of local governments to dispose of their property for the purposes that they consider to best serve their constituents. As a result, the Legislature has seen a parade of bills attempting to address issues with the Surplus Land Act that have come to light since the enactment of AB 1486. Several of these bills have enacted, or would create, exemptions to the Surplus Land Act to enable the development of worthy causes, including the development of affordable housing on an important transit corridor in the San Diego Area (SB 51, Durazo, 2021), the Metro North Hollywood Joint Development project (AB 175, Committee on Budget, 2021), the Tustin military base (SB 719, Min, 2021), several economic development projects in the City of Los Angeles (SB 1373, Kamlager, 2021), and the former military base at Alameda Point (AB 1319, Bonta, 2022). AB 1734 is the latest member of the parade, seeking to allow certain local agencies that have compliant housing elements, pro-housing designations, and have declared a local homelessness emergency to exempt parcels for specified housing projects. The Committee may wish to consider whether the previous changes to the Surplus Land Act should be revisited more broadly so such exemptions become less necessary.

3. Striking a balance. AB 1734 allows cities and counties that have compliant housing elements, pro-housing designations, and have declared a local homelessness emergency to dispose of land for affordable housing and other types of emergency or supportive housing without going through the SLA. On the one hand, this provides additional flexibility to cities and counties that have demonstrated to HCD that their housing policies align with state goals. On the other hand, conditioning this flexibility on these designations severely limits the cities and counties that would receive additional flexibility to build more housing outside the SLA. HCD has only designated 22 cities and counties as pro-housing, with a few dozen more under review. On the one hand, extending this flexibility to all cities and counties may reward bad actors who have stood in the way of housing. On the other hand, limiting this flexibility to just those cities and counties that are pro-housing and have compliant housing elements misses many cities and counties that also desperately need to build affordable housing and housing to serve individuals experiencing homelessness. To ensure the measure continues to reward good actors while providing necessary flexibility to respond to local homeless emergencies, the Committee may wish to consider amending the bill to remove the requirement that cities and counties be designated pro-housing, but retain the requirement for them to have compliant housing elements, and declare a local homelessness emergency.

4. Proceed with caution. Under the SLA, prior to agreeing to terms for the disposition of surplus land, a local agency must provide HCD a description of the notices of availability sent, and negotiations conducted with any responding entities, in regard to the disposal of the parcel of surplus land and a copy of any restrictions to be recorded against the property, in a form HCD prescribes. HCD must then submit written findings to the local agency within 30 days of receipt of the description of the disposal if the proposed disposal of the land will violate SLA. This gives the local agency a chance to cure the potential violation before finalizing the disposal. AB 1734 creates a separate penalty provision that does not require the local agency and HCD to work together to identify potential violations before a disposal occurs. If the local agency does not proactively reach out to HCD to identify any potential issues, it could be subject to fines through AB 1734’s civil penalty provisions. Local agencies that use AB 1734’s provisions will have to determine whether to proceed with disposals that entities like HCD may challenge in court.

5. Parade isn’t over. The Legislature is considering numerous other proposals that provide specific provisions or exemptions regarding surplus land:

• SB 34 (Umberg, 2023), which the Committee approved on a 6-2 vote at its April 19^th hearing, creates a process for HCD to determine whether land disposals in Orange County violate the ­SLA. The bill is currently pending in the Assembly Local Government Committee.
• SB 229 (Umberg, 2023), which the Committee approved on a 6-1 vote at its April 19^th hearing, requires a local agency to hold an open and public meeting if HCD notifies the local agency that its disposal of a parcel violates the SLA. The bill is currently pending in the Assembly Local Government Committee.
• SB 693 (Seyarto, 2023) exempts certain parcels in the City of Murrieta from the SLA. The bill is currently pending in the Senate Governance and Finance Committee.
• SB 747 (Caballero, 2023), which the Committee approved on a 8-0 vote at its April 12^th hearing, makes numerous changes to the Surplus Land Act, including expanding the definition of agency use, and exempt surplus land. The bill is currently pending in the Assembly Housing and Community Development Committee.
• AB 129 (Committee on Budget, 2023) includes, among its many provisions, an exemption from the SLA for land acquired by a local agency under an adopted sectional area plan. The bill is currently on the Governor’s desk.
• AB 457 (Joe Patterson, 2023), which the Committee approved on a 8-0 vote at its June 28^th hearing, creates an exemption from the Surplus Land Act (SLA) for parcels abutting a state highway right-of-way that a local agency identified in its circulation element or capital improvement plan for future roadway development. The bill is currently pending on the Senate Floor.
• AB 480 (Ting, 2023), which the Committee approved on a 6-1 vote at its June 28^th hearing, changes the penalty provisions of the SLA and makes procedural changes to noticing provisions that apply to “surplus land” and “exempt surplus land” disposed of by local agencies subject to the SLA. The bill is currently pending in the Senate Housing Committee.
• AB 837 (Alvarez, 2023) creates an exemption from the SLA for land acquired by a local agency under an adopted sectional area plan. The bill is pending in the Senate Governance and Finance Committee.
• AB 983 (Cervantes, 2023) expands the definition of exempt surplus land to include land designated in an adopted downtown revitalization plan not to exceed 1.1 square miles and includes residential, commercial, office, civic, and hospitality uses. The bill is currently pending in the Assembly Local Government Committee.
• AB 1469 (Kalra, 2023) allows the Santa Clara Valley Water District to take actions to assist unsheltered people living along streams, riparian corridors, or otherwise within the district’s jurisdiction, to provide solutions or improve outcomes for the unsheltered individuals, in consultation with a city or the County of Santa Clara. AB 1469 includes a provision that use of land for these purposes meets the definition of “agency use,” which is exempt from the SLA. The bill is also scheduled for this Committee’s July 5^th meeting.

SB 747 seeks to address broader concerns over the SLA compared to many of these bills that provide more tailored flexibility to particular agencies, or types of projects. If enacted, SB 747 could reduce the need to pursue one-off legislation. To help address broader SLA concerns without the need for piecemeal legislation, the Committee may wish to consider amending the bill to make its enactment contingent on SB 747’s enactment.

6. Coming and going. The Senate Rules Committee has ordered a double referral of AB 1734: first to the Senate Governance and Finance Committee to hear issues related to disposal of land owned by local governments, and second to the Senate Housing Committee.

Assembly Actions

Assembly Housing and Community Development Committee: 7-0
Assembly Local Government Committee: 8-0
Assembly Appropriations Committee: 15-0
Assembly Floor: 79-0

Support and Opposition

(6/30/23)

Support: Karen Bass - Mayor of Los Angeles (Sponsor)
City of Long Beach
LA Family Housing
Los Angeles Unified School District
St. Joseph Center
The United Way of Greater Los Angeles

Opposition: None submitted.

-- END --

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Anna M. Caballero, Chair

2023 - 2024 Regular

Local Government: Surplus Land Act: exemptions

Exempts certain housing and homelessness projects from the SLA in local agencies that have declared a local homelessness emergency and meet other requirements.

Background

Surplus Land Act. Public agencies are major landlords in some communities, owning significant pieces of real estate. When properties become surplus to their needs, public officials want to sell the land to recoup their investments. The Surplus Land Act (SLA) spells out the steps local agencies must follow when they want to dispose of land. It requires local governments to give a “first right of refusal” to other governments and nonprofit housing developers, and to negotiate in good faith with them to try to come to agreement.

Before local officials can dispose of property, they must declare in a public meeting the land is no longer needed for the agency’s use and declare the land either “surplus land” or “exempt surplus land.” Agency use includes land that is being used, or is planned to be used pursuant to a written plan the local agency’s governing board adopts, or is disposed of to support agency work or operations. This includes, but is not limited to:

• Utility sites;
• Watershed property;
• Land being used for conservation purposes;
• Land for demonstration, exhibition, or education purposes related to greenhouse gas emissions; and
• Buffer sites near sensitive governmental uses, including, waste water treatment plants.

Agency use cannot include commercial or industrial uses or activities. However, if the local agency is a district, agency use can include certain commercial or industrial uses if the agency’s governing body takes action in a public meeting that the use of the site will directly further the express purpose of agency work or operations, or be expressly authorized by a statute provided the district complies with specified affordable housing requirements.

The SLA designates certain types of land as “exempt surplus land,” which does not have to meet the requirements of the SLA. All other surplus land must follow the procedures laid out in the SLA before a local agency can sell it. Exempt surplus land includes:

• Land a city or county transfers for less than fair market value to provide affordable housing subject to various requirements.
• Land less than 5,000 sq. ft. in area or the minimum legal residential building lot size for the jurisdiction, whichever is less, that is not contiguous to land a state or local agency uses for open-space or affordable housing, and sold to an owner of contiguous land.
• Land a local agency is exchanging for another property necessary for the agency’s use, or transferring to another public entity or a federally recognized California Indian tribe.
• Land that is a former street, right-of-way, or easement, and the local agency conveys to an owner of an adjacent property.
• Land that is put out to open, competitive bid by a local agency, provided it invites other governments and nonprofit housing developers to participate in the competitive bid process, for specified affordable housing projects.
• Land subject to valid legal restrictions that would make housing a prohibited use, unless the restrictions can be mitigated or avoided. This does not include nonresidential land use designations.
• Land the state granted in trust to a local agency, or that a local agency acquired for trust purposes, where statutory provisions apply.
• Land school entities own that is subject to specified statutory exemptions;
• Certain former military bases the federal government conveyed to a local agency.
• Real property a district uses for an agency’s use.
• Specified land the state transferred to a local agency before January 30, 2019, with at least 100 units per acre that meets certain affordability requirements.

Before agencies can enter into negotiations to sell surplus land, they must send a written notice of availability to various public agencies and nonprofit groups, referred to as “housing sponsors,” notifying them land is available for the following purposes:

• Low- and moderate-income housing;
• Park and recreation, and open space;
• School facilities; or
• Infill opportunity zones or transit village plans.

Housing sponsors can notify the Department of Housing and Community Development (HCD) that they are interested in acquiring surplus land to develop affordable housing. HCD maintains a list of notices of availability on its website.

If another agency or housing sponsor wants to buy or lease the surplus land for one of these purposes, it must tell the disposing agency within 60 days, and if multiple entities want to purchase the land, the housing sponsor that proposes to provide the greatest level of affordable housing gets priority. The agency and the housing sponsor then have an additional 90 days to negotiate a mutually satisfactory price and terms in good faith. If they cannot agree, the agency that owns the surplus land can sell the land on the private market. The SLA says nothing in its provisions prevents a local agency from disposing of the land at or below fair market value, where not in conflict with other law.

AB 1486 (Ting, 2019). In 2019, the Legislature substantially 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). Among other changes, AB 1486 broadened the definition of surplus land and required land to be designated as surplus prior to the local agency selling the land, which ensures local agencies must comply with the SLA. AB 1486 prohibited local agencies from counting the sale of land for economic development purposes as being “for the agency’s use.” This means local agencies must open their properties up to affordable housing developers first, even if they have different purposes in mind for the property. Additionally, AB 1486 instituted a requirement that if a property sold as surplus is not sold to a housing sponsor, but housing is developed on it later, 15% of the units must be sold or rented at an affordable cost to lower income households.

Finally, AB 1486 imposed penalties on local agencies that dispose of surplus land in violation of the SLA totaling 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. These penalty revenues must be deposited in a local housing trust fund, or certain state affordable housing funds. AB 1486 established an enforcement process, as follows:

• Prior to agreeing to terms for the disposition of surplus land, a local agency must provide HCD a description of the notices of availability sent, and negotiations conducted with any responding entities, in regard to the disposal of the parcel of surplus land and a copy of any restrictions to be recorded against the property, in a form prescribed by HCD.
• HCD must submit written findings to the local agency within 30 days of receipt of the description of the disposal if the proposed disposal of the land will violate SLA.
• A local agency has at least 60 days to respond to the findings before HCD may take further action. The local agency must consider findings made by HCD and then either correct any issues found by HCD or respond in writing why the disposal complied with the SLA.
• If the local agency does not respond or does not address the issues, HCD must notify the local government and may notify the Attorney General the disposal violates the SLA.
• A local agency cannot be held liable for the penalties under the SLA if does not notify the agency it is in violation within 30 days of receiving the description.

AB 1486 also provided that certain projects could use the previous version of the SLA before AB 1486 amended it, if the local agency, as of September 30, 2019, entered into an exclusive negotiating, or legally binding, agreement to dispose of property, provided the local agency completed the disposition by December 31, 2022. AB 1486 included a similar provision for land held in a Community Redevelopment Property Trust Fund, or designated in a long-range property management plan, for sale or retained for future development, so long as the local agency entered into the exclusive negotiating, or legally binding, agreement by December 31, 2020, and completed the disposition by December 31, 2022.

Subsequent measures have added additional projects that could use the previous version of the SLA before AB 1486 amended it, including:

• SB 51 (Durazo, 2021) provides that if a local agency issued a competitive request for proposals as of September 30, 2019, that included at least 100 residential units and at least 25% of the total units are restricted to lower income housing, and other factors specified, then the property is not subject to changes made to the Surplus Land Act made by AB 1486 (Ting).
• AB 175 (Committee on Budget, 2021) allowed a similar exemption for land entered into an exclusive negotiating agreement to dispose of property related to the Metro North Hollywood Joint Development Project, provided it completes disposition no later than December 31, 2024.
• SB 1373 (Kamlager, 2021) extends by two years (until December 31, 2024) the deadlines in the Surplus Land Act to complete disposition of a property subject to an exclusive negotiating agreement for a charter city with a population of over two million people.

California’s homelessness crisis. According to the most recent point in time (PIT) count, 171,521 people were experiencing homelessness in California—representing 30% of the nation’s homeless population. Two-thirds of the homeless population in California is unsheltered. Over half (51%) of all unsheltered people in the U.S. were in California. Existing homelessness counts are imperfect for a variety of reasons. They likely underestimate the number of individuals experiencing homelessness because the federal PIT count only measures the homeless population on one day of the year. Moreover, the PIT count does not capture everyone experiencing homelessness, as some do not wish to be counted and others cannot be counted because their location is unknown to those counting. California has the largest concentration of severely unaffordable housing markets in the nation and the statewide average home value reached a new record in June 2022 at $793,300. Over three-quarters (78%) of extremely low-income households in California are paying more than half of their income on housing costs compared to just 6% of moderate-income households.

The Committee has held two homelessness informational hearings over the past two years. In the joint hearing held by this Committee and four others on February 24, 2021, titled “A Perfect Storm: Confronting California’s Homelessness Crisis during the Pandemic,” the Committees examined the impact of homelessness on the state, and found that the way the homelessness crisis has evolved because of the pandemic is relatively unknown because the available data predates the pandemic.

Recent state expenditures to address homelessness. To help address the persistent crisis, in recent years the state has increased funding for various homelessness programs. From 2018-19 to 2021-22, the state has allocated $2.65 billion to California Interagency Council on Homelessness (Cal ICH) homelessness programs. The largest of these programs is the Homeless Housing, Assistance, and Prevention Program (HHAPP), which provides block grants to large cities, counties, continuums of care (CoCs), and tribal governments, for a variety of solutions for those experiencing homelessness or at risk of homelessness. These solutions can include rapid rehousing, operating subsidies, street outreach, services coordination, delivery of permanent and innovative housing solutions, and homelessness prevention. The state has also invested billions more for other housing and homelessness programs in other state agencies. This includes Project Homekey, a program HCD administers to purchase and rehabilitate housing, including hotels, motels, vacant apartment buildings, and other types of housing, and convert them into permanent, long-term housing for people experiencing or at-risk of homelessness. The state allocated $2.25 billion to Project Homekey between 2018-19 and 2021-22.

Low-barrier navigation centers. Presently there are two main options to streamline the development of shelters, interim interventions, and low barrier navigation centers. The first is through the housing element, which requires local governments to identity at least one zoning designation (that allows residential including mixed uses) where shelters and other interim interventions are allowed as a permitted use without a conditional use or other discretionary permit. The local government may impose specified objective standards to these shelters and interim interventions. The second is through a specific streamlining approval process for low-barrier navigation centers.

AB 101 (Committee on Budget, 2019) streamlines approval of low-barrier navigation centers. Specifically, this bill defines low-barrier navigation centers as high-quality, low-barrier, service-enriched shelters focused on moving people into permanent housing while connecting them with services. Until January 1, 2027, AB 101 requires low-barrier navigation center developments to be a use by-right, as defined, in areas zoned for mixed uses and nonresidential zones permitting multifamily uses if the development meets certain requirements. A navigation center is low barrier if it includes best practices to reduce barriers to entry, such as allowing tenants to have partners, pets, possessions, and privacy.

City of Los Angeles. The City of Los Angeles is California’s largest city with approximately 3.8 million residents. While the City of Los Angeles represents less than 10% of the State’s total population, it is home to almost 25% of the State’s unsheltered population. According to the 2022 Greater Los Angeles Homeless Count, there are nearly 42,000 unhoused Californians in Los Angeles alone. Housing availability is a key contributing factor. In 2019, the City of Los Angeles had a higher percentage of cost-burdened renter households than any other major American city, at nearly 60%. Over one-quarter of residents are severely cost-burdened, contributing to the homelessness emergency in the City.

A major cause of the housing crisis is the mismatch between the supply and demand of affordable housing. Through the Regional Housing Needs Assessment process (RHNA), the Southern California Association of Governments (SCAG) has determined that the City of Los Angeles needs to plan for 184,721 homes by 2029 that are affordable to lower income households. However, if the production rates from the previous RHNA cycle continue, the City of Los Angeles would create just 8% (14,200) of these units in the next eight years.

On May 27, 2022, HCD certified the City’s housing element was compliant, meaning it complied with the requirements of state housing laws.

On March 10, 2023, Los Angeles received its pro-housing designation from HCD acknowledging the City had taken efforts to streamline multifamily developments, upzone near jobs and transit, and create affordable housing in areas that have excluded lower-income households and people of color.

Since taking office in December 2022, Los Angeles Mayor Karen Bass has taken steps to address the housing and homelessness crises. The Mayor declared, and the city council ratified, a citywide state of emergency to address homelessness. Under the state of emergency, the City can take steps to lift rules and regulations that slow housing production, expedite housing contracts, and allow the City to acquire rooms, properties, and land to provide housing.

The Mayor also issued the following executive directives:

• No. 1, which required all affordable housing projects to be approved within 60 days and permitted within five days.
• No. 3, which expedited the identification and disposition of city-owned land that is vacant, surplus, or underutilized.

Los Angeles Mayor Karen Bass wants to allow local agencies that declare a local emergency related to homelessness, have a compliant housing element, and are designated pro-housing by HCD to exclude land that is disposed of for the following purposes from the SLA.

Proposed Law

Assembly Bill 1734 exempts from the SLA land disposed of for:

• Emergency shelters that are low-barrier navigation centers;
• Supportive housing;
• Transitional housing; or
• Affordable housing where 100% of the units are affordable to lower-income households, 20% of which can be for moderate-income households.

Before a local agency disposes of land described above, it must:

• Have a compliant housing element;
• Be designated prohousing; and
• Declare a local homelessness emergency.

A local agency that disposes of land pursuant to AB 1734 must submit an annual report to HCD that includes:

• Location of disposed land; and
• Number of emergency shelter beds and housing units approved and produced on the land.

HCD may request additional information, but is not authorized to require this data to be submitted as a disposition precondition.

If the local agency’s disposal of this land violates these requirements, the local agency is liable for the following civil penalties:

• For the first violation, 30% of the greater of the final sale price or fair market value of the land at time of disposition; and
• For any additional violations, 50% of the greater of the final sale price or fair market value of the land at time of disposition.

An independent appraisal of the land must determine the fair market value. Any of the following can bring an action to enforce these penalties:

• Entities entitled to receive notices of availability under the SLA;
• A person who would have been eligible to apply for residence in affordable housing had the agency not violated AB 1734;
• A housing organization;
• A beneficially interested person or entity; and
• HCD.

These penalties musts be deposited into a local housing trust fund, or certain state affordable housing funds. Local agencies cannot pay these penalties out of funds dedicated to affordable housing. The local agency must commit to spending the penalties deposited into a local housing trust fund within five years of deposit for the sole purpose of financing new affordable housing units. After five years, the funds revert to the state to deposit in existing state affordable housing funds for the sole purpose of building new affordable housing units in the same jurisdiction.

The measure defines its terms.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “California has the largest population of people experiencing homelessness in the nation, yet only builds a fraction of the affordable housing needed. Like most of the state, the City of Los Angeles is experiencing a housing crisis. Just last year, there were nearly 42,000 unhoused individuals in LA alone. Under Mayor Karen Bass’ leadership, LA has taken critical steps to address homelessness and expedite affordable housing production. Unfortunately, though the Surplus Land Act was designed to promote an increase in the supply of affordable housing, existing exemptions for affordable housing projects often lead to a prolonged process and unfulfilled projects. AB 1734 will enable pro-housing jurisdictions that have declared a local emergency on homelessness and are compliant with state housing law more quickly dispose of publicly owned property to develop emergency shelters and transitional supportive or affordable housing.”

2. Bigger changes needed? Prior to the enactment of AB 1486, state law did not require local agencies to always designate land as surplus prior to disposing of it, which meant they could enter into negotiations to dispose of land to further local priorities such as economic development without going through the Surplus Land Act process. AB 1486 excluded economic development from being considered “agency’s use”; made changes that complicate the ability of local governments to dispose of large parcels that need infrastructure investments to support other uses; and otherwise clamped down on the ability of local governments to dispose of their property for the purposes that they consider to best serve their constituents. As a result, the Legislature has seen a parade of bills attempting to address issues with the Surplus Land Act that have come to light since the enactment of AB 1486. Several of these bills have enacted, or would create, exemptions to the Surplus Land Act to enable the development of worthy causes, including the development of affordable housing on an important transit corridor in the San Diego Area (SB 51, Durazo, 2021), the Metro North Hollywood Joint Development project (AB 175, Committee on Budget, 2021), the Tustin military base (SB 719, Min, 2021), several economic development projects in the City of Los Angeles (SB 1373, Kamlager, 2021), and the former military base at Alameda Point (AB 1319, Bonta, 2022). AB 1734 is the latest member of the parade, seeking to allow certain local agencies that have compliant housing elements, pro-housing designations, and have declared a local homelessness emergency to exempt parcels for specified housing projects. The Committee may wish to consider whether the previous changes to the Surplus Land Act should be revisited more broadly so such exemptions become less necessary.

3. Striking a balance. AB 1734 allows cities and counties that have compliant housing elements, pro-housing designations, and have declared a local homelessness emergency to dispose of land for affordable housing and other types of emergency or supportive housing without going through the SLA. On the one hand, this provides additional flexibility to cities and counties that have demonstrated to HCD that their housing policies align with state goals. On the other hand, conditioning this flexibility on these designations severely limits the cities and counties that would receive additional flexibility to build more housing outside the SLA. HCD has only designated 22 cities and counties as pro-housing, with a few dozen more under review. On the one hand, extending this flexibility to all cities and counties may reward bad actors who have stood in the way of housing. On the other hand, limiting this flexibility to just those cities and counties that are pro-housing and have compliant housing elements misses many cities and counties that also desperately need to build affordable housing and housing to serve individuals experiencing homelessness. To ensure the measure continues to reward good actors while providing necessary flexibility to respond to local homeless emergencies, the Committee may wish to consider amending the bill to remove the requirement that cities and counties be designated pro-housing, but retain the requirement for them to have compliant housing elements, and declare a local homelessness emergency.

4. Proceed with caution. Under the SLA, prior to agreeing to terms for the disposition of surplus land, a local agency must provide HCD a description of the notices of availability sent, and negotiations conducted with any responding entities, in regard to the disposal of the parcel of surplus land and a copy of any restrictions to be recorded against the property, in a form HCD prescribes. HCD must then submit written findings to the local agency within 30 days of receipt of the description of the disposal if the proposed disposal of the land will violate SLA. This gives the local agency a chance to cure the potential violation before finalizing the disposal. AB 1734 creates a separate penalty provision that does not require the local agency and HCD to work together to identify potential violations before a disposal occurs. If the local agency does not proactively reach out to HCD to identify any potential issues, it could be subject to fines through AB 1734’s civil penalty provisions. Local agencies that use AB 1734’s provisions will have to determine whether to proceed with disposals that entities like HCD may challenge in court.

5. Parade isn’t over. The Legislature is considering numerous other proposals that provide specific provisions or exemptions regarding surplus land:

• SB 34 (Umberg, 2023) creates a process for HCD to determine whether land disposals in Orange County violate the ­SLA. The bill is currently pending in the Assembly Local Government Committee.
• SB 229 (Umberg, 2023) requires a local agency to hold an open and public meeting if HCD notifies the local agency that its disposal of a parcel violates the SLA. The bill is currently pending in the Assembly Local Government Committee.
• SB 693 (Seyarto, 2023) exempts certain parcels in the City of Murrieta from the SLA. The bill is currently pending in the Senate Governance and Finance Committee.
• SB 747 (Caballero, 2023) makes numerous changes to the Surplus Land Act, including expanding the definition of agency use, and exempt surplus land. The bill is currently pending in the Assembly Local Government Committee.
• AB 457 (Joe Patterson, 2023) creates an exemption from the SLA for parcels abutting a state highway right-of-way that a local agency identified in its circulation element or capital improvement plan for future roadway development.
• AB 480 (Ting, 2023) changes the penalty provisions of the SLA and makes procedural changes to noticing provisions that apply to “surplus land” and “exempt surplus land” disposed of by local agencies subject to the SLA. The bill is also scheduled for this Committee’s June 28^th meeting.
• AB 837 (Alvarez, 2023) creates an exemption from the SLA for land acquired by a local agency for the development of a university and innovation district. The bill is also scheduled for this Committee’s June 28^th meeting.
• AB 983 (Cervantes, 2023) expands the definition of exempt surplus land to include land designated in an adopted downtown revitalization plan not to exceed 1.1 square miles and includes residential, commercial, office, civic, and hospitality uses. The bill is currently pending in the Assembly Local Government Committee.
• AB 1469 (Kalra, 2023) allows the Santa Clara Valley Water District to take actions to assist unsheltered people living along streams, riparian corridors, or otherwise within the district’s jurisdiction, to provide solutions or improve outcomes for the unsheltered individuals, in consultation with a city or the County of Santa Clara. AB 1469 includes a provision that use of land for these purposes meets the definition of “agency use,” which is exempt from the SLA. The bill is also scheduled for this Committee’s June 28^th meeting.

SB 747 seeks to address broader concerns over the SLA compared to many of these bills that provide more tailored flexibility to particular agencies, or types of projects. If enacted, SB 747 could reduce the need to pursue one-off legislation. To help address broader SLA concerns without the need for piecemeal legislation, the Committee may wish to consider amending the bill to make its enactment contingent on SB 747’s enactment.

6. Coming and going. The Senate Rules Committee has ordered a double referral of AB 1734: first to the Senate Governance and Finance Committee to hear issues related to disposal of land owned by local governments, and second to the Senate Housing Committee.

Assembly Actions

Assembly Housing and Community Development Committee: 7-0
Assembly Local Government Committee: 8-0
Assembly Appropriations Committee: 15-0
Assembly Floor: 79-0

Support and Opposition

(6/23/23)

Support: Karen Bass - Mayor of Los Angeles (Sponsor)
City of Long Beach
LA Family Housing
Los Angeles Unified School District
St. Joseph Center
The United Way of Greater Los Angeles

Opposition: None submitted.

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1734

Author:(Jones-Sawyer)

As Amended Ver:April 20, 2023

Majority vote

SUMMARY

States that the Surplus Lands Act (SLA) does not apply to the disposition of land for emergency shelter and affordable housing in jurisdictions that meet specified criteria, including having a declared state of emergency related to homelessness.

Major Provisions

1. States that the SLA does not apply to the disposition of land in the following circumstances:
   1. The disposition would be for any of the following:
      1. Emergency shelters that meet the requirements of Low Barrier Navigation Centers;
      2. Supportive housing;
      3. Transitional housing; or
      4. Housing developments with 100% of all units in the development, but exclusive of a manager's unit or units, sold or rented to lower income households, except that up to 20 percent of the units in the development may be for moderate-income households.
   2. The local agency disposing of the land meets all of the following criteria:
      1. Adopted a housing element that is compliant with law, as determined by the Department of Housing and Community Development (HCD);
      2. Received a pro-housing designation by HCD; and
      3. Declared a local emergency related to homelessness.
2. Requires a local agency that disposes of land pursuant to 1) to submit an annual report to HCD that includes the number of emergency shelter beds, supportive housing units, transitional housing units or beds, affordable housing units, and total number of projects permitted and produced utilizing this authority.
3. Enables HCD to request additional information from the agency regarding land disposed of pursuant to 1).
4. Provides that if a local agency disposes of land in violation of this bill the agency is liable for a civil penalty calculated as follows:
   1. For a first violation, 30% of the greater of the final sale price or the fair market value of the land at the time of disposition; and
   2. For a second or subsequent violation, 50% of the greater of the final sale price or the fair market value of the land at the time of disposition.
5. Authorizes HCD, entities identified in the SLA, as well as person who would have been eligible to apply for residency in affordable housing had the agency not violated this bill to bring an action to enforce the penalty provisions of the bill.

COMMENTS

Local Surplus Lands: The SLA prioritizes the use of a local agency's surplus land for the development of affordable housing. It spells out the steps local agencies must follow when they dispose of land they no longer need. It gives first priority to housing projects that provide the greatest number of affordable units and the deepest levels of affordability. The exception to this is if the surplus land meets specified criteria that enables it to be considered "exempt surplus land." These exemptions include:

1. Land that is transferred for the construction of affordable housing, as specified;
2. Land that is transferred to or exchanged with another government agency that will be utilized by that agency;
3. Land that is difficult or impossible to build upon, such as small sites and sites subject to valid legal restrictions that prohibit housing; and
4. Land whose future use meets specified criteria, such as land put to open bid for use as 100 percent affordable housing or larger mixed-use projects with at least 25 percent affordable housing.

To dispose of exempt surplus land, such as for production of affordable housing, the SLA, as interpreted by HCD, requires local agencies to make written findings. It may be difficult for local agencies to write such findings in cities where the utilization of public land for affordable housing is politically contentious.

There is no exemption in the SLA for the disposal of for the creation of Low Barrier Navigation Centers. As such, such projects need to go through the SLA's proscribed competitive bidding process. This process requires noticing the availability of the land to local public entities and any housing developers that have conveyed to HCD their interest in being noticed. The noticed entities have 60 days to respond to the notice, after which the local agency could enter into negotiations with an entity that meets the proposed specifications. This negotiation process can also take several months. This bill would enable qualified jurisdictions to bypass this process and directly dispose of land for Low Barrier Navigation Centers.

This bill removes the applicability of the SLA in qualified jurisdictions for the production of Low Barrier Navigation Centers, supportive housing, transitional housing, and affordable housing. To qualify, the jurisdictions must have a declared local emergency related to homelessness, have a state-compliant housing element, and have been designated as a pro-housing jurisdiction by HCD. Currently, it is believed that the only jurisdiction to meet that requirement is the City of Los Angeles. However, that could change at any moment, as jurisdictions are added to the list of pro-housing jurisdictions and/or declare states of emergency related to homelessness.

According to the Author

"California has the largest population of people experiencing homelessness in the nation but builds only a fraction of the affordable housing needed. Though the Surplus Land Act was designed to promote an increase in the supply of affordable housing, existing exemptions for affordable housing projects often lead to a prolonged process and unfulfilled projects. AB 1734 will enable pro-housing government and transit agencies to dispose of publicly owned property for the development of shelters, transitional housing, supportive housing, or affordable housing."

Arguments in Support

Supporters of the bill argue that, while well intentioned, the SLA could actually slow down the development of affordable housing. According to City of Los Angeles Mayor Karen Bass, "My Administration is acting with urgency to meet the moment, in partnership with the State, to build more housing, faster. To save lives, restore our neighborhoods, and house Angelenos immediately, we must urgently prioritize underutilized existing publicly owned property. Unfortunately, the Surplus Land Act has proven to be an impediment to utilizing City-owned property."

Arguments in Opposition

None on file.

FISCAL COMMENTS

According to the Assembly Committee on Appropriations:

1. Cost pressures (Trial Court Trust Fund) in the mid- to high-hundreds of thousands of dollars annually for trial courts to hear and adjudicate additional civil actions for alleged violations of the exemptions to the state SLA provided pursuant to this bill. This bill allows HCD, various local entities, housing organizations, as well as beneficially interested and potentially harmed individuals to sue local agencies for violations. If ten cases are filed in civil court annually requiring seven to ten days (56 to 80 hours) of court time, at an average cost per hour of $1,000 in workload costs, the cost to the trial courts would be between $560,000 and $800,000 annually. Actual costs would vary depending on the number of cases filed and the amount of court time required in each case. Although courts are not funded on the basis of workload, increased pressure on the courts and staff may create a need for increased funding for courts to perform existing duties.
2. Minor and absorbable costs to HCD. However, HCD notes there are multiple bills moving through the legislature impacting the SLA. While many of these bills in isolation would have a minor and absorbable fiscal impact, were multiple of these bills to be chaptered, HCD anticipates an increased workload comprising additional monitoring and enforcement efforts, training for existing staff, updating guidelines and technical assistance materials, and providing technical assistance to local agencies directly impacted by these bills. Additional staffing would be required to absorb this cumulative workload.

VOTES

ASM HOUSING AND COMMUNITY DEVELOPMENT: 7-0-1

YES: Wicks, Wendy Carrillo, Zbur, Kalra, Quirk-Silva, Sanchez, Ward

ABS, ABST OR NV: Joe Patterson

ASM LOCAL GOVERNMENT: 8-0-0

YES: Aguiar-Curry, Dixon, Boerner, Pacheco, Ramos, Robert Rivas, Waldron, Wilson

ASM APPROPRIATIONS: 15-0-1

YES: Holden, Megan Dahle, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Sanchez, Weber, Ortega

ABS, ABST OR NV: Robert Rivas

UPDATED

VERSION: April 20, 2023

CONSULTANT: Steve Wertheim / H. & C.D. / (916) 319-2085 FN: 0000716

Date of Hearing: May 10, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 1734

Author:(Jones-Sawyer) – As Amended Ver:April 20, 2023

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

SUMMARY:

This bill excludes land disposed of by certain local agencies for emergency shelters and various types of housing from the requirements of the Surplus Land Act (SLA) and creates a civil penalty for violations of these provisions by local agencies.

Specifically, this bill:

1. States the SLA does not apply to the disposition of land for emergency shelters that meet existing statutory criteria for “Low Barrier Navigation Center,” supportive housing, transitional housing, and affordable housing, all as defined in current law, if the local agency disposing of the land has done all of the following:
2. Adopted a housing element that is compliant with law, as determined by the Department of Housing and Community Development (HCD).
3. Received a pro-housing designation by HCD.
4. Declared a local emergency related to homelessness.
5. Requires a local agency that disposes of land pursuant to 1) to submit an annual report to HCD that includes specified data. Authorizes HCD to request additional data, but does not authorize HCD to require the submission of data as a precondition of disposition.
6. Provides if a local agency disposes of land in violation of the bill’s provisions the agency is liable for a civil penalty calculated, for the first violation, as 30% of the greater of the final sale price or the fair market value of the land at the time of disposition and, for the second and subsequent violations, as 50% of the greater of the final sale price or the fair market value of the land at the time of disposition.
7. Authorizes HCD, entities identified in the SLA, as well as any person who would have been eligible to apply for residency in affordable housing had the agency not violated the provisions of this bill to bring an action to enforce the penalty provisions of the bill.
8. Requires a penalty to be deposited into a local housing trust fund, the Building Homes and Jobs Trust Fund, or the Housing Rehabilitation Loan Fund, and requires a local agency to expend the penalty moneys deposited into the local housing trust fund within five years of deposit.

FISCAL EFFECT:

1. Cost pressures (Trial Court Trust Fund) in the mid- to high-hundreds of thousands of dollars annually for trial courts to hear and adjudicate additional civil actions for alleged violations of the exemptions to the state SLA provided pursuant to this bill. This bill allows HCD, various local entities, housing organizations, as well as beneficially interested and potentially harmed individuals to sue local agencies for violations. If ten cases are filed in civil court annually requiring seven to ten days (56 to 80 hours) of court time, at an average cost per hour of $1,000 in workload costs, the cost to the trial courts would be between $560,000 and $800,000 annually. Actual costs would vary depending on the number of cases filed and the amount of court time required in each case. Although courts are not funded on the basis of workload, increased pressure on the courts and staff may create a need for increased funding for courts to perform existing duties.
2. Minor and absorbable costs to HCD. However, HCD notes there are multiple bills moving through the legislature impacting the SLA. While many of these bills in isolation would have a minor and absorbable fiscal impact, were multiple of these bills to be chaptered, HCD anticipates an increased workload comprising additional monitoring and enforcement efforts, training for existing staff, updating guidelines and technical assistance materials, and providing technical assistance to local agencies directly impacted by these bills. Additional staffing would be required to absorb this cumulative workload.

COMMENTS:

1. Purpose. The author of this bill seeks to assist pro-housing government and transit agencies to more quickly dispose of publicly owned property for the development of emergency shelters, transitional housing, supportive housing, or affordable housing. This bill is sponsored by Los Angeles Mayor Karen Bass.
2. Background. The SLA spells out the steps local agencies must follow when they dispose of land they no longer need. Before local officials can dispose of property, they must declare the land is no longer necessary for the agency’s use in a public meeting and declare the land either “surplus land” or “exempt surplus land.” The SLA prioritizes the use of a local agency’s surplus land for the development of affordable housing and gives first priority to housing projects that provide the greatest number of affordable units and the deepest levels of affordability.

The SLA exempts a series of potential land dispositions from its requirements, usually because certain dispositions provide intrinsic value to residents, provide one of the desired outcomes (provision of affordable housing or preservation of parklands) envisioned in the SLA, or that the land being disposed of is incompatible with housing. These exemptions allow local agencies to more expeditiously dispose of land while achieving one of the desired outcomes of the SLA.

This bill allows a local agency that declares a local emergency related to homelessness, has a compliant housing element, and is designated pro-housing by HCD to exclude from the requirements of the SLA land disposed of for the production of emergency shelters, supportive housing, transitional housing, and specified affordable housing. This bill is intended for the City of Los Angeles which is likely the only jurisdiction to currently meet these requirements.

1. Related Legislation. There are four additional Assembly bills introduced this session that create various exemptions under the SLA. These include AB 457 (Joe Patterson), pending in the Senate; AB 837 (Alvarez), pending in this committee; AB 983 (Cervantes), pending in the Assembly Local Government Committee; and AB 1607 (Wendy Carrillo), pending in this committee.

AB 480 (Ting) changes the penalty provisions of the SLA, similar to the penalties in this bill, and makes procedural changes to noticing provisions that apply to surplus land and exempt surplus land disposed of by local agencies subject to the SLA. AB 480 is pending in this committee.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: April 26, 2023

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Cecilia Aguiar-Curry, Chair

ABPCA Bill Id:AB 1734 (

Author:Jones-Sawyer) – As Amended Ver:April 20, 2023

SUBJECT: Local Government: Surplus Land Act: exemptions.

SUMMARY: Specifies that land disposed of by certain local agencies for emergency shelters and various types of housing is excluded from the Surplus Land Act (SLA). Specifically, this bill:

1. Excludes certain dispositions of land that occur in local agencies that meet specified criteria from the SLA. Specifically, this bill allows local agencies that meet the following criteria to dispose of land for the purposes noted in 2) below without regard to the SLA:
   1. The local agency has a housing element that is determined by the Department of Housing and Community Development (HCD) to comply with existing law.
   2. The local agency is designated as a prohousing jurisdiction by HCD.
   3. The local agency declares a local emergency related to homelessness pursuant to existing law.
2. Allows a local agency the meets all of the criteria above to dispose of land for the following purposes without regard for the SLA except as explicitly prescribed in the bill:
   1. Emergency shelters that meet existing statutory criteria for “Low Barrier Navigation Center.”
   2. Supportive housing, as defined in existing law.
   3. Transitional housing, as defined in existing law.
   4. Affordable housing.
3. Provides that while land dispositions specified in 2) above that occur in jurisdictions that meet the criteria in 1) above are not subject to the procedures of the SLA, local agencies that dispose of land under the authorization of this bill must submit an annual report to HCD that identifies the following for each disposition:
   1. The location of the disposed land.
   2. The number of emergency shelter beds and housing units approved on the land.
   3. The number of emergency shelter beds and housing units produced on the land.
4. Authorizes HCD to request additional information from local agencies regarding land disposed of pursuant to this section.
5. Specifies that this bill does not authorize HCD to require the submission of data related to land dispositions authorized under this bill as a precondition of the disposition.
6. Provides that if a local agency disposes of land in violation of this bill the agency shall be liable for a civil penalty calculated as follows:
   1. For a first violation, 30 percent of the greater of the final sale price or the fair market value of the land at the time of disposition.
   2. For a second or subsequent violation, 50 percent of the greater of the final sale price or the fair market value of the land at the time of disposition.
   3. Provides that the fair market value of the land shall be determined by an independent appraisal of the land.
7. Authorizes HCD, entities identified in the SLA, as well as person who would have been eligible to apply for residency in affordable housing had the agency not violated this bill to bring an action to enforce the penalty provisions of the bill.
8. Provides the following with respect to assessed penalties:
   1. A penalty shall, except as otherwise provided, be deposited into a local housing trust fund. The local agency may elect to instead deposit the penalty moneys into the Building Homes and Jobs Trust Fund or the Housing Rehabilitation Loan Fund. Penalties shall not be paid out of funds already dedicated to affordable housing, including, but not limited to, Low and Moderate Income Housing Asset Funds, funds dedicated to housing for very low, low-, and moderate-income households, and federal HOME Investment Partnerships Program and Community Development Block Grant Program funds. The local agency shall commit and expend the penalty moneys deposited into the local housing trust fund within five years of deposit for the sole purpose of financing newly constructed housing units that are affordable to extremely low, very low, or low-income households.
   2. Five years after deposit of the penalty moneys into the local housing trust fund, if the funds have not been expended, the funds shall revert to the state and be deposited in the Building Homes and Jobs Trust Fund or the Housing Rehabilitation Loan Fund for the sole purpose of financing newly constructed housing units located in the same jurisdiction as the surplus land and that are affordable to extremely low, very low, or low-income households. Expenditure of any penalty moneys deposited into the Building Homes and Jobs Trust Fund or the Housing Rehabilitation Loan Fund shall be subject to appropriation by the Legislature.
9. Defines “affordable housing” to mean a housing development with 100 percent of all units in the development, but exclusive of a manager’s unit or units, sold or rented to lower income households, as defined by Section 50079.5 of the Health and Safety Code, except that up to 20 percent of the units in the development may be for moderate-income households, as defined in Section 50053 of the Health and Safety Code.

EXISTING LAW:

1. Requires each city and county to prepare, adopt, and administer a general plan for their jurisdiction, which must include a housing element, to shape the future growth of its community (Government Code § 65300 – 65404).
2. Establishes the SLA which, among other provisions, provides the following:
   1. Requires each local agency, on or before December 31 of each year, to make an inventory of all lands held, owned or controlled by it or any of its departments, agencies, or authorities, to determine what land, if any, is in excess of its foreseeable needs. Requires a description of each parcel found to be in excess of needs to be made a matter of public record and requires the agency to report this information to HCD no later than April 1.
   2. Defines “surplus land” as land owned by any local agency that is determined to be no longer necessary for the agency’s use.
   3. Exempts certain types of surplus land owned by local agencies from the requirements of the SLA.
   4. Requires a local agency that is disposing of surplus land to notify certain public entities and housing sponsors that surplus land is available for one of the following purposes:
      1. Low- and moderate-income housing.
      2. Park and recreation, and open space.
      3. School facilities.
      4. Infill opportunity zones or transit village plans.
   5. Requires that if another agency or housing sponsor wants to buy or lease the surplus land for one of these purposes, it must inform the disposing agency of its interest within 60 days, and if multiple entities want to purchase the land, the housing sponsor that proposes to provide the greatest level of affordable housing gets priority. The disposing agency and the entity have an additional 90 days to negotiate a mutually satisfactory price and terms in good faith. If they can’t agree, the agency that owns the surplus land can dispose of the land on the private market.
   6. Requires a local agency, prior to agreeing to the terms for the disposition of surplus land, to provide specified information about its disposition process to HCD. Requires HCD to submit to the local agency, within 30 days, written findings of any process violations that have occurred. The law provides a local agency at least 30 days to either correct the violations or adopt a resolution with findings explaining why the process is not in violation.
   7. Provides that a local agency that disposes of land in violation of the SLA following a notification from HCD is liable for a penalty of 30 percent of the final sale price for a first violation and 50 percent for subsequent violations. Requires that penalty assessments shall be deposited into a local housing trust fund, the state Building Homes and Jobs Fund, or the Housing Rehabilitation Loan Fund, as specified (Government Code § 54220-54234).
3. Establishes the following with respect to Low Barrier Navigation Centers:
   1. Specifies that a Low Barrier Navigation Center development is a use by right in areas zoned for mixed use and nonresidential zones permitting multifamily uses, if it meets specified requirements.
   2. Requires a local jurisdiction to permit a Low Barrier Navigation Center development provided that it meets the following requirements:
      1. It offers services to connect people to permanent housing through a services plan that identifies services staffing.
      2. It is linked to a coordinated entry system, so that staff in the interim facility or staff who colocate in the facility may conduct assessments and provide services to connect people to permanent housing. “Coordinated entry system” means a centralized or coordinated assessment system developed pursuant to Section 576.400(d) or Section 578.7(a)(8), as applicable, of Title 24 of the Code of Federal Regulations, as those sections read on January 1, 2020, and any related requirements, designed to coordinate program participant intake, assessment, and referrals.
      3. It complies with Chapter 6.5 (commencing with Section 8255) of Division 8 of the Welfare and Institutions Code.
      4. It has a system for entering information regarding client stays, client demographics, client income, and exit destination through the local Homeless Management Information System as defined by Section 578.3 of Title 24 of the Code of Federal Regulations (Government Code § 65662).
4. Defines the following terms and standards:
   1. “Low Barrier Navigation Center” means a housing first, low-barrier, service-enriched shelter focused on moving people into permanent housing that provides temporary living facilities while case managers connect individuals experiencing homelessness to income, public benefits, health services, shelter, and housing. “Low Barrier” means best practices to reduce barriers to entry, and may include, but is not limited to, the following:
      1. The presence of partners if it is not a population-specific site, such as for survivors of domestic violence or sexual assault, women, or youth.
      2. Pets.
      3. The storage of possessions.
      4. Privacy, such as partitions around beds in a dormitory setting or in larger rooms containing more than two beds, or private rooms (Government Code § 65662).
   2. “Supportive housing,” means housing with no limit on length of stay, that is occupied by the target population, and that is linked to onsite or offsite services that assist the supportive housing resident in retaining the housing, improving their health status, and maximizing their ability to live and, when possible, work in the community (Health and Safety Code § 50675.14).
   3. “Transitional housing,” means buildings configured as rental housing developments, but operated under program requirements that require the termination of assistance and recirculating of the assisted unit to another eligible program recipient at a predetermined future point in time that shall be no less than six months from the beginning of the assistance (Government Code § 65582).

FISCAL EFFECT: This bill is keyed fiscal.

COMMENTS:

1. Author’s Statement and Bill Summary. According to the author, “California has the largest population of people experiencing homelessness in the nation but builds only a fraction of the affordable housing needed. Though the Surplus Land Act was designed to promote an increase in the supply of affordable housing, existing exemptions for affordable housing projects often lead to a prolonged process and unfulfilled projects. AB 1734 will enable pro-housing government and transit agencies to dispose of publicly owned property for the development of shelters, transitional housing, supportive housing, or affordable housing.”

This bill creates a new category of land dispositions that the SLA does not apply to, provided that those dispositions occur in local agencies that meet specified criteria. Specifically, this bill allows local agencies that declare a local emergency related to homelessness, have a compliant housing element, and are designated pro-housing by HCD to exclude land that is disposed of for the following purposes from the SLA:

• 1. Emergency shelters.
  2. Supportive housing. 
  3. Transitional housing. 
  4. Affordable housing.

This bill requires jurisdictions that dispose of land under its provisions to submit annual reports to HCD regarding the dispositions that occur. This bill also subjects these jurisdictions to penalties if they are found to have disposed of land in violation of the provisions in the bill.

Finally, this bill excludes these transactions from the SLA and therefore excludes these transactions from HCD’s SLA oversight authority except as explicitly prescribed in the bill.

This bill is sponsored by Los Angeles Mayor Karen Bass.

1. Homelessness in Los Angeles. Like most of California, there is an acute housing crisis in Los Angeles. In 2019, the City of Los Angeles had a higher percentage of cost-burdened renter households than any other major American city, at nearly 60 percent. Over one-quarter of residents are severely cost-burdened, contributing to the homelessness emergency in the City. According to the 2022 Greater Los Angeles Homeless Count, there are nearly 42,000 unhoused Californians in Los Angeles alone. While the City of Los Angeles represents less than 10 percent of the State’s total population, it is home to almost 25 percent of the State’s unsheltered population.

A major cause of the housing crisis is the mismatch between the supply and demand of affordable housing. Through the Regional Housing Needs Assessment process (RHNA), the Southern California Association of Governments (SCAG) has determined that the City of Los Angeles needs to plan for 184,721 homes by 2029 that are affordable to lower income households. However, if the production rates from the previous RHNA cycle continue, the City of Los Angeles would create just eight percent (14,200) of these units in the next eight years.

Since taking office in mid-December, City of Los Angeles Mayor Bass has taken several steps to address homeless and expedite production of affordable housing. This includes declaring a citywide State of Emergency regarding homelessness (as ratified by the city council), requiring all affordable housing projects to be approved within 60 days and permitted within five days (Executive Directive No. 1), and expediting the identification and disposition of city-owned land that is vacant, surplus, or underutilized (Executive Directive No. 3).

1. Local Surplus Lands. The SLA spells out the steps local agencies must follow when they dispose of land they no longer need. Before local officials can dispose of property, they must declare that the land is no longer necessary for the agency’s use in a public meeting and declare the land either “surplus land” or “exempt surplus land.” The SLA designates certain types of land as “exempt surplus land,” which is not subject to the requirements of the SLA. All other surplus land must follow the procedures laid out in the SLA.

After a local agency declares that a piece of land is surplus to its needs (and is not exempt), the agency must send a written notice of availability to various public agencies and nonprofit groups, referred to as “housing sponsors,” notifying them that land is available for any of the following purposes:

• 1. Low- and moderate-income housing.
  2. Park and recreation, and open space.
  3. School facilities.
  4. Infill opportunity zones or transit village plans.

If another agency or housing sponsor wants to purchase or lease the surplus land for one of these purposes, it must tell the disposing agency within 60 days. Except where the surplus land is currently used for park or recreational purposes, the local agency must give priority to the housing sponsor that proposes to provide the greatest level of affordable housing on the land. If the surplus land is currently used for park or recreational purposes, the disposing agency must give first priority to an entity that agrees to continue to use the site for park or recreational purposes.

If the local agency and any of the prioritized entities are not able to negotiate a mutually satisfactory price after 90 days of good faith negotiations, the local agency may proceed to sell the land on the open market.

1. Exemptions from the SLA. The SLA exempts a series of potential land dispositions from its requirements. Exempt dispositions are not required to go through the solicitation and negotiation process outlined in the SLA. This reflects the reality that certain dispositions provide intrinsic value to residents, will provide one of the desired outcomes (provision of affordable housing, or preservation of parklands) envisioned in the SLA, or that the land that is being disposed of is incompatible with housing. For example, surplus land that will be developed with a large mixed-use development that dedicates at least 25 percent of the units to lower income households is considered “exempt surplus land,” as the affordability levels provided are equivalent to the minimum requirements of the SLA. This exemption allows local agencies to more expeditiously dispose of land while achieving one of the desired outcomes of the SLA.
2. Local Noticing Requirements. Prior to disposing of surplus land, the SLA requires local agencies to declare that the land is surplus land or “exempt surplus land” at a public meeting. This action increases the transparency related to the disposal of surplus land, making stakeholders aware of the potential to acquire surplus land, or to protest a designation of surplus land as exempt.

The SLA provides for a series of categories and several subcategories of surplus land that is deemed “exempt surplus land.” Certain categories of “exempt surplus land” are subjective and could be widely interpreted; in this case, declaring land exempt at a public hearing adds a useful layer of disclosure. However, certain categories of “exempt surplus land” are patently objective and not subject to interpretation. Requiring local agencies to declare these parcels are exempt at a public meeting adds an unnecessary layer of procedure to the disposition of objectively “exempt surplus land.” Disposition of these categories of “exempt surplus land” should still require public notice; however, the appropriate level of notice can be achieved through a notice that is made public prior to the disposal.

1. Land Dispositions under the SLA. HCD provided data to the Committee on local land dispositions that occurred since the updates to the SLA took effect in January of 2021. HCD reviewed 237 standard land dispositions i.e. land that is subject to the provisions of the SLA and does not fall under a category of “exempt surplus land.” According to HCD, these standard dispositions led to 21 projects that are currently in the development pipeline and are expected to generate 2,994 housing units, of which 1,832 will be affordable units.

HCD reported that it reviewed another 525 dispositions that were either determined to be necessary for the agency’s use or categorized as “exempt surplus land” i.e. non-standard dispositions. Local agencies are not required to identify land that continues to be necessary for an agency use to HCD as surplus or exempt surplus land. That land is not surplus and is excluded from the disposition requirements of the SLA, constituting a de facto exemption. However, local agencies often consult with HCD to verify that an intended disposition meets the statutory definition of “agency use.” HCD provided expanded data on 290 of the most recent non-standard dispositions. Of the non-standard definitions, 253 were categorized as “exempt surplus land” and 37 dispositions were determined to be necessary for the local agency’s use.

1. Related Legislation. AB 457 (Joe Patterson) creates an SLA exemption for parcels that abut state highway right of way that a local agency identified in its circulation element or capital improvement plan for future roadway development. AB 457 is pending on the Assembly Floor.

AB 480 (Ting) changes the penalty provisions of the SLA and makes procedural changes to noticing provisions that apply to “surplus land” and “exempt surplus land” disposed of by local agencies subject to the SLA. AB 480 is pending in the Housing and Community Development Committee.

AB 837 (Alvarez) creates an SLA exemption for land acquired by a local agency for the development of a university and innovation district. AB 837 is pending in the Housing and Community Development Committee.

AB 983 (Cervantes) categorizes as exempt surplus land, properties that are designated in an adopted downtown revitalization plan, as specified. AB 983 is pending in this Committee.

AB 1607 (Wendy Carrillo) exempts land transferred within Los Angeles County to the Los Angeles County Affordable Housing Solutions Agency from the SLA. AB 1607 is pending in this Committee.

1. Previous Legislation. AB 1784 (Seyarto) of 2022 would have created an SLA exemption for low density parcels located in jurisdictions that meet or exceed their 6th cycle Regional Housing Needs Allocation (RHNA) production targets for Very Low Income (VLI) and Low Income (LI) housing on an annual basis. AB 1784 was held in the Housing and Community Development Committee.

AB 2319 (Bonta), Chapter 963, Statutes of 2022, created an exemption from the SLA for the Alameda Naval Air Station (Alameda Point).

AB 2357 (Ting) of 2022 was substantially similar to this bill. AB 2357 was held in the Governance and Finance Committee.

SB 361 (Umberg) of 2022 would have required the City of Anaheim to comply with additional transparency requirements prior to disposing of surplus land. SB 361 was ordered to the inactive file on the Assembly Floor.

SB 1373 (Kamlager), Chapter 724, Statutes of 2022, extended the authority for the City of Los Angeles to complete disposition of certain surplus property in accordance with the SLA as it read on December 31, 2019.

AB 1271 (Ting) of 2021 would have expanded the types of land exempt from the SLA, imposed new procedural requirements on local agencies disposing of surplus land, and made various technical changes to the SLA. AB 1271 was held in the Housing and Community Development Committee.

SB 719 (Min) of 2021 would have provided that land comprising the former Tustin Marine Corps Air Station is exempt surplus land for the purposes of the SLA if certain affordability standards for residential developments and other conditions are met. SB 719 was held in this Committee.

AB 1486 (Ting), Chapter 664, Statutes of 2019, expanded the scope of local agencies subject to the SLA, revised the definitions of “surplus land” and “exempt surplus land,” revised the noticing requirements relative to local agencies, housing sponsors and HCD, and added penalties for local agencies that sell land in violation of the SLA.

AB 2135 (Ting), Chapter 644, Statues of 2014, amended the procedure for the disposal of surplus land by local agencies and expanded the provisions relating to the prioritization of affordable housing development if the surplus land will be used for residential development.

1. Arguments in Support. City of Los Angeles Mayor Karen Bass writes in support, “My Administration is acting with urgency to meet the moment, in partnership with the State, to build more housing, faster. To save lives, restore our neighborhoods, and house Angelenos immediately, we must urgently prioritize underutilized existing publicly owned property. Unfortunately, the Surplus Land Act has proven to be an impediment to utilizing City-owned property.”
2. Arguments in Opposition. None on file.
3. Double-Referral. This bill was double-referred to the Housing and Community Development Committee, where it passed on a 7-0 vote on April 19, 2023.

REGISTERED SUPPORT / OPPOSITION:

Support

Los Angeles Mayor Karen Bass [SPONSOR]

Central City Association

Downtown Women's Center

John Burton Advocates for Youth

LA Family Housing

Los Angeles Unified School District

Safe Place for Youth

St. Joseph Center

The People Concern

The United Way of Greater Los Angeles

Opposition

None on file

Analysis Prepared by: Hank Brady / L. GOV. / (916) 319-3958

Date of Hearing: April 19, 2023

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

Buffy Wicks, Chair

ABPCA Bill Id:AB 1734 (

Author:Jones-Sawyer) – As Amended Ver:April 11, 2023

SUBJECT: Local Government: Surplus Land Act: exemptions

SUMMARY: States that the Surplus Lands Act (SLA) does not apply to the disposition of land for emergency shelter and affordable housing in jurisdictions that meet specified criteria, including having a declared state of emergency related to homelessness. Specifically, this bill:

1. States that the SLA does not apply to the disposition of land in the following circumstances:
   1. The disposition would be for any of the following:
      1. Emergency shelters that meet the requirements of Low Barrier Navigation Centers;
      2. Supportive housing;
      3. Transitional housing; or
      4. Housing developments with 100 percent of all units in the development, but exclusive of a manager’s unit or units, sold or rented to lower income households, except that up to 20 percent of the units in the development may be for moderate-income households.
   2. The local agency disposing of the land meets all of the following criteria:
      1. Adopted a housing element that is compliant with law, as determined by the Department of Housing and Community Development (HCD);
      2. Received a pro-housing designation by HCD; and
      3. Declared a local emergency related to homelessness.
2. Requires a local agency that disposes of land pursuant to 1) to submit an annual report to HCD that includes the number of emergency shelter beds, supportive housing units, transitional housing units or beds, affordable housing units, and total number of projects permitted and produced utilizing this authority.

EXISTING LAW:

1. Establishes the SLA which, among other provisions, provides the following:
   1. Provides that the Legislature declares that a shortage of sites available for housing for persons and families of low and moderate income is a barrier to addressing urgent statewide housing needs and that surplus government land, prior to disposition, should be made available for that purpose;
   2. Defines “surplus land” as land owned by any local agency that is determined to be no longer necessary for the agency’s use;
   3. Defines certain types of surplus land as “exempt surplus land,” including:
      1. Land that is transferred for the construction of affordable housing, as specified;
      2. Land that is transferred to or exchanged with another government agency that will be utilized by that agency;
      3. Land that is difficult or impossible to build upon, as specified, such as small sites and sites subject to valid legal restrictions that prohibit housing; and
      4. Land whose future use meets specified criteria, such as land put to open bid for use as 100 percent affordable housing or larger mixed-use projects with at least 25 percent affordable housing.
   4. Requires each local agency, on or before December 31 of each year, to make an inventory of all of its surplus land;
   5. Requires a local agency to declare the surplus land to be either “surplus land” or “exempt surplus land,” as supported by written findings, before a local agency may take any action to dispose of it consistent with an agency’s policies or procedures.
   6. Specifies that the SLA does not apply to the disposal of exempt surplus land;
   7. Requires a local government to declare land to be “exempt surplus land,” supported by written findings, before the local agency may take any action to dispose of it;
   8. Requires a local agency, prior to agreeing to the terms for the disposition of surplus land, to provide specified information about its disposition process to HCD. Requires HCD to submit to the local agency, within 30 days, written findings of any process violations that have occurred. The law provides a local agency at least 30 days to either correct the violations or adopt a resolution with findings explaining why the process is not in violation; and
   9. Provides that a local agency that disposes of land in violation of the SLA following a notification from HCD is liable for a penalty of 30 percent of the final sale price for a first violation and 50 percent for subsequent violations. (Government Code (GC) Sections 54220-54234)
2. Defines “Low Barrier Navigation Center” to mean a Housing First, low-barrier, service-enriched shelter focused on moving people into permanent housing that provides temporary living facilities while case managers connect individuals experiencing homelessness to income, public benefits, health services, shelter, and housing. (GC 65660)
3. Defines supportive housing as housing with no limit on length of stay, that is occupied by the target population, and that is linked to onsite or offsite services that assist the supportive housing resident in retaining the housing, improving their health status, and maximizing their ability to live and, when possible, work in the community. (Health and Safety Code Section 50675.14)
4. Defines transitional housing to mean buildings configured as rental housing developments, but operated under program requirements that require the termination of assistance and recirculating of the assisted unit to another eligible program recipient at a predetermined future point in time that shall be no less than six months from the beginning of the assistance. (GC 65582)
5. Establishes the pro-housing program at HCD, which create incentives for jurisdictions that are compliant with housing element requirements and have enacted pro-housing local policies. (GC 65589.9)
6. Allows a local government to declare an emergency related to homelessness. During such an emergency, the local government, or officials designated thereby, may promulgate orders and regulations necessary to provide for the protection of life and property. (GC 8630-8634).

FISCAL EFFECT: Unknown.

COMMENTS:

Author’s Statement: According to the author, “California has the largest population of people experiencing homelessness in the nation but builds only a fraction of the affordable housing needed. Though the Surplus Land Act was designed to promote an increase in the supply of affordable housing, existing exemptions for affordable housing projects often lead to a prolonged process and unfulfilled projects. AB 1734 will enable pro-housing government and transit agencies to dispose of publicly owned property for the development of shelters, transitional housing, supportive housing, or affordable housing.”

Homelessness in Los Angeles: Like most of California, there is an acute housing crisis in Los Angeles. In 2019, the City of Los Angeles had a higher percentage of cost-burdened renter households than any other major American city, at nearly 60 percent. Over one-quarter of residents are severely cost-burdened, contributing to the homelessness emergency in the City. According to the 2022 Greater Los Angeles Homeless Count, there are nearly 42,000 unhoused Californians in Los Angeles alone. While the City of Los Angeles represents less than 10 percent of the State’s total population, it is home to almost 25 percent of the State’s unsheltered population.

A major cause of the housing crisis is the mismatch between the supply and demand of affordable housing. Through the Regional Housing Needs Assessment process (RHNA), the Southern California Association of Governments (SCAG) has determined that the City of Los Angeles needs to plan for 184,721 homes by 2029 that are affordable to lower income households. However, if the production rates from the previous RHNA cycle continue, the City of Los Angeles would create just eight percent (14,200) of these units in the next eight years.

Since taking office in mid-December, City of Los Angeles Mayor Bass has taken several steps to address homeless and expedite production of affordable housing. This includes declaring a citywide State of Emergency regarding homelessness (as ratified by the city council), requiring all affordable housing projects to be approved within 60 days and permitted within five days (Executive Directive No. 1), and expediting the identification and disposition of city-owned land that is vacant, surplus, or underutilized (Executive Directive No. 3).

Local Surplus Lands: The SLA prioritizes the use of a local agency’s surplus land for the development of affordable housing. It spells out the steps local agencies must follow when they dispose of land they no longer need. It gives first priority to housing projects that provide the greatest number of affordable units and the deepest levels of affordability. The exception to this is if the surplus land meets specified criteria that enables it to be considered “exempt surplus land.” These exemptions include:

• Land that is transferred for the construction of affordable housing, as specified;
• Land that is transferred to or exchanged with another government agency that will be utilized by that agency;
• Land that is difficult or impossible to build upon, such as small sites and sites subject to valid legal restrictions that prohibit housing; and
• Land whose future use meets specified criteria, such as land put to open bid for use as 100 percent affordable housing or larger mixed-use projects with at least 25 percent affordable housing.

The SLA includes internally conflicting direction on the requirements for local agencies seeking to dispose of exempt surplus land. According to Government Code (GC) Section 54222.3, the provisions of the SLA do not apply to the disposal of exempt surplus land – meaning that the rest of the Act would not apply once a site met the criteria for exemption. However, according to GC 54221(b)(1), local governments seeking to dispose exempt surplus land must declare land to be “exempt surplus land,” supported by written findings, before the local agency may take any action to dispose of it. HCD, which implements and enforces the SLA, has interpreted via its SLA Guidelines that “a local agency that determines that property is exempt from the SLA shall support such a determination with written findings and shall provide a copy of the written determination to HCD at least 30 days prior to disposition.”^[1]

This bill removes the applicability of the SLA in qualified jurisdictions for the production of Low Barrier Navigation Centers, supportive housing, transitional housing, and affordable housing. To qualify, the jurisdictions must have a declared local emergency related to homelessness, have a state-compliant housing element, and have been designated as a pro-housing jurisdiction by HCD. Currently, it is believed that the only jurisdiction to meet that requirement is the City of Los Angeles. However, that could change at any moment, as jurisdictions are added to the list of pro-housing jurisdictions and/or declare states of emergency related to homelessness.

The SLA requires jurisdictions wishing to dispose of land for the creation of Low Barrier Navigation Centers to dispose of the land through a competitive bidding process. This process requires noticing the availability of the land to local public entities and any housing developers that have conveyed to HCD their interest in being noticed. The noticed entities have 60 days to respond to the notice, after which the local agency could enter into negotiations with an entity that meets the proposed specifications. This negotiation process can also take several months. This bill would enable qualified jurisdictions to bypass this process and directly dispose of land for Low Barrier Navigation Centers.

As discussed above, the SLA also requires local agencies seeking to dispose of land for the production of affordable housing to make written findings that such land is “exempt surplus land.” It may be difficult for local agencies to write such findings in cities where the utilization of public land for affordable housing is politically contentious. This bill would enable qualified jurisdictions to bypass this process and directly dispose of the land for the creation of affordable housing, including supportive housing and transitional housing.

Arguments in Support: Supporters of the bill argue that, while well intentioned, the SLA could actually slow down the development of affordable housing. According to City of Los Angeles Mayor Karen Bass, “My Administration is acting with urgency to meet the moment, in partnership with the State, to build more housing, faster. To save lives, restore our neighborhoods, and house Angelenos immediately, we must urgently prioritize underutilized existing publicly owned property. Unfortunately, the Surplus Land Act has proven to be an impediment to utilizing City-owned property.”

Arguments in Opposition: None on file.

Committee Amendments: This bill would enable qualifying jurisdictions to avoid the oversight from HCD that is inherent to the SLA. This oversight is important for ensuring that local agencies uphold the letter and the spirit of the law to facilitate the production of affordable housing. To ensure that there is still proper oversight from HCD, the committee may wish to amend the bill to do the following:

• Require that the annual report to HCD that is already in this bill provide disaggregated information for sites disposed of pursuant to this act, including the location of the sites, number of beds or units approved, and the number of beds or units produced;
• Enable HCD to seek additional information about these disposals, while clarifying that HCD may not require that information as a precondition of disposal;
• Enable HCD to enforce these provisions in a manner that is akin to their enforcement provisions in the SLA, except that the potential fines for non-compliance would be based on the greater of the final sales price or fair market value. This would serve as a greater deterrent than the current language in the SLA, which only factors in sales price, in instances where the local agency disposes of the property at below market value.

Related Legislation:

AB 480 (Ting) of the current legislative session amends the noticing provisions that apply to “surplus land” and “exempt surplus land” disposed of by local agencies subject to the SLA, among other provisions. AB 480 is pending in this Committee.

AB 837 (Alvarez) of the current legislative session declares that the SLA does not apply to a particular project in Chula Vista that was acquired by the local agency before January 1, 2019 and is subject to an irrevocable offer of dedication of fee interest requiring that the land be developed for educational purposes. AB 837 is pending in this Committee.

AB 1607 (Wendy Carrillo) of the current legislative session declares that the SLA does not apply to the transfer of land within Los Angeles County to the Los Angeles County Affordable Housing Solutions Agency, and from within the San Francisco Bay Area to the Bay Area Housing Finance Authority. AB 1607 is pending in this Committee.

SB 747 (Caballero) of the current legislative session amends the SLA to increase the ability for local agencies to dispose of the land for with economic development opportunities. SB 747 is pending hearing in the Senate Committee on Housing.

AB 1486 (Ting), Chapter 664, Statutes of 2019: Expanded the scope of local agencies subject to the SLA, revised the definitions of “surplus land” and “exempt surplus land,” revised the noticing requirements relative to local agencies, housing sponsors and HCD, and added penalties for local agencies that sell land in violation of the SLA.

AB 2135 (Ting), Chapter 644, Statues of 2014: Amended the procedure for the disposal of surplus land by local agencies and expanded the provisions relating to the prioritization of affordable housing development if the surplus land will be used for residential development.

Double Referred: This bill was also referred to the Assembly Committee on Local Government, where it will be heard should it pass out of this committee.

REGISTERED SUPPORT / OPPOSITION:

Support

Office of Los Angeles Mayor Karen Bass (Sponsor)
Central City Association
Downtown Women's Center
John Burton Advocates for Youth
LA Family Housing
Los Angeles Unified School District
Safe Place for Youth
The People Concern

Opposition

None on file.

Analysis Prepared by: Steve Wertheim / H. & C.D. / (916) 319-2085

1. HCD’s SLA Guidelines, April 2021, Section 400(e): https://www.hcd.ca.gov/community-development/docs/sla_guidelines_final.pdf ↑