SB 1439: Surplus Land Act: exempt surplus land: health facilities: City of Sacramento.
- Session Year: 2023-2024
- House: Senate
- Latest Version Date: 2024-06-10
Current Status:
Failed
(2024-08-22: Returned to Chief Clerk pursuant to Joint Rule 62(a).)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
Existing law prescribes requirements for the disposal of surplus land by a local agency. Existing law defines surplus land for these purposes to mean land owned in fee simple by any local agency for which the local agencys governing body takes formal action in a regular public meeting declaring that the land is surplus and is not necessary for the agencys use. Existing law provides that an agency is not required to follow the requirements for the disposal of surplus land for exempt surplus land, except as provided. Existing law defines exempt surplus land to include certain types of land, including surplus land that the local agency is exchanging for another property necessary for the agencys use.
This bill would define exempt surplus land to include land that: (1) is being or will be developed for a health facility, as defined and specified; (2) is located at one of certain sites within the City of Sacramento; (3) is not identified in the sites inventory in the applicable housing element for lower income households; and (4) will be subject to a recorded deed restriction for a period of 55 years, as specified. The bill would provide that the owner of a health facility that fails to meet certain of these requirements is liable for a civil penalty, as specified.
This bill would make legislative findings and declarations as to the necessity of a special statute for the City of Sacramento.
Existing law prescribes requirements for the disposal of surplus land by a local agency. Existing law defines surplus land for these purposes to mean land owned in fee simple by any local agency for which the local agencys governing body takes formal action in a regular public meeting declaring that the land is surplus and is not necessary for the agencys use. Existing law provides that an agency is not required to follow the requirements for the disposal of surplus land for exempt surplus land, except as provided. Existing law defines exempt surplus land to include certain types of land, including surplus land that the local agency is exchanging for another property necessary for the agencys use.
This bill would define exempt surplus land to include land that that: (1) is being or will be developed for a health facility, as defined and specified. specified; (2) is located at one of certain sites within the City of Sacramento; (3) is not identified in the sites inventory in the applicable housing element for lower income households; and (4) will be subject to a recorded deed restriction for a period of 55 years, as specified. The bill would provide that the owner of a health facility that fails to meet certain of these requirements is liable for a civil penalty, as specified.
This bill would make legislative findings and declarations as to the necessity of a special statute for the City of Sacramento.
Existing law prescribes requirements for the disposal of surplus land by a local agency. Existing law defines surplus land for these purposes to mean land owned in fee simple by any local agency for which the local agencys governing body takes formal action in a regular public meeting declaring that the land is surplus and is not necessary for the agencys use. Existing law provides that an agency is not required to follow the requirements for the disposal of surplus land for exempt surplus land, except as provided. Existing law defines exempt surplus land to include certain types of land, including surplus land that the local agency is exchanging for another property necessary for the agencys use.
This bill would define exempt surplus land to include land that is being or will be developed for a health facility, as defined and specified.
As used in this article, the following definitions shall apply:
(a)(1)Local agency means every city, whether organized under general law or by charter, county, city and county, district, including school, sewer, water, utility, and local and regional park districts of any kind or class, joint powers authority, successor agency to a former redevelopment agency, housing authority, or other political subdivision of this state and any instrumentality thereof that is empowered to acquire and hold real property.
(2)The Legislature finds and declares that the term district as used in this article includes all districts within the state, including, but not limited to, all special districts, sewer, water, utility, and local and regional park districts, and any other political subdivision of this state that is a district, and therefore the changes in paragraph (1) made by the act adding this paragraph that specify that the provisions of this article apply to all districts, including school, sewer, water, utility, and local and regional park districts of any kind or class, are declaratory of, and not a change in, existing law.
(b)(1)Surplus land means land owned in fee simple by any local agency for which the local agencys governing body takes formal action in a regular public meeting declaring that the land is surplus and is not necessary for the agencys use. Land shall be declared 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 agencys policies or procedures. A local agency, on an annual basis, may declare multiple parcels as surplus land or exempt surplus land.
(2)Surplus land includes land held in the Community Redevelopment Property Trust Fund pursuant to Section 34191.4 of the Health and Safety Code and land that has been designated in the long-range property management plan approved by the Department of Finance pursuant to Section 34191.5 of the Health and Safety Code, either for sale or for future development, but does not include any specific disposal of land to an identified entity described in the plan.
(3)Nothing in this article prevents a local agency from obtaining fair market value for the disposition of surplus land consistent with Section 54226.
(4)Notwithstanding paragraph (1), a local agency is not required to make a declaration at a public meeting for land that is exempt surplus land pursuant to subparagraph (A), (B), (E), (K), (L), or (Q) of paragraph (1) of subdivision (f) if the local agency identifies the land in a notice that is published and available for public comment, including notice to the entities identified in subdivision (a) of Section 54222, at least 30 days before the exemption takes effect.
(c)(1)Except as provided in paragraph (2), agencys use shall include, but not be limited to, land that is being used, or is planned to be used pursuant to a written plan adopted by the local agencys governing board, for agency work or operations, including, but not limited to, utility sites, property owned by a port that is used to support logistics uses, watershed property, land being used for conservation purposes, land for demonstration, exhibition, or educational purposes related to greenhouse gas emissions, sites for broadband equipment or wireless facilities, and buffer sites near sensitive governmental uses, including, but not limited to, waste disposal sites, and wastewater treatment plants. Agencys use by a local agency that is a district shall also include land disposed for uses described in subparagraph (B) of paragraph (2).
(2)(A)Agencys use shall not include commercial or industrial uses or activities, including nongovernmental retail, entertainment, or office development. Property disposed of for the sole purpose of investment or generation of revenue shall not be considered necessary for the agencys use.
(B)In the case of a local agency that is a district, excepting those whose primary mission or purpose is to supply the public with a transportation system, agencys use may include commercial or industrial uses or activities, including nongovernmental retail, entertainment, or office development or be for the sole purpose of investment or generation of revenue if the agencys governing body takes action in a public meeting declaring that the use of the site will do one of the following:
(i)Directly further the express purpose of agency work or operations.
(ii)Be expressly authorized by a statute governing the local agency, provided the district complies with Section 54233.5 if applicable.
(d)(1)Dispose means either of the following:
(A)The sale of the surplus land.
(B)The entering of a lease for surplus land, which is for a term longer than 15 years, inclusive of any extension or renewal options included in the terms of the initial lease, entered into on or after January 1, 2024.
(2)Dispose shall not mean either of the following:
(A)The entering of a lease for surplus land, which is for a term of 15 years or less, inclusive of any extension or renewal options included in the terms of the initial lease.
(B)The entering of a lease for surplus land on which no development or demolition will occur, regardless of the term of the lease.
(e)Open-space purposes means the use of land for public recreation, enjoyment of scenic beauty, or conservation or use of natural resources.
(f)(1)Except as provided in paragraph (2), exempt surplus land means any of the following:
(A)Surplus land that is transferred pursuant to Section 25539.4 or 37364.
(B)Surplus land that is less than one-half acre in area and is not contiguous to land owned by a state or local agency that is used for open-space or low- and moderate-income housing purposes.
(C)Surplus land that a local agency is exchanging for another property necessary for the agencys use. Property may include easements necessary for the agencys use.
(D)Surplus land that a local agency is transferring to another local, state, or federal agency, or to a third-party intermediary for future dedication for the receiving agencys use, or to a federally recognized California Indian tribe. If the surplus land is transferred to a third-party intermediary, the receiving agencys use must be contained in a legally binding agreement at the time of transfer to the third-party intermediary.
(E)Surplus land that is a former street, right of way, or easement, and is conveyed to an owner of an adjacent property.
(F)(i)Surplus land that is to be developed for a housing development, which may have ancillary commercial ground floor uses, that restricts 100 percent of the residential units to persons and families of low or moderate income, with at least 75 percent of the residential units restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Section 50052.5 or 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands, and in no event shall the maximum affordable sales price or rent level be higher than 20 percent below the median market rents or sales prices for the neighborhood in which the site is located.
(ii)The requirements of clause (i) shall be contained in a covenant or restriction recorded against the surplus land at the time of sale that shall run with the land and be enforceable against any owner who violates the covenant or restriction and each successor in interest who continues the violation.
(G)(i)Surplus land that is subject to a local agencys open, competitive solicitation or that is put to open, competitive bid by a local agency, provided that all entities identified in subdivision (a) of Section 54222 will be invited to participate in the process, for a housing or a mixed-use development that is more than one acre and less than 10 acres in area, consisting of either a single parcel, or two or more adjacent or non-adjacent parcels combined, that includes not less than 300 residential units, and that restricts at least 25 percent of the residential units to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands.
(ii)The requirements of clause (i) shall be contained in a covenant or restriction recorded against the surplus land at the time of sale that shall run with the land and be enforceable against any owner who violates the covenant or restriction and each successor in interest who continues the violation.
(H)(i)Surplus land totaling 10 or more acres, consisting of either a single parcel, or two or more adjacent or non-adjacent parcels combined for disposition to one or more buyers pursuant to a plan or ordinance adopted by the legislative body of the local agency, or a state statute. That surplus land shall be subject to a local agencys open, competitive solicitation process or put out to open, competitive bid by a local agency, provided that all entities identified in subdivision (a) of Section 54222 will be invited to participate in the process for a housing or mixed-use development.
(ii)The aggregate development shall include the greater of the following:
(I)Not less than three hundred residential units.
(II)A number of residential units equal to 10 times the number of acres of the surplus land or 10,000 residential units, whichever is less.
(iii)At least 25 percent of the residential units shall be restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent pursuant to Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands.
(iv)If nonresidential development is included in the development pursuant to this subparagraph, at least 25 percent of the total planned units affordable to lower income households shall be made available for lease or sale and permitted for use and occupancy before or at the same time with every 25 percent of nonresidential development made available for lease or sale and permitted for use and occupancy.
(v)A violation of this subparagraph is subject to the penalties described in Section 54230.5. Those penalties are in addition to any remedy a court may order for violation of this subparagraph. A local agency shall only dispose of land pursuant to this subparagraph through a disposition and development agreement that includes an indemnification clause that provides that if an action occurs after disposition violates this subparagraph, the person or entity that acquired the property shall be liable for the penalties.
(vi)The requirements of clauses (i) to (v), inclusive, shall be contained in a covenant or restriction recorded against the surplus land at the time of sale that shall run with the land and be enforceable against any owner who violates the covenant or restriction and each successor in interest who continues the violation.
(I)A mixed-use development, which may include more than one publicly owned parcel, that meets all of the following conditions:
(i)The development restricts at least 25 percent of the residential units to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands.
(ii)At least 50 percent of the square footage of the new construction associated with the development is designated for residential use.
(iii)The development is not located in an urbanized area, as defined in Section 21094.5 of the Public Resources Code.
(J)(i)Surplus land that is subject to a valid legal restriction that is not imposed by the local agency and that makes housing prohibited, unless there is a feasible method to satisfactorily mitigate or avoid the prohibition on the site. A declaration of exemption pursuant to this subparagraph shall be supported by documentary evidence establishing the valid legal restriction. For the purposes of this section, documentary evidence includes, but is not limited to, a contract, agreement, deed restriction, statute, regulation or other writing that documents the valid legal restriction.
(ii)Valid legal restrictions include, but are not limited to, all of the following:
(I)Existing constraints under ownership rights or contractual rights or obligations that prevent the use of the property for housing, if the rights or obligations were agreed to prior to September 30, 2019.
(II)Conservation or other easements or encumbrances that prevent housing development.
(III)Existing leases, or other contractual obligations or restrictions, if the terms were agreed to prior to September 30, 2019.
(IV)Restrictions imposed by the source of funding that a local agency used to purchase a property, provided that both of the following requirements are met:
(ia)The restrictions limit the use of those funds to purposes other than housing.
(ib)The proposed disposal of surplus land meets a use consistent with that purpose.
(iii)Valid legal restrictions that would make housing prohibited do not include either of the following:
(I)An existing nonresidential land use designation on the surplus land.
(II)Covenants, restrictions, or other conditions on the property rendered void and unenforceable by any other law, including, but not limited to, Section 714.6 of the Civil Code.
(iv)Feasible methods to mitigate or avoid a valid legal restriction on the site do not include a requirement that the local agency acquire additional property rights or property interests belonging to third parties.
(K)Surplus land that was granted by the state in trust to a local agency or that was acquired by the local agency for trust purposes by purchase or exchange, and for which disposal of the land is authorized or required subject to conditions established by statute.
(L)Land that is subject to either of the following, unless compliance with this article is expressly required:
(i)Section 17388, 17515, 17536, 81192, 81397, 81399, 81420, or 81422 of the Education Code.
(ii)Part 14 (commencing with Section 53570) of Division 31 of the Health and Safety Code.
(M)Surplus land that is a former military base that was conveyed by the federal government to a local agency, and is subject to Article 8 (commencing with Section 33492.125) of Chapter 4.5 of Part 1 of Division 24 of the Health and Safety Code, provided that all of the following conditions are met:
(i)The former military base has an aggregate area greater than five acres, is expected to include a mix of residential and nonresidential uses, and is expected to include no fewer than 1,400 residential units upon completion of development or redevelopment of the former military base.
(ii)The affordability requirements for residential units shall be governed by a settlement agreement entered into prior to September 1, 2020. Furthermore, at least 25 percent of the initial 1,400 residential units developed shall be restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands.
(iii)Before disposition of the surplus land, the agency adopts written findings that the land is exempt surplus land pursuant to this subparagraph.
(iv)Before disposition of the surplus land, the recipient has negotiated a project labor agreement consistent with the local agencys project stabilization agreement resolution, as adopted on February 2, 2021, and any succeeding ordinance, resolution, or policy, regardless of the length of the agreement between the local agency and the recipient.
(v)The agency includes in the annual report required by paragraph (2) of subdivision (a) of Section 65400 the status of development of residential units on the former military base, including the total number of residential units that have been permitted and what percentage of those residential units are restricted for persons and families of low or moderate income, or lower income households, as defined in Section 50079.5 of the Health and Safety Code.
A violation of this subparagraph is subject to the penalties described in Section 54230.5. Those penalties are in addition to any remedy a court may order for violation of this subparagraph or the settlement agreement.
(N)Real property that is used by a district for an agencys use expressly authorized in subdivision (c).
(O)Land that has been transferred before June 30, 2019, by the state to a local agency pursuant to Section 32667 of the Streets and Highways Code and has a minimum planned residential density of at least 100 dwelling units per acre, and includes 100 or more residential units that are restricted to persons and families of low or moderate income, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands. For purposes of this subparagraph, not more than 20 percent of the affordable units may be restricted to persons and families of moderate income and at least 80 percent of the affordable units must be restricted to lower income households as defined in Section 50079.5 of the Health and Safety Code.
(P)(i)Land that meets the following conditions:
(I)Land that is subject to a sectional planning area document that meets both of the following:
(ia)The sectional planning area was adopted prior to January 1, 2019.
(ib)The sectional planning area document is consistent with county and city general plans applicable to the land.
(II)The land identified in the adopted sectional planning area document was dedicated prior to January 1, 2019 2019.
(III)On January 1, 2019, the parcels on the land met at least one of the following conditions:
(ia)The land was subject to an irrevocable offer of dedication of fee interest requiring the land to be used for a specified purpose.
(ib)The land was acquired through a land exchange subject to a land offer agreement that grants the lands original owner the right to repurchase the land acquired by the local agency pursuant to the agreement if the land will not be developed in a manner consistent with the agreement.
(ic)The land was subject to a grant deed specifying that the property shall be used for educational uses and limiting other types of uses allowed on the property.
(IV)At least 25 percent of the units are dedicated to lower income households, as defined in Section 50079.5 of the Health and Safety Code, at an affordable rent, as defined by Section 50053 of the Health and Safety Code, or an affordable housing cost, as defined by Section 50052.5 of the Health and Safety Code, and subject to a recorded deed restriction for a period of 55 years for rental units and land use for owner-occupied units.
(V)The land is developed at an average density of at least 10 units per acre, calculated with respect to the entire sectional planning area.
(VI)No more than 25 percent of the nonresidential square footage identified in the sectional planning area document receives its first certificate of occupancy before at least 25 percent of the residential square footage identified in the sectional planning area document has received its first certificate of occupancy.
(VII)No more than 50 percent of the nonresidential square footage identified in the sectional planning area document receives its first certificate of occupancy before at least 50 percent of the residential square footage identified in the sectional planning area document has received its first certificate of occupancy.
(VIII)No more than 75 percent of the nonresidential square footage identified in the sectional planning area document shall receive its first certificate of occupancy before at least 75 percent of the residential square footage identified in the sectional planning area document has received its first certificate of occupancy.
(ii)The local agency includes in the annual report required by paragraph (2) of subdivision (a) of Section 65400 the status of development, including the total square footage of the residential and nonresidential development, the number of residential units that have been permitted, and what percentage of those residential units are restricted for persons and families of low or moderate income, or lower income households, as defined in Section 50079.5 of the Health and Safety Code.
(iii)The Department of Housing and Community Development may request additional information from the agency regarding land disposed of pursuant to this subparagraph.
(iv)At least 30 days prior to disposing of land declared exempt surplus land, a local agency shall provide the Department of Housing and Community Development a written notification of its declaration and findings in a form prescribed by the Department of Housing and Community Development. Within 30 days of receipt of the written notification and findings, the department shall notify the local agency if the department has determined that the local agency is in violation of this article. A local agency that fails to submit the written notification and findings shall be liable for a civil penalty pursuant to this subparagraph. A local agency shall not be liable for the civil penalty if the Department of Housing and Community Development does not notify the agency that the agency is in violation of this article within 30 days of receiving the written notification and findings. Once the department determines that the declarations and findings comply with subclauses (I) to (IV), inclusive, of clause (i), the local agency may proceed with disposal of land pursuant to this subparagraph. This clause is declaratory of, and not a change in, existing law.
(v)If the local agency disposes of land in violation of this subparagraph, the local agency shall be liable for a civil penalty calculated as follows:
(I)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.
(II)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.
(III)For purposes of this subparagraph, fair market value shall be determined by an independent appraisal of the land.
(IV)An action to enforce this subparagraph may be brought by any of the following:
(ia)An entity identified in subdivisions (a) to (e), inclusive, of Section 54222.
(ib)A person who would have been eligible to apply for residency in affordable housing had the agency not violated this section.
(ic)A housing organization, as that term is defined in Section 65589.5.
(id)A beneficially interested person or entity.
(ie)The Department of Housing and Community Development.
(V)A penalty assessed pursuant to this subparagraph 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.
(VI)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 pursuant to this subdivision shall be subject to appropriation by the Legislature.
(vi)For purposes of this subparagraph, the following definitions apply:
(I)Sectional planning area means an area composed of identifiable planning units, within which common services and facilities, a strong internal unity, and an integrated pattern of land use, circulation, and townscape planning are readily achievable.
(II)Sectional planning area document means a document or plan that sets forth, at minimum, a site utilization plan of the sectional planning area and development standards for each land use area and designation.
(vii)This subparagraph shall become inoperative on January 1, 2034.
(Q)Land that is owned by a California public-use airport on which residential uses are prohibited pursuant to Federal Aviation Administration Order 5190.6B, Airport Compliance Program, Chapter 20 -- Compatible Land Use and Airspace Protection.
(R)Land that is transferred to a community land trust, and all of the following conditions are met:
(i)The property is being or will be developed or rehabilitated as any of the following:
(I)An owner-occupied single-family dwelling.
(II)An owner-occupied unit in a multifamily dwelling.
(III)A member-occupied unit in a limited equity housing cooperative.
(IV)A rental housing development.
(ii)Improvements on the property are or will be available for use and ownership or for rent by qualified persons, as defined in paragraph (6) of subdivision (c) of Section 214.18 of the Revenue and Taxation Code.
(iii)(I)A deed restriction or other instrument, requiring a contract or contracts serving as an enforceable restriction on the sale or resale value of owner-occupied units or on the affordability of rental units is recorded on or before the lien date following the acquisition of the property by the community land trust.
(II)For the purpose of this clause, the following definitions apply:
(ia)A contract or contracts serving as an enforceable restriction on the sale or resale value of owner-occupied units means a contract described in paragraph (11) of subdivision (a) of Section 402.1 of the Revenue and Taxation Code.
(ib)A contract or contracts serving as an enforceable restriction on the affordability of rental units means an enforceable and verifiable agreement with a public agency, a recorded deed restriction, or other legal document described in subparagraph (A) of paragraph (2) of subdivision (g) of Section 214 of the Revenue and Taxation Code.
(iv)A copy of the deed restriction or other instrument shall be provided to the assessor.
(S)(i)For local agencies whose primary mission or purpose is to supply the public with a transportation system, surplus land that is developed for commercial, or industrial uses or activities, including nongovernmental retail, entertainment, or office development or for the sole purpose of investment or generation of revenue, if the agency meets all of the following conditions:
(I)The agency has an adopted land use plan or policy that designates at least 50 percent of the of the gross acreage covered by the adopted land use plan or policy for residential purposes. The adopted land use plan or policy shall also require the development of at least 300 residential units, or at least 10 residential units per gross acre, averaged across all land covered by the land use plan or policy, whichever is greater.
(II)The agency has an adopted land use plan or policy that requires at least 25 percent of all residential units to be developed on the parcels covered by the adopted land use plan or policy made available to lower income households, as defined in Section 50079 of the Health and Safety Code, at an affordable sales price or rented at an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing and 45 years for ownership housing. These terms shall be included in the land use plan or policy and dictate that they will be contained in a covenant or restriction recorded against the surplus land at the time of disposition that shall run with the land and be enforceable against any owner or lessee who violates the covenant or restriction and each successor in interest who continues the violation.
(III)Land disposed of for residential purposes shall issue a competitive request for proposals subject to the local agencys open, competitive solicitation process or put out to open, competitive bid by the local agency, provided that all entities identified in subdivision (a) of Section 54222 are invited to participate.
(IV)Prior to entering into an agreement to dispose of a parcel for non-residential development on land designated for the purposes authorized pursuant to this subparagraph in an agencys adopted land use plan or policy, the agency, since January 1, 2020, must have entered into an agreement to dispose of a minimum of 25 percent of the land designated for affordable housing pursuant to subclause (II).
(ii)The agency may exempt at one time all parcels covered by the adopted land use plan or policy pursuant to this subparagraph.
(T)(i)Land that satisfies all of the following conditions:
(I)The land is being or will be developed for a health facility that meets either of the following conditions:
(ia)The health facility will be a disproportionate share hospital.
(ib)The health facility will meet the requirements of Section 256b(a)(4)(L) of Title 42 of the United States Code.
(II)The land is located at one of the following sites within the City of Sacramento:
(ia)1516 29th Street (Assessor Parcel Numbers 007-0274-012 and 007-0274-013).
(ib)2831 P Street (Assessor Parcel Number 007-0274-026).
(ic)2811 O Street (Assessor Parcel Numbers 007-0273-014 and 007-0273-015).
(id)2824 N Street (Assessor Parcel Number 007-0273-004).
(ie)2812 N Street (Assessor Parcel Number 007-0273-003).
(if)1400 29th Street (Assessor Parcel Numbers 007-0273-008 and 007-0273-022).
(ig)1323 28th Street (Assessor Parcel Number 007-0174-003).
(ih)1301 28th Street (Assessor Parcel Number 007-0174-004).
(ii)2830 Capitol Avenue (Assessor Parcel Number 007-0174-005).
(III)The land is not identified in the sites inventory in the applicable housing element for lower income households.
(IV)The land will be subject to a recorded deed restriction for a period of 55 years that the health facility will meet one of the conditions described in subclause (I).
(ii)Before disposition of land pursuant to this subparagraph, the agency shall adopt written findings that the land is exempt surplus land pursuant to this subparagraph that includes a description of how the development of the land pursuant to this subparagraph aligns with the public interest and the goals of this article.
(iii)(I)If the health facility fails to meet the requirements described in subclause (I) of clause (i) during the period described in subclause (IV) of clause (i), the owner of the health facility shall be liable for a civil penalty of 30 percent of the greater of the final sale price or the fair market value of the land at the time of disposition. For purposes of this subparagraph, fair market value shall be determined by an independent appraisal of the land.
(II)An action to enforce this subparagraph may be brought by any of the following:
(ia)An entity identified in subdivisions (a) to (e), inclusive, of Section 54222.
(ib)A person who would have been eligible to apply for residency in affordable housing had the agency not violated this section.
(ic)A housing organization, as that term is defined in Section 65589.5.
(id)A beneficially interested person or entity.
(ie)The Department of Housing and Community Development.
(III)A penalty assessed pursuant to this subparagraph shall, except as otherwise provided, be deposited into a local housing trust fund. The local agency may elect to transfer the penalty moneys into the Building Homes and Jobs Trust Fund or the Housing Rehabilitation Loan Fund. 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.
(IV)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 pursuant to this subparagraph shall be subject to appropriation by the Legislature.
(iv)For purposes of this subparagraph:
(I)Disproportionate share hospital has the same meaning as defined in Section 14163 of the Welfare and Institutions Code.
(II)Health facility means a facility, place, or building that is organized, maintained, and operated for the diagnosis, care, prevention, and treatment of human illness, physical or mental, including convalescence and rehabilitation and including care during and after pregnancy.
(2)Notwithstanding paragraph (1), a written notice of the availability of surplus land for open-space purposes shall be sent to the entities described in subdivision (b) of Section 54222 before disposing of the surplus land, provided the land does not meet the criteria in subparagraph (H) of paragraph (1), if the land is any of the following:
(A)Within a coastal zone.
(B)Adjacent to a historical unit of the State Parks System.
(C)Listed on, or determined by the State Office of Historic Preservation to be eligible for, the National Register of Historic Places.
(D)Within the Lake Tahoe region as defined in Section 66905.5.
(g)Persons and families of low or moderate income has the same meaning as provided in Section 50093 of the Health and Safety Code.
SEC. 2.The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique nature of the identified sites.
As used in this article, the following definitions shall apply:
(a)(1)Local agency means every city, whether organized under general law or by charter, county, city and county, district, including school, sewer, water, utility, and local and regional park districts of any kind or class, joint powers authority, successor agency to a former redevelopment agency, housing authority, or other political subdivision of this state and any instrumentality thereof that is empowered to acquire and hold real property.
(2)The Legislature finds and declares that the term district as used in this article includes all districts within the state, including, but not limited to, all special districts, sewer, water, utility, and local and regional park districts, and any other political subdivision of this state that is a district, and therefore the changes in paragraph (1) made by the act adding this paragraph that specify that the provisions of this article apply to all districts, including school, sewer, water, utility, and local and regional park districts of any kind or class, are declaratory of, and not a change in, existing law.
(b)(1)Surplus land means land owned in fee simple by any local agency for which the local agencys governing body takes formal action in a regular public meeting declaring that the land is surplus and is not necessary for the agencys use. Land shall be declared 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 agencys policies or procedures. A local agency, on an annual basis, may declare multiple parcels as surplus land or exempt surplus land.
(2)Surplus land includes land held in the Community Redevelopment Property Trust Fund pursuant to Section 34191.4 of the Health and Safety Code and land that has been designated in the long-range property management plan approved by the Department of Finance pursuant to Section 34191.5 of the Health and Safety Code, either for sale or for future development, but does not include any specific disposal of land to an identified entity described in the plan.
(3)Nothing in this article prevents a local agency from obtaining fair market value for the disposition of surplus land consistent with Section 54226.
(4)Notwithstanding paragraph (1), a local agency is not required to make a declaration at a public meeting for land that is exempt surplus land pursuant to subparagraph (A), (B), (E), (K), (L), or (Q) of paragraph (1) of subdivision (f) if the local agency identifies the land in a notice that is published and available for public comment, including notice to the entities identified in subdivision (a) of Section 54222, at least 30 days before the exemption takes effect.
(c)(1)Except as provided in paragraph (2), agencys use shall include, but not be limited to, land that is being used, or is planned to be used pursuant to a written plan adopted by the local agencys governing board, for agency work or operations, including, but not limited to, utility sites, property owned by a port that is used to support logistics uses, watershed property, land being used for conservation purposes, land for demonstration, exhibition, or educational purposes related to greenhouse gas emissions, sites for broadband equipment or wireless facilities, and buffer sites near sensitive governmental uses, including, but not limited to, waste disposal sites, and wastewater treatment plants. Agencys use by a local agency that is a district shall also include land disposed for uses described in subparagraph (B) of paragraph (2).
(2)(A)Agencys use shall not include commercial or industrial uses or activities, including nongovernmental retail, entertainment, or office development. Property disposed of for the sole purpose of investment or generation of revenue shall not be considered necessary for the agencys use.
(B)In the case of a local agency that is a district, excepting those whose primary mission or purpose is to supply the public with a transportation system, agencys use may include commercial or industrial uses or activities, including nongovernmental retail, entertainment, or office development or be for the sole purpose of investment or generation of revenue if the agencys governing body takes action in a public meeting declaring that the use of the site will do one of the following:
(i)Directly further the express purpose of agency work or operations.
(ii)Be expressly authorized by a statute governing the local agency, provided the district complies with Section 54233.5 if applicable.
(d)(1)Dispose means either of the following:
(A)The sale of the surplus land.
(B)The entering of a lease for surplus land, which is for a term longer than 15 years, inclusive of any extension or renewal options included in the terms of the initial lease, entered into on or after January 1, 2024.
(2)Dispose shall not mean either of the following:
(A)The entering of a lease for surplus land, which is for a term of 15 years or less, inclusive of any extension or renewal options included in the terms of the initial lease.
(B)The entering of a lease for surplus land on which no development or demolition will occur, regardless of the term of the lease.
(e)Open-space purposes means the use of land for public recreation, enjoyment of scenic beauty, or conservation or use of natural resources.
(f)(1)Except as provided in paragraph (2), exempt surplus land means any of the following:
(A)Surplus land that is transferred pursuant to Section 25539.4 or 37364.
(B)Surplus land that is less than one-half acre in area and is not contiguous to land owned by a state or local agency that is used for open-space or low- and moderate-income housing purposes.
(C)Surplus land that a local agency is exchanging for another property necessary for the agencys use. Property may include easements necessary for the agencys use.
(D)Surplus land that a local agency is transferring to another local, state, or federal agency, or to a third-party intermediary for future dedication for the receiving agencys use, or to a federally recognized California Indian tribe. If the surplus land is transferred to a third-party intermediary, the receiving agencys use must be contained in a legally binding agreement at the time of transfer to the third-party intermediary.
(E)Surplus land that is a former street, right of way, or easement, and is conveyed to an owner of an adjacent property.
(F)(i)Surplus land that is to be developed for a housing development, which may have ancillary commercial ground floor uses, that restricts 100 percent of the residential units to persons and families of low or moderate income, with at least 75 percent of the residential units restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Section 50052.5 or 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands, and in no event shall the maximum affordable sales price or rent level be higher than 20 percent below the median market rents or sales prices for the neighborhood in which the site is located.
(ii)The requirements of clause (i) shall be contained in a covenant or restriction recorded against the surplus land at the time of sale that shall run with the land and be enforceable against any owner who violates the covenant or restriction and each successor in interest who continues the violation.
(G)(i)Surplus land that is subject to a local agencys open, competitive solicitation or that is put to open, competitive bid by a local agency, provided that all entities identified in subdivision (a) of Section 54222 will be invited to participate in the process, for a housing or a mixed-use development that is more than one acre and less than 10 acres in area, consisting of either a single parcel, or two or more adjacent or non-adjacent parcels combined, that includes not less than 300 residential units, and that restricts at least 25 percent of the residential units to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands.
(ii)The requirements of clause (i) shall be contained in a covenant or restriction recorded against the surplus land at the time of sale that shall run with the land and be enforceable against any owner who violates the covenant or restriction and each successor in interest who continues the violation.
(H)(i)Surplus land totaling 10 or more acres, consisting of either a single parcel, or two or more adjacent or non-adjacent parcels combined for disposition to one or more buyers pursuant to a plan or ordinance adopted by the legislative body of the local agency, or a state statute. That surplus land shall be subject to a local agencys open, competitive solicitation process or put out to open, competitive bid by a local agency, provided that all entities identified in subdivision (a) of Section 54222 will be invited to participate in the process for a housing or mixed-use development.
(ii)The aggregate development shall include the greater of the following:
(I)Not less than three hundred residential units.
(II)A number of residential units equal to 10 times the number of acres of the surplus land or 10,000 residential units, whichever is less.
(iii)At least 25 percent of the residential units shall be restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent pursuant to Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands.
(iv)If nonresidential development is included in the development pursuant to this subparagraph, at least 25 percent of the total planned units affordable to lower income households shall be made available for lease or sale and permitted for use and occupancy before or at the same time with every 25 percent of nonresidential development made available for lease or sale and permitted for use and occupancy.
(v)A violation of this subparagraph is subject to the penalties described in Section 54230.5. Those penalties are in addition to any remedy a court may order for violation of this subparagraph. A local agency shall only dispose of land pursuant to this subparagraph through a disposition and development agreement that includes an indemnification clause that provides that if an action occurs after disposition violates this subparagraph, the person or entity that acquired the property shall be liable for the penalties.
(vi)The requirements of clauses (i) to (v), inclusive, shall be contained in a covenant or restriction recorded against the surplus land at the time of sale that shall run with the land and be enforceable against any owner who violates the covenant or restriction and each successor in interest who continues the violation.
(I)A mixed-use development, which may include more than one publicly owned parcel, that meets all of the following conditions:
(i)The development restricts at least 25 percent of the residential units to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands.
(ii)At least 50 percent of the square footage of the new construction associated with the development is designated for residential use.
(iii)The development is not located in an urbanized area, as defined in Section 21094.5 of the Public Resources Code.
(J)(i)Surplus land that is subject to a valid legal restriction that is not imposed by the local agency and that makes housing prohibited, unless there is a feasible method to satisfactorily mitigate or avoid the prohibition on the site. A declaration of exemption pursuant to this subparagraph shall be supported by documentary evidence establishing the valid legal restriction. For the purposes of this section, documentary evidence includes, but is not limited to, a contract, agreement, deed restriction, statute, regulation or other writing that documents the valid legal restriction.
(ii)Valid legal restrictions include, but are not limited to, all of the following:
(I)Existing constraints under ownership rights or contractual rights or obligations that prevent the use of the property for housing, if the rights or obligations were agreed to prior to September 30, 2019.
(II)Conservation or other easements or encumbrances that prevent housing development.
(III)Existing leases, or other contractual obligations or restrictions, if the terms were agreed to prior to September 30, 2019.
(IV)Restrictions imposed by the source of funding that a local agency used to purchase a property, provided that both of the following requirements are met:
(ia)The restrictions limit the use of those funds to purposes other than housing.
(ib)The proposed disposal of surplus land meets a use consistent with that purpose.
(ii)(iii)Valid legal restrictions that would make housing prohibited do not include either of the following:
(I)An existing nonresidential land use designation on the surplus land.
(II)Covenants, restrictions, or other conditions on the property rendered void and unenforceable by any other law, including, but not limited to, Section 714.6 of the Civil Code.
(iii)(iv)Feasible methods to mitigate or avoid a valid legal restriction on the site do not include a requirement that the local agency acquire additional property rights or property interests belonging to third parties.
(K)Surplus land that was granted by the state in trust to a local agency or that was acquired by the local agency for trust purposes by purchase or exchange, and for which disposal of the land is authorized or required subject to conditions established by statute.
(L)Land that is subject to either of the following, unless compliance with this article is expressly required:
(i)Section 17388, 17515, 17536, 81192, 81397, 81399, 81420, or 81422 of the Education Code.
(ii)Part 14 (commencing with Section 53570) of Division 31 of the Health and Safety Code.
(M)Surplus land that is a former military base that was conveyed by the federal government to a local agency, and is subject to Article 8 (commencing with Section 33492.125) of Chapter 4.5 of Part 1 of Division 24 of the Health and Safety Code, provided that all of the following conditions are met:
(i)The former military base has an aggregate area greater than five acres, is expected to include a mix of residential and nonresidential uses, and is expected to include no fewer than 1,400 residential units upon completion of development or redevelopment of the former military base.
(ii)The affordability requirements for residential units shall be governed by a settlement agreement entered into prior to September 1, 2020. Furthermore, at least 25 percent of the initial 1,400 residential units developed shall be restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands.
(iii)Before disposition of the surplus land, the agency adopts written findings that the land is exempt surplus land pursuant to this subparagraph.
(iv)Before disposition of the surplus land, the recipient has negotiated a project labor agreement consistent with the local agencys project stabilization agreement resolution, as adopted on February 2, 2021, and any succeeding ordinance, resolution, or policy, regardless of the length of the agreement between the local agency and the recipient.
(v)The agency includes in the annual report required by paragraph (2) of subdivision (a) of Section 65400 the status of development of residential units on the former military base, including the total number of residential units that have been permitted and what percentage of those residential units are restricted for persons and families of low or moderate income, or lower income households, as defined in Section 50079.5 of the Health and Safety Code.
A violation of this subparagraph is subject to the penalties described in Section 54230.5. Those penalties are in addition to any remedy a court may order for violation of this subparagraph or the settlement agreement.
(N)Real property that is used by a district for an agencys use expressly authorized in subdivision (c).
(O)Land that has been transferred before June 30, 2019, by the state to a local agency pursuant to Section 32667 of the Streets and Highways Code and has a minimum planned residential density of at least 100 dwelling units per acre, and includes 100 or more residential units that are restricted to persons and families of low or moderate income, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands. For purposes of this subparagraph, not more than 20 percent of the affordable units may be restricted to persons and families of moderate income and at least 80 percent of the affordable units must be restricted to lower income households as defined in Section 50079.5 of the Health and Safety Code.
(P)(i)Land that meets the following conditions:
(I)Land that is subject to a sectional planning area document that meets both of the following:
(ia)The sectional planning area was adopted prior to January 1, 2019.
(ib)The sectional planning area document is consistent with county and city general plans applicable to the land.
(II)The land identified in the adopted sectional planning area document was dedicated prior to January 1, 2019
(III)On January 1, 2019, the parcels on the land met at least one of the following conditions:
(ia)The land was subject to an irrevocable offer of dedication of fee interest requiring the land to be used for a specified purpose.
(ib)The land was acquired through a land exchange subject to a land offer agreement that grants the lands original owner the right to repurchase the land acquired by the local agency pursuant to the agreement if the land will not be developed in a manner consistent with the agreement.
(ic)The land was subject to a grant deed specifying that the property shall be used for educational uses and limiting other types of uses allowed on the property.
(IV)At least 25 percent of the units are dedicated to lower income households, as defined in Section 50079.5 of the Health and Safety Code, at an affordable rent, as defined by Section 50053 of the Health and Safety Code, or an affordable housing cost, as defined by Section 50052.5 of the Health and Safety Code, and subject to a recorded deed restriction for a period of 55 years for rental units and land use for owner-occupied units.
(V)The land is developed at an average density of at least 10 units per acre, calculated with respect to the entire sectional planning area.
(VI)No more than 25 percent of the nonresidential square footage identified in the sectional planning area document receives its first certificate of occupancy before at least 25 percent of the residential square footage identified in the sectional planning area document has received its first certificate of occupancy.
(VII)No more than 50 percent of the nonresidential square footage identified in the sectional planning area document receives its first certificate of occupancy before at least 50 percent of the residential square footage identified in the sectional planning area document has received its first certificate of occupancy.
(VIII)No more than 75 percent of the nonresidential square footage identified in the sectional planning area document shall receive its first certificate of occupancy before at least 75 percent of the residential square footage identified in the sectional planning area document has received its first certificate of occupancy.
(ii)The local agency includes in the annual report required by paragraph (2) of subdivision (a) of Section 65400 the status of development, including the total square footage of the residential and nonresidential development, the number of residential units that have been permitted, and what percentage of those residential units are restricted for persons and families of low or moderate income, or lower income households, as defined in Section 50079.5 of the Health and Safety Code.
(iii)The Department of Housing and Community Development may request additional information from the agency regarding land disposed of pursuant to this subparagraph.
(iv)At least 30 days prior to disposing of land declared exempt surplus land, a local agency shall provide the Department of Housing and Community Development a written notification of its declaration and findings in a form prescribed by the Department of Housing and Community Development. Within 30 days of receipt of the written notification and findings, the department shall notify the local agency if the department has determined that the local agency is in violation of this article. A local agency that fails to submit the written notification and findings shall be liable for a civil penalty pursuant to this subparagraph. A local agency shall not be liable for the civil penalty if the Department of Housing and Community Development does not notify the agency that the agency is in violation of this article within 30 days of receiving the written notification and findings. Once the department determines that the declarations and findings comply with subclauses (I) to (IV), inclusive, of clause (i), the local agency may proceed with disposal of land pursuant to this subparagraph. This clause is declaratory of, and not a change in, existing law.
(v)If the local agency disposes of land in violation of this subparagraph, the local agency shall be liable for a civil penalty calculated as follows:
(I)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.
(II)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.
(III)For purposes of this subparagraph, fair market value shall be determined by an independent appraisal of the land.
(IV)An action to enforce this subparagraph may be brought by any of the following:
(ia)An entity identified in subdivisions (a) to (e), inclusive, of Section 54222.
(ib)A person who would have been eligible to apply for residency in affordable housing had the agency not violated this section.
(ic)A housing organization, as that term is defined in Section 65589.5.
(id)A beneficially interested person or entity.
(ie)The Department of Housing and Community Development.
(V)A penalty assessed pursuant to this subparagraph 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.
(VI)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 pursuant to this subdivision shall be subject to appropriation by the Legislature.
(vi)For purposes of this subparagraph, the following definitions apply:
(I)Sectional planning area means an area composed of identifiable planning units, within which common services and facilities, a strong internal unity, and an integrated pattern of land use, circulation, and townscape planning are readily achievable.
(II)Sectional planning area document means a document or plan that sets forth, at minimum, a site utilization plan of the sectional planning area and development standards for each land use area and designation.
(vii)This subparagraph shall become inoperative on January 1, 2034.
(Q)Land that is owned by a California public-use airport on which residential uses are prohibited pursuant to Federal Aviation Administration Order 5190.6B, Airport Compliance Program, Chapter 20 -- Compatible Land Use and Airspace Protection.
(R)Land that is transferred to a community land trust, and all of the following conditions are met:
(i)The property is being or will be developed or rehabilitated as any of the following:
(I)An owner-occupied single-family dwelling.
(II)An owner-occupied unit in a multifamily dwelling.
(III)A member-occupied unit in a limited equity housing cooperative.
(IV)A rental housing development.
(ii)Improvements on the property are or will be available for use and ownership or for rent by qualified persons, as defined in paragraph (6) of subdivision (c) of Section 214.18 of the Revenue and Taxation Code.
(iii)(I)A deed restriction or other instrument, requiring a contract or contracts serving as an enforceable restriction on the sale or resale value of owner-occupied units or on the affordability of rental units is recorded on or before the lien date following the acquisition of the property by the community land trust.
(II)For the purpose of this clause, the following definitions apply:
(ia)A contract or contracts serving as an enforceable restriction on the sale or resale value of owner-occupied units means a contract described in paragraph (11) of subdivision (a) of Section 402.1 of the Revenue and Taxation Code.
(ib)A contract or contracts serving as an enforceable restriction on the affordability of rental units means an enforceable and verifiable agreement with a public agency, a recorded deed restriction, or other legal document described in subparagraph (A) of paragraph (2) of subdivision (g) of Section 214 of the Revenue and Taxation Code.
(iv)A copy of the deed restriction or other instrument shall be provided to the assessor.
(S)(i)For local agencies whose primary mission or purpose is to supply the public with a transportation system, surplus land that is developed for commercial, or industrial uses or activities, including nongovernmental retail, entertainment, or office development or for the sole purpose of investment or generation of revenue, if the agency meets all of the following conditions:
(I)The agency has an adopted land use plan or policy that designates at least 50 percent of the of the gross acreage covered by the adopted land use plan or policy for residential purposes. The adopted land use plan or policy shall also require the development of at least 300 residential units, or at least 10 residential units per gross acre, averaged across all land covered by the land use plan or policy, whichever is greater.
(II)The agency has an adopted land use plan or policy that requires at least 25 percent of all residential units to be developed on the parcels covered by the adopted land use plan or policy made available to lower income households, as defined in Section 50079 of the Health and Safety Code, at an affordable sales price or rented at an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing and 45 years for ownership housing. These terms shall be included in the land use plan or policy and dictate that they will be contained in a covenant or restriction recorded against the surplus land at the time of disposition that shall run with the land and be enforceable against any owner or lessee who violates the covenant or restriction and each successor in interest who continues the violation.
(III)Land disposed of for residential purposes shall issue a competitive request for proposals subject to the local agencys open, competitive solicitation process or put out to open, competitive bid by the local agency, provided that all entities identified in subdivision (a) of Section 54222 are invited to participate.
(IV)Prior to entering into an agreement to dispose of a parcel for non-residential development on land designated for the purposes authorized pursuant to this subparagraph in an agencys adopted land use plan or policy, the agency, since January 1, 2020, must have entered into an agreement to dispose of a minimum of 25 percent of the land designated for affordable housing pursuant to subclause (II).
(ii)The agency may exempt at one time all parcels covered by the adopted land use plan or policy pursuant to this subparagraph.
(T)(i)Land that is satisfies all of the following conditions:
(I)The land is being or will be developed for a health facility. facility that meets either of the following conditions:
(ia)The health facility will be a disproportionate share hospital.
(ib)The health facility will meet the requirements of Section 256b(a)(4)(L) of Title 42 of the United States Code.
(II)The land is located at one of the following sites within the City of Sacramento:
(ia)1516 29th Street (Assessor Parcel Numbers 007-0274-012 and 007-0274-013).
(ib)2831 P Street (Assessor Parcel Number 007-0274-026).
(ic)2811 O Street (Assessor Parcel Numbers 007-0273-014 and 007-0273-015).
(id)2824 N Street (Assessor Parcel Number 007-0273-004).
(ie)2812 N Street (Assessor Parcel Number 007-0273-003).
(if)1400 29th Street (Assessor Parcel Numbers 007-0273-008 and 007-0273-022).
(III)The land is not identified in the sites inventory in the applicable housing element for lower income households.
(IV)The land will be subject to a recorded deed restriction for a period of 55 years that the health facility will meet one of the conditions described in subclause (I).
(ii)Before disposition of land pursuant to this subparagraph, the agency shall adopt written findings that the land is exempt surplus land pursuant to this subparagraph that includes a description of how the development of the land pursuant to this subparagraph aligns with the public interest and the goals of this article.
(iii)(I)If the health facility fails to meet the requirements described in subclause (I) of clause (i) during the period described in subclause (IV) of clause (i), the owner of the health facility shall be liable for a civil penalty of 30 percent of the greater of the final sale price or the fair market value of the land at the time of disposition. For purposes of this subparagraph, fair market value shall be determined by an independent appraisal of the land.
(II)An action to enforce this subparagraph may be brought by any of the following:
(ia)An entity identified in subdivisions (a) to (e), inclusive, of Section 54222.
(ib)A person who would have been eligible to apply for residency in affordable housing had the agency not violated this section.
(ic)A housing organization, as that term is defined in Section 65589.5.
(id)A beneficially interested person or entity.
(ie)The Department of Housing and Community Development.
(III)A penalty assessed pursuant to this subparagraph shall, except as otherwise provided, be deposited into a local housing trust fund. The local agency may elect to transfer the penalty moneys into the Building Homes and Jobs Trust Fund or the Housing Rehabilitation Loan Fund. 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.
(IV)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 pursuant to this subparagraph shall be subject to appropriation by the Legislature.
(iii)(iv)For purposes of this subparagraph, health subparagraph:
(I)Disproportionate share hospital has the same meaning as defined in Section 14163 of the Welfare and Institutions Code.
(II)Health facility means a facility, place, or building that is organized, maintained, and operated for the diagnosis, care, prevention, and treatment of human illness, physical or mental, including convalescence and rehabilitation and including care during and after pregnancy.
(2)Notwithstanding paragraph (1), a written notice of the availability of surplus land for open-space purposes shall be sent to the entities described in subdivision (b) of Section 54222 before disposing of the surplus land, provided the land does not meet the criteria in subparagraph (H) of paragraph (1), if the land is any of the following:
(A)Within a coastal zone.
(B)Adjacent to a historical unit of the State Parks System.
(C)Listed on, or determined by the State Office of Historic Preservation to be eligible for, the National Register of Historic Places.
(D)Within the Lake Tahoe region as defined in Section 66905.5.
(g)Persons and families of low or moderate income has the same meaning as provided in Section 50093 of the Health and Safety Code.
SEC. 2.The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique nature of the identified sites.
As used in this article, the following definitions shall apply:
(a)(1)Local agency means every city, whether organized under general law or by charter, county, city and county, district, including school, sewer, water, utility, and local and regional park districts of any kind or class, joint powers authority, successor agency to a former redevelopment agency, housing authority, or other political subdivision of this state and any instrumentality thereof that is empowered to acquire and hold real property.
(2)The Legislature finds and declares that the term district as used in this article includes all districts within the state, including, but not limited to, all special districts, sewer, water, utility, and local and regional park districts, and any other political subdivision of this state that is a district, and therefore the changes in paragraph (1) made by the act adding this paragraph that specify that the provisions of this article apply to all districts, including school, sewer, water, utility, and local and regional park districts of any kind or class, are declaratory of, and not a change in, existing law.
(b)(1)Surplus land means land owned in fee simple by any local agency for which the local agencys governing body takes formal action in a regular public meeting declaring that the land is surplus and is not necessary for the agencys use. Land shall be declared 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 agencys policies or procedures. A local agency, on an annual basis, may declare multiple parcels as surplus land or exempt surplus land.
(2)Surplus land includes land held in the Community Redevelopment Property Trust Fund pursuant to Section 34191.4 of the Health and Safety Code and land that has been designated in the long-range property management plan approved by the Department of Finance pursuant to Section 34191.5 of the Health and Safety Code, either for sale or for future development, but does not include any specific disposal of land to an identified entity described in the plan.
(3)Nothing in this article prevents a local agency from obtaining fair market value for the disposition of surplus land consistent with Section 54226.
(4)Notwithstanding paragraph (1), a local agency is not required to make a declaration at a public meeting for land that is exempt surplus land pursuant to subparagraph (A), (B), (E), (K), (L), or (Q) of paragraph (1) of subdivision (f) if the local agency identifies the land in a notice that is published and available for public comment, including notice to the entities identified in subdivision (a) of Section 54222, at least 30 days before the exemption takes effect.
(c)(1)Except as provided in paragraph (2), agencys use shall include, but not be limited to, land that is being used, or is planned to be used pursuant to a written plan adopted by the local agencys governing board, for agency work or operations, including, but not limited to, utility sites, property owned by a port that is used to support logistics uses, watershed property, land being used for conservation purposes, land for demonstration, exhibition, or educational purposes related to greenhouse gas emissions, sites for broadband equipment or wireless facilities, and buffer sites near sensitive governmental uses, including, but not limited to, waste disposal sites, and wastewater treatment plants. Agencys use by a local agency that is a district shall also include land disposed for uses described in subparagraph (B) of paragraph (2).
(2)(A)Agencys use shall not include commercial or industrial uses or activities, including nongovernmental retail, entertainment, or office development. Property disposed of for the sole purpose of investment or generation of revenue shall not be considered necessary for the agencys use.
(B)In the case of a local agency that is a district, excepting those whose primary mission or purpose is to supply the public with a transportation system, agencys use may include commercial or industrial uses or activities, including nongovernmental retail, entertainment, or office development or be for the sole purpose of investment or generation of revenue if the agencys governing body takes action in a public meeting declaring that the use of the site will do one of the following:
(i)Directly further the express purpose of agency work or operations.
(ii)Be expressly authorized by a statute governing the local agency, provided the district complies with Section 54233.5 if applicable.
(d)(1) Dispose means either of the following:
(A)The sale of the surplus land.
(B)The entering of a lease for surplus land, which is for a term longer than 15 years, inclusive of any extension or renewal options included in the terms of the initial lease, entered into on or after January 1, 2024.
(2)Dispose shall not mean either of the following:
(A)The entering of a lease for surplus land, which is for a term of 15 years or less, inclusive of any extension or renewal options included in the terms of the initial lease.
(B)The entering of a lease for surplus land on which no development or demolition will occur, regardless of the term of the lease.
(e)Open-space purposes means the use of land for public recreation, enjoyment of scenic beauty, or conservation or use of natural resources.
(f)(1)Except as provided in paragraph (2), exempt surplus land means any of the following:
(A)Surplus land that is transferred pursuant to Section 25539.4 or 37364.
(B)Surplus land that is less than one-half acre in area and is not contiguous to land owned by a state or local agency that is used for open-space or low- and moderate-income housing purposes.
(C)Surplus land that a local agency is exchanging for another property necessary for the agencys use. Property may include easements necessary for the agencys use.
(D)Surplus land that a local agency is transferring to another local, state, or federal agency, or to a third-party intermediary for future dedication for the receiving agencys use, or to a federally recognized California Indian tribe. If the surplus land is transferred to a third-party intermediary, the receiving agencys use must be contained in a legally binding agreement at the time of transfer to the third-party intermediary.
(E)Surplus land that is a former street, right of way, or easement, and is conveyed to an owner of an adjacent property.
(F)(i)Surplus land that is to be developed for a housing development, which may have ancillary commercial ground floor uses, that restricts 100 percent of the residential units to persons and families of low or moderate income, with at least 75 percent of the residential units restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Section 50052.5 or 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands, and in no event shall the maximum affordable sales price or rent level be higher than 20 percent below the median market rents or sales prices for the neighborhood in which the site is located.
(ii)The requirements of clause (i) shall be contained in a covenant or restriction recorded against the surplus land at the time of sale that shall run with the land and be enforceable against any owner who violates the covenant or restriction and each successor in interest who continues the violation.
(G)(i)Surplus land that is subject to a local agencys open, competitive solicitation or that is put to open, competitive bid by a local agency, provided that all entities identified in subdivision (a) of Section 54222 will be invited to participate in the process, for a housing or a mixed-use development that is more than one acre and less than 10 acres in area, consisting of either a single parcel, or two or more adjacent or non-adjacent parcels combined, that includes not less than 300 residential units, and that restricts at least 25 percent of the residential units to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands.
(ii)The requirements of clause (i) shall be contained in a covenant or restriction recorded against the surplus land at the time of sale that shall run with the land and be enforceable against any owner who violates the covenant or restriction and each successor in interest who continues the violation.
(H)(i)Surplus land totaling 10 or more acres, consisting of either a single parcel, or two or more adjacent or non-adjacent parcels combined for disposition to one or more buyers pursuant to a plan or ordinance adopted by the legislative body of the local agency, or a state statute. That surplus land shall be subject to a local agencys open, competitive solicitation process or put out to open, competitive bid by a local agency, provided that all entities identified in subdivision (a) of Section 54222 will be invited to participate in the process for a housing or mixed-use development.
(ii)The aggregate development shall include the greater of the following:
(I)Not less than three hundred residential units.
(II)A number of residential units equal to 10 times the number of acres of the surplus land or 10,000 residential units, whichever is less.
(iii)At least 25 percent of the residential units shall be restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent pursuant to Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands.
(iv)If nonresidential development is included in the development pursuant to this subparagraph, at least 25 percent of the total planned units affordable to lower income households shall be made available for lease or sale and permitted for use and occupancy before or at the same time with every 25 percent of nonresidential development made available for lease or sale and permitted for use and occupancy.
(v)A violation of this subparagraph is subject to the penalties described in Section 54230.5. Those penalties are in addition to any remedy a court may order for violation of this subparagraph. A local agency shall only dispose of land pursuant to this subparagraph through a disposition and development agreement that includes an indemnification clause that provides that if an action occurs after disposition violates this subparagraph, the person or entity that acquired the property shall be liable for the penalties.
(vi)The requirements of clauses (i) to (v), inclusive, shall be contained in a covenant or restriction recorded against the surplus land at the time of sale that shall run with the land and be enforceable against any owner who violates the covenant or restriction and each successor in interest who continues the violation.
(I)A mixed-use development, which may include more than one publicly owned parcel, that meets all of the following conditions:
(i)The development restricts at least 25 percent of the residential units to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands.
(ii)At least 50 percent of the square footage of the new construction associated with the development is designated for residential use.
(iii)The development is not located in an urbanized area, as defined in Section 21094.5 of the Public Resources Code.
(J)(i)Surplus land that is subject to a valid legal restriction that is not imposed by the local agency and that makes housing prohibited, unless there is a feasible method to satisfactorily mitigate or avoid the prohibition on the site. A declaration of exemption pursuant to this subparagraph shall be supported by documentary evidence establishing the valid legal restriction. For the purposes of this section, documentary evidence includes, but is not limited to, a contract, agreement, deed restriction, statute, regulation or other writing that documents the valid legal restriction.
(ii)Valid legal restrictions include, but are not limited to, all of the following:
(I)Existing constraints under ownership rights or contractual rights or obligations that prevent the use of the property for housing, if the rights or obligations were agreed to prior to September 30, 2019.
(II)Conservation or other easements or encumbrances that prevent housing development.
(III)Existing leases, or other contractual obligations or restrictions, if the terms were agreed to prior to September 30, 2019.
(IV)Restrictions imposed by the source of funding that a local agency used to purchase a property, provided that both of the following requirements are met:
(ia)The restrictions limit the use of those funds to purposes other than housing.
(ib)The proposed disposal of surplus land meets a use consistent with that purpose.
(ii)Valid legal restrictions that would make housing prohibited do not include either of the following:
(I)An existing nonresidential land use designation on the surplus land.
(II)Covenants, restrictions, or other conditions on the property rendered void and unenforceable by any other law, including, but not limited to, Section 714.6 of the Civil Code.
(iii)Feasible methods to mitigate or avoid a valid legal restriction on the site do not include a requirement that the local agency acquire additional property rights or property interests belonging to third parties.
(K)Surplus land that was granted by the state in trust to a local agency or that was acquired by the local agency for trust purposes by purchase or exchange, and for which disposal of the land is authorized or required subject to conditions established by statute.
(L)Land that is subject to either of the following, unless compliance with this article is expressly required:
(i)Section 17388, 17515, 17536, 81192, 81397, 81399, 81420, or 81422 of the Education Code.
(ii)Part 14 (commencing with Section 53570) of Division 31 of the Health and Safety Code.
(M)Surplus land that is a former military base that was conveyed by the federal government to a local agency, and is subject to Article 8 (commencing with Section 33492.125) of Chapter 4.5 of Part 1 of Division 24 of the Health and Safety Code, provided that all of the following conditions are met:
(i)The former military base has an aggregate area greater than five acres, is expected to include a mix of residential and nonresidential uses, and is expected to include no fewer than 1,400 residential units upon completion of development or redevelopment of the former military base.
(ii)The affordability requirements for residential units shall be governed by a settlement agreement entered into prior to September 1, 2020. Furthermore, at least 25 percent of the initial 1,400 residential units developed shall be restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands.
(iii)Before disposition of the surplus land, the agency adopts written findings that the land is exempt surplus land pursuant to this subparagraph.
(iv)Before disposition of the surplus land, the recipient has negotiated a project labor agreement consistent with the local agencys project stabilization agreement resolution, as adopted on February 2, 2021, and any succeeding ordinance, resolution, or policy, regardless of the length of the agreement between the local agency and the recipient.
(v)The agency includes in the annual report required by paragraph (2) of subdivision (a) of Section 65400 the status of development of residential units on the former military base, including the total number of residential units that have been permitted and what percentage of those residential units are restricted for persons and families of low or moderate income, or lower income households, as defined in Section 50079.5 of the Health and Safety Code.
A violation of this subparagraph is subject to the penalties described in Section 54230.5. Those penalties are in addition to any remedy a court may order for violation of this subparagraph or the settlement agreement.
(N)Real property that is used by a district for an agencys use expressly authorized in subdivision (c).
(O)Land that has been transferred before June 30, 2019, by the state to a local agency pursuant to Section 32667 of the Streets and Highways Code and has a minimum planned residential density of at least 100 dwelling units per acre, and includes 100 or more residential units that are restricted to persons and families of low or moderate income, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands. For purposes of this subparagraph, not more than 20 percent of the affordable units may be restricted to persons and families of moderate income and at least 80 percent of the affordable units must be restricted to lower income households as defined in Section 50079.5 of the Health and Safety Code.
(P)(i)Land that meets the following conditions:
(I)Land that is subject to a sectional planning area document that meets both of the following:
(ia)The sectional planning area was adopted prior to January 1, 2019.
(ib)The sectional planning area document is consistent with county and city general plans applicable to the land.
(II)The land identified in the adopted sectional planning area document was dedicated prior to January 1, 2019
(III)On January 1, 2019, the parcels on the land met at least one of the following conditions:
(ia)The land was subject to an irrevocable offer of dedication of fee interest requiring the land to be used for a specified purpose.
(ib)The land was acquired through a land exchange subject to a land offer agreement that grants the lands original owner the right to repurchase the land acquired by the local agency pursuant to the agreement if the land will not be developed in a manner consistent with the agreement.
(ic)The land was subject to a grant deed specifying that the property shall be used for educational uses and limiting other types of uses allowed on the property.
(IV)At least 25 percent of the units are dedicated to lower income households, as defined in Section 50079.5 of the Health and Safety Code, at an affordable rent, as defined by Section 50053 of the Health and Safety Code, or an affordable housing cost, as defined by Section 50052.5 of the Health and Safety Code, and subject to a recorded deed restriction for a period of 55 years for rental units and land use for owner-occupied units.
(V)The land is developed at an average density of at least 10 units per acre, calculated with respect to the entire sectional planning area.
(VI)No more than 25 percent of the nonresidential square footage identified in the sectional planning area document receives its first certificate of occupancy before at least 25 percent of the residential square footage identified in the sectional planning area document has received its first certificate of occupancy.
(VII)No more than 50 percent of the nonresidential square footage identified in the sectional planning area document receives its first certificate of occupancy before at least 50 percent of the residential square footage identified in the sectional planning area document has received its first certificate of occupancy.
(VIII)No more than 75 percent of the nonresidential square footage identified in the sectional planning area document shall receive its first certificate of occupancy before at least 75 percent of the residential square footage identified in the sectional planning area document has received its first certificate of occupancy.
(ii)The local agency includes in the annual report required by paragraph (2) of subdivision (a) of Section 65400 the status of development, including the total square footage of the residential and nonresidential development, the number of residential units that have been permitted, and what percentage of those residential units are restricted for persons and families of low or moderate income, or lower income households, as defined in Section 50079.5 of the Health and Safety Code.
(iii)The Department of Housing and Community Development may request additional information from the agency regarding land disposed of pursuant to this subparagraph.
(iv)At least 30 days prior to disposing of land declared exempt surplus land, a local agency shall provide the Department of Housing and Community Development a written notification of its declaration and findings in a form prescribed by the Department of Housing and Community Development. Within 30 days of receipt of the written notification and findings, the department shall notify the local agency if the department has determined that the local agency is in violation of this article. A local agency that fails to submit the written notification and findings shall be liable for a civil penalty pursuant to this subparagraph. A local agency shall not be liable for the civil penalty if the Department of Housing and Community Development does not notify the agency that the agency is in violation of this article within 30 days of receiving the written notification and findings. Once the department determines that the declarations and findings comply with subclauses (I) to (IV), inclusive, of clause (i), the local agency may proceed with disposal of land pursuant to this subparagraph. This clause is declaratory of, and not a change in, existing law.
(v)If the local agency disposes of land in violation of this subparagraph, the local agency shall be liable for a civil penalty calculated as follows:
(I)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.
(II)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.
(III)For purposes of this subparagraph, fair market value shall be determined by an independent appraisal of the land.
(IV)An action to enforce this subparagraph may be brought by any of the following:
(ia)An entity identified in subdivisions (a) to (e), inclusive, of Section 54222.
(ib)A person who would have been eligible to apply for residency in affordable housing had the agency not violated this section.
(ic)A housing organization, as that term is defined in Section 65589.5.
(id)A beneficially interested person or entity.
(ie)The Department of Housing and Community Development.
(V)A penalty assessed pursuant to this subparagraph 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.
(VI)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 pursuant to this subdivision shall be subject to appropriation by the Legislature.
(vi)For purposes of this subparagraph, the following definitions apply:
(I)Sectional planning area means an area composed of identifiable planning units, within which common services and facilities, a strong internal unity, and an integrated pattern of land use, circulation, and townscape planning are readily achievable.
(II)Sectional planning area document means a document or plan that sets forth, at minimum, a site utilization plan of the sectional planning area and development standards for each land use area and designation.
(vii)This subparagraph shall become inoperative on January 1, 2034.
(Q)Land that is owned by a California public-use airport on which residential uses are prohibited pursuant to Federal Aviation Administration Order 5190.6B, Airport Compliance Program, Chapter 20 -- Compatible Land Use and Airspace Protection.
(R)Land that is transferred to a community land trust, and all of the following conditions are met:
(i)The property is being or will be developed or rehabilitated as any of the following:
(I)An owner-occupied single-family dwelling.
(II)An owner-occupied unit in a multifamily dwelling.
(III)A member-occupied unit in a limited equity housing cooperative.
(IV)A rental housing development.
(ii)Improvements on the property are or will be available for use and ownership or for rent by qualified persons, as defined in paragraph (6) of subdivision (c) of Section 214.18 of the Revenue and Taxation Code.
(iii)(I)A deed restriction or other instrument, requiring a contract or contracts serving as an enforceable restriction on the sale or resale value of owner-occupied units or on the affordability of rental units is recorded on or before the lien date following the acquisition of the property by the community land trust.
(II)For the purpose of this clause, the following definitions apply:
(ia)A contract or contracts serving as an enforceable restriction on the sale or resale value of owner-occupied units means a contract described in paragraph (11) of subdivision (a) of Section 402.1 of the Revenue and Taxation Code.
(ib)A contract or contracts serving as an enforceable restriction on the affordability of rental units means an enforceable and verifiable agreement with a public agency, a recorded deed restriction, or other legal document described in subparagraph (A) of paragraph (2) of subdivision (g) of Section 214 of the Revenue and Taxation Code.
(iv)A copy of the deed restriction or other instrument shall be provided to the assessor.
(S)(i)For local agencies whose primary mission or purpose is to supply the public with a transportation system, surplus land that is developed for commercial, or industrial uses or activities, including nongovernmental retail, entertainment, or office development or for the sole purpose of investment or generation of revenue, if the agency meets all of the following conditions:
(I)The agency has an adopted land use plan or policy that designates at least 50 percent of the of the gross acreage covered by the adopted land use plan or policy for residential purposes. The adopted land use plan or policy shall also require the development of at least 300 residential units, or at least 10 residential units per gross acre, averaged across all land covered by the land use plan or policy, whichever is greater.
(II)The agency has an adopted land use plan or policy that requires at least 25 percent of all residential units to be developed on the parcels covered by the adopted land use plan or policy made available to lower income households, as defined in Section 50079 of the Health and Safety Code, at an affordable sales price or rented at an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing and 45 years for ownership housing. These terms shall be included in the land use plan or policy and dictate that they will be contained in a covenant or restriction recorded against the surplus land at the time of disposition that shall run with the land and be enforceable against any owner or lessee who violates the covenant or restriction and each successor in interest who continues the violation.
(III)Land disposed of for residential purposes shall issue a competitive request for proposals subject to the local agencys open, competitive solicitation process or put out to open, competitive bid by the local agency, provided that all entities identified in subdivision (a) of Section 54222 are invited to participate.
(IV)Prior to entering into an agreement to dispose of a parcel for non-residential development on land designated for the purposes authorized pursuant to this subparagraph in an agencys adopted land use plan or policy, the agency, since January 1, 2020, must have entered into an agreement to dispose of a minimum of 25 percent of the land designated for affordable housing pursuant to subclause (II).
(ii)The agency may exempt at one time all parcels covered by the adopted land use plan or policy pursuant to this subparagraph.
(T)(i)Land that is being or will be developed for a health facility.
(ii)Before disposition of land pursuant to this subparagraph, the agency shall adopt written findings that the land is exempt surplus land pursuant to this subparagraph that includes a description of how the development of the land pursuant to this subparagraph aligns with the public interest and the goals of this article.
(iii)For purposes of this subparagraph, health facility means a facility, place, or building that is organized, maintained, and operated for the diagnosis, care, prevention, and treatment of human illness, physical or mental, including convalescence and rehabilitation and including care during and after pregnancy.
(2)Notwithstanding paragraph (1), a written notice of the availability of surplus land for open-space purposes shall be sent to the entities described in subdivision (b) of Section 54222 before disposing of the surplus land, provided the land does not meet the criteria in subparagraph (H) of paragraph (1), if the land is any of the following:
(A)Within a coastal zone.
(B)Adjacent to a historical unit of the State Parks System.
(C)Listed on, or determined by the State Office of Historic Preservation to be eligible for, the National Register of Historic Places.
(D)Within the Lake Tahoe region as defined in Section 66905.5.
(g)Persons and families of low or moderate income has the same meaning as provided in Section 50093 of the Health and Safety Code.
|
Date
|
Status
|
|---|---|
| Aug 22, 2024 | Returned to Chief Clerk pursuant to Joint Rule 62(a). |
| Jun 26, 2024 | June 26 set for first hearing. Failed passage in committee. (Ayes 2. Noes 6.) |
| Jun 20, 2024 | From committee: Do pass and re-refer to Com. on H. & C.D. (Ayes 9. Noes 0.) (June 19). Re-referred to Com. on H. & C.D. |
| Jun 10, 2024 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on L. GOV. |
| Jun 3, 2024 | Referred to Coms. on L. GOV. and H. & C.D. |
| May 21, 2024 | In Assembly. Read first time. Held at Desk. |
| May 20, 2024 | Read third time. Passed. (Ayes 37. Noes 0. Page 4029.) Ordered to the Assembly. |
| May 14, 2024 | Read second time. Ordered to third reading. |
| May 13, 2024 | From committee: Be ordered to second reading pursuant to Senate Rule 28.8. |
| May 9, 2024 | Set for hearing May 13. |
| May 8, 2024 | Re-referred to Com. on APPR. pursuant to Joint Rule 10.5. |
| May 7, 2024 | Read second time and amended. Ordered to third reading. |
| May 6, 2024 | From committee: Do pass as amended. (Ayes 6. Noes 0. Page 3821.) (May 1). |
| Apr 17, 2024 | Set for hearing May 1. |
| Feb 29, 2024 | Referred to Com. on L. GOV. |
| Feb 20, 2024 | From printer. May be acted upon on or after March 18. |
| Feb 16, 2024 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Jun 26, 2024 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Housing and Community Development |
Failed |
|
| Jun 19, 2024 | Do pass and be re-referred to the Committee on [Housing and Community Development] | Assembly Standing Committee on Local Government |
Passed |
|
| May 20, 2024 | Senate 3rd Reading SB1439 Ashby | Senate Floor |
Passed |
|
| May 1, 2024 | Do pass as amended | Senate Standing Committee on Local Government |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Association of California Healthcare Districts | ** Support | |
| California Advocacy for Oncology Nursing | * Support | Jun 26, 2024 |
| California Ambulatory Surgery Association | * Support | Jun 26, 2024 |
| California Apartment Association | * Support | Jun 26, 2024 |
| California Asian Chamber of Commerce | * Support | Jun 26, 2024 |
| California Association Of Local Housing Finance Agencies | * Against | Jun 26, 2024 |
| California Association Of Realtors | * Support | Jun 26, 2024 |
| California Black Chamber Of Commerce | * Support | Jun 26, 2024 |
| California Coalition For Rural Housing | * Against | Jun 26, 2024 |
| California Coalition of Utility Employees | * Support | Jun 22, 2024 |
| California Consortium for Urban Indian Health | * Support | Jun 26, 2024 |
| California Hospital Association | * Support | Jun 26, 2024 |
| California Housing Partnership | * Against | Jun 26, 2024 |
| California Medical Association | * Support | Jun 26, 2024 |
| California Partnership For Health | * Support | Jun 26, 2024 |
| California Primary Care Association Advocates | * Support | Jun 26, 2024 |
| California Professional Firefighters | * Support | Jun 26, 2024 |
| California Rural Legal Assistance Foundation | * Against | Jun 26, 2024 |
| California State Association Of Electrical Workers | * Support | Jun 26, 2024 |
| California State Pipe Trades Council | * Support | Jun 26, 2024 |
| Central Valley Health Network | * Support | Jun 26, 2024 |
| City Of Sacramento | * Support | Jun 26, 2024 |
| City of San Diego Mayor's Office | * Support | May 1, 2024 |
| Community Health Centers and Clinics | * Support | Jun 26, 2024 |
| District Council of Ironworkers | * Support | Jun 26, 2024 |
| Downtown Sacramento Partnership | * Support | Jun 26, 2024 |
| EAH Housing | * Against | Jun 26, 2024 |
| East Bay Housing Organizations | ** Against | |
| Elevator Constructors Union | * Support | Jun 22, 2024 |
| Former Mayor Kevin Johnson | * Support | Jun 19, 2024 |
| Greater Sacramento Economic Council | * Support | Jun 26, 2024 |
| Heat and Frost Insulators | * Support | Jun 26, 2024 |
| Heat and Frost Insulators Local 16 | * Support | Jun 26, 2024 |
| Housing California | * Against | Jun 26, 2024 |
| Leiomyosarcoma Patient Group | * Support | Jun 26, 2024 |
| Midtown Association | * Support | Jun 19, 2024 |
| Midtown Association | * Support | Jun 26, 2024 |
| Mutual Housing California | * Against | Jun 26, 2024 |
| Non Profit Housing Association of Northern California | * Against | Jun 26, 2024 |
| Planned Parenthood Affiliates Of California | * Support | Jun 26, 2024 |
| Providence | ** Support | |
| Providence Health Services | * Support | May 1, 2024 |
| Public Advocates | * Against | Jun 26, 2024 |
| Public Interest Law Project | * Against | Jun 26, 2024 |
| R Street Sacramento Partnership | * Support | Jun 19, 2024 |
| Sacramento Area Firefighters Local 522 | * Support | Jun 26, 2024 |
| Sacramento Asian Chamber of Commerce | * Support | Jun 26, 2024 |
| Sacramento Association of Realtors | * Support | Jun 26, 2024 |
| Sacramento Housing Alliance | * Against | Jun 26, 2024 |
| Sacramento LGBT Community Center | ** Support | |
| Sacramento Mayor Darrell Steinberg | * Support | Jun 26, 2024 |
| Sacramento Metropolitan Chamber of Commerce | * Support | Jun 26, 2024 |
| Sacramento Native American Health Center | ** Support | |
| Sacramento Native American Health Center, Inc. | * Support | Jun 22, 2024 |
| Sacramento Regional Builders Exchange | * Support | Jun 26, 2024 |
| Sacramento Regional Water Authority | * Support | Jun 26, 2024 |
| Sacramento Sierra Building and Construction Trades | * Support | Jun 26, 2024 |
| Sacramento-Sierra's Building and Construction Trades Council | * Support | Jun 19, 2024 |
| San Diego Housing Federation | * Against | Jun 26, 2024 |
| Scripps Health | ** Support | |
| State Building and Construction Trades Council | * Support | Jun 26, 2024 |
| Steinberg Institute | * Support | Jun 22, 2024 |
| Sutter Health | * Support | Jun 26, 2024 |
| Sutter Medical Group | * Support | Jun 26, 2024 |
| TMP for Life | * Support | Jun 26, 2024 |
| Wellspace Health | * Support | Jun 26, 2024 |
| Western States Council Of Sheet Metal Workers | * Support | Jun 26, 2024 |
Date of Hearing: June 26, 2024
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Christopher M. Ward, Chair
SBPCA Bill Id:SB 1439
Author:(Ashby) – As Amended Ver:June 10, 2024
SENATE VOTE: 37-0
SUBJECT: Surplus Land Act: exempt surplus land: health facilities: City of Sacramento
SUMMARY: Creates a new exemption under the Surplus Land Act (SLA) for specified parcels in the City of Sacramento, if the parcels are being or will be developed for specified health facilities. Specifically, this bill:
- Establishes a new category of exempt surplus land under the SLA for land that is being or will be developed for a health facility that will be a disproportionate share hospital or will be eligible for the 340B Drug Program and meets all of the following requirements:
- The land is located on one of 12 specified parcels within the City of Sacramento, as identified by the site Assessor Parcel Numbers (APNs);
- The land is not identified in the sites inventory in the applicable housing element for lower-income households; and
- The land will be subject to a recorded deed restriction for a period of 55 years that it will remain either a disproportionate share hospital or eligible for the 340B Drug Program.
- Requires a local agency, before using this exemption, to adopt written findings that the land meets the requirements of the bill and include a description of how the development of the land for a health facility aligns with the public interest and goals of the SLA.
- Specifies that if the health facility fails to meet the requirements of the deed restriction at any time while the deed restriction is in force, the owner of the health facility is liable for a civil penalty of 30% of the greater of the final sale price or the fair market value of the land at the time of disposition. Requires fair market value to be determined by an independent appraisal.
- Provides that the civil penalty above may be enforced by those entities authorized under existing law to enforce the SLA.
- Specifies procedures for the deposit of the penalty into a local housing trust fund or the state Building Homes and Jobs Trust Fund or Housing Rehabilitation Loan Fund, as specified.
- Defines a “health facility” as a facility, place, or building that is organized, maintained, and operated for the diagnosis, care, prevention, and treatment of human illness, physical or mental, including convalescence and rehabilitation and including care during and after pregnancy.
- Includes findings and declarations stating the need for a special statute because of the unique nature of the identified sites.
EXISTING LAW:
- Establishes procedures for the disposal of publicly-owned land that is surplus to the needs of local agencies, under SLA. (Government Code (GC) Sections 54220 - 54262)
- 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.” (GC 54221)
- Provides that “agency’s use” includes land that is being used, or is planned to be used pursuant to a written plan adopted by the local agency or will be disposed of to support agency work or operations, and excludes land for agency’s use from the SLA. (GC 54221)
- Requires local agencies to follow the procedures laid out in the SLA before surplus land can be sold, including, but not limited, to:
- 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. (GC 54222)
- Negotiate in good faith for 90 days with housing sponsors that respond. (GC 54223)
- 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:
- Allows the local agency to dispose of the property on the private market if a mutually satisfactory agreement is not reached with interested parties during the good faith negotiations. (GC 54223)
- Requires the disposing agency to record a covenant or restriction to the property, if a property is disposed pursuant to 5) after completing steps 2)-4), stating that if 10 or more units of housing are developed on the property later, 15% of the units must be sold or rented at an affordable cost to lower income households. (GC 54233)
- Gives the Department of Housing and Community Development (HCD) enforcement authority over the SLA, as follows:
- Allows HCD to develop guidelines to implement the penalty provisions of the SLA and provides that those guidelines are not subject to the Administrative Procedures Act.
- Requires local agencies to notify the Department of Housing and Community Development (HCD) before agreeing to terms for the disposition of surplus land.
- Imposes penalties of 30% of the disposition value of the land for a first violation and 50% of the disposition value 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 HCD that it is in violation of the act. (GC 54220 – 54262)
- Allows for public and private enforcement of the SLA by affordable housing developers, housing organizations, individuals that would have been eligible to apply for residency in affordable housing, a beneficially interested person or entity, and HCD. (GC 54221)
- Designates certain types of land as “exempt surplus land” and provides that the entirety of the SLA does not apply to exempt surplus land. (GC 54221)
- Designates, under federal law:
- Certain health facilities as a disproportionate share hospital, which are health facilities that receive additional Medicare payments because they serve a significantly disproportionate number of low-income patients, as specified. [United States Code Title 42 Section 256b(a)(4)(L)]
- Certain health facilities as eligible for discounted drugs under the “340B program” if they serve specified underserved communities, including low-income individuals, children, and rural populations. [United States Code Title 42 Section 256b(a)(4)(L)]
FISCAL EFFECT: Unknown.
COMMENTS:
Author’s Statement: According to the author, “SB 1439 introduces an exemption within the Surplus Land Act for Sutter Health to construct a healthcare facility on the Regional Transit lots located along 29th Street in Sacramento. This land will have a state-of-the-art cancer, serving Senate District 8 and surrounding regions.
According to UC Davis study, Sacramento County has a higher cancer mortality rate than the state average, indicating a significant need for a new facility in our region. Cancer is the second leading cause of death in California, with 189,000 new cases and over 60,000 deaths annually. There is an urgent need for increased accessibility to critical, lifesaving care, especially for Medi-Cal and Medicare patients diagnosed with cancer.
Sutter Health has shown its dedication to community investment by partnering with Federally Qualified Health Centers (FQHCs), such as WellSpace Health and the Sacramento Native American Health Center, supporting their development and success while serving a large population of Medi-Cal patients. With this new specialty care facility in Sacramento, Sutter Health will be able to provide patients from FQHCs with essential care that would otherwise be challenging to obtain. By accommodating more patients and offering a broader range of medical services, healthcare facilities can contribute to better health outcomes and overall community well-being.”
SLA: Local public agencies are major landlords in some communities, owning significant pieces of real estate. When properties become surplus to a local agency’s needs, public officials may want to dispose of the property. They can do so under the SLA to recoup their investment by selling or leasing that land for fifteen years or longer, assuming they follow the process specified in the SLA. The SLA spells out the steps local agencies must follow when they want to dispose of land. In 2023, AB 480 (Ting), Chapter 788, and SB 747 (Caballero), Chapter 786 made significant changes to the SLA. Together these bills attempted to strike a balance between ensuring comprehensive coverage of dispositions while enacting statutory exemptions and other changes that would streamline the process for local governments.
Generally, before local officials can dispose of property under the SLA, 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.” Before agencies can broadly negotiate to dispose of surplus land on the private market, they must give a “first right of refusal” to other public agencies, nonprofit housing developers, schools, and parks and recreation departments. Public agencies and nonprofit housing developers interested in developing surplus property are referred to as “housing sponsors.” Housing sponsors can notify the HCD if they are generally interested in acquiring surplus land to develop affordable housing. HCD maintains a list of housing sponsors and Notice of Availability (NOAs) on its website.
When a local agency wants to dispose of surplus land, it must send a written NOA to let interested parties – including local public entities with jurisdiction where the surplus land is located and all interested housing sponsors – know 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.
If any interested parties respond to the NOA within 60 days, the disposing agency must negotiate in good faith for 90 days with any interested parties who respond to the NOA to try to come to a mutually satisfactory sale or long-term lease agreement. If multiple entities respond to the NOA, the housing sponsor that proposes to provide the greatest number of units, and the highest level of affordable housing, gets priority. If the disposing agency and interested parties cannot agree to mutually satisfactory terms after negotiating in good faith, the agency that owns the surplus land can sell the land on the private market. Before disposing of the land through the private market, the disposing local agency must record a restriction or covenant against the property maintaining that housing is developed on the property in the future, 15% of the units must be sold or rented at an affordable cost to lower-income households.
The SLA says that nothing in its provisions:
- Limits the power of any local agency to sell or lease surplus land at fair market value or less than fair market value;
- Prevents a local agency from obtaining fair market value for the land;
- Limits a local agency’s authority or discretion to approve land use, zoning, or other entitlement decisions in connection with surplus land; or
- Requires a local agency to dispose of land just because it is surplus.
HCD has enforcement authority over the SLA. Furthermore, the SLA may be enforced by affordable housing developers, housing organizations, individuals who would have been eligible to apply for residency in affordable housing, or a beneficially interested person or entity. Local agencies that improperly dispose of surplus land face penalties of 30% of the sale price or market value for the first violation, and 50% for subsequent violations, with penalty revenues going to a local housing trust fund. Before finalizing land dispositions, agencies must notify HCD and provide HCD with documentation of their compliance with the SLA disposition process. HCD has 30 days to review the submitted materials and respond. If HCD finds violations and notifies the disposing local agency within 30 days, the agency has 60 days to address them. If the violations are not addressed, the disposing agency may incur penalties including referral to the Attorney General. However, penalties are void if HCD fails to notify the local agency of a violation within 30 days.
In summary, the SLA establishes the following clear guidance related to timing:
- Sixty days for parties interested in purchasing or leasing the surplus property to respond to the NOA;
- Ninety days (minimum) good faith negotiation period with interested parties; and
- Thirty days for HCD to review the SLA disposition materials provided by the local public agency to verify compliance with the SLA.
- If no violation is found, the local public agency can proceed with disposing of the property to either an interested party (if a mutually satisfactory sales price or term of lease is reached), or disposing of the property on the private market if not.
- If a violation is found, and communicated to the disposing local public agency by HCD in the 30-day timeframe, then the local public agency has 60 days to correct the violation, or face penalties if not corrected.
Affected Parties: The sponsor of this bill is Sutter Health, a nonprofit healthcare system headquartered in Sacramento which, according to their website, serves three million Californians.
Sacramento Regional Transit (SacRT) provides transportation services in the Sacramento region, operating 82 bus routes, 43 miles of light rail serving 53 light rail stations, and ADA paratransit services. Some SacRT facilities are located near Sutter Health’s existing medical facilities, including a bus maintenance facility located at 29th and N Streets that is adjacent to a Sutter Health medical campus.
Parcels Exempted by the Bill: The introduced version of the bill created a new category of exempt surplus land for land that is being or will be developed for a health facility, as defined. Before using this exemption to dispose of land, the local public agency, SacRT, must adopt written findings that include a description of how the development of the land with health facilities aligns with the public interest and the goals of the SLA.
Amendments in the Senate Local Government Committee limited the bill’s exemption to apply to nine specific parcels owned by SacRT in the City of Sacramento. SacRT has already declared the properties as surplus under the SLA, and issued a NOA for the properties, on January 17, 2024. As such, SacRT is already complying with the provisions of the SLA for the nine parcels that would be deemed exempt from the SLA under this bill.
Those parcels are:
- 1516 29th Street (Assessor Parcel Numbers 007-0274-012 and 007-0274-013);
- 2831 P Street (Assessor Parcel Number 007-0274-026);
- 2811 O Street (Assessor Parcel Numbers 007-0273-014 and 007-0273-015);
- 2824 N Street (Assessor Parcel Number 007-0273-004);
- 2812 N Street (Assessor Parcel Number 007-0273-003); and
- 1400 29th Street (Assessor Parcel Numbers 007-0273-008 and 007-0273-022).
Recent author amendments added three additional parcels owned by SacRT to the exemptions proposed by this bill. The parcels have not been identified as surplus by SacRT, and are currently in active use as SacRT’s bus maintenance facility. Those parcels are:
- 1323 28th Street (Assessor Parcel Number 007-0174-003);
- 1301 28th Street (Assessor Parcel Number 007-0174-004); and
- 2830 Capitol Avenue (Assessor Parcel Number 007-0174-005).
While all of the parcels in question are located near the Capital City Freeway, these parcels are also within walking distance of major amenities like medical facilities, grocery stores, schools, parks, transit, and job opportunities. As such, they could score favorably in the state’s Cap-and-Trade Funded Affordable Housing and Sustainable Communities (AHSC) program. The parcels also are identified as “Highest Resource” opportunity and low-poverty & segregation parcels on the California Tax Credit Allocation Committee (CTCAC)/HCD Opportunity Map.[1] Research has shown numerous positive outcomes for households that live in low-segregation and high opportunity neighborhoods.[2] In recognition of the benefits of building housing in high opportunity areas, many affordable housing funding programs like CTCAC’s Low-Income Housing Tax Credits, AHSC, and the Infill Infrastructure Grant Program (IIG), reward projects located in those areas through favorable scoring. Development of affordable housing on these parcels would further numerous statewide objectives like facilitating infill housing development in high opportunity areas and reducing greenhouse gas emissions.
State and Local Housing Need: According to HCD’s 2022 Statewide Housing Plan Update, California’s housing crisis is a half-century in the making. [3] After decades of underproduction, housing supply is far behind need and costs are soaring. As a result, millions of Californians must make hard decisions about paying for housing at the expense of food, health care, child care, and transportation, directly impacting the quality of life in the state. One in three households in the state does not earn enough money to meet their basic needs. In 2023, over 181,000 Californians experienced homelessness on a given night, with a sharp increase in the number of people who experienced homelessness for the first time.[4] To meet this housing need, HCD determined that California must plan for more than 2.5 million new homes, and no less than one million of those homes must be affordable to lower-income households, in the 6th Regional Housing Needs Assessment (RHNA).
Sacramento was the first jurisdiction in the state to earn HCD’s “Prohousing” Designation.[5] The City of Sacramento’s 6th RHNA cycle began on May 15, 2021 and ends on May 15, 2029.[6] As such, the City is a little over three years into its eight-year RHNA cycle (37.5% through the cycle). To meet the housing needs of current and future residents, the City of Sacramento must permit 45,580 new homes, including 16,769 homes affordable for lower-income households earning 0-80% of the Area Median Income (AMI), by the end of the 6th RHNA cycle.[7] Sacramento’s permitting progress towards its RHNA is as follows:
- 9.9% of the very low-income (0-50% AMI) RHNA
- 25.1% of the low-income (50-80% AMI) RHNA
- 32.9% of the moderate-income (80-120% AMI) RHNA
- 10.3% of the above moderate-income (120%+ AMI) RHNA
Given that the City of Sacramento is over a third of the way through its 6th RHNA cycle, its permitting numbers are not on track to meet its housing needs, especially in the very low-income and above moderate-income RHNA income categories.
SLA as a Tool for Housing Production: The SLA is a powerful tool for the production of affordable housing in California. The SLA requires an entity proposing to use surplus land for developing low- and moderate-income housing to deed restrict at least 25% of the units as affordable. In the event that multiple entities respond to a SLA NOA with an interest to purchase or lease the land, the local agency is required to give priority to housing projects that meet the aforementioned affordability requirements. The disposing entity must also prioritize the number of units proposed, and the affordability levels of those units, while reviewing responses to the NOA and proceeding with negotiations.
Since January 2021, surplus and exempt surplus land dispositions tracked by HCD have resulted in 16,926 housing units, including over 10,535 units of housing affordable to lower-income households, entering the development pipeline.[8]
This bill would provide an exemption from the SLA for 12 specified parcels in the City of Sacramento, as described above in this analysis. Some of those parcels are in the SLA disposition process, and SacRT received responses to the NOA from numerous affordable housing developers, though the details of the proposals from the respondents are not public. Should this bill be signed, it would become law on January 1, 2025. By that time, the good faith negotiation period mandated by the SLA with the NOA respondents would be complete, and SacRT would have either reached a mutually satisfactory sales term to dispose of the land, or they would not. If SacRT fails to reach a mutually satisfactory sales term with the NOA respondents during the good faith negotiations period, the agency could sell the land on the free market to any interested party, assuming they dutifully complied with the provisions of the SLA. It is important to note, that this bill would also exempt three additional SacRT parcels that are in active use and not yet declared surplus, from the provisions of the SLA in the future.
Healthcare Facilities and the SLA: Under current law, there are no exemptions to the SLA that would prioritize a healthcare provider seeking to acquire land owned by a local public agency to build a healthcare facility, as is proposed in this bill. Under the SLA, the agency must offer that property to affordable housing developers, schools, parks and recreation departments, and other public agencies before opening up the bidding process to other potential buyers. With certain exceptions, agencies have discretion in setting conditions on the disposition, which includes requesting market value for the land. Existing law prohibits a local agency from disallowing residential use as a condition of the disposal, reducing the allowable number of residential unitsor the maximum lot coverage to below what is allowed by zoning or the general plan, or requiring design standards that have a substantial adverse effect on the viability of a housing development for lower and moderate-income households [GOV § 54223 (b)]. The local agency also has the ability to use of existing exemptions in the SLA; but even where an exemption applies, a local public agency may choose not to exercise it.
In the case of this bill, SacRT could elect to sell the land to a health care provider on the private market after complying with the provisions of the SLA if they cannot reach mutually satisfactory disposition terms with respondents to the SLA NOA after the good faith negotiation period concludes. There is nothing in the SLA precluding a local public agency from selling the property to any interested buyer after the good faith negotiation period, so long as the disposing agency complies with the provisions of the SLA leading up to that sale.
SLA versus State-Owned Excess Sites: There are two different pathways for the development of affordable housing on publicly-owned land. One is the SLA, which, as outlined in this analysis, establishes a process for local agencies to dispose of land that they consider to be surplus. This process is initiated by the local agency, and conducted in coordination with HCD. After a local agency moves through the SLA process, if they do not reach a mutually satisfactory disposal term with interested parties after negotiating in good faith, there is a clear pathway for them to sell the property on the public market. Local agencies are required to provide HCD with documentation supporting their compliance with the SLA, and HCD has 30 days to review the documentation and notify the local public agency of any violations of the SLA. After which, the local public agency is free to proceed with disposal on the public market.
There is also the State-Owned Excess Sites (Excess Sites) program, established by Governor Newsom’s Executive Order N-06-19. This executive order directed the Department of General Services (DGS) and HCD to “identify and prioritize excess state-owned property and aggressively pursue sustainable, innovative, cost-effective housing projects.”[9] Through the excess sites program, DGS and HCD are tasked with the identification and disposal of state-owned parcels, including site mapping, screening, in issuance of Requests for Proposals (RFPs) for Excess Sites. According to HCD, the Excess Sites program is on track to deliver approximately 5,500 housing units.[10] Unlike the in SLA, there are no formalized timing requirements associated with the Excess Sites program.
The Excess Sites program is sometimes conflated with the SLA in conversations around developing affordable housing on publicly-owned land, but is quite different in scope and function. The SLA establishes a process for local public agencies to follow when they seek to dispose of their own land, with HCD oversight. DGS is not involved in the SLA process. The Excess Sites program is led by DGS and HCD, and tasks the state government with identifying state-owned land for affordable housing development and facilitating the development of that land.
Policy Considerations: The Committee may wish to consider the following:
- Bill Timing and Coordination: SacRT posted a NOA for nine parcels neighboring the Sutter Health campus on January 17, 2024. These nine parcels have been identified in this bill as nine of the twelve parcels eligible for the proposed exemption. SacRT received six responses to the NOA, including multiple from affordable housing developers. As of June 14, 2024, these parcels are still going through the SLA process and are currently in the “good faith negotiations” stage of the disposal process.
As mentioned above, a local agency must first declare land surplus or exempt surplus before taking steps to dispose of it. SacRT has already declared nine of the twelve parcels as surplus. This bill, if signed, would become effective on January 1, 2025, likely after SacRT has concluded current good faith negotiations with interested parties. The Committee may wish to consider the necessity of this bill if nine of the identified parcels have already begun the SLA process.
It is also possible that the introduction of this bill, while SacRT was in the SLA process, may put a chilling effect on the required good faith negotiations with the NOA respondents, as SacRT now knows that Sutter Medical is interested in purchasing these parcels from them in the future. - Is this a SLA Issue? While providing access to health care is a noble mission and ensuring access to health care for lower-income populations is critical, this bill seeks to create an exemption for both land that has already been identified as surplus and has begun the disposition process and for land that has not been identified surplus and is currently in active use by a local public agency. The surplus parcels could be eligible for a bid from any interested party before the legislative year is over, should SacRT not reach mutually satisfactory terms during the good faith negotiations period, and well before the bill could go into effect if it were signed into law. SacRT is not compelled to sell the land to any respondents to the NOA, just to negotiate in good faith. If SacRT and the NOA respondents do not reach a mutually satisfactory deal, there is nothing preventing SacRT from selling the land to another party, including a health care provider, once its obligations under the SLA are complete.
- Actively Used Public Land: The SLA requires that land identified as surplus by a public agency is first offered to those interested in developing affordable housing, schools, and open space. Any land that is disposed by a local agency must be declared surplus land or exempt surplus land by the public agency. Existing law provides that only the local public agency can identify and declare their land surplus. The recent amendments to the bill identify an additional three parcels that have not been identified as surplus by SacRT.
- Setting a Precedent? Since the major revisions of the SLA via AB 1486 (Ting), Chapter 664, Statutes of 2019, legislation proposing exemptions to the SLA have been sponsored by local governments seeking to dispose of their land or nonprofit affordable housing developers. The SLA was also significantly reformed in 2023 by AB 480 (Ting), Chapter 788 and SB 747 (Caballero), Chapter 786. Together the bills attempted to strike a balance between ensuring comprehensive coverage of dispositions while enacting statutory exemptions and other changes that would streamline the process for local governments. The Committee may wish to consider the precedent this legislation could set for situations where public agencies are seen as an obstacle to a private entity wishing to expand its footprint.
Arguments in Support: According to Sutter Health, the bill sponsor, “As the Sacramento region continues to grow, we need to continue to ensure the community has adequate access to health care. Currently, Sutter Medical Center, Sacramento, our flagship hospital in the Sacramento region, runs at or over capacity, and we are now embarking on plans to expand the last remaining shell space in our current footprint. Additionally, Sutter Medical Center, Sacramento is surrounded by developed land or Regional Transit property, so the only real way we could expand our services would be to acquire land currently owned by RT – which would be subject to the SLA process.
Current law, as stated in Section 54221 of the Government Code, establishes the framework for the disposal of surplus land by local agencies across California. The code outlines exemptions for how surplus land can be disposed which include, but are not limited to, housing developments, specific government uses such as waste disposal or wastewater treatment plants, infrastructure projects including wireless facilities or utility sites, as well as commercial or industrial use.
For these reasons, we are pleased to sponsor SB 1439 and urge your AYE vote.”
Arguments in Opposition: According to the Sacramento Housing Alliance, “While the aim by the author and Sutter Health to develop a cancer center is a noble goal, exempting healthcare facilities from the SLA is the wrong way to develop such a facility. Even Sutter Health identified access to basic needs such as housing, jobs, and food as a significant community health need in their 2022 Community Health Needs Assessment. Housing and healthcare are interconnected, yet this bill would put them in conflict with each other.
Additionally, as the author’s office informed us, Sacramento Regional Transit (SacRT) was not consulted regarding this bill. As amended, this bill would exempt six parcels currently owned by SacRT, which were included in an SLA Notices of Availability (NOAs). SacRT received six proposals, including proposals from several of our member non-profit affordable housing developers.
These proposals are currently being reviewed by SacRT staff as required by law. It is concerning that the author did not consult with SacRT before proposing a bill that will impact their land and bidding process under the SLA. It is a matter of fairness, as SacRT and affordable housing developers have worked in good faith to comply with the law. This bill could stop the actual development of several proposed affordable housing communities in Sacramento and, indeed, across the state by setting a precedent that allows for exemptions to the SLA.
Sacramento is significantly behind in producing its state mandated Regional Housing Needs Allocation (RHNA) for low-income households; and this bill will create yet another barrier to build more affordable housing for our low-income neighbors, particularly seniors, children and families, communities of color, and people experiencing homelessness.
As written, SB 1439 weakens one of the most powerful laws protecting our public lands while also facilitating the development of affordable housing across the state.”
Related Legislation:
AB 480 (Ting), Chapter 788, Statutes of 2023 makes numerous changes to the SLA, including the disposal process, the authority of the Department of Housing and Community Development (HCD), and penalties for violations.
AB 1734 (Jones-Sawyer), Chapter 769, Statutes of 2023 creates, until January 1, 2034, a specific process under the SLA for the disposition of land in the City of Los Angeles for affordable housing and low barrier navigation centers.
AB 457 (Joe Patterson) created 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 was substantially amended into a different subject matter.
AB 837 (Alvarez) of 2023 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 Senate Local Government Committee. However, a substantially similar policy adopted via a budget trailer bill was enacted into law in 2023.
AB 983 (Cervantes) of 2023 would have categorized as exempt surplus land, properties that are designated in an adopted downtown revitalization plan, as specified. AB 983 was held in the Assembly Local Government Committee.
AB 2319 (Bonta) Chapter 963, 2022 created an exemption from the Surplus Lands Act (SLA) for the Alameda Naval Air Station (Alameda Point).
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 Assembly Housing 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.
SB 747 (Caballero), Chapter 786, Statutes of 2023 makes numerous changes to the Surplus Lands Act (SLA), including modifying SLA procedures, defining disposals of surplus land to include leases of longer than 15 years, altering the definition of exempt surplus land, and other changes.
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.
Double Referred: This bill was double-referred. It was heard in the Assembly Local Government Committee, where it passed on a 9-0 vote on June 19, 2024.
REGISTERED SUPPORT / OPPOSITION:
Support
Sutter Health (Sponsor)
California Hospital Association
California Medical Association
California Professional Firefighters
California State Association of Electrical Workers
California State Pipe Trades Council
Sacramento LGBT Community Center
Sacramento Native American Health Center
The City of Sacramento, Mayor’s Office
WellSpace Health
Western States Council Sheet Metal, Air, Rail, and Transportation
Opposition
350 Bay Area Action
California Coalition for Rural Housing
California Housing Partnership Corporation
Community HousingWorks
EAH Housing
East Bay Housing Organizations
Homes & Hope
House Sacramento
Housing California
J Gould Consulting
MidPen Housing Corporation
Mutual Housing California
Non-profit Housing Association of Northern California
Organize Sacramento
Public Advocates
Public Interest Law Project
Resources for Community Development
Sacramento Housing Alliance
San Diego Housing Federation
Tenants Together
Analysis Prepared by: Dori Ganetsos / H. & C.D. / (916) 319-2085
https://belonging.berkeley.edu/final-2024-ctcac-hcd-opportunity-map ↑
https://www.huduser.gov/portal/mto.html ↑
California Department of Housing and Community Development, A Home for Every Californian: 2022 Statewide Housing Plan. March 2022, https://storymaps.arcgis.com/stories/94729ab1648d43b1811c1698a748c136 ↑
U.S. Department of Housing and Urban Development, Point in Time Counts. https://www.huduser.gov/portal/datasets/ahar/2023-ahar-part-1-pit-estimates-of-homelessness-in-the-us.html ↑
https://www.hcd.ca.gov/about-hcd/newsroom/sacramento-becomes-first-california-jurisdiction-to-earn-state-prohousing-designation ↑
https://www.hcd.ca.gov/planning-and-community-development/housing-open-data-tools/housing-element-implementation-and-apr-dashboard ↑
IBID. ↑
https://www.hcd.ca.gov/sites/default/files/docs/planning-and-community/draft-updated-sla-guidelines-presentation.pdf ↑
https://www.dgs.ca.gov/en/RESD/Projects/Page-Content/Projects-List-Folder/Executive-Order-N-06-19-Affordable-Housing-Development ↑
https://www.hcd.ca.gov/about-hcd/newsroom/california-invests-63-million-to-advance-governors-excess-sites-order-funding-975-homes-state-land ↑
Date of Hearing: June 19, 2024
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Juan Carrillo, Chair
SBPCA Bill Id:SB 1439
Author:(Ashby) – As Amended Ver:June 10, 2024
SENATE VOTE: 37-0
SUBJECT: Surplus Land Act: exempt surplus land: health facilities: City of Sacramento
SUMMARY: Creates a new exemption under the Surplus Land Act (SLA) for specified parcels in the City of Sacramento, if the parcels are being or will be developed for specified health facilities. Specifically, this bill:
- Establishes a new category of exempt surplus land under the SLA for land that is being or will be developed for a health facility that will be a disproportionate share hospital or will be eligible for the 340B Drug Program and meets all of the following requirements:
- The land is located on one of 12 specified parcels within the City of Sacramento.
- The land is not identified in the sites inventory in the applicable housing element for lower-income households.
- The land will be subject to a recorded deed restriction for a period of 55 years that it will remain either a disproportionate share hospital or eligible for the 340B Drug Program.
- Requires a local agency, before using this exemption, to adopt written findings that the land meets the requirements of the bill and include a description of how the development of the land for a health facility aligns with the public interest and goals of the SLA.
- Specifies that if the health facility fails to meet the requirements of the deed restriction at any time while the deed restriction is in force, the owner of the health facility is liable for a civil penalty of 30 percent of the greater of the final sale price or the fair market value of the land at the time of disposition. Fair market value shall be determined by an independent appraisal.
- Provides that the civil penalty above may be enforced by those entities authorized under existing law to enforce the SLA.
- Specifies procedures for the deposit of the penalty into a local housing trust fund or the state Building Homes and Jobs Trust Fund or Housing Rehabilitation Loan Fund, as specified.
- Defines its terms, including to define a health facility as a facility, place, or building that is organized, maintained, and operated for the diagnosis, care, prevention, and treatment of human illness, physical or mental, including convalescence and rehabilitation and including care during and after pregnancy.
- Includes findings and declarations stating the need for a special statute because of the unique nature of the identified sites.
FISCAL EFFECT: This bill is keyed fiscal.
COMMENTS:
- Bill Summary. SB 1439 creates a new exemption under the SLA for specific parcels in Sacramento disposed of to a health facility that is either a disproportionate share hospital or is eligible for the federal 340B Drug Program. The list of parcels include 9 parcels identified as surplus by Sacramento Regional Transit (SacRT), the disposing agency, and 3 parcels still in use by SacRT. The health facility must maintain its status as a disproportionate share hospital or its eligibility for the 340B Drug Program; if the health facility does not maintain its status, it may face penalties equal to 30% of the sale price or appraised market value, whichever is higher. The bill requires that any penalties collected must be used for the development of affordable housing in the same jurisdiction of the surplus land.
This bill is sponsored by Sutter Health. - Author’s Statement. According to the author, “SB 1439 introduces an exemption within the Surplus Land Act for Sutter Health to construct a healthcare facility on the Regional Transit lots located along 29th street in Sacramento. This land will have a state-of-the-art cancer, serving Senate District 8 and surrounding regions.
“According to a study from UC Davis, Sacramento County has a higher cancer mortality rate than the state average, indicating a significant need for a new facility in our region. Cancer is the second leading cause of death in California, with 189,000 new cases and over 60,000 deaths annually. There is an urgent need for increased accessibility to critical, lifesaving care, especially for Medi-Cal and Medicare patients diagnosed with cancer.
“California is also experiencing a healthcare provider shortage and a crisis in access to medical services. An estimated 7 million Californians live in areas with insufficient healthcare providers. The Kaiser Family Foundation reported that only about half of the state’s primary care needs were met in 2022. This shortage further emphasizes the necessity for improved healthcare infrastructure and resources in our region.
“Sutter Health has shown its dedication to community investment by partnering with Federally Qualified Health Centers (FQHCs), such as WellSpace Health and the Sacramento Native American Health Center, supporting their development and success while serving a large population of Medi-Cal patients. With this new specialty care facility in Sacramento, Sutter Health will be able to provide patients from FQHCs with essential care that would otherwise be challenging to obtain. By accommodating more patients and offering a broader range of medical services, healthcare facilities can contribute to better health outcomes and overall community well-being.” - Surplus Land Act. Public agencies are major landlords in some communities, owning significant pieces of real estate. When properties become surplus to an agency’s needs, public officials want to dispose, which means to sell or lease for fifteen years or longer, 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 public agencies, nonprofit housing developers, schools, and parks and recreation departments. After notifying these groups that the land is available, the disposing agency must negotiate in good faith with these interested parties to try to come to agreement for 90 days before the local agency can dispose of the surplus land.
- Agency’s Use. Generally, 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.” AB 480 (Ting), Chapter 788, Statutes of 2023 allows certain types of exempt surplus land to be declared ministerially, in-lieu of the public hearing, the local agency must publish a notice and allow for public comment for a minimum of 30 days. Land that is being used for an agency work or operations is not surplus and therefore is not disposed. Pursuant to GOV § 54221 (c), “agency’s use” includes land that is being used, or is planned to be used pursuant to a written plan adopted by the local agency.
As a general rule, “agency’s use” cannot include commercial or industrial uses or activities, and land disposed of for the purpose of investment or generating revenue cannot be considered necessary for the agency’s use. As a result, cities and counties are limited in their ability to dispose of properties for economic development or revenue generation purposes. However, most special districts are not subject to those restrictions on agency’s use as long as they can demonstrate that use of the site will do one of the following: - Directly further the express purpose of agency work or operations.
- Be expressly authorized by a statute governing the local agency.
The SLA designates certain types of land as “exempt surplus land.” Statute provides that the entirety of the SLA does not apply to disposals of exempt surplus land. However, some exemptions have requirements for eligibility. If the disposal is not consistent with the exemption claimed, the disposition may be illegal. All other surplus land must follow the procedures laid out in the SLA before a local agency can dispose of it.
- Process of the SLA. Before agencies can enter into negotiations to dispose of surplus land, they must send a written notice of availability to various public agencies and nonprofit affordable housing developers, commonly 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 Department of Housing and Community Development (HCD) if 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. If surplus land is not sold to an affordable housing developer, but housing is developed on it later, 15 percent of the units must be sold or rented at an affordable cost to lower income households.
The SLA says that nothing in its provisions:
- Limits the power of any local agency to sell or lease surplus land at fair market value or less than fair market value;
- Prevents a local agency from obtaining fair market value;
- Limits a local agency’s authority or discretion to approve land use, zoning, or other entitlement decisions in connection with surplus land; or
- Requires a local agency to dispose of land just because it is surplus.
- Local agencies that dispose of surplus land in violation of the SLA face penalties totaling 30 percent of the sales price or the appraised fair market value at the time of disposition for the first violation, and 50 percent for subsequent violations. These penalty revenues must be deposited in a local housing trust fund. The enforcement process in the SLA requires that: 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, as specified.
- 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 that the disposal violates the SLA.
- A local agency cannot be held liable for the penalties under the SLA if HCD does not notify the agency that the agency is in violation within 30 days of receiving the description.
- SLA Reform. In 2023, AB 480 (Ting), Chapter 788 and SB 747 (Caballero), Chapter 786 made significant changes to the SLA. Together the bills attempted to strike a balance between ensuring comprehensive coverage of dispositions, while enacting exemptions and other changes that would streamline the process for local governments. Specifically, AB 480 and SB 747:
- Define “dispose” in the law to include leases of longer than 15 years that are entered into on or after January 1, 2024, but excludes leases of terms shorter than15 years and leases where no development or demolition will occur;
- Apply penalties to leases that violate the SLA, but provide that penalties don’t apply to non-substantive violations of the SLA;
- Add numerous categories of exempt surplus land, such as properties of smaller than one-half acre, specified mixed-use developments and developments on larger sites that include affordability requirements, airport land, and others;
- Authorize disposal of certain categories of exempt surplus land without a public hearing, as long as specified notice is provided;
- Establish additional types of activities that explicitly qualify as “agency’s use”; and
- Extend provisions that allow projects with an exclusive negotiating agreement in place to follow a previous version of the SLA.
- Agency’s Use, Exemptions, and Disposals. As described above, the SLA does not apply to land used by a public agency for its own operations because such property is not “surplus” as defined in the law. Special districts that provide healthcare services can already use their land for healthcare services as agency’s use, because providing healthcare supports the agency’s work or operations. If the public agency wanted to dispose of the land to an entity whose use of the land furthers the agency’s public purpose without first offering it to affordable housing developers, the agency would need to declare the land exempt under the agency’s use exemption in existing law [GOV § 54221 (f)(1)(N)].
If a healthcare provider wants to acquire property from a public agency to build a healthcare facility, the agency must offer that property to affordable housing developers, schools, parks and recreation departments, and other public agencies before opening up the bidding process to other potential buyers. With certain exceptions, agencies have discretion in setting conditions on the disposition, which includes requesting market value for the land. Existing law prohibits a local agency from disallowing residential use as condition of the disposal, reducing the allowable number of residential units or the maximum lot coverage to below what is allowed by zoning or the general plan, or requiring design standards that have a substantial adverse effect on the viability of a housing development for lower and moderate-income households [GOV § 54223 (b)]. The local agency also has discretion on making use of existing exemptions in the SLA; even where an exemption applies, a local agency may choose not to exercise it.
In the aforementioned example, the local agency could choose to not dispose to the health care provider for a multitude of reasons. Even with an applicable exemption, the local agency could choose to dispose to an affordable housing developer, a market rate housing developer, a school, a developer of commercial or mixed-use project or any other project that meets their conditions of disposal. - Transit Agency Exemptions. Transit agencies are treated differently from special districts and do not have the flexibility provided by the “agency use” exemption of the SLA. Transit agencies have their own exemption in the SLA [GOV § 54220 (f) (1) (S)]. Under this exemption, a transit agency is provided more flexibility if the agency adopts a land use plan or policy that designates at least 50 percent of the gross acreage covered by the adopted land use plan or policy for residential purposes. The adopted land use plan or policy must also require the development of at least 300 residential units, or at least 10 residential units per gross acre, averaged across all land covered by the land use plan or policy, whichever is greater.
As of June 3, 2024, SacRT does not have a system-wide land use plan for building housing. - Affected Parties. The sponsor of the bill is Sutter Health, a nonprofit healthcare system headquartered in Sacramento which, according to their website, serves 3 million Californians.
SacRT provides transportation services in the Sacramento region, operating 82 bus routes, 43 miles of light rail serving 53 light rail stations, and ADA paratransit services. Some SacRT facilities are located near Sutter Health’s existing medical facilities, including a bus maintenance facility located at 29th and N Streets that is adjacent to a Sutter Health medical campus. - Parcels Identified in the Bill. The introduced version of the bill created a new category of exempt surplus land for land that is being or will be developed for a health facility. Before using this exemption to dispose of land, the agency must adopt written findings that include a description of how the development of the land with health facilities aligns with the public interest and the goals of the SLA.
Amendments in Senate Local Government Committee limited the bill’s exemption to apply to specific parcels in Sacramento. Those nine parcels, are consistent with parcels identified as surplus in SacRT’s notice of availability dated January 17, 2024. Those parcels are listed below:- 1516 29th Street (Assessor Parcel Numbers 007-0274-012 and 007-0274-013).
- 2831 P Street (Assessor Parcel Number 007-0274-026).
- 2811 O Street (Assessor Parcel Numbers 007-0273-014 and 007-0273-015).
- 2824 N Street (Assessor Parcel Number 007-0273-004).
- 2812 N Street (Assessor Parcel Number 007-0273-003).
- 1400 29th Street (Assessor Parcel Numbers 007-0273-008 and 007-0273-022).
Recent author amendments add three additional parcels that have not been identified as surplus by SacRT and currently house SacRT’s bus maintenance facility. Those parcels are listed below:
- 1323 28th Street (Assessor Parcel Number 007-0174-003).
- 1301 28th Street (Assessor Parcel Number 007-0174-004).
- 2830 Capitol Avenue (Assessor Parcel Number 007-0174-005).
- Guidance on Implementation. The HCD has authority to adopt guidance and implement the Surplus Land Act. HCD is currently in the process of developing guidelines to implement the law as amended by AB 480 (Ting) and SB 747 (Caballero).
Local agencies often work with HCD early on to ensure that the disposal is compliant with state law. - Policy Considerations. The Committee was wish to consider the following:
- Late to the Party. SacRT posted a notice of availability for nine parcels neighboring the Sutter Health campus on January 17, 2024. These nine parcels have been identified in this bill as nine of the twelve parcels eligible for the exemption. As of June 14, 2024, these parcels are still going through the SLA process and are currently in in the “good faith negotiations” stage of the disposal process.
As above, a local agency must first declare land surplus or exempt surplus before taking steps to dispose of it. SacRT has already declared nine of the twelve parcels as surplus. It is unclear what utility an exemption, new or existing, could bring if the land has already been declared surplus and is nearing the end of the disposition process. The Committee may wish to consider the necessity of this bill if nine of the identified parcels have already begun the SLA process. - Is the SLA a Barrier? While providing access to health care is a noble mission and ensuring access to health care for lower income populations is critical, this bill seeks to create an exemption for both land that has already been identified as surplus and has begun the disposition process and for land that hasn’t been identified surplus and is currently in use. The surplus parcels could be eligible for a bid from any interested party before the legislative year is over and well before the bill could go into effect if it were signed into law.
In regards to the parcels in the bill that have not been identified as surplus, it is not clear that the SLA is a barrier since the parcels are not surplus and are currently being used for SacRT’s bus maintenance. - Dibs! Carving up Public Land that is Still in Use. The SLA requires that land that has been identified as surplus by a public agency is first offered to schools, for open space purposes, and to nonprofit affordable housing developers. Any land that is disposed by a local agency must be declared surplus land or exempt surplus land by the public agency. Existing law provides that only the public agency can identify and declare their land surplus. The recent amendments to the bill identify an additional three parcels that have not been identified as surplus by SacRT.
Since the major revisions of the SLA via AB 1486 (Ting), Chapter 664, Statutes of 2019, legislation proposing exemptions to the SLA have been sponsored by local governments seeking to dispose of their land or nonprofit affordable housing developers. The Committee may wish to consider the precedent this legislation could set for situations where public agencies are seen as an obstacle to a private entity wishing to expand its footprint.
- Late to the Party. SacRT posted a notice of availability for nine parcels neighboring the Sutter Health campus on January 17, 2024. These nine parcels have been identified in this bill as nine of the twelve parcels eligible for the exemption. As of June 14, 2024, these parcels are still going through the SLA process and are currently in in the “good faith negotiations” stage of the disposal process.
- Related Legislation. SB 1134 (Caballero) deletes the HCD’s exemption from the Administrative Procedures Act when developing or adopting guidelines to implement the SLA and specifies that each parcel of land be treated as a distinct unit of surplus land, unless the parcels are contiguous and disposed simultaneously to the same receiving entity.. SB 1134 is pending in this committee.
- Previous Legislation. AB 480 (Ting), Chapter 788, Statutes of 2023 makes numerous changes to the SLA, including the disposal process, the authority of the Department of Housing and Community Development (HCD), and penalties for violations.
AB 1734 (Jones-Sawyer), Chapter 769, Statutes of 2023, creates, until January 1, 2034, a specific process under the SLA for the disposition of land in the City of Los Angeles for affordable housing and low barrier navigation centers.
AB 457 (Joe Patterson) created 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 was substantially amended into a different subject matter.
AB 837 (Alvarez) of 2023 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 Senate Local Government Committee. However, substantially similar policy adopted via a budget trailer bill was enacted into law in 2023.
AB 983 (Cervantes) of 2023 would have categorized as exempt surplus land, properties that are designated in an adopted downtown revitalization plan, as specified. AB 983 was held in the Assembly Local Government Committee.
AB 2319 (Bonta) Chapter 963, 2022, created an exemption from the Surplus Lands Act (SLA) for the Alameda Naval Air Station (Alameda Point).
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 Assembly Housing 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.
SB 747 (Caballero), Chapter 786, Statutes of 2023, makes numerous changes to the Surplus Lands Act (SLA), including modifying SLA procedures, defining disposals of surplus land to include leases of longer than 15 years, altering the definition of exempt surplus land, and other changes.
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. - Arguments in Support. Sutter Health, sponsor of this bill, writes, “As the Sacramento region continues to grow, we need to continue to ensure the community has adequate access to health care. Currently, Sutter Medical Center, Sacramento, our flagship hospital in the Sacramento region, runs at or over capacity, and we are now embarking on plans to expand the last remaining shell space in our current footprint. Additionally, Sutter Medical Center, Sacramento is surrounded by developed land or Regional Transit property, so the only real way we could expand our services would be to acquire land currently owned by RT – which would be subject to the SLA process.
“Current law, as stated in Section 54221 of the Government Code, establishes the framework for the disposal of surplus land by local agencies across California. The code outlines exemptions for how surplus land can be disposed which include, but are not limited to, housing developments, specific government uses such as waste disposal or wastewater treatment plants, infrastructure projects including wireless facilities or utility sites, as well as commercial or industrial use.” - Arguments in Opposition. The Public Interest Law Project, San Diego Housing Federation, Non-Profit Housing of Northern California, East Bay Housing Organization, California Housing Partnership, and Housing California write in opposition, “Our organizations have a shared mission of increasing the supply of affordable housing for lower-income households. We have been deeply engaged in helping to strengthen and implement the SLA for many years and worked closely last year with Assemblymember Ting, Senator Caballero, and many stakeholders on the improvements to the SLA in AB 480 and SB 747.
“The SLA is a landmark housing law that requires local public agencies, when disposing of public land they no longer need, to first make the land available for affordable housing development or other specified public purposes, such as parks. Under the SLA, affordable housing developers and other public entities have the first right to bid on and negotiate for the purchase of surplus public sites, but the agency disposing of the land may sell or lease it for other purposes if no agreement is reached during the time period specified in the law.
“This process has been effective in delivering lower-income units where they may not have been previously possible. Since 2021, surplus land transactions tracked by the California Department of Housing and Community Development (HCD) have resulted in over 17,150 housing units, including over 10,750 units affordable to lower-income households.” - Double-Referral. This bill is double-referred to the Assembly Housing and Community Development Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
Sutter Health [Sponsor]
Association of California Healthcare Districts
California Ambulatory Surgery Association
California Hospital Association
California Professional Firefighters
Providence
Sacramento LGBT Community Center
Sacramento Native American Health Center
Scripps Health
Wellspace Health
Opposition
California Coalition for Rural Housing
California Housing Partnership Corporation
Community Housingworks
East Bay Housing Organizations
Homes & Hope
House Sacramento
Housing California
J Gould Consulting
Midpen Housing
Mutual Housing California
Non-profit Housing Association of Northern California (NPH)
Organize Sacramento
Public Advocates
Public Interest Law Project
Resources for Community Development
Sacramento Housing Alliance
San Diego Housing Federation
Analysis Prepared by: Linda Rios / L. GOV. / (916) 319-3958
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 1439 |
THIRD READING
Bill No: SB 1439
Author: Ashby (D)
Amended: 5/7/24
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE: 6-0, 5/1/24
AYES: Durazo, Seyarto, Dahle, Skinner, Smallwood-Cuevas, Wiener
NO VOTE RECORDED: Glazer
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Surplus Land Act: exempt surplus land: health facilities: City of Sacramento
SOURCE: Sutter Health
DIGEST:
This bill exempts specified parcels in the City of Sacramento from the Surplus Land Act (SLA) if the parcels would be used for specified health facilities.
ANALYSIS:
Existing law:
- Establishes procedures for the disposal of publicly-owned land that is surplus to the needs of local agencies, under SLA.
- 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.”
- Provides that “agency’s use” includes land that is being used, or is planned to be used pursuant to a written plan adopted by the local agency or will be disposed of to support agency work or operations, and excludes land for agency’s use from the SLA.
- Requires local agencies to follow the procedures laid out in the SLA before surplus land can be sold, including, but not limited, to:
- 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.
- 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:
- Negotiates in good faith for 90 days with housing sponsors that respond.
- Allows the local agency to dispose of the property on the private market if agreement is not reached with a housing sponsor.
- 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.
- Requires local agencies to notify the Department of Housing and Community Development (HCD) prior to agreeing to terms for the disposition of surplus land.
- Imposes penalties of 30% of the disposition value of the land for a first violation and 50% of the disposition value 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 HCD that it is in violation of the act.
- Allows private enforcement of the SLA by affordable housing developers, housing organizations, individuals that would have been eligible to apply for residency in affordable housing, a beneficially interested person or entity, and HCD.
- Designates certain types of land as “exempt surplus land” and provides that the entirety of the SLA does not apply to exempt surplus land.
- Allows HCD to develop guidelines to implement the penalty provisions of the SLA and provides that those guidelines are not subject to the Administrative Procedures Act.
- Provides, under federal law:
- Designates some health facilities as a disproportionate share hospital, which are health facilities that receive additional Medicare payments because they serve a significantly disproportionate number of low-income patients, as specified.
- Designates some health facilities as eligible for discounted drugs under the “340B program” if they serve specified underserved communities, including low-income individuals, children, and rural populations.
This bill:
- Establishes a new category of exempt surplus land for land that is being or will be developed for a health facility that is either a disproportionate share hospital or is eligible for the 340B program and meets all of the following requirements:
- The land is located on one of nine specified parcels within the City of Sacramento.
- The land is not identified in the sites inventory in the applicable housing element for lower-income households.
- The land will be subject to a recorded deed restriction for a period of 55 years that it will remain either a disproportionate share hospital or eligible for the 340B program.
- Requires a local agency, before using this exemption, to adopt written findings that the land meets the requirements of the bill and include a description of how the development of the land for a health facility aligns with the public interest and goals of the SLA.
- Specifies that if the health facility fails to meet the requirements of the deed restriction at any time while the deed restriction is in force, the owner of the health facility is liable for a civil penalty of 30 percent of the greater of the final sale price or the fair market value of the land at the time of disposition.
- Provides that the civil penalty above may be enforced by those entities authorized under existing law to enforce the SLA.
- Specifies procedures for the deposit of the funds into a local housing trust fund or the state Building Homes and Jobs Trust Fund or Housing Rehabilitation Loan Fund.
- Defines its terms, including to define a health facility as a facility, place, or building that is organized, maintained, and operated for the diagnosis, care, prevention, and treatment of human illness, physical or mental, including convalescence and rehabilitation and including care during and after pregnancy.
- Includes findings and declarations stating the need for a special statute that applies just to the specified sites.
Background
Public agencies are major landlords in some communities, owning significant pieces of real estate. When properties become surplus to an agency’s 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. This means that local agencies must open their properties up to affordable housing developers first, even if they have a different purpose in mind for the property.
Land for healthcare facilities. Under the SLA, if a healthcare provider wants to acquire property from a local agency to build a healthcare facility, in many cases, local agencies must offer that property to affordable housing developers first, potentially resulting in the loss of that site for healthcare facilities. Local governments across the state have reported that the SLA has delayed or halted many dispositions due to the uncertainty that the law has introduced into their property transactions.
Sacramento Regional Transit (SacRT) provides transportation services in the Sacramento region, operating 82 bus routes, 43 miles of light rail serving 53 light rail stations, and ADA paratransit services. SacRT has several properties in the Sacramento area that it is considering putting up for sale at some point in the future to improve operations by clustering facilities together and divesting of facilities that have outlived their useful life. Sutter Health is a nonprofit healthcare system headquartered in Sacramento that provides healthcare to about three million Californians, including to more Medi-Cal patients in Northern California than any other health system. Some SacRT facilities are located near Sutter Health’s existing medical facilities, including a bus maintenance facility and other administrative buildings located near 29th and N Streets that border a Sutter Health medical campus.
Sutter Health wants the Legislature to streamline the process of disposing of land to build healthcare facilities.
Comments
- Purpose of the bill. According to the author:
SB 1439 introduces an exemption within the Surplus Land Act for Sutter Health to construct a healthcare facility on the Regional Transit lot located on 29th street in Sacramento. This lot will have a state of the art cancer and neurology center, which will be an asset in our region.
While the development of affordable housing is a priority in California, we are also facing a healthcare provider shortage and a crisis in access to medical services. There are an estimated 7 million Californians living in provider shortage areas, and, according to the Kaiser Family Foundation, only about half of the state’s primary care needs were met in 2022.
Sutter Health has shown its dedication to community investment by partnering with Federally Qualified Health Centers (FQHCs), like WellSpace Health, supporting their development and success, while serving a large population of Medi-Cal patients. With this new specialty care facility in Sacramento, Sutter Health will be able to provide patients from FQHCs with essential care otherwise challenging to obtain. By accommodating more patients and offering a broader range of medical services, health care facilities can contribute to better health outcomes and overall community well-being.
- Undermining affordable housing production. Until 2020, the SLA was largely toothless. AB 1486 (Ting, 2019) rewrote the SLA to include many of the provisions in the SLA today. The 2019 amendments to the SLA were intended to increase the supply of housing affordable to lower-income Californians by giving affordable housing developers the first right of refusal on surplus local properties and by imposing affordability requirements on surplus land that later had market-rate housing built on it. The changes also strictly limited the cases where local governments could dispose of land to support commercial purposes, on the theory that if given the option, local governments would preferentially offer land to most other developers, instead of affordable housing. SB 1439 proposes an additional exemption to the SLA for a subset of commercial development, namely healthcare facilities. SB 1439 poses significant challenges to the goal of the SLA, which is to increase the supply of housing affordable to lower-income residents. Specifically, SB 1439 prioritizes healthcare facilities over affordable housing development on specified sites owned by SacRT. By creating an exemption, SB 1439 could preclude affordable housing developers from making the first offer on local surplus property if it is proposed to become a healthcare facility. It also sets a precedent for other types of commercial development to ask for priority over affordable housing, potentially undoing the Legislature’s progress on prioritizing local government land for affordable housing.
- Is it necessary? While the SLA is a cumbersome process for local agencies, it is unclear whether the SLA itself specifically blocks healthcare facilities from being constructed. Absent SB 1439, if a local government offers property for sale that a healthcare provider wants to acquire, the local agency must follow all the steps in the SLA, including the right of first refusal to any affordable housing developers that indicate interest. However, that does not necessarily mean that the site will be unavailable to the healthcare provider—an affordable housing developer may not be able to pay fair market value, in which case the local government could proceed to put the property on the open market. In the case that the property is purchased by an affordable housing developer pursuant to the SLA, healthcare providers may be able to find alternative sites and purchase them from private entities.
- What now? Committee amendments to this bill narrowed this bill to apply to nine specific parcels owned by SacRT. Following the committee hearing, it became clear these parcels are already in the SLA disposition process. Specifically, SacRT issued a notice of availability (NOA) for these parcels on January 17, 2024. The 60-day response period for affordable housing developers has elapsed and SacRT reports that it has received some interest from affordable housing developers. The SLA mandates that local agencies negotiate in good faith with affordable housing developers for 90 days, and if no agreement can be reached then the land can be sold to other bidders. SacRT notes that the 90-day window for these parcels to elapse on June 17th, but could extend further. This bill creates two challenges in connection with this timeline:
- First, this bill becomes moot if SacRT concludes negotiations with the interested affordable housing developers prior to this bill’s January 1, 2025 effective date. If SacRT concludes negotiations because it has reached agreement for the sale of the parcels to an affordable housing developer, the properties will no longer be available for Sutter to purchase. If SacRT concludes negotiations because it cannot reach agreement with affordable housing developers, it can offer the parcels on the broader market, at which point Sutter could bid for the properties regardless of whether this bill is in effect.
- However, if negotiations with affordable housing developers have not concluded by January 1, 2025, when this bill becomes effective, this bill could allow SacRT to use the authority under this bill to sell the parcels to Sutter. As a result, this bill could prematurely end negotiations with affordable housing developers and result in the loss of affordable housing at the sites in this bill.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
SUPPORT: (Verified 5/15/24)
Sutter Health (source)
Association of California Healthcare Districts
California Hospital Association
California Professional Firefighters
Providence
Sacramento LGBT Community Center
Sacramento Native American Health Center
Scripps Health
Wellspace Health
OPPOSITION: (Verified 5/15/24)
California Housing Partnership Corporation
East Bay Housing Organizations
Nonprofit Housing Association of Northern California
Public Interest Law Project
San Diego Housing Federation
Prepared by: Anton Favorini-Csorba / L. GOV. / (916) 651-4119
5/15/24 12:36:54
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SENATE COMMITTEE ON LOCAL GOVERNMENT
Senator María Elena Durazo, Chair
2023 - 2024 Regular
Bill No: | SB 1439 | Hearing Date: | 5/1/24 |
Author: | Ashby | Fiscal: | No |
Version: | 2/16/24 | Consultant: | Favorini-Csorba |
Surplus Land Act: exempt surplus land: health facilities
Exempts land for health facilities from the Surplus Land Act.
Background
Surplus Land Act. Public agencies are major landlords in some communities, owning significant pieces of real estate. When properties become surplus to an agency’s 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. This means that local agencies must open their properties up to affordable housing developers first, even if they have a different purpose in mind for the property.
Surplus land vs. agency’s use. 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.” Land that is being used for an agency’s use is not subject to the SLA. “Agency’s use” includes land that is being used, or is planned to be used pursuant to a written plan adopted by the local agency or will be disposed of to support agency work or operations.
As a general rule, agency’s use cannot include commercial or industrial uses or activities, and land disposed of for the purpose of investment or generating revenue cannot be considered necessary for the agency’s use. As a result, cities and counties are limited in their ability to dispose of properties for economic development or revenue generation purposes. However, most special districts are not subject to those restrictions on agency’s use as long as they can demonstrate that use of the site will do one of the following:
- Directly further the express purpose of agency work or operations.
- Be expressly authorized by a statute governing the local agency.
Transit districts can only dispose of property for commercial or revenue generation purposes if they meet specific requirements for developing affordable housing across their portfolio of properties, and have made a certain amount of progress towards building that housing.
The SLA designates certain types of land as “exempt surplus land.” Statute provides that the entirety of the SLA does not apply to disposals of exempt surplus land. All other surplus land must follow the procedures laid out in the SLA before a local agency can sell it.
SLA process. Before agencies can enter into negotiations to dispose of 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 Department of Housing and Community Development (HCD) if 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. If surplus land is not sold to an affordable housing developer, but housing is developed on it later, 15 percent of the units must be sold or rented at an affordable cost to lower income households.
The SLA says that nothing in its provisions:
- Limits the power of any local agency to sell or lease surplus land at fair market value or less than fair market value;
- Prevents a local agency from obtaining fair market value;
- Limits a local agency’s authority or discretion to approve land use, zoning, or other entitlement decisions in connection with surplus land; or
- Requires a local agency to dispose of land just because it is surplus.
Local agencies that dispose of surplus land in violation of the SLA face penalties totaling 30 percent of the sales price, or fair market value of the sale or lease, of land disposed of in violation of the SLA for a first violation, and 50 percent for subsequent violations. These penalty revenues must be deposited in a local housing trust fund. The enforcement process in the SLA requires that:
- 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, as specified.
- 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 that the disposal violates the SLA.
- A local agency cannot be held liable for the penalties under the SLA if HCD does not notify the agency that the agency is in violation within 30 days of receiving the description.
Recent SLA revisions. Two bills chaptered last year, SB 747 (Caballero) and AB 480 (Ting), made significant changes to the SLA. Collectively, the bills attempted to strike a balance between ensuring comprehensive coverage of dispositions, while enacting exemptions and other changes that would streamline the process for local governments. Specifically, SB 747 and AB 480:
- Define “dispose” in the law to include leases of longer than 15 years that are entered into on or after January 1, 2024, but exclude leases of shorter than 15 years and leases where no development or demolition will occur;
- Apply penalties to leases that violate the SLA, but provide that penalties don’t apply to non-substantive violations of the SLA;
- Add numerous categories of exempt surplus land, such as properties of smaller than one-half acre, specified mixed-use developments and developments on larger sites that include affordability requirements, airport land, and others;
- Authorize disposal of certain categories of exempt surplus land without a public hearing, as long as specified notice is provided;
- Establish additional types of activities that explicitly qualify as “agency’s use”; and
- Extend provisions that allow projects with an exclusive negotiating agreement in place to follow a previous version of the SLA.
Land for healthcare facilities. As described above, the SLA does not apply to land used by a local agency or disposed of for the agency’s use because such property is not “surplus” as defined in the law. Special districts that provide healthcare services can dispose of property for healthcare services as agency’s use without going through the SLA, because it supports the agency’s work or operations, and other special districts have some ability to dispose of property for revenue generation or commercial purposes. Accordingly, if a healthcare provider wants to acquire property from a local agency to build a healthcare facility, in many cases, local agencies must offer that property to affordable housing developers first, potentially resulting in the loss of that site for healthcare facilities. In any case, local governments across the state have reported that the SLA has delayed or halted many dispositions due to the uncertainty that the law has introduced into their property transactions.
Sacramento Regional Transit (SacRT) provides transportation services in the Sacramento region, operating 82 bus routes, 43 miles of light rail serving 53 light rail stations, and ADA paratransit services. SacRT has several properties in the Sacramento area that it is considering putting up for sale at some point in the future to improve operations by clustering facilities together and divesting of facilities that have outlived their useful life. Sutter Health is a nonprofit healthcare system headquartered in Sacramento that provides healthcare to about three million Californians, including to more Medi-Cal patients in Northern California than any other health system. Some SacRT facilities are located near Sutter Health’s existing medical facilities, including a bus maintenance facility located at 29th and N Streets that borders a Sutter Health medical campus.
Sutter Health wants the Legislature to streamline the process of disposing of land to build healthcare facilities.
Proposed Law
Senate Bill 1439 creates a new category of exempt surplus land for land that is being or will be developed for a health facility. Before using this exemption to dispose of land, the agency must adopt written findings that include a description of how the development of the land with health facilities aligns with the public interest and the goals of the SLA.
SB 1439 defines health facility to mean a facility, place, or building that is organized, maintained, and operated for the diagnosis, care, prevention, and treatment of human illness, physical or mental, including convalescence and rehabilitation and including care during and after pregnancy.
Comments
1. Purpose of the bill. According to the author, “SB 1439 introduces an exemption within the Surplus Land Act, facilitating the establishment of healthcare facilities on unused or underutilized public land. While the development of affordable housing is a priority in California, we are also facing a healthcare provider shortage and a crisis in access to medical services. There are an estimated 7 million Californians living in provider shortage areas, and, according to the Kaiser Family Foundation, only about half of the state’s primary care needs were met in 2022.
“In Senate District 8, Sutter Health has shown its dedication to community investment by partnering with Federally Qualified Health Centers (FQHCs), like WellSpace Health, supporting their development and success, while serving a large population of Medi-Cal patients. Seeking to expand its services, Sutter aims to acquire a nearby publicly-owned parcel adjacent to its medical center. With its new specialty care facility in Sacramento, Sutter Health will be able to provide patients from FQHCs with essential care otherwise challenging to obtain.
“This exemption will apply exclusively to organizations constructing healthcare facilities and procuring land at market rates. By accommodating more patients and offering a broader range of medical services, health care facilities can contribute to better health outcomes and overall community well-being.”
2. Housing uber alles. Until 2020, the SLA was largely toothless. AB 1486 (Ting, 2019) rewrote the SLA to include many of the provisions in the SLA today. The 2019 amendments to the SLA were intended to increase the supply of housing affordable to lower-income Californians by giving affordable housing developers the first right of refusal on surplus local properties and by imposing affordability requirements on surplus land that later had market-rate housing built on it. The changes also strictly limited the cases where local governments could dispose of land to support commercial purposes, on the theory that if given the option, local governments would preferentially offer land to most other developers, instead of affordable housing. SB 1439 proposes an additional exemption to the SLA for a subset of commercial development, namely healthcare facilities. On the one hand, healthcare facilities may be categorically different from other types of commercial development: healthcare is fundamental to the wellbeing of residents of the state. Additionally, the state and local governments intervene heavily to ensure that there is broad access to affordable care through the state’s Medi-Cal program, and some counties and healthcare districts directly provide healthcare services—indicating that there is a clear governmental interest in healthcare. On the other hand, SB 1439 poses significant challenges to the goal of the SLA, which is to increase the supply of housing affordable to lower-income residents. Specifically, SB 1439:
- Prioritizes healthcare facilities over affordable housing development. By creating an exemption, SB 1439 precludes affordable housing developers from making the first offer on local surplus property if it is proposed to become a healthcare facility. This may reduce the amount of affordable housing built in the state.
- Sets a precedent for other types of development to seek exemptions. Should SB 1439 be enacted, other developers that provide public benefits might seek similar treatment under the SLA, such as private higher education institutions. While these may be worthy endeavors, additional exemptions would further reduce the potential of the SLA to generate affordable housing.
- Does not provide assurance that the specific healthcare facilities enabled by the bill would benefit lower-income Californians. The purpose of the SLA is to provide a benefit to lower-income households through the form of affordable housing. SB 1439 applies to any health facility that provides care, as opposed to specific facilities that benefit vulnerable communities, such as facilities that serve a higher proportion of Medi-Cal patients or Federally Qualified Health Centers, which receive federal funds to serve underserved populations.
- Reopens the debate over what types of properties should qualify for exemptions. After several years of implementation, the Legislature enacted SB 747 and AB 480 to address significant issues with the SLA and stem the tide of bills amending it (14 in three years). SB 1439 comes less than a year after those efforts concluded.
The Committee may wish to consider whether the benefit to healthcare facilities provided by this bill outweighs the potential impact to affordable housing in the state.
3. Is it necessary? While the SLA is a cumbersome process for local agencies, it is unclear whether the SLA itself specifically blocks healthcare facilities from being constructed. Absent SB 1439, if a local government offers property for sale that a healthcare provider wants to acquire, the local agency must follow all the steps in the SLA, including the right of first refusal to any affordable housing developers that indicate interest. However, that does not necessarily mean that the site will be unavailable to the healthcare provider—an affordable housing developer may not be able to pay fair market value, in which case the local government could proceed to put the property on the open market. In the case that the property is purchased by an affordable housing developer pursuant to the SLA, healthcare providers may be able to find alternative sites and purchase them from private entities. The Committee may wish to consider whether this bill is necessary.
4. Related legislation. SB 1134 (Caballero), which the Committee will also consider at its May 1st hearing, makes a minor clarifying change to the SLA. Additionally, SB 1514 (Committee on Local Government) corrects two technical drafting errors that were contained in AB 480, which amended the SLA last year. SB 1514 was approved by the Committee at its April 3rd hearing on a 7-0 vote.
Support and Opposition
(4/26/24)
Support: Sutter Health (Sponsor)
Association of California Healthcare Districts
California Hospital Association
Opposition: California Housing Partnership Corporation
East Bay Housing Organizations
Nonprofit Housing Association of Northern California
Public Interest Law Project
San Diego Housing Federation
-- END --
Discussed in Hearing
1H
Assembly Standing Committee on Housing and Community Development
58MIN
Assembly Standing Committee on Local Government
9MIN
Senate Floor
35MIN
Senate Standing Committee on Local Government
Bill Author
Bill Co-Author(s):