Existing law authorizes the Department of General Services to dispose of surplus state real property, as defined, as authorized by the Legislature, upon any terms and conditions and subject to any reservations and exceptions the department deems to be in the best interests of the state. Existing law requires the department to first offer surplus state real property to a local agency, as defined, and then to nonprofit affordable housing sponsors, as defined, prior to being offered for sale to private entities or individuals. Existing law requires a local agency or nonprofit affordable housing sponsor to satisfy certain requirements to be considered as a potential priority buyer of the surplus state real property, including that the local agency or nonprofit affordable housing sponsor demonstrate, to the satisfaction of the department, that the surplus state real property, or portion of that surplus state real property, is to be used by the local agency or nonprofit affordable housing sponsor for open space, public parks, affordable housing projects, or development of local government-owned facilities. Existing law authorizes the department to sell surplus state real property, or a portion of surplus state real property, to a local agency, or to a nonprofit affordable housing sponsor if no local agency is interested in the surplus state real property, for affordable housing projects at a sales price less than fair market value if the department determines that such a discount will enable the provision of housing for persons and families of low or moderate income.

This bill would additionally authorize a local agency or nonprofit affordable housing sponsor to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used by the agency or sponsor for housing for formerly incarcerated individuals, subject to the same provisions described above, as specified.

The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.

This bill would provide that development of surplus state real property by a local agency or nonprofit affordable housing sponsor for an affordable housing project is by right, making the development ministerial in nature and exempt from CEQA requirements.

Existing law authorizes the Department of General Services to dispose of surplus state real property, as defined, as authorized by the Legislature, upon any terms and conditions and subject to any reservations and exceptions the department deems to be in the best interests of the state. Existing law requires the department to first offer surplus state real property to a local agency, as defined, and then to nonprofit affordable housing sponsors, as defined, prior to being offered for sale to private entities or individuals. Existing law requires a local agency or nonprofit affordable housing sponsor to satisfy certain requirements to be considered as a potential priority buyer of the surplus state real property, including that the local agency or nonprofit affordable housing sponsor demonstrate, to the satisfaction of the department, that the surplus state real property, or portion of that surplus state real property, is to be used by the local agency or nonprofit affordable housing sponsor for open space, public parks, affordable housing projects, or development of local government-owned facilities. Existing law authorizes the department to sell surplus state real property, or a portion of surplus state real property, to a local agency, or to a nonprofit affordable housing sponsor if no local agency is interested in the surplus state real property, for affordable housing projects at a sales price less than fair market value if the department determines that such a discount will enable the provision of housing for persons and families of low or moderate income.

This bill would additionally authorize a local agency or nonprofit affordable housing sponsor to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used by the agency or sponsor for housing for formerly incarcerated individuals, subject to the same provisions described above, as specified.

The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.

This bill would provide that development of surplus state real property by a local agency or nonprofit affordable housing sponsor for an affordable housing project is by right, making the development ministerial in nature and exempt from CEQA requirements.

Existing law authorizes the Department of General Services to dispose of surplus state real property, as defined, as authorized by the Legislature, upon any terms and conditions and subject to any reservations and exceptions the department deems to be in the best interests of the state. Existing law requires the department to first offer surplus state real property to a local agency, as defined, and then to nonprofit affordable housing sponsors, as defined, prior to being offered for sale to private entities or individuals. Existing law requires a local agency or nonprofit affordable housing sponsor to satisfy certain requirements to be considered as a potential priority buyer of the surplus state real property, including that the local agency or nonprofit affordable housing sponsor demonstrate, to the satisfaction of the department, that the surplus state real property, or portion of that surplus state real property, is to be used by the local agency or nonprofit affordable housing sponsor for open space, public parks, affordable housing projects, or development of local government-owned facilities. Existing law authorizes the department to sell surplus state real property, or a portion of surplus state real property, to a local agency, or to a nonprofit affordable housing sponsor if no local agency is interested in the surplus state real property, for affordable housing projects at a sales price less than fair market value if the department determines that such a discount will enable the provision of housing for persons and families of low or moderate income.

This bill would additionally authorize a local agency or nonprofit affordable housing sponsor to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used by the agency or sponsor for housing for formerly incarcerated individuals, subject to the same provisions described above, as specified.

The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.

This bill would provide that development of surplus state real property by a local agency or nonprofit affordable housing sponsor for an affordable housing project or housing for formerly incarcerated individuals is by right, making the development ministerial in nature and exempt from CEQA requirements.

Existing law authorizes the Department of General Services to dispose of surplus state real property, as defined, as authorized by the Legislature, upon any terms and conditions and subject to any reservations and exceptions the department deems to be in the best interests of the state. Existing law requires the department to first offer surplus state real property to a local agency, as defined, and then to nonprofit affordable housing sponsors, as defined, prior to being offered for sale to private entities or individuals. Existing law requires a local agency or nonprofit affordable housing sponsor to satisfy certain requirements to be considered as a potential priority buyer of the surplus state real property, including that the local agency or nonprofit affordable housing sponsor demonstrate, to the satisfaction of the department, that the surplus state real property, or portion of that surplus state real property, is to be used by the local agency or nonprofit affordable housing sponsor for open space, public parks, affordable housing projects, or development of local government-owned facilities. Existing law authorizes the department to sell surplus state real property, or a portion of surplus state real property, to a local agency, or to a nonprofit affordable housing sponsor if no local agency is interested in the surplus state real property, for affordable housing projects at a sales price less than fair market value if the department determines that such a discount will enable the provision of housing for persons and families of low or moderate income.

This bill would additionally authorize a local agency or nonprofit affordable housing sponsor to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used by the agency or sponsor for transitional housing for formerly incarcerated individuals, subject to the same provisions described above, as specified.

The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.

This bill would provide that development of surplus state real property by a local agency or nonprofit affordable housing sponsor for an affordable housing project or transitional housing for formerly incarcerated individuals is by right, making the development ministerial in nature and exempt from CEQA requirements.

Existing law authorizes the Department of General Services to dispose of surplus state real property, as defined, as authorized by the Legislature, upon any terms and conditions and subject to any reservations and exceptions the department deems to be in the best interests of the state. Existing law requires the department to first offer surplus state real property to a local agency, as defined, and then to nonprofit affordable housing sponsors, as defined, prior to being offered for sale to private entities or individuals. Existing law requires a local agency or nonprofit affordable housing sponsor to satisfy certain requirements to be considered as a potential priority buyer of the surplus state real property, including that the local agency or nonprofit affordable housing sponsor demonstrate, to the satisfaction of the department, that the surplus state real property, or portion of that surplus state real property, is to be used by the local agency or nonprofit affordable housing sponsor for open space, public parks, affordable housing projects, or development of local government-owned facilities. Existing law authorizes the department to sell surplus state real property, or a portion of surplus state real property, to a local agency, or to a nonprofit affordable housing sponsor if no local agency is interested in the surplus state real property, for affordable housing projects at a sales price less than fair market value if the department determines that such a discount will enable the provision of housing for persons and families of low or moderate income. Existing law also authorizes the Director of General Services to transfer surplus state real property to a local agency for less than fair market value if the agency uses the surplus state real property for parks or open-space purposes.

This bill would remove authorization for additionally authorize a local agency or nonprofit affordable housing sponsor to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used by the agency or sponsor for open space or a public park. The bill would, where surplus state real property that is to be used by the local agency or nonprofit affordable housing sponsor for affordable housing projects and the affordable housing project is not completed within 5 years of the date the property was acquired by the local agency or nonprofit affordable housing sponsor, require the local agency or nonprofit affordable housing sponsor to pay a penalty in the amount of 1% of the purchase price. The bill would remove authorization to transfer surplus state real property to a local agency for less than fair market value if the agency proposes to use the surplus state real property for parks or open-space purposes. transitional housing for formerly incarcerated individuals, subject to the same provisions described above, as specified.

The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.

This bill would provide that development of surplus state real property by a local agency or nonprofit affordable housing sponsor for an affordable housing purposes project or transitional housing for formerly incarcerated individuals is by right, making the development ministerial in nature and exempt from CEQA requirements.

Existing law authorizes the Department of General Services to dispose of surplus state real property, as defined, as authorized by the Legislature, upon any terms and conditions and subject to any reservations and exceptions the department deems to be in the best interests of the state. Existing law requires the department to first offer surplus state real property to a local agency, as defined, and then to nonprofit affordable housing sponsors, as defined, prior to being offered for sale to private entities or individuals. Existing law requires a local agency or nonprofit affordable housing sponsor to satisfy certain requirements to be considered as a potential priority buyer of the surplus state real property, including that the local agency or nonprofit affordable housing sponsor demonstrate, to the satisfaction of the department, that the surplus state real property, or portion of that surplus state real property, is to be used by the local agency or nonprofit affordable housing sponsor for open space, public parks, affordable housing projects, or development of local government-owned facilities. Existing law authorizes the department to sell surplus state real property, or a portion of surplus state real property, to a local agency, or to a nonprofit affordable housing sponsor if no local agency is interested in the surplus state real property, for affordable housing projects at a sales price less than fair market value if the department determines that such a discount will enable the provision of housing for persons and families of low or moderate income. Existing law also authorizes the Director of General Services to transfer surplus state real property to a local agency for less than fair market value if the agency uses the surplus state real property for parks or open-space purposes.

This bill would remove authorization for a local agency or nonprofit affordable housing sponsor to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used by the agency or sponsor for open space or a public park. The bill would, where surplus state real property that is to be used by the local agency or nonprofit affordable housing sponsor for affordable housing projects and the affordable housing project is not completed within 5 years of the date the property was acquired by the local agency or nonprofit affordable housing sponsor, require the local agency or nonprofit affordable housing sponsor to pay a penalty in the amount of 1% of the purchase price. The bill would remove authorization to transfer surplus state real property to a local agency for less than fair market value if the agency proposes to use the surplus state real property for parks or open-space purposes.

The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.

This bill would provide that development of surplus state real property by a local agency or nonprofit affordable housing sponsor for affordable housing purposes is by right, making the development ministerial in nature and exempt from CEQA requirements.

SENATE THIRD READING

STR Bill Id:SB 240

Author:(Ochoa Bogh)

As Amended Ver:May 2, 2023

Majority vote

SUMMARY

Adds housing for formerly incarcerated individuals as a priority in the disposal of state surplus land and provides that these projects are a use by-right.

Major Provisions

1. Authorizes a local agency or nonprofit affordable housing sponsor to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used by the agency or housing sponsor for formerly incarcerated individuals, as specified.
2. Provides that development of surplus state real property by a local agency or nonprofit affordable housing sponsor for an affordable housing project for formerly incarcerated individuals is a by-right.

COMMENTS

Excess and Surplus State Land. The State of California owns over 3,100 properties and over 44,000 parcels totaling nearly seven million acres in size. Most of these are actively in use by the state's departments and agencies, or are non-developable land. Each year, state agencies review their lands, identify real properties which are excess to their needs, and report them to the Department of General Services (DGS). Until recently, DGS's prioritization for the disposal had been to transfer surplus properties to other state agencies, sell them to local governments, sell them to affordable housing developers, or sell them on the open market, in that order. During the period between 2010 and 2020, DGS disposed of 64 properties, of which seven were utilized for affordable housing.

In January 2019, Governor Newsome issued Executive Order (EO) N-06-19, which ordered DGS and the California Department of Housing and Community Development (HCD) to identify and inventory excess state-owned property for affordable housing projects. The EO reoriented DGS's priorities to focus on facilitating the conversion of excess property to affordable housing. Within the three months required, DGS reviewed over 44,000 parcels, and identified 92 properties potentially suitable for housing. Since the beginning of implementation in 2019, DGS has awarded 16 of these state properties, totaling 24 projects, for affordable housing development, each of which is proceeding through the planning, development, or construction phase. Collectively, these properties will provided approximately 5,000 units of affordable housing through a low-cost ($1/year), long term (99+ years) ground lease with the state. In 2023, DGS will select and award at least 5 more additional sites for development of affordable housing.

If excess state lands are not viable for affordable housing development, DGS will then offer the properties to other state agencies in order to maximize state use of existing facilities. If no state agencies express interest, DGS will ask to include the properties in the annual surplus property bill and requests legislative authorization to sell or dispose of those properties. The Legislature must declare the property to be surplus and must authorize the Director of DGS to sell, exchange, lease, or transfer the surplus property according to specified procedures set forth in law.

Generally, current law requires surplus property to be transferred or sold at market value, or upon such other terms and conditions that DGS determines are in the best interest of the state. Current law gives the right of first refusal for any surplus property to a local agency and then to a nonprofit affordable housing sponsor, prior to being offered for sale to private entities or individuals in the open market. In addition, DGS is authorized to sell surplus property to a local agency or to a nonprofit affordable housing sponsor at a sales price less than fair market value if DGS determines that such a discount will enable housing for individuals or families of low or moderate income.

This bill would add "housing for formerly incarcerated individuals" to the types of activities that would qualify for discounted surplus property.

Approving Housing Developments. Before new housing can be built, housing developers must obtain one or more permits from local planning departments and must also obtain approval from local planning commissions, city councils, or county board of supervisors. Some housing projects can be permitted by city or county planning staff ministerially or without further approval from elected officials. Projects reviewed ministerially require only an administrative review designed to ensure they are consistent with existing general plan and zoning rules, as well as meet standards for building quality, health, and safety. Most large housing projects are not allowed ministerial review. Instead, these projects are vetted through both public hearings and administrative review. Most housing projects that require discretionary review and approval are subject to review under the California Environmental Quality Act (CEQA), while projects permitted ministerially generally are not.

In addition to bypassing the CEQA process and the potential for litigation, housing streamlining provides more certainty as to what is required for permitting approval, and generally also requires approval within specified timelines. The certainty and shortened approval timelines are particularly beneficial to affordable housing developers seeking funding from multiple federal, state, and local public funding sources. Additionally, this certainty provides more opportunities for multifamily developers to build in jurisdictions that are not housing friendly. Some local governments have intentionally made entitlement and permitting onerous to such a degree developers – and in particular affordable housing developers—have avoided working in those jurisdictions altogether. Longer, uncertain permitting situations are risky for developers, and could kill projects all together. Streamlining unlocks more land opportunities, particularly in higher-resources, unfriendly housing cities.

This bill would allow surplus state land developed by a local agency or nonprofit affordable housing sponsor for an affordable housing project or housing for formerly incarcerated individuals a use by-right, making the development ministerial in nature.

According to the Author

The lack of new housing development has continued to increase the cost of housing in California to the point the vast majority of housing units are unaffordable. According to the Department of Finance, the median price of a single-family home peaked in May 2022 at $898,980. To afford this, a family would need a combined income of $180,000, more than twice California's median household income and almost five times the California Poverty Measure (CPM) line of $36,900. The Legislature must look for every available opportunity to incentivize stakeholders to build affordable housing.

The Legislature has already found that the 'provision of decent housing for all Californians is a state goal of the highest priority' and that the 'disposal of surplus state real property is a direct and substantial public purpose of statewide concern.' SB 240 will address these concerns by ensuring the timely development of affordable housing is further prioritized in statute.

Arguments in Support

According to the California Apartment Association, "this bill would be a positive step to address California's homelessness crisis by ensuring that affordable housing is developed for individuals who need assistance transitioning outside of the criminal justice system back into our communities."

Arguments in Opposition

None on file.

FISCAL COMMENTS

According to the Assembly Appropriations Committee, costs of an unknown, but potentially significant, amount in forgone revenue to the state, to the extent providing by-right affordable housing development and adding an additional priority and discounted use for surplus state real property increases disposal of such property for lower sales prices (Special Fund for Economic Uncertainties or fund that paid for the property).

VOTES

SENATE FLOOR: 40-0-0

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ASM ACCOUNTABILITY AND ADMINISTRATIVE REVIEW: 6-0-1

YES: Petrie-Norris, Dixon, Bains, Davies, Stephanie Nguyen, Rodriguez

ABS, ABST OR NV: Wilson

ASM HOUSING AND COMMUNITY DEVELOPMENT: 8-0-0

YES: Wicks, Joe Patterson, Wendy Carrillo, Grayson, Kalra, Quirk-Silva, Sanchez, Ward

ASM APPROPRIATIONS: 16-0-0

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

UPDATED

VERSION: May 2, 2023

CONSULTANT: Bernie Orozco / A. & A.R. / (916) 319-3600 FN: 0001547

Date of Hearing: August 16, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

SBPCA Bill Id:SB 240

Author:(Ochoa Bogh) – As Amended Ver:May 2, 2023

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

SUMMARY:

This bill provides that use of surplus state real property by a local agency or nonprofit affordable housing sponsor for an affordable housing project is a use by right and not a “project” under the California Environmental Quality Act (CEQA).

This bill also adds housing for formerly incarcerated individuals as a use for such property that: (a) qualifies a local agency or nonprofit affordable housing sponsor as a potential priority buyer of such property and (b) allows such property to be sold at less than fair market value.

FISCAL EFFECT:

Costs of an unknown, but potentially significant, amount in forgone revenue to the state, to the extent providing by-right affordable housing development and adding an additional priority and discounted use for surplus state real property increases disposal of such property for lower sales prices (Special Fund for Economic Uncertainties or fund that paid for the property).

COMMENTS:

1. Purpose. According to the author:

The Legislature has already found that the “provision of decent housing for all Californians is a state goal of the highest priority” and that the “disposal of surplus state real property is a direct and substantial public purpose of statewide concern.” SB 240 will address these concerns by ensuring the timely development of affordable housing is further prioritized in statute.

This bill is supported by the California Apartment Association, California State Association of Counties, and pro-growth housing groups.

1. Background.

Surplus State Real Property. Surplus state real property is real property declared surplus by the Legislature for disposal by the Department of General Services (DGS). Existing law declares the intent of the Legislature that priority is given to the disposal of surplus state real property for housing persons and families of low or moderate income, where land is suitable for housing and there is a need for housing in the community.

Disposal Process. A local agency, followed by a nonprofit affordable housing sponsor, has right of first refusal to purchase surplus state real property before DGS can sell the property to private entities or individuals in the open market. To be considered a potential priority buyer, a local agency or nonprofit affordable housing sponsor must notify DGS of its interest in an available property within 90 days of the property’s listing on DGS’s website and demonstrate the property will be used for open space, public parks, affordable housing, or development of local government-owned facilities. While surplus state real property must generally be sold at market value, DGS may sell such property at less than fair market value to a local agency or nonprofit affordable housing sponsor if the discount will enable the provision of housing for persons and families of low to moderate income. This bill adds housing for formerly incarcerated individuals as a use for which a local agency or nonprofit affordable housing sponsor can qualify as a priority buyer, and for which surplus state real property may be sold at less than fair market value.

Development By Right. Existing law exempts ministerial projects from CEQA’s environmental review requirements. A ministerial project is one that requires conformance with a fixed standard or objective measurement and requires little or no personal judgment by a public official. Thus, housing projects reviewed ministerially require only an administrative review designed to ensure consistency with existing general plan and zoning rules, as well as standards for building quality, health, and safety. However, most large housing projects require discretionary review and are subject to CEQA and public hearings. This bill provides that use of surplus state real property by a local agency or nonprofit affordable housing sponsor for an affordable housing project is a use by right, making the development ministerial in nature and exempt from CEQA review. Such housing streamlining generally provides more certainty and shortened approval timelines, which is beneficial to affordable housing developers seeking funding from multiple federal, state, and local sources, especially when building in unfriendly jurisdictions.

Unlike other provisions of this bill, this by-right provision does not extend to housing for formerly incarcerated individuals.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: July 12, 2023

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

Buffy Wicks, Chair

SBPCA Bill Id:SB 240

Author:(Ochoa Bogh) – As Amended Ver:May 2, 2023

SENATE VOTE: 40-0

SUBJECT: Surplus state real property: affordable housing and housing for formerly incarcerated individuals

SUMMARY: Adds housing for formerly incarcerated individuals as a priority in the disposal of state surplus land and provides that these projects are a use by-right. Specifically, this bill:

1. Authorizes a local agency or nonprofit affordable housing sponsor to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used by the agency or sponsor housing for formerly incarcerated individuals, as specified.
2. Provides that development of surplus state real property by a local agency or nonprofit affordable housing sponsor for an affordable housing project or transitional housing for formerly incarcerated individuals is a use by-right.
   

EXISTING LAW:

1. Authorizes the California Department of General Services (DGS), subject to legislative approval, to sell, lease, exchange, or transfer various specified properties for current market value, or upon such other terms and conditions that DGS determines are in the best interest of the state. (Government Code (GC) Section 11011.1 (b))
2. Requires each state agency, on or before December 31 of each year, to make a review of all proprietary state lands to determine what, if any, land is in excess of its foreseeable needs and report that information to DGS. (GC 11011(a))
3. Establishes criteria for state agencies to use in determining and reporting excess lands. A state agency must report land as excess that is:
   1. Not currently utilized, or is underutilized, for any existing or ongoing programs;
   2. Land for which the agency cannot identify a specific utilization relative to future needs; and,
   3. Land not identified by the state agency within its master plan for facility development. (GC 11011(a))
4. Requires DGS to dispose of surplus state real property in a specified manner, and prescribes the priority of disposition of the property before DGS may offer it for sale to private entities or individuals. (GC 11011.1(b)(2)(B))
5. Authorizes DGS to sell surplus real property to a local agency or to a nonprofit affordable housing sponsor for affordable housing projects at a sale price less than fair market value if DGS determines that such a discount will enable housing for persons and families of low or moderate income. (GC 11011.1(c)(3))
6. Requires a local agency or nonprofit affordable housing sponsor to satisfy certain requirements to be considered as a potential priority buyer of the surplus state real property, including that the local agency or nonprofit affordable housing sponsor demonstrates, to the satisfaction of DGS, that the surplus state real property, or portion of that surplus state real property, is to be used by the local agency or nonprofit affordable housing sponsor for open space, public parks, affordable housing projects, or development of local government-owned facilities. (GC 11011.1(b)(2)(D))

FISCAL EFFECT: Unknown.

COMMENTS:

Author’s Statement: According to the author, “The lack of new housing development has continued to increase the cost of housing in California to the point the vast majority of housing units are unaffordable. According to the Department of Finance, the median price of a single-family home peaked in May 2022 at $898,980. To afford this, a family would need a combined income of $180,000, more than twice California's median household income and almost five times the California Poverty Measure (CPM) line of $36,900. The Legislature must look for every available opportunity to incentivize stakeholders to build affordable housing.

The Legislature has already found that the ‘provision of decent housing for all Californians is a state goal of the highest priority’ and that the ‘disposal of surplus state real property is a direct and substantial public purpose of statewide concern.’ SB 240 will address these concerns by ensuring the timely development of affordable housing is further prioritized in statute.”

Excess and Surplus State Land: The State of California owns over 3,100 properties and over 44,000 parcels totaling nearly seven million acres in size. Most of these are actively in use by the state's departments and agencies, or are non-developable land. Each year, state agencies review their lands, identify real properties which are excess to their needs, and report them to DGS. Until recently, DGS’s prioritization for this disposal was to transfer to other state agencies, sell to local governments, sell to affordable housing developers, or sell on the open market, in that order. During the period between 2010 and 2020, DGS disposed of 64 properties, of which seven were utilized for affordable housing.

In January 2019, Governor Newsom issued Executive Order (EO) N-06-19, which ordered DGS and HCD to identify and inventory excess state-owned property for affordable housing projects. The EO reoriented DGS' priorities to focus on facilitating the conversion of excess property to affordable housing. Within the required three months, DGS reviewed over 44,000 parcels, and identified 92 properties potentially suitable for housing. Since the beginning of implementation in 2019, DGS has awarded 16 of these state properties, totally 24 projects, for affordable housing development, each of which is proceeding through the planning, development, or construction phase. These properties will provide approximately 5,000 units of affordable housing through a low-cost ($1/year), long-term (99+ years) ground lease with the state. In 2023, DGS will select and award at least 5 more sites for the development of affordable housing.

If excess state lands are not viable for affordable housing development, DGS will then offer the properties to other state agencies in order to maximize state use of existing facilities. If no state agencies express interest, DGS asks to include the properties in the annual surplus property bill and requests legislative authorization to sell or dispose of those properties. The Legislature must declare the property to be surplus and must authorize the Director of DGS to sell, exchange, lease, or transfer the surplus property according to specified procedures set forth in law.

Generally, current law requires surplus property to be transferred or sold at market value, or upon such other terms and conditions that DGS determines are in the best interest of the state. Current law gives right of first refusal on any surplus property to a local agency and then to a nonprofit affordable housing sponsor, prior to being offered for sale to private entities or individuals in the open market. In addition, DGS is authorized to sell surplus property to a local agency or to a nonprofit affordable housing sponsor at a sales price less than fair market value if DGS determines that such a discount will enable housing for individuals or families of low or moderate income.

This bill would add “housing for formerly incarcerated individuals” to the type of activities that would qualify for discounted surplus property.

Approving Housing Developments: Before new housing can be built, housing developers must obtain one or more permits from local planning departments and must also obtain approval from local planning commissions, city councils, or county board of supervisors. Some housing projects can be permitted by city or county planning staff ministerially or without further approval from elected officials. Projects reviewed ministerially require only an administrative review designed to ensure they are consistent with existing general plan and zoning rules, as well as meet standards for building quality, health, and safety. Most large housing projects are not allowed ministerial review. Instead, these projects are vetted through both public hearings and administrative review. Most housing projects that require discretionary review and approval are subject to review under the California Environmental Quality Act (CEQA), while projects permitted ministerially generally are not.

In addition to bypassing the CEQA process and the potential for litigation, housing streamlining provides more certainty as to what is required for permitting approval, and generally also requires approval within specified timelines. This certainty and shortened approval timelines are particularly beneficial to affordable housing developers seeking funding from multiple federal, state, and local public funding sources. Additionally, this certainty provides more opportunities for multifamily developers to build in jurisdictions that are not housing friendly. Some local governments have intentionally made entitlement and permitting onerous to such a degree developers—and in particular affordable housing developers—have avoided working in those jurisdictions altogether. Longer, uncertain permitting situations are risky for developers, and could kill projects all together. Streamlining unlocks more land opportunities, particularly in higher-resource, unfriendly housing cities.

This bill would allow surplus state land developed by a local agency or nonprofit affordable housing sponsor for an affordable housing purposes project or housing for formerly incarcerated individuals a use by-right, making the development ministerial in nature.

Arguments in Support: According to the California Apartment Association, “this bill would be a positive step to address California’s homelessness crisis by ensuring that affordable housing is developed for individuals who need assistance transiting outside of the criminal justice system back into our communities.”

Arguments in Opposition: None on file.

Related Legislation:

SB 561 (Dodd, Chapter 446, Statues of 2022) requires DGS to develop criteria to evaluate the suitability of state-owned parcels determined to be used for affordable housing and to conduct a comprehensive survey of state-owned parcels using that criteria by January 1, 2024, and every four years thereafter.

AB 2233 (Quirk-Silva, Chapter 428, Statutes of 2022) requires DGS to develop a plan to facilitate the development of affordable housing on state-owned excess land, as specified.

AB 2592 (McCarty, Chapter 439, Statures of 2022) requires DGS to prepare and report to the Legislature a streamlined plan to transition underutilized multistory state buildings into housing, as specified.

SB 886 (Wiener, Chapter 663, Statutes of 2022) exempts, until January 1, 2030, faculty and staff housing projects and student housing projects meeting specified requirements from CEQA.

SB 1336 (Wiener, 2022) would have provided that housing is a use by right on land owned by a religious institution or nonprofit college, as specified. (Never heard in the Assembly Natural Resources Committee)

SB 899 (Wiener, 2020) would have provided that housing is a use by right on land owned by a religious institution or nonprofit college. (Held in the Assembly Appropriations Suspense File)

SB 6 (Beall, Chapter 667, Statutes of 2019) requires DGS, in coordination with HCD, to create a public inventory of local sites suitable for residential development, along with state surplus lands.

Double Referred: This bill is double referred. It was heard in the Assembly Committee on Accountability and Administrative Review and passed on a vote of 6-0 on June 21, 2023.

REGISTERED SUPPORT / OPPOSITION:

Support

California Apartment Association
California State Association of Counties
Fresno County Board of Supervisors

Opposition

None on file.

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

Date of Hearing: June 21, 2023

ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW

Cottie Petrie-Norris, Chair

SBPCA Bill Id:SB 240

Author:(Ochoa Bogh) – As Amended Ver:May 2, 2023

SENATE VOTE: 40-0

SUBJECT: Surplus state real property: affordable housing and housing for formerly incarcerated individuals

SUMMARY: This bill adds transitional housing projects intended for formerly incarcerated individuals as a priority in the disposal of state surplus land and provides that these projects are a use by right. Specifically, this bill:

1. Authorizes a local agency or nonprofit affordable housing sponsor to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used for transitional housing for formerly incarcerated individuals, as specified.
2. Provides that the development of surplus state real property by a local agency or nonprofit affordable housing sponsor for an affordable housing project or transitional housing for formerly incarcerated individuals is by right, making the development ministerial in nature and exempt from the California Environmental Quality Act (CEQA) requirements.

EXISTING LAW:

1. Authorizes the California Department of General Services (DGS), subject to legislative approval, to sell, lease, exchange, or transfer various specified properties for current market value, or upon such other terms and conditions that DGS determines are in the best interest of the state. (Gov. Code Sec. 11011.1 (b))
2. Requires each state agency, on or before December 31 of each year, to make a review of all proprietary state lands to determine what, if any, land is in excess of its foreseeable needs and report that information to DGS. (Gov. Code Sec. 11011(a))
3. Establishes criteria for state agencies to use in determining and reporting excess lands. A state agency must report land as excess that is:
   1. Not currently utilized, or is underutilized, for any existing or ongoing programs;
   2. Land for which the agency cannot identify a specific utilization relative to future needs; and,
   3. Land not identified by the state agency within its master plan for facility development. (Gov. Code Sec. 11011(a))
4. Requires DGS to dispose of surplus state real property in a specified manner, and prescribes the priority of disposition of the property before DGS may offer it for sale to private entities or individuals. (Gov. Code Sec. 11011.1(b)(2)(B))
5. Authorizes DGS to sell surplus real property to a local agency or to a nonprofit affordable housing sponsor for affordable housing projects at a sale price less than fair market value if DGS determines that such a discount will enable housing for persons and families of low or moderate income. (Gov. Code Sec. 11011.1(c)(3))
6. Requires a local agency or nonprofit affordable housing sponsor to satisfy certain requirements to be considered as a potential priority buyer of the surplus state real property, including that the local agency or nonprofit affordable housing sponsor demonstrates, to the satisfaction of DGS, that the surplus state real property, or portion of that surplus state real property, is to be used by the local agency or nonprofit affordable housing sponsor for open space, public parks, affordable housing projects, or development of local government-owned facilities. (Gov. Code Sec. 11011.1(b)(2)(D))

FISCAL EFFECT: Legislative Counsel has keyed this bill as Fiscal.

COMMENTS:

1. According to the Author:

“The lack of new housing development has continued to increase the cost of housing in California to the point the vast majority of housing units are unaffordable. According to the Department of Finance, the median price of a single-family home peaked in May 2022 at $898,980. To afford this, a family would need a combined income of $180,000, more than twice California's median household income and almost five times the California Poverty Measure (CPM) line of $36,900. The Legislature must look for every available opportunity to incentivize stakeholders to build affordable housing.

The Legislature has already found that the ‘provision of decent housing for all Californians is a state goal of the highest priority’ and that the ‘disposal of surplus state real property is a direct and substantial public purpose of statewide concern.’ SB 240 will address these concerns by ensuring the timely development of affordable housing is further prioritized in statute.”

1. Executive Order N-06-19. In January 2019, Governor Newsom issued Executive Order (EO) N-06-19, which directed DGS and the California Department of Housing and Community Development to identify and prioritize excess state-owned property suitable for affordable housing projects. DGS reviewed over 44,000 parcels and identified roughly 92 properties suitable for housing of which 20 properties are currently proceeding through the planning, development, or construction phase.^[1] EO N-06-19 is making progress in repurposing surplus state real property for affordable housing.
2. Homeless Rate for Formerly Incarcerated. The formerly incarcerated are at a higher risk of homelessness. Prior research has found that formerly incarcerated people are about 10 times more likely to be homeless than the general public. “People who have been to prison just once experience homelessness at a rate nearly 7 times higher than the general public. But people who have been incarcerated more than once have rates 13 times higher than the general public.”^[2] This bill will add more affordable housing projects intended for formerly incarcerated individuals as a priority in the disposal of surplus state real property.

In support of the bill, the California Association of Counties writes:

“Roughly 70% of California’s unsheltered homeless population are criminal justice involved. Given this high percentage, it is imperative that the justice-involved population receives the necessary services and resources that are essential for successful reentry. … Ultimately, additional housing support improves reentry outcomes and also plays a significant role in the prevention of crime and homelessness.”

1. CEQA Exemption. CEQA generally requires a lead agency to prepare and certify the completion of an environmental impact report on a project that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect.

CEQA provides for a number of exemptions, including projects that are considered ministerial. A ministerial project is one that requires only conformance with a fixed standard or objective measurement and requires little or no personal judgment by a public official as to the wisdom or manner of carrying out the project. The public official merely applies the law to the facts as presented but uses no discretion or judgment in reaching a decision.

This bill provides that the development of surplus state real property by a local agency or nonprofit affordable housing sponsor for the development of affordable housing projects or transitional housing for formerly incarcerated individuals is by right, making the development ministerial in nature and exempt from CEQA requirements. This is intended to ensure the timely development of affordable housing on surplus state real property.

1. Prior Legislation:

SB 561 (Dodd, Chapter 446, Statues of 2022) requires DGS to develop criteria to evaluate the suitability of state-owned parcels determined to be used for affordable housing and to conduct a comprehensive survey of state-owned parcels using that criteria by January 1, 2024, and every four years thereafter.

AB 2233 (Quirk-Silva, Chapter 428, Statutes of 2022) requires DGS to develop a plan to facilitate the development of affordable housing on state-owned excess land, as specified.

AB 2592 (McCarty, Chapter 439, Statures of 2022) requires DGS to prepare and report to the Legislature a streamlined plan to transition underutilized multistory state buildings into housing, as specified.

SB 886 (Wiener, Chapter 663, Statutes of 2022) exempts, until January 1, 2030, faculty and staff housing projects and student housing projects meeting specified requirements from CEQA.

SB 1336 (Wiener, 2022) would have provided that housing is a use by right on land owned by a religious institution or nonprofit college, as specified. (Never heard in the Assembly Natural Resources Committee)

SB 899 (Wiener, 2020) would have provided that housing is a use by right on land owned by a religious institution or nonprofit college. (Held in the Assembly Appropriations Suspense File)

SB 6 (Beall, Chapter 667, Statutes of 2019) requires DGS, in coordination with HCD, to create a public inventory of local sites suitable for residential development, along with state surplus lands.

REGISTERED SUPPORT / OPPOSITION:

Support

California Apartment Association

California State Association of Counties

Fresno County Board of Supervisors

Opposition

None on file.

Analysis Prepared by: Bernie Orozco / A. & A.R. / (916) 319-3600

1. https://www.dgs.ca.gov/RESD/Projects/Page-Content/Projects-List-Folder/Executive-Order-N-06-19-Affordable-Housing-Development ↑

2. https://www.prisonpolicy.org/reports/housing.html ↑

 THIRD READING  

Bill No: SB 240

Author: Ochoa Bogh (R), et al.

Amended: 5/2/23

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 14-0, 4/11/23

AYES: Dodd, Alvarado-Gil, Archuleta, Ashby, Bradford, Glazer, Jones, Nguyen, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto

NO VOTE RECORDED: Wilk

SENATE HOUSING COMMITTEE: 10-0, 4/18/23

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

NO VOTE RECORDED: Padilla

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/18/23

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

SUBJECT: Surplus state real property: affordable housing and housing for formerly incarcerated individuals

SOURCE: Author

DIGEST: This bill authorizes a local agency or nonprofit affordable housing sponsors to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used for transitional housing for formerly incarcerated individuals, as specified. Additionally, the bill provides that the development of surplus state real property by a local agency or nonprofit housing for an affordable housing project is by right, making the development ministerial in nature and exempt from requirements under the California Environmental Quality Act (CEQA).

ANALYSIS:

Existing law:

1. Establishes the Department of General Services (DGS) for purposes of, among other things, planning, acquiring, constructing, and maintaining state buildings and property.
2. Authorizes DGS, subject to legislative approval, to sell, lease, exchange, or transfer various specified properties for current market value, or upon such other terms and conditions that DGS determines are in the best interest of the state.
3. Requires, by executive order, DGS to, among other things, create a digitized inventory of all excess state land, create screening tools for prioritizing affordable housing development on excess state land, and issue requests for proposals and select affordable housing developments on excess state land, as described.
4. Establishes criteria for state agencies to use in determining and reporting excess lands. A state agency must report land as surplus that is:
   1. Not currently utilized, or is underutilized, for any existing or ongoing programs;
   2. Land for which the agency cannot identify a specific utilization relative to future needs; and,
   3. Land not identified by the state agency within its master plan for facility development.
5. Requires DGS to dispose of surplus state real property in a specified manner, and prescribes the priority of disposition of the property before DGS may offer it for sale to private entities or individuals.
6. Authorizes DGS to sell surplus real property to a local agency or to a nonprofit affordable housing sponsor for affordable housing projects at a sales price less than fair market value if DGS determines that such a discount will enable housing for persons and families of low or moderate income.
7. Requires DGS, in consultation with the California Department of Housing and Community Development, to develop criteria to evaluate the suitability of excess state-owned parcels for affordable housing, as specified.
8. Authorizes the Department of Transportation, if it determines that real property or an interest therein acquired by the state for highway purposes is no longer necessary for those purposes, to sell to DGS surplus property at less than the property’s current fair market value, to the extent permissible, if the property is used for the development of affordable housing.
9. Requires, under the California Environmental Quality Act (CEQA), a lead agency, as defined, to prepare and certify the completion of an environmental impact report on a project that it proposes to carry out or approve that may have significant effect on the environment.
10. Requires, under CEQA, a lead agency to prepare a mitigated negative evidence that the project, as revised, would have a significant effect on the environment.
11. Provides that CEQA does not apply to the approval of ministerial projects.
12. Provides that supportive housing, in which 100% of units are dedicated to low-income households and are receiving public funding to ensure affordability, shall be used by right in all zones where multifamily and mixed uses are allowed, as specified.

This bill:

1. Authorizes a local agency or nonprofit affordable housing sponsors to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used for transitional housing for formerly incarcerated individuals, as specified.
2. Provides that the development of surplus state real property by a local agency or nonprofit housing for an affordable housing project is by right, making the development ministerial in nature and exempt from CEQA requirements.

Background

Purpose of the bill. According to the author’s office, “the lack of new housing development has continued to increase the cost of housing in California to the point the vast majority of housing units are unaffordable. According to the Department of Finance, the median price of a single-family home peaked in May 2022 at $898,980. To afford this, a family would need a combined income of $180,000, more than twice California’s median household income and almost five times the California Poverty Measure line of $36,900. The Legislature must look for every available opportunity to incentivize stakeholders to build affordable housing.”

The author’s office further argues that, “the Legislature has already found that the ‘provision of decent housing for all Californians is a state goal of the highest priority’ and that the ‘disposal of surplus state real property is a direct and substantial public purpose of statewide concern.’ SB 240 will address these concerns by ensuring timely development of affordable housing is further prioritized in statute.”

Current Process for Disposal of Surplus Property. DGS is currently responsible for the disposition of state-owned property that has been declared surplus to future state needs. The Legislature must declare the property to be surplus and must authorize the Director of DGS to sell, exchange, lease, or transfer the surplus property according to specified procedures set forth in law.

Generally, current law requires surplus property to be transferred or sold at market value, or upon such other terms and conditions that DGS determines are in the best interest of the state. Current law gives right of first refusal on any surplus property to a local agency and then to a nonprofit affordable housing sponsor, prior to being offered for sale to private entities or individuals in the open market. In addition, DGS is authorized to sell surplus property to a local agency or to a nonprofit affordable housing sponsor at a sales price less than fair market value if DGS determines that such a discount will enable housing for individuals or families of low or moderate income.

This bill additionally adds “transitional housing for formerly incarcerated individuals” to the provisions discussed above. This would authorize DGS to sell surplus property to a local agency or to a nonprofit affordable housing sponsor at a sales price less than fair market value if DGS determines that such a discount will enable transitional housing for formerly incarcerated individuals.

CEQA Exemption. The California Environmental Quality Act generally requires a lead agency to prepare and certify the completion of an environmental impact report on a project that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect.

CEQA does include a number of exemptions, including projects that are considered ministerial. A ministerial project is one that requires only conformance with a fixed standard or objective measurement and requires little or no personal judgement by a public official as to the wisdom or manner of carrying out the project. The public official merely applies the law to the facts as presented but uses no discretion or judgement in reaching a decision.

This bill provides that the development of surplus state real property by a local agency or nonprofit affordable housing sponsors for the development of affordable housing projects is by right, making the development ministerial in nature and exempt from CEQA requirements.

Executive Order N-06-19. In January 2019, Governor Newsom issued Executive Order (EO) N-06-19, which directed DGS and HCD to identify and inventory excess state-owned property for affordable housing projects. Within the required three months, DGS reviewed over 44,000 parcels, and identified 92 properties that were potentially suitable for housing. As of March 2022, DGS had offered 19 of these properties for affordable housing development, each of which is proceeding through the planning, development, or construction phase. The properties will provide approximately 1,700 affordable housing units.

Last year the Legislature passed and the Governor signed a number of bills to permanently set in statue many of the provisions of EO N-06-19. In doing so, the state has facilitated the process of developing affordable housing on state properties without the need for DGS to obtain authorization to declare a state property surplus. It is therefore not surprising that since the issuance of EO N-06-19, it does not appear that any state properties have been sold to local agencies or affordable housing sponsors for purposes of affordable housing outside of the provisions of EO N-06-19. This is likely because those properties that DGS and HCD have found are suitable for housing are already captured under the executive order long before the state declares those properties surplus. If so, the impact on this bill in the development of affordable housing or transitional housing for formerly incarcerated individuals might be marginal.

Related/Prior Legislation

SB 387 (Dodd, 2023) authorizes DGS, with the consent of the agency concerned, to lease real property under the jurisdiction of a state agency, department, or district agricultural association in support of broadband development in the state, at an amount less than fair market value. (Pending in the Assembly Accountability and Administrative Review Committee)

SB 561 (Dodd, Chapter 446, Statues of 2022) required DGS to develop criteria to evaluate the suitability of state-owned parcels determined to be used for affordable housing and to conduct a comprehensive survey of state-owned parcels using that criteria by January 1, 2024, and every four years thereafter.

AB 2233 (Quirk-Silva, Chapter 428, Statutes of 2022) required DGS to develop a plan to facilitate the development of affordable housing on state-owned excess land, as specified.

AB 2592 (McCarty, Chapter 439, Statures of 2022) required DGS to prepare and report to the Legislature a streamlined plan to transition underutilized multistory state buildings into housing, as specified.

SB 886 (Wiener, Chapter 663, Statutes of 2022) exempted, until January 1, 2030, faculty and staff housing projects and student housing projects meeting specified requirements from CEQA.

SB 1336 (Wiener, 2022) would have provided that housing is a “use by right” on land owned by a religious institution or nonprofit college, as specified. (Never Heard in the Assembly Natural Resources Committee)

SB 899 (Wiener, 2020) would have provided that housing is a use by right on land owned by a religious institution or nonprofit college. (Held in the Assembly Appropriations Suspense File)

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

According to the Senate Appropriations Committee:

• The Department of General Services (DGS) reports unknown, potentially significant foregone revenues from the disposal of surplus state real property at less than fair market value, to the extent this bill limits the sale of real property for housing for formerly incarcerated individuals.
• The California Department of Housing and Community Development (HCD) anticipates any fiscal impact to be minor and absorbable.

SUPPORT: (Verified 5/18/23)

California Apartment Association

California State Association of Counties

East Bay YIMBY

Grow the Richmond

How to ADU

Mountain View YIMBY

Napa-Solano for Everyone

Northern Neighbors

Peninsula for Everyone

People for Housing Orange County

Progress Now Valley

Santa Cruz YIMBY

San Francisco YIMBY

San Luis Obispo YIMBY

Santa Rosa YIMBY

South Bay YIMBY

Southside YIMBY

Ventura County YIMBY

YIMBY Action

OPPOSITION: (Verified 5/18/23)

None received

ARGUMENTS IN SUPPORT: According to the California Apartment Association, “current surplus property disposal laws require the state to offer surplus property to local entities for the development of low and moderate-income housing, open spaces, public parks, and government-owned facilities. SB 240 would expand that authority to serve critically overlook population: formerly incarcerated individuals. SB 240 would be a positive step to address California’s

homelessness crisis by ensuring that affordable housing is developed for individuals who need assistance transiting outside of the criminal justice system back into our communities.”

Prepared by: Felipe Lopez / G.O. / (916) 651-1530

5/20/23 12:41:00

**** END ****

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

SB 240 (Ochoa Bogh) - Surplus state real property: affordable housing and housing for formerly incarcerated individuals

Bill Summary:

SB 240 authorizes a local agency or nonprofit affordable housing sponsors to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used for housing for formerly incarcerated individuals.

Fiscal Impact:

The Department of General Services (DGS) reports unknown, potentially significant foregone revenues from the disposal of surplus state real property at less than fair market value, to the extent this bill limits the sale of real property for housing for formerly incarcerated individuals.

The California Department of Housing and Community Development (HCD) anticipates any fiscal impact to be minor and absorbable.

Background:

DGS is currently responsible for the disposition of state-owned property that has been declared surplus to future state needs. The Legislature must declare the property to be surplus and must authorize the Director of DGS to sell, exchange, lease, or transfer the surplus property according to specified procedures set forth in law.

Generally, current law requires surplus property to be transferred or sold at market value, or upon such other terms and conditions that DGS determines are in the best interest of the state. Current law gives right of first refusal on any surplus property to a local agency and then to a nonprofit affordable housing sponsor, prior to being offered for sale to private entities or individuals in the open market. In addition, DGS is authorized to sell surplus property to a local agency or to a nonprofit affordable housing sponsor at a sales price less than fair market value if DGS determines that such a discount will enable housing for individuals or families of low or moderate income.

Proposed Law:

• Adds housing for formerly incarcerated individuals to the list of uses in considering a local agency or nonprofit affordable housing sponsor as a potential priority buyer of surplus state real property.
• Makes other technical, non-substantive, and conforming changes.

-- END --

SENATE COMMITTEE ON HOUSING

Senator Scott Wiener, Chair

2023 - 2024 Regular

Bill No: SB 240 Hearing Date: 4/18/2023

SUBJECT: Surplus state real property: affordable and transition housing

DIGEST: This bill adds transitional housing projects intended for formerly incarcerated individuals as a priority in the disposal of state surplus land and provides that these projects are a use by-right.

ANALYSIS:

Existing law:

1. Authorizes the California Department of General Services (DGS), subject to legislative approval, to sell, lease, exchange, or transfer various specified properties for current market value, or upon such other terms and conditions that DGS determines are in the best interest of the state.
2. Establishes criteria for state agencies to use in determining and reporting excess lands. A state agency must report land as excess that is:
   1. Not currently utilized, or is underutilized, for any existing or ongoing programs;
   2. Land for which the agency cannot identify a specific utilization relative to future needs; and,
   3. Land not identified by the state agency within its master plan for facility development.
3. Requires DGS to dispose of surplus state real property in a specified manner, and prescribes the priority of disposition of the property before DGS may offer it for sale to private entities or individuals.
4. Authorizes DGS to sell surplus real property to a local agency or to a nonprofit affordable housing sponsor for affordable housing projects at a sales price less than fair market value if DGS determines that such a discount will enable housing for persons and families of low or moderate income.
5. Current law requires a local agency or nonprofit affordable housing sponsor to satisfy certain requirements to be considered as a potential priority buyer of the surplus state real property, including that the local agency or nonprofit affordable housing sponsor demonstrate, to the satisfaction of the department, that the surplus state real property, or portion of that surplus state real property, is to be used by the local agency or nonprofit affordable housing sponsor for open space, public parks, affordable housing projects, or development of local government-owned facilities.

This bill:

1. Adds authorization for a local agency or nonprofit affordable housing sponsor to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used by the agency or sponsor for transitional housing for formerly incarcerated individuals, as specified.
2. Provides that development of surplus state real property by a local agency or nonprofit affordable housing sponsor for an affordable housing purposes project or transitional housing for formerly incarcerated individuals is a use by right.

COMMENTS:

1. Author’s statement. “The lack of new housing development has continued to increase the cost of housing in California to the point the vast majority of housing units are unaffordable. According to the Department of Finance, the median price of a single-family home peaked in May 2022 at $898,980. To afford this, a family would need a combined income of $180,000, more than twice California's median household income and almost five times the California Poverty Measure (CPM) line of $36,900. The Legislature must look for every available opportunity to incentivize stakeholders to build affordable housing. The Legislature has already found that the ‘provision of decent housing for all Californians is a state goal of the highest priority’ and that the ‘disposal of surplus state real property is a direct and substantial public purpose of statewide concern.’ SB 240 will address these concerns by ensuring the timely development of affordable housing is further prioritized in statute.”
2. Excess and Surplus State Land. The State of California owns over 3,100 properties and over 44,000 parcels totaling nearly seven million acres in size. Most of these are actively in use by the state's departments and agencies, or are non-developable land.

Each year, state agencies review their lands, identify real properties which are excess to their needs, and report them to DGS. Until recently, DGS' prioritization for this disposal was to transfer to other state agencies, sell to local governments, sell to affordable housing developers, or sell on the open market, in that order. During the period between 2010 and 2020, DGS disposed of 64 properties, of which seven were utilized for affordable housing.

In January 2019, Governor Newsom issued Executive Order (EO) N-06-19, which ordered DGS and HCD to identify and inventory excess state-owned property for affordable housing projects. In doing so, this EO reoriented DGS' priorities to focus on facilitating the conversion of excess property to affordable housing. Within the required three months, DGS reviewed over 44,000 parcels, and identified 92 properties potentially suitable for housing. Since the beginning of implementation in 2019, DGS has awarded 16 of these state properties, totally 24 projects, for affordable housing development, each of which is proceeding through the planning, development, or construction phase. These properties will provide approximately 5,000 units of affordable housing through a low-cost ($1/year), long-term (99+ years) ground lease with the state. In 2023, DGS will select and award at least 5 more sites for the development of affordable housing.

If excess state lands are not viable for affordable housing development, DGS will then offer the properties to other state agencies in order to maximize state use of existing facilities. If no state agencies express interest, DGS asks to include the properties in the annual surplus property bill and requests legislative authorization to sell or dispose of those properties. The Legislature must declare the property to be surplus and must authorize the Director of DGS to sell, exchange, lease, or transfer the surplus property according to specified procedures set forth in law.

Generally, current law requires surplus property to be transferred or sold at market value, or upon such other terms and conditions that DGS determines are in the best interest of the state. Current law gives right of first refusal on any surplus property to a local agency and then to a nonprofit affordable housing sponsor, prior to being offered for sale to private entities or individuals in the open market. In addition, DGS is authorized to sell surplus property to a local agency or to a nonprofit affordable housing sponsor at a sales price less than fair market value if DGS determines that such a discount will enable housing for individuals or families of low or moderate income.

This bill would add “transitional housing for formerly incarcerated individuals” to the type of activities that would qualify for discounted surplus property.

1. California’s Housing Market and Affordability. California has an existing housing deficit of over a million units of housing. To address this gap, HCD estimates that California must plan for the development of more than 2.5 million homes over the next eight years, and no less than one million of those homes must meet the needs of lower-income households (more than 640,000 very low-income and 385,000 low-income units are needed).

The lack of housing in California has created a systemic and persistent housing crisis, where homeownership is out of reach to all but the most affluent, lower income households struggle to pay the rent, and homelessness is rampant.

As a result of the severe housing shortage, millions of Californians, who are disproportionately lower-income and people of color, must make hard decisions about paying for housing at the expense of food, health care, child care, and transportation—one in three households in the state don’t earn enough money to meet their basic needs.^[1]

A lack of affordable housing is the biggest contributor to homelessness.^[2] As housing costs continue to rise, rent becomes less affordable for lower-income households, who are forced to live beyond their means (paying more than 30% of income on housing costs) or are pushed out of their homes, leading to rapid increases in homelessness.^[3] Variation in rates of homelessness cannot be explained by variation in rates of individual factors such as poverty or mental illness, however, cities with higher rents and lower rental vacancy rates (i.e., tighter housing markets) are directly linked to higher per capita rates of homelessness. ^[4]

1. Clarifying an outdated reference. “Transitional housing” is not used in housing policy today and, in fact, no longer funded at the federal or state level. The author has agreed to remove the word “transitional” so any reference to the eligible housing type says “housing for formerly incarcerated individuals”.
2. Approving Housing Developments. Before new housing can be built, housing developers must obtain one or more permits from local planning departments and must also obtain approval from local planning commissions, city councils, or county board of supervisors. Some housing projects can be permitted by city or county planning staff ministerially or without further approval from elected officials. Projects reviewed ministerially require only an administrative review designed to ensure they are consistent with existing general plan and zoning rules, as well as meet standards for building quality, health, and safety. Most large housing projects are not allowed ministerial review. Instead, these projects are vetted through both public hearings and administrative review. Most housing projects that require discretionary review and approval are subject to review under the California Environmental Quality Act (CEQA), while projects permitted ministerially generally are not.

In addition to bypassing the CEQA process and the potential for litigation, housing streamlining provides more certainty as to what is required for permitting approval, and generally also requires approval within specified timelines. This certainty and shortened approval timelines are particularly beneficial to affordable housing developers seeking funding from multiple federal, state, and local public funding sources. Additionally, this certainty provides more opportunities for multifamily developers to build in jurisdictions that are not housing friendly. Some local governments have intentionally made entitlement and permitting onerous to such a degree developers—and in particular affordable housing developers—have avoided working in those jurisdictions altogether. Longer, uncertain permitting situations are risky for developers, and could kill projects all together. Streamlining unlocks more land opportunities, particularly in higher-resource, unfriendly housing cities.

This bill would allow surplus state land developed by a local agency or nonprofit affordable housing sponsor for an affordable housing purposes project or housing for formerly incarcerated individuals a use by-right, making the development ministerial in nature.

1. Opposition. Opponents argue that, “SB 240 does not comport with appropriate government scrutiny and could potentially cause unintended consequences – further isolating formerly incarcerated individuals.” The author has agreed to work with the opposition on their concerns in the next committee.
2. Double-referral. This bill was first referred to the Committee on Governmental Organization, where it passed on a 14-0 vote on April 11, 2023.

Related Legislation:

AB 2233 (Quirk-Silva, Chapter 438, Statutes of 2022) — required DGS to develop a plan (i.e., establish an ongoing system for identifying and disposing of state land) to facilitate development of affordable housing on state-owned excess land, codifying a portion of Executive Order N-06-19.

AB 2592 (McCarty, Chapter 439, Statutes of 2022) — required DGS to prepare and report to the Legislature a streamlined plan to transition underutilized multistory state buildings into housing for the purpose of expanding affordable housing development and adaptive reuse opportunities.

SB 6 (Beall, Chapter 667, Statutes of 2019) — required DGS to create a public, searchable database of sites in local government’s housing element inventory of land suitable for residential development and state surplus properties.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

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

April 12, 2023.)

SUPPORT:

California Apartment Association

OPPOSITION:

Affordable Housing Management Association - Pacific Southwest

Apartment Association of Orange County

East Bay Rental Housing Association

-- END --

1. National Low Income Housing Coalition’s 2022 Out of Reach Report. Accessible here: https://nlihc.org/oor/state/ca ↑

2. Thomas H. Byrne, Benjamin F. Henwood, and Anthony W. Orlando, “A Rising Tide Drowns Unstable Boats: How Inequality Creates Homelessness,” The ANNALS of the American Academy of Political and Social Science 693, no. 1 (2021): 28-45. Accessible here: https://doi.org/10.1177/0002716220981864/ ↑

3. Chris Glynn, Thomas H. Byrne, and Dennis P. Culhane. "Inflection points in community-level homeless rates." The Annals of Applied Statistics, 15(2) 1037-1053 June 2021. Accessible here: https://doi.org/10.1214/20-AOAS1414 ↑

4. Sightline Institute (2022). Homelessness is a Housing Problem. https://www.sightline.org/2022/03/16/homelessness-is-a-housing-problem/ ↑

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: SB Hearing Date: 4/11/2023

SUBJECT:

DIGEST: This bill authorizes a local agency or nonprofit affordable housing sponsors to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used for transitional housing for formerly incarcerated individuals, as specified. Additionally, the bill provides that the development of surplus state real property by a local agency or nonprofit housing for an affordable housing project or transitional housing for formerly incarcerated individuals is by right, making the development ministerial in nature and exempt from requirements under the California Environmental Quality Act (CEQA).

ANALYSIS:

Existing law:

1. Establishes the Department of General Services (DGS) for purposes of, among other things, planning, acquiring, constructing, and maintaining state buildings and property.
2. Authorizes DGS, subject to legislative approval, to sell, lease, exchange, or transfer various specified properties for current market value, or upon such other terms and conditions that DGS determines are in the best interest of the state.
3. Requires, by executive order, DGS to, among other things, create a digitized inventory of all excess state land, create screening tools for prioritizing affordable housing development on excess state land, and issue requests for proposals and select affordable housing developments on excess state land, as described.
4. Establishes criteria for state agencies to use in determining and reporting excess lands. A state agency must report land as surplus that is:
   1. Not currently utilized, or is underutilized, for any existing or ongoing programs;
   2. Land for which the agency cannot identify a specific utilization relative to future needs; and,
   3. Land not identified by the state agency within its master plan for facility development.
5. Requires DGS to dispose of surplus state real property in a specified manner, and prescribes the priority of disposition of the property before DGS may offer it for sale to private entities or individuals.
6. Authorizes DGS to sell surplus real property to a local agency or to a nonprofit affordable housing sponsor for affordable housing projects at a sales price less than fair market value if DGS determines that such a discount will enable housing for persons and families of low or moderate income.
7. Requires DGS, in consultation with the California Department of Housing and Community Development, to develop criteria to evaluate the suitability of excess state-owned parcels for affordable housing, as specified.
8. Authorizes the Department of Transportation, if it determines that real property or an interest therein acquired by the state for highway purposes is no longer necessary for those purposes, to sell to DGS surplus property at less than the property’s current fair market value, to the extent permissible, if the property is used for the development of affordable housing.
9. Requires, under the California Environmental Quality Act (CEQA), a lead agency, as defined, to prepare and certify the completion of an environmental impact report on a project that it proposes to carry out or approve that may have significant effect on the environment.
10. Requires, under CEQA, a lead agency to prepare a mitigated negative evidence that the project, as revised, would have a significant effect on the environment.
11. Provides that CEQA does not apply to the approval of ministerial projects.
12. Provides that supportive housing, in which 100% of units are dedicated to low-income households and are receiving public funding to ensure affordability, shall be used by right in all zones where multifamily and mixed uses are allowed, as specified.

This bill:

1. Authorizes a local agency or nonprofit affordable housing sponsors to be considered as a potential priority buyer of surplus state real property upon demonstration that the property is to be used for transitional housing for formerly incarcerated individuals, as specified.
2. Provides that the development of surplus state real property by a local agency or nonprofit housing for an affordable housing project or transitional housing for formerly incarcerated individuals is by right, making the development ministerial in nature and exempt from CEQA requirements.

Background

Purpose of the Bill. According to the author’s office, “the lack of new housing development has continued to increase the cost of housing in California to the point the vast majority of housing units are unaffordable. According to the Department of Finance, the median price of a single-family home peaked in May 2022 at $898,980. To afford this, a family would need a combined income of $180,000, more than twice California’s median household income and almost five times the California Poverty Measure line of $36,900. The Legislature must look for every available opportunity to incentivize stakeholders to build affordable housing.”

The author’s office further argues that, “the Legislature has already found that the ‘provision of decent housing for all Californians is a state goal of the highest priority’ and that the ‘disposal of surplus state real property is a direct and substantial public purpose of statewide concern.’ SB 240 will address these concerns by ensuring timely development of affordable housing is further prioritized in statute.”

Current Process for Disposal of Surplus Property. DGS is currently responsible for the disposition of state-owned property that has been declared surplus to future state needs. The Legislature must declare the property to be surplus and must authorize the Director of DGS to sell, exchange, lease, or transfer the surplus property according to specified procedures set forth in law.

Generally, current law requires surplus property to be transferred or sold at market value, or upon such other terms and conditions that DGS determines are in the best interest of the state. Current law gives right of first refusal on any surplus property to a local agency and then to a nonprofit affordable housing sponsor, prior to being offered for sale to private entities or individuals in the open market. In addition, DGS is authorized to sell surplus property to a local agency or to a nonprofit affordable housing sponsor at a sales price less than fair market value if DGS determines that such a discount will enable housing for individuals or families of low or moderate income.

This bill would additionally add “transitional housing for formerly incarcerated individuals” to the provisions discussed above. This would authorize DGS to sell surplus property to a local agency or to a nonprofit affordable housing sponsor at a sales price less than fair market value if DGS determines that such a discount will enable transitional housing for formerly incarcerated individuals.

CEQA Exemption. The California Environmental Quality Act generally requires a lead agency to prepare and certify the completion of an environmental impact report on a project that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect.

CEQA does include a number of exemptions, including projects that are considered ministerial. A ministerial project is one that requires only conformance with a fixed standard or objective measurement and requires little or no personal judgement by a public official as to the wisdom or manner of carrying out the project. The public official merely applies the law to the facts as presented but uses no discretion or judgement in reaching a decision.

This bill would provide that the development of surplus state real property by a local agency or nonprofit affordable housing sponsors for the development of affordable housing projects or transitional housing for formerly incarcerated individuals is by right, making the development ministerial in nature and exempt from CEQA requirements.

Executive Order N-06-19. In January 2019, Governor Newsom issued Executive Order (EO) N-06-19, which directed DGS and HCD to identify and inventory excess state-owned property for affordable housing projects. Within the required three months, DGS reviewed over 44,000 parcels, and identified 92 properties that were potentially suitable for housing. As of March 2022, DGS had offered 19 of these properties for affordable housing development, each of which is proceeding through the planning, development, or construction phase. The properties will provide approximately 1,700 affordable housing units.

Last year the Legislature passed and the Governor signed a number of bills to permanently set in statue many of the provisions of EO N-06-19. In doing so, the state has facilitated the process of developing affordable housing on state properties without the need for DGS to obtain authorization to declare a state property surplus. It is therefore not surprising that since the issuance of EO N-06-19, it does not appear that any state properties have been sold to local agencies or affordable housing sponsors for purposes of affordable housing outside of the provisions of EO N-06-19. This is likely because those properties that DGS and HCD have found are suitable for housing are already captured under the executive order long before the state declares those properties surplus. If so, the impact on this bill in the development of affordable housing or transitional housing for formerly incarcerated individuals might be marginal.

Prior/Related Legislation

SB 387 (Dodd, 2023) would authorize DGS, with the consent of the agency concerned, to lease real property under the jurisdiction of a state agency, department, or district agricultural association in support of broadband development in the state, at an amount less than fair market value. (Pending in the Senate Governmental Organization Committee)

SB 561 (Dodd, Chapter 446, Statues of 2022) requires DGS to develop criteria to evaluate the suitability of state-owned parcels determined to be used for affordable housing and to conduct a comprehensive survey of state-owned parcels using that criteria by January 1, 2024, and every four years thereafter.

AB 2233 (Quirk-Silva, Chapter 428, Statutes of 2022) requires DGS to develop a plan to facilitate the development of affordable housing on state-owned excess land, as specified.

AB 2592 (McCarty, Chapter 439, Statures of 2022) requires DGS to prepare and report to the Legislature a streamlined plan to transition underutilized multistory state buildings into housing, as specified.

SB 886 (Wiener, Chapter 663, Statutes of 2022 ) exempts, until January 1, 2030, faculty and staff housing projects and student housing projects meeting specified requirements from CEQA.

SB 1336 (Wiener, 2022) would have provided that housing is a “use by right” on land owned by a religious institution or nonprofit college, as specified. (Never Heard in the Assembly Natural Resources Committee)

SB 899 (Wiener, 2020) would have provided that housing is a use by right on land owned by a religious institution or nonprofit college. (Held in the Assembly Appropriations Suspense File)

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

SUPPORT:

California Apartment Association

OPPOSITION:

Affordable Housing Management Association, Pacific Southwest

Apartment Association of Orange County

East Bay Rental Housing Association

ARGUMENTS IN SUPPORT: According to the California Apartment Association, “current surplus property disposal laws require the state to offer surplus property to local entities for the development of low and moderate-income housing, open spaces, public parks, and government-owned facilities. SB 240 would expand that authority to serve critically overlook population: formerly incarcerated individuals. SB 240 would be a positive step to address California’s homelessness crisis by ensuring that affordable housing is developed for individuals who need assistance transiting outside of the criminal justice system back into our communities.”

ARGUMENTS IN OPPOSITION: Opponents argue that, “SB 240 does not comport with appropriate government scrutiny and could potentially cause unintended consequences – further isolating formerly incarcerated individuals. We also believe there are alternative ways in which [the author’s] goal to advance awareness of Surplus Property for affordable housing can be attained.”

DUAL REFERRAL: Governmental Organization Committee & Housing Committee