Everyone agrees that there is a shortage of affordable housing in California. There are many possible solutions to this problem, one of the solutions was the Legislature’s passage of AB 1486.
Government Code section 54220 sets the stage for the other provisions of the Surplus Land Act.
When there is so much real estate to buy in California, it may not be clear why anyone would benefit from purchasing surplus land in the first instance. After all, it requires going through a negotiation process with a public entity and may take longer than other land purchases. There are some drawbacks to buying “surplus land” from a public entity. The question, then, is whether there are any benefits to buying surplus land.
Government Code section 54225 provides that any public agency disposing of surplus for “low- and moderate-income housing purposes may provide for a payment period of up to 20 years in any contract of sale or sale by trust deed for the land. The payment period for surplus land disposed of for housing and low- and moderate-income families may exceed 20 years. Still, the payment period shall not exceed the term that the land is required to be used for low- or moderate-income housing.”
The revised Surplus Land Act contains negotiation requirements to encourage the sale of surplus public land. Also, the law makes it more likely that the land will ultimately be developed for as much housing as possible. Prior to entering negotiations, however, AB 1486 requires that the agency selling the surplus land must first give notice.
Government Code section 54222 states that “Any local agency disposing of surplus land shall send, prior to disposing of that property or participating in negotiations to dispose of that property with a prospective transferee, a written notice of availability to all of the following [list of persons]. (emphasis added.)”
By the use of the mandatory term shall, this section mandates notification and therefore ensures that the widest possible array of interested persons will be able to compete to develop the surplus land.
Everything old is new again. Or so it seems. Sometimes a new thing really is new. In this case, the question is whether the new Surplus Land Act is truly as big of a change as touted. After all, there was a Surplus Land Act before, and there’s a Surplus Land Act now. What’s the big deal?
One small but powerful change is that AB 1486 requires an entity disposing of surplus land to send a notice of availability to the Department of Housing and Community Development (the “Department”) rather than upon written request. This is part of the new “master list” requirements whereby the Department is now required to maintain a master list of available surplus land available. (see Gov. Code § 54222(a)(2).) By requiring each entity to send the information to the Department instead of requiring the Department to request such information, AB 1486 makes it easier for prospective purchasers to understand what is available.
The purpose of this article is to address the goals that California’s Surplus Land Act was designed to accomplish.
The article will address the prior version of the Surplus Land Act, the changes to definitions made in 2019, and provide a big-picture perspective on its aims.
In 2019, the California Legislature re-made the Surplus Land Act in significant ways. Just three of those ways are addressed here.
Government Code section 54230.5 contains the “penalty” or “enforcement” provisions in the updated Surplus Land Act enacted under Assembly Bills 1255 and 1486 in 2019. Specifically, Section 54230.5 (a)(1) creates a penalty of “30 percent of the final sale price of the land sold in violation of this article for a first violation and 50 percent of any subsequent violation.” This is a serious hammer for noncompliance. A public entity may rightly be concerned, however, with ambiguities or gaps in a newly-enacted law.
Recently, in April 2021, the California Department of Housing and Community Development (HCD) released “guidelines” to provide clarity on the law to avoid the perils of non-compliance. Broadly, the Guidelines include further refinement of “definitions,” information on the “surplus land determination process,” requirements to be placed on surplus land for affordable housing, reporting requirements, and performance monitoring and penalties. These Guidelines are made available here and through HCD’s website. Since the Guidelines are too extensive to be digested in a single blog post, later posts here will digest each of the pieces and–the remaining gaps–over time. Until then, they are worth reviewing in full.
In 2019, California passed a revision to the Surplus Land Act to make more public land available for private development in order to address the State’s ongoing housing crisis.
Currently, as a result of the Legislature’s revision in 2019, the Surplus Land Act extends to any public entity within the State of California. Previously, the definition was limited to specified entities.
California Partition Law Blog