What types of uses are favored for Surplus Land?

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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.

What is the purpose of the Surplus Land Act?

Government Code section 54220 sets the stage for the other provisions of the Surplus Land Act.

Subdivision (a) states that “housing is of vital statewide importance to the health, safety, and welfare of the residents of this state and that provision of a decent home and a suitable living environment for every Californian is a priority of the highest order. The Legislature further declares that a shortage of sites available for housing for persons and families of low and moderate income is a barrier to addressing urgent statewide housing needs and that surplus government land, prior to disposition, should be made available for that purpose.”

How did the Legislature encourage the development of Surplus Land for Housing?

Government Code section 54227 addresses how an entity disposing of Surplus Land should encourage the development of surplus land for housing purposes to fulfill the purpose set out in Section 54220.

Section 54227, Subdivision (a), provides that “[i]n the event that any local agency disposing of surplus land receives a notice of interest to purchase or lease that land from more than one of the entities to which notice of available surplus land was given pursuant to this article, the local agency shall give first priority to the entity or entities that agree to use the site for housing that meets the requirements of Section 54222.” (emphasis added.)

Further, Subdivision (a), states that “[i]f the local agency receives offers from more than one entity that agrees to meet the requirements of Section 54222.5, then the local agency shall give priority to the entity that proposes to provide the greatest number of units that meet the requirements of Section 54222.5. In the event that more than one entity proposes the same number of units that meet the requirements of Section 54222.5, priority shall be given to the entity that proposes the deepest average level of affordability for the affordable units.” (emphasis added.)

To that end, Section 54222.5 provides that an, “Entity proposing to use the surplus land for developing low and moderate income housing shall agree to make available not less than 25 percent of the total number of units developed on the parcels at affordable housing cost, as defined in Section 50052.5 of the Health and Safety Code, or affordable rent, as defined in Section 50053 of the Health and Safety Code, to lower-income households, as defined in Section 50079.5 of the Health and Safety Code. Rental units shall remain affordable to, and occupied by, lower-income households for a period of at least 55 years. The initial occupants of all ownership units shall be lower-income households, and the units shall be subject to an equity sharing agreement consistent with paragraph (2) of subdivision (c) of Section 65915.”

What does this mean for buyers of Surplus Land?

In short, Section 54227 requires a public entity to give priority to developers of affordable housing, and then provide priority among those affordable housing developers based on the number of units, and levels of affordability.

Conclusion

If you are negotiating the purchase of surplus land, or contemplating making an offer to purchase surplus land, and would like assistance navigating the process, please contact Marcus | Underwood for a free initial consultation.

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