Finding of Emergency

The Legislature has deemed the existence of an emergency in Government Code (Gov. Code), § 54329.5(e). The California Department of Transportation (Caltrans) is proposing to adopt emergency regulations that are necessary to address a situation that calls for immediate action to avoid serious harm to the public peace, health, safety, or general welfare.

1. INFORMATIVE DIGEST AND STATEMENT OF EMERGENCY

The Roberti Act (Gov. Code, § 54235 et seq.) governs the sale of over 400 surplus properties owned by Caltrans in Los Angeles County. The properties are located within the State Route 710 corridor between State Routes 210 and 5 and are often referred to as the “SR 710 Properties.” Caltrans adopted 21 CCR 1475 et seq. to clarify and make specific the sales process for the SR 710 Properties. Those regulations were recently amended in April 2022 as a result of the Roberti Act being amended by Senate Bill (SB) 381 (Portantino, 2021). The proposed emergency regulations will again amend and adopt new regulations to implement SB 959 (Portantino, 2022).

The proposed emergency regulations are intended to clarify and make specific the sales process required by the Roberti Act as amended by SB 959 and to comply with the requirement to file emergency regulations by June 30, 2023. (Gov. Code, § 54239.5 (e)(2).)

The proposed emergency regulations will 1) adopt regulations to clarify the sales process for properties in the City of Pasadena; and 2) make changes to general provisions—in sections 1485, 1485.1, 1486, and 1487—applicable to the entire SR 710 sales program.

The Legislature has deemed the existence of an emergency for the Administrative Procedures Act. (Gov. Code, § 54239.5(e)(1).) “The Legislature finds and declares that the state’s homelessness crisis has compounded the need for affordable housing described in Section 54235. To help mitigate the need for affordable housing and to speed up sales pursuant to this article, the Legislature further finds and declares that an emergency exists for purposes of Sections 11342.545, 11346.1, and 11349.6.” (Gov. Code, § 54239.5(e)(1).)

In addition to deeming an emergency warranting these emergency regulations, the Legislature has directed Caltrans to file emergency regulations to implement the Roberti Act no later than six months after the enactment of section 54239.5: “The Department of Transportation shall file proposed emergency regulations with the Office of Administrative Law for adoption to implement this section not later than six months after this section is enacted.” (Gov. Code, § 54239.5(e)(2).) These emergency regulations are intended to implement the Roberti Act, as recently amended by SB 959.

Also, once adopted, these regulations and the previously adopted emergency regulations “shall remain in effect until September 30, 2024, or until permanent regulations are adopted, whichever is sooner.” (Gov. Code, § 54239.5(e)(3).)

Immediate action is necessary to facilitate sales under the Roberti Act to mitigate the need for affordable housing.

a. Regulatory Compatibility

Caltrans has determined that these proposed regulations are not inconsistent or incompatible with existing regulations. After conducting a review for any regulations that would relate to or affect this area, Caltrans has concluded that these are the only regulations that concern the implementation of the Roberti Act. (Gov. Code, §§ 54235-54239.5)

b. Local Mandate Determination

These proposed regulations will not impose a mandate on local agencies or school districts.

2. NECESSITY

The proposed emergency regulations are necessary to implement the changes to the Roberti Act made by SB 959.

The substantive changes to the regulations are described below:

a. Changes required by SB 959

Amend § 1477.2: This section specifies the sales priorities and pricing required by the Roberti Act for the City of Pasadena. The sales order is specified by SB 959 and is necessary to identify the sales order and pricing applicable to properties in the City of Pasadena. Section 1477.2(a)(4) implements Gov. Code, § 54239.5(a) and

§ 1477.2(a)(5) implements Gov. Code, § 54239.5(b).

Section 1477.2(a)(4) appears duplicative of § 1477.2(a)(9), but it is not. Government Code, § 54239.5(a) requires a Surplus Residential Property to be “offered at fair market value to present tenants who have occupied the property for five years or more and who are in good standing with all rent obligations current and paid in full.” However, Gov. Code, § 1477.2(a)(9) has no occupancy requirement.

Amend § 1477.2(a)(7): This section is amended for consistency and to clarify price.

Amend §1477.2(b): This section is amended to implement Gov. Code, § 54239.5(d) requiring Caltrans to offer Surplus Nonresidential Properties to housing related entities for affordable housing purposes prior to disposing of the property pursuant to Streets and Highways Code § 118.

Amend § 1477.2 Authority and Reference sections: Amended to include Gov. Code,

§ 54239.5, added to the Roberti Act by SB 959.

Amend § 1483(a): This section specifies how Surplus Residential Properties will be offered and sold at Priority 3. It is amended to account for residential and nonresidential properties in the City of Pasadena at Priority 3, as otherwise specified in § 1477.2(a)(5-6) and § 1477.2(b)(2). This is necessary for clarity.

Amend § 1483(f): This section is amended to include a provision in Gov. Code,

§ 54239.5(b)(4) pertaining to reporting requirements by the City of Pasadena to the Department of Housing and Community Development prior to closing escrow on the purchase of unoccupied Surplus Residential Properties.

Amend § 1483 Authority and Reference sections: Amended to include Gov. Code,

§ 54239.5, added to the Roberti Act by SB 959.

Amend § 1483.1: Government Code, § 54237(d)(1)(A)(ii) requires Caltrans to “impose terms, conditions, and restrictions” upon properties sold at less than fair market value. Section 1483.1 describes the terms, conditions, and restrictions that will be enforced through Use and Resale Restrictions. These restrictions are necessary to ensure the properties are used as affordable housing. Section 1483.1 is amended as follows specific to properties in the City of Pasadena:

Amend § 1483.1(b)(1): This section is amended to exclude Surplus Residential Properties sold to the City of Pasadena from being developed as a limited equity cooperative under § 54237(d)(1)(A)(ii) due to the new sales process implemented by

SB 959 and described in § 54239.5(b).

Amend § 1483.1(b)(3): This section is amended to add reference to § 1477.2(a)(5). Funds generated from sales under § 1477.2(a)(5) are required to be held for the sole purpose of financing the production or acquisition of affordable housing units pursuant to Gov. Code, § 54239.5(b)(3).

Amend § 1483.1(b) to include subdivision (4) specifying that unoccupied properties sold at Priority 3 to the City of Pasadena are conditioned upon acceptance of use and resale restrictions. This is necessary to implement Gov. Code, § 54239.5(b)(16), which requires “a covenant recorded against the property to ensure the property’s use pursuant to this subdivision.” The Use and Resale restrictions are incorporated by reference, and thereby, made part of these regulations. The provisions of the Use and Resale restrictions are discussed further below in this Finding of Emergency.

Amend § 1483.1 Authority and Reference sections: Amended to include Gov. Code,

§ 54239.5, which was added to the Roberti Act by SB 959.

Amend § 1486(b)(6): Section 1486(b) specifies the eligibility criteria for Priority 6. This section is amended to add reference to § 1477.2(a)(4), which is necessary to clarify the five-year occupancy requirement for eligibility to buy when Priority 6 is specified at

§ 1477.2(a)(4). There is no occupancy requirement when Priority 6 is specified at

§ 1477.2(a)(9).

Amend § 1486 Authority and Reference sections: Amended to include Gov. Code,

§ 54239.5, which was added to the Roberti Act by SB 959.

b. Changes in General Provisions

Amend § 1485 (c)(1): Clarifies the Reasonable Price for Surplus Residential Properties located in the Cities of Los Angeles and South Pasadena is set at the original acquisition price pursuant to Gov. Code, §§ 54239.1(c)(1) and 54239.4(c)(1). The original acquisition price is defined as the Minimum Sales Price in § 1476(a)(13). Properties located in the City of Pasadena are sold at a Reasonable Sales Price pursuant to Gov. Code, § 54239.5(c)(1) and § 54237(d)(1)(A).

Amend § 1485(d-e): These sections are amended to clarify the bid submittal and bid evaluation process. The use of a Surplus Residential Property is not limited to providing affordable rental housing, but also includes utilizing as affordable homeownership, which is consistent with the Roberti Act.

Amend § 1485(f): This section is amended to provide Caltrans flexibility in conducting interviews virtually or in person.

Amend § 1485(h)(2): This section is amended to require bids to score at least 70% in order to be ranked. This is necessary to ensure properties are awarded to entities with bid proposals that adequately meet the evaluation criteria.

Amend § 1485 Authority and Reference sections: Amended to include Gov. Code,

§ 54239.5, which was added to the Roberti Act by SB 959.

Amend § 1485.1(c): This section is amended to clarify the 120 calendar days restriction is specific to occupied properties. The restriction on reselling a property is due to relocation assistance that Caltrans must provide to current Occupants pursuant to

§ 1490. Occupants who receive a notice to vacate within 90 days after Caltrans transfers the property to a new owner are entitled to receive relocation assistance. The 120 calendar days restriction is not applicable to unoccupied properties.

Amend § 1485.1 Authority and Reference sections: Amended to include Gov. Code,

§ 54239.5, which was added to the Roberti Act by SB 959.

Amend § 1486(b)(7-8): These sections are added to clarify the process and the documentation required for submittal prior to offering a Surplus Residential Property at fair market value to current Tenants. The process for determining eligibility of a Tenant to purchase is necessary prior to expending state funds to obtain an appraisal of a Surplus Residential Property.

Amend § 1486(c): This section is added to provide clarification regarding the time to provide the requested documentation in § 1486(b).

Amend § 1487(b)(6-7): Section 1487(b) specifies the eligibility criteria for Priority 7. These sections are added to clarify the process and the documentation required for submittal prior to offering a Surplus Residential Property at fair market value to a former Tenant. The process for determining eligibility of a former Tenant to purchase is necessary prior to expending state funds to obtain an appraisal of a Surplus Residential Property.

Amend § 1487(c): This section is added to provide clarification regarding the time to provide the requested documentation in § 1487(b).

c. Regulations Incorporated by Reference: Form 1477.2(a)(5) – City of Pasadena, Priority 3, Unoccupied Surplus Residential Properties (03/23)

Form 1477.2(a)(5) – City of Pasadena, Priority 3, Unoccupied Surplus Residential Properties (03/23) is incorporated by reference in § 1483.1(b)(4). The form’s title refers to its applicability to the priority identified in § 1477.2(a)(5), which applies to unoccupied properties sold to the City of Pasadena at Priority 3.

Adopt: Introduction paragraph: This paragraph identifies the parties to the agreement, which for Priority 3, includes the City of Pasadena, Caltrans, and Monitoring Entity, which is defined later. It also identifies the property by address and by legal description. These are legal necessities for a valid and enforceable agreement.

Adopt: Recitals: There are five recitals, labeled A to E. These provide facts that may be helpful in interpreting the agreement at a later time. They are necessary because the Parole Evidence Rule should preclude the consideration of these facts if they are not included in the agreement.

Adopt: Section 1.1: This section memorializes the agreement of the parties that the encumbered property was sold at the proper sales price required by the Roberti Act. It is necessary to prevent delayed challenges to the propriety of the sales price.

Adopt: Section 1.2: This section contains acknowledgments in which the City of Pasadena must agree. They include:

(a) The City will comply with the agreement.

(b) The property will be subject to restrictions.

(c) Caltrans is providing assistance in making the property available to the City.

(d) The agreement will remain in effect until terminated by the terms of the agreement.

(e) The City accepts the agreement on behalf of itself and its successors in interest.

(f) The City agrees not to challenge the agreement as an unreasonable restraint on the sale of the property.

(g) The City acknowledges that it must comply with additional requirements in the Roberti Act that are not reflected in this agreement.

(h) The City acknowledges that the Roberti Act provides the Monitoring Entity with certain authority.

These provisions are necessary to demonstrate that the parties understand the general and long-term implications of the agreement and to demonstrate a meeting of the minds.

Adopt: Section 2: This section contains three definitions. This is necessary for clarity.

Adopt: Section 3.1: This section implements the resale requirement specified in Gov. Code, § 54239.5(b)(3), the two-year time for performance specified in § 54239.5(b)(17), and the criteria for extension in § 54239.5(b)(18). This is necessary to implement the requirements specified in the Roberti Act.

Adopt: Section 3.2: This section implements the statutory use requirements for a property not resold within the time for performance required in Section 3.1. This implements Gov. Code, § 54239.5(b)(17), which requires such properties to be used as affordable housing.

Adopt: Section 4.1: This section specifies what the City of Pasadena must do with the proceeds from the resale of the property under Section 3.1. This is necessary to implement Gov. Code, § 54239.5(b)(3).

Adopt: Section 4.2: This section specifies the City’s monitoring requirements, as specified in Gov. Code, § 54239.5(b)(19).

Adopt: Section 4.3: This section specifies that the housing units described in Section 4.1 can be on one or multiple sites. This is necessary to implement Gov. Code,

§ 54239.5(b)(5).

Adopt: Section 4.4: This section specifies the time for performance specified in Gov. Code, § 54239.5(b)(7) and the criteria for extension in § 54239.5(b)(18). This is necessary to implement these sections.

Adopt: Section 4.5: This section specifies how surplus funds are to be used. This is necessary to implement Gov. Code, § 54239.5(b)(13). It also clarifies that section. Section 54239.5(b)(13) says “persons and families of very low, low, or moderate income, as defined in Section 50093 of the Health and Safety Code.” But section 50093 does not have a definition for “persons and families of very low, low, or moderate income.” Instead, it has a definition for “persons and families of low or moderate income” and that definition explicitly includes “very low-income households” as defined in section 50105. Therefore, Section 4.5 uses “persons and families of low and moderate income” as defined in section 50093 because: (1) it avoids confusion caused by looking for a defined term in section 50093 that is not there; and (2) that definition explicitly includes very low-income households, which conforms with the language of SB 959.

Adopt: Section 5.1: This section specifies when the agreement ceases to encumber the property, and when that happens, the agreement continues as a contract to ensure compliance with the production or acquisition of three housing units as required by Sections 4.1 through 4.5. It is necessary to unencumber the property once it is sold at market value because the new owner has no obligations under the Roberti Act. But it is necessary to have an enforcement mechanism to ensure the City of Pasadena complies with the requirements in the Roberti Act.

Adopt: Section 6.1: This section specifies what events constitute a default under the agreement. This is necessary to implement Gov. Code, § 54239.5(b)(11).

Adopt: Section 6.2: This section specifies the penalties for default under the agreement. This is necessary to implement Gov. Code, § 54239.5(b)(11).

Adopt: Section 6.3: This section specifies who determines a default and that such a determination is not subject to appeal. This is necessary to implement Gov. Code,

§ 54239.5(b)(14).

Adopt: Sections 7.1 through 7.15: These sections contain general contract terms that do not implement specific parts of the Roberti Act but are necessary or convenient for contracts in general.

• Section 7.1 is a nondiscrimination clause.

• Section 7.2 specifies the form and method of notices under the agreement.

• Section 7.3 is an attorney’s fees provision.

• Section 7.4 is an integration clause.

• Section 7.5 is a severability clause.

• Section 7.6 addresses the use of headings in the agreement.

• Section 7.7 addresses time for performance.

• Section 7.8 addresses amendments to the agreement.

• Section 7.9 addresses the controlling nature of the agreement.

• Section 7.10 addresses exhibits to the agreement.

• Section 7.11 designates the governing law.

• Section 7.12 authorizes counterpart signatures.

• Section 7.13 requires the agreement to be recorded.

• Section 7.14 discusses interpretation of the agreement.

• Section 7.15 is an assignment.

3. AUTHORITY AND REFERENCE

Caltrans has implied authority to adopt the proposed regulations under Gov. Code,

§ 54237, and express authority under § 54239.5(e). The proposed regulations implement, interpret, and make specific the sales process described in the Roberti Act. (Gov. Code, §§ 54235-54239.5.)

4. DOCUMENTS RELIED UPON

• CTC resolution G-98-22

• Final Environmental Impact Report for SR-710 Surplus Property Sales, July 28, 2016, SCH# 2014071006

• Caltrans Director’s Policy No. DP-28-R2, Title VI of the Civil Rights Act of 1964 and Related Nondiscrimination Law.

5. NOTICE OF PROPOSED EMERGENCY ACTION

Government Code, § 11346.1(a)(2) requires that at least five working days prior to submission of the proposed emergency action to the Office of Administrative Law, the adopting agency provide notice of the proposed emergency action to every person who has filed a request for notice of regulatory action with the agency. After submission of the proposed emergency to the Office of Administrative Law, the Office of Administrative Law shall allow interested parties five calendar days to submit comments on the proposed emergency regulations as outlined in Gov. Code, § 11349.6. Caltrans sent notice of the proposed emergency action to every person who has filed a request for notice of regulatory action in accordance with the requirements of Gov. Code,

§ 11346.1(a)(2).

6. COST ESTIMATE

The regulations involve no costs or savings to any State agency, no discretionary costs or savings to school districts, no reimbursable costs or savings to school districts under Gov. Code, § 17500, and no costs or savings in federal funding to the State.

The proposed emergency regulations will involve minor costs to administer the SR 710 Sales Program, which Caltrans will absorb in its existing budget.