Finding of Emergency

The California Department of Transportation (Caltrans) finds that an emergency exists and the proposed emergency regulations 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 in a gap in State Route 710 between State Routes 210 and 5, and they are often referred to as the “SR 710 Properties.” In 2016, 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 Those regulations were recently amended and/or repealed and replaced as a result of the Roberti Act being amended by Senate Bill (SB) 51 (Durazo, 2021). The SR 710 Sales Program regulations became effective December 13, 2021. The proposed emergency regulations would again amend and adopt new regulations to implement SB 381 (Portantino, 2021). The proposed emergency regulations are intended to clarify and make specific the sales process required by the Roberti Act, as amended by SB 381 and to comply with the requirement to file emergency regulations by March 28, 2022. (Gov. Code, 54239.4 (f)(2).)

The proposed emergency regulations will 1) adopt regulations to clarify the sales process for properties in the City of South Pasadena; 2) make changes to general provisions—in sections 1475 and 1485—applicable to the entire SR 710 sales program; and 3) amend sections 1477.1 and 1477.2 to reflect the proper cross reference. The Legislature has deemed the existence of an emergency for the Administrative Procedures Act. (Gov. Code, § 54239.4(f)(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, § 54239.4 (f)(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 by March 28, 2022: “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 article is enacted.” (Gov. Code, § 54239.4(f)(2).) These emergency regulations are intended to implement the Roberti Act, as recently amended by SB 381.

Also, once adopted, these regulations “shall remain in effect for two years after their effective date or until permanent regulations are adopted, whichever is sooner.” (Gov. Code, § 54239.4(f)(3).) Immediate action is necessary to facilitate speedy 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- 54239.4)

b. Local Mandate Determination
These proposed regulations would 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 381. The substantive changes to the regulations are described below:

a. Changes required by SB 381
Amend § 1477(a): This section currently informs readers where to find the priorities of sale for properties in the City of Los Angeles and the City of Pasadena. It is amended to also indicate that section 1477.3 specifies the priorities of sale for the City of South Pasadena. This is necessary for clarity and consistency.

Amend § 1477 reference: Amended to include Gov. Code, § 54239.4, which was added to the Act by SB 381.

Adopt § 1477.3: This section specifies the sales priorities required by the Act for the City of South Pasadena. This sales order is specified by SB 381. This is  necessary to specify the sales order applicable to the properties in the City of South Pasadena, and to do so in a manner consistent with section 1477.1 and 1477.2.

Amend § 1477.4: This section recognizes the self-executing language in Gov. Code, § 54237(f)(2) and excludes those properties from this chapter until after Caltrans has complied with 54237(f)(2). It is amended to account for the sale of properties in the City of South Pasadena. This section is necessary to specify how those properties are to be sold if they are in the City of South Pasadena and they are not sold pursuant to 54237(f)(2).

Amend § 1483(a): This section specifies how Surplus Residential Properties would be offered and sold at Priority 3. It is amended to account for residential and nonresidential properties in the City of South Pasadena at Priority 3, as otherwise specified in sections 1477.3(a)(6) & (b)(2). This is necessary for clarity.

Amend § 1483(b): This section identifies the Housing-Related Public Entities (Public HREs) eligible of purchasing at this Priority as the City of Pasadena and the County ofLos Angeles. It is amended to include the City of South Pasadena. This is necessary for clarity.

Amend § 1483(e): This section specifies the processes for sending and executing sales contracts. It is amended to include the City of South Pasadena.

Amend § 1483 reference: Amended to include Gov. Code, § 54239.4, which was added to the Act by SB 381.

Amend § 1483.1(c): Section 1483.1 describes the use restrictions for properties sold at Priority 3. It is amended to include a provision that is specific to properties sold at Priority 3 and which are in the City of South Pasadena. This is necessary for clarity in implementing a provision in Government Code, § 54239.4(c)(3)(C)(ii).

Amend § 1483.1 reference: Amended to include Government Code section 54239.4, which was added to the Act by SB 381.

Adopt § 1484.3: This section specifies how properties would be offered and sold at Priority 4SP. This Priority is necessary to implement the priority of sale specified in Gov. Code, § 54239.4(b) because adding this sales priority to Priority 4 with exceptions would have been confusing. To mitigate confusion with SB 580 Properties described in Priority 4, these properties are described as SB 381 Properties.

Adopt § 1484.3(a): This section specifies that only SB 381 Properties are to be offered at Priority 4SP to the City of South Pasadena. This is necessary for clarity and is consistent with similar provisions for other priorities.

Adopt § 1484.3(b): This section specifies the criteria for SB 381 Properties, which is specified in Gov. Code, § 54239.4(b)(1)(T)(2). This is necessary for clarity.

Adopt § 1484.3(c): This section specifies the process for obtaining the list of properties that the City of South Pasadena had designated as historic prior to January 1, 2021. This is necessary for implementation of the Act, as amended by SB 381. The time for the City of South Pasadena to submit a list of properties that meet the criteria in Gov. Code, § 54239.4(b)(1)(T)(2)(B) is limited to 30 days, which is considered reasonable, but is also necessary in order for Caltrans to comply with the requirement to commence the sale of unoccupied properties in the City of South Pasadena by June 30, 2022. (Gov. Code, 54239.4 (g).) Additional time can be provided under section 1475(c) upon a showing of good cause.

Adopt § 1484.3(d-e): These sections specify the process for soliciting interest from the City of South Pasadena. This is necessary to determine which properties must be considered for sale at Priority 4SP, and which properties can move to the next Priority. This is consistent with the approach used in Priority 3.

Adopt § 1484.3(f-i): These sections specify the processes for sending and executinsales contracts; escrow and the payment of escrow fees; and the “as-is” condition of the properties. These are necessary to facilitate the sales of these properties. The City of South Pasadena has 60 days to execute the sales contract, which provides sufficient time to acquire any necessary approvals from the South Pasadena City Council. Additional time can be provided under section 1475(c) upon a showing of good cause. The City of South Pasadena would pay all closing and escrow fees, consistent with section 1483(g), which requires Housing-Related Public Entities who purchase at Priority 3 to pay all closing and escrow fees.

Adopt § 1484.3(j): This section specifies that properties sold at Priority 4SP are conditioned upon acceptance of use and resale restrictions. This is necessary to implement Gov. Code, § 54239.4(b)(1)(Q), which requires “a covenant recorded against the property to ensure the property’s use as pursuant to this paragraph.” The use and resale restrictions are incorporated by reference, and thereby, made part of these regulations. The provisions of that use and resale restriction is discussed below.

Amend § 1485(a): This section specifies how Surplus Residential Properties would be offered and sold at Priority 5. It is amended to add reference to § 1477.3, which is necessary to clarify that Priority 5 applies to properties in South Pasadena.

Amend § 1485 reference: Amended to include Gov. Code, § 54239.4, which was added to the Act by SB 381.

Amend § 1485.1 reference: Amended to include Gov. Code, § 54239.4, which was added to the Act by SB 381.

Amend § 1486(a): This section specifies how Surplus Residential Properties would be offered and sold at Priority 6. It is amended to add reference to §1477.3, which is necessary to clarify that Priority 6 applies to properties in South Pasadena.

Amend § 1486(b): This section specifies the eligibility criteria for Priority 6. It is amended to add reference to § 1477.3(a)(4), which is necessary to clarify the five-year occupancy requirement for eligibility to buy when Priority 6 is specified at §1477.3(a)(4). There is no occupancy requirement when Priority 6 is specified at § 1477.3(a)(8). This is necessary for clarity.

Amend § 1486 reference: Amended to include Gov. Code, § 54239.4, which was added to the Act by SB 381.

Amend § 1487(a): This section specifies how Surplus Residential Properties would be offered and sold at Priority 7. It is amended to add reference to §1477.3, which is necessary to clarify that Priority 7 applies to properties in South Pasadena.

Amend § 1488 (a): This section specifies how Surplus Residential Properties would be offered and sold at Priority 8. It is amended to add reference to §1477.3, which is necessary to clarify that Priority 8 applies to properties in South Pasadena.

Amend § 1489 (a): This section specifies how Surplus Residential Properties would be offered and sold at Priority 9. It is amended to add reference to §1477.3, which is necessary to clarify that Priority 9 applies to properties in South Pasadena.

 

b. Regulations Incorporated by Reference: Form 1477.3(a)(5) – South Pasadena, Priority 4SP (02/22)

Form 1477.3(a)(5) – South Pasadena, Priority 4SP (02/22) is incorporated by reference in section 1484.3(j). The form’s title refers to its applicability to the priority identified in section 1477.3(a)(5), which applies to properties sold in South Pasadena at Priority 4SP.

Adopt: Introduction paragraph: This paragraph identifies the parties to the agreement, which for Priority 4 SP, includes the City of South 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 Act. It is necessary to prevent delayed challenges to the propriety of the sales price.

Adopt: Section 1.2: This section contains acknowledgments that the City of South Pasadena must agree to. 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 Act that are not reflected in this agreement.
(h) The City acknowledges that the Act provides the Monitoring Entity (HCD) 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, § 54239.4(b)(1)(C), the two-year time for performance specified in 54239.4(b)(1)(R), and the criteria for extension in 54239.4(b)(1)(S). This is necessary to implement the requirements specified in the 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, § 54239.4(b)(1)(R), which requires such properties to be used as affordable housing pursuant to § 54239.4(c)(3-4).

Adopt: Section 4.1: This section specifies what the City of South Pasadena must do with the proceeds from the resale of the property under Section 3.1. This is necessary to implement Gov. Code, § 54239.4(b)(1)(C) and 54239(b)(1)(F).

Adopt: Section 4.2: This section specifies the City’s monitoring requirements, as specified in Gov. Code, § 54239.4(b)(1)(T).

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, § 54239.4(b)(1)(E).

Adopt: Section 4.4: This section specifies the time for performance specified in Gov. Code, § 54239.4(b)(1)(G) and the criteria for extension in 54239.4(b)(1)(L). 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, § 54239.4(b)(1)(M). It also clarifies that section. Section 54239.4(b)(1)(M) 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 381.

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 3 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 Act. But it is necessary to have an enforcement mechanism to ensure the City of South Pasadena complies with the requirements in the Act.

Adopt: Section 6.1: This section specifies what events constitute a default under the agreement. This is necessary to implement Gov. Code, § 54239.4(b)(1)(K).

Adopt: Section 6.2: This section specifies the penalties for default under the agreement. This is necessary to implement Gov. Code, § 54239.4(b)(1)(K).

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, §54239.4(b)(1)(N).

Adopt: Sections 7.1 through 7.15: These sections contain general contract terms that do not implement specific parts of the 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.

c. Changes impacting general provisions

Amend § 1475(g): Clarifies that a determination of eligibility for receiving a sales contract is separate from an occupant’s or tenant’s ability to qualify for a mortgage loan.

Amend § 1475(h): Clarifies the sales processes for properties offered but not sold under the regulations in effect from July 26, 2016 and December 12, 2021, which was commonly referred to as the “Phase 1 Sales.”

Amend 1477(b): This section currently informs readers that the priorities are sequential and that properties do not repeat priorities unless specifically called for in the regulations. This amendment accounts for the addition of section 1477.3 and the sales priorities it establishes for properties in the City of South Pasadena.

Amend 1477.1(a)(2) to reflect the proper cross-reference to §1481.

Amend 1477.2(a)(2) to reflect the proper cross-reference to §1481.

Amend § 1485(e): Clarifies the process for evaluating bids by stating that the Department of Housing and Community Development may assist the Department in reviewing bids.

Amend § 1485.1(c): This section specifies resale restrictions for properties sold at Priority 5. Amended to clarify that the profits use requirement in 1485.1(c)(2)(B) applies when a Housing-Related Private Entity resells the property, and not when resold by an owner-occupant after the expiration of the 45-year period, as described in 1485.1(b)(2).

3. AUTHORITY AND REFERENCE

Caltrans has implied authority to adopt the proposed regulations under Government Code, section 54237, and express authority under section 54239.4(f). The proposed regulations implement, interpret, and make specific the sales process described in the Roberti Act (Gov. Code, §§ 54239.4.)

4. DOCUMENTS RELIED UPON

• CTC resolution G98-22
• Final Environmental Impact Report for SR-710 Surplus Property Sales, July 28, 2016, SCH# 2014071006
• Initial Study with Negative Declaration for Caltrans Surplus Property Sale, January 22, 2015, SCH# 2014071006
• Categorical Exemption Determination for Sale of Vacant Properties, April 29, 2014
• Caltrans non-discrimination policies

5. NOTICE OF PROPOSED EMERGENCY ACTION

Government Code section 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 Government Code section 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
Government Code, section 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 Section 17500 of the Government Code, and no costs or savings in federal funding to the State.