Bill Text: CA AB129 | 2023-2024 | Regular Session | Chaptered

California Assembly Bill 129

Bill Title: Housing.

Spectrum: Committee Bill

Status: (Passed) 2023-07-10 - Chaptered by Secretary of State - Chapter 40, Statutes of 2023. [AB129 Detail]

Download: California-2023-AB129-Chaptered.html

Assembly Bill No. 129

CHAPTER 40

An act to amend Sections 12804, 14684.3, 65589.9, 65589.11, 65852.24, 65912.114, and 65912.124 of, and to amend, repeal, and add Section 54221 of, the Government Code, to amend Sections 17036, 50199.21, 50216, 50218.6, 50218.7, 50220.8, 50704.83, 50900, and 53559 of, to add Section 17008.7 to, and to add Chapter 6.5 (commencing with Section 50230) to Part 1 of Division 31 of, the Health and Safety Code, to add Section 17131.13 to the Revenue and Taxation Code, and to amend Section 8257 of, and to add Section 8257.01 to, the Welfare and Institutions Code, relating to housing, and making an appropriation thereof, to take effect immediately, bill related to the budget.

[ Approved by Governor July 10, 2023. Filed with Secretary of State July 10, 2023. ]

LEGISLATIVE COUNSEL'S DIGEST

AB 129, Committee on Budget. Housing.

(1) Existing law establishes the Department of Housing and Community Development (HCD) in the Business, Consumer Services, and Housing Agency for purposes of carrying out state housing policies and programs, and creates in HCD the California Housing Finance Agency.

This bill would remove the California Housing Finance Agency from within HCD. This bill would continue the existence of the California Housing Finance Agency in the Business, Consumer Services, and Housing Agency.

This bill would also make technical, conforming changes and would delete obsolete references.

(2) Existing federal law authorizes the United States Secretary of Agriculture to extend financial assistance through multifamily housing direct loan and grant programs to serve very low, low-, and moderate-income households, including, among other programs, Section 515 Rural Rental Housing Loans, which are mortgages to provide affordable rental housing for very low, low-, and moderate-income families, elderly persons, and persons with disabilities.

Existing law establishes a low-income housing tax credit program pursuant to which the California Tax Credit Allocation Committee provides procedures and requirements for the allocation, in modified conformity with federal law, of state insurance, personal income, and corporation tax credit amounts to qualified low-income housing projects that have been allocated, or qualify for, a federal low-income housing tax credit and farmworker housing. Existing law requires not less than 20% of the low-income housing tax credits available annually to be set aside for allocation to rural areas. Existing law defines “rural area” for purposes of the low-income housing tax credit program as an area, which, on January 1 of any calendar year, satisfies any number of certain criteria, including being eligible for financing under the Section 515 program, or successor program, of the United States Department of Agriculture Rural Development.

This bill would expand the above-described criteria relating to Section 515 eligibility to instead include eligibility for financing under a multifamily housing program, as specified, or successor program, of the United States Department of Agriculture Rural Development.

Existing law also includes in the definition of “rural area” an unincorporated area that adjoins a city having a population of 40,000 or less, provided that the city and its adjoining unincorporated area are not located within a census tract designated as an urbanized area by the United States Census Bureau.

This bill would revise the definition of “rural area” to include an unincorporated area that adjoins a city having a population of 40,000 or less, provided that the unincorporated area is not located within a census tract, block group, or block designated as an urban area by the United States Census Bureau in the most recent decennial census. The bill would also include in the definition of “rural area” an unincorporated area that does not adjoin a city, provided that the unincorporated area is not located within a census tract, block group, or block designated as an urban area by the United States Census Bureau in the most recent decennial census.

(3) Existing law, the Planning and Zoning Law, requires a city or county to adopt a general plan for land use development within its boundaries that includes, among other things, a housing element. The law requires HCD to determine whether the housing element is in substantial compliance with specified provisions of that law. Existing law requires HCD to designate jurisdictions as prohousing pursuant to emergency regulations adopted by HCD, as prescribed. Existing law awards jurisdictions that are in substantial compliance with specified provisions and that are prohousing additional points or preference in the scoring of applications for specified state programs, including, among others, the Affordable Housing and Sustainable Communities Program. Existing law requires the Department of Finance to annually publish the list of programs that must award prohousing jurisdictions additional points or preferences on its internet website.

This bill would instead require HCD to publish the list of programs that must award prohousing jurisdictions additional points or preferences on its internet website.

Existing law also requires the Department of Finance to annually publish on its internet website a list of programs, if any, where eligibility for funding is contingent upon the jurisdiction having adopted a housing element that has been found to be in substantial compliance with the requirements of the Planning and Zoning Law.

This bill would instead require HCD to publish that list of programs.

(4) Existing law prescribes requirements for the disposal of surplus land by a local agency. Existing law defines terms for these purposes, including, among others, “surplus land” to mean land owned in fee simple by any local agency for which the local agency’s governing body takes formal action in a regular public meeting declaring that the land is surplus and is not necessary for the agency’s use. Existing law defines “exempt surplus land” to mean, among other things, surplus land that a local agency is exchanging for another property necessary for the agency’s use and surplus land that a local agency is transferring to another local, state, or federal agency for the agency’s use.

Existing law provides that an agency is not required to follow the requirements for disposal of surplus land for “exempt surplus land,” except as provided.

The Planning and Zoning Law requires the planning agency of a city or county to provide an annual report to HCD by April 1 of each year that includes, among other information, the city’s or county’s progress in meeting its share of regional housing needs, as described.

This bill would provide, until January 1, 2034, that land that is subject to a sectional planning area, as described, is not subject to the above-described requirements for the disposal of surplus land if specified conditions are met. The bill would require the agency to include in its annual report the status of development, as prescribed. The bill would authorize HCD to request additional information from the agency regarding land disposed of pursuant to these provisions. The bill would require a local agency, at least 30 days prior to declaring land “exempt surplus land” under these provisions, to notify HCD of its findings, as specified, and would require HCD to notify the local agency if the department has determined that the local agency is in violation. The bill would make a local agency that disposes of land in violation of these provisions liable for a civil penalty, as specified.

(5) Existing law requires the housing element of a city’s or county’s general plan to include, among other things, an inventory of land suitable and available for residential development. If the inventory of sites does not identify adequate sites to accommodate the needs of groups of all households pursuant to specified law, existing law requires the local government to rezone sites within specified time periods and that this rezoning accommodate 100% of the need for housing for very low and low-income households on sites that will be zoned to permit owner-occupied and rental multifamily residential use by right for specified developments.

Existing law, the Middle Class Housing Act of 2022, until January 1, 2033, deems a housing development project an allowable use on a parcel that is within a zone where office, retail, or parking are a principally permitted use if specified conditions are met, including requirements relating to density, public notice, comment, hearing, or other procedures, site location and size, consistency with sustainable community strategy or alternative plans, prevailing wage, and a skilled and trained workforce. Existing law authorizes a local agency to exempt a parcel from the act if the local agency makes specified written findings. The act authorizes a local agency to reallocate the residential density from an exempt parcel pursuant to these provisions only if the site or sites chosen by the local agency are suitable for residential development and are subject to an ordinance that allows for development by right.

This bill would additionally require the exempted parcel or parcels to be subject to an ordinance that allows for development by right for a local agency to reallocate the residential density from an exempt parcel pursuant to the provisions described above. The bill would additionally require all development contractors and subcontractors to be registered and the development proponent to provide notice of all contracts for the performance of the work to the Department of Industrial Relations, as specified.

(6) Existing law establishes, among various other programs intended to address homelessness in this state, the Homeless Housing, Assistance, and Prevention program for the purpose of providing jurisdictions with one-time grant funds to support regional coordination and expand or develop local capacity to address their immediate homelessness challenges, as specified. Existing law provides for the allocation of funding under the program among continuums of care, cities, counties, and tribes in 4 rounds, which are to be administered by the Interagency Council on Homelessness. Existing law, in order to receive a round 3 or round 4 program allocation, requires an applicant to submit an application to the council that includes outcome goals that set definitive metrics for, among other things, reducing the number of persons experiencing homelessness, reducing the number of persons who become homeless for the first time, and increasing the number of people exiting homelessness into permanent housing. Existing law requires, except as provided, 18%, or $180,000,000, of the funds allocated for rounds 3 and 4 of the program to be set aside for awarding bonus funds to recipients that have met their outcome goals.

This bill would require those bonus funds for rounds 3 and 4 that have not been awarded by July 1, 2023, to be reallocated for distribution under round 5 of the Homeless Housing, Assistance, and Prevention program, which the bill would establish for the purpose of creating and implementing regionally coordinated plans that organize and deploy the full array of homelessness programs and resources comprehensively and effectively. By reallocating round 3 and round 4 funding to round 5, the bill would make an appropriation.

The bill would require the council to administer round 5 of the program, as specified. The bill would require the council to leverage the programmatic and administrative expertise of relevant state departments and agencies. The bill would authorize the council to designate and reimburse a state agency or department to administer programs and related functions as it considers necessary.

To be eligible for a round 5 base program allocation, this bill would require a jurisdiction that is not a tribe to apply as part of a region and to be signatory to a regionally coordinated homelessness action plan that has been approved by the council. The bill would require the council to approve a regionally coordinated homelessness action plan when the council determines that the plan meets all of the specified requirements, including identification and analysis of the specific roles and responsibilities of each participating jurisdiction in the region, as provided. The bill would require participating jurisdictions to collaborate to complete the regionally coordinated homelessness action plan and to engage in a public stakeholder process that includes at least 3 public meetings before completing the plan. The bill would require participating jurisdictions to invite and encourage specified stakeholders to partake in the public process, including people with lived experience of homelessness. The bill would require a qualifying jurisdiction or continuum of care participating in the regionally coordinated homelessness action plan to post on its internet website the proposed, approved, and amended regionally coordinated homeless action plan.

Upon appropriation by the Legislature, the bill would require that the funds to administer the program, except as provided, be made available in the 2023–24 fiscal year for implementing round 5 of the program, as specified. The bill would prohibit a program recipient from using funding from the program to supplant existing local funds for homelessness services under penalty of disallowance or reduction, or both, of future program funds, as determined by the council. The bill would prohibit the use of more than 5% of appropriated funds to cover state administrative costs. The bill would require a program recipient to use at least 10% of the funds allocated for services for homeless youth populations and require moneys allocated pursuant to its provisions to be expended in compliance with Housing First.

The bill would require the council to make an application for round 5 base program allocations available no later than September 30, 2023, and would require applications to be due no later than 180 days from the date applications are made available. To receive a round 5 base program allocation, the bill would require an applicant to submit an application to the council in the form and manner prescribed by the council, including a regionally coordinated homelessness action plan. The bill would require the applicants from each region to submit a single, regional application from their shared region. Within 30 days of the application deadline, the bill would require the council to either approve the application or return it to the applicant with written, detailed comments and request one or more amendments, as specified.

On or before January 31, 2026, the bill would require a grantee to submit to the council an updated regionally coordinated homelessness action plan that shall include updates on the metrics and corresponding key actions carried out, as applicable. The bill would require a recipient to contractually obligate not less than 75%, and to expend not less than 50%, of the initial round 5 program allocations made to it no later than June 30, 2026. The bill would authorize the council to request additional information from applicants, as needed, to meet other applicable reporting or audit requirements and to monitor the expenditures and programmatic activities of an applicant, as the council considers necessary, to ensure compliance with round 5 program requirements. The bill would authorize the council to, as it considers appropriate or necessary, request the repayment of round 5 program funds from an applicant, or pursue any other remedies available to it by law for failure to comply with program requirements. The bill would require any remaining amounts of round 5 base program allocation funds not expended by June 30, 2028, to revert to, and be paid and deposited in, the General Fund.

The bill would declare allowable uses of round 5 base program allocation funds, including, among others, permanent housing. The bill would authorize applicants to request, in a form prescribed by the council, approval to utilize round 5 funding on allowable expenditures outside of the state’s intended priorities. The bill would authorize a county to accept or deposit into the county treasury funds from any source for the purpose of administering a project, proposal, or program under this chapter.

Existing law establishes the Multifamily Housing Program administered by the Department of Housing and Community Development. Existing law requires assistance for projects under the program to be provided in the form of deferred payment loans to pay for eligible costs of specified types of development, as provided. Existing law requires that specified funds appropriated to provide housing for individuals and families who are experiencing homelessness or who are at risk of homelessness and who are inherently impacted by or at increased risk for medical diseases or conditions due to the COVID-19 pandemic or other communicable diseases be disbursed in accordance with the Multifamily Housing Program for specified uses. This disbursement scheme is referred to as Homekey.

This bill would specify that cities and counties that are eligible for round 5 are eligible, separately, for supplemental Homekey funding if they satisfy specified conditions, including having a housing element at the time program applications must be submitted.

The bill would specify the distribution of funds, upon appropriation of the Legislature, including that $100,000,000 be made available for the 2023–24 fiscal year, as specified, and that $260,000,000 be made available for the 2024–25 fiscal year, as specified. The bill would require the council to award supplemental program funding upon the jurisdiction receiving its round 5 base allocation award. The bill would require the council to, on or before November 1, 2024, make an application available for supplemental Homeless Housing, Assistance, and Prevention program funding.

Existing law, the Administrative Procedure Act, generally governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law.

The bill would, among other exemptions, exempt the council from the requirements of the Administrative Procedure Act in administering round 5 of the program.

(7) Under existing law, the Employee Housing Act requires that buildings used for human habitation, and buildings accessory thereto, comply with the building standards in the California Building Standards Code relating to employee housing, as defined. The Employee Housing Act requires HCD to adopt regulations that it determines are necessary for the administration and enforcement of the Employee Housing Act and to establish a schedule of fees to pay for the cost of administration and enforcement of the Employee Housing Act. The Employee Housing Act sets certain minimum permit fees and authorizes HCD to increase any fees in the schedule if necessary.

This bill would authorize HCD to, instead, adjust fees if necessary. Under the bill, any fee adjustment would be deemed a change in regulation for purposes of the rulemaking provisions of the Administrative Procedure Act. The bill would establish in the State Treasury the Employee Housing Regulation Fund. The bill would require HCD to deposit moneys collected pursuant to the Employee Housing Act in the fund. The bill would require moneys deposited in the fund to be available, subject to appropriation by the Legislature, to HCD for expenditure in carrying out the Employee Housing Act. The bill would require HCD to set fees with the primary objective that the aggregate revenue deposited in the fund, on an annual basis, not exceed the costs of HCD’s activities mandated by the Employee Housing Act. The bill would prohibit the total money contained in the fund on June 30 of each fiscal year from exceeding the operating expenses and statewide general administrative costs that HCD needs to enforce the Employee Housing Act for one year. The bill would require HCD, if the total moneys contained in the fund exceeds this amount, to make appropriate reductions in the schedule of fees.

(8) Existing law, the Affordable Housing and High Road Jobs Act of 2022, authorizes a development proponent to submit an application for a multifamily housing development that meets specified objective standards and affordability and site criteria, including being located within a zone where office, retail, or parking are a principally permitted use, and makes the development a use by right and subject to one of 2 streamlined, ministerial review processes. Existing law authorizes a local government to exempt a parcel from these provisions before a development proponent submits a development application if specified requirements are met, including that the local government makes written findings that development of the parcel would lead to no net loss of the total potential residential density in the jurisdiction, as specified.

This bill would instead authorize a local government to exempt a parcel from the Affordable Housing and High Road Jobs Act of 2022 by an ordinance adopted to implement the act before a development proponent submits a development application and if specified requirements are met. The bill would modify the required written findings to include, among other things, that the substitution of a parcel for reclassified parcels would result in no net loss of the total realistic and demonstrated potential residential capacity, as specified, and the local government has completed all rezonings required for the 6th revision of its housing element.

(9) Existing law establishes the Department of General Services (DGS) in the Government Operations Agency for purposes of, among other things, planning, acquiring, constructing, and maintaining state buildings and property. Executive Order No. N-06-19 required DGS to create a digitized inventory of all state-owned parcels that are in excess of foreseeable needs, as provided, and required DGS, in consultation with HCD, to issue requests for proposals on individual parcels and accept proposals from certain developers of affordable housing, as provided.

Existing law requires DGS to develop, in consultation with HCD, no later than September 1, 2023, a set of criteria to consistently evaluate state-owned parcels for suitability as affordable housing sites. Existing law requires, on or before July 1, 2024, and every 4 years thereafter, DGS to, among other things, conduct a review of all state-owned property and identify state-owned parcels that are potentially viable for affordable housing based on those criteria. Existing law also requires, on or before July 1, 2024, and every 4 years thereafter, DGS to update the digitized inventory created pursuant to Executive Order No. N-06-19 of all excess state land, as defined, suitable for affordable housing identified by its review.

This bill would instead require DGS to update the digitized inventory of all excess state land suitable for affordable housing after the conclusion of its review of all state-owned property. The bill would require, on or before January 1, 2025, and annually thereafter, DGS to update the digitized inventory with any state parcels newly determined or declared excess that are suitable for affordable housing, as specified.

Existing law establishes, upon appropriation by the Legislature, the Excess Sites Local Government Matching Grants Program, to be administered by HCD. Existing law requires HCD to allocate grants of up to $10,000,000 to development partners selected under an Executive Order No. N-06-19 program to enter a ground lease with the state to create affordable housing on excess state-owned property. Existing law requires a selected developer that receives a grant under the program to submit a report, in a form and manner prescribed by HCD, by December 31 of the year following the receipt of those funds, and annually thereafter until December 31, 2024, containing specified information, and requires a recipient of grant moneys under the program to expend their funds no later than June 30, 2024.

This bill would remove the December 31, 2024, date to extend those report provisions indefinitely. The bill would also remove the requirement that a recipient of grant moneys under the program expend their funds no later than June 30, 2024.

(10) Existing law establishes the Infill Infrastructure Grant Program of 2019, which requires HCD, upon appropriation of funds by the Legislature, to establish and administer a grant program to allocate those funds to eligible applicants, as defined, to fund capital improvement projects that are an integral part of, or necessary to facilitate the development of, a qualifying infill project, qualifying infill area, or catalytic qualifying infill area, as those terms are defined, pursuant to specified requirements. Existing law requires HCD to administer a competitive application process for capital improvement projects for large jurisdictions, as defined. Existing law requires HCD, in its review and ranking of applications for the award of capital improvement project grants, to rank affected qualifying infill projects and qualifying infill areas based on specified priorities.

This bill would instead require HCD to rank only qualifying infill areas based on those specified priorities in its review and ranking of applications for the award of capital improvement project grants. The bill would make other nonsubstantive changes.

(11) Existing law requires the Governor to establish the Interagency Council on Homelessness, and requires the council to, among other things, identify mainstream resources, benefits, and services that can be accessed to prevent and end homelessness in California, and promote systems integration to increase efficiency and effectiveness while focusing on designing systems to address the needs of people experiencing homelessness. Existing law requires the council to create a data system, known as the Homeless Data Integration System, to collect local data through Homeless Management Information Systems with the ultimate goal of matching data on homelessness to programs impacting homeless recipients of state programs. Existing law prohibits a state public agency from disclosing any personal information in a manner that would link the information disclosed to the individual to whom it pertains except under specific circumstances. Existing law also exempts health information and personally identifying information in the Homeless Data Integration System from public inspection or disclosure under the California Public Records Act.

This bill would authorize the council to share Homeless Data Integration System data with a state agency or department that is a member of the council.

Existing law requires the Interagency Council on Homelessness to regularly seek guidance from and, at least twice per year, meet with an advisory committee. Existing law, the Bagley-Keene Open Meeting Act, requires a quorum of any state body that is an advisory board, advisory commission, advisory committee, advisory subcommittee, or similar multimember advisory body to be in attendance at the designated primary physical meeting location and provides that members of the state body participating remotely shall not count toward establishing a quorum. Existing law requires members of the council to serve without compensation but authorizes members of the council who are, or have been, homeless to receive reimbursement for travel, per diem, or other expenses, as specified.

This bill would authorize the members of the advisory committee to participate remotely in advisory committee meetings, including meetings held with the council, and would provide that those members are not required to be present at the designated primary physical meeting location. This bill would authorize members of the council, the advisory committee, or a working group who are, or have been, homeless to receive per diem, reimbursement for travel, or other expenses, as specified.

(12) Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill would contain findings in compliance with this requirement.

(13) The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

(14) Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

Vote: MAJORITY Appropriation: YES Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 12804 of the Government Code is amended to read:

12804.

(a) There is in the state government the Business, Consumer Services, and Housing Agency.

(b) The Business, Consumer Services, and Housing Agency shall consist of the following: the Department of Consumer Affairs, the Department of Real Estate, the Department of Housing and Community Development, the California Housing Finance Agency, the Civil Rights Department, the Department of Financial Protection and Innovation, the Department of Alcoholic Beverage Control, the Alcoholic Beverage Control Appeals Board, the California Horse Racing Board, the Department of Cannabis Control, and the Cannabis Control Appeals Panel.

SEC. 2.

Section 14684.3 of the Government Code is amended to read:

14684.3.

(a) Not later than September 1, 2023, the department, in consultation with the Department of Housing and Community Development, shall develop a set of criteria to consistently evaluate state-owned parcels for suitability as affordable housing sites.

(b) On or before July 1, 2024, and every four years thereafter, the department shall do all of the following:

(1) Conduct a review of all state-owned property and identify state-owned parcels that are potentially viable for affordable housing based on the established criteria developed in subdivision (a).

(2) Following each review, contact all related state agencies to determine excess state land.

(3) Collaborate with the Department of Housing and Community Development to prioritize excess state land for development.

(c) (1) Upon the conclusion of each comprehensive survey conducted pursuant to subdivision (b), the department shall update the digitized inventory created pursuant to Executive Order No. N-06-19 with all excess state land suitable for affordable housing identified pursuant to subdivision (b).

(2) (A) On or before January 1, 2025, and annually thereafter, the department shall update the digitized inventory described in paragraph (1) with any state parcels newly determined or declared excess pursuant to the requirements of Section 11011 that are suitable for affordable housing.

(B) Not later than June 1, 2023, and annually thereafter, the department and the Department of Housing and Community Development shall evaluate and update the screening tools jointly developed pursuant to Executive Order No. N-06-19.

(3) The department, in consultation with the Department of Housing and Community Development, shall pursue the development of affordable housing on excess state properties, including those in the digitized inventory described in paragraph (1).

(d) (1) All state agencies shall respond to the department’s request for information to satisfy the requirements of this section.

(2) Notwithstanding any other law, all state agencies shall consider exchanging excess state land with local governments for other parcels for purposes of affordable housing development and preservation, if the exchange is appropriate and maximizes regional capacity to build and preserve affordable housing units.

(3) All state agencies shall use all existing legal and financial authority, subject to the direction of the Governor, to expedite and prioritize the developments described in paragraph (4) of subdivision (c).

(e) For purposes of this section, “excess state land” means state-owned parcels that are in excess of state agencies’ foreseeable needs.

(f) On or before January 1, 2024, and annually thereafter, the department shall report to the Legislature on the status of the excess state properties identified pursuant to subdivision (c), including, but not limited to, whether the property has been leased and, if so, for what purpose.

SEC. 3.

Section 54221 of the Government Code is amended to read:

54221.

As used in this article, the following definitions shall apply:

(a) (1) “Local agency” means every city, whether organized under general law or by charter, county, city and county, district, including school, sewer, water, utility, and local and regional park districts of any kind or class, joint powers authority, successor agency to a former redevelopment agency, housing authority, or other political subdivision of this state and any instrumentality thereof that is empowered to acquire and hold real property.

(2) The Legislature finds and declares that the term “district” as used in this article includes all districts within the state, including, but not limited to, all special districts, sewer, water, utility, and local and regional park districts, and any other political subdivision of this state that is a district, and therefore the changes in paragraph (1) made by the act adding this paragraph that specify that the provisions of this article apply to all districts, including school, sewer, water, utility, and local and regional park districts of any kind or class, are declaratory of, and not a change in, existing law.

(b) (1) “Surplus land” means land owned in fee simple by any local agency for which the local agency’s governing body takes formal action in a regular public meeting declaring that the land is surplus and is not necessary for the agency’s use. Land shall be declared either “surplus land” or “exempt surplus land,” as supported by written findings, before a local agency may take any action to dispose of it consistent with an agency’s policies or procedures. A local agency, on an annual basis, may declare multiple parcels as “surplus land” or “exempt surplus land.”

(2) “Surplus land” includes land held in the Community Redevelopment Property Trust Fund pursuant to Section 34191.4 of the Health and Safety Code and land that has been designated in the long-range property management plan approved by the Department of Finance pursuant to Section 34191.5 of the Health and Safety Code, either for sale or for future development, but does not include any specific disposal of land to an identified entity described in the plan.

(3) Nothing in this article prevents a local agency from obtaining fair market value for the disposition of surplus land consistent with Section 54226.

(c) (1) Except as provided in paragraph (2), “agency’s use” shall include, but not be limited to, land that is being used, is planned to be used pursuant to a written plan adopted by the local agency’s governing board for, or is disposed to support pursuant to subparagraph (B) of paragraph (2) agency work or operations, including, but not limited to, utility sites, watershed property, land being used for conservation purposes, land for demonstration, exhibition, or educational purposes related to greenhouse gas emissions, and buffer sites near sensitive governmental uses, including, but not limited to, wastewater treatment plants.

(2) (A) “Agency’s use” shall not include commercial or industrial uses or activities, including nongovernmental retail, entertainment, or office development. Property disposed of for the sole purpose of investment or generation of revenue shall not be considered necessary for the agency’s use.

(B) In the case of a local agency that is a district, excepting those whose primary mission or purpose is to supply the public with a transportation system, “agency’s use” may include commercial or industrial uses or activities, including nongovernmental retail, entertainment, or office development or be for the sole purpose of investment or generation of revenue if the agency’s governing body takes action in a public meeting declaring that the use of the site will do either of the following:

(i) Directly further the express purpose of agency work or operations.

(ii) Be expressly authorized by a statute governing the local agency, provided the district complies with Section 54233.5 where applicable.

(d) “Open-space purposes” means the use of land for public recreation, enjoyment of scenic beauty, or conservation or use of natural resources.

(e) “Persons and families of low or moderate income” has the same meaning as provided in Section 50093 of the Health and Safety Code.

(f) (1) Except as provided in paragraph (2), “exempt surplus land” means any of the following:

(A) Surplus land that is transferred pursuant to Section 25539.4 or 37364.

(B) Surplus land that is (i) less than 5,000 square feet in area, (ii) less than the minimum legal residential building lot size for the jurisdiction in which the parcel is located, or 5,000 square feet in area, whichever is less, or (iii) has no record access and is less than 10,000 square feet in area; and is not contiguous to land owned by a state or local agency that is used for open-space or low- and moderate-income housing purposes. If the surplus land is not sold to an owner of contiguous land, it is not considered exempt surplus land and is subject to this article.

(D) Surplus land that a local agency is transferring to another local, state, or federal agency for the agency’s use, or to a federally recognized California Indian tribe.

(E) Surplus land that is a former street, right-of-way, or easement, and is conveyed to an owner of an adjacent property.

(F) Surplus land that is put out to open, competitive bid by a local agency, provided all entities identified in subdivision (a) of Section 54222 will be invited to participate in the competitive bid process, for either of the following purposes:

(i) A housing development, which may have ancillary commercial ground floor uses, that restricts 100 percent of the residential units to persons and families of low or moderate income, with at least 75 percent of the residential units restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 or 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing and 45 years for ownership housing, and in no event shall the maximum affordable sales price or rent level be higher than 20 percent below the median market rents or sales prices for the neighborhood in which the site is located.

(ii) A mixed-use development that is more than one acre in area, that includes not less than 300 housing units, and that restricts at least 25 percent of the residential units to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing and 45 years for ownership housing.

(G) Surplus land that is subject to valid legal restrictions that are not imposed by the local agency and that would make housing prohibited, unless there is a feasible method to satisfactorily mitigate or avoid the prohibition on the site. An existing nonresidential land use designation on the surplus land is not a legal restriction that would make housing prohibited for purposes of this subparagraph. Nothing in this article limits a local jurisdiction’s authority or discretion to approve land use, zoning, or entitlement decisions in connection with the surplus land.

(H) Surplus land that was granted by the state in trust to a local agency or that was acquired by the local agency for trust purposes by purchase or exchange, and for which disposal of the land is authorized or required subject to conditions established by statute.

(I) Land that is subject to Sections 17388, 17515, 17536, 81192, 81397, 81399, 81420, and 81422 of the Education Code and Part 14 (commencing with Section 53570) of Division 31 of the Health and Safety Code, unless compliance with this article is expressly required.

(J) Surplus land that is a former military base that was conveyed by the federal government to a local agency, and is subject to Article 8 (commencing with Section 33492.125) of Chapter 4.5 of Part 1 of Division 24 of the Health and Safety Code, provided that all of the following conditions are met:

(i) The former military base has an aggregate area greater than five acres, is expected to include a mix of residential and nonresidential uses, and is expected to include no fewer than 1,400 residential units upon completion of development or redevelopment of the former military base.

(ii) The affordability requirements for residential units shall be governed by a settlement agreement entered into prior to September 1, 2020. Furthermore, at least 25 percent of the initial 1,400 residential units developed shall be restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing and 45 years for ownership housing.

(iii) Prior to disposition of the surplus land, the agency adopts written findings that the land is exempt surplus land pursuant to this subparagraph.

(iv) Prior to the disposition of the surplus land, the recipient has negotiated a project labor agreement consistent with the local agency’s project stabilization agreement resolution, as adopted on February 2, 2021, and any succeeding ordinance, resolution, or policy, regardless of the length of the agreement between the local agency and the recipient.

(v) The agency includes in the annual report required by paragraph (2) of subdivision (a) of Section 65400 the status of development of residential units on the former military base, including the total number of residential units that have been permitted and what percentage of those residential units are restricted for persons and families of low or moderate income, as defined in Section 50093 of the Health and Safety Code, or lower income households, as defined in Section 50079.5 of the Health and Safety Code.

A violation of this subparagraph is subject to the penalties described in Section 54230.5. Those penalties are in addition to any remedy a court may order for violation of this subparagraph or the settlement agreement.

(K) Real property that is used by a district for agency’s use expressly authorized in subdivision (c).

(L) Land that has been transferred before June 30, 2019, by the state to a local agency pursuant to Section 32667 of the Streets and Highways Code and has a minimum planned residential density of at least 100 dwelling units per acre, and includes 100 or more residential units that are restricted to persons and families of low or moderate income, as defined in Section 50093 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing and 45 years for ownership housing. For purposes of this paragraph, not more than 20 percent of the affordable units may be restricted to persons and families of moderate income and at least 80 percent of the affordable units must be restricted to persons and families of lower income as defined in Section 50079.5 of the Health and Safety Code.

(M) (i) Land that meets the following conditions:

(I) Land that is subject to a sectional planning area document that meets both of the following:

(ia) The sectional planning area was adopted prior to January 1, 2019.

(ib) The sectional planning area document is consistent with county and city general plans applicable to the land.

(II) The land identified in the adopted sectional planning area document was dedicated prior to January 1, 2019

(III) On January 1, 2019, the parcels on the land met at least one of the following conditions:

(ia) The land was subject to an irrevocable offer of dedication of fee interest requiring the land to be used for a specified purpose.

(ib) The land was acquired through a land exchange subject to a land offer agreement that grants the land’s original owner the right to repurchase the land acquired by the local agency pursuant to the agreement if the land will not be developed in a manner consistent with the agreement.

(ic) The land was subject to a grant deed specifying that the property shall be used for educational uses and limiting other types of uses allowed on the property.

(IV) At least 25 percent of the units are dedicated to lower income households, as defined in Section 50079.5 of the Health and Safety Code, at an affordable rent, as defined by Section 50053 of the Health and Safety Code, or an affordable housing cost, as defined by Section 50052.5 of the Health and Safety Code, and subject to a recorded deed restriction for a period of 55 years for rental units and 45 years for owner-occupied units.

(V) The land is developed at an average density of at least 10 units per acre, calculated with respect to the entire sectional planning area.

(VI) No more than 25 percent of the nonresidential square footage identified in the sectional planning area document receives its first certificate of occupancy before at least 25 percent of the residential square footage identified in the sectional planning area document has received its first certificate of occupancy.

(VII) No more than 50 percent of the nonresidential square footage identified in the sectional planning area document receives its first certificate of occupancy before at least 50 percent of the residential square footage identified in the sectional planning area document has received its first certificate of occupancy.

(VIII) No more than 75 percent of the nonresidential square footage identified in the sectional planning area document shall receive its first certificate of occupancy before at least 75 percent of the residential square footage identified in the sectional planning area document has received its first certificate of occupancy.

(ii) The local agency includes in the annual report required by paragraph (2) of subdivision (a) of Section 65400 the status of development, including the total square footage of the residential and nonresidential development, the number of residential units that have been permitted, and what percentage of those residential units are restricted for persons and families of low or moderate income, or lower income households, as defined in Section 50079.5 of the Health and Safety Code.

(iii) The Department of Housing and Community Development may request additional information from the agency regarding land disposed of pursuant to this subparagraph.

(iv) At least 30 days prior to disposing of land declared “exempt surplus land,” a local agency shall provide the Department of Housing and Community Development a written notification of its declaration and findings in a form prescribed by the Department of Housing and Community Development. Within 30 days of receipt of the written notification and findings, the department shall notify the local agency if the department has determined that the local agency is in violation of this article. A local agency that fails to submit the written notification and findings shall be liable for a civil penalty pursuant to this subparagraph. A local agency shall not be liable for the civil penalty if the Department of Housing and Community Development does not notify the agency that the agency is in violation of this article within 30 days of receiving the written notification and findings. Once the department determines that the declarations and findings comply with subclauses (I) to (IV), inclusive, of clause (i), the local agency may proceed with disposal of land pursuant to this subparagraph. This clause is declaratory of, and not a change in, existing law.

(v) If the local agency disposes of land in violation of this subparagraph, the local agency shall be liable for a civil penalty calculated as follows:

(I) For a first violation, 30 percent of the greater of the final sale price or the fair market value of the land at the time of disposition.

(II) For a second or subsequent violation, 50 percent of the greater of the final sale price or the fair market value of the land at the time of disposition.

(III) For purposes of this subparagraph, fair market value shall be determined by an independent appraisal of the land.

(IV) An action to enforce this subparagraph may be brought by any of the following:

(ia) An entity identified in subdivisions (a) to (e), inclusive, of Section 54222.

(ib) A person who would have been eligible to apply for residency in affordable housing had the agency not violated this section.

(ic) A housing organization, as that term is defined in Section 65589.5.

(id) A beneficially interested person or entity.

(ie) The Department of Housing and Community Development.

(V) A penalty assessed pursuant to this subparagraph shall, except as otherwise provided, be deposited into a local housing trust fund. The local agency may elect to instead deposit the penalty moneys into the Building Homes and Jobs Trust Fund or the Housing Rehabilitation Loan Fund. Penalties shall not be paid out of funds already dedicated to affordable housing, including, but not limited to, Low and Moderate Income Housing Asset Funds, funds dedicated to housing for very low, low-, and moderate-income households, and federal HOME Investment Partnerships Program and Community Development Block Grant Program funds. The local agency shall commit and expend the penalty moneys deposited into the local housing trust fund within five years of deposit for the sole purpose of financing newly constructed housing units that are affordable to extremely low, very low, or low-income households.

(VI) Five years after deposit of the penalty moneys into the local housing trust fund, if the funds have not been expended, the funds shall revert to the state and be deposited in the Building Homes and Jobs Trust Fund or the Housing Rehabilitation Loan Fund for the sole purpose of financing newly constructed housing units located in the same jurisdiction as the surplus land and that are affordable to extremely low, very low, or low-income households. Expenditure of any penalty moneys deposited into the Building Homes and Jobs Trust Fund or the Housing Rehabilitation Loan Fund pursuant to this subdivision shall be subject to appropriation by the Legislature.

(vi) For purposes of this subparagraph, the following definitions apply:

(I) “Sectional planning area” means an area composed of identifiable planning units, within which common services and facilities, a strong internal unity, and an integrated pattern of land use, circulation, and townscape planning are readily achievable.

(II) “Sectional planning area document” means a document or plan that sets forth, at minimum, a site utilization plan of the sectional planning area and development standards for each land use area and designation.

(2) Notwithstanding paragraph (1), a written notice of the availability of surplus land for open-space purposes shall be sent to the entities described in subdivision (b) of Section 54222 prior to disposing of the surplus land, provided the land does not meet the criteria in subparagraph (H) of paragraph (1), if the land is any of the following:

(A) Within a coastal zone.

(B) Adjacent to a historical unit of the State Parks System.

(C) Listed on, or determined by the State Office of Historic Preservation to be eligible for, the National Register of Historic Places.

(D) Within the Lake Tahoe region as defined in Section 66905.5.

(g) This section shall remain in effect only until January 1, 2034, and as of that date is repealed.

SEC. 4.

Section 54221 is added to the Government Code, to read: