Caltrans Surplus Properties

a. Now that SB 381 has been signed into law, Caltrans will prepare regulations for the implementation of the law. This process is expected to take six months, and there will be opportunity for the public to provide input on the development of these regulations through the California Transportation Commission.
b. The City of South Pasadena will be holding a series of public meetings to discuss the implementation of SB 381.

1. SB 381 has moved current tenants who have lived on the property for 5 or more years and are in good standing ahead of the City or any Housing Related Entity (HRE) in the purchase order, regardless of their income level.
2. Under Roberti, only those tenants incomes less than 150% of the Area Median Income ($96,000/year for a household size of four) would have had the option to purchase the property prior to it being offered to the City or an HRE for purchase. Now, ALL tenants will be offered to purchase the property where they live before the property is offered to the City or an HRE.
3. Click on the image below to view a chart showing the updated purchase order.

(PDF, 3MB)

a. SB 381 requires Caltrans to adopt emergency regulations within six months from the September 28, 2021 effective date of the bill. Caltrans has a deadline of April 28, 2022 to adopt the emergency regulations.

a. Current tenants may contact Caltrans at SR710@dot.ca.gov or call the SR 710 hotline at (213) 897-8184. Please include first name, last name, address, and your phone number.

a. Sales in South Pasadena will begin immediately after emergency regulations implementing SB 381 are adopted. It is anticipated this will occur during the first quarter of 2022. Sales of unoccupied properties are to commence prior to June 30, 2022 pursuant to SB 381.

a. The City is not involved in the sale of occupied homes to existing tenants. Caltrans is handling these sales without the City’s involvement.
b. If current tenants decide not to purchase the home they live in from Caltrans, Caltrans will offer the home to the City to purchase. The City will then need to decide if it would like to purchase the home. If the City or its designated HRE does purchase the home, no current tenants will be displaced. Tenants will be able to continue to rent the home from the City or its HRE.

a. The City will explore the formation of a community-based ownership entity with a Board that will consist of local residents. This entity would be the steward and ensure that the portfolio of surplus properties remain in local ownership and with high quality maintenance and management in perpetuity.
b. The community-based entity will issue a Request for Proposal and hire local highly experienced companies to manage the properties and collect a fee.

a. The City will have the opportunity to purchase 1028 Magnolia from Caltrans in order to keep it as a community garden.

a. The newly enacted law requires Caltrans to offer existing qualified tenants of single-family homes the property on which they reside the opportunity to purchase the property prior to selling it to the City.
b. The law allows the City to purchase multi-family properties, either occupied or vacant. The law requires that an affordability covenant be placed on these properties but gives the City the flexibility to determine the eventual ownership of those properties.
c. The City has not reviewed any existing rental or lease agreements between the tenants and Caltrans. A new agreement will need to be executed between the new ownership entity and the tenant. Rents may be adjusted to whatever the current affordable rental schedule published by the State of California Housing and Community Development allows.
d. Tenants of single-family homes who decide not to purchase the property will be allowed to remain in the properties. No tenant who is in compliance with their lease will be displaced because of this transaction.
e. Any property that has an affordability covenant placed on it due to this transaction will have rents assigned that adhere to state health and safety codes that are updated annually on the State of California Housing and Community Development website.
f. The City will be evaluating and inspecting each property to determine what repairs and improvements can and should be completed.

a. Whether the acquired properties are maintained as rentals or sold to income-qualified individuals is a policy choice that will be the subject of community input and subsequent Council determination.
b. If the property is sold the price will be determined using affordability standards and restrict any future resale to the same standards for 45 years.
c. The City will have the authority to sell historic homes it purchases at market rate. However, if properties are sold at market rate, the City will be responsible to create three additional units of affordable housing for each unit that is sold at market rate.

a. With this approach we stop Caltrans from managing the City’s destiny on housing and neighborhoods and put the control in the hands of the City.
b. With this approach, the community will have more direct input on all aspects of this process. The City Council, unlike Caltrans, is directly answerable to the residents of South Pasadena.
c. With this approach we can ensure that the City has the opportunity to purchase the entire portfolio of Caltrans surplus properties in the City and rehabilitate them to a high-quality without a large subsidy from the City.
d. With this approach the City can add much needed affordable housing to our community.

a. First the properties must be thoroughly inspected and rehabilitated.
b. These homes will only be available to households that are income-qualified according to income qualifications for LA County.
c. The exact tenant selection process would be subject to community input and subsequent Council determination.

a. The City will work closely with the South Pasadena Historic Preservation Foundation to determine the scope of work needed to restore these homes according to the City’s historic preservation ordinance.
b. The South Pasadena Historic Preservation Foundation will provide ongoing monitoring of the home to ensure repairs and renovations in the future will be done in accordance with standards typical of a historic home.
c. The City will have the ability to sell or rent the historic homes at affordable rates, in accordance with State of California rental limits for low- and moderate-income households for LA County. Or, the City will be able to sell the historic homes at a fair market price, and use the resulting proceeds to create at least three additional affordable units in the city.

a. For the first time ever, SB 381 allows the City to purchase the surplus properties at a price far below the market value or even the restricted value for affordable housing. This creates instant equity in the homes that can be used to obtain private financing for acquisition and/or rehabilitation.
b. The City has sufficient funding from existing sources to acquire all the unoccupied surplus properties.
c. It is anticipated that the rents collected from the homes will provide sufficient funding to take care of all the ongoing maintenance and property management of the properties. A thorough economic and property analysis will be conducted prior to acquisition.
d. The City will leverage its resources to pursue all available sources of funding to reduce the cost to the City.

a. The newly enacted law allows either affordable rental or home ownership. It will be a policy choice of the City as to the mix between rental and ownership.
b. This decision between rental and ownership will be part of the public input process that the City Council will put in place for the disposition of these properties.

a. For more information, please visit Caltran’s SR 710 Sales Program website at https://dot.ca.gov/710homes, or call the SR 710 hotline at (213) 897-8184.