Surplus Land Act Upends Public Agency Development Plans
- Josh Stephens
- Apr 27, 2021
- 7 min read
For years, the San Diego Sports Arena, could have been considered “surplus land” insofar as it’s been over three decades since a major league team called the arena home. Likewise, much of the land around the stations of the Los Angeles County Metropolitan Transportation Authority are also “surplus,” having been used as staging areas for rail transit stops.
According to the Surplus Land Act (SLA), a relatively new state law whose implementing guidelines went into effect in January, all of these properties must be made available to affordable housing developers first. While state officials defend the guidelines, the landowning agencies say the law will undermine their vision for the property – and maybe even hinder their ability to build the affordable housing that the law seeks to create.
The SLA’s mission is straightforward and almost universally embraced—in concept.
“We’re thinking about this an opportunity to not only support the department’s mission but also to support one of the biggest constraints to housing, affordable or otherwise, which is the cost of land,” said Sasha Wisotsky Kergan, Data & Research Unit Chief for Housing Policy at the state Department of Housing & Community Development. “There’s some real potential for localities to apply costs that are already sunk into land into the support of housing development. That can really start removing some of the barriers and constraints that we’ve all been navigating.”
And yet, many agencies--primarily transit agencies that control prime properties near rail stations and other transit agencies—say the provisions of the SLA are burdensome and even counterproductive.
Assembly Bill 1486, adopted last year, officially started the SLA clock. It clarified some of the language in the original SLA—including the word “dispose – and grandfathers in many projects that are already underway; they must be completed by the end of 2022. Most remaining surplus properties, though, will be subject to the SLA.
“One thing 1486 does is it puts every public agency on notice that they need an asset plan… they cannot keep that property on the shelf and not think about it,” said Larry Kosmont, Chairman and CEO of real estate advisory firm Kosmont Companies.
With the release of SLA guidelines by the HCD in December, transit agencies say that the SLA not only may interfere with their vision for their surplus properties, especially those that are ripe for high-density transit-oriented development, but also may hinder the creation of affordable housing as part of larger projects.
For example, Los Angeles Metro has, since 2016, partnered with developer Trammell Crow to develop more than 1,500 units of housing, including affordable housing and some commercial space, at its North Hollywood subway station. The Surplus Land Act now essentially forbids the use of exclusive negotiating agreements, making North Hollywood but one example of a development that might be prevented by the act. All told, Metro estimates that up to 3,039 units developed under its joint development program, including 777 affordable units, are “at risk.” Meanwhile, the act significantly restricts how Metro can dispose of properties that do not yet have development agreements in place.
