The Surplus Land Act requires all local agencies, including a 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 (Local Agencies), to follow certain protocols, as described in the Act, when disposing of land. The Local Agency must either declare the property Surplus Land or Exempt Surplus Land. Surplus land is land owned in fee simple by a Local Agency for which its 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 (Surplus Land). The protocols for disposing of the land depends on whether the Local Agency declares the land Surplus Land or it falls within the definition of Exempt Surplus Land.
AB 480 and SB 747 modify the definitions of “dispose” and “Exempt Surplus Land.” SB 747 defines “dispose” to mean the sale of the surplus land or a lease of any surplus land for a term longer than 15 years, including renewal options, entered into on or after January 1, 2024. SB 747 specifies that “dispose” does not include entering into a lease for Surplus Land on which no development or demolition will occur, regardless of the term. “Dispose” also does not include entering into a lease for Surplus Land, which is for a term of 15 years or less, including renewal options included in the terms of the initial lease.
SB 747 modifies certain the existing categories of Exempt Surplus Property, and creates new categories of Exempt Surplus Land, including land owned by public-use airports, certain lands owned by agencies whose primary mission relates to public transportation, and certain lands transferred to community land trusts. SB 747 authorizes a Local Agency to dispose of specified types of Exempt Surplus Land without making a declaration at a public meeting, if the Local Agency identifies the land in a notice that is published and available for public comment and provides that notice to the appropriate entities at least 30 days before the exemption takes effect. These specified types of Exempt Surplus Land include, but are not limited to, land used to provide housing affordable to persons and families of low or moderate income, certain land used for open-space or low- and moderate-income housing purposes, certain school district and community college district facilities or land owned by public-use airports.
Exempt Surplus Land will now also include land totaling 10 or more acres, consisting of a single parcel, or two or more adjacent or nonadjacent parcels combined for disposition to one or more buyers pursuant to a plan or ordinance adopted by the legislative body of the Local Agency, or a state statute, as specified. SB 747 requires this type of Exempt Surplus Land be subject to an open, competitive bid process, as specified, and that the development satisfy certain requirements. The restrictions on the land must be contained in a covenant or restriction recorded against the surplus land at the time of sale. If a Local Agency fails to follow this process it may be subject to penalties of thirty to fifty percent of the disposition value, as defined. The Local Agency must dispose of this type of Exempt Surplus Land pursuant to a Disposition and Development Agreement that contains an indemnification clause that provides that if an action occurs after disposition of the land that violates the restrictions, the person or entity that acquired the property shall be liable for the penalties.
Local Agencies should meticulously review the amendments to the Surplus Land Act when evaluating the disposal of Surplus Land or Excess Surplus Land to ensure they are proceeding with the appropriate process.
(AB 480 and SB 747 amend Sections 54222, 54222.5, 54223, 54224, 54225, 54226, 54227, 54230, 54230.5, and 54234 of, and amends and repeals Section 54221 of, the Government Code.)