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Surplus Lands Act Compliance – New Amendments Effective in 2020 and HCD Guidelines Effective as of Jan 2021

Any local agency selling, leasing, or otherwise disposing of land must ensure compliance with the Surplus Lands Act (SLA), as most recently amended in 2019 by AB 1486 (Ting).   The amended SLA prescribes notification and negotiation procedures, documentation and reporting requirements, and minimum inclusionary affordable housing thresholds for residential development on surplus land. Failure to comply with SLA, including newly established guidelines from the Housing and Community Development Department (HCD), may result in avoidable delays, legal action, and financial penalties.

In brief, SLA requires that prior to disposing of land that is not necessary for the agency’s use, as defined, the local agencymust take formal action with written findings declaring it as “surplus land” or “exempt surplus land,” and report this to HCD. It must send a Notice of Availability (NOA) for surplus land to any local public entity, “housing sponsors” that have requested notification, parks and recreation entities and school districts for open space purposes or school facilities. Those entities have 60 days to express interest, after which the agency must negotiate in good faith for 90 days. Documentation of notices and negotiations must be provided, reviewed and approved by HCD.  Exempt surplus land includes disposition for affordable housing, if it is within certain parameters, and small parcels sold to a contiguous owner of land.  Even if no entity responds to the NOA, if 10 or more residential units are developed on the land, then at least 15% of units must be affordable to lower income households. Violations are subject to a penalty of 30% of sales proceeds (50% on subsequent violations) to be deposited in the local housing trust fund.

If you need assistance navigating SLA and the HCD guidelines, including evaluating and strategizing if certain properties and uses should be deemed surplus or exempt surplus land, contact Mark Sawicki at [email protected] or 714-316-2194.