Notwithstanding subdivision (d) of Section 54237, after a surplus residential property located within the City of South Pasadena is offered for sale pursuant to subdivisions (a) to (c), inclusive, of Section 54237, the surplus residential property shall be offered for sale in accordance with all of the following priorities and procedures:

(a) After the surplus residential property is offered for sale pursuant to subdivisions (a) to (c), inclusive, of Section 54237, these properties shall then be offered at fair market value to present tenants who have occupied the property for five years or more and who are in good standing with all rent obligations current and paid in full, with first right of occupancy to the present tenants.

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(b) (1) After the surplus residential property is offered for sale pursuant to subdivisions (a) to (c), inclusive, of Section 54237 and subdivision (a) of this section, and if the property has a historic home not occupied by tenants, the property shall be offered to the City of South Pasadena subject to all of the following:

(A) The sales price shall be the price paid by the Department of Transportation for original acquisition. The original acquisition price shall not be adjusted for inflation.

(B) Surplus residential property sold pursuant to this subdivision shall be sold in its existing “as is” condition.

(C) The City of South Pasadena shall, with the proceeds generated from the subsequent sale of unoccupied historic homes, finance the production or acquisition of affordable housing units. Units produced must have a regulatory agreement requiring 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 and 45 years for owner-occupied affordable housing. Units acquired must have a regulatory agreement requiring an affordable rent, as defined in § 50053 of the Health and Safety Code, for a minimum of 55 years for rental. Proceeds may be used to finance either or both of the following:

(i) The production of three housing units affordable to persons and families of very-low, low- and moderate-income, as defined in § 50093 of the Health and Safety Code, for every unoccupied historic home purchased by the City of South Pasadena.

(ii) The acquisition of three existing units for use as rental housing affordable to persons and families of very low, low, and moderate income, as defined in § 50093 of the Health and Safety Code, for every unoccupied historic home purchased by the City of South Pasadena.

(D) Prior to closing escrow on the purchase of the surplus residential property from the Department of Transportation, the City of South Pasadena shall demonstrate to the Department of Housing and Community Development the zoned capacity on parcels suitable for housing development to produce at least three affordable units, as defined in subparagraph (C), for each housing unit on the surplus residential property being purchased and identify and analyze potential and actual governmental constraints to the maintenance, improvement, or development of housing affordable to persons and families of low income, including housing for people with disabilities, on said parcels to the satisfaction of the Department of Housing and Community Development. The analysis must also demonstrate local efforts to remove constraints that hinder development of the parcels and evaluate their impact on the speed of delivery and depth of affordability of the necessary affordable units prescribed in subparagraph (C).

(E) Units may be produced or acquired on a single site, or on multiple sites.

(F) All units produced or acquired must be within the 91030 postal ZIP Code.

(G) The City of South Pasadena shall commence construction or complete acquisition of all affordable units numbering at least three times the total number of unoccupied historic homes acquired by the city by December 31, 2025.

(H) Notwithstanding any other law, funds generated through the sale of unoccupied historic homes by the City of South Pasadena shall be held by the City of South Pasadena for the sole purpose of the financing of these units.

(I) The City of South Pasadena shall include as an attachment to its annual report required by paragraph (2) of subdivision (a) of Section 65400 all of the following:

(i) Current ownership status of unoccupied historic homes in the State Route 710 corridor purchased by the City of South Pasadena, and an accounting of funds spent by the city on the purchase of these homes and generated through their sale.

(ii) The City of South Pasadena shall provide documents that evidence sale to the Department of Housing and Community Development. These documents shall include purchase and sale agreements, escrow instructions, and final HUD-1 form closing statements.

(iii) Documentation of rezoning actions taken by the City of South Pasadena to ensure the continued availability of sufficient capacity for development of sufficient affordable housing to accommodate all units prescribed in subparagraph (C).

(iv) Documentation of other actions taken by the City of South Pasadena to support its compliance with subparagraph (C), including the acquisition of homes for use as affordable housing, rehabilitation of homes or apartment units for the same purpose, or the extension of affordability restrictions on housing units currently restricted to low- and moderate-income households.

(v) Other information requested by the Department of Housing and Community Development regarding the City of South Pasadena’s compliance with this paragraph.

(J) At the end of the period defined in subparagraph (G), the City of South Pasadena shall additionally report all of the following information to the Department of Housing and Community Development:

(i) A summary of all prior reporting.

(ii) Supporting documentation that evidences the acquisition or commencement of construction on a sufficient number of units of affordable housing to satisfy subparagraphs (C) and (G) in a form agreeable to the Department of Housing and Community Development.

(iii) An accounting of total funds spent to acquire unoccupied historic homes from the Department of Transportation pursuant to this paragraph.

(iv) An accounting of funds generated through the sale of these homes.

(K) Failure to comply with any of subparagraphs (A) through (J), inclusive, shall require the City of South Pasadena to pay a fine of an amount equal to the funds generated through the sale of unoccupied historic homes pursuant to this paragraph less the city’s acquisition cost. Fines shall be deposited into an account held by the Department of Housing and Community Development under the stipulations of Section 50470 and made accessible for the development of housing for persons and families of low and moderate income residing exclusively in the City of South Pasadena.

(L) Terms of subparagraph (K) may be subject to up two two-year extensions from the deadline specified in subparagraph (G), provided the City of South Pasadena is able to demonstrate sufficient progress on the development or acquisition of all required affordable units. Sufficient progress may include, but is not limited, to an executed option agreement or exclusive negotiation agreement for purchase of property intended for conversion to affordable units, completed project entitlements or building permits, executed purchase agreements and draft covenants for the acquisition or rehabilitation of market rate units for the purpose of conversion to affordable units, a combination thereof, or other proof of progress at the discretion of the Director of the Department of Housing and Community Development.

(M) Any surplus funds remaining after the completion of the construction of the required affordable units shall be used at the discretion of the City of South Pasadena for the production or acquisition of rental or for-sale housing affordable to persons and families of very low, low, or moderate income, as defined in § 50093 of the Health and Safety Code.

(N) Compliance with any clause in subparagraphs (C) through (M), inclusive, shall be determined by the Department of Housing and Community Development and is not subject to appeal.

(O) The Department of Housing and Community Development may review, adopt, amend, and repeal the standards, forms, or definitions to implement subparagraphs (C) through (N), inclusive. Any standards, forms, or definitions adopted to implement this article shall not be subject to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2.

(P) The Department of Transportation shall provide an accounting of all historically designated properties in the State Route 710 corridor in the City of South Pasadena by January 1, 2022, to the Department of Housing and Community Development. This accounting shall include locations of all properties, addresses of all properties, parcel numbers for all properties, current occupancy status, and any other known building details.

(Q) The surplus residential property subject to this subdivision shall be subject to a covenant recorded against the property to ensure the property’s use as pursuant to this paragraph.

(R) Notwithstanding subparagraphs (C) through (P), inclusive, if the City of South Pasadena does not resell a surplus residential property sold to it by the Department of Transportation within two years of closure of the sale, the property shall be used as affordable housing pursuant to paragraphs (3) and (4) of subdivision (c).

(S) Terms of subparagraph (R) may be subject to up one two-year extension provided the City of South Pasadena is able to demonstrate sufficient progress on the sale of the surplus residential properties. Sufficient progress may include proof that the property has been listed for 180 days at a price that does not exceed fair market value based on comparable sales in the City of South Pasadena with no offers, unexpected structural damage due to a natural disaster or similar occurrence, or other proof of progress at the discretion of the Director of the Department of Housing and Community Development.

(T) The City of South Pasadena shall monitor compliance with the covenant required by subparagraph (Q). The City of South Pasadena may charge the property owner a fee to recover the cost of this monitoring.

(2) For purposes of this subdivision, “historic home” means either of the following:

(A) A surplus residential property that is listed on, or for which an application has been filed for listing on, at least one of the following by January 1, 2015:

(i) The California Register of Historical Resources, as established pursuant to Article 2 (commencing with Section 5020) of Chapter 1 of Division 5 of the Public Resources Code.

(ii) The National Register of Historic Places, as established pursuant to Chapter 3021 of Title 54 of the United States Code.

(iii) The National Register of Historic Places, as previously established pursuant to the federal National Historic Preservation Act (54 U.S.C. § 300101 et seq.).

(B) A locally designated surplus residential property that meets either of the following requirements:

(i) The property has been identified before January 1, 2021, in the City of South Pasadena’s inventory of cultural resources that has been adopted by the city pursuant to Section 2.63 of the Code of the City of South Pasadena, California, 1958.

(ii) The property has been designated before January 1, 2021, by the City of South Pasadena as a historic home.

(c) After the surplus residential property is offered for sale pursuant to subdivisions (a) to (c), inclusive, of Section 54237 and subdivisions (a) and (b) of this section, the surplus residential property shall be offered to the City of South Pasadena, as a housing-related entity, and then to another housing-related entity as follows:

(1) The sales price shall be the price paid by the Department of Transportation for original acquisition. The original acquisition price shall not be adjusted for inflation.

(2) Surplus residential property sold pursuant to this subdivision shall be sold in its existing “as is” condition.

(3) The surplus residential property shall be subject to a covenant recorded against the property to ensure the property’s use as affordable housing pursuant to this paragraph.

(A) In the event that the surplus residential property is sold prior to the expiration of the covenant, the covenant shall remain in effect until the time at which it expires according to the provisions of this paragraph.

(B) Any housing-related entity purchaser shall comply with monitoring requirements, as determined by the Department of Transportation or the monitoring entity.

(C) For each surplus residential property purchased under this subdivision, the housing-related entity shall cause the property to be used for either of the following:

(i) (I) Low- or moderate-income rental housing for a term of at least 55 years. The purchase and operation of the property shall remain available and affordable for rental by lower income and moderate-income households, as defined by Sections 50052.5 and 50079.5 of the Health and Safety Code, respectively, for a term no shorter than 55 years.

(II) In the event the housing-related entity is no longer able to provide affordable housing on the property, the housing-related entity shall either sell the property to a successor housing-related entity that will maintain the property and the operations in compliance with the covenant or transfer the title to the city in which the property is located, which shall subsequently transfer the title and operations to a successor housing-related entity that will maintain the property and the operations in compliance with the covenant. The housing-related entity shall provide first right of occupancy to the present tenants. The rental amount shall be in accordance with income certification if the current tenants qualify as low or moderate income. If the current tenant’s income exceeds the limits for that level, the rent for that tenant shall be no less than the current rent, or adjusted no higher than current market rates for the ZIP Code in which the surplus residential property is located. The housing-related entity shall cause any additional new units added to the property to be used only for low- or moderate-income rental housing, and the new units shall remain available and affordable for rental by lower income and moderate-income households, as defined by Sections 50052.5 and 50079.5 of the Health and Safety Code, during the covenant period.

(ii) If the surplus residential property is a single-family residence, it may be used for owner-occupied affordable housing for a term of at least 45 years. The housing-related entity shall sell the property to a person or family of low or moderate income for ownership and occupancy as affordable housing, as defined in Section 62250, and specifically as the primary residence of that buyer. The housing-related entity shall dedicate profits realized from the sale during the covenant period, as specified in subdivision (b) of Section 54237.7, to the construction of affordable housing within the City of South Pasadena. The housing-related entity shall provide first right of refusal to present tenants if they are a person or family of low or moderate income. All subsequent sales of the property during the covenant period shall be to a person or family of low or moderate income for ownership and occupancy as affordable housing, as defined in Section 62250. The property owner shall cause any additional new units added to the property to be used only for low- or moderate-income rental housing, and the new units shall remain available and affordable for rental by lower income and moderate-income households, as defined by Sections 50052.5 and 50079.5 of the Health and Safety Code, during the covenant period. The monitoring entity shall ensure that subsequent sales are made in compliance with this paragraph by conducting and certifying the income qualifications of the buyer(s) prior to purchase and sales contracts being consummated and prior to the opening of escrow.

(4) The Department of Transportation may designate in regulations to, or delegate by agreement to, a public agency to monitor the purchasers’ compliance with the terms, conditions, and restrictions required by this subdivision.

(A) If the monitoring is not performed by a state agency, the monitoring entity shall prepare and submit to the Legislature reports that describe how the purchasers complied with this subdivision and how they were monitored for compliance. The first report shall be submitted five years after the first property is sold pursuant to this subdivision, and subsequent reports shall be submitted every five years thereafter until the last covenant expires. A report to be submitted pursuant to this subparagraph shall be submitted in compliance with Section 9795.

(B) The monitoring entity may charge the property owner a fee to recover the cost of this monitoring and reporting.

(d) After the surplus residential property is offered for sale pursuant to subdivisions (a) to (c), inclusive, of Section 54237 and subdivisions (a) to (c), inclusive, of this section, the property shall be offered in accordance with the priorities and procedures specified in subdivision (e) of Section 54237.

(e) Before selling unimproved property within the State Route 710 corridor in the City of South Pasadena pursuant to § 118 of the Streets and Highways Code, the Department of Transportation shall offer to sell the property at the price paid by the Department of Transportation for original acquisition to the City of South Pasadena, as a housing-related entity, for affordable housing purposes, and then to another housing-related entity for affordable housing purposes, pursuant to the terms and conditions provided in subdivision (c).

(f) (1) The Legislature finds and declares that the state’s homelessness crisis has compounded the need for affordable housing described in Section 54235. To help mitigate the need for affordable housing and to speed up sales pursuant to this article, the Legislature further finds and declares that an emergency exists for purposes of Sections 11342.545, 11346.1, and 11349.6.

(2) The Department of Transportation shall file proposed emergency regulations with the Office of Administrative Law for adoption to implement this section not later than six months after this section is enacted.

(3) Notwithstanding Section 11346.1, the emergency regulations adopted pursuant to paragraph (2) shall remain in effect for two years after their effective date or until permanent regulations are adopted, whichever is sooner.

(g) If the Department of Transportation does not commence the sale of its unoccupied surplus residential property in the City of South Pasadena through a solicitation of interest in the first relevant step in the sales process pursuant to subdivision (b) or (c), as applicable, by June 30, 2022, the Department of Transportation shall report by December 31, 2022, to the relevant policy and fiscal committees of the Legislature the reasons for not commencing the sales and its plans for commencing them. The report required by this subdivision shall be submitted in compliance with Section 9795.

(h) (1) As a condition of the sale of property to a housing-related entity pursuant to subdivision (c) or (e), the housing-related entity shall provide an enforceable commitment to the selling agency that, if a construction project is undertaken on the property, and the entirety of the project is not a public work for which prevailing wages must be paid for purposes of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code, all construction workers employed on the project will be paid at least the general prevailing rate of per diem wages for the type of work and geographic area, as determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.

(2) If the project is subject to paragraph (1), then for those portions of the project that are not a public work all of the following shall apply:

(A) The housing-related entity shall ensure that the prevailing wage requirement is included in all contracts for the performance of all construction work.

(B) All contractors and subcontractors shall pay to all construction workers employed in the execution of the work at least the general prevailing rate of per diem wages, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.

(C) Except as provided in subparagraph (E), all contractors and subcontractors shall maintain and verify payroll records pursuant to § 1776 of the Labor Code and make those records available for inspection and copying as provided therein.

(D) Except as provided in subparagraph (E), the obligation of the contractors and subcontractors to pay prevailing wages may be enforced by the Labor Commissioner through the issuance of a civil wage and penalty assessment pursuant to § 1741 of the Labor Code, which may be reviewed pursuant to § 1742 of the Labor Code, within 18 months after the completion of the project, or by an underpaid worker through an administrative complaint or civil action, or by a joint labor-management committee though a civil action under § 1771.2 of the Labor Code. If a civil wage and penalty assessment is issued, the contractor, subcontractor, and surety on a bond or bonds issued to secure the payment of wages covered by the assessment shall be liable for liquidated damages pursuant to § 1742.1 of the Labor Code.

(E) Subparagraphs (C) and (D) shall not apply if all contractors and subcontractors performing work on the project are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the project and provides for enforcement of that obligation through an arbitration procedure. For purposes of this paragraph, “project labor agreement” has the same meaning as set forth in paragraph (1) of subdivision (b) of § 2500 of the Public Contract Code.

(F) Notwithstanding subdivision (c) of § 1773.1 of the Labor Code, the requirement that employer payments not reduce the obligation to pay the hourly straight time or overtime wages found to be prevailing shall not apply if otherwise provided in a bona fide collective bargaining agreement covering the worker. The requirement to pay at least the general prevailing rate of per diem wages does not preclude use of an alternative workweek schedule adopted pursuant to Section 511 or 514 of the Labor Code.

(Added by Stats. 2021, Ch. 362, Sec. 3. (SB 381) Effective September 28, 2021.)