HCD Adopts New Surplus Land Act Guidelines for Local Government Property

By Vanessa Gonzales posted 08-06-2024 09:02 AM

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On August 1, the California Department of Housing and Community Development (HCD) adopted its Final Updated Surplus Land Act (SLA) Guidelines (Final Guidelines) governing the process for the sale and lease of surplus land owned by special districts, including mandatory reporting to HCD. Districts must comply with SLA requirements to avoid potential penalties for violating the Act.

A copy of the Final Guidelines may be viewed here: Final Updated Surplus Land Act Guidelines 2024 (ca.gov).

HCD’s Final Guidelines apply on or after the date adopted (August 1, 2024). The application of the Final Guidelines to the disposition of surplus land shall be determined by the date of issuance of the Notice of Availability (NOA). The applicability of the Final Guidelines to exempt determinations shall be determined by the date that the property was declared exempt surplus land.

Previously, HCD released Draft Updated Guidelines for comment. CSDA contended that the Draft Updated Guidelines were inconsistent with the statute and may result in operational challenges for special districts. As a result, CSDA issued a Call to Action to its members, and submitted a lengthy comment letter to HCD. Although CSDA raised many concerns with the Draft Updated Guidelines, four major areas of concern were highlighted:

The Draft Updated Guidelines Misapply the SLA to Agency’s Use Land and Improperly Purport to Apply the SLA to Exempt Surplus Land.
The Draft Updated Guidelines Misapply SLA Penalty Provisions while Making Changes in Conflict with Statute.
The Draft Updated Guidelines Allow Third Parties to Issue Notices of Alleged Violations of the SLA Directly to Public Agencies with No Basis in Statute, Exposing Local Agencies to Unaccountable Interference with Operations.
The Draft Updated Guidelines Subject Local Agencies to a Subjective and Open-Ended Definition of “Good Faith Negotiations.”

Additional information about CSDA’s major areas of concern can be found in the comment letter and on CSDA’s Take Action page: Updated Surplus Land Act Guidelines - California Special Districts Association (csda.net).

In connection with its adoption of the Final Guidelines, HCD issued a response to public comments, which may be viewed here: Final Updated Surplus Land Act Guidelines Response to Comments (ca.gov). HCD also released a redline showing changes from the Draft Updated Guidelines.

Although some adjustments from the Draft Updated Guidelines were made throughout the Final Guidelines, including to the penalty and “good faith negotiations” provisions, it appears that significant concerns raised by CSDA and others were not resolved in the Final Guidelines.

In response to HCD’s Draft Updated Guidelines, Senate Bill 1134 (Caballero) was amended to remove HCD's exemption in current law from the Administrative Procedures Act related to SLA rulemaking. Instead, the measure would require that: “Any rule, policy, or standard of general application issued by the Department of Housing and Community Development in implementing this article shall be subject to the rulemaking provisions of the Administrative Procedure Act….” CSDA and partner associations maintain a support if amended position on the bill, with the requested amendment intended to address a minor drafting error. SB 1134 is currently on the Assembly Appropriations Committee Suspense File.

For additional information about the Final Guidelines, please view HCD’s SLA webpage: Public Lands for Affordable Housing Development | California Department of Housing and Community Development.