With all the excitement about the release of the CalTrans properties along the 710 corridor, now is a good time to look at what state law says about how these properties are to be sold and to whom. South Pasadena City Manager Sergio Gonzalez stated for this publication that these homes will be made available to current tenants at market rate. Actually, according to the “Affordable Sales Program,” the set of state regulations governing the release of these properties, market rate sales are only part of the story.
The adopted regulations (at dot.ca.gov, linked from the City’s Web site) provide that the CalTrans properties will be offered to five categories of prospective buyers, in order of priority. Top priority are folks renting single-family homes which they used to own. CalTrans bought your house, you stayed as a renter; here’s your chance to buy it back. Price will be fair market value. Down the list at fifth priority we again see fair market value, the price at which properties will be offered to current and former tenants earning above 150% of area Median Family Income. That is, if they are not sold pursuant to priorities two through four, in which we see Sacramento acting to increase the state’s supply of affordable housing.
Second priority, right after former owners/current occupants, are current occupants of low or moderate income, defined as less than 120% of area MFI ($62,400 for a family of four in 2016, as published by the U.S. Department of Housing and Urban Development (HUD)). Third priority are current occupants earning between 120% and 150% of MFI. The homes are to be priced so that payments on a 30-year mortgage will not exceed 25% of household adjusted income for low-income households, 30% for moderate-income households and those earning up to 150% of MFI. I hope occupants qualifying for these affordable prices are notified of their rights in the clearest of terms.
As defined in the regulations, the fourth priority is a head-spinner, so I’ll leave it to those better qualified to say exactly how it’s supposed to play out. I will say that on its face it requires all other surplus residential properties (including multi-family), as well as those not purchased pursuant to the first three priorities, to be offered to public and private housing-related entities on condition they be developed as limited equity cooperatives. Such coops are special and distinct. They involve complex structuring, but their purpose is to operate as nonprofits and provide affordable units by removing the properties from the speculative real estate market. Also qualified to purchase are public and private entities that agree to develop the properties as low- and moderate-income housing.
It’s in this fourth priority that the City of South Pasadena, representing or including at least one such public entity, finds an opportunity to meet some of the affordable housing objectives in its 2014-2021 General Plan Housing Element Update (available on the City’s Web site). For example, page six of the Element states, “In the past the City has partnered with a local affordable housing developer in efforts to acquire CalTrans properties for redevelopment as affordable housing.” This developer recommended during the preparation of the 2006-2014 Element that South Pas create a housing authority for this purpose, which it did on April 6, 2011. That’s good, because page 17 of the current Element states that “South Pasadena should provide sufficient capacity for a total of 63 new housing units… to include 17 units for very low (inclusive of 9 units for extremely low), 10 units for low, 11 units for moderate, and 25 units for above moderate income households.” That’s a whole lot going on below market rate.
I’m pleased that California has anticipated the supply-side frenzy for properties rendered increasingly exclusive by this merciless market, and acted to protect Californians struggling to satisfy a basic human need. And I find it encouraging that our city appears to have not only the will but also the structure to provide more affordable housing. I’ll be interested to see the results.
South Pasadena Tenants’ Association