Report 2021-114 Recommendation 11 Responses

Report 2021-114: State Surplus Property: The State Should Use Its Available Property More Effectively to Help Alleviate the Affordable Housing Crisis (Release Date: March 2022)

Recommendation #11 To: Housing and Community Development, Department of

To better promote development of affordable housing on local surplus land, HCD should, by January 2023, update its guidelines on the local surplus property law to indicate how it will respond to instances where local agencies do not notify it of their intention to sell property before disposing of it, and where DGS was unable to issue a notice of violation before the sale. Further, HCD should seek legislative changes to the extent it believes they are needed to clarify its authority or the law.

Annual Follow-Up Agency Response From October 2024

Part 2 of 2

Further, even in cases where an unlawful disposition occurs and HCD was unable to issue a Notice of Violation pursuant to Government Code section 54230.5, due to incomplete information or other reasons, once HCD is made aware of the issue, it may seek to enforce the SLA and pursue all applicable legal and equitable remedies consistent with Government Code section 54230.5(d), including, but not limited to, injunctive or declaratory relief. HCD may also take action pursuant to Government Code section 65585.1 if a city, county or city and county violates the SLA. And third parties can still bring a court action to enforce the SLA.

Finally, HCD will continue its efforts to publicize and educate on the SLA's requirements, and maintain the Surplus Land Act Portal, which serves as technical assistance for local agencies and a venue for parties to raise concerns relating to proposed dispositions.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

HCD submitted their response in 2 parts. The first part reads:

"As noted in the audit findings, Government Code section 54230.5(b)(1) states, "A local agency shall not be liable for the penalty imposed by subdivision (a) if [HCD] does not notify the agency that the agency is in violation of this article within 30 days of receiving the description," and yet statute remains silent on how to address situations where a local agency fails to submit a description of the disposition in accordance with the law for HCD to review, thus never beginning the 30-day clock for HCD to issue a Notice of Violation. As per the audit recommendations, during the 2023 legislative session, HCD sought clarity on this issue, and further mitigated any risk through its Guidelines updates and outreach. While HCD welcomes further legislative clarification on this issue, the legislative changes that were enacted significantly mitigate any risks."

HCD continues: "Through the aforementioned legislative changes, and Guidelines updates, the Legislature and HCD strengthened public noticing and disposition noticing requirements, clarifying that all disposition descriptions need to go to HCD for review, including "exempt surplus" and "agency's use" dispositions, so that HCD can confirm the validity of each. It is now clear that it would be unlawful for a local agency to dispose of land without first giving HCD an opportunity to review the disposition documentation referenced in Government Code section 54230.5(b)(1)."


1-Year Agency Response

HCD is in the process of updating the Surplus Land Act guidelines to address the recommendations of the audit. Draft guideline language has been prepared to clarify how HCD will respond in instances where a local agency disposes of a property prior to notifying HCD.

The project schedule for the SLA Guidelines Revision process includes an internal review of needed changes (complete), drafting of a strike out and underline version of revisions (currently in progress), and a 30-day public comment and review period. The timeline for this project estimates a release of draft guidelines by April 2023.

HCD will evaulate opportunites to address audit recommendations that require statutory changes in the coming legislative session.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

HCD has made progress on updating its guidelines, and expects to release draft guidelines by April 2023.


Annual Follow-Up Agency Response From March 2023

HCD is in the process of updating the Surplus Land Act guidelines to address the recommendations of the audit. Draft guideline language has been prepared to clarify how HCD will respond in instances where a local agency disposes of a property prior to notifying HCD.

The project schedule for the SLA Guidelines Revision process includes an internal review of needed changes (complete), drafting of a strike out and underline version of revisions (currently in progress), and a 30-day public comment and review period. The timeline for this project estimates a release of draft guidelines by April 2023.

HCD will evaulate opportunites to address audit recommendations that require statutory changes in the coming legislative session.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

HCD has made progress in the revision of its guidelines and expects to release draft guidelines in April 2023.


6-Month Agency Response

HCD is in the process of updating the Surplus Land Act guidelines to address the recommendations of the audit. Draft guideline language has been prepared to clarify how HCD will respond in instances where a local agency disposes of a property prior to notifying HCD.

The project schedule for the SLA Guidelines Revision process includes an internal review of needed changes, an external stakeholder engagement and review process, drafting of a strike out and underline version of revisions, and a 30-day public comment and review period. The timeline for this project estimates a release of final guidelines by April 2023.

HCD will evaluate opportunities to address audit recommendations that require statutory changes in the coming legislative session

California State Auditor's Assessment of 6-Month Status: Partially Implemented

HCD has begun updating its guidelines and expects to release the approved update by April 2023.


60-Day Agency Response

o HCD has developed a draft timeline/work plan and a list of changes (including this one) to include in the update, and it is currently developing and reaching out to a list of stakeholders to engage early in the process.

o A number of current bills have proposed changes to the Surplus Land Act (SLA), including strengthening the consequences of non-compliance with the SLA. HCD is providing its analysis and input.

California State Auditor's Assessment of 60-Day Status: Pending


All Recommendations in 2021-114

Agency responses received are posted verbatim.