AB2329 - Surplus residential property: condition-adjusted price of the fair market value: Cities of Pasadena and South Pasadena.

Amended IN Senate August 25, 2026 Amended IN Senate August 13, 2026 Amended IN Senate July 02, 2026 Amended IN Senate June 18, 2026 Amended IN Assembly April 13, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 2329 Introduced by Assembly Member Fong (Principal coauthor: Senator Pérez) February 19, 2026 An act to amend Sections 54235, 54236, 54237, 54237.10, 54238, 54238.8, 54239.5, and 54239.6 of, and to add Section 54238.2 to, the Government Code, relating to surplus residential property. property, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 2329, as amended, Fong. Surplus residential property: condition-adjusted price of the fair market value: Cities of Pasadena and South Pasadena. (1) Existing law establishes priorities and procedures that any state agency disposing of surplus property is required to follow. Existing law requires the Department of Transportation to deposit proceeds from the sale of a surplus residential property from the department to a new owner into the SR-710 Rehabilitation Account. Existing law continuously appropriates the funds in the account to the department for the purpose of providing required repairs to certain surplus residential properties that are offered for sale, as provided. Existing law requires that the total funds maintained in the account not exceed a specified amount and that funds exceeding that amount, less any reimbursements due to the federal government, be transferred to the State Highway Account in the State Transportation Fund, to be used for allocation by the California Transportation Commission exclusively to fund projects located in specified cities and in the 90032 postal ZIP Code. Existing law also establishes the Affordable Housing Trust Account within the Housing Finance Fund, a continuously appropriated fund, and requires certain funds to be deposited in the account in accordance with specified provisions for the benefit of income restricted persons and families residing exclusively in the Cities of Pasadena, South Pasadena, Alhambra, La Cañada Flintridge, and the 90032 postal ZIP Code. Existing Existing law sets forth an order of priority for the disposal of specified surplus residential property, including that a state agency disposing of single-family surplus residential property first offer the property at the appraised fair market value to former owners and present occupants, and then offer the property at an affordable price to other present occupants who have occupied the property for a specified number of years and who meet certain income levels. Existing law sets certain parameters for the calculation of an affordable price for purposes of these provisions based on, among other things, the fair market value of the property. This bill would, instead, require the first tier priority offer to be based on the appraised condition-adjusted price of the fair market value and would define “condition-adjusted price of the fair market value” to mean the fair market value of the property as of October 13, 2019, and as adjusted as to reflect the existing “as is” condition of the property and the amount needed to make certain repairs and capital improvements, as determined by an independent appraiser and adjusted, as provided. The bill would revise the above-specified parameters for calculating an affordable price so that the price would be based on the fair market value or the condition-adjusted fair market value of the property, whichever is less. price. The bill would establish requirements relating to the performance and cost of the inspection of the property, and define various terms for purposes of these provisions, including, among others, “guidelines.” The bill would also, for surplus residential property sold at a condition-adjusted fair market value, exempt the selling agency from providing repairs to the property, as specified. This bill, among other changes, would authorize a present occupant or tenant purchasing a residence at an affordable price or condition-adjusted price of the fair market value to receive purchase assistance in accordance with certain procedures. The bill would provide that certain amounts repaid for those purposes constitute deferred proceeds from the department’s sale of the property and would be deposited into the Affordable Housing Trust Account, as prescribed. (2) If the surplus residential property is not sold pursuant to the priorities described above, or pursuant to other specified priorities, existing law requires the property to then be sold at fair market value, with priority given first to purchasers who are present tenants in good standing, as provided, and then to former tenants who were in good standing at the time they vacated the premises, as provided. This bill would, instead, require the property to be sold to those present or former tenants at condition-adjusted fair market value. This bill would require the department Department of Transportation, upon request, to provide certain documents related to the surplus residential property to all persons or entities offered or purchasing surplus residential property. The bill would require any surplus residential property purchased at the condition-adjusted price of the fair market value price pursuant to the bill to be assessed at its condition-adjusted price of the fair market value price for property tax purposes. purposes, as prescribed. (3) Existing law contains provisions that are specific to the sale of surplus residential property located in the City of Pasadena. Those provisions, among other things, contain a priority requiring surplus residential property located in the city to be offered at fair market value to specified present tenants who are in good standing, as provided. This bill would, instead, require the property to be offered to those present tenants at condition-adjusted price of the fair market value. The bill would, for residential property sold at a condition-adjusted fair market value, exempt the City of Pasadena from providing repairs to the property, as specified. The bill would authorize the City of Pasadena, in a transaction between the city and the Department of Transportation, and without taking ownership of surplus residential property, to offer the residence to the present tenants, regardless of whether the tenant is in good standing, as specified, at the condition-adjusted fair market value price. The bill, among other things, would require the proceeds realized by the city from this type of sale to be placed into an affordable housing trust fund, as provided. The bill would make other related changes. value, as defined. Existing law also requires the City of Pasadena to commence the construction, or complete acquisition, of affordable units in an amount at least equal to 3 times the number of unoccupied homes acquired by the city by December 31, 2026. This bill would change the timing for this requirement to within 2 years from the date on which the proceeds from the subsequent sale of the unoccupied homes are received, as specified. specified, and would make other related changes to these provisions. (4) Existing law contains provisions that are specific to the sale of surplus residential property located in the City of South Pasadena. Those provisions, among other things, contain a priority requiring surplus residential property located in the city to be offered at fair market value to specified present tenants who are in good standing, as provided. This bill would, instead, require the property to be offered to those present tenants at condition-adjusted price of the fair market value. The bill would, for residential property sold at a condition-adjusted fair market value, exempt the City of South Pasadena providing repairs to the property, as specified. The bill would authorize the City of South Pasadena, in a transaction between the city and the Department of Transportation, and without taking ownership of surplus residential property, to offer the residence to the present tenants, regardless of whether the tenant is in good standing, as specified, at the condition-adjusted fair market value price. The bill would require the proceeds realized by the city from this type of sale to be placed into an affordable housing trust fund, as provided. The bill would make other related changes. Existing law also requires the City of South Pasadena to commence the construction, or complete acquisition, of affordable units in an amount at least equal to three times the number of unoccupied homes acquired by the city by July 1, 2028. This bill would, for unoccupied homes acquired by the City of South Pasadena after July 1, 2026, change the timing for this requirement to within 2 years from the date on which the proceeds from the subsequent sale of the unoccupied homes are received, as specified. specified, and would make other related changes to these provisions. By requiring new deposits into a continuously appropriated account, the bill would make an appropriation. (5) This bill would make legislative findings and declarations as to the necessity of a special statute for the Cities of South Pasadena and Pasadena. (6) By imposing new requirements on the Cities of South Pasadena and Pasadena, this bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above. This bill would declare that it is to take effect immediately as an urgency statute. Digest Key Vote: MAJORITY 2/3 Appropriation: NO YES Fiscal Committee: YES Local Program: YES Bill Text The people of the State of California do enact as follows: SECTION 1. Section 54235 of the Government Code is amended to read: 54235. The Legislature reaffirms its finding that the disposition of surplus property owned by public agencies should be utilized to further state policies. The Legislature reaffirms its finding that there exists within the urban and rural areas of the state a serious shortage of decent, safe, and sanitary housing which persons and families of low or moderate income can afford, and consequently a pressing and urgent need for the preservation and expansion of the low- and moderate-income housing supply. The Legislature further reaffirms its finding that highway and other state activities have contributed to the severe shortage of such housing. The Legislature reaffirms that the provision of decent housing for all Californians is a state goal of the highest priority. The Legislature finds and declares that actions of state agencies including the sales of surplus residential properties which result in the loss of decent and affordable housing for persons and families of low or moderate income is contrary to state housing, urban development, and environmental policies and is a significant environmental effect, within the meaning of Article XIX of the California Constitution, which will be mitigated by the sale of surplus residential property pursuant to the provisions of this article. The Legislature further finds and declares that the displacement of large numbers of persons as a result of the sale of surplus residential property owned by agencies of the state is a significant environmental effect, within the meaning of Article XIX of the California Constitution which will be mitigated by sale of such properties pursuant to the provisions of this article. The Legislature further finds and declares that the sale of surplus residential property pursuant to the provisions of this article will directly serve an important public purpose. Wherefore, the Legislature intends by this article to preserve, upgrade and expand the supply of housing available to persons and families of low or moderate income. income, present tenants, and workers. The Legislature further intends by this article to mitigate the environmental effects, within the meaning of Article XIX, of the California Constitution, caused by highway activities. SECTION 1. SEC. 2. Section 54236 of the Government Code is amended to read: 54236. (a) As used in this article, the term “offer” means to solicit proposals prior to sale in a manner calculated to achieve a sale under the conditions specified, and to hold the offer open for a reasonable period of time, which shall be no more than one year, unless the time is extended by the selling agency at its discretion, for a period to be specified by the selling agency. (b) As used in this article, the term “affordable price” means, in the case of a purchaser, other than a lower income household, the price for residential property for which the purchaser’s monthly payments will not exceed that portion of the purchasing household’s adjusted income as determined in accordance with the regulations of the United States Department of Housing and Urban Development, issued pursuant to Section 235 of the National Housing Act; and, in the case of a purchaser that is a lower income household, the price for residential property for which the purchaser’s monthly payments will not exceed that portion of the purchasing household’s adjusted income as determined in accordance with the regulations of the United States Department of Housing and Urban Development issued pursuant to Section 8 of the United States Housing Act of 1937. Department of Housing and Community Development pursuant to subdivision (b) of Section 50052.5 of the Health and Safety Code. (c) As used in this article, the term “single-family residence” means a real property improvement used, or intended to be used, as a dwelling unit for one family. (d) (1) As used in this article, the term “surplus residential property” means land and structures owned by any agency of the state that is determined to be no longer necessary for the agency’s use, and that is developed as single-family or multifamily housing, except property being held by the agency for the purpose of exchange. (2) Surplus residential properties shall only include land and structures that, at the time of purchase by the state, the state had intended to remove the residences thereon and to use the land for state purposes. (e) As used in this article, the term “displacement” includes, but is not limited to, persons who will have to move from surplus residential property that they occupy when it is sold by a state agency because they are unable to afford to pay the price that the state agency is asking for the residential property. (f) As used in this article, the term “fair market value” shall mean fair market value as of the date the offer of sale is [Text truncated for display. Full text available on Congress.gov.]