New State Regulations Loom Large Over City’s Vote to Declare Riverfront Land Surplus

What you need to know about how California’s Surplus Land Act might impact a potential sale of city riverfront property, what options the city is exploring, and why a vote on riverfront land has been delayed.

This story is part of Scout’s ongoing coverage of proposed riverfront land development.

Update: This story was updated on 12.27.21 to reflect new communication from HCD that the agency may be able to provide technical assistance with returning land to Wintu ownership if asked to do so by the city.

Redding City Manager Barry Tippin and Mayor Kristen Schreder are delaying a high-stakes vote on whether to declare publicly-owned riverfront land “surplus” so it can be sold to developers, according to a December 15 city press release.  The council is now scheduled to vote on riverfront land on either January 18 or February 1. 

The causes of the postponement seem to be new and complicated revisions to the state’s Surplus Land Act (SLA) meant to encourage cities and agencies to prioritize the construction of affordable housing. In 2019, the state legislature also gave the department of Housing and Community Development (HCD) new enforcement powers that include the ability to levy heavy fines against violators of the SLA. 

HCD released official guidelines for adhering to the SLA earlier this year. The City of Anaheim and Alameda County already face multi-million dollar fines from HCD relating to possible violations connected to sports stadium deals. Other cities have been entangled in litigation related to HCD brought by community groups. 

Speaking to Shasta Scout, Tippin indicated that both the complexity of the new regulations and HCD’s power to enforce them, loom large over the process of declaring the Civic Auditorium and Redding Rodeo Grounds parcels as surplus and selling them for development.

Despite the fact that the majority of oral and written public comments have opposed the sale of riverfront land, the city council voted 3 to 2 on Nov. 18 to prepare to declare the land surplus. A vote to do so would pave the way for beloved public riverfront land to be developed by the D&D Group, a coalition of corporate and philanthropic organizations. That group includes the McConnell Foundation, Populous (an international entertainment design firm with ties to Redding), K2 Development Company Inc., and Turtle Bay Exploration Park. In August, the group submitted a 70-page proposal to the city to buy, masterplan and develop  220-acres of the riverfront, an area encompassing the Turtle Bay area south of the Sacramento River. While the city has since narrowed its focus to selling the riverfront properties that include the Civic Auditorium and the Redding Rodeo grounds, Tippin said the D&D group would likely still masterplan the entire 220 acres included in the proposal. 

In response to questions from Shasta Scout, Megan Kirkeby, Deputy Director of Housing Policy Development, said she believes the riverfront parcels represent a unique surplus land case. It’s extremely rare, she said, for there to be significant community outcry against declaring lands as surplus.

“Mostly where we have engaged, there is less debate about whether the land should remain with the city or leave the city,” Kirkeby added, “and more debate around who the city has chosen to give the land to.” She also said that it  was unclear to what degree her agency could legally take into account public dissent when evaluating the city’s process, but noted the department would likely have more in-depth conversations with the city if the lands are indeed declared surplus.

According to the press release, Tippin and Schreder chose to postpone the vote on riverfront land to provide HCD more time to review technical documents related to the surplus declaration. If the city council moves forward with selling the properties, HCD would have to verify that the city had adhered to the requirements of the law before the final price and terms could be reached, according to HCD Communications Specialist Alicia Murillo.

Speaking to Shasta Scout about the delay, Tippin said the city doesn’t see any urgency to the process. “We prefer to be in line with the state. .  . and have everyone on the same page. We don’t see any urgency with this. “What we don’t want is for the city to declare the land surplus and then have to come back two weeks later because (HCD) wants us to change something.” 

Here’s more of what you need to know about how the Surplus Land Act and HCD’s oversight and enforcement may impact the riverfront land deal.

HCD’s Role in the Riverfront Land Deal

Under state law, before a local agency decides to sell or lease public land that it owns and considers unnecessary for its operations, it must declare the properties as “surplus” or “exempt surplus”.

The Surplus Land Act was originally enacted in 1968, but it has been regularly updated and revised through legislation and court decisions. It requires municipalities to follow certain regulatory processes when selling or leasing public land that has been declared surplus. For instance, agencies that are selling or leasing public land primarily used as parks or for recreational activities have to prioritize deals with developers that agree to continue to use the site for those purposes, according to HCD spokesperson, Murillo. 

Recent legislation and an executive order by Governor Newsom have amended the law to compel local agencies to construct new affordable housing on surplus lands to address the state’s housing shortage. Research by HCD indicates 1.8 million homes need to be constructed by 2025 to stem the state’s current housing crisis. 

Agencies now have to notify the public, HCD and affordable housing developers about the availability of surplus land and allow 60 days for anyone to make a bid. If the agency receives multiple proposals, they have to prioritize providing affordable housing projects and negotiate in good faith for at least 90 days.

The Act also now requires a certain degree of transparency and communication to the public about the selling or leasing of public land. For instance, agencies must notify local public “entities,” such as housing authorities or tribal housing departments, before finalizing a sale or lease. In the case of the riverfront proposal, HCD would have to verify that the city had contacted the appropriate local entities before the final price and terms of the sale of the Civic and rodeo grounds to the D&D group could be finalized, Murillo said.  

While it might seem counterintuitive that highly valued and visited public spaces such as  riverfront land could be declared “surplus,” some legal experts and city staff say any  property that isn’t integral to the city’s operation in the way that, for example, a water treatment plant would be, can be legally designated that way. 

Kirkeby said land can be declared surplus if the city owns it completely and explains in written findings that it’s “no longer necessary” to the city’s use. 

While local agencies are not required to consult with HCD or gain the department’s approval prior to declaring the land surplus, Murillo said many do contact HCD if they have questions about the process.

In Redding’s case, Tippin said city staff had met with HCD staff and two HCD attorneys who requested further documentation regarding special conditions and covenants attached to the two properties. He said those conditions include grant agreements with California’s Natural Resources Agency that require the city to maintain the boat ramp and trails on the rodeo grounds parcel for 20 years, or until 2040. Parts of both properties are also designated as park lands under HUD open space agreements, he said, and complying with their terms will be part of the process of declaring and selling the land as surplus. 

Redding staff provided this slide illustrating HUD restricted land as part of a public workshops on the potential riverfront land sale.

Working with HCD early allows city staff to ensure they are meeting the state’s criteria before beginning negotiations for the sale with a future buyer, he said, in this scenario most likely the D&D group. As the regulatory body, Tippin continued, HCD has “the ability to penalize and fine.” That’s why the technical review ensuring the city’s process is in compliance with SLA is so important, he said.

Kirkeby confirmed that HCD staff had requested that the city share documents related to the land restrictions.  She said it’s not unusual for agencies to ask questions about lands that have restrictions imposed on them by outside entities, such as, in the case of the rodeo grounds, the natural resources grant.

City Considering Possibility of “Exempt Surplus” Declaration

But Kirkeby also said that the city has asked whether the riverfront properties might qualify as “exempt surplus” land because of the open space and grant restrictions. Declaring the land “exempt surplus” would allow the city to skip the open bid process and move straight to negotiating with the D&D group. 

Land can be considered “exempt surplus” for numerous reasons, including a land use restriction, hazardous waste site, or other issues that make the properties unsuitable for housing. Properties can also qualify as “exempt surplus” if they come with restrictions or covenants that essentially prohibit the construction of new housing.

“At this point we don’t know much about the land in question,” Kirkeby said, “so we just asked them to share documentation about (the land) restrictions.”

This isn’t the first time city staff has discussed a way to qualify the lands as “exempt surplus.” During a November public workshop, the city said the land would qualify for an exemption to the SLA if developers committed to building at least 300 housing units with 25 percent of them meeting affordable housing requirements. While Michael Lockwood of Populous has said during public workshops that the D&D group hopes to incorporate housing into a new events center on the property, it’s unclear whether housing will be included in the development, or how much might be built. 

In an email to Shasta Scout, Tippin said that while they’ve asked HCD to review their argument that the land should be exempt surplus, city staff believe it’s likely the land will have to go through the regular, more intensive surplus process instead.

HCD’s New Hammer

Given that the SLA guidelines were just released in April, Tippin said he thought local agencies and HCD itself were still figuring out all of the ramifications of new SLA guidelines and how to apply them to particular, complex properties. The California League of Cities has issued a policy paper on the new surplus land guidelines, which included criticisms of the new regulations for being overly restrictive.

Kirkeby said the state is definitely in a “ramp up period” for helping jurisdictions come to understand the law and conduct the research necessary to ensure they’re complying. “We are noticing that there are a lot of unintentional errors,” Kirkeby said. “In the past, jurisdictions had a lot more discretion in how they could dispose of surplus land, so it’s not uncommon for jurisdictions to still be thinking about the law how it was a few years ago.” Nevertheless, she said, “the law is the law.”

For the first 50 years since the Surplus Land Act was first passed, the only way to enforce the law was through litigation. But a 2019 bill gave HCD the right to track all public land deals and levy heavy fines, according to reporting by Calmatters

In some recent cases, HCD has demonstrated a willingness to use its new enforcement powers. This April, HCD staff sent a letter to the City of Anaheim expressing concern the municipality’s plan to sell Angel Stadium for $325 million would violate the Surplus Land Act. Anaheim, according to the letter, could face a 30 percent penalty – or $96 million – if they proceed with the sale. Earlier this month, HCD staff officially declared the Angel Stadium sale illegal, giving the city 60 days to redo the deal or make it available to other developers. Kirkeby said such letters are “in the spirit of technical assistance, informing (cities) they’ve missed something or seem to have skipped a step.”

A violation of the Act won’t invalidate or stop the selling or leasing of a property, but the fine imposed by the violation would have to be put into a trust fund to build low-income housing. Further violations of the act could result in penalties of 50 percent of the purchase price. 

A violation of the Act by the city of Redding, Murrillo said, might allow some Redding residents, especially those who would have benefited from more affordable housing, legal standing to enforce the penalties and requirements of the SLA through private litigation. 

The Surplus Land Act and the Rights of Wintu Tribes

The D&D group’s  proposal to purchase and develop the riverfront properties have raised criticism from multiple quarters of the Redding community. Many residents who have spoken out publicly against the project decry what they see as a lack of transparency in the process and reject the unnecessary sale of public land. The properties are also historically, culturally and spiritually significant landscapes to the Wintu people, whose ancestral lands include what is currently the City of Redding.

Tribal leaders and Native activists have advocated that the land should be returned to the Wintu people if ownership is to change hands. And leaders from both the Winnemem Wintu Tribe and Wintu Tribe of Northern California have publicly stated they officially oppose the project.

When asked if HCD staff would be consulting with Wintu tribes about the City of Redding’s investigation into declaring the land surplus, Kirkeby said that the city’s requirement to notify public entities could include the Wintu tribes as well as the Redding Rancheria. She noted that the City of Redding had not informed HCD of the Wintu tribes’ ties to the riverfront lands in question or of their objections to their sale. Murillo added that HCD would continue to offer California tribes the opportunity to consult regarding any HCD policies that affect them, including the SLA. 

This July California passed AB 1180, which allows land to qualify for exempt surplus status if it is being returned to a federally recognized California tribe. The bill was meant to more easily facilitate the restoration of a tribe’s ancestral land, but historic California tribes who’ve been denied federal recognition, such as the Wintu tribes, aren’t eligible under the new law. However, Kirkeby noted that HCD’s consultation policy doesn’t discriminate against unrecognized California tribes, and that HCD could potentially provide technical assistance if the city decided to return the lands to its original stewards, the Wintu people.

Members of the public may submit any comments regarding a surplus land sale or lease to HCD at [email protected]. You can contact the Redding City Council here.

Marc Dadigan covers Indigenous Affairs and the Environment for Shasta Scout. His writing has been published in Reveal, Yes! Magazine, the Christian Science Monitor, High Country News, and Indian Country Today. He welcomes your emails here.

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