LOS ANGELES-A new California land rush may be lining up on the starting line, as the successors to the state's axed redevelopment agencies begin to make their properties available for purchase. That is expected to create massive new opportunities for developers and other interested land speculators.
The 2011 legislation that ended the reign of redevelopment agencies in California requires their successors to begin actions on the land under their control within six months after receiving a “Finding of Completion” from the state's Finance Dept. That finding is made after the wind-down of prior state-run redevelopment agency activities.
The new local successor agencies are not obligated to sell the properties that they obtained. They can, if they choose, retain them for future redevelopment or government use, among other choices. But a great number of them are expected to put the properties up for sale to generate revenue.
In order to do so, the successor agencies must first submit a long-range Property Management Plan (PMP) that addresses the disposition and use of the property that formerly belonged to the state-run redevelopment agency. That process began for many jurisdictions on April 1 of this year. These new local redevelopment agencies will, over the next few months, make their PMPs public. It is estimated that over 8,000 pieces of property of varying degrees of desirability will then be sold on the open market.
Doug Praw, a partner in Goodwin Procter's business law department, tells GlobeSt.com that the manner in which the properties will be made available “depends on the sophistication” of the successor agencies. Some will unleash a flood of property, he says, while others will be orderly and organized. Los Angeles County's successor agency is run by “three individuals who are savvy real estate professionals,” Praw says, which bodes well for the way land sales will be handled.
“I anticipate there will be a lot of development and real estate professionals champing at the bit to see if there is gold in this (property) pile,” says Praw. Due diligence is the key to success in this land grab, he says. Many of the parcels that will be made available are environmentally contaminated, small lots, old corner pieces and other encumbered properties. “People are really going to struggle to find choice infill property,” he says.
Despite that admonition, Praw predicts downtown Los Angeles and San Diego, San Jose and the city and county of San Francisco are the places where there will be heated competition for available land.
Although there is already information available online and elsewhere as to the properties available in some jurisdictions, many would-be purchasers are enlisting outside agencies to perform research and due diligence, creating a lot of business activity for law firms and consultants.
As previously reported by GlobeSt.com, a City of Industry deal that was grandfathered-in as an "enforceable obligation" after state redevelopment agencies were dissolved has closed. It was one of the first post-redevelopment agency land deals to reach completition, but endured 1.5 years in escrow before its closing, a process one developer termed "a debacle."
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