California Orders City to Offer Land for Housing

California is invoking its Surplus Land Act to order a San Diego suburb to put 300 acres it set aside for a university campus and innovation district on the market for sale or lease to affordable housing developers.

The Surplus Land Act, originally enacted in 1968, mandates the prioritization of affordable housing development whenever local government land is designated as “no longer necessary for public use.”

In 2019, the state legislature expanded the scope of the Act, widening the definition of what constitutes surplus land to include former redevelopment properties, and to apply it to economic development agencies.

The 2019 law also narrowed the definition of surplus land that was exempt from the Act; it required local public agencies to make public the availability of surplus land in a listings inventory maintained by the Department of Housing and Community Development (HCD), California’s state housing agency.

HCD has notified Chula Vista that more than 300 acres that the city has been setting aside since 2015 for the development of a university campus and innovation district near its Otay Ranch Town Center is not exempt from the Surplus Land Act, according to a report in the San Diego Union-Tribune.

HCD has ordered Chula Vista to begin the process of making the property available for sale or lease to affordable housing developers. The city is refusing to initiate the process. Instead, David Alvarez, who represents Chula Vista in the State Assembly, has introduced a bill in the legislature that would exempt the city from the requirement to declare the 300-acre tract as surplus land.

The Surplus Land Act as currently written includes some general exceptions—including property deemed unsuitable for housing and lands that local agencies are exchanging for another property or transferring to another government agency. Alvarez has proposed an amendment to specifically exempt land acquired by a local agency for the development of a university and innovation district.

The city has been planning to develop a 383-acre parcel known as the University Innovation District since 2015, when it acquired the property from several residential developers in a deal that allowed them to build homes in the surrounding area.

A university campus, lab space for R&D companies and market-rate student housing are envisioned for the district. Last year, Chula Vista announced that San Diego University would build a complex for its film, TV and media production programs near Otay Ranch.

Chula Vista, which has been in negotiations with HomeFed Corp. and CBRE to develop and market the district site, told HCD late last year that its purchase agreement for the land restricted its use to “higher education purposes” and could not include any residential development other than student dorms.

In a letter rejecting the claim, HCD said the claim was “not tenable” because “the fact that university-related housing (student and/or faculty housing) is permitted on the property demonstrates that housing development is feasible on the property,” according to the newspaper report.

The agency ordered the city to declare the land surplus and notify other developers of its availability. HCD said the development of a university campus on the site would not preclude the development of an affordable residential component.

Chula Vista Deputy City Manager Eric Crockett told the Union-Tribune that declaring the district land as surplus “would undermine our ability to attract and develop a university.”

“Any developer could make an offer to purchase the entire property and if we don’t agree, HCD can overturn our decision. The process creates too much risk of the City losing its 30-year vision [to develop a university],” Crockett told the newspaper.