California's Surplus Lands Act needs a reality check for rural parcels

California's housing crisis is urgent and severe. We need policies that support affordable housing development - especially in urban and suburban areas where the housing shortage is most acute. But when good intentions are applied blindly, without regard for local context, even the best laws can become barriers to common sense.

Consider the case of El Dorado Irrigation District, located in the Sierra Nevada foothills. The District owns a 10-acre parcel of land, nowhere near an urban or suburban center, nearly all of which is covered by a natural pond. The pond has no operational value to the District - it's simply excess land. However, the pond has long served as a beloved gathering place for nearby rural residents, who use it for fishing, kayaking, and bird-watching. To preserve this community asset, local residents organized a nonprofit public benefit corporation with one purpose: purchase the parcel from the District and keep it open for public recreation.

It should have been a straightforward, feel-good transaction. The District, recognizing the value of the pond to the community (and interested in reducing its liability exposure), agreed to sell the parcel to the nonprofit for $1. The price wasn't about revenue - it was about stewardship and ensuring that land unwanted by the District continued to serve the public good.

However, the District had to comply with the state's Surplus Lands Act (SLA), a well-meaning law designed to prioritize affordable housing development when public agencies dispose of land. Under the SLA, before a local agency can sell surplus property, it must individually notify the Department of Housing and Community Development (HCD) and hundreds of developers registered with the HCD and give affordable housing developers the first opportunity to purchase it. After sending out its notifications, the SLA required the District to spend at least 90 days negotiating in good faith with any developers that responded to the notice expressing interest in the purchase - even those that submitted canned responses that reflected no genuine interest or understanding of the surplus property details.

The problem? The SLA contains no meaningful exemption for rural parcels where housing development isn't feasible or even physically possible. Despite the fact that this parcel is a pond in a remote area - unsuitable for housing - HCD has refused to allow the sale to proceed. The reason? The District must first record a covenant permanently restricting the land for low-income housing development of 10 or more residential units.

This requirement makes no sense. The covenant is designed to ensure that surplus land sold below market value is ultimately used for housing. But in this case, the land cannot be used for housing - let alone 10 or more residential units. It's a pond. And yet, the law applies as if it were a downtown infill site ripe for dense development.

California deserves a smarter Surplus Lands Act - one that distinguishes between parcels with real development potential and those without. A narrow exemption for small, rural parcels - particularly those that cannot reasonably support housing development - would preserve the spirit of the law while avoiding counterproductive and costly outcomes like this.

Let's be clear: exempting land like this from the SLA will not slow the production of affordable housing. It will, however, spare public agencies from spending years in bureaucratic limbo (the costs of which are ironically recovered from public rate-payers) trying to give away land that no low-income housing developer would ever touch. And it will empower rural communities to preserve cherished spaces like this pond without unnecessary red tape.

Laws should advance public benefit - not block it. It's time for California to revise the Surplus Lands Act and restore common sense to the process.