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State Officials Question Angel Stadium Sale Deal Over Affordable Housing Law

By Lucas Smith | July 8, 2021

State housing officials are questioning whether Anaheim’s deal to sell Angel Stadium and the surrounding land for development may have violated a law intended to foster more affordable housing.

The Department of Housing and Community Development wrote the city this spring saying it believes the stadium deal, which the Anaheim City Council approved in December 2019, is covered by the Surplus Land Act.

The act requires local governments to give priority to affordable housing and open space when selling excess property – which includes giving nonprofit homebuilders and other such parties a chance to negotiate for the property before it’s sold.

In the deal, city officials agreed to sell the land to SRB Management, Angels owner Arte Moreno’s business partnership, in exchange for $150 million in cash and building for the city as part of the development another $170 million in community benefits including affordable housing and a large public park.

Moreno has filed a proposal for the 150-acre stadium site that would allow construction of up to 5,175 residential units, plus two hotels, shops and offices; it would also reserve space for a new baseball stadium (though Moreno hasn’t said whether he’ll build new or renovate the existing facility).

If the state were to find Anaheim violated the Surplus Land Act, it could theoretically require the City Council to undo the sale to SRB Management and make the stadium land available to other potential buyers. Or, the city could be charged a penalty of 30% of the land’s final sale price (in this case the total price is $320 million, making the possible penalty $96 million).

Anaheim spokeswoman Lauren Gold said Thursday in an emailed statement that the city is working with state housing officials and “a positive conversation” to address the state’s concerns is ongoing.

“We share a goal of bringing more affordable housing to Anaheim, and this plan is a great way to make that happen,” Gold said in the statement. “It calls for the largest expansion of affordable housing in our city’s history with up to 777 new affordable homes, as well as new jobs and revenue to serve our community. This preliminary response is a chance for us to share why this project is unique and how it prioritizes affordable housing.”

In Anaheim’s June 14 response, city officials, along with arguing the stadium property sale is exempt from the Surplus Land Act, said applying the act in this case would be “unlawful retroactive application.

SRB Management spokeswoman Marie Garvey said in a statement that Anaheim officials from the beginning “made it clear that no sale would happen without a significant commitment to affordable housing and park land.”

“We support the city of Anaheim’s efforts to clarify that this project shares the goals of the Surplus Land Act,” she said.

Critics of the Angel Stadium deal raised concerns about the surplus land law before the council voted to sell the property. One of them was Paul Kott, a longtime local real estate broker who has argued the city severely lowballed the stadium’s value.

“When it was brought up, it was always squelched in favor of getting (the deal) done for fear the Angels would leave,” Kott said Thursday.

News of the state’s concerns came as a surprise Thursday to Anaheim Councilman Jose Moreno, who said he only learned of it that morning when the city manager notified the council of a Los Angeles Times article on the issue.

Moreno was among those questioning in December 2019 why the council moved ahead with the sale during the holiday season, which he and other critics thought was rushed.

He said he asked the city manager and city attorney at the time whether new provisions of the Surplus Land Act, set to kick in on Jan. 1, 2020, were driving the speed of the process.

“I was told no, this is just what the mayor wants and what Angels Baseball wants, they want to close the books on this and move on.”

State housing officials learned of the possible issue in September 2020, Housing and Community Development spokeswoman Alicia Murillo said in an email Thursday; she did not explain what brought it to their attention.

Murillo said the department “is reviewing the city’s response and has not yet determined whether the information provided is sufficient to resolve the concerns.” The state will “act expeditiously,” she said, but didn’t give a specific deadline for action.

A determination on whether Anaheim ran afoul of the Surplus Land Act will likely hinge on a few key issues, including how certain terms are interpreted and when some actions were taken. Questions include:

Is the stadium sale exempt from the law’s provisions? The state’s preliminary conclusion (described in an April 28 letter) is no, because leaserestrictions on how the land could be used were voluntarily put in place by the city. Anaheim disagreed in its June 14 response, noting the city has been leasing the stadium to the Angels since 1966, before the Surplus Land Act existed.

What counts as a negotiating agreement, which if in place by Sept. 30, 2019, could also provide an exemption from the law? The city points to the state’s 2020 decision that the surplus land law didn’t cover Santa Monica’s discussions of a land sale because the city was already negotiating with developers, and argues that Anaheim was already in talks with Moreno by September 2019.

Does the affordable housing proposed for the Angel Stadium property meet the goals of the Surplus Land Act? The city says it does, and the state should consider this.

Attorney Elizabeth Hull, a partner at Best Best & Krieger and an expert in the Surplus Land Act, said the most recent overhaul of the law expanded and more clearly defined which government agencies it covered and what is considered “surplus” land, and it adjusted the requirement to notify potentially interested parties that the land was available.

In situations covered by the law, she said, the government agency looking to sell is required to have good faith discussions with affordable housing developers or others who respond to a notice about the land. If the parties can’t come to an agreement, the agency can move on and sell the land to whomever it wants.

No such notifications or discussions took place regarding Angel Stadium; the city maintains they weren’t required.

While Hull isn’t familiar with the Anaheim deal, she said state officials could theoretically step in and try to stop a sale that hadn’t yet closed if they determine the law was violated – but she’s not aware of any cases where that happened.

Anaheim officials have said the stadium sale could close by the end of this year.

The circumstances aren’t identical, but news reports last week said San Diego officials who got a letter from state Housing and Community Development have opted to restart the process of selling their city’s sports arena to a developer who planned to build housing, shops and parks.

The San Diego Union-Tribune reported the state made preliminary findings that an arena development deal made in 2020 could violate the Surplus Land Act, so the city must fix its mistakes. San Diego officials decided to do the bidding process over.

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