Anaheim City Council members’ illegal $150 million sale of Angel Stadium may have exposed a significant weakness in a key California land use law that is meant to protect public lands and often comes up in development battles across the state.
State Attorney General Rob Bonta this week fined the city $96 million for the stadium sale’s violation of the state Surplus Land Act.
City officials say the team owner will foot the bill, though city staff reports indicate the fine will be paid by a mere restructuring of the original deal.
The surplus land law requires cities that are ready to sell some public land to notify other local agencies, housing providers, and open space interests of its availability first and then negotiate in good faith with them to buy or lease it.
Anaheim City Council members did not do that when they secretly negotiated a deal with Angels Baseball owner Arte Moreno to buy the site in 2019.
Bonta has since found the city’s move to be in violation of the law.
Yet he’s also allowing the deal to move forward.
Bonta publicly argued to reporters this week the penalty furthers the spirit of the Act – given that the proceeds of the fine go toward a trust to build 1,000 affordable housing units across town in the next 5 years.
Yet Bonta’s approach is also prompting questions as to whether this enforcement approach emboldens illegal actions and could imperil public lands across the state.
Assemblyman Phil Ting (D-San Francisco), who helped amend the Surplus Land Act a few years ago, said while the penalty levied against Anaheim is a correct amount, that money should’ve gone to a state fund for affordable housing.
“That money shouldn’t have been kept by the city – it should’ve gone to the state,” Ting said in a Tuesday phone interview. “Allowing the City of Anaheim to keep the money really doesn’t make any sense to me.”
Regardless of the fine, Ting said the whole stadium sale process should be redone, making sure affordable housing developers and open space interests get a chance to bid on the public land.
“If you followed the law, which really wasn’t followed, the project should’ve started over,” he said. “That’s what the law says – you got to restart the process.”
State housing officials note that the Anaheim enforcement action could already be spurring change.
Under the Surplus Land Act, a local jurisdiction’s sale of a publicly-owned surplus property cannot be invalidated.
Even if the sale is found to be in violation of that very law.
“I think it’s certainly one of the things we’re going to be evaluating,” said Megan Kirkeby, the deputy director of housing policy at California Housing and Community Development, when asked about the limitations such a provision may have on enforcement.
Cesar Covarrubias is the executive director of an affordable housing advocacy group called the Kennedy Commission, which had warned the city to follow the state land law and alerted state housing officials when city officials ignored those warnings.
Covarrubias had mixed reactions when asked about Bonta’s enforcement approach.
“It sounds great that we have $96 million for affordable housing.”
“But we don’t know where that will go,” he said, adding, “we have some reservations about where things are at.”
“What officials are saying is let the project stand because it’s housing – that’s not what the SLA says, it says you have to give the first right of refusal to affordable housing developers”
While Bonta’s order sets the stage for more affordable housing to be built citywide, it doesn’t add any more low-cost units on the actual stadium property than the 466 units city officials originally proposed.
State housing officials do point out that Bonta’s order transforms that housing goal from a deal point to an enforceable commitment.
Yet the public might have also gotten a better deal by considering alternative offers for the site ones that could have even featured more affordable housing on the property if officials had followed the Surplus Land Act process in the first place, Covarrubias said.
“We could have done a lot more if they (Anaheim officials) had been more upfront about this,” he said.
Ting also wondered why Anaehim wasn’t forced to redo the deal under the land law.
“What officials are saying is let the project stand because it’s housing – that’s not what the Surplus Land Act says, it says you have to give the first right of refusal to affordable housing developers,” he said.
The state Housing and Community Development Dept. acts as an enforcement arm of the public land use law.
But state housing officials’ enforcement power only goes as far as state legislators want it to.
The Surplus Land Act keeps coming into play on a number of public lands issues across California.
The Battle for Open Space in Central Orange County
Several miles south of Anaheim’s Platinum Triangle area is the 102-acre Willowick Golf Course, one of the last open green expanses between two park-poor cities: Garden Grove and Santa Ana.
Garden Grove city officials originally sought to lease the land to a hotel and resort developer in 2019 until a group of activists coalesced under the Rise Up Willowick coalition and forced the city through a legal challenge to restart the process under the Surplus Land Act.
Rise Up Willowick Lead Researcher Karen Romero Estrada said the handling of Anaheim’s land law violation sets a bad precedent.
“We think that the state is setting a dangerous precedent by signaling to municipal governments that they can bypass the process in the Surplus Land Act, get the deal they want and get a slap on the wrist,” Romero Estrada said in a Tuesday phone interview.
She said state officials should act sooner in public land deals.
“The [housing department] should be proactive and not reactive in monitoring the enforcement of the SLA and we definitely think they need to get involved before the state goes through a (stipulated judgment) or a lawsuit,” Romero Estrada said.
Romero Estrada also said if Anaheim would’ve restarted the process and followed the public land law, taxpayers in the city would’ve seen more benefits be developed on the stadium land.
“What the City of Anaheim and the City of Garden Grove reveal is that the Surplus Land Act needs more strengthening to achieve its goals,” she said.
Other Cities Across SoCal Also Face Surplus Land Act Issues
The City of San Diego also came under scrutiny for trying to skirt the Surplus Land Act through a loophole, regarding the development of a 5-acre property known as Tailgate Park, which sits near the San Diego Padres’ home field of Petco Park, as reported by the Latino community newspaper La Prensa.
A lawsuit by slow-growth activists in Santa Monica also called on officials to prioritize a piece of public land in downtown for public use and opposed the building of an 11-story, 240-room luxury hotel, as reported by the Santa Monica Mirror.
City officials there argued the land was exempt from the Surplus Land Act because Santa Monica had an exclusive negotiating agreement with the developer before the updated law took effect.
In a March 2020 determination letter, state housing officials granted the exemption, citing the agreement – although it expired.
Anaheim City Attorney Rob Fabela tried something similar during the city’s battle with the state housing department.
But state officials weren’t going for Fabela’s view that the city has a “constructive negotiating agreement” throughout the stadium negotiations.
In fact, the city council explicitly voted against creating an exclusive negotiating agreement in early 2019 when the Angels were threatening to move to Long Beach.
Do State Legislators Need to Reexamine the Surplus Land Act?
Bonta, at a Monday news conference announcing Anaheim’s fine, faced questions about whether his stipulation sustains the stadium sale to Arte Moreno – in violation of the law – and might set a bad precedent that rewards bad actors.
In response, Bonta pegged it on lawmakers in Sacramento – that his office is “happy to provide technical support” if the State Legislature wants to tighten the Surplus Land Act.
The law was last modified in 2020, under Assembly Bill 1486.
Ting, who authored the amendments expanding the law’s applicability to more types of local jurisdictions, said state legislation isn’t supposed to micro-manage everything done on the local level “but it is the job of the departments to follow the law.”
But he said he’s heard concerns from local activists about the enforcement approach to the Surplus Land Act.
“I know the advocates have every right to be concerned,” Ting said. “We’re in the process of doing some clean-up language. So we will be discussing with advocates based on this situation whether or not there’s additional clean up we need to do.”
The bill amendment also added penalties for disposing of surplus land in violation of the Act – penalties that increase with multiple violations.
But it still prohibits the retroactive invalidation of any sale.
“Not everybody sees the work we’re trying to do here – sort of the people’s work, they also want to make sure we’re not busybodies, busting up done deals,” Kirkeby said. “Once a sale is done, it’s done. They don’t want us interfering with private contracts.”
She added, “They want our enforcement to all be before the deal – before the deal happens.”
Kirkeby said the Angel Stadium issue is the first type of enforcement action of the state housing department under the updated law.
“We’re doing a lot of enforcement all the time,” Kirkeby said, but added, “this is the first time a penalty under the Surplus Land Act has been taken.”
Though she and others at the Housing and Community Development Dept. also defended the effectiveness of the enforcement action.
“I think what we’re coming out with, in the stipulated judgment, is something that leverages a lot of tools in our toolbox, that goes far beyond just the penalty. And it’s definitely the first real commitment to affordable housing, on the property,” Kirkeby said.
Bonta on Monday said the “outcome is stronger than what could ever be achieved through litigation under the Surplus Land Act.”
Though Kirkeby acknowledged there’s the question of whether her agency should put “some more tools” in its “toolbox.”
“I think certainly, we always want every piece of leverage … that’s our role here,” she said. “We want people to follow the law. We want a big stick.”
Ting said the updated Surplus Land Act is a step in the right direction.
“It clearly worked because after I did that bill I got calls from almost every single developer across the state.”
Brandon Pho is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at bpho@voiceofoc.org or on Twitter @photherecord.
Spencer Custodio is the civic editor. You can reach him at scustodio@voiceofoc.org. Follow him on Twitter @SpencerCustodio.