Community Stabilization Act: Counties of Los Angeles and Ventura.

Plain English Breakdown

The bill was vetoed, so there's uncertainty about whether lawmakers will override this decision or if the program will be implemented as intended.

Community Stabilization Act: Counties of Los Angeles and Ventura

This act requires the California Infrastructure and Economic Development Bank (I-Bank) to develop a program for issuing securities that help stabilize property values in disaster-affected areas of Los Angeles and Ventura counties.

What This Bill Does

• Requires the I-Bank to create and administer a program to issue tradable securities aimed at stabilizing property values in disaster-hit areas.
• Specifies that funds from these securities will be used by qualifying investment entities, such as nonprofits, to purchase and manage damaged or destroyed residential land until it can be resold.
• Sets rules for the distribution of profits between investors and the I-Bank, and requires reimbursement for administrative costs incurred by investment entities.
• Establishes a Community Stabilization Fund where money from securities is deposited and continuously appropriated to the I-Bank.
• Requires the I-Bank to submit a final report on the program's performance to lawmakers, the governor, and finance officials by 2034.

Who It Names or Affects

• People who live in Los Angeles and Ventura counties affected by wildfires starting January 7, 2025.
• Investors interested in buying securities that help stabilize property values in disaster-affected areas.
• Nonprofit organizations and other entities involved in purchasing and managing damaged or destroyed residential land.

Terms To Know

Security

A financial tool, like a bond, that can be bought and sold to raise money for projects.

Limits and Unknowns

• The bill was vetoed by the governor.
• It's not clear how much money will be raised or if the program will work as planned.

Official Summary Text

AB 797, Harabedian.
Community Stabilization Act: Counties of Los Angeles and Ventura.
(1) Existing law, the Bergeson-Peace Infrastructure and Economic Development Bank Act, establishes the California Infrastructure and Economic Development Bank (I-Bank) in the Governor’s Office of Business and Economic Development. Existing law, among other things, authorizes the I-Bank to issue bonds, make loans, and provide financial assistance for various types of projects that qualify as economic development or public development facilities.
This bill would enact
the Community Stabilization Act. The bill would require the I-Bank to develop and administer a program to issue a
security, and to cease issuing a security on January 1, 2030. The bill would specify that the purpose of the program is to help stabilize property values in disaster-affected areas by allowing qualified investors, as defined, to purchase tradable securities, with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value. The bill would require profits from the land investments to be shared among investors and the I-Bank according to certain percentages, with qualifying investment entities being reimbursed for their administrative costs.
This bill would establish various requirements for the security, including that it be tradeable, comply with specified municipal bonding requirements, and that it be funded by investments made by qualified investors using funds available pursuant to the federal Community Reinvestment Act of 1977. The bill would
require the security to repay the investment upon a liquidity event and within
7 years of the purchase of an investment property, and would describe a liquidity event as the refinance or sale of the investment property.
This bill would require funds raised from the purchase of the security to be deposited in the Community Stabilization Fund, which would be created by the bill, and would require all moneys in the fund to be continuously appropriated to the I-Bank. The bill would require the I-Bank to allocate moneys in the fund to qualifying investment entities to be invested in the Counties of Los Angeles and Ventura and in those areas that are covered by a state of disaster declared by the Governor. The bill would require a qualifying investment entity to meet prescribed
requirements, including that it be a specified entity, including, among others, a nonprofit organization, as provided. The bill would also impose
various requirements on the qualifying investment entity relating to the purchase, maintenance, and sale of the investment
property, including, among other things, limiting the purchase of property to residential property that has been damaged or destroyed by the wildfires that began on January 7, 2025, in the Counties of Los Angeles and Ventura, as specified. The bill would require the I-Bank to submit a final report on the program to the Legislature, the Governor, and the Department of Finance no later than January 1, 2034, as specified.
By establishing a new continuously appropriated fund, the Community Stabilization Fund, this bill would make an appropriation.
(2) This bill would make legislative findings and declarations as to the necessity of a special statute for the Counties of Los Angeles and Ventura.
(3) This bill would declare that it is to take effect immediately as an urgency statute.

Current Bill Text

Download Bill PDF