AB 2397: Local government: community facilities districts: financing.
- Session Year: 2025-2026
- House: Assembly
- Latest Version Date: 2026-09-30
Current Status:
Passed
(2026-09-30: Chaptered by Secretary of State - Chapter 938, Statutes of 2026.)
Introduced
In Committee
Awaiting First Chamber Vote
Passed First Chamber
In Committee
Awaiting Second Chamber Vote
Passed Second Chamber
Enacted
Existing law, the Mello-Roos Community Facilities Act of 1982, authorizes a local agency, as defined, to initiate proceedings to establish a community facilities district as an alternative method of financing certain public capital facilities and services, especially in developing areas undergoing rehabilitation, only if it has first considered and adopted local goals and policies, as prescribed. Existing law authorizes a local agency to take any actions or make any determinations which it determines are necessary or convenient to carry out the purposes of the act and which are not otherwise prohibited by law.
This bill would prohibit the legislative body of a local agency from taking certain actions with respect to a critical housing infrastructure district, as defined, including abandoning the proposed establishment of the district, as specified, unless prior to taking the action it makes certain findings based upon substantial evidence, including that establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest. The bill would specify that these provisions do not require or prohibit the legislative body from taking any other action authorized by the act with respect to a critical housing infrastructure district, as specified.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
Existing law, the Mello-Roos Community Facilities Act of 1982, authorizes a local agency, as defined, to initiate proceedings to establish a community facilities district as an alternative method of financing certain public capital facilities and services, especially in developing areas undergoing rehabilitation, only if it has first considered and adopted local goals and policies, as prescribed. Existing law authorizes a local agency to take any actions or make any determinations which it determines are necessary or convenient to carry out the purposes of the act and which are not otherwise prohibited by law.
This bill would prohibit the legislative body of a local agency from taking certain actions with respect to a critical housing infrastructure district, as defined, including abandoning the proposed establishment of the district, as specified, unless prior to taking the action it makes certain findings based upon substantial evidence, including that establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest. The bill would specify that these provisions do not require or prohibit the legislative body from taking any other action authorized by the act with respect to a critical housing infrastructure district, as specified.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
Existing law, the Mello-Roos Community Facilities Act of 1982, authorizes a local agency, as defined, to initiate proceedings to establish a community facilities district as an alternative method of financing certain public capital facilities and services, especially in developing areas undergoing rehabilitation, only if it has first considered and adopted local goals and policies, as prescribed. Existing law authorizes a local agency to take any actions or make any determinations which it determines are necessary or convenient to carry out the purposes of the act and which are not otherwise prohibited by law.
This bill would prohibit the legislative body of a local agency from taking certain actions with respect to a critical housing infrastructure district, as defined, including abandoning the proposed establishment of the district, as specified, unless prior to taking the action it makes certain findings based upon substantial evidence, including that establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest. The bill would specify that these provisions do not require or prohibit the legislative body from taking any other action authorized by the act with respect to a critical housing infrastructure district, as specified.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
Existing law, the Mello-Roos Community Facilities Act of 1982, authorizes a local agency, as defined, to initiate proceedings to establish a community facilities district as an alternative method of financing certain public capital facilities and services, especially in developing areas undergoing rehabilitation, only if it has first considered and adopted local goals and policies, as prescribed. Existing law authorizes a local agency to take any actions or make any determinations which it determines are necessary or convenient to carry out the purposes of the act and which are not otherwise prohibited by law.
This bill would prohibit the legislative body of a local agency from taking certain actions with respect to a critical housing infrastructure district, as defined, including abandoning the proposed establishment of the district, as specified, unless prior to taking the action it makes certain findings based upon substantial evidence that, among other things, evidence, including that establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would, among other things, would have a specific adverse impact upon the public interest. The bill would specify that these provisions do not require or prohibit the legislative body from taking any other action authorized by the act with respect to a critical housing infrastructure district, as specified.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
Existing law, the Mello-Roos Community Facilities Act of 1982, authorizes a local agency, as defined, to initiate proceedings to establish a community facilities district as an alternative method of financing certain public capital facilities and services, especially in developing areas undergoing rehabilitation, only if it has first considered and adopted local goals and policies, as prescribed. Existing law authorizes a local agency to take any actions or make any determinations which it determines are necessary or convenient to carry out the purposes of the act and which are not otherwise prohibited by law.
This bill would prohibit the legislative body of a local agency from taking certain actions with respect to a critical housing infrastructure district, as defined, including abandoning the proposed establishment of the district, as specified, unless prior to taking the action it makes findings based upon substantial evidence that, among other things, establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would would, among other things, have a specific adverse impact upon the public interest. The bill would specify that these provisions do not require or prohibit the legislative body from taking any other action authorized by the act with respect to a critical housing infrastructure district, as specified.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
Existing law, the Mello-Roos Community Facilities Act of 1982, authorizes a local agency, as defined, to initiate proceedings to establish a community facilities district as an alternative method of financing certain public capital facilities and services, especially in developing areas undergoing rehabilitation, only if it has first considered and adopted local goals and policies, as prescribed. Existing law authorizes a local agency to take any actions or make any determinations which it determines are necessary or convenient to carry out the purposes of the act and which are not otherwise prohibited by law.
This bill would prohibit a local agency from denying or conditionally denying, or imposing conditions on in a manner that renders infeasible, an application for financing through a community facilities district pursuant to the act that is related to a housing development project that includes units affordable to persons and families of lower income households or moderate income households, as those terms are defined, unless the local agency makes written findings supported by a preponderance of the evidence in the record that, among other things, the denial or any condition is based on specific, written findings setting forth the reasons for the decision.Existing law, the Housing Accountability Act, which is part of the Planning and Zoning Law, prohibits, among other things, a local agency from disapproving a housing development project or emergency shelter, or conditioning approval in a manner that renders the housing or emergency shelter infeasible, as specified, for a housing development project for very low, low-, or moderate-income households, or an emergency shelter, unless the local agency makes specified written findings based upon a preponderance of the evidence in the record. This bill would require its provisions to be construed consistently with the standards set forth in the Housing Accountability Act, as applicable.This bill would prohibit the legislative body of a local agency from taking certain actions with respect to a critical housing infrastructure district, as defined, including abandoning the proposed establishment of the district, as specified, unless prior to taking the action it makes findings based upon substantial evidence that, among other things, establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest. The bill would specify that these provisions do not require or prohibit the legislative body from taking any other action authorized by the act with respect to a critical housing infrastructure district, as specified.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
Existing law, the Mello-Roos Community Facilities Act of 1982, authorizes a local agency, as defined, to initiate proceedings to establish a community facilities district as an alternative method of financing certain public capital facilities and services, especially in developing areas undergoing rehabilitation, only if it has first considered and adopted local goals and policies, as prescribed. Existing law authorizes a local agency to take any actions or make any determinations which it determines are necessary or convenient to carry out the purposes of the act and which are not otherwise prohibited by law.
This bill would require a completed application for financing through a bond issued pursuant to the act to be subject to a streamlined, ministerial review process. The bill would require a local agency to make its determination as to whether to approve or deny a completed application within 30 days of receiving the application, and would deem a completed application approved if the local agency does not approve or deny the application within the 30 days. The bill would require a local agency that denies an application to support the denial with documentation of actuarial evidence of the substantial, adverse impact that the approval would have had on the insolvency risk of the local agency. The bill would prohibit a local agency from selectively denying a completed application to finance any type of public infrastructure relating to a housing development that meets specified requirements if the local agency has already approved applications relating to other projects during the prior or same regional housing needs allocation cycle.The bill would authorize an applicant to submit an appeal to the Department of Housing and Community Development to reconsider an application, and require the department to consider the appeal and make its determination on the appeal within 30 days. The bill would prohibit a local agency from, among other things, charging a fee for an application in excess of the historical average of the fee amount for prior applications. The bill would require each city and county that is part of a community facilities district to publish all terms for a financing through a bond issued pursuant to the act, including any applicable fees, on their internet website for public comparison. The bill would authorize the Department of Housing and Community Development to enforce these provisions, as specified.This bill would prohibit a local agency from denying or conditionally denying, or imposing conditions on in a manner that renders infeasible, an application for financing through a community facilities district pursuant to the act that is related to a housing development project that includes units affordable to persons and families of lower income households or moderate income households, as those terms are defined, unless the local agency makes written findings supported by a preponderance of the evidence in the record that, among other things, the denial or any condition is based on specific, written findings setting forth the reasons for the decision.
Existing law, the Housing Accountability Act, which is part of the Planning and Zoning Law, prohibits, among other things, a local agency from disapproving a housing development project or emergency shelter, or conditioning approval in a manner that renders the housing or emergency shelter infeasible, as specified, for a housing development project for very low, low-, or moderate-income households, or an emergency shelter, unless the local agency makes specified written findings based upon a preponderance of the evidence in the record.
This bill would require its provisions to be construed consistently with the standards set forth in the Housing Accountability Act, as applicable.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
Existing law, the Mello-Roos Community Facilities Act of 1982, authorizes a local agency, as defined, to initiate proceedings to establish a community facilities district as an alternative method of financing certain public capital facilities and services, especially in developing areas undergoing rehabilitation, only if it has first considered and adopted local goals and policies, as prescribed. Existing law authorizes a local agency to take any actions or make any determinations which it determines are necessary or convenient to carry out the purposes of the act and which are not otherwise prohibited by law.
This bill would require a completed application for financing through a bond issued pursuant to the act to be subject to a streamlined, ministerial review process. The bill would require a local agency to make its determination as to whether to approve or deny a completed application within 30 days of receiving the application, and would deem a completed application approved if the local agency does not approve or deny the application within the 30 days. The bill would require a local agency that denies an application to support the denial with documentation of actuarial evidence of the substantial, adverse impact that the approval would have had on the insolvency risk of the local agency. The bill would prohibit a local agency from selectively denying a completed application to finance any type of public infrastructure relating to a housing development that meets specified requirements if the local agency has already approved applications relating to other projects during the prior or same regional housing needs allocation cycle.
The bill would authorize an applicant to submit an appeal to the Department of Housing and Community Development to reconsider an application, and require the department to consider the appeal and make its determination on the appeal within 30 days. The bill would prohibit a local agency from, among other things, charging a fee for an application in excess of the historical average of the fee amount for prior applications. The bill would require each city and county that is part of a community facilities district to publish all terms for a financing through a bond issued pursuant to the act, including any applicable fees, on their internet website for public comparison. The bill would authorize the Department of Housing and Community Development to enforce these provisions, as specified.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
Existing law prescribes various statewide warehouse design and build standards for any proposed new or expanded logistics use developments, as specified, including, among other things, standards for building design and location, parking, truck loading bays, landscaping buffers, entry gates, and signage. Existing law defines various terms, including 21st century warehouse, and tier 1 21st century warehouse, for purposes of those provisions.This bill would make a nonsubstantive change to the definitions applicable to those provisions.Existing law prescribes various statewide warehouse design and build standards for any proposed new or expanded logistics use developments, as specified, including, among other things, standards for building design and location, parking, truck loading bays, landscaping buffers, entry gates, and signage. Existing law defines various terms, including 21st century warehouse, and tier 1 21st century warehouse, for purposes of those provisions.
This bill would make a nonsubstantive change to the definitions applicable to those provisions.
(a)For purposes of this section, all of the following definitions apply:
(1)Critical housing infrastructure district means a community facilities district that meets all of the following criteria:
(A)The district has been established, or is proposed to be established, solely to finance facilities described in subdivisions (e) and (f) of Section 53313.5 that serve a housing development project that includes housing for very low, low-, or moderate-income households.
(B)Proceedings for establishment of the district were instituted by petition under subdivision (c) of Section 53318 signed by owners of 100 percent of the area of land proposed to be included within the district.
(C)Any special taxes proposed to be levied by the district are eligible to be approved by the landowners of the proposed district in accordance with subdivision (b) of Section 53326.
(2)Housing for very low, low-, or moderate-income households has the same meaning as defined in paragraph (3) of subdivision (h) of Section 65589.5.
(b)The legislative body shall not take any of the following actions with respect to a critical housing infrastructure district unless it makes any of the findings set forth in subdivision (c):
(1)Abandon the proposed establishment of the district pursuant to Section 53325.
(2)Refuse to adopt an ordinance levying special taxes pursuant to Section 53340.
(3)Refuse to adopt a resolution necessary to incur bonded indebtedness pursuant to Sections 53345, 53351, or 53356.
(c)Prior to taking any action described in subdivision (b), the legislative body shall make at least one of the following findings based upon substantial evidence:
(1)Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest.
(2)Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would result in housing costs for the housing for very low, low-, or moderate-income households that no longer meet the definition of affordable housing costs pursuant to Section 50052.5 of the Health and Safety Code.
(3)If the site has been identified in the housing element pursuant to Sections 65583 and 65583.2 as a site to accommodate any portion of the jurisdictions regional housing need for low-income or very low income households, establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, is not necessary for development of the site at the densities specified in subparagraph (B) of paragraph (3) of subdivision (c) of Section 65583.2.
(d)This section shall not require or prohibit the legislative body from taking any other action authorized by this chapter with respect to a critical housing infrastructure district, including, without limitation, modifying the resolution of intention pursuant to Section 53325.
SEC. 2.The Legislature finds and declares that increasing housing production is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution, and one of the impediments to housing production is the inability to secure infrastructure financing. Therefore, Section 1 of this act adding Section 53316.8 to the Government Code applies to all cities, including charter cities.
(a)For purposes of this section, all of the following definitions apply:
(1)Critical housing infrastructure district means a community facilities district that meets all of the following criteria:
(A)The district has been established, or is proposed to be established, solely to finance facilities described in subdivisions (e) and (f) of Section 53313.5 that serve a housing development project that includes housing for very low, low-, or moderate-income households.
(B)Proceedings for establishment of the district were instituted by petition under subdivision (c) of Section 53318 signed by owners of 100 percent of the area of land proposed to be included within the district.
(C)Any special taxes proposed to be levied by the district are eligible to be approved by the landowners of the proposed district in accordance with subdivision (b) of Section 53326.
(2)Housing for very low, low-, or moderate-income households has the same meaning as defined in paragraph (3) of subdivision (h) of Section 65589.5.
(b)The legislative body shall not take any of the following actions with respect to a critical housing infrastructure district unless it makes any of the findings set forth in subdivision (c):
(1)Abandon the proposed establishment of the district pursuant to Section 53325.
(2)Refuse to adopt an ordinance levying special taxes pursuant to Section 53340.
(3)Refuse to adopt a resolution necessary to incur bonded indebtedness pursuant to Sections 53345, 53351, or 53356.
(c)Prior to taking any action described in subdivision (b), the legislative body shall make at least one of the following findings based upon substantial evidence:
(1)Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest.
(2)Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would result in housing costs for the housing for very low, low-, or moderate-income households that no longer meet the definition of affordable housing costs pursuant to Section 50052.5 of the Health and Safety Code.
(3)If the site has been identified in the housing element pursuant to Sections 65583 and 65583.2 as a site to accommodate any portion of the jurisdictions regional housing need for low-income or very low income households, establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, is not necessary for development of the site at the densities specified in subparagraph (B) of paragraph (3) of subdivision (c) of Section 65583.2.
(d)This section shall not require or prohibit the legislative body from taking any other action authorized by this chapter with respect to a critical housing infrastructure district, including, without limitation, modifying the resolution of intention pursuant to Section 53325.
SEC. 2.The Legislature finds and declares that increasing housing production is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution, and one of the impediments to housing production is the inability to secure infrastructure financing. Therefore, Section 1 of this act adding Section 53316.8 to the Government Code applies to all cities, including charter cities.
(a)For purposes of this section, all of the following definitions apply:
(1)Critical housing infrastructure district means a community facilities district that meets all of the following criteria:
(A)The district has been established, or is proposed to be established, solely to finance facilities described in subdivisions (e) and (f) of Section 53313.5 that serve a housing development project that includes units affordable to persons and families of lower income households or moderate income households. housing for very low, low-, or moderate-income households.
(B)Proceedings for establishment of the district were instituted by petition under subdivision (c) of Section 53318 signed by owners of 100 percent of the area of land proposed to be included within the district.
(C)Any special taxes proposed to be levied by the district are eligible to be approved by the landowners of the proposed district in accordance with subdivision (b) of Section 53326.
(2)Lower income household has the same meaning as defined in Section 50079.5 of the Health and Safety Code.(3)Moderate income household has the same meaning as defined in Section 50052.5 of the Health and Safety Code.(2)Housing for very low, low-, or moderate-income households has the same meaning as defined in paragraph (3) of subdivision (h) of Section 65589.5.
(b)The legislative body shall not take any of the following actions with respect to a critical housing infrastructure district unless it makes any of the findings set forth in subdivision (c):
(1)Abandon the proposed establishment of the district pursuant to Section 53325.
(2)Refuse to adopt an ordinance levying special taxes pursuant to Section 53340.
(3)Refuse to adopt a resolution necessary to incur bonded indebtedness pursuant to Sections 53345, 53351, or 53356.
(c)Prior to taking any action described in subdivision (b), the legislative body shall make at least one of the following findings based upon substantial evidence:
(1)Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest.
(2)Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would result in housing costs for the units dedicated to lower income households and moderate income households housing for very low, low-, or moderate-income households that no longer meet the definition of affordable housing costs pursuant to Section 50052.5 of the Health and Safety Code for lower income households or moderate income households. Code.
(3)If the site has been identified in the housing element pursuant to Sections 65583 and 65583.2 as a site to accommodate any portion of the jurisdictions regional housing need for low-income or very low income households, establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, is not necessary for development of the site at the densities specified in subparagraph (B) of paragraph (3) of subdivision (c) of Section 65583.2.
(d)This section shall not require or prohibit the legislative body from taking any other action authorized by this chapter with respect to a critical housing infrastructure district, including, without limitation, modifying the resolution of intention pursuant to Section 53325.
SEC. 2.The Legislature finds and declares that increasing housing production is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution, and one of the impediments to housing production is the inability to secure infrastructure financing. Therefore, Section 1 of this act adding Section 53316.8 to the Government Code applies to all cities, including charter cities.
(a)For purposes of this section, all of the following definitions apply:
(1)Critical housing infrastructure district means a community facilities district that meets all of the following criteria:
(A)The district has been established, or is proposed to be established, solely to finance facilities described in subdivisions (e) and (f) of Section 53313.5 that serve a housing development project that includes units affordable to persons and families of lower income households or moderate income households.
(B)Proceedings for establishment of the district were instituted by petition under subdivision (c) of Section 53318 signed by owners of 100 percent of the area of land proposed to be included within the district.
(C)Any special taxes proposed to be levied by the district are eligible to be approved by the landowners of the proposed district in accordance with subdivision (b) of Section 53326.
(2)Lower income household has the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(3)Moderate income household has the same meaning as defined in Section 50052.5 of the Health and Safety Code.
(b)The legislative body shall not take any of the following actions with respect to a critical housing infrastructure district unless it makes any of the findings set forth in subdivision (c):
(1)Abandon the proposed establishment of the district pursuant to Section 53325.
(2)Refuse to adopt an ordinance levying special taxes pursuant to Section 53340.
(3)Refuse to adopt a resolution necessary to incur bonded indebtedness pursuant to Sections 53345, 53351, or 53356.
(c)Prior to taking any action described in subdivision (b), the legislative body shall make at least one of the following findings based upon substantial evidence:
(1)Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest.
(2)Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would result in housing costs for the units dedicated to lower income households and moderate income households that no longer meet the definition of affordable housing costs pursuant to Section 50052.5 of the Health and Safety Code for lower income households or moderate income households.
(3)If the site has been identified in the housing element pursuant to Sections 65583 and 65583.2 as a site to accommodate any portion of the jurisdictions regional housing need for low-income or very low income households, establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, is not necessary for development of the site at the densities specified in subparagraph (B) of paragraph (3) of subdivision (c) of Section 65583.2.
(d)This section shall not require or prohibit the legislative body from taking any other action authorized by this chapter with respect to a critical housing infrastructure district, including, without limitation, modifying the resolution of intention pursuant to Section 53325.
SEC. 2.The Legislature finds and declares that increasing housing production is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution, and one of the impediments to housing production is the inability to secure infrastructure financing. Therefore, Section 1 of this act adding Section 53316.8 to the Government Code applies to all cities, including charter cities.
(a)For purposes of this section, all of the following definitions apply:
(1)Critical housing infrastructure district means a community facilities district that meets all of the following criteria:
(A)The district has been established, or is proposed to be established, solely to finance facilities described in subdivisions (e) and (f) of Section 53313.5 that serve a housing development project that includes units affordable to persons and families of lower income households or moderate income households.
(B)Proceedings for establishment of the district were instituted by petition under subdivision (c) of Section 53318 signed by owners of 100 percent of the area of land proposed to be included within the district.
(C)Any special taxes proposed to be levied by the district are eligible to be approved by the landowners of the proposed district in accordance with subdivision (b) of Section 53326.
(2)Lower income household has the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(3)Moderate income household has the same meaning as defined in Section 50052.5 of the Health and Safety Code.
(b)The legislative body shall not take any of the following actions with respect to a critical housing infrastructure district unless it makes the findings set forth in subdivision (c):
(1)Abandon the proposed establishment of the district pursuant to Section 53325.
(2)Refuse to adopt an ordinance levying special taxes pursuant to Section 53340.
(3)Refuse to adopt a resolution necessary to incur bonded indebtedness pursuant to Sections 53345, 53351, or 53356.
(c)Prior to taking any action described in subdivision (b), the legislative body shall make the following findings based upon substantial evidence:
(1)Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest.
(2)Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would result in housing costs for the units dedicated to lower income households and moderate income households that no longer meet the definition of affordable housing costs pursuant to Section 50052.5 of the Health and Safety Code for lower income households or moderate income households.
(2)(3)If the site has been identified in the housing element pursuant to Sections 65583 and 65583.2 as a site to accommodate any portion of the jurisdictions regional housing need for low-income or very low income households, establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, is not necessary for development of the site at the densities specified in subparagraph (B) of paragraph (3) of subdivision (c) of Section 65583.2.
(d)This section shall not require or prohibit the legislative body from taking any other action authorized by this chapter with respect to a critical housing infrastructure district, including, without limitation, modifying the resolution of intention pursuant to Section 53325.
SEC. 2.The Legislature finds and declares that Section 1 of this act adding Section 53316.8 to the Government Code addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, Section 1 of this act applies to all cities, including charter cities.SEC. 2.The Legislature finds and declares that increasing housing production is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution, and one of the impediments to housing production is the inability to secure infrastructure financing. Therefore, Section 1 of this act adding Section 53316.8 to the Government Code applies to all cities, including charter cities.
(a)For purposes of this section, all of the following definitions apply:
(1)Critical housing infrastructure district means a community facilities district that meets all of the following criteria:
(A)The district has been established, or is proposed to be established, solely to finance facilities described in subdivisions (e) and (f) of Section 53313.5 that serve a housing development project that includes units affordable to persons and families of lower income households or moderate income households.
(B)Proceedings for establishment of the district were instituted by petition under subdivision (c) of Section 53318 signed by owners of 100 percent of the area of land proposed to be included within the district.
(C)Any special taxes proposed to be levied by the district are eligible to be approved by the landowners of the proposed district in accordance with subdivision (b) of Section 53326.
(2)Lower income household has the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(3)Moderate income household has the same meaning as defined in Section 50052.5 of the Health and Safety Code.
(b)The legislative body shall not take any of the following actions with respect to a critical housing infrastructure district unless it makes the findings set forth in subdivision (c):
(1)Abandon the proposed establishment of the district pursuant to Section 53325.
(2)Refuse to adopt an ordinance levying special taxes pursuant to Section 53340.
(3)Refuse to adopt a resolution necessary to incur bonded indebtedness pursuant to Sections 53345, 53351, or 53356.
(c)Prior to taking any action described in subdivision (b), the legislative body shall make the following findings based upon substantial evidence:
(1)Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest.
(2)If the site has been identified in the housing element pursuant to Sections 65583 and 65583.2 as a site to accommodate any portion of the jurisdictions regional housing need for low-income or very low income households, establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, is not necessary for development of the site at the densities specified in subparagraph (B) of paragraph (3) of subdivision (c) of Section 65583.2.
(d)This section shall not require or prohibit the legislative body from taking any other action authorized by this chapter with respect to a critical housing infrastructure district, including, without limitation, modifying the resolution of intention pursuant to Section 53325.
SEC. 2.The Legislature finds and declares that Section 1 of this act adding Section 53316.8 to the Government Code addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, Section 1 of this act applies to all cities, including charter cities.
(a)A local agency shall not deny or conditionally deny, or impose conditions on in a manner that renders infeasible, an application for financing through a community facilities district pursuant to this chapter that is related to a housing development project that includes units affordable to persons and families of lower income households or moderate income households, unless the local agency makes written findings supported by a preponderance of the evidence in the record as to both of the following:
(1)The denial or any condition is based on specific, written findings setting forth the reasons for the decision.
(2)The local agency has established, based on substantial evidence in the record, that the formation of the community facilities district would have a specific, adverse impact upon public health or safety, or would violate applicable state or federal law, and there is no feasible method to satisfactorily mitigate or avoid the adverse impact or comply with applicable state or federal law.
(b)This section shall be construed consistently with the standards set forth in the Housing Accountability Act (Section 65589.5), as applicable.
(c)For purposes of this section, both of the following definitions apply:
(1)Lower income household has the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(2)Moderate income household has the same meaning as defined in Section 50052.5 of the Health and Safety Code.
SEC. 2.The Legislature finds and declares that Section 1 of this act adding Section 53316.8 to the Government Code addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, Section 1 of this act applies to all cities, including charter cities.
(a)A completed application for financing through a bond issued pursuant to this chapter shall be subject to a streamlined, ministerial review process.
(b)(1)A local agency shall make its determination as to whether to approve or deny a completed application within 30 days of receiving the application. Notwithstanding any law, if the local agency does not approve or deny the application within 30 days, the completed application shall be deemed approved.
(2)If a local agency denies an application, the local agency shall support the denial with documentation of actuarial evidence of the substantial, adverse impact that the approval would have had on the insolvency risk of the local agency.
(3)A local agency shall not selectively deny a completed application to finance any type of public infrastructure relating to a housing development that meets the requirements of paragraphs (3) through (8), inclusive, of subdivision (b) of Section 66499.40 if the local agency has already approved applications relating to other projects during the prior or same regional housing needs allocation cycle.
(c)An applicant may submit an appeal to the Department of Housing and Community Development to reconsider an application. The department shall consider an appeal and make its determination on the appeal within 30 days of receiving the request for appeal.
(d)(1)A local agency shall not charge a fee for an application in excess of the historical average of the fee amount for prior applications.
(2)A local agency shall not require an applicant to accept financing that the applicant does not want.
(e)Each city and county that is part of a community facilities district shall publish all terms for a financing through a bond issued pursuant to this chapter, including any applicable fees, bond purposes, and boundaries of community facilities districts in the same general region, on their internet website for public comparison.
(f)The Department of Housing and Community Development may enforce any provision of this section by doing all of the following:
(1)Investigating complaints of noncompliance.
(2)Issuing findings of noncompliance within 90 days of submission of a complaint.
(3)Order issuance.
(4)Recommending the withholding of state housing funds from any local agency found in noncompliance.
SEC. 2.The Legislature finds and declares that Section 1 of this act adding Section 53316.8 to the Government Code addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, Section 1 of this act applies to all cities, including charter cities.
SECTION 1.Section 65098 of the Government Code is amended to read:65098.As used throughout this chapter:(a)21st century warehouse means a logistics use development that meets all of the following:(1)Complies with or exceeds all requirements of the most current building energy efficiency standards specified in Part 6 (commencing with Section 100) of Title 24 of the California Code of Regulations and the California Green Building Standards Code (Part 11 of Title 24 of the California Code of Regulations) that are in effect at the time that the building permit is issued, including, but not limited to, the following requirements related to:(A)Photovoltaic system installation and associated battery storage.(B)Cool roofing.(C)Medium- and heavy-duty vehicle charging readiness.(D)Light-duty electric vehicle charging readiness and installed charging stations.(2)Has skylights in at least 1 percent of the roof area, or equivalent LED efficient lighting.(3)(A)Provides conduits and electrical hookups at all loading bays serving cold storage.(B)Idling or use of auxiliary truck engine power to power climate control equipment shall be prohibited if the truck is capable of plugging in at the loading bay and sufficient power is available.(4)Ensures that any heating, ventilation, and air-conditioning is high-efficiency.(5)(A)Ensures that all classes of forklifts used on site, pursuant to State Air Resources Boards Zero-Emission Forklifts regulation, as drafted, shall be zero-emission by January 1, 2030, to the extent operationally feasible, commercially off-the-shelf available, and adequate power available on site.(B)(i)If not operationally feasible, commercially off-the-shelf available, or if there is inadequate power available on site, the cleanest technology commercially available shall be used.(ii)Cost shall not be a factor in determining operational feasibility pursuant to this subparagraph.(6)(A)Ensures that equipment used on site utilizing small off-road engines shall be zero-emission, to the extent operationally feasible, commercially off-the-shelf available, and adequate power available on site.(B)(i)If not operationally feasible, commercially off-the-shelf available, or if there is inadequate power available on site, the cleanest technology commercially available shall be used.(ii)Cost shall not be a factor in determining operational feasibility pursuant to this subparagraph.(C)Should any equipment used on site utilizing small off-road engines be contracted out, the logistics use development shall preferentially contract for services utilizing zero-emission small off-road engines.(b)Expansion means the expansion of an existing logistics use development by 20 percent or more of the existing square footage. Office space shall not be included as part of the existing square footage or in the square footage for the 20-percent expansion threshold.(c)Heavy-duty truck means a class 7 or class 8 truck. As used in this subdivision:(1)Class 7 truck means a truck with a gross vehicle weight rating of 26,001 to 33,000 pounds.(2)Class 8 truck means a truck with a gross vehicle weight rating of greater than 33,000 pounds.(d)Logistics use development means a building that is primarily used as a warehouse for the movement or the storage of cargo, goods, or products that are moved to business or retail customers, or both, that does not predominantly serve retail customers for onsite purchases, and heavy-duty trucks are primarily involved in the movement of the cargo, goods, or products. Logistics use development does not include any of the following:(1)Facilities where food or household goods are sold directly to consumers and are accessible to the public.(2)A building primarily served by rail to move cargo goods or product.(3)(A)A Strategic Intermodal Facility.(B)For purposes of this subdivision, Strategic Intermodal Facility means a project that satisfies all of the following requirements:(i)Logistics facilities, including warehousing and transloading facilities, served by rail.(ii)Intermodal freight transport services.(iii)All facility structures and related rail operations are located within a single site footprint.(4)A building that serves a primary agricultural use that is actively operated for a single period of 90 consecutive days or less each year.(e)Sensitive receptor means one or more of the following:(1)A residence, including, but not limited to, a private home, apartment, condominium unit, group home, dormitory unit, or retirement home.(2)A school, including, but not limited to, a preschool, prekindergarten, or school maintaining kindergarten or any of grades 1 to 12, inclusive.(3)A daycare facility, including, but not limited to, in-home daycare.(4)(A)Publicly owned parks, playgrounds, and recreational areas or facilities primarily used by children.(B)For purposes of subparagraph (A), the following types of park and recreation areas shall not be considered a sensitive receptor:(i)Parks and recreation areas included as a condition of approval for the logistics use development.(ii)Land that will be used to ensure the publics right of access to the sea, or other public access, pursuant to the California Coastal Act of 1976 (Division 20 (commencing with Section 30000) of the Public Resources Code) or McAteer-Petris Act (Title 7.2 (commencing with Section 66600)).(iii)Land developed at or adjacent to an airport or seaport for the express purpose of creating a buffer area between sensitive receptors and an airport or seaport facility.(5)Nursing homes, long-term care facilities, hospices, convalescent facilities, or similar live-in housing.(6)Hospitals, as defined in Section 128700 of the Health and Safety Code.(f)Small off-road engines means spark-ignition engines rated at or below 19 kilowatts or 25 horsepower or less.(g)Tier 1 21st century warehouse means a logistics use development that meets all of the following:(1)Complies with or exceeds all requirements of the most current building energy efficiency standards specified in Part 6 (commencing with Section 100) of Title 24 of the California Code of Regulations and the California Green Building Standards Code (Part 11 of Title 24 of the California Code of Regulations) that are in effect at the time that the building permit is issued, including, but not limited to, the following requirements related to:(A)(i)Photovoltaic system installation and associated battery storage.(ii)For purposes of the photovoltaic system installation requirement in clause (i), all logistic use square footage should be considered conditioned space.(B)Cool roofing.(C)Medium- and heavy-duty vehicle charging readiness.(D)Light-duty electric vehicle charging readiness and installed charging stations.(2)Has skylights in at least one percent of the roof area, or equivalent LED efficient lighting.(3)Has a microgrid-ready switchgear system capable of supporting distributed energy resources.(4)Is advanced smart metering ready.(5)Has a minimum of 50 percent of all passenger vehicle parking spaces preinstalled with conduit and all necessary physical infrastructure to support future charging of electric vehicles.(6)Has a minimum of 10 percent of all passenger vehicle parking spaces installed with electric vehicle charging stations.(7)(A)Provides conduits and electrical hookups at all loading bays serving cold storage.(B)Idling or use of auxiliary truck engine power to power climate control equipment shall be prohibited if the truck is capable of plugging in at the loading bay and sufficient power is available.(8)Ensures that any heating, ventilation, and air-conditioning is high-efficiency.(9)(A)Ensures that all classes of forklifts used on site, pursuant to State Air Resources Boards Zero-Emission Forklifts regulation, as drafted, shall be zero-emission by January 1, 2028, to the extent operationally feasible, commercially off-the-shelf available, and adequate power available on site.(B)(i)If not operationally feasible, commercially off-the-shelf available, or if there is inadequate power available on site, the cleanest technology commercially available shall be used.(ii)Cost shall not be a factor in determining operational feasibility pursuant to this subparagraph.(10)(A)Ensures that equipment used on site utilizing small off-road engines shall be zero-emission, to the extent operationally feasible, commercially off-the-shelf available, and adequate power available on site.(B)(i)If not operationally feasible, commercially off-the-shelf available, or if there is inadequate power available on site, the cleanest technology commercially available shall be used.(ii)Cost shall not be a factor in determining operational feasibility pursuant to this subparagraph.(C)Should any equipment used on site utilizing small off-road engines be contracted out, the logistics use development shall preferentially contract for services utilizing zero-emission small off-road engines.(h)Warehouse concentration region includes the unincorporated areas within the Counties of Riverside and San Bernardino and the Cities of Chino, Colton, Fontana, Jurupa Valley, Moreno Valley, Ontario, Perris, Rancho Cucamonga, Redlands, Rialto, Riverside, and San Bernardino.(i)Logistics park means a development consisting of multiple buildings containing logistics use developments.As used in throughout this chapter:
(a)21st century warehouse means a logistics use development that meets all of the following:
(1)Complies with or exceeds all requirements of the most current building energy efficiency standards specified in Part 6 (commencing with Section 100) of Title 24 of the California Code of Regulations and the California Green Building Standards Code (Part 11 of Title 24 of the California Code of Regulations) that are in effect at the time that the building permit is issued, including, but not limited to, the following requirements related to:
(A)Photovoltaic system installation and associated battery storage.
(B)Cool roofing.
(C)Medium- and heavy-duty vehicle charging readiness.
(D)Light-duty electric vehicle charging readiness and installed charging stations.
(2)Has skylights in at least 1 percent of the roof area, or equivalent LED efficient lighting.
(3)(A)Provides conduits and electrical hookups at all loading bays serving cold storage.
(B)Idling or use of auxiliary truck engine power to power climate control equipment shall be prohibited if the truck is capable of plugging in at the loading bay and sufficient power is available.
(4)Ensures that any heating, ventilation, and air-conditioning is high-efficiency.
(5)(A)Ensures that all classes of forklifts used on site, pursuant to State Air Resources Boards Zero-Emission Forklifts regulation, as drafted, shall be zero-emission by January 1, 2030, to the extent operationally feasible, commercially off-the-shelf available, and adequate power available on site.
(B)(i)If not operationally feasible, commercially off-the-shelf available, or if there is inadequate power available on site, the cleanest technology commercially available shall be used.
(ii)Cost shall not be a factor in determining operational feasibility pursuant to this subparagraph.
(6)(A)Ensures that equipment used on site utilizing small off-road engines shall be zero-emission, to the extent operationally feasible, commercially off-the-shelf available, and adequate power available on site.
(B)(i)If not operationally feasible, commercially off-the-shelf available, or if there is inadequate power available on site, the cleanest technology commercially available shall be used.
(ii)Cost shall not be a factor in determining operational feasibility pursuant to this subparagraph.
(C)Should any equipment used on site utilizing small off-road engines be contracted out, the logistics use development shall preferentially contract for services utilizing zero-emission small off-road engines.
(b)Expansion means the expansion of an existing logistics use development by 20 percent or more of the existing square footage. Office space shall not be included as part of the existing square footage or in the square footage for the 20-percent expansion threshold.
(c)Heavy-duty truck means a class 7 or class 8 truck. As used in this subdivision:
(1)Class 7 truck means a truck with a gross vehicle weight rating of 26,001 to 33,000 pounds.
(2)Class 8 truck means a truck with a gross vehicle weight rating of greater than 33,000 pounds.
(d)Logistics use development means a building that is primarily used as a warehouse for the movement or the storage of cargo, goods, or products that are moved to business or retail customers, or both, that does not predominantly serve retail customers for onsite purchases, and heavy-duty trucks are primarily involved in the movement of the cargo, goods, or products. Logistics use development does not include any of the following:
(1)Facilities where food or household goods are sold directly to consumers and are accessible to the public.
(2)A building primarily served by rail to move cargo goods or product.
(3)(A)A Strategic Intermodal Facility.
(B)For purposes of this subdivision, Strategic Intermodal Facility means a project that satisfies all of the following requirements:
(i)Logistics facilities, including warehousing and transloading facilities, served by rail.
(ii)Intermodal freight transport services.
(iii)All facility structures and related rail operations are located within a single site footprint.
(4)A building that serves a primary agricultural use that is actively operated for a single period of 90 consecutive days or less each year.
(e)Sensitive receptor means one or more of the following:
(1)A residence, including, but not limited to, a private home, apartment, condominium unit, group home, dormitory unit, or retirement home.
(2)A school, including, but not limited to, a preschool, prekindergarten, or school maintaining kindergarten or any of grades 1 to 12, inclusive.
(3)A daycare facility, including, but not limited to, in-home daycare.
(4)(A)Publicly owned parks, playgrounds, and recreational areas or facilities primarily used by children.
(B)For purposes of subparagraph (A), the following types of park and recreation areas shall not be considered a sensitive receptor:
(i)Parks and recreation areas included as a condition of approval for the logistics use development.
(ii)Land that will be used to ensure the publics right of access to the sea, or other public access, pursuant to the California Coastal Act of 1976 (Division 20 (commencing with Section 30000) of the Public Resources Code) or McAteer-Petris Act (Title 7.2 (commencing with Section 66600)).
(iii)Land developed at or adjacent to an airport or seaport for the express purpose of creating a buffer area between sensitive receptors and an airport or seaport facility.
(5)Nursing homes, long-term care facilities, hospices, convalescent facilities, or similar live-in housing.
(6)Hospitals, as defined in Section 128700 of the Health and Safety Code.
(f)Small off-road engines means spark-ignition engines rated at or below 19 kilowatts or 25 horsepower or less.
(g)Tier 1 21st century warehouse means a logistics use development that meets all of the following:
(1)Complies with or exceeds all requirements of the most current building energy efficiency standards specified in Part 6 (commencing with Section 100) of Title 24 of the California Code of Regulations and the California Green Building Standards Code (Part 11 of Title 24 of the California Code of Regulations) that are in effect at the time that the building permit is issued, including, but not limited to, the following requirements related to:
(A)(i)Photovoltaic system installation and associated battery storage.
(ii)For purposes of the photovoltaic system installation requirement in clause (i), all logistic use square footage should be considered conditioned space.
(B)Cool roofing.
(C)Medium- and heavy-duty vehicle charging readiness.
(D)Light-duty electric vehicle charging readiness and installed charging stations.
(2)Has skylights in at least one percent of the roof area, or equivalent LED efficient lighting.
(3)Has a microgrid-ready switchgear system capable of supporting distributed energy resources.
(4)Is advanced smart metering ready.
(5)Has a minimum of 50 percent of all passenger vehicle parking spaces preinstalled with conduit and all necessary physical infrastructure to support future charging of electric vehicles.
(6)Has a minimum of 10 percent of all passenger vehicle parking spaces installed with electric vehicle charging stations.
(7)(A)Provides conduits and electrical hookups at all loading bays serving cold storage.
(B)Idling or use of auxiliary truck engine power to power climate control equipment shall be prohibited if the truck is capable of plugging in at the loading bay and sufficient power is available.
(8)Ensures that any heating, ventilation, and air-conditioning is high-efficiency.
(9)(A)Ensures that all classes of forklifts used on site, pursuant to State Air Resources Boards Zero-Emission Forklifts regulation, as drafted, shall be zero-emission by January 1, 2028, to the extent operationally feasible, commercially off-the-shelf available, and adequate power available on site.
(B)(i)If not operationally feasible, commercially off-the-shelf available, or if there is inadequate power available on site, the cleanest technology commercially available shall be used.
(ii)Cost shall not be a factor in determining operational feasibility pursuant to this subparagraph.
(10)(A)Ensures that equipment used on site utilizing small off-road engines shall be zero-emission, to the extent operationally feasible, commercially off-the-shelf available, and adequate power available on site.
(B)(i)If not operationally feasible, commercially off-the-shelf available, or if there is inadequate power available on site, the cleanest technology commercially available shall be used.
(ii)Cost shall not be a factor in determining operational feasibility pursuant to this subparagraph.
(C)Should any equipment used on site utilizing small off-road engines be contracted out, the logistics use development shall preferentially contract for services utilizing zero-emission small off-road engines.
(h)Warehouse concentration region includes the unincorporated areas within the Counties of Riverside and San Bernardino and the Cities of Chino, Colton, Fontana, Jurupa Valley, Moreno Valley, Ontario, Perris, Rancho Cucamonga, Redlands, Rialto, Riverside, and San Bernardino.
(i)Logistics park means a development consisting of multiple buildings containing logistics use developments.
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Date
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Status
|
|---|---|
| Sep 30, 2026 | Chaptered by Secretary of State - Chapter 938, Statutes of 2026. |
| Sep 30, 2026 | Approved by the Governor. |
| Sep 15, 2026 | Enrolled and presented to the Governor at 3 p.m. |
| Aug 31, 2026 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 76. Noes 0.). |
| Aug 31, 2026 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 76. Noes 0. Page 7048.). |
| Aug 31, 2026 | Senate amendments concurred in. To Engrossing and Enrolling. |
| Aug 19, 2026 | In Assembly. Concurrence in Senate amendments pending. |
| Aug 19, 2026 | Read third time. Passed. Ordered to the Assembly. (Ayes 37. Noes 0.). |
| Aug 19, 2026 | Read third time. Passed. Ordered to the Assembly. (Ayes 38. Noes 0. Page 5557.). |
| Aug 17, 2026 | Read second time. Ordered to third reading. |
| Aug 13, 2026 | Read third time and amended. Ordered to second reading. |
| Aug 3, 2026 | Ordered to third reading. |
| Aug 3, 2026 | From Consent Calendar. |
| Jul 2, 2026 | Read second time and amended. Ordered to consent calendar. |
| Jul 1, 2026 | From committee: Amend, and do pass as amended. To Consent Calendar. (Ayes 9. Noes 0.) (June 30). |
| Jun 10, 2026 | From committee: Do pass and re-refer to Com. on HOUSING. (Ayes 7. Noes 0.) (June 10). Re-referred to Com. on HOUSING. |
| Jun 3, 2026 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on L. GOV. |
| May 20, 2026 | Referred to Coms. on L. GOV. and HOUSING. |
| May 7, 2026 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 7, 2026 | Read third time. Passed. Ordered to the Senate. (Ayes 66. Noes 0.) |
| May 7, 2026 | Read third time. Passed. Ordered to the Senate. (Ayes 66. Noes 0. Page 4967.) |
| Apr 30, 2026 | Read second time. Ordered to Consent Calendar. |
| Apr 29, 2026 | From committee: Do pass. To Consent Calendar. (Ayes 12. Noes 0.) (April 29). |
| Apr 27, 2026 | Re-referred to Com. on H. & C.D. |
| Apr 23, 2026 | From committee: Do pass and re-refer to Com. on H. & C.D. (Ayes 10. Noes 0.) (April 22). Re-referred to Com. on H. & C.D. |
| Apr 23, 2026 | From committee chair, with author's amendments: Amend, and re-refer to Com. on H. & C.D. Read second time and amended. |
| Apr 9, 2026 | In committee: Hearing postponed by committee. |
| Apr 7, 2026 | Re-referred to Com. on L. GOV. |
| Apr 6, 2026 | From committee chair, with author's amendments: Amend, and re-refer to Com. on L. GOV. Read second time and amended. |
| Mar 23, 2026 | Re-referred to Com. on L. GOV. |
| Mar 19, 2026 | Referred to Coms. on L. GOV. and H. & C.D. |
| Mar 19, 2026 | From committee chair, with author's amendments: Amend, and re-refer to Com. on L. GOV. Read second time and amended. |
| Feb 21, 2026 | From printer. May be heard in committee March 23. |
| Feb 20, 2026 | Read first time. To print. |
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Date
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Description
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Location
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Votes
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|
|---|---|---|---|---|
| Aug 31, 2026 | AB 2397 Ta Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Aug 19, 2026 | Assembly 3rd Reading AB2397 Ta By Seyarto | Senate Floor |
Passed |
|
| Jun 30, 2026 | Do pass as amended, and be ordered to the Consent Calendar | Senate Standing Committee on Housing |
Passed |
|
| Jun 10, 2026 | Do pass, but first be re-referred to the Committee on [Housing] | Senate Standing Committee on Local Government |
Passed |
|
| May 7, 2026 | AB 2397 Ta Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| Apr 29, 2026 | Do pass. To Consent Calendar. | Assembly Standing Committee on Housing and Community Development |
Passed |
|
| Apr 22, 2026 | Do pass and be re-referred to the Committee on [Housing and Community Development] | Assembly Standing Committee on Local Government |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
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Position
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Date
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|---|---|---|
| Solano County | ** Against |
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 2397
Author:(Ta)
As Amended Ver:August 13, 2026
Majority vote
SUMMARY
This bill creates a subset of community facilities districts (CFDs) called critical housing infrastructure districts (CHIDs), and prohibits a local agency from taking specified actions with respect to a CHID.
Senate Amendments
- Provide that the legislative body shall make at least one of a number of findings prior to taking specified actions.
- Add to the list of findings a legislative body can make for the purposes of 1), above, that the establishment of the CHID, levying the special taxes, or incurring bonded indebtedness, as applicable, would result in housing costs for the housing for very low, low-, or moderate-income households that no longer meet the definition of affordable housing costs pursuant to existing law.
- Make other technical changes.
COMMENTS
- Mello-Roos. The Mello-Roos Community Facilities Act allows counties, cities, special districts, and school districts to levy special taxes (parcel taxes), with 2/3rds voter approval, to finance a wide variety of public works, including parks, recreation centers, schools, libraries, child care facilities, and utility infrastructure. A Mello-Roos district issues bonds against these special taxes to finance the public works projects.
In addition to financing public capital facilities, Mello-Roos special taxes can fund a limited list of public services: police services, fire protection, recreation programs, library services, museum operations, park maintenance, flood protection, hazardous waste cleanup, street and road maintenance, lighting of parks, parkways, streets, roads, and open space, plowing and removal of snow, and graffiti management and removal.
To initiate the formation of a Mello-Roos district, one of three things must happen: A written request for the establishment of a district signed by two members of the legislative body, through a petition signed by not less than 10% of the registered voters, or a petition signed by not less than 10% of landowners owning the requisite portion of the area of a proposed district. The written request or petition filed are not required to be acted upon until payment of a specified fee is paid. Within 90 days of either receiving a written request by two members of the legislative body or a petition filed, and the payment of the required fee, a local agency's legislative body must adopt a resolution of intention to establish the district, which must do all of the following: describe the district's boundaries; describe the facilities and services proposed to be financed; state that a special tax, secured by a lien against real property, will be annually levied; specify, in detail, the rate, method of apportionment, and manner of collections of the special tax; and, fix a time and place for public hearing.
After holding the hearing and considering protests, the legislative body, to establish the Mello-Roos district, must adopt a resolution of formation containing all of the information provided in the resolution of intention; and, if a special tax is to be levied, include additional information about the tax levy that must be approved by registered voters. The local agency may modify the resolution by eliminating proposed facilities or services, by changing the rate or method of apportionment of the proposed special tax in order to reduce the special tax, or by removing territory from the proposed district.
If 50% or more registered voters, or the owners of one-half or more of the area of land in the territory proposed to be included in the district, file written protests against the formation of the district, the district cannot be established. The legislative body must submit the levy of any special taxes to the voters of the district. If there are fewer than 12 registered voters in the territory of the Mello-Roos district, the affected landowners vote. In that case, landowners get one vote per acre included in the Mello-Roos district. The special tax imposed by a Mello-Roos district is a lien upon the real property. Should a property owner fail to pay the special tax, the local governmental entity may (and will typically be required to) foreclose upon the real property to collect the special tax.
- Mello-Roos Controversies. The Mello-Roos Act has been an important feature of the local fiscal landscape, providing local officials with a key tool for accumulating the public capital needed to pay for the public works projects that make new residential development possible. However, Mello-Roos districts have not existed without controversy. As detailed in the May 24, 1992, "State Panel Seeking Tougher Rules for Mello-Roos Districts : Legislation: The commission is recommending changes aimed at giving home buyers more protection." In the Los Angeles Time, "Mello-Roos districts, also called community facilities districts, usually are created when a large chunk of vacant land is owned by only one or two developers.
"The districts then sell bonds to finance public facilities that enable development of the land. Until homes and businesses are built and occupied, the landowners pay the Mello-Roos taxes used to pay off the bonds. But as new homeowners and businesses move in, they assume the cost of repaying the bond debt, which can amount to more than $1,000 a year on top of their regular property taxes.
"The Times articles detailed several weaknesses and failings of the system. Among them:
Home buyers often are not aware of the amount of debt their local Mello-Roos district is authorized to accumulate or the projects that can be funded with bond proceeds.
In some instances, local government officials have quietly imposed Mello-Roos taxes that favor developers at the expense of home buyers.
Governments in Orange and Riverside counties have entered into deals with developers that were in trouble financially, imperiling the security of the bonds.
Developers have been allowed to select the appraisers who value the land that is collateral for the bonds.
"For example, Lake Elsinore, a city of 19,200 residents in Riverside County, has authorized the issuance of $500 million in bonds, to the surprise and concern of both residents and state officials.
"Trouble is brewing in one of the city's housing developments called Tuscany Hills. Fewer than 200 of the planned 2,000 homes have been built, leaving Tuscany Hills with a $14.1-million bond debt that can't be retired because there are not yet enough residents."[1]
Despite past controversies, there are a number of safeguards in Mello-Roos Law to ensure that both the local agency and the residents or landowners approve of the establishment of a Mello-Roos district, including, allowing the local agency to abandon the establishment of the Mello-Roos district, modify the resolution of intention by eliminating proposed facilities or services or by changing the rate or method of apportionment of the proposed special tax, and a protest process and subsequent tax election.
- Current State of Mello-Roos. To monitor the use and financial health of Mello-Roos districts, state law requires issuers of Mello-Roos bonds sold on or after January 1, 1993, to file Yearly Fiscal Status Report (YSFR) with the California Debt and Investment Advisory Commission (CDIAC) until the bonds are retired. In CDIAC's "Mello-Roos Yearly Fiscal Status Report Summary for Reporting Year 2023-24," for reporting year (RY) 2023-23, a total of 1,200 Mello-Roos districts were required to submit reports for 1,864 debt issues, including 171 new issues that sold during the RY. The original principal issued for the Mello-Roos bonds reported to CDIAC for RY 2023-24 totaled $20.8 billion. At the end of the RY, the amount of principal outstanding was $16.3 billion, approximately 78.4% of the original principal amount.
According to CDIAC, "Detailed delinquent parcel and tax information is required to be submitted and summarizes ongoing unpaid amounts that may be cumulative over reporting years. The amount of delinquent taxes reported to CDIAC for RY 2023–24 totaled $134.9 million, a 49.5% increase over RY 2022–23 ($90.2 million). The CFD that had the largest volume of delinquencies was Northstar Community Services District CFD No. 1 with approximately $41.0 million.
"… The total number of delinquent parcels for RY 2023–24 was 16,685 compared to 18,615 for RY 2022–23, a decrease of 10.4%. The top four CFDs with the largest number of delinquent parcels are the same as RY 2022–23. The CFD with the most reported delinquent parcels was South Lake Tahoe Recreation Facilities Joint Powers Authority CFD No. 2000-1 with 2,343."[2]
According to the Author
"The Housing Accountability Act, which is current law, lays out strict guidelines for local governments to follow when approving or denying development projects. However, some local jurisdictions are denying projects that meet the goals of the HAA on the grounds that they disapprove of the project's financing. It is not the intent of this bill to require local governments to take on bonded debt, but rather to ensure that all developers get equal treatment when constructing low and moderate-income housing, which is desperately needed."
Arguments in Support
None on file.
Arguments in Opposition
" According to Solano County, on a previous version of this bill, …AB 2397 goes too far. It creates loopholes that constrain local decision-making, making it difficult, if not impossible, for jurisdictions to reject or modify financing structures that may not be in the best interest of their communities. In doing so, it removes essential protections for homeowners, the County, and the public. At a time when California should be strengthening local-state partnerships to responsibly expand housing, this bill instead weakens accountability and local oversight.
FISCAL COMMENTS
None.
VOTES:
ASM LOCAL GOVERNMENT: 10-0-0
YES: Carrillo, Ta, Johnson, Pacheco, Ramos, Ransom, Blanca Rubio, Stefani, Ward, Wilson
ASM HOUSING AND COMMUNITY DEVELOPMENT: 12-0-0
YES: Haney, Patterson, Ávila Farías, Caloza, Garcia, Kalra, Lee, Quirk-Silva, Ta, Tangipa, Wicks, Wilson
ASSEMBLY FLOOR: 66-0-14
YES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bryan, Calderon, Caloza, Carrillo, Castillo, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Fong, Gabriel, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Jackson, Johnson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Patel, Patterson, Pellerin, Quirk-Silva, Ramos, Ransom, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Ward, Wilson, Zbur, Rivas
ABS, ABST OR NV: Arambula, Bonta, Chen, Flora, Gallagher, Hart, Hoover, Irwin, Papan, Petrie-Norris, Celeste Rodriguez, Valencia, Wallis, Wicks
SENATE FLOOR: 38-0-2
YES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Reyes, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener
ABS, ABST OR NV: Blakespear, Limón
UPDATED
VERSION: August 13, 2026
CONSULTANT: Jimmy MacDonald / L. GOV. / (916) 319-3958 FN: 0003816
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-4171 | AB 2397 |
THIRD READING
Bill No: AB 2397
Author: Ta (R)
Amended: 8/13/26 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE: 7-0, 6/10/26
AYES: Durazo, Choi, Arreguín, Ashby, Cervantes, Laird, Seyarto
SENATE HOUSING COMMITTEE: 9-0, 6/30/26
AYES: Arreguín, Seyarto, Cabaldon, Caballero, Cortese, Durazo, Grayson, Ochoa Bogh, Padilla
NO VOTE RECORDED: Gonzalez
ASSEMBLY FLOOR: 66-0, 5/7/26 (Consent) - See last page for vote
SUBJECT: Local government: community facilities districts: financing
SOURCE: Author
DIGEST:
This bill creates a subset of community facilities districts (CFDs) called critical housing infrastructure districts (CHIDs), and prohibits a local agency from taking specified actions with respect to a CHID.
Senate Floor Amendments on 8/13/26 make technical changes.
ANALYSIS:
Existing law:
- Establishes the Mello-Roos Act, which allows local agencies to establish CFDs as an alternative method of financing certain public capital facilities and services, especially in developing areas and areas undergoing rehabilitation.
- Specifies how a local agency is allowed to create a CFD, including the formation, voter approval, authority to levy taxes, and the types of public facilities and infrastructure.
- Allows counties, cities, special districts, and school districts to finance public works projects and a limited list of public services by levying special taxes (parcel taxes)
- Allows a CFD to issue bonds against these special taxes to finance the public works projects. Like all special taxes, Mello-Roos Act special taxes require 2/3 -voter approval. If there are fewer than 12 registered voters, the affected landowners vote.
This bill:
- Creates a subset of CFDs called critical housing infrastructure districts (CHIDs), and prohibits a local agency from taking any of the following actions with respect to a CHID:
- Abandon the proposed establishment of the district;
- Refuse to adopt an ordinance levying special taxes; or
- Refuse to adopt a resolution necessary to incur bond debt.
- Provides that a local agency can move forward with one of these actions if it makes at least one of the following findings supported by substantial evidence that:
- Establishment of the CFD, levying the special taxes, or incurring bond debt would have a specific adverse impact upon the public interest;
- If the local agency has identified the site in its housing element as a site to accommodate low- or very low-income households, the establishment of the CFD, levying the special taxes, or incurring bond debt is not necessary to develop the site at specified densities; or
- Establishment of the CFD, levying the special taxes, or incurring bond debt would make units for lower- and moderate-income households unaffordable to those households.
- Defines a CHID to mean a CFD that:
- Has been established solely to finance specified utility, flood, and storm protection services that serve a housing development project that includes units affordable to lower- or moderate-income households;
- Has had unanimous landowner approval for the CFD’s establishment; and
- Has had unanimous landowner approval for taxes the CFD would levy.
- Provides that it does not require or prohibit the local agency from taking any other actions with respect to CHIDs.
Background
Local government finance after Proposition 13. A series of propositions have drastically cut into local revenue sources, requiring local governments to look elsewhere to fund services that the public demands. First, Proposition 13 (1978) capped property tax rates at 1% of assessed value (which only changes upon new construction or when ownership changes) and required 2/3 voter approval for special taxes; as a result local governments turned to general taxes to avoid the higher voter threshold. When Proposition 62 (1986) required majority voter approval of general taxes, local agencies imposed assessments that were more closely tied to the benefit that an individual property owner receives. Subsequently, Proposition 218 (1996) required voter approval of parcel taxes, assessments, and property-related fees.
Since they cannot impose broad-based taxes without great difficulty, cities and counties follow a simple principle: new developments should pay for the impacts they have on the community and the burden they impose on public services.
Mello-Roos Districts. The Mello-Roos Community Facilities Act allows counties, cities, special districts, and school districts to finance public works projects and a limited list of public services by levying special taxes (parcel taxes). A Mello-Roos CFD issues bonds against these special taxes to finance the public works projects. Like all special taxes, Mello-Roos Act special taxes require 2/3 -voter approval. If there are fewer than 12 registered voters, the affected landowners vote.
The Mello-Roos Act is an important feature of the local fiscal landscape, providing local officials with a key tool for accumulating the public capital needed to pay for the public works projects that make new residential development possible. Since 1985, CFDs have issued over $18 billion in long-term bonds, mostly for capital improvements. Without access to Mello-Roos bond funding, many builders would have to pay higher development impact fees and raise housing prices. Based on nearly 30 years of experience, practitioners want the Legislature to adjust several statutory features of the Mello-Roos Community Facilities Act. Local agencies can use CFDs to finance a wide range of projects, including everything from parks, schools, libraries, utility projects, stormwater projects, among others.
Mello-Roos for housing developments. CFDs have become a common tool for developers to finance the infrastructure needed to serve a new development. When a developer is the sole landowner of a project, satisfying the 2/3 vote requirement of affected landowners is an easy threshold to meet. In effect, the developer is agreeing to tax itself until it sells off individual units, and the new landowners become the taxpayers. Repaying the debt the developer incurred to build the infrastructure for the development is on top of regular property tax payments. Concerns over whether new homeowners are aware of these payments have persisted throughout the life of the Mello-Roos Act.
Comments
Purpose of the bill. According to the author, “The Housing Accountability Act, which is current law, lays out strict guidelines for local governments to follow when approving or denying development projects. However, some local jurisdictions are denying projects that meet the goals of the HAA on the grounds that they disapprove of the project’s financing. It is not the intent of this bill to require local governments to take on bonded debt, but rather to ensure that all developers get equal treatment when constructing low and moderate-income housing, which is desperately needed.”
Home rule. The initial intent of the Mello-Roos Community Facilities Act was to allow local agencies to finance public works projects and a limited list of public services by levying special taxes (parcel taxes). It was always in the hands of local agencies to determine whether passing on the costs of infrastructure to current or future landowners made sense, or whether financing infrastructure costs through a parcel tax would put too much of a burden on future homeowners. AB 2397 limits the ability for a local agency to make this decision. Specifically, it limits when a local agency can deny formation of a CFD for specified infrastructure projects. Unless a local agency could make specified findings on the need to deny a CFD, AB 2397 forces local agencies to approve a tax on current and future landowners. However, without AB 2397, local agencies can use the CFD approval process to have another bite at the apple to deny a housing project. AB 2397 limits its provisions to CFDs that have been established solely to finance specified utility, flood, and storm protection services that serve a housing development project that includes units affordable to lower- or moderate-income households. That said, AB 2397 represents a rare instance in which the Legislature limits a local agency’s authority to tax.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 8/13/26)
None received
OPPOSITION: (Verified 8/13/26)
None received
ASSEMBLY FLOOR: 66-0, 5/7/26
AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bryan, Calderon, Caloza, Carrillo, Castillo, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Fong, Gabriel, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Jackson, Johnson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Patel, Patterson, Pellerin, Quirk-Silva, Ramos, Ransom, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Ward, Wilson, Zbur, Rivas
NO VOTE RECORDED: Arambula, Bonta, Chen, Flora, Gallagher, Hart, Hoover, Irwin, Papan, Petrie-Norris, Celeste Rodriguez, Valencia, Wallis, Wicks
Prepared by: Jonathan Peterson / L. GOV. / (916) 651-4119
8/17/26 10:03:11
**** END ****
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-4171 | AB 2397 |
THIRD READING
Bill No: AB 2397
Author: Ta (R)
Amended: 7/2/26 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE: 7-0, 6/10/26
AYES: Durazo, Choi, Arreguín, Ashby, Cervantes, Laird, Seyarto
SENATE HOUSING COMMITTEE: 9-0, 6/30/26
AYES: Arreguín, Seyarto, Cabaldon, Caballero, Cortese, Durazo, Grayson, Ochoa Bogh, Padilla
NO VOTE RECORDED: Gonzalez
ASSEMBLY FLOOR: 66-0, 5/7/26 (Consent) - See last page for vote
SUBJECT: Local government: community facilities districts: financing
SOURCE: Author
DIGEST:
This bill creates a subset of community facilities districts (CFDs) called critical housing infrastructure districts (CHIDs), and prohibits a local agency from taking specified actions with respect to a CHID.
ANALYSIS:
Existing law:
- Establishes the Mello-Roos Act, which allows local agencies to establish CFDs as an alternative method of financing certain public capital facilities and services, especially in developing areas and areas undergoing rehabilitation.
- Specifies how a local agency is allowed to create a CFD, including the formation, voter approval, authority to levy taxes, and the types of public facilities and infrastructure.
- Allows counties, cities, special districts, and school districts to finance public works projects and a limited list of public services by levying special taxes (parcel taxes)
- Allows a CFD to issue bonds against these special taxes to finance the public works projects. Like all special taxes, Mello-Roos Act special taxes require 2/3 -voter approval. If there are fewer than 12 registered voters, the affected landowners vote.
This bill:
- Creates a subset of CFDs called critical housing infrastructure districts (CHIDs), and prohibits a local agency from taking any of the following actions with respect to a CHID:
- Abandon the proposed establishment of the district;
- Refuse to adopt an ordinance levying special taxes; or
- Refuse to adopt a resolution necessary to incur bond debt.
- Provides that a local agency can move forward with one of these actions if it makes at least one of the following findings supported by substantial evidence that:
- Establishment of the CFD, levying the special taxes, or incurring bond debt would have a specific adverse impact upon the public interest;
- If the local agency has identified the site in its housing element as a site to accommodate low- or very low-income households, the establishment of the CFD, levying the special taxes, or incurring bond debt is not necessary to develop the site at specified densities; or
- Establishment of the CFD, levying the special taxes, or incurring bond debt would make units for lower- and moderate-income households unaffordable to those households.
- Defines a CHID to mean a CFD that:
- Has been established solely to finance specified utility, flood, and storm protection services that serve a housing development project that includes units affordable to lower- or moderate-income households;
- Has had unanimous landowner approval for the CFD’s establishment; and
- Has had unanimous landowner approval for taxes the CFD would levy.
- Provides that it does not require or prohibit the local agency from taking any other actions with respect to CHIDs.
Background
Local government finance after Proposition 13. A series of propositions have drastically cut into local revenue sources, requiring local governments to look elsewhere to fund services that the public demands. First, Proposition 13 (1978) capped property tax rates at 1% of assessed value (which only changes upon new construction or when ownership changes) and required 2/3 voter approval for special taxes; as a result local governments turned to general taxes to avoid the higher voter threshold. When Proposition 62 (1986) required majority voter approval of general taxes, local agencies imposed assessments that were more closely tied to the benefit that an individual property owner receives. Subsequently, Proposition 218 (1996) required voter approval of parcel taxes, assessments, and property-related fees.
Since they cannot impose broad-based taxes without great difficulty, cities and counties follow a simple principle: new developments should pay for the impacts they have on the community and the burden they impose on public services.
Mello-Roos Districts. The Mello-Roos Community Facilities Act allows counties, cities, special districts, and school districts to finance public works projects and a limited list of public services by levying special taxes (parcel taxes). A Mello-Roos Community Facilities District (CFD) issues bonds against these special taxes to finance the public works projects. Like all special taxes, Mello-Roos Act special taxes require 2/3 -voter approval. If there are fewer than 12 registered voters, the affected landowners vote.
The Mello-Roos Act is an important feature of the local fiscal landscape, providing local officials with a key tool for accumulating the public capital needed to pay for the public works projects that make new residential development possible. Since 1985, CFDs have issued over $18 billion in long-term bonds, mostly for capital improvements. Without access to Mello-Roos bond funding, many builders would have to pay higher development impact fees and raise housing prices. Based on nearly 30 years of experience, practitioners want the Legislature to adjust several statutory features of the Mello-Roos Community Facilities Act. Local agencies can use CFDs to finance a wide range of projects, including everything from parks, schools, libraries, utility projects, stormwater projects, among others.
Mello-Roos for housing developments. CFDs have become a common tool for developers to finance the infrastructure needed to serve a new development. When a developer is the sole landowner of a project, satisfying the 2/3 vote requirement of affected landowners is an easy threshold to meet. In effect, the developer is agreeing to tax itself until it sells off individual units, and the new landowners become the taxpayers. Repaying the debt the developer incurred to build the infrastructure for the development is on top of regular property tax payments. Concerns over whether new homeowners are aware of these payments have persisted throughout the life of the Mello-Roos Act.
Comments
Purpose of the bill. According to the author, “The Housing Accountability Act, which is current law, lays out strict guidelines for local governments to follow when approving or denying development projects. However, some local jurisdictions are denying projects that meet the goals of the HAA on the grounds that they disapprove of the project’s financing. It is not the intent of this bill to require local governments to take on bonded debt, but rather to ensure that all developers get equal treatment when constructing low and moderate-income housing, which is desperately needed.”
Home rule. The initial intent of the Mello-Roos Community Facilities Act was to allow local agencies to finance public works projects and a limited list of public services by levying special taxes (parcel taxes). It was always in the hands of local agencies to determine whether passing on the costs of infrastructure to current or future landowners made sense, or whether financing infrastructure costs through a parcel tax would put too much of a burden on future homeowners. AB 2397 limits the ability for a local agency to make this decision. Specifically, it limits when a local agency can deny formation of a CFD for specified infrastructure projects. Unless a local agency could make specified findings on the need to deny a CFD, AB 2397 forces local agencies to approve a tax on current and future landowners. However, without AB 2397, local agencies can use the CFD approval process to have another bite at the apple to deny a housing project. AB 2397 limits its provisions to CFDs that have been established solely to finance specified utility, flood, and storm protection services that serve a housing development project that includes units affordable to lower- or moderate-income households. That said, AB 2397 represents a rare instance in which the Legislature limits a local agency’s authority to tax.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 7/2/26)
None received
OPPOSITION: (Verified 7/2/26)
None received
ASSEMBLY FLOOR: 66-0, 5/7/26
AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bryan, Calderon, Caloza, Carrillo, Castillo, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Fong, Gabriel, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Jackson, Johnson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Patel, Patterson, Pellerin, Quirk-Silva, Ramos, Ransom, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Ward, Wilson, Zbur, Rivas
NO VOTE RECORDED: Arambula, Bonta, Chen, Flora, Gallagher, Hart, Hoover, Irwin, Papan, Petrie-Norris, Celeste Rodriguez, Valencia, Wallis, Wicks
Prepared by: Jonathan Peterson / L. GOV. / (916) 651-4119
8/3/26 15:18:48
**** END ****
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-4171 | AB 2397 |
CONSENT
Bill No: AB 2397
Author: Ta (R)
Amended: 7/2/26 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE: 7-0, 6/10/26
AYES: Durazo, Choi, Arreguín, Ashby, Cervantes, Laird, Seyarto
SENATE HOUSING COMMITTEE: 9-0, 6/30/26
AYES: Arreguín, Seyarto, Cabaldon, Caballero, Cortese, Durazo, Grayson, Ochoa Bogh, Padilla
NO VOTE RECORDED: Gonzalez
ASSEMBLY FLOOR: 66-0, 5/7/26 (Consent) - See last page for vote
SUBJECT: Local government: community facilities districts: financing
SOURCE: Author
DIGEST:
This bill creates a subset of community facilities districts (CFDs) called critical housing infrastructure districts (CHIDs), and prohibits a local agency from taking specified actions with respect to a CHID.
ANALYSIS:
Existing law:
- Establishes the Mello-Roos Act, which allows local agencies to establish CFDs as an alternative method of financing certain public capital facilities and services, especially in developing areas and areas undergoing rehabilitation.
- Specifies how a local agency is allowed to create a CFD, including the formation, voter approval, authority to levy taxes, and the types of public facilities and infrastructure.
- Allows counties, cities, special districts, and school districts to finance public works projects and a limited list of public services by levying special taxes (parcel taxes)
- Allows a CFD to issue bonds against these special taxes to finance the public works projects. Like all special taxes, Mello-Roos Act special taxes require 2/3 -voter approval. If there are fewer than 12 registered voters, the affected landowners vote.
This bill:
- Creates a subset of CFDs called critical housing infrastructure districts (CHIDs), and prohibits a local agency from taking any of the following actions with respect to a CHID:
- Abandon the proposed establishment of the district;
- Refuse to adopt an ordinance levying special taxes; or
- Refuse to adopt a resolution necessary to incur bond debt.
- Provides that a local agency can move forward with one of these actions if it makes at least one of the following findings supported by substantial evidence that:
- Establishment of the CFD, levying the special taxes, or incurring bond debt would have a specific adverse impact upon the public interest;
- If the local agency has identified the site in its housing element as a site to accommodate low- or very low-income households, the establishment of the CFD, levying the special taxes, or incurring bond debt is not necessary to develop the site at specified densities; or
- Establishment of the CFD, levying the special taxes, or incurring bond debt would make units for lower- and moderate-income households unaffordable to those households.
- Defines a CHID to mean a CFD that:
- Has been established solely to finance specified utility, flood, and storm protection services that serve a housing development project that includes units affordable to lower- or moderate-income households;
- Has had unanimous landowner approval for the CFD’s establishment; and
- Has had unanimous landowner approval for taxes the CFD would levy.
- Provides that it does not require or prohibit the local agency from taking any other actions with respect to CHIDs.
Background
Local government finance after Proposition 13. A series of propositions have drastically cut into local revenue sources, requiring local governments to look elsewhere to fund services that the public demands. First, Proposition 13 (1978) capped property tax rates at 1% of assessed value (which only changes upon new construction or when ownership changes) and required 2/3 voter approval for special taxes; as a result local governments turned to general taxes to avoid the higher voter threshold. When Proposition 62 (1986) required majority voter approval of general taxes, local agencies imposed assessments that were more closely tied to the benefit that an individual property owner receives. Subsequently, Proposition 218 (1996) required voter approval of parcel taxes, assessments, and property-related fees.
Since they cannot impose broad-based taxes without great difficulty, cities and counties follow a simple principle: new developments should pay for the impacts they have on the community and the burden they impose on public services.
Mello-Roos Districts. The Mello-Roos Community Facilities Act allows counties, cities, special districts, and school districts to finance public works projects and a limited list of public services by levying special taxes (parcel taxes). A Mello-Roos Community Facilities District (CFD) issues bonds against these special taxes to finance the public works projects. Like all special taxes, Mello-Roos Act special taxes require 2/3 -voter approval. If there are fewer than 12 registered voters, the affected landowners vote.
The Mello-Roos Act is an important feature of the local fiscal landscape, providing local officials with a key tool for accumulating the public capital needed to pay for the public works projects that make new residential development possible. Since 1985, CFDs have issued over $18 billion in long-term bonds, mostly for capital improvements. Without access to Mello-Roos bond funding, many builders would have to pay higher development impact fees and raise housing prices. Based on nearly 30 years of experience, practitioners want the Legislature to adjust several statutory features of the Mello-Roos Community Facilities Act. Local agencies can use CFDs to finance a wide range of projects, including everything from parks, schools, libraries, utility projects, stormwater projects, among others.
Mello-Roos for housing developments. CFDs have become a common tool for developers to finance the infrastructure needed to serve a new development. When a developer is the sole landowner of a project, satisfying the 2/3 vote requirement of affected landowners is an easy threshold to meet. In effect, the developer is agreeing to tax itself until it sells off individual units, and the new landowners become the taxpayers. Repaying the debt the developer incurred to build the infrastructure for the development is on top of regular property tax payments. Concerns over whether new homeowners are aware of these payments have persisted throughout the life of the Mello-Roos Act.
Comments
Purpose of the bill. According to the author, “The Housing Accountability Act, which is current law, lays out strict guidelines for local governments to follow when approving or denying development projects. However, some local jurisdictions are denying projects that meet the goals of the HAA on the grounds that they disapprove of the project’s financing. It is not the intent of this bill to require local governments to take on bonded debt, but rather to ensure that all developers get equal treatment when constructing low and moderate-income housing, which is desperately needed.”
Home rule. The initial intent of the Mello-Roos Community Facilities Act was to allow local agencies to finance public works projects and a limited list of public services by levying special taxes (parcel taxes). It was always in the hands of local agencies to determine whether passing on the costs of infrastructure to current or future landowners made sense, or whether financing infrastructure costs through a parcel tax would put too much of a burden on future homeowners. AB 2397 limits the ability for a local agency to make this decision. Specifically, it limits when a local agency can deny formation of a CFD for specified infrastructure projects. Unless a local agency could make specified findings on the need to deny a CFD, AB 2397 forces local agencies to approve a tax on current and future landowners. However, without AB 2397, local agencies can use the CFD approval process to have another bite at the apple to deny a housing project. AB 2397 limits its provisions to CFDs that have been established solely to finance specified utility, flood, and storm protection services that serve a housing development project that includes units affordable to lower- or moderate-income households. That said, AB 2397 represents a rare instance in which the Legislature limits a local agency’s authority to tax.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 7/2/26)
None received
OPPOSITION: (Verified 7/2/26)
None received
ASSEMBLY FLOOR: 66-0, 5/7/26
AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bryan, Calderon, Caloza, Carrillo, Castillo, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Fong, Gabriel, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Jackson, Johnson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Patel, Patterson, Pellerin, Quirk-Silva, Ramos, Ransom, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Ward, Wilson, Zbur, Rivas
NO VOTE RECORDED: Arambula, Bonta, Chen, Flora, Gallagher, Hart, Hoover, Irwin, Papan, Petrie-Norris, Celeste Rodriguez, Valencia, Wallis, Wicks
Prepared by: Jonathan Peterson / L. GOV. / (916) 651-4119
7/30/26 14:49:26
**** END ****
SENATE COMMITTEE ON HOUSING
Senator Jesse Arreguín, Chair
2025 - 2026 Regular
Bill No: AB 2397 Hearing Date: 6/30/2026
Author: | Ta | ||
Version: | 6/3/2026 Amended | ||
Urgency: | No | Fiscal: | No |
Consultant: | Alison Hughes | ||
SUBJECT: Local government: community facilities districts: financing
DIGEST: This bill creates a subset of community facilities districts (CFD) called critical housing infrastructure districts (CHIDs), as specified.
ANALYSIS:
Existing law:
- Establishes the Mello-Roos Act, which allows local agencies to establish CFDs as an alternative method of financing certain public capital facilities and services, especially in developing areas and areas undergoing rehabilitation.
- Specifies how a local agency is allowed to create a CFD, including the formation, voter approval, authority to levy taxes, and the types of public facilities and infrastructure.
- Specifies a CFD may fund public utility infrastructure and flood and storm protection services, as specified.
This bill:
- Creates a subset of CFDs called critical housing infrastructure districts (CHIDs), and prohibits a local agency from taking any of the following actions with respect to a CHID:
- Abandoning the proposed establishment of the district;
- Refusing to adopt an ordinance levying special taxes; or,
- Refusing to adopt a resolution necessary to incur bond debt.
- Provides that a local agency can move forward with one of the actions described in (1) if a local agency makes the following findings supported by substantial evidence that:
- Establishment of the CFD, levying the special taxes, or incurring bond debt would have a specific adverse impact upon the public interest;
- If the local agency has identified the site in its housing element as a site to accommodate low- or very low-income households, the establishment of the CFD, levying the special taxes, or incurring bond debt is not necessary to develop the site at specified densities; or,
- Establishment of the CFD, levying the special taxes, or incurring bond debt would make units for lower- and moderate-income households unaffordable to those households.
- Requires a CFD to do the following to meet the definition of a CHID:
- Have been established solely to finance specified utility, flood, and storm protection services that serve a housing development project that includes units affordable to lower- or moderate-income households;
- Have had unanimous landowner approval for the CFD’s establishment; and,
- Have had unanimous landowner approval for taxes the CFD would levy.
- Provides that this bill does not require or prohibit the local agency from taking any other actions with respect to CHIDs.
Background
Local government finance. A series of propositions have drastically cut into local revenue sources, requiring local governments to look elsewhere to fund services that the public demands. First, Proposition 13 (1978) capped property tax rates at 1% of assessed value (which only changes upon new construction or when ownership changes) and required 2/3 voter approval for special taxes; as a result, local governments turned to general taxes to avoid the higher voter threshold. When Proposition 62 (1986) required majority voter approval of general taxes, local agencies imposed assessments that were more closely tied to the benefit that an individual property owner receives. Subsequently, Proposition 218 (1996) required voter approval of parcel taxes, assessments, and property-related fees.
Since they cannot impose broad-based taxes without great difficulty, cities and counties follow a simple principle: new developments should pay for the impacts they have on the community and the burden they impose on public services.
Mello-Roos Districts. The Mello-Roos Community Facilities Act allows counties, cities, special districts, and school districts to finance public works projects and a limited list of public services by levying special taxes (parcel taxes). A Mello-Roos Community Facilities District (CFD) issues bonds against these special taxes to finance the public works projects. Like all special taxes, Mello-Roos Act special taxes require two-thirds voter approval. If there are fewer than 12 registered voters, the affected landowners vote.
The Mello-Roos Act is an important feature of the local fiscal landscape, providing local officials with a key tool for accumulating the public capital needed to pay for the public works projects that make new residential development possible. Since 1985, CFDs have issued over $18 billion in long-term bonds, mostly for capital improvements. Without access to Mello-Roos bond funding, many builders would have to pay higher development impact fees and raise housing prices. Based on nearly 30 years of experience, practitioners want the Legislature to adjust several statutory features of the Mello-Roos Community Facilities Act. Local agencies can use CFDs to finance a wide range of projects, including everything from parks, schools, libraries, utility projects, stormwater projects, among others.
Comments
- Author’s statement. “AB 2397 closes a loophole by ensuring that a local jurisdiction must justify a decision to deny a community facilities housing district. At a time when California faces a severe housing shortage, we need to remove every unnecessary obstacle to production. This bill is a targeted, practical step to ensure that financing doesn’t become the hidden veto on desperately needed housing.”
- Home rule. The initial intent of the Mello-Roos Community Facilities Act was to allow local agencies to finance public works projects and a limited list of public services by levying special taxes (parcel taxes). It was always in the hands of local agencies to determine whether passing on the costs of infrastructure to current or future landowners made sense, or whether financing infrastructure costs through a parcel tax would put too much of a burden on future homeowners.
Since financing infrastructure for new development through a CFD has become a common practice, the author wants to ensure that local agencies do not use the CFD formation process to deny a housing development project that the local agency has already approved. This bill would prohibit a local agency from abandoning or refusing to create a Mello-Roos district for a critical housing infrastructure district, which is created to finance a narrow set of infrastructure costs – public utilities and flood and storm water for low- or moderate-income housing. To qualify, 100% of the property owners must petition for the financing. If a local agency does reverse course on financing this type of project, it would be required to make a finding that establishing the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest and the infrastructure is not needed to support the development of the site as the density required by Housing Element Law. The intent of this bill is to ensure that if a developer is relying upon financing form a Mello-Roos district for infrastructure and has followed the correct process for petitioning to create one, the local agency cannot abandon the creation of the district except in narrow cases.
- Department of corrections. The author, due to timing, is requesting to process technical amendments as committee amendments to correct drafting errors. The amendments do the following:
(b) The legislative body shall not take any of the following actions with respect to a critical housing infrastructure district unless it makes any of the findings set forth in subdivision (c):
(1) Abandon the proposed establishment of the district pursuant to Section 53325.
(2) Refuse to adopt an ordinance levying special taxes pursuant to Section 53340.
(3) Refuse to adopt a resolution necessary to incur bonded indebtedness pursuant to Sections 53345, 53351, or 53356.
(c) Prior to taking any action described in subdivision (b), the legislative body shall make at least one of the following findings based upon substantial evidence:
(1) Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest.
(2) Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would result in housing costs for the units dedicated to lower income households and moderate income households that no longer meet the definition of affordable housing costs pursuant to Section 50052.5 of the Health and Safety Code for lower income households or moderate income households.
(3) If the site has been identified in the housing element pursuant to Sections 65583 and 65583.2 as a site to accommodate any portion of the jurisdiction’s regional housing need for low-income or very low income households, establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, is not necessary for development of the site at the densities specified in subparagraph (B) of paragraph (3) of subdivision (c) of Section 65583.2.
- Incoming! This bill was heard in the Local Government Committee on June 10th and passed on a vote of 7-0.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
POSITIONS: (Communicated to the committee before noon on Wednesday,
June 24th, 2026.)
SUPPORT:
None received.
OPPOSITION:
None received.
-- END --
SENATE COMMITTEE ON LOCAL GOVERNMENT
Senator María Elena Durazo, Chair
2025 - 2026 Regular
Bill No: | AB 2397 | Hearing Date: | 6/10/26 |
Author: | Ta | Fiscal: | No |
Version: | 6/3/26 | Consultant: | Peterson |
Local government: community facilities districts: financing
Creates a subset of community facilities districts called critical housing infrastructure districts (CHIDs), and prohibits a local agency from taking any of the following actions with respect to a CHID.
Background
Local government finance after Proposition 13. A series of propositions have drastically cut into local revenue sources, requiring local governments to look elsewhere to fund services that the public demands. First, Proposition 13 (1978) capped property tax rates at 1% of assessed value (which only changes upon new construction or when ownership changes) and required 2/3 voter approval for special taxes; as a result local governments turned to general taxes to avoid the higher voter threshold. When Proposition 62 (1986) required majority voter approval of general taxes, local agencies imposed assessments that were more closely tied to the benefit that an individual property owner receives. Subsequently, Proposition 218 (1996) required voter approval of parcel taxes, assessments, and property-related fees.
Since they cannot impose broad-based taxes without great difficulty, cities and counties follow a simple principle: new developments should pay for the impacts they have on the community and the burden they impose on public services.
Mello-Roos Districts. The Mello-Roos Community Facilities Act allows counties, cities, special districts, and school districts to finance public works projects and a limited list of public services by levying special taxes (parcel taxes). A Mello-Roos Community Facilities District (CFD) issues bonds against these special taxes to finance the public works projects. Like all special taxes, Mello-Roos Act special taxes re-quire 2/3 -voter approval. If there are fewer than 12 registered voters, the affected landowners vote.
The Mello-Roos Act is an important feature of the local fiscal landscape, providing local officials with a key tool for accumulating the public capital needed to pay for the public works projects that make new residential development possible. Since 1985, CFDs have issued over $18 billion in long-term bonds, mostly for capital improvements. Without access to Mello-Roos bond funding, many builders would have to pay higher development impact fees and raise housing prices. Based on nearly 30 years of experience, practitioners want the Legislature to adjust several statutory features of the Mello-Roos Community Facilities Act. Local agencies can use CFDs to finance a wide range of projects, including everything from parks, schools, libraries, utility projects, stormwater projects, among others.
Mello-Roos for housing developments. CFDs have become a common tool for developers to finance the infrastructure needed to serve a new development. When a developer is the sole landowner of a project, satisfying the 2/3 vote requirement of affected landowners is an easy threshold to meet. In effect, the developer is agreeing to tax itself until it sells off individual units, and the new landowners become the taxpayers. Repaying the debt the developer incurred to build the infrastructure for the development is on top of regular property tax payments. Concerns over whether new homeowners are aware of these payments have persisted throughout the life of the Mello-Roos Act.
Since financing infrastructure for new development through a CFD has become a common practice, the author wants to ensure that local agencies do not use the CFD formation process to deny a housing development project that the local agency has already approved.
Proposed Law
Assembly Bill 2397 creates a subset of CFDs called critical housing infrastructure districts (CHIDs), and prohibits a local agency from taking any of the following actions with respect to a CHID:
- Abandon the proposed establishment of the district;
- Refuse to adopt an ordinance levying special taxes; or
- Refuse to adopt a resolution necessary to incur bond debt.
AB 2397 provides that a local agency can move forward with one of these actions if it makes the following findings supported by substantial evidence that:
- Establishment of the CFD, levying the special taxes, or incurring bond debt would have a specific adverse impact upon the public interest; or
- If the local agency has identified the site in its housing element as a site to accommodate low- or very low-income households, the establishment of the CFD, levying the special taxes, or incurring bond debt is not necessary to develop the site at specified densities; or
- Establishment of the CFD, levying the special taxes, or incurring bond debt would make units for lower- and moderate-income households unaffordable to those households.
To meet the definition of a CHID, a CFD must:
- Have been established solely to finance specified utility, flood, and storm protection services that serve a housing development project that includes units affordable to lower- or moderate-income households;
- Have had unanimous landowner approval for the CFD’s establishment; and
- Have had unanimous landowner approval for taxes the CFD would levy.
AB 2397 also provides that it does not require or prohibit the local agency from taking any other actions with respect to CHIDs.
Comments
1. Purpose of the bill. According to the author, “The Housing Accountability Act, which is current law, lays out strict guidelines for local governments to follow when approving or denying development projects. However, some local jurisdictions are denying projects that meet the goals of the HAA on the grounds that they disapprove of the project’s financing. It is not the intent of this bill to require local governments to take on bonded debt, but rather to ensure that all developers get equal treatment when constructing low and moderate-income housing, which is desperately needed.”
2. Home rule. The initial intent of the Mello-Roos Community Facilities Act was to allow local agencies to finance public works projects and a limited list of public services by levying special taxes (parcel taxes). It was always in the hands of local agencies to determine whether passing on the costs of infrastructure to current or future landowners made sense, or whether financing infrastructure costs through a parcel tax would put too much of a burden on future homeowners. AB 2397 limits the ability for a local agency to make this decision. Specifically, it limits when a local agency can deny formation of a CFD for specified infrastructure projects. Unless a local agency could make specified findings on the need to deny a CFD, AB 2397 forces local agencies to approve a tax on current and future landowners. However, without AB 2397, local agencies can use the CFD approval process to have another bite at the apple to deny a housing project. AB 2397 limits its provisions to CFDs that have been established solely to finance specified utility, flood, and storm protection services that serve a housing development project that includes units affordable to lower- or moderate-income households. That said, AB 2397 represents a rare instance in which the Legislature limits a local agency’s authority to tax.
3. Charter city. The California Constitution allows cities that adopt charters to control their own “municipal affairs.” In all other matters, charter cities must follow the general, statewide laws. Because the Constitution doesn’t define “municipal affairs,” the courts determine whether a topic is a municipal affair or whether it’s an issue of statewide concern. AB 2397 says that it applies to all cities, including charter cities. To support this assertion, the bill includes a legislative finding and declaration that increasing housing production is a matter of statewide concern and is not a municipal affair, and one of the impediments to housing production is the inability to secure infrastructure financing.
4. Coming and going. The Senate Rules Committee has ordered a double referral of AB 2397: first to the Committee on Local Government to hear issues related to local government finance, and second to the Committee on Housing.
Assembly Actions
Assembly Local Government Committee: 10-0
Assembly Housing and Community Development Committee: 12-0
Assembly Floor: 66-0
Support and Opposition
(6/5/2026)
Support: None Submitted
Opposition: None Submitted
-- END --
Date of Hearing: April 29, 2026
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Matt Haney, Chair
ABPCA Bill Id:AB 2397 (
Author:Ta) – As Amended Ver:April 6, 2026
SUBJECT: Local government: community facilities districts: financing
SUMMARY: Prohibits a local agency from abandoning or refusing to create a community facilities district (CFD or Mello-Roos district) to finance specified infrastructure for a housing development for low or moderate income households, unless it makes findings based upon substantial evidence, as specified.
- Defines “critical housing infrastructure district” to mean a community facilities district that meets all of the following criteria:
- The district has been established, or is proposed to be established, solely to finance public utilities and flood water protection services [as defined in Government Code Section (GOV) 53313.5 (e) and (f)], that serve a housing development project that includes units affordable to persons and families of lower income households or moderate income households.
- Proceedings for establishment of the district were instituted by petition describing the boundaries of the territory that is proposed for inclusion in the area and specifying the type or types of facilities and services to be financed by the district, is filed with the clerk of the legislative body signed by owners of 100% of the area of land proposed to be included within the district.
- Any special taxes proposed to be levied by the district are eligible to be approved by the landowners of the proposed district in accordance with vote threshold in the Mello-Roos Act [Gov 53326 (b)].
- Prohibits a legislative body from taking any of the following actions with respect to a critical housing infrastructure district unless it makes specified findings:
- Abandoning the proposed establishment of the district, as specified;
- Refusing to adopt an ordinance levying special taxes, as specified; and
- Refusing to adopt a resolution necessary to incur bonded indebtedness, as specified.
- Requires a legislative body to make the following findings, based upon substantial evidence, before taking the actions described in 2) above:
- Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest; and
- If the site has been identified in the housing element as a site to accommodate any portion of the jurisdiction’s regional housing need for low-income or very low income; and households, establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, is not necessary for development of the site at the densities specified in Housing Element Law.
- Provides that this bill does not require or prohibit the legislative body from taking any other action authorized by the Mello-Roos Act with respect to a critical housing infrastructure district, including, without limitation, modifying the resolution of intention to create a Mello-Roos district.
EXISTING LAW:
- Establishes the Mello-Roos Act, which allows local agencies to establish CFD as an alternative method of financing certain public capital facilities and services, especially in developing areas and areas undergoing rehabilitation. (GOV 53313.5)
- Specifies how a local agency is allowed to create a CFD, including the formation, voter approval, authority to levy taxes, and the types of public facilities and infrastructure. (GOV 53313.5)
- Specifies a CFD may fund public utility infrastructure and flood and storm protection services, as specified (GOV 53313.5 (e) and (f).
FISCAL EFFECT: Nonfiscal. This bill was keyed nonfiscal by legislative counsel.
COMMENTS:
Author’s Statement: According to the author, “The Housing Accountability Act, which is current law, lays out strict guidelines for local governments to follow when approving or denying development projects. However, some local jurisdictions are denying projects that meet the goals of the HAA on the grounds that they disapprove of the project’s financing. It is not the intent of this bill to require local governments to take on bonded debt, but rather to ensure that all developers get equal treatment when constructing low and moderate-income housing, which is desperately needed.”
Mello-Roos: The Mello-Roos Community Facilities Act allows counties, cities, special districts, and school districts to levy special taxes (parcel taxes), with 2/3rds voter approval, to finance a wide variety of public works, including parks, recreation centers, schools, libraries, child care facilities, and utility infrastructure. A Mello-Roos district issues bonds against these special taxes to finance the public works projects. In addition to financing public capital facilities, Mello-Roos special taxes can fund a limited list of public services: police services, fire protection, recreation programs, library services, museum operations, park maintenance, flood protection, hazardous waste cleanup, street and road maintenance, lighting of parks, parkways, streets, roads, and open space, plowing and removal of snow, and graffiti management and removal.
To initiate the formation of a Mello-Roos district, one of three things must happen: a written request for the establishment of a district signed by two members of the legislative body, a petition signed by not less than 10% of the registered voters, or a petition signed by not less than 10% of landowners owning the requisite portion of the area of a proposed district. The written request or petition filed are not required to be acted upon until payment of a specified fee is paid. Within 90 days of either receiving a written request by two members of the legislative body or a petition filed, and the payment of the required fee, a local agency's legislative body must adopt a resolution of intention to establish the district, which must do all of the following: describe the district's boundaries; describe the facilities and services proposed to be financed; state that a special tax, secured by a lien against real property, will be annually levied; specify, in detail, the rate, method of apportionment, and manner of collections of the special tax; and, fix a time and place for public hearing. After holding the hearing and considering protests, the legislative body, to establish the Mello-Roos district, must adopt a resolution of formation containing all of the information provided in the resolution of intention; and, if a special tax is to be levied, include additional information about the tax levy that must be approved by registered voters. The local agency may modify the resolution by eliminating proposed facilities or services, by changing the rate or method of apportionment of the proposed special tax in order to reduce the special tax, or by removing territory from the proposed district.
If 50% or more registered voters, or the owners of one-half or more of the area of land in the territory proposed to be included in the district, file written protests against the formation of the district, the district cannot be established. The legislative body must submit the levy of any special taxes to the voters of the district. If there are fewer than 12 registered voters in the territory of the Mello-Roos district, the affected landowners vote. In that case, landowners get one vote per acre included in the Mello-Roos district. The special tax imposed by a Mello-Roos district is a lien upon the real property. Should a property owner fail to pay the special tax, the local governmental entity may (and will typically be required to) foreclose upon the real property to collect the special tax.
Housing Element Inventory: All the state’s 540 cities and counties are required to appropriately plan for new housing through the housing element of each community’s General Plan, which outlines a long-term plan for meeting the community’s existing and projected housing needs. Cities and counties are required to update their housing elements every eight years in most of the high population parts of the state, and five years in areas with smaller populations. Localities must adopt a legally valid housing element by their statutory deadline for adoption. Failure to do so can result in certain escalating penalties, including an accelerated deadline for completing rezoning, exposure to the “builder’s remedy,” public or private lawsuits, financial penalties, potential loss of permitting authority, or even court receivership. Among other things, the housing element must demonstrate how the community plans to accommodate its share of its region’s RHNA, described above. To do so, each community establishes an inventory of sites designated for new housing that is sufficient to accommodate its fair share. Sites that are sufficient to accommodate the jurisdictions lower income housing needs must be zoned a specified density, called the Mullin Density, that is sufficient to ensure that there are enough units to make the development financially feasible.
This Bill: This bill would prohibit a local agency from abandoning or refusing to create a Mello-Roos district for critical housing infrastructure district which is created to finance a narrow set of infrastructure costs – public utilities and flood and storm water for low or moderate income housing. To qualify 100% of the property owners must petition for the financing. If a local agency does reverse course on financing this type of project, it would be required to make a finding that establishing the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest and the infrastructure is not needed to support the development of the site as the density required by Housing Element Law. The intent of this bill is to ensure that if a developer is relying upon financing form a Mello-Roos district for infrastructure and has followed the correct process for petitioning to create one, the local agency cannot abandon the creation of the district except in narrow cases.
Arguments in Support: None on file.
Arguments in Opposition: None on file.
Double-Referred: This bill is double-referred. It was heard in the Assembly Committee on Local Government and passed on a vote of 10-0 on April 22, 2026.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file.
Opposition
None on file.
Analysis Prepared by: Lisa Engel / H. & C.D. / (916) 319-2085
Date of Hearing: April 22, 2026
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Juan Carrillo, Chair
ABPCA Bill Id:AB 2397 (
Author:Ta) – As Amended Ver:April 6, 2026
SUBJECT: Local government: community facilities districts: financing.
SUMMARY: Prohibits a local agency from denying, or imposing conditions that would render infeasible, an application for financing through a Community Facilities District (CFD or Mello-Roos district) that is related to specified housing developments unless the local agency makes certain written findings, supported by a preponderance of evidence. Specifically, this bill:
- Specifies that a local agency shall not deny or conditionally deny, or impose conditions on in a manner that renders infeasible, an application for financing through a Mello-Roos district that is related to a housing development project that includes units affordable to persons and families of lower income households or moderate income households, unless the local agency makes written findings supported by a preponderance of the evidence in the record as to both of the following:
- The denial or any condition is based on specific, written findings setting forth the reasons for the decision.
- The local agency has established, based on substantial evidence in the record, that the formation of the Mello-Roos district would have a specific, adverse impact upon public health and safety, or would violate applicable state or federal law, and there is no feasible method to satisfactorily mitigate or avoid the adverse impact or comply with applicable state or federal law.
- Provides that this bill shall be construed with the standards set forth in the Housing Accountability Act (HAA), as applicable.
- Defines “lower income household” and “moderate income household” for its purposes.
- Finds and declares that this bill addresses a matter of statewide concern rather than a municipal affair. Therefore, this bill applies to all cities, including charter cities.
FISCAL EFFECT: None.
COMMENTS:
- Bill Summary. This bill prohibits a local agency from denying or conditionally denying, or imposing conditions in a manner that renders infeasible, an application for financing through a Mello-Roos District that is related to a housing development that includes affordable units unless the local agency makes certain written findings that are supported by a preponderance of evidence. Such findings include, that the denial be based on specific, written findings regarding the reason for the denial, and that the local agency finds that formation of the Mello-Roos district would have a specific adverse impact on public health and safety or would violate applicable state or federal law. Lastly, this bill would state that it must be construed consistently with the standards in the HAA, as applicable.
This bill is sponsored by the author.
- Author’s Statement. According to the author, “The Housing Accountability Act, which is current law, lays out strict guidelines for local governments to follow when approving or denying development projects. However, some local jurisdictions are denying projects that meet the goals of the HAA on the grounds that they disapprove of the project’s financing. It is not the intent of this bill to require local governments to take on bonded debt, but rather to ensure that all developers get equal treatment when constructing low and moderate-income housing, which is desperately needed.”
- Housing Accountability Act. In 1982, in response to the housing crisis, which was viewed as threatening the economic, environmental, and social quality of life in California, the Legislature enacted the HAA. The purpose of the HAA is to help ensure that a city does not reject or make infeasible housing development projects that contribute to meeting the housing need determined pursuant to Housing Element Law without a thorough analysis of the economic, social, and environmental effects of the action and without complying with the HAA. The HAA restricts a city’s ability to disapprove, or require density reductions in, certain types of residential development proposals, including mixed-use projects. The HAA does not preclude a locality from imposing developer fees necessary to provide public services or from requiring a housing development project to comply with objective standards, conditions, and policies appropriate to the locality's share of the regional housing needs assessment.
If a locality denies approval or imposes conditions that have a substantial adverse effect on the viability or affordability of a housing development for very low-, low, or moderate-income households, and the denial or imposition of conditions is subject to a court challenge, the burden is on the local government to show that its decision is consistent with specified written findings. The Department of Housing and Community Development (HCD) has enforcement authority over the HAA, and HAA violations may be referred to the Attorney General.
- Mello-Roos. The Mello-Roos Community Facilities Act allows counties, cities, special districts, and school districts to levy special taxes (parcel taxes), with 2/3rds voter approval, to finance a wide variety of public works, including parks, recreation centers, schools, libraries, child care facilities, and utility infrastructure. A Mello-Roos district issues bonds against these special taxes to finance the public works projects.
In addition to financing public capital facilities, Mello-Roos special taxes can fund a limited list of public services: police services, fire protection, recreation programs, library services, museum operations, park maintenance, flood protection, hazardous waste cleanup, street and road maintenance, lighting of parks, parkways, streets, roads, and open space, plowing and removal of snow, and graffiti management and removal.
To initiate the formation of a Mello-Roos district, one of three things must happen: A written request for the establishment of a district signed by two members of the legislative body, through a petition signed by not less than 10% of the registered voters, or a petition signed by not less than 10% of landowners owning the requisite portion of the area of a proposed district. The written request or petition filed are not required to be acted upon until payment of a specified fee is paid. Within 90 days of either receiving a written request by two members of the legislative body or a petition filed, and the payment of the required fee, a local agency's legislative body must adopt a resolution of intention to establish the district, which must do all of the following: describe the district's boundaries; describe the facilities and services proposed to be financed; state that a special tax, secured by a lien against real property, will be annually levied; specify, in detail, the rate, method of apportionment, and manner of collections of the special tax; and, fix a time and place for public hearing.
After holding the hearing and considering protests, the legislative body, to establish the Mello-Roos district, must adopt a resolution of formation containing all of the information provided in the resolution of intention; and, if a special tax is to be levied, include additional information about the tax levy that must be approved by registered voters. The local agency may modify the resolution by eliminating proposed facilities or services, by changing the rate or method of apportionment of the proposed special tax in order to reduce the special tax, or by removing territory from the proposed district.
If 50 percent or more registered voters, or the owners of one-half or more of the area of land in the territory proposed to be included in the district, file written protests against the formation of the district, the district cannot be established. The legislative body must submit the levy of any special taxes to the voters of the district. If there are fewer than 12 registered voters in the territory of the Mello-Roos district, the affected landowners vote. In that case, landowners get one vote per acre included in the Mello-Roos district. The special tax imposed by a Mello-Roos district is a lien upon the real property. Should a property owner fail to pay the special tax, the local governmental entity may (and will typically be required to) foreclose upon the real property to collect the special tax.
- Mello-Roos Controversies. The Mello-Roos Act has been an important feature of the local fiscal landscape, providing local officials with a key tool for accumulating the public capital needed to pay for the public works projects that make new residential development possible. However, Mello-Roos districts have not existed without controversy. As detailed in the May 24, 1992, “State Panel Seeking Tougher Rules for Mello-Roos Districts : Legislation: The commission is recommending changes aimed at giving home buyers more protection.” In the Los Angeles Time, “Mello-Roos districts, also called community facilities districts, usually are created when a large chunk of vacant land is owned by only one or two developers.
“The districts then sell bonds to finance public facilities that enable development of the land. Until homes and businesses are built and occupied, the landowners pay the Mello-Roos taxes used to pay off the bonds. But as new homeowners and businesses move in, they assume the cost of repaying the bond debt, which can amount to more than $1,000 a year on top of their regular property taxes.
“The Times articles detailed several weaknesses and failings of the system. Among them:
* Home buyers often are not aware of the amount of debt their local Mello-Roos district is authorized to accumulate or the projects that can be funded with bond proceeds.
* In some instances, local government officials have quietly imposed Mello-Roos taxes that favor developers at the expense of home buyers.
* Governments in Orange and Riverside counties have entered into deals with developers that were in trouble financially, imperiling the security of the bonds.
* Developers have been allowed to select the appraisers who value the land that is collateral for the bonds.
“For example, Lake Elsinore, a city of 19,200 residents in Riverside County, has authorized the issuance of $500 million in bonds, to the surprise and concern of both residents and state officials.
“Trouble is brewing in one of the city’s housing developments called Tuscany Hills. Fewer than 200 of the planned 2,000 homes have been built, leaving Tuscany Hills with a $14.1-million bond debt that can’t be retired because there are not yet enough residents.”[1]
Despite past controversies, there are a number of safeguards in Mello-Roos Law to ensure that both the local agency and the residents or landowners approve of the establishment of a Mello-Roos district, including, allowing the local agency to abandon the establishment of the Mello-Roos district, modify the resolution of intention by eliminating proposed facilities or services or by changing the rate or method of apportionment of the proposed special tax, and a protest process and subsequent tax election.
Current State of Mello-Roos. To monitor the use and financial health of Mello-Roos districts, state law requires issuers of Mello-Roos bonds sold on or after January 1, 1993, to file Yearly Fiscal Status Report (YSFR) with the California Debt and Investment Advisory Commission (CDIAC) until the bonds are retired. In CDIAC’s “Mello-Roos Yearly Fiscal Status Report Summary for Reporting Year 2023-24,” for reporting year (RY) 2023-23, a total of 1,200 Mello-Roos districts were required to submit reports for 1,864 debt issues, including 171 new issues that sold during the RY. The original principal issued for the Mello-Roos bonds reported to CDIAC for RY 2023-24 totaled $20.8 billion. At the end of the RY, the amount of principal outstanding was $16.3 billion, approximately 78.4% of the original principal amount.
According to CDIAC, “Detailed delinquent parcel and tax information is required to be submitted and summarizes ongoing unpaid amounts that may be cumulative over reporting years. The amount of delinquent taxes reported to CDIAC for RY 2023–24 totaled $134.9 million, a 49.5% increase over RY 2022–23 ($90.2 million). The CFD that had the largest volume of delinquencies was Northstar Community Services District CFD No. 1 with approximately $41.0 million.
“… The total number of delinquent parcels for RY 2023–24 was 16,685 compared to 18,615 for RY 2022–23, a decrease of 10.4%. The top four CFDs with the largest number of delinquent parcels are the same as RY 2022–23. The CFD with the most reported delinquent parcels was South Lake Tahoe Recreation Facilities Joint Powers Authority CFD No. 2000-1 with 2,343.”[2]
- Policy Consideration. Mello-Roos districts have been a valuable tool for local agencies and developers to finance much needed infrastructure. However, as currently crafted, Mello-Roos District Law places limitations on both the local agencies and the property owners seeking to establish them. Current law provides local agencies with an opportunity to modify the proposed district to either reduce the facilities and services the district will fund and the amount of taxes that would be placed on a property owner. Additionally, it allows for property owners and residents to, first, protest the establishment of a Mello-Roos district and, second, requires a vote on any Mello-Roos taxes.
While affordable housing is undoubtedly needed, these safeguards help ensure that only the facilities and services that are necessary for a community are financed by a Mello-Roos district. Also, ensuring that tax rates are not too high as to diminish affordability is an important consideration. As currently written, this bill would ultimately reduce the ability of a local agency to make these determinations by requiring them to make written findings supported by a preponderance of evidence that the denial is based on specific, written findings and that the formation of a Mello-Roos district would have an adverse impact on public health and safety or would violate state or federal law. It is unclear how a local agency would be able to meet these standards and what factors would allow them to deny the proposal for the establishment of a Mello-Roos district. Given these uncertainties, the Committee may wish to consider if additional guardrails need to be placed in this bill.
- Committee Amendments. In order to respond to the policy consideration above, the Committee may wish to consider the following amendments:
- Remove the contents of the bill.
- Add Government Code Section 53316.8: (a) For purposes of this section, all of the following definitions apply:
(1) “Critical housing infrastructure district” means a community facilities district that meets all of the following criteria:
(A) The district has been established, or is proposed to be established, solely to finance facilities described in subdivisions (e) and (f) of Section 53313.5 that serve a housing development project that includes units affordable to persons and families of lower income households or moderate income households.
(B) Proceedings for establishment of the district were instituted by petition under subdivision (c) of Section 53318 signed by owners of 100 percent of the area of land proposed to be included within the district.
(C) Any special taxes proposed to be levied by the district are eligible to be approved by the landowners of the proposed district in accordance with subdivision (b) of Section 53326.
(2) “Lower income household” has the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(3) “Moderate income household” has the same meaning as defined in Section 50052.5 of the Health and Safety Code.
(b) The legislative body shall not take any of the following actions with respect to a critical housing infrastructure district unless it makes the findings set forth in subdivision (c):
(1) Abandon the proposed establishment of the district pursuant to Section 53325.
(2) Refuse to adopt an ordinance levying special taxes pursuant to Section 53340.
(3) Refuse to adopt a resolution necessary to incur bonded indebtedness pursuant to Sections 53345, 53351, or 53356.
(c) Prior to taking any action described in subdivision (b), the legislative body shall make the following findings based upon substantial evidence:
(1) Establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, would have a specific adverse impact upon the public interest.
(2) If the site has been identified in the housing element pursuant to Sections 65583 and 65583.2 as a site to accommodate any portion of the jurisdiction’s regional housing need for low-income or very low income households, establishment of the district, levying the special taxes, or incurring bonded indebtedness, as applicable, is not necessary for development of the site at the densities specified in subparagraph (B) of paragraph (3) of subdivision (c) of Section 65583.2.
(d) This section shall not require or prohibit the legislative body from taking any other action authorized by this chapter with respect to a critical housing infrastructure district, including, without limitation, modifying the resolution of intention pursuant to Section 53325.
- Arguments in Support. None on file.
- Arguments in Opposition. None on file.
- Double-referral. This bill is double referred to the Committee on Housing and Community Development.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file
Opposition
None on file
Analysis Prepared by: Jimmy MacDonald / L. GOV. / (916) 319-3958
Discussed in Hearing
1MIN
Assembly Floor
1MIN
Senate Floor
11MIN
Senate Standing Committee on Local Government
4MIN
Assembly Standing Committee on Local Government
Bill Author
Bill Co-Author(s):