(1)Existing law, the Bergeson-Peace Infrastructure and Economic Development Bank Act, establishes the California Infrastructure and Economic Development Bank (I-Bank) in the Governors Office of Business and Economic Development. Existing law, among other things, authorizes the I-Bank to issue bonds, make loans, and provide financial assistance for various types of projects that qualify as economic development or public development facilities.

This bill would enact the Community Stabilization Act. The bill would require the I-Bank to develop and administer a program to issue a security, and to cease issuing a security on January 1, 2030. The bill would specify that the purpose of the program is to help stabilize property values in disaster-affected areas by allowing qualified investors, as defined, to purchase tradable securities, with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value. The bill would require profits from the land investments to be shared among investors and the I-Bank according to certain percentages, with qualifying investment entities being reimbursed for their administrative costs.

This bill would establish various requirements for the security, including that it be tradeable, comply with specified municipal bonding requirements, and that it be funded by investments made by qualified investors using funds available pursuant to the federal Community Reinvestment Act of 1977. The bill would require the security to repay the investment upon a liquidity event and within 7 years of the purchase of an investment property, and would describe a liquidity event as the refinance or sale of the investment property.

This bill would require funds raised from the purchase of the security to be deposited in the Community Stabilization Fund, which would be created by the bill, and would require all moneys in the fund to be continuously appropriated to the I-Bank. The bill would require the I-Bank to allocate moneys in the fund to qualifying investment entities to be invested in the Counties of Los Angeles and Ventura and in those areas that are covered by a state of disaster declared by the Governor. The bill would require a qualifying investment entity to meet prescribed requirements, including that it be a specified entity, including, among others, a nonprofit organization, as provided. The bill would also impose various requirements on the qualifying investment entity relating to the purchase, maintenance, and sale of the investment property, including, among other things, limiting the purchase of property to residential property that has been damaged or destroyed by the wildfires that began on January 7, 2025, in the Counties of Los Angeles and Ventura, as specified. The bill would require the I-Bank to submit a final report on the program to the Legislature, the Governor, and the Department of Finance no later than January 1, 2034, as specified.

By establishing a new continuously appropriated fund, the Community Stabilization Fund, this bill would make an appropriation.

(2)This bill would make legislative findings and declarations as to the necessity of a special statute for the Counties of Los Angeles and Ventura.

(3)This bill would declare that it is to take effect immediately as an urgency statute.

(1)Existing law, the Bergeson-Peace Infrastructure and Economic Development Bank Act, establishes the California Infrastructure and Economic Development Bank (I-Bank) in the Governors Office of Business and Economic Development. Existing law, among other things, authorizes the I-Bank to issue bonds, make loans, and provide financial assistance for various types of projects that qualify as economic development or public development facilities.

This bill would enact the Community Stabilization Act and would Act. The bill would require the I-Bank to develop and administer a program to issue a security. security, and to cease issuing a security on January 1, 2030. The bill would specify that the purpose of the program is to help stabilize property values in disaster-affected areas by allowing qualified investors, as defined, to purchase tradable securities, with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value. The bill would require profits from the land investments to be shared among investors and the I-Bank according to certain percentages, with qualifying investment entities being reimbursed for their administrative costs.

This bill would establish various requirements for the security, including that it be tradeable, comply with specified municipal bonding requirements, and that it be funded by investments made by qualified investors using funds available pursuant to the federal Community Reinvestment Act of 1977. The bill would require the security to repay the investment upon a liquidity event and within 10 7 years of the purchase of an investment property, and would describe a liquidity event as the refinance or sale of the investment property.

This bill would require funds raised from the purchase of the security to be deposited in the Community Stabilization Fund, which would be created by the bill, and would require all moneys in the fund to be continuously appropriated to the I-Bank. The bill would require the I-Bank to allocate moneys in the fund to qualifying investment entities to be invested in a specific region of the state that is the Counties of Los Angeles and Ventura and in those areas that are covered by a state of disaster declared by the Governor. The bill would require a qualifying investment entity to meet prescribed requirements, including that it be a specified entity, including, among others, a nonprofit organization, as provided. The bill would also impose various requirements on the qualifying investment entity relating to the purchase, maintenance, and sale of the investment property. The bill would authorize a qualified investor to defer up to 30% percent of the capital gains it realizes from its investment for up to 10 years or until any return is realized on the investment. property, including, among other things, limiting the purchase of property to residential property that has been damaged or destroyed by the wildfires that began on January 7, 2025, in the Counties of Los Angeles and Ventura, as specified. The bill would require the I-Bank to submit a final report on the program to the Legislature, the Governor, and the Department of Finance no later than January 1, 2034, as specified.

By establishing a new continuously appropriated fund, the Community Stabilization Fund, this bill would make an appropriation.

(3)This bill would declare that it is to take effect immediately as an urgency statute.

Existing law, the Bergeson-Peace Infrastructure and Economic Development Bank Act, establishes the California Infrastructure and Economic Development Bank (I-Bank) in the Governors Office of Business and Economic Development. Existing law, among other things, authorizes the I-Bank to issue bonds, make loans, and provide financial assistance for various types of projects that qualify as economic development or public development facilities.

This bill would enact the Community Stabilization Act and would require the I-Bank to develop and administer a program to issue a security. The bill would specify that the purpose of the program is to help stabilize property values in disaster-affected areas by allowing qualified investors investors, as defined, to purchase tradable securities, with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value. The bill would require profits from the land investments to be shared among investors and the I-Bank according to certain percentages, with qualifying investment entities being reimbursed for their administrative costs.

This bill would establish various requirements for the security, including that it be tradeable, comply with specified municipal bonding requirements, and that it be funded by investments made by qualified investors using funds available pursuant to the federal Community Reinvestment Act of 1977. The bill would require the security to repay the investment upon a liquidity event and within 10 years of the purchase of an investment property, and would describe a liquidity event as the refinance or sale of the investment property.

This bill would require funds raised from the purchase of the security to be deposited in the Community Stabilization Fund, which would be created by the bill, and would require all moneys in the fund to be continuously appropriated to the I-Bank. The bill would require the I-Bank to allocate moneys in the fund to qualifying investment entities to be invested in a specific region of the state that is covered by a state of disaster declared by the Governor. The bill would require a qualifying investment entity to meet prescribed requirements, including that it be a specified entity, including, among others, a nonprofit organization, as provided. The bill would also impose requirements on the qualifying investment entity relating to the purchase and maintenance purchase, maintenance, and sale of the investment property. The bill would authorize a qualified investor to defer up to 30% percent of the capital gains it realizes from its investment for up to 10 years or until any return is realized on the investment.

By establishing a new continuously appropriated fund, the Community Stabilization Fund, this bill would make an appropriation.

This bill would declare that it is to take effect immediately as an urgency statute.

This bill would enact the Community Stabilization Act and would require GO-Biz the I-Bank to develop and administer a program to issue a security. The bill would specify that the purpose of the program is to help stabilize property values in disaster-affected areas by allowing qualified investors to purchase tradable securities, with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value. The bill would require profits from the land investments to be shared among investors and the state I-Bank according to certain percentages, with qualifying investment entities being reimbursed for their administrative costs.

This bill would establish various requirements for the security, including that it be tradeable, comply with specified municipal bonding requirements, and that it be funded by investments made by qualified investors using funds available pursuant to the federal Community Reinvestment Act of 1977. The bill would require the security to repay the investment upon a liquidity event and within 10 years of the purchase of an investment property, and would describe a liquidity event as the refinance or sale of the investment property.

This bill would require funds raised from the purchase of the security to be deposited in the Community Stabilization Fund, which would be created by the bill, and would require all moneys in the fund to be continuously appropriated to GO-Biz. the I-Bank. The bill would require GO-Biz the I-Bank to allocate moneys in the fund to qualifying investment entities to be invested in a specific region of the state that is covered by a state of disaster declared by the Governor. The bill would require a qualifying investment entity to meet prescribed requirements, including that it be a specified entity, including, among others, a nonprofit organization, as provided. The bill would also impose requirements on the qualifying investment entity relating to the purchase and maintenance of the investment property. The bill would authorize a qualified investor to defer up to 30% percent of the capital gains it realizes from its investment for up to 10 years or until any return is realized on the investment.

By establishing a new continuously appropriated fund, the Community Stabilization Fund, this bill would make an appropriation.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law establishes the Governors Office of Business and Economic Development, also known as GO-Biz, to serve the Governor as the lead entity for economic strategy and the marketing of California on issues relating to business development, private sector investment, and economic growth. Existing law authorizes GO-Biz, in that capacity, to, among other things, recommend to the Governor and the Legislature new state policies, programs, and actions, or amendments to existing programs and advance statewide economic goals and to respond to emerging economic problems and opportunities.

This bill would enact the Community Stabilization Act and would require GO-Biz to develop and administer a program to issue a security. The bill would specify that the purpose of the program is to help stabilize property values in disaster-affected areas by allowing qualified investors to purchase tradable securities, with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value. The bill would require profits from the land investments to be shared among investors and the state according to certain percentages, with qualifying investment entities being reimbursed for their administrative costs.

This bill would establish various requirements for the security, including that it be tradeable, comply with specified municipal bonding requirements, and that it be funded by investments made by qualified investors using funds available pursuant to the federal Community Reinvestment Act. Act of 1977. The bill would require the security to repay the investment upon a liquidity event and within 10 years of the purchase of an investment property, and would describe a liquidity event as the refinance or sale of the investment property.

This bill would require funds raised from the purchase of the security to be deposited in the Community Stabilization Fund, which would be created by the bill, and would require all moneys in the fund to be continuously appropriated to GO-Biz. The bill would require GO-Biz to allocate moneys in the fund to qualifying investment entities to be invested in a specific region of the state that is covered by a state of disaster declared by the Governor. The bill would require a qualifying investment entity to meet certain prescribed requirements, including that it be a specified entity, including, among others, a nonprofit organization formed under federal law, as specified, or a charity registered with the state. organization, as provided. The bill would also impose requirements on the qualifying investment entity relating to the purchase and maintenance of the investment property. The bill would authorize a qualified investor to defer up to 30% percent of the capital gains it realizes from its investment for up to 10 years or until any return is realized on the investment.

By establishing a new continuously appropriated fund, the Community Stabilization Fund, this bill would make an appropriation.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law establishes the Governors Office of Business and Economic Development, also known as GO-Biz, to serve the Governor as the lead entity for economic strategy and the marketing of California on issues relating to business development, private sector investment, and economic growth. Existing law authorizes GO-Biz, in that capacity, to, among other things, recommend to the Governor and the Legislature new state policies, programs, and actions, or amendments to existing programs and advance statewide economic goals and to respond to emerging economic problems and opportunities.

This bill would enact the Community Stabilization Act and would require GO-Biz to develop and administer a program to issue a security. The bill would specify that the purpose of the program is to help stabilize property values in disaster-affected areas by allowing qualified investors to purchase tradable securities, with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value. The bill would require profits from the land investments to be shared among investors and the state according to certain percentages, with qualifying investment entities being reimbursed for their administrative costs.

This bill would establish various requirements for the security, including that it be tradeable, comply with specified municipal bonding requirements, and that it be funded by investments made by qualified investors using funds available pursuant to the federal Community Reinvestment Act. The bill would require the security to repay the investment upon a liquidity event and within 10 years of the purchase of an investment property, and would describe a liquidity event as the refinance or sale of the investment property.

This bill would require funds raised from the purchase of the security to be deposited in the Community Stabilization Fund, which would be created by the bill, and would require all moneys in the fund to be continuously appropriated to GO-Biz. The bill would require GO-Biz to allocate moneys in the fund to qualifying investment entities to be invested in a specific region of the state that is covered by a state of disaster declared by the Governor. The bill would require a qualifying investment entity to meet certain requirements, including that it be a nonprofit organization formed under federal law, as specified, or a charity registered with the state. The bill would also impose requirements on the qualifying investment entity relating to the purchase and maintenance of the investment property. The bill would authorize a qualified investor to defer up to 30% percent of the capital gains it realizes from its investment for up to 10 years or until any return is realized on the investment.

By establishing a new continuously appropriated fund, the Community Stabilization Fund, this bill would make an appropriation.

This bill would declare that it is to take effect immediately as an urgency statute.

GOVERNOR'S VETO

GV Bill Id:AB 797

Author:(Harabedian)

As Enrolled Ver:September 11, 2025

2/3 vote

SUMMARY

The Community Stabilization Act, administered by Governor's Office of Business and Economic Development (GO-Biz) and the California Infrastructure and Economic Development Bank (IBank), creates a program to stabilize property values in disaster-affected areas. It enables qualified investors to buy tradable securities that fund entities managing and reselling residential land, with profits shared between the state and investors. This bill also establishes a Community Stabilization Fund, provides tax incentives, and takes effect immediately as an urgency statute.

Senate amendments: The program's authority to issue securities will be extended from January 1, 2030, to January 1, 2035. It will expand to include properties impacted by the 2025 LA and Ventura wildfires and other governor-declared disasters. Property owners will have the right to decline purchase offers from Qualified Intent Entities (QIEs), with payment to owners required within 30 days of application approval. Additionally, redevelopment by QIEs must aim to preserve the socioeconomic makeup of affected communities.

Governor's Veto Message

This bill requires the California Infrastructure and Economic Development Bank (IBank) to develop and administer a program that issues securities to support redevelopment to help stabilize property values in disaster-affected areas.

The intent of this bill is to ensure fair redevelopment of disaster-affected residential properties to help keep such properties in the hands of community members - an effort I wholeheartedly support. However, the administration of the IBank program proposed by this bill would result in significant, ongoing General Fund impacts in the tens of millions of dollars not included in the 2025 Budget Act.

In partnership with the Legislature this year, my Administration has enacted a balanced budget that recognizes the challenging fiscal landscape our state faces while maintaining our commitment to working families and our most vulnerable communities. With significant fiscal pressures and the federal government's hostile economic policies, it is vital that we remain disciplined when considering bills with significant fiscal implications that are not included in the budget, such as this measure.

COMMENTS

The California Infrastructure and Economic Development Bank (IBank), part of GO-Biz, funds public infrastructure and private projects to boost economic growth and quality of life through loans, credit enhancements, and bond financing. Amid severe climate-driven disasters like the 2025 wildfires that worsened California's housing crisis, the California Housing Finance Agency (CalHFA) supports affordable housing by providing below-market loans and down payment assistance to low- and moderate-income buyers and developers.

According to the Author

The author states, "AB 797 helps stabilize property values in disaster-affected areas, giving homeowners a fair chance to recover without being forced to sell at a loss. It prevents displacement, supports long-term recovery, and ensures communities can rebuild stronger."

Arguments in Support

Those in support state, Altadena residents, business owners, and community leaders express strong support for AB 797, the Community Stabilization Act, as a vital response to the devastation caused by the 2025 Los Angeles wildfires. With over 18,000 structures lost and billions in damages, the bill helps protect homeowners from predatory investors by allowing nonprofits to acquire and manage properties through a state-administered program. AB 797 aims to stabilize property values, preserve community integrity, and support long-term recovery in disaster-impacted areas.

Arguments in Opposition

None on file.

FISCAL COMMENTS

According to the Senate Committee on Appropriations, the Governor's Office of Business and Economic Development (GO-Biz) reports one-time General Fund costs of approximately $12.7 million and $2.7 million ongoing for IBank to develop and administer the program. GO-Biz also notes potential cost pressures in the millions of dollars depending on program demand.

VOTES

ASM ECONOMIC DEVELOPMENT, GROWTH, AND HOUSEHOLD IMPACT: 7-0-1

YES: Solache, Bonta, Patel, Petrie-Norris, Soria, Stefani, Wallis

ABS, ABST OR NV: Castillo

ASM APPROPRIATIONS: 11-1-3

YES: Wicks, Arambula, Calderon, Caloza, Elhawary, Fong, Mark González, Hart, Pacheco, Pellerin, Solache

NO: Tangipa

ABS, ABST OR NV: Sanchez, Dixon, Ta

ASSEMBLY FLOOR: 69-3-7

YES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Connolly, Davies, Elhawary, Flora, Fong, Gabriel, Gallagher, Garcia, Gipson, Jeff Gonzalez, Mark González, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Kalra, Krell, Lee, Lowenthal, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NO: DeMaio, Macedo, Tangipa

ABS, ABST OR NV: Castillo, Chen, Dixon, Ellis, Hadwick, Lackey, Sanchez

SENATE FLOOR: 29-9-2

YES: Allen, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Cortese, Durazo, Gonzalez, Grayson, Hurtado, Laird, Limón, McGuire, McNerney, Menjivar, Padilla, Pérez, Reyes, Richardson, Rubio, Smallwood-Cuevas, Umberg, Wahab, Weber Pierson, Wiener

NO: Alvarado-Gil, Choi, Dahle, Jones, Niello, Ochoa Bogh, Seyarto, Strickland, Valladares

ABS, ABST OR NV: Grove, Stern

ASSEMBLY FLOOR: 69-5-6

YES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Connolly, Davies, Elhawary, Flora, Fong, Gabriel, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Kalra, Krell, Lee, Lowenthal, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NO: DeMaio, Ellis, Johnson, Macedo, Tangipa

ABS, ABST OR NV: Castillo, Chen, Dixon, Gallagher, Lackey, Sanchez

UPDATED

VERSION: September 11, 2025

CONSULTANT: Carla Castilla / E.D., G., & H.I. / (916) 319-2090 FN: 0002202

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 797

Author:(Harabedian)

As Amended Ver:August 29, 2025

2/3 vote. Urgency

SUMMARY

The Community Stabilization Act creates a program to stabilize property values in disaster-affected areas. Administered by GO-Biz and IBank, it allows qualified investors to buy tradable securities, with funds going to entities that manage and resell residential land. Profits are shared between the state and investors. The bill establishes a Community Stabilization Fund, offers tax incentives, and takes effect immediately as an urgency statute.

Senate Amendments

1. Extend the program's authority to issue securities from January 1, 2030, to January 1, 2035.
2. Expand language to include properties affected by the 2025 LA and Ventura wildfires and other disasters declared by the Governor.
3. Add provisions ensuring property owners have the right to decline purchase offers from QIEs.
4. Establish timelines for payment to property owners (within 30 days of application approval).
5. Clarify that redevelopment efforts by QIEs should preserve the socioeconomic composition of the affected communities as much as possible.

COMMENTS

The California Infrastructure and Economic Development Bank (IBank), part of GO-Biz, finances public infrastructure and private development to support economic growth and quality of life. Its programs include loans, credit enhancements, and bond financing for public and private projects. California continues to face severe climate-driven disasters, such as the 2025 wildfires that destroyed over 18,000 structures in Los Angeles and Ventura Counties, worsening the state's housing crisis. The California Housing Finance Agency (CalHFA), the state's affordable housing bank, supports low- and moderate-income homebuyers and developers through below-market loans and down payment assistance funded by tax-exempt bonds.

According to the Author

The author states, "AB 797 helps stabilize property values in disaster-affected areas, giving homeowners a fair chance to recover without being forced to sell at a loss. It prevents displacement, supports long-term recovery, and ensures communities can rebuild stronger."

Arguments in Support

Alpha Kappa Alpha writes in support of this bill stating, Altadena residents, business owners, and community leaders express strong support for AB 797, the Community Stabilization Act, as a vital response to the devastation caused by the 2025 Los Angeles wildfires. With over 18,000 structures lost and billions in damages, the bill helps protect homeowners from predatory investors by allowing nonprofits to acquire and manage properties through a state-administered program. AB 797 aims to stabilize property values, preserve community integrity, and support long-term recovery in disaster-impacted areas.

Arguments in Opposition

None.

FISCAL COMMENTS

According to the Senate Committee on Appropriations, the Governor's Office of Business and Economic Development (GO-Biz) reports one-time General Fund costs of approximately $12.7 million and $2.7 million ongoing for IBank to develop and administer the program. GO-Biz also notes potential cost pressures in the millions of dollars depending on program demand.

VOTES:

ASM ECONOMIC DEVELOPMENT, GROWTH, AND HOUSEHOLD IMPACT: 7-0-1

YES: Solache, Bonta, Patel, Petrie-Norris, Soria, Stefani, Wallis

ABS, ABST OR NV: Castillo

ASM APPROPRIATIONS: 11-1-3

YES: Wicks, Arambula, Calderon, Caloza, Elhawary, Fong, Mark González, Hart, Pacheco, Pellerin, Solache

NO: Tangipa

ABS, ABST OR NV: Sanchez, Dixon, Ta

ASSEMBLY FLOOR: 69-3-7

YES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Connolly, Davies, Elhawary, Flora, Fong, Gabriel, Gallagher, Garcia, Gipson, Jeff Gonzalez, Mark González, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Kalra, Krell, Lee, Lowenthal, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NO: DeMaio, Macedo, Tangipa

ABS, ABST OR NV: Castillo, Chen, Dixon, Ellis, Hadwick, Lackey, Sanchez

UPDATED

VERSION: August 29, 2025

CONSULTANT: Carla Castilla / E.D., G., & H.I. / (916) 319-2090 FN: 0001894

 THIRD READING  

Bill No: AB 797

Author: Harabedian (D)

Amended: 8/29/25 in Senate

Vote: 27 - Urgency

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 8-3, 6/30/25

AYES: Ashby, Archuleta, Arreguín, Grayson, Menjivar, Smallwood-Cuevas, Umberg, Weber Pierson

NOES: Choi, Niello, Strickland

SENATE JUDICIARY COMMITTEE: 10-2, 7/15/25

AYES: Umberg, Allen, Arreguín, Ashby, Caballero, Durazo, Laird, Stern, Weber Pierson, Wiener

NOES: Niello, Valladares

NO VOTE RECORDED: Wahab

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/29/25

AYES: Caballero, Cabaldon, Grayson, Richardson, Wahab

NOES: Seyarto, Dahle

ASSEMBLY FLOOR: 69-3, 6/2/25 - See last page for vote

SUBJECT: Community Stabilization Act: Counties of Los Angeles and Ventura

SOURCE: Author

DIGEST:

This bill establishes the Community Stabilization Act which requires the California Infrastructure and Economic Development Bank (IBank) to develop and administer a program to issue a security, with the stated purpose of the program as helping stabilize property values in disaster-affected areas by allowing qualified investors to purchase tradable securities with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value.

ANALYSIS:

Existing law:

1. Establishes the Bergeson-Peace Infrastructure and Economic Development Bank Act and creates the IBank. (Government Code (GC) § 63000 et seq.)
2. Authorizes IBank to make loans, issue bonds, and provide other economic development assistance, among other things. (GC § 63050 et seq.)
3. Establishes and authorizes the California Housing Finance Agency (CalHFA) to make loans to housing sponsors for housing developments and to qualified mortgage lenders, among others. Provides that the primary purpose of CalHFA is to meet the housing needs of persons and families of low- or moderate-income.

This bill:

1. Establishes the Community Stabilization Act until January 1, 2030, which requires IBank to develop and administer a program to issue a security, with the stated purpose of the program as helping stabilize property values in disaster-affected areas by allowing qualified investors to purchase tradable securities with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value. Requires profits from these land investments to be shared among investors and the state, with qualifying investment entities being reimbursed for their administrative costs, ensuring disaster-stricken homeowners can recover their equity while helping prevent predatory land grabs.
2. Specifies how a qualifying investment entity must be organized in order to ensure proper stewardship of funds.

1. Requires IBank to issue a security that meets specified requirements, including that it is: tradeable; allows for purchases in qualifying residential land; complies with municipal federal bonding requirements but specifies the security does not need to be tax exempt; is funded by investments made by qualified investors using funds available pursuant to the federal Community Reinvestment Act of 1977; repays investment based on specified liquidity events; is noninterest bearing and provides an investment return to qualified investors when a liquidity event and; allows for multiple classes of qualified investors to participate in purchasing the security.
2. Specifies how the profit from the sale or refinance of the investment must be distributed, including: five percent of the profit to the bank; 90% of the profit to qualified investors, apportioned according to each qualified investor’s percentage of investment in the security and; five percent of the qualifying investment entity to be allocated as their administrative fee.
3. Requires a qualifying investment entity to use funds for a qualifying community development project as required under the federal Community Reinvestment Act of 1977. Requires that a qualifying investment entity use funds to purchase residential property that has been damaged or destroyed by the January 7, 2025 wildfires in Los Angeles and Ventura Counties.
4. Authorizes a qualifying investment entity to charge an administrative fee of up to five percent and specifies that a qualifying investment entity with lower administrative fees shall be prioritized for the greatest dispersal of funds. Authorizes a qualifying investment entity to allocate various fees beyond administrative costs, including escrow costs, maintenance of properties under ownership, including the security of a property, or property tax fees paid to a local government as a result of ownership. Authorizes IBank to remove a qualified investment entity if it does not meet any of its obligations and requires funds to be returned to IBank.
5. Specifies how property value and ownership are established and how payment is made to a property owner.
6. Specifies that preference shall be given to preserve the socioeconomic composition of the disaster area to the maximum extent possible.
7. Specifies that necessary zoning changes shall be approved by the appropriate local government entity and exempts a property developed under this bill from the California Environmental Quality Act.
8. Authorizes a qualified investor, within two years of a state of disaster declared by the Governor, to purchase a security established by this bill.
9. Requires a qualifying investment entity to annually disclose information to IBank and posted on its website relating to the properties it acquires with funds authorized by this bill.
10. Authorizes a local jurisdiction to limit the number of qualifying investment entities eligible for participation in the program.
11. Requires IBank to submit a final report on the program to the Legislature, Governor, and the Department of Finance by January 1, 2034 that includes the total number of properties acquired, held, and sold under the program; the total amount of capital invested and distributed and; an assessment of the program’s effectiveness in stabilizing disaster-impacted property value.

Background

IBank. According to its website, IBank exists within GO-Biz and “was created in 1994 to finance public infrastructure and private development that promote a healthy climate for jobs, contribute to a strong economy and improve the quality of life in California communities. IBank has broad authority to issue tax-exempt and taxable revenue bonds, provide financing to public agencies, provide credit enhancements, acquire or lease facilities, and leverage State and Federal funds. IBank’s current programs include the Infrastructure State Revolving Fund (ISRF) Loan Program, California Lending for Energy and Environmental Needs (CLEEN) Center, the Climate Catalyst Revolving Loan fund, Small Business Finance Center and the Bond Financing Program.”

Wildfires and housing. California continues to experience the impacts of climate change with disasters of increasing scale and frequency destroying whole communities at an unprecedented scale. In the first month of 2025, major wildfires burned more than 50,000 acres. The Eaton and Palisades fires alone destroyed or damaged more than 18,000 structures including homes, small businesses, schools, and places of worship in Los Angeles County. The destruction of homes in Los Angeles County exacerbates the existing housing crises facing that region and California as a whole.

The California Housing Finance Agency (CalHFA) is the state’s affordable housing bank. CalHFA borrows money from the private financial market at below-market interest rates by issuing tax-exempt revenue bonds. CalHFA passes these interest rate savings on to low- and moderate-income first-time homebuyers and affordable rental housing developers by offering below market-rate mortgages. These bonds are backed only by CalHFA revenues and not by the state General Fund. CalHFA also provides downpayment assistance in the form of deferred, “silent second” mortgages (i.e., the borrower makes no monthly payments but repays the loan at sale or refinance) for families who need extra assistance achieving homeownership.

FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: No

According to the Senate Committee on Appropriations, the Governor’s Office of Business and Economic Development (GO-Biz) reports one-time General Fund costs of approximately $12.7 million and $2.7 million ongoing for IBank to develop and administer the program. GO-Biz also notes potential cost pressures in the millions of dollars depending on program demand.

SUPPORT: (Verified 8/29/25)

Alpha Kappa Alpha Sorority, Inc. - Pasadena Chapter
Alpha Kappa Alpha Sorority, Inc., Omega Upsilon Omega
Altadena Tenants Union
California Community Foundation
California-Hawaii State Conference of the NAACP
County of Los Angeles Board of Supervisors

Eaton Fire Survivors Network
Global Empowerment Mission

OPPOSITION: (Verified 8/29/25)

None received

ARGUMENTS IN SUPPORT: The California Community Foundation writes “We support AB 797 because it is a thoughtful, market-based solution for communities to address several urgent challenges we consistently hear from our partners closest to the ground, particularly in Altadena, where homeownership has long been a cornerstone of generational wealth-building for families otherwise historically excluded from that opportunity. For many Altadenans, their homes are not just structures—they are their most important financial asset, one that holds deep familial, cultural, and community meaning. For too many, this asset is now a source of uncertainty. They face the tough decision of whether to rebuild or to sell, and selling isn’t a simple choice when faced with the prospect of selling to predatory investors with no commitment to preserving the fabric of this vibrant, historic, and diverse community. This bill creates a pathway for mission-driven nonprofits to leverage Community Reinvestment Act funds to acquire homes at fair market value and ensure those properties are redeveloped or resold in ways that benefit the community, not just private equity. It’s a smart, fiscally responsible model that protects homeowners from predatory practices, prevents neighborhood destabilization, keeps wealth circulating locally, and puts the possibility of preserving the character of beloved neighborhoods like Altadena within reach.”

The California-Hawaii State Conference of the NAACP writes that “By stabilizing communities and safeguarding property values, AB 797 ensures long-term recovery for disaster victims.”

The County of Los Angeles Board of Supervisors writes that “By keeping ownership and operation of the land in community hands, AB 797 offers a sustainable path to neighborhood stabilization and helps protect residents from predatory speculation.”

ASSEMBLY FLOOR: 69-3, 6/2/25

AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Connolly, Davies, Elhawary, Flora, Fong, Gabriel, Gallagher, Garcia, Gipson, Jeff Gonzalez, Mark González, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Kalra, Krell, Lee, Lowenthal, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NOES: DeMaio, Macedo, Tangipa

NO VOTE RECORDED: Castillo, Chen, Dixon, Ellis, Hadwick, Lackey, Sanchez

Prepared by: Sarah Mason / B., P. & E.D. /

9/2/25 18:04:47

**** END ****

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2025 - 2026 Regular Session

AB 797 (Harabedian) - Community Stabilization Act

Bill Summary:

AB 797 requires the California Infrastructure and Economic Development Bank (IBank) to develop and administer a program to issue securities to fund qualifying investment entities’ purchase of residential properties for redevelopment in a specific region of the state that is covered by a state of disaster, as specified.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on August 29, 2025

Fiscal Impact:

The Governor’s Office of Business and Economic Development (GO-Biz) reports one-time costs of approximately $12.7 million and $2.7 million ongoing for IBank to develop and administer the program (General Fund). GO-Biz also notes potential cost pressures in the millions of dollars depending on program demand.

Committee Amendments:

• Lower, from 10 to seven years, the liquidity event timeframe.
• Narrow the program to only residential property that has been damaged or destroyed by the January 7, 2025 wildfires in Los Angeles and Ventura Counties.
• Delete capital gains deferment provisions.
• Require IBank to submit a final report on the program to the Legislature, Governor, and the Department of Finance by January 1, 2034. Requires the report to include:
  • The total number of properties acquired, held, and sold under the program.
  • The total amount of capital invested and distributed.
  • An assessment of the program’s effectiveness in stabilizing disaster-impacted property value.
• Sunset the program on January 1, 2030.

-- END --

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2025 - 2026 Regular Session

AB 797 (Harabedian) - Community Stabilization Act

Bill Summary:

AB 797 requires the California Infrastructure and Economic Development Bank (IBank) to develop and administer a program to issue securities to fund qualifying investment entities’ purchase of residential properties for redevelopment in a specific region of the state that is covered by a state of disaster, as specified.

Fiscal Impact:

• The Governor’s Office of Business and Economic Development (GO-Biz) reports one-time costs of approximately $12.7 million and $2.7 million ongoing for IBank to develop and administer the program (General Fund). GO-Biz also notes potential cost pressures in the millions of dollars depending on program demand.
• Unknown significant General Fund revenue impacts, ranging in the hundreds of millions of dollars, from potential capital gains deferrals.

Background:

According to IBank’s website, IBank was created in 1994 to finance public infrastructure and private development that promote a healthy climate for jobs, contribute to a strong economy and improve the quality of life in California communities. IBank has broad authority to issue tax-exempt and taxable revenue bonds, provide financing to public agencies, provide credit enhancements, acquire or lease facilities, and leverage State and Federal funds. IBank’s current programs include the Infrastructure State Revolving Fund Loan Program, California Lending for Energy and Environmental Needs Center, the Climate Catalyst Revolving Loan fund, Small Business Finance Center and the Bond Financing Program.

Proposed Law:

• Establishes the Community Stabilization Act, which requires IBank to develop and administer a program to issue a security, for the purpose of helping stabilize property values in disaster-affected areas by allowing qualified investors to purchase tradable securities with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value.
  • Requires profits from these land investments to be shared among investors and the state, with qualifying investment entities being reimbursed for their administrative costs, ensuring disaster-stricken homeowners can recover their equity while helping prevent predatory land grabs.
• Requires a security issued by IBank to have specified features.
• Requires proceeds from any profit realized by the sale or refinance of the investment property to be distributed as follows:
  • 5 percent of the profit to IBank.
  • 90 percent of the profit to qualified investors, to be apportioned according to each investor’s percentage of investment in the security.
  • 5 percent of the profit to a qualifying investment entity, to be allocated as their administrative fee.
• Upon realization of profits due to a liquidity event, requires a qualified investment entity to transfer those funds to IBank within 30 days of the funds being received, to be allocated in the above specified disbursements.
• Authorizes a qualifying entity to charge an administrative fee of up to 5 percent, to be paid from the profits disbursed. Requires a qualified investment entity to publish its administrative fees and submit a copy of the fees to IBank prior to dispersal of funds. Provides that a qualified investment entity with lower administrative fees be prioritized for the greatest dispersal of funds. Authorizes a qualifying investment entity to allocate direct cost fees to the operation of the project outside of administrative fees, as specified.
• Creates the Community Stabilization Fund, and requires funds raised from the purchase of the security by qualified investors to be deposited into the fund.
• Specifies requirements for an entity to be a qualifying investment entity.
• Authorizes IBank to remove a qualified investment entity or its designee if the entity does not meet its obligations required under the Act. Requires a qualified entity that is removed to return any funds it received.
• Requires a qualified investment entity to use funds it receives under the Act to purchase residential property that has been damaged or destroyed by a disaster in an area covered by a state of disaster declared by the Governor, as specified. Requires property acquired by a qualified investment entity to be held for up to 10 years following the disaster, and imposes specified requirements on the entity for maintenance of the property.
• Specifies how property value and ownership are established and how payment is made to a property owner.
• Authorizes a qualified investor, within 24 months of a state of disaster declared by the Governor, to purchase a security established by this bill. Specifies tax deferral options and tax payment deadlines.
• Requires a qualifying investment entity to annually disclose information to IBank and posted on its website relating to the properties it acquires with funds authorized under the Act.
• Authorizes a local jurisdiction to limit the number of qualifying investment entities eligible for participation in the program for each specific state of disaster declared by the Governor.
• If multiple disasters are declared, provides that the area with the least restrictive use of qualifying investment entities receive priority consideration.
• States the measure is an urgency statute necessary to coordinate efforts at the earliest time possible to rebuild housing in communities in the Counties of Los Angeles and Ventura that were impacted by the wildfires that began on January 7, 2025.
• States legislative findings and declarations.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2025-2026 Regular Session

Bill No: AB 797 (Author:Harabedian)

Version: June 23, 2025

Hearing Date: July 15, 2025

Fiscal: Yes

Urgency: Yes

Consultant: ID

SUBJECT

Community Stabilization Act

DIGEST

This bill establishes the Community Stabilization Act to authorize the California Infrastructure and Economic Development Bank to issue securities to fund qualifying investment entities’ purchase of residential properties for redevelopment in a specific region of the state that is covered by a state of disaster, as specified.

EXECUTIVE SUMMARY

In early January 2025, extremely dry conditions and high winds in Los Angeles resulted in two of the worst wildfires in state history: the Palisades and Eaton fires. The fires burned 37,469 acres and damaged or destroyed almost 18,000 structures, including 373 mobilehomes, and resulted in 29 fatalities. In the aftermath of this tragedy, there have been reports that predatory investors are contacting property owners to attempt to purchase their disaster-affected property, often at prices much lower than the property’s fair market value. Given these reports and the financial distress that the fires have placed on many homeowners, concerns have been raised by local groups that the disasters are resulting in displacement and gentrification. AB 797 seeks to ensure fair redevelopment of disaster-affected residential properties and help keep such properties in the hands of community members by creating a program by which the California Infrastructure and Economic Development Bank (I-Bank) issues securities to fund the purchase of disaster-distressed residential properties by qualifying investment entities. AB 797 would require these investment entities to purchase the properties for a fair market value, as specified, and to redevelop the properties. AB 797 is author-sponsored, and is supported by the California Community Foundation, the California-Hawaii State Conference of the NAACP, the County of Los Angeles Board of Supervisors, and two individuals. The Committee has received no timely letters of opposition. AB 797 previously passed out of the Senate Business, Professions, and Economic Development Committee by a vote of 8 to 3. This bill contains an urgency clause.

PROPOSED CHANGES TO THE LAW

Existing federal law:

1. Establishes the Community Reinvestment Act of 1977 to require the Federal Reserve and other federal banking regulators to encourage insured financial institutions to help meet the credit needs of all borrowers in the communities in which the do business, including low- and moderate-income communities. (12 U.S.C. §§ 2901 et seq.)

Existing law:

1. Establishes the Governor’s Office of Business and Economic Development (GO-Biz) within the Governor's Office, for the purpose of serving as the lead state entity for economic strategy and marketing of California on issues relating to business development, private sector investment, and economic growth. (Gov. Code §§ 12096 et seq.)
2. Establishes the Bergeson-Peace Infrastructure and Economic Development Bank Act and creates the I-Bank, and establishes GO-Biz as the administrator of the I-Bank and the fund. (Gov. Code §§ 63000 et seq.)
3. Authorizes the I-Bank to make loans, issue bonds, and provide other economic development assistance, among other things. (Gov. Code § 63050 et seq.)
4. Establishes and authorizes the California Housing Finance Agency (CalHFA) to make loans to housing sponsors for housing developments and to qualified mortgage lenders, among others. Provides that the primary purpose of CalHFA is to meet the housing needs of persons and families of low- or moderate-income. (Health & Saf. Code § 50900.)

This bill:

1. Makes specified findings and declarations regarding disasters and the importance of homeownership.
2. Establishes the Community Stabilization Act to require the I-Bank to develop and administer a program to issue security for the raising of funds to help stabilize property values in disaster-affected areas by allowing qualified investors to purchase tradeable securities with the funding allocated to qualifying investment entities to purchase and manage residential properties until they can be resold at fair market value.
3. Requires the I-Bank to issue a security that:
   1. Is tradeable;
   2. Allows for purchases in qualifying residential land for the purposes of the bill;
   3. Complies with municipal bonding requirements;
   4. Is funded by investments made by qualified investors using funds available pursuant to the Community Reinvestment Act;
   5. Is non-interest bearing;
   6. Allows for multiple classes of qualified investors to participate; and
   7. Repays investors’ investment by either of the following, to occur no later than 10 years from the purchase of the property:
      1. The refinance of the investment property; or
      2. The sale of the investment property.
4. Requires any profit realized from the sale or refinance of the investment property to be distributed by the following:
   1. Five percent to the I-Bank;
   2. 90 percent to qualified investors, to be apportioned according to each qualified investors’ percentage of the investment; and
   3. Five percent to the qualifying investment entity as an administrative fee.
5. Requires funds raised by the purchase of security authorized by (4), above, to be deposited into the Community Stabilization Fund, which this bill creates, for the I-Bank to allocate to qualifying investment entities to be invested in a specific region of the state that is covered by a state of disaster declared by the Governor. Requires funds to be used for a qualifying community development project as required by the federal Community Reinvestment Act.
6. Requires a qualifying investment entity to be organized as any of the following and be capable of receiving funds before fund dispersal, as determined by I-Bank, in order to ensure proper stewardship of funds:
   1. a nonprofit organization with a determination letter from the Internal Revenue Service affirming its tax-exempt status with its principal place of business in California and the primary residences of all board members are located in California. One of the nonprofit’s primary activities must be the development and preservation of affordable rental or home ownership housing or small business in California, and the nonprofit must be registered and in good standing with the Attorney General's Registry of Charities and Fundraisers, and the nonprofit does not have any outstanding state or federal tax liabilities or other liens;
   2. a charity registered with the state;
   3. an instrumentality of the state or county;
   4. a local public entity, as defined in the Health and Safety Code for purposes of state housing programs;
   5. a limited partnership in which the general partner is a nonprofit pursuant to the requirements of a) above; or
   6. a limited liability company wholly owned by a nonprofit described in a) above or owned by a nonprofit community land trust.
7. Requires, upon realization of profits due to a liquidity event, the qualifying investment entity to transfer the funds to the I-Bank within 30 days for disbursement.
8. Permits a qualifying investment entity to charge an administrative fee of up to five percent, which must be paid from the profits disbursed to the qualifying investment entity, and requires a qualifying investment entity to publish its administrative fees and submit them to I-Bank for approval. Specifies that a qualifying investment entity with lower administrative fees must be prioritized for the greatest dispersal of funds. Permits a qualifying investment entity to allocate direct cost fees to the operation of the project outside of administrative fees, as specified.
9. Permits the I-Bank to remove a qualified investment entity if the qualifying investment entity does not meet any of its obligations under these provisions, and requires any qualifying investment entity that is removed to return the funds it received.
10. Requires a qualifying investment entity to use the funds it receives to purchase residential property that has been damaged or destroyed by a disaster in an area covered by a state of disaster declared by the Governor.
11. Specifies that the purchase price for any property purchased using these funds be the value of the property minus the insured amount of the structure that was damaged or destroyed; if there was no insurance on the structure or the proceeds are not available, the investment entity must make a reasonable determination of the value that otherwise would have been allocated to the structure based on available information. Specifies that proof of the total value of the property may be based on the higher of: an existing official appraisal in the last 12 months prior to the declaration of the state of disaster; publicly available documentation, including internet websites and real estate data; or use of county property tax assessments for the last calendar year.
12. Requires the property value to be determined within 30 days of an application being received by a property owner, and requires the property owner to provide proof of ownership and other title releases prior to the approval of the property, and specifies that the property owner may elect not to take the offer proposed by the qualifying investment entity. Requires payment be made to the property owner within 30 days of being approved.
13. Requires a qualifying investment entity to hold the property for up to 10 years following the disaster, and requires that the investment entity maintain the property in good standing with the expectations of the community and regularly remove trash. Prohibits the occupancy of the property unless it is developed.
14. Requires the investment entity to redevelop the property as soon as practicable, with preference given to preserve the socioeconomic composition of the disaster area to the maximum extent possible. Requires any necessary zoning changes to be approved by the appropriate local government entity, and exempts any property developed under the bill’s program from the California Environmental Quality Act (CEQA).
15. Permits a qualified investor to purchase the security authorized by the bill within 24 months of a state of disaster declared by the Governor. Permits up to 30 percent of the capital gains realized by a qualified investor to be deferred for up to 10 years, or until any return is realized. Requires any original tax due and any tax on profits realized to be paid within 30 days of the conclusion of the deferral period or liquidity event.
16. Requires a qualifying investment entity to annually disclose information relating to the properties it acquires with funds through this bill, to be provided to the I-Bank and posted on the qualifying investment entity’s website, as specified.
17. Permits a local jurisdiction to limit the number of qualifying investment entities eligible for participation in the program for each specific state of disaster declared by the Governor. Specifies that, if multiple disasters are declared, the area with the least restrictive use of qualifying investment entities is to receive priority consideration.
18. Specifies that it is an urgency statute necessary in order to coordinate efforts at the earliest time possible to rebuild housing in communities in the Counties of Los Angeles and Ventura that were impacted by the wildfires that began on January 7, 2025.

COMMENTS

1. Author’s statement

According to the author:

AB 797 helps stabilize property values in disaster-affected areas, giving homeowners a fair chance to recover without being forced to sell at a loss. It prevents displacement, supports long-term recovery, and ensures communities can rebuild stronger.

1. The Palisades and Eaton fires

In early January 2025, extremely dry conditions and high winds in Los Angeles resulted in two of the most destructive wildfires in state history. The Palisades fire, which started on January 7th, burned a total of 23,448 acres and damaged or destroyed almost 8,000 structures in the Pacific Palisades and Topanga State Park area of West Los Angeles.^[1] That same day, another major fire also broke out in the greater Los Angeles area: the Eaton fire. The Eaton fire consumed 14,021 acres and damaged or destroyed more than 10,000 structures, including significant portions of the city of Altadena.^[2] About half of all properties in the Pacific Palisades and Altadena were destroyed by the Palisades and Eaton fires, and both fires together tragically took the lives of 29 civilians and injured a dozen firefighters. Real estate losses have been estimated to be as high as $30 billion, and just under 13,000 households were displaced by the Palisades and Eaton fires.^[3] An estimated 9,592 single family homes and condominiums, 678 apartment units, 2,210 duplex and bungalow courts, and 373 mobilehomes were either heavily damaged or destroyed. All told, the January wildfires in Los Angeles were some of the most tragic and destructive wildfires in state history.

Many homeowners were significantly affected by the wildfires. Many had their properties covered by hazardous debris and ash, significantly damaged, or completely destroyed by the blazes. The wildfires also interrupted numerous businesses and many people’s jobs. Homeowners whose homes were damaged or destroyed found themselves searching for temporary housing as they worked to rebuild or clean up their properties, all while still having mortgage payments due and possibly also experiencing interruptions in their employment or income. For homeowners who were uninsured or underinsured, the financial strain of the fires have been even more significant.

1. The fires may contribute to displacement and a decrease in homeownership

In the aftermath of this tragedy, affected property owners are incredibly vulnerable to further victimization and harm. This is the exact vulnerability that some have attempted to capitalize upon. Residents within the affected areas of the fires – particularly in Altadena – have reported being solicited almost immediately after the fires to sell their properties.^[4] Often times, these offers are often far below the market value of the property. Vulnerable homeowners facing the daunting task of rebuilding and additional financial strains from the wildfires may be easily convinced to take these unscrupulous buyers’ offers for the promise of a quick solution or quick cash. When they do, they may lose out on a significant amount of accumulated equity in their homes and the fair market value of the property, and they may be forced to ultimately move out of the community.

For the city of Altadena, a historically African American and working-class city with a strong sense of community, the effects of these predatory property sales may significantly change the community’s identity and result in the displacement of families that have resided in Altadena for generations. Some studies have found that disasters like wildfires result in significant displacement and gentrification, as victims of the disaster must move out and wealthier residents and investors buy the distressed properties.^[5] Recently, the wildfire in Lahaina, Maui, raised concerns about speculative real estate investors purchasing destroyed properties and accelerating displacement and gentrification, concerns that resulted in the creation of the Lahaina Community Land Trust to purchase and preserve land in the city.^[6] These concerns caused some in Altadena to start a movement after the wildfires, the “Altadena Not for Sale” movement, to advocate against the predatory buying up of properties in the city that were impacted by the Eaton fire.^[7]

In light of these concerns, the Department of Real Estate issued a consumer alert warning homeowners affected by the wildfires of the risks of predatory buyers.^[8] In addition, Governor Newsom issued an Executive Order prohibiting unsolicited offers to buy the property of victims of the wildfires.^[9] But these actions do not provide hard-hit communities with the tools to combat outside investors and gentrification.

1. Go-BIZ and the I-Bank

The Governor’s Office of Business and Economic Development(GO-Biz) was created in 2012 to serve as the state’s single point of contact for economic development and job creation efforts. GO-Biz offers services to businesses relating to the attraction of customers, retention and expansion of services, site selection, permit streamlining, regulatory hurdles, small business assistance, international trade development, and assistance with state government, among others.^[10] The California Infrastructure and Economic Development Bank (I-Bank) is housed within GO-Biz, and was created “to finance public infrastructure and private development that promote a healthy climate for jobs, contribute to a strong economy, and improve the quality of life in California communities.”^[11] The I-Bank is able to issue tax-exempt and taxable revenue bonds, provide financing to public agencies, provide credit enhancements, acquire or lease facilities, and leverage state and federal funds. It currently operates the Infrastructure State Revolving Fund (ISRF) Loan program, Expanding Venture Capital Access program, the Climate Catalyst Revolving Loan Fund, the Small Business Finance Center, and the Bond Financing Program. It provided $1.4 billion in bonds and loans, 1,024 business loan guarantees, and more than $58 billion in total finance activity in the 2023-2024 fiscal year.^[12]

1. AB 797 creates the Community Reinvestment Act to provide nonprofits and community groups the ability to purchase and develop properties destroyed by disaster

AB 797 proposes to create the “Community Reinvestment Act of 2025” to provide funding for local community organizations and nonprofits to purchase properties damaged or destroyed by the wildfires. It does so by leveraging securities sold by the I-Bank to major insured financial institutions to raise funds that will then be provided by I-Bank to qualifying nonprofits and other entities for the purchase and redevelopment of properties damaged or destroyed by a disaster. The securities sold under the bill would be tradeable, zero-interest securities purchased by major banks and other depository institutions that have obligations to invest in low- and moderate-income communities under the federal Community Reinvestment Act of 1977. (12 U.S.C. § 2901.)

The raised funds would be disbursed by I-Bank to qualifying investment entities, who would then use the funds to purchase distressed properties to redevelop. Qualifying investment entities under the bill include: a California-based 501(c)(3) nonprofit that develops and preserves affordable housing or small businesses in California; a charity registered with the state; an instrumentality of the state or county; a local public entity; or a limited partnership or limited liability company that is owned by a nonprofit or community land trust. When purchasing a property with the bill’s funds, the investment entity would have to buy the property for a price based on the value of the property prior to the disaster, less any insurance amount for the structure that used to exist on the property, or less a reasonable determination of the value of the previous structure. The investment entity would be required to seek to redevelop the property as soon as practicable, and the property would not be permitted to be occupied until it is redeveloped.

The investment entity would have to conduct a liquidity event within 10 years of purchasing the property, which could be the refinancing of the property, or the sale of the property. All proceeds from the liquidity event, less a five percent administrative fee, would be split between the investors in the security and the I-Bank.

1. Amendments

The author has agreed to amendments that: provide a definition of a qualified investor; clarify that purchased properties may not be occupied or leased during the time in which the qualified investment entity owns the property under the bill’s program; and specify that the sale of a redeveloped property purchased by a qualified investment entity must prioritize owner occupancy. A full mock-up of these amendments is attached at the end of this analysis.

1. Arguments in support

According to the California Community Foundation, which supports AB 797:

Los Angeles County proudly supports AB 797, the Community Stabilization Act, which would enable qualified investors, such as nonprofit organizations, to fund the acquisition and management of residential properties. Administered through the California Infrastructure and Economic Development Bank (I-Bank), this bill would leverage Community Reinvestment Act dollars, which banks are tasked with investing in underserved communities, to create a zero-interest investment vehicle.

The nonprofit can then invest those dollars back into the community. By keeping ownership and operation of the land in community hands, AB 797 offers a sustainable path to neighborhood stabilization and helps protect residents from predatory speculation.

SUPPORT

California Community Foundation

California-Hawaii State Conference of the NAACP

County of Los Angeles Board of Supervisors
Two individuals

OPPOSITION

None received

RELATED LEGISLATION

Pending Legislation:

SB 851 (McKinnor, 2025) prohibits a buyer of residential real property in specified ZIP codes from making an unsolicited offer to purchase the property, requires that the buyer and seller execute a specified written attestation affirming that the contract was not entered into as a result of an unsolicited offer, and provides various civil and criminal enforcement provisions. AB 851 is currently pending before the Senate Appropriations Committee.

SB 641 (Ashby, 2025) authorizes the Real Estate Commissioner to revoke the real estate license of any realtor who makes an unsolicited offer to an owner of real property to purchase the property for an amount less than the fair market value if the property is located in a declared disaster area, and would make a violation of that provision a misdemeanor. SB 641 is currently pending before the Assembly Appropriations Committee.

SB 610 (Pérez, 2025) requires, among other things, that the Commissioner of Financial Protection and Innovation of the Department of Financial Protection and Innovation to coordinate with mortgage lenders and servicers operating in the state to facilitate and monitor the implementation and promotion of mortgage forbearance, foreclosure prevention, and loss mitigation programs available to borrowers who experience a material decrease in household income or an increase in household expenses due to a wildfire, upon the declaration of a state of emergency due to wildfire. AB 610 is currently pending before the Assembly Judiciary Committee.

AB 493 (Harabedian, 2025) requires mortgage lenders that make loans secured by property containing one- to four-family residences to pay two percent interest on any insurance proceeds following property damage or loss that is held by the mortgage lender. AB 493 is currently pending before the Senate Appropriations Committee.

AB 238 (Harabedian, 2025) authorizes a borrower experiencing financial hardship due to the wildfire disasters in Los Angeles County in January 2025 to request forbearance on their residential mortgage loan, and requires a mortgage servicer to offer mortgage payment forbearance for an initial period of up to 90 days, which can be extended up to 12 months. AB 238 is currently pending before the Senate Appropriations Committee.

Prior Legislation:

SB 455 (McGuire, Ch. 873, Stats. 2023) required that, when a mortgage on a property located within the geographic area of a declared state of emergency or local emergency is transferred to a new mortgage servicer, the transferor mortgage servicer provide the new mortgage servicer with any written records between the borrower and the mortgage servicer relating to the borrower’s use of insurance proceeds to repair or replace property damaged or destroyed by the disaster, and required the new mortgage servicer to honor any previous written agreements between the borrower and the previous mortgage servicer.

SB 101 (Bergeson, Ch. 749, Stats. 1994) established the Bergeson-Peace Infrastructure Bank Act, creating the California Infrastructure and Economic Development Bank (I-Bank).

PRIOR VOTES:

Senate Business, Professions and Economic Development Committee (Ayes 8, Noes 3)

Assembly Floor (Ayes 69, Noes 3)

Assembly Appropriations Committee (Ayes 11, Noes 1)

Assembly Economic Development, Growth, and Household Impact Committee (Ayes 7, Noes 0)

**************

Mock-up of Amendments for AB-797 (Harabedian (A))

(Amendments may be subject to technical changes by Legislative Counsel)

The people of the State of California do enact as follows:

SECTION 1. The Legislature finds and declares all of the following:

(a) Disasters create a situation where distortions of capital allocation can be created.

(b) In some cases, property insurance for the structure is inadequate to meet the overall loss created by a disaster.

(c) Land, as a portion of the disaster loss, is illiquid immediately following a disaster, limiting options for those most affected.

(d) For most working and middle-class families, their home is their single greatest asset and disasters can wipe out that investment or force the sale of that investment at reduced prices.

(e) It is imperative that capital is properly allocated to ensure fair market prices are available to those who want to sell their property because of a disaster.

(f) Stabilizing the underlying property for communities is a critical factor in helping recovery from a disaster.

SEC. 2. Article 11 (commencing with Section 63049.80) is added to Chapter 2 of Division 1 of Title 6.7 of the Government Code, to read:

Article  11. Community Stabilization Act

63049.80. This article shall be known, and may be cited, as the Community Stabilization Act.

63049.81. (a) The bank shall develop and administer a program to issue a security. The purpose of the program is to help stabilize property values in disaster-affected areas by allowing qualified investors to purchase tradable securities with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value. The profits from the land investments shall be shared among investors and the state pursuant to this article, with qualifying investment entities being reimbursed for their administrative costs, ensuring disaster-stricken homeowners can recover their equity while helping prevent predatory land grabs.

(b) The bank shall issue a security that has all of the following features:

(1) Is tradeable.

(2) Allows for purchases in qualifying residential land for the purposes of this article.

(3) Complies with municipal bonding requirements set forth in Section 149 of Title 26 of the United States Code, except that the security does not need to be tax exempt.

(4) Is funded by investments made by qualified investors using funds available pursuant to the federal Community Reinvestment Act of 1977 (12 U.S.C. Sec. 2901 et seq.).

(5) Repays investment based on either of the following liquidity events, which shall occur within 10 years of the purchase of an investment property:

(A) The refinance of the investment property.

(B) The sale of the investment property.

(6) Is noninterest bearing and provides an investment return to qualified investors when a liquidity event, as described in paragraph (5), occurs. Any increase in value to the security shall be distributed as described in Section 63049.82.

(7) Allows for multiple classes of qualified investors to participate in purchasing the security.

(c) For the purposes of this article, “qualified investor” means an “insured depository institution” as defined in 12 U.S.C. Sec. 1813.

63049.82. (a) For any profit realized by the sale or refinance of the investment property, the proceeds shall be distributed as follows:

(1) The bank shall receive 5 percent of the profit.

(2) The qualified investors shall receive 90 percent of the profit to be apportioned according to each qualified investor’s percentage of investment in the security.

(3) A qualifying investment entity shall receive 5 percent of the profit, to be allocated as their administrative fee, pursuant to Section 63049.86.

(b) An investment entity shall return the proceeds of profits received upon a liquidity event to the bank for disbursement as described in subdivision (a).

63049.83. (a) Funds raised from the purchase of the security by qualified investors shall be deposited in the Community Stabilization Fund, which is hereby created. Notwithstanding Section 13340, all moneys in the fund are continuously appropriated, without regard to fiscal years, to the bank for purposes of this article. The moneys in the fund shall be allocated by the bank to qualifying investment entities to be invested in a specific region of the state that is covered by a state of disaster declared by the Governor.

(b) A qualifying investment entity shall use funds for a qualifying community development project as required under the federal Community Reinvestment Act of 1977 (12 U.S.C. Sec. 2901 et seq.).

63049.84. A qualifying investment entity shall meet both of the following requirements:

(a) Be any of the following:

(1) A nonprofit organization formed under Section 501(c)(3) of the Internal Revenue Code that meets all of the following requirements:

(A) It has a determination letter from the Internal Revenue Service affirming its tax-exempt status pursuant to Section 501(c)(3) of the Internal Revenue Code and is not a private foundation as that term is defined in Section 509 of the Internal Revenue Code.

(B) It has its principal place of business in California.

(C) The primary residences of all board members are located in California.

(D) One of its primary activities is the development and preservation of affordable rental or home ownership housing or small business in California.

(E) It is registered and in good standing with the Attorney General’s Registry of Charities and Fundraisers, pursuant to the Supervision of Trustees and Fundraisers for Charitable Purposes Act (Article 7 (commencing with Section 12580) of Chapter 6 of Part 2 of Division 3 of Title 2).

(F) It has no outstanding state or federal tax liabilities or other lien.

(2) A charity registered with the state.

(3) An instrumentality of the state or county.

(4) A local public entity, as defined in Section 50079 of the Health and Safety Code.

(5) A limited partnership in which the general partner is a nonprofit corporation, as described in paragraph (1).

(6) A limited liability company wholly owned by either of the following:

(A) One or more nonprofit corporations described in paragraph (1).

(B) A community land trust, as defined in subdivision (a) of Section 402.1 of the Revenue and Taxation Code that is a nonprofit corporation, as described in paragraph (1).

(b) Prove its capability to receive funds before fund dispersal, as determined by the bank, to ensure proper stewardship of funds for the purposes of this article.

63049.85. Upon realization of profits due to a liquidity event, the qualifying investment entity shall, within 30 days of the funds being received by the qualifying investment entity, transfer those funds to the bank for disbursement as described in Section 63049.82.

63049.86. (a) A qualifying investment entity may charge an administrative fee of up to 5 percent, which shall be paid from the profits disbursed to the qualified investment entity pursuant to paragraph (3) of subdivision (a) of Section 63049.82.

(1) A qualifying investment entity shall publish its administrative fees and submit a copy of the fees to the bank prior to dispersal of funds.

(2) A qualifying investment entity with lower administrative fees shall be prioritized for the greatest dispersal of funds.

(b) A qualifying investment entity may allocate direct cost fees to the operation of the project outside of administrative fees. Direct cost fees may include any of the following:

(1) Escrow costs, including insurances for purchase and title of property.

(2) Maintenance of properties under ownership, including the security of a property.

(3) Property tax fees paid to a local government as a result of ownership. A qualifying investment entity shall continue to pay property tax to the local government while a property is under ownership.

63049.87. (a) A qualified investment entity may be removed by the bank or its designee if the qualifying investment entity does not meet any of its obligations required under this article.

(b) If a qualifying investment entity is removed, the qualified investment entity shall return the funds it received pursuant to this article to the bank.

63049.88. (a) A qualified investment entity shall use funds that it receives pursuant to this article to purchase residential property that has been damaged or destroyed by a disaster in an area covered by a state of disaster declared by the Governor.

(b) (1) The purchase price of the property shall be based on the value of the property minus the insured amount of the structure.

(2) If there was no insurance on the structure or if insurance proceeds are not available, the qualifying investment entity shall make a reasonable determination of the value that otherwise would have been allocated to the structure based on available information and subtract that amount from the total amount of value as determined by subdivision (c).

(c) Proof of the total value of the property may be based on the higher of any of the following:

(1) Existing official appraisal in the last 12 months prior to the declaration of a state of disaster.

(2) Publicly available documentation, including internet websites and real estate data, demonstrating a fair market value and agreed upon price.

(3) Use of county property tax assessments for the last calendar year.

63049.89. (a) Property value shall be determined within 30 days of an application being received by a property owner.

(1) A property owner shall provide proof of ownership and other title releases prior to approval of property acceptance as required by law and customary real estate transactions.

(2) A property owner may elect not to take the offer proposed by the qualifying investment entity and instead retain their property.

(b) Payment will be made to a property owner within 30 days of an application being approved.

63049.90. (a) Property acquired shall be held by the qualifying investment entity for up to 10 years following the disaster.

(1) During the time of ownership, the qualifying investment entity shall maintain the property in good standing with the expectations of the community.

(2) Regular trash removal shall take place.

(3) A property shall not be occupied during the period of ownership by the qualifying investment entity unless it is developed. A qualified investment entity shall not lease, rent, or otherwise allow occupancy of the property.

(b) A qualified investment entity shall seek to redevelop the property as soon as practicable.

(1) Preference shall be given to preserve the socioeconomic composition of the disaster area to the maximum extent possible.

(2) Any necessary zoning changes shall be approved by the appropriate local government entity.

(3) A property developed under this section shall be exempt from the California Environmental Quality Act (Division 13 (commencing with Section 21000 of the Public Resources Code)).

(c) Upon the sale of the property, the profits realized from the appreciation of the property shall be returned by the qualifying investment entity to the bank for distribution as provided in Section 63049.82.

(d) Priority shall be given to ensuring that the sale of the property by the qualifying investment entity results in owner occupancy.

63049.91. (a) Within 24 months of a state of disaster declared by the Governor, a qualified investor may purchase the security authorized pursuant to this article.

(b) Up to 30 percent of the capital gains realized by a qualified investor pursuant to this article may be deferred for up to 10 years or until any return is realized on the investments made pursuant to this article.

(c) The original tax due and any tax on profits realized shall be paid within 30 days of the conclusion of the deferral period or liquidity event realized.

63049.92. A qualifying investment entity shall annually disclose information relating to the properties it acquires with funds from this article. The information shall be submitted to the bank and shall be posted on the qualifying investment entity’s internet website. The information shall include all of the following:

(a) The total number of properties owned and under management.

(b) The total dollars received by a qualifying investment entity and invested in a land purchase.

(c) An accounting of allowable expenses.

(d) The total number of properties sold and acquired.

(e) The total dollar amount of properties sold.

(f) The allocation of profits.

(g) Any public accounting of operation of the qualifying investment entity otherwise disclosed to public sources in consideration for qualifying as a nonprofit entity, including tax returns as required by state and federal laws.

63049.93. (a) A local jurisdiction may limit the number of qualifying investment entities eligible for participation in the program pursuant to this article for each specific state of disaster declared by the Governor.

(b) If multiple disasters are declared, the area with the least restrictive use of qualifying investment entities shall receive priority consideration.

SEC. 3. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:

In order to coordinate efforts at the earliest time possible to rebuild housing in communities in the Counties of Los Angeles and Ventura that were impacted by the wildfires that began on January 7, 2025, it is necessary for this act to take effect immediately.

1. CalFire, “Palisades Fire,” (3/27/2025) https://www.fire.ca.gov/incidents/2025/1/7/palisades-fire. ↑

2. CalFire, “Eaton Fire,” (3/04/2025) https://www.fire.ca.gov/incidents/2025/1/7/eaton-fire. ↑

3. Doug Smith and Sandhya Kambhampati, “Real Estate losses from fires may top $30 billion, from old mobile homes to $23-million mansions,” Los Angeles Times (Feb. 21, 2025) https://www.latimes.com/california/story/2025-02-21/real-estate-losses-from-palisades-and-eaton-fires-top-30-billion#:~:text=Los%20Angeles%20Housing%20Department%20records,the%20city's%20rent%20stabilization%20ordinance. ↑

4. Amanda Del Cid Lugo, “Altadena residents sift through calls to sell – but the soul is not for sale,” Los Angeles Public Press (Feb. 12, 2025), https://lapublicpress.org/2025/02/altadena-real-estate-not-for-sale-eaton-property/. ↑

5. Abdallah Fayyad, “What happens when the California fires go out? More gentrification,” VOX (Jan. 17, 2025) https://www.vox.com/policy/395261/california-wildfires-los-angeles-gentrification-displacement. ↑

6. Nina Lakhani, “First came the Maui wildfires. Now come the land grabs: ‘Who owns the land is key to Lahaina’s future’,” The Guardian (Mar. 15, 2024) https://www.theguardian.com/us-news/2024/mar/15/maui-wildfires-community-land-trust. ↑

7. Id. ↑

8. Cal. Dept. of Real Estate, “Public Notice: Los Angeles property owners near wildfires urged to report unsolicited offers to buy their properties under fair market value,” (Jan. 17, 2025), https://www.dre.ca.gov/Consumers/PublicNotice_01172025_LA_Wildfires.html#:~:text=An%20unsolicited%20offer%20is%20an,%2C%20phone%20call%2C%20or%20mail. ↑

9. Governor Gavin Newsom, Executive Order N-7-25 (Jan. 14, 2025). ↑

10. State of California, “Governor’s Office of Business and Economic Development (Go-Biz)” (Dec. 24, 2024), https://www.ca.gov/departments/237/. ↑

11. Cal. Infrastructure & Econ. Dev. Bank, “What is IBank?” (accessed Jul. 11, 2025) https://www.ibank.ca.gov/. ↑

12. Id. ↑

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Angelique Ashby, Chair

2025 - 2026 Regular

Bill No: AB 797 Hearing Date: June 30, 2025

Subject: Community Stabilization Act

SUMMARY:

An urgency bill that establishes the Community Stabilization Act which requires the California Infrastructure and Economic Development Bank (IBank) to develop and administer a program to issue a security, with the stated purpose of the program as helping stabilize property values in disaster-affected areas by allowing qualified investors to purchase tradable securities with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value

NOTE: This bill is double-referred, second, to the Senate Committee on Judiciary.

Existing law:

1. Establishes the Governor’s Office of Business and Economic Development (GO-Biz) within the Governor's Office for the purpose of serving as the lead state entity for economic strategy and marketing of California on issues relating to business development, private sector investment and economic growth. (Government Code (GC) §§ 12096 – 12098.5)
2. Establishes the Bergeson-Peace Infrastructure and Economic Development Bank Act and creates the IBank. (GC § 63000 et seq.)
3. Establishes the GO-Biz as the administrator of the Fund. (GC § 63021)
4. Authorizes IBank to make loans, issue bonds, and provide other economic development assistance, among other things. (GC § 63050 et seq.)
5. Establishes and authorizes the California Housing Finance Agency (CalHFA) to make loans to housing sponsors for housing developments and to qualified mortgage lenders, among others. Provides that the primary purpose of CalHFA is to meet the housing needs of persons and families of low- or moderate-income.

This bill:

1. An urgency measure that establishes the Community Stabilization Act which requires IBank to develop and administer a program to issue a security, with the stated purpose of the program as helping stabilize property values in disaster-affected areas by allowing qualified investors to purchase tradable securities with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value. Requires profits from these land investments to be shared among investors and the state, with qualifying investment entities being reimbursed for their administrative costs, ensuring disaster-stricken homeowners can recover their equity while helping prevent predatory land grabs.
2. Specifies that a qualifying investment entity must be organized as any of the following and is capable of receiving funds before fund dispersal, as determined by IBank, in order to ensure proper stewardship of funds:
3. A nonprofit organization with a determination letter from the Internal Revenue Service affirming its tax-exempt status with its principal place of business in California and the primary residences of all board members are located in California. One of the nonprofit’s primary activities is the development and preservation of affordable rental or home ownership housing or small business in California and the nonprofit must be registered and in good standing with the Attorney General's Registry of Charities and Fundraisers and the nonprofit does not have any outstanding state or federal tax liabilities or other lien.
4. A charity registered with the state.
5. An instrumentality of the state or county.
6. A local public entity, as defined in Health and Safety Code for purposes of state housing programs.
7. A limited partnership in which the general partner is a nonprofit pursuant to the requirements of a) above.
8. A limited liability company wholly owned by a nonprofit described in a) above or owned by a nonprofit community land trust.
9. Requires IBank to issue a security that meets specified requirements, including that it is: tradeable; allows for purchases in qualifying residential land; complies with municipal federal bonding requirements but specifies the security does not need to be tax exempt; is funded by investments made by qualified investors using funds available pursuant to the federal Community Reinvestment Act of 1977; repays investment based on specified liquidity events; is noninterest bearing and provides an investment return to qualified investors when a liquidity event and; allows for multiple classes of qualified investors to participate in purchasing the security.
10. Specifies how the profit from the sale or refinance of the investment must be distributed, including: 5 percent of the profit to the bank; 90 percent of the profit to qualified investors, apportioned according to each qualified investor’s percentage of investment in the security and; 5 percent of the qualifying investment entity to be allocated as their administrative fee.
11. Requires funds raised from the purchase of a security by qualified investors to be deposited into a new Community Stabilization Fund (Fund) which is continuously appropriated, without regard to fiscal years, to the IBank. Requires IBank to allocate moneys in the Fund to qualifying investment entities to be invested in a specific region of the state that is covered by a state of disaster declared by the Governor. Requires a qualifying investment entities, upon realization of profits, to transfer those funds to IBank within 30-days.
12. Requires a qualifying investment entity to use funds for a qualifying community development project as required under the federal Community Reinvestment Act of 1977. Requires that a qualifying investment entity use funds to purchase residential property that has been damaged or destroyed by a disaster in an area covered by a state of disaster declared by the Governor. Specifies that the purchase price of the property must be based on the value of the property minus the insured amount of the structure and that if there was no insurance on the structure or if insurance proceeds are not available, the qualifying investment entity shall make a reasonable determination of the value that otherwise would have been allocated to the structure based on available information and subtract that amount from the total amount of value.
13. Authorizes a qualifying investment entity to charge an administrative fee of up to 5 percent and specifies that a qualifying investment entity with lower administrative fees shall be prioritized for the greatest dispersal of funds. Authorizes a qualifying investment entity to allocate various fees beyond administrative costs, including escrow costs, maintenance of properties under ownership, including the security of a property, or roperty tax fees paid to a local government as a result of ownership. Authorizes IBank to remove a qualified investment entity if it does not meet any of its obligations and requires funds to be returned to IBank.
14. Specifies how property value and ownership are established and how payment is made to a property owner.
15. Requires a qualifying investment entity to hold property acquired for up to 10 years following the disaster and maintain the property in good standing according to community expectations. Prohibits a property from being occupied during this time unless it is developed and requires the qualifying investment entity to redevelop the property as soon as practicable.
16. Specifies that preference shall be given to preserve the socioeconomic composition of the disaster area to the maximum extent possible.
17. Specifies that necessary zoning changes shall be approved by the appropriate local government entity and exempts a property developed under this bill from the California Environmental Quality Act.
18. Authorizes a qualified investor, within 2 years of a state of disaster declared by the Governor, to purchase a security established by this bill. Specifies tax deferral options and tax payment deadlines.
19. Requires a qualifying investment entity to annually disclose information to IBank and posted on its website relating to the properties it acquires with funds authorized by this bill.
20. Authorizes a local jurisdiction to limit the number of qualifying investment entities eligible for participation in the program.
21. Makes findings and declarations that: disasters create a situation where distortions of capital allocation can be created; in some cases, property insurance for the structure is inadequate to meet the overall loss created by a disaster; land, as a portion of the disaster loss, is illiquid immediately following a disaster, limiting options for those most affected; for most working and middle-class families, their home is their single greatest asset and disasters can wipe out that investment or force the sale of that investment at reduced prices; it is imperative that capital is properly allocated to ensure fair market prices are available to those who want to sell their property because of a disaster and; stabilizing the underlying property for communities is a critical factor in helping recovery from a disaster.
22. States that it is urgent the bill take effect immediately in order to coordinate efforts at the earliest time possible to rebuild housing in communities in the Counties of Los Angeles and Ventura that were impacted by the wildfires that began on January 7, 2025.

FISCAL EFFECT:

Unknown. This bill is keyed fiscal by Legislative Counsel. The prior version of the measure did not establish a program at IBank so the bill in its current form has not been evaluated by a fiscal committee of the Legislature.

COMMENTS:

1. Purpose. The Author is the Sponsor of this bill. According to the Author, “In the wake of disasters, too many homeowners are forced to sell at a loss, opening the door to predatory investors and displacing long-time residents. AB 797 offers a targeted solution by leveraging Community Reinvestment Act dollars to empower nonprofits to purchase and manage homes in affected areas—stabilizing property values and protecting community control. This bill ensures that recovery efforts prioritize families and neighborhoods, not speculation, helping communities rebuild stronger and more equitably.”

The Author adds that “The 2025 wildfires in Los Angeles have left over 16,000 structures damaged or destroyed, with insured losses estimated between $28 billion and $35 billion. This widespread destruction has devastated homeowners, especially those in working- and middle-class communities, who often rely on their homes as their primary asset. When disasters strike, property values can drop sharply, forcing homeowners to sell at reduced prices. This creates a window for predatory investors to capitalize on the crisis, purchasing devalued properties at a fraction of their worth. These land grabs can lead to gentrification, displacing long-time residents and reshaping communities in favor of profit-driven development. Such shifts further deepen economic inequality and push vulnerable families out of their homes. Additionally, disasters often lead to liquidity issues, leaving homeowners unable to access funds for rebuilding or to sell their properties at fair market value. With insurance claims taking time to process and limited government relief, many families face a prolonged financial struggle, risking foreclosure and long-term instability. Without stronger protections, the economic impact of disasters can last far beyond the immediate destruction.”

According to the Author, this bill will create a program to stabilize property values in areas affected by disasters, particularly in California, by allowing investors to purchase a tradable security from the state. The security can then by invested in a qualified investment entity (which is a nonprofit organization or charity that is registered with the state) to fund the purchase and management of residential properties in these areas. Investors can earn returns when the properties are sold.

According to the Author, the program established in this bill directly addresses the economic fallout of disasters like the 2025 wildfires in Los Angeles and:

• Prevents Predatory Land Grabs – Without intervention, disaster-stricken homeowners may be forced to sell at reduced prices, allowing profit-driven investors to buy up properties and drive gentrification. This bill ensures that nonprofit organizations, rather than speculative investors have the opportunity to stabilize affected neighborhoods.
• Stabilizes Property Values – When disasters hit, property values often plummet. By allowing qualified investors to purchase and manage properties, the act helps maintain home values, preventing further financial losses for struggling homeowners.
• Provides a Path for Homeowners to Recover Equity – Many homeowners face liquidity issues after a disaster, struggling to rebuild or sell at a fair price. The program creates a structured way for properties to be managed and resold, allowing owners to regain financial stability.
• Leverages Federal Community Reinvestment Act (CRA) Funds – By aligning with the CRA, this bill encourages banks to invest in community recovery, making use of existing financial mechanisms to fund disaster relief in a sustainable way.
• Encourages Responsible Redevelopment – The act requires that purchased properties be maintained and redeveloped within ten years, ensuring long-term investment in disaster-affected areas rather than allowing abandoned or neglected properties to degrade further.

1. Background.

IBank. According to its website, IBank exists within GO-Biz and “was created in 1994 to finance public infrastructure and private development that promote a healthy climate for jobs, contribute to a strong economy and improve the quality of life in California communities. IBank has broad authority to issue tax-exempt and taxable revenue bonds, provide financing to public agencies, provide credit enhancements, acquire or lease facilities, and leverage State and Federal funds. IBank’s current programs include the Infrastructure State Revolving Fund (ISRF) Loan Program, California Lending for Energy and Environmental Needs (CLEEN) Center, the Climate Catalyst Revolving Loan fund, Small Business Finance Center and the Bond Financing Program.”

Wildfires and housing. California continues to experience the impacts of climate change with disasters of increasing scale and frequency destroying whole communities at an unprecedented scale. In the first month of 2025, major wildfires burned more than 50,000 acres. The Eaton and Palisades fires alone destroyed or damaged more than 18,000 structures including homes, small businesses, schools, and places of worship in Los Angeles County. The destruction of homes in Los Angeles County exacerbates the existing housing crises facing that region and California as a whole.

The California Housing Finance Agency (CalHFA) is the state’s affordable housing bank. CalHFA borrows money from the private financial market at below-market interest rates by issuing tax-exempt revenue bonds. CalHFA passes these interest rate savings on to low- and moderate-income first-time homebuyers and affordable rental housing developers by offering below market-rate mortgages. These bonds are backed only by CalHFA revenues and not by the state General Fund. CalHFA also provides downpayment assistance in the form of deferred, “silent second” mortgages (i.e., the borrower makes no monthly payments but repays the loan at sale or refinance) for families who need extra assistance achieving homeownership.

1. Arguments in Support. The California Community Foundation writes “We support AB 797 because it is a thoughtful, market-based solution for communities to address several urgent challenges we consistently hear from our partners closest to the ground, particularly in Altadena, where homeownership has long been a cornerstone of generational wealth-building for families otherwise historically excluded from that opportunity. For many Altadenans, their homes are not just structures—they are their most important financial asset, one that holds deep familial, cultural, and community meaning. For too many, this asset is now a source of uncertainty. They face the tough decision of whether to rebuild or to sell, and selling isn’t a simple choice when faced with the prospect of selling to predatory investors with no commitment to preserving the fabric of this vibrant, historic, and diverse community. This bill creates a pathway for mission-driven nonprofits to leverage Community Reinvestment Act funds to acquire homes at fair market value and ensure those properties are redeveloped or resold in ways that benefit the community, not just private equity. It’s a smart, fiscally responsible model that protects homeowners from predatory practices, prevents neighborhood destabilization, keeps wealth circulating locally, and puts the possibility of preserving the character of beloved neighborhoods like Altadena within reach.”

The California-Hawaii State Conference of the NAACP writes that “By stabilizing communities and safeguarding property values, AB 797 ensures long-term recovery for disaster victims.”

The County of Los Angeles Board of Supervisors write that “By keeping ownership and operation of the land in community hands, AB 797 offers a sustainable path to neighborhood stabilization and helps protect residents from predatory speculation.”

SUPPORT AND OPPOSITION:

Support:

Alpha Kappa Alpha Sorority, Inc. - Pasadena Chapter
Alpha Kappa Alpha Sorority, Inc., Omega Upsilon Omega
Altadena Tenants Union
California Community Foundation
California-Hawaii State Conference of the NAACP
County of Los Angeles Board of Supervisors
Global Empowerment Mission

Opposition:

None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 797

Author:(Harabedian)

As Amended Ver:April 21, 2025

2/3 vote. Urgency

SUMMARY

This bill establishes the Community Stabilization Act, directing GO-Biz to administer a program that stabilizes property values in disaster-affected areas. The program allows qualified investors to purchase tradable securities, with funds going to approved entities that buy, manage, and resell residential land at fair market value. Profits are shared 90% to investors, and 5% each to GO-Biz and the managing entity. The bill also creates a Community Stabilization Fund, provides tax incentives for investors, ensures compliance with municipal bonding rules, and takes effect immediately as an urgency statute.

Major Provisions

COMMENTS

In January 2025, wildfires devastated Altadena, destroying over 2,700 structures and displacing thousands of residents. The fires disproportionately affected Black families, many of whom had deep generational ties to the area. In the aftermath, concerns have arisen about the potential for "disaster capitalism," where developers might capitalize on the destruction to acquire properties at reduced prices, thereby displacing long-time residents. This situation underscores the need for measures to ensure that property values are stabilized and that homeowners are not forced to sell at a loss.

This bill recognizes that natural disasters can severely disrupt capital allocation, making residential land illiquid and often forcing homeowners in affected areas to sell their properties at significantly reduced prices. The bill emphasizes the need to stabilize property values as a crucial part of community recovery efforts, ensuring homeowners have a fair opportunity to recover financially without being compelled to sell at a loss.

The proposed program aligns with previous legislative initiatives, such as Assembly Bill 239, which established a state-led task force to expedite housing recovery by coordinating federal, state, and local resources after disasters. However, unlike existing frameworks, the bill seeks to authorize the Governor's Office of Business and Economic Development (GO-Biz) to administer a securitization program that enables qualified investors to purchase tradable securities. These funds would then be allocated to qualifying investment entities tasked with acquiring, managing, and eventually reselling residential land at fair market value in disaster-impacted regions.

Currently, GO-Biz lacks explicit statutory authority to engage in securitization of housing assets. California's statutes governing investment authority, such as Section 53601, are highly prescriptive and generally restrict investments to those explicitly authorized by law. While local agencies are permitted to invest in securitized products issued by federal agencies, California's primary securitization efforts for housing are conducted through specialized agencies like the California Housing Finance Agency (CalHFA). CalHFA facilitates affordable housing by securitizing loans and enabling market access, often in partnership with federal entities like Freddie Mac and Fannie Mae.

The bill's author intends to provide a mechanism to stabilize property values in areas affected by disasters—such as the devastating Palisades and Eaton wildfires in Los Angeles County in January 2025, which destroyed over 16,000 structures and caused tens of billions in economic losses. Many displaced homeowners are faced with difficult decisions about their properties, often pressured to sell at discounted prices.

To address this, the bill proposes using funds—potentially sourced from Community Reinvestment Act dollars—to support nonprofit organizations that can purchase homes at fair market value. These nonprofits would have the flexibility to engage in activities such as land banking and coordinated rebuilding efforts, helping preserve community stability and dignity for affected residents.

GO-Biz, as California's lead economic development agency, would administer this program, although it currently lacks experience or in-house expertise in securitization or housing recovery programs of this nature. Given these complexities, the committee recommends further study by the Department of Finance, the California State Treasurer's Office, and other relevant agencies to identify implementation challenges and opportunities.

This bill aims to prevent homeowners from being forced to sell at a loss by providing financial support for property stabilization. While California's existing laws offer property tax relief and financial assistance, AB 797 introduces a novel approach by involving qualified investors in purchasing and managing disaster-impacted properties until they can be resold at fair market value. Creating a new tool for disaster recovery by stabilizing housing markets, protecting homeowners, and facilitating sustainable community rebuilding aligns with California's broader economic and housing recovery strategies.

According to the Author

AB 797 helps stabilize property values in disaster-affected areas, giving homeowners a fair chance to recover without being forced to sell at a loss. It prevents displacement, supports long-term recovery, and ensures communities can rebuild stronger.

Arguments in Support

Those in support state, this bill offers a thoughtful, market-based solution to urgent challenges faced by communities like Altadena, where homeownership has long been a key source of generational wealth for families historically excluded from such opportunities. For many residents, their homes are not just buildings but vital financial assets rich with familial and cultural meaning. Today, many face uncertainty, forced to choose between rebuilding or selling often at risk of predatory investors who lack commitment to preserving the community's character.

By enabling mission-driven nonprofits to use Community Reinvestment Act funds to purchase homes at fair market value, this bill creates a pathway to protect these neighborhoods. It ensures properties are redeveloped or resold in ways that truly benefit the community, not just private equity interests. This is a smart, fiscally responsible approach that safeguards homeowners, prevents neighborhood destabilization, and helps preserve the wealth and vibrant identity of communities like Altadena.

Arguments in Opposition

None on file.

FISCAL COMMENTS

According to the Assembly Committee on Appropriations, GO-Biz provided an estimate of costs related to this bill of approximately $2.5 million in years one and two of implementation and approximately $2 million thereafter (General Fund) for nine staff positions and outside contracting. However, GO-Biz cautioned that its estimate is not precise because the tasks this bill assigns to it are "very outside of the current scope of work managed by GO-Biz."

VOTES

ASM ECONOMIC DEVELOPMENT, GROWTH, AND HOUSEHOLD IMPACT: 7-0-1

YES: Solache, Bonta, Patel, Petrie-Norris, Soria, Stefani, Wallis

ABS, ABST OR NV: Castillo

ASM APPROPRIATIONS: 11-1-3

YES: Wicks, Arambula, Calderon, Caloza, Elhawary, Fong, Mark González, Hart, Pacheco, Pellerin, Solache

NO: Tangipa

ABS, ABST OR NV: Sanchez, Dixon, Ta

UPDATED

VERSION: April 21, 2025

CONSULTANT: Carla Castilla / E.D., G., & H.I. / (916) 319-2090 FN: 0000821

Date of Hearing: May 14, 2025

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 797

Author:(Harabedian) – As Amended Ver:April 21, 2025

Urgency: Yes State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill creates the Community Stabilization Act, by which the Governor’s Office of Business and Economic Development (GO-Biz) is to develop and administer a program that allows qualified investors to purchase tradable securities with the funding allocated to qualifying investment entities that purchase and manage residential land until the land can be resold at fair market value.

The bill specifies that any profits from the land investments are to be shared among investors and the state, with qualifying investment entities being reimbursed for their administrative costs.

The bill specifies that any profit realized by the sale or refinance of an investment property is to be distributed, as follows: 90 percent to qualified investors, five percent to GO-Biz and five percent to a qualifying investment entity, to be allocated as its investment fee.

FISCAL EFFECT:

GO-Biz provided an estimate of costs related to this bill of approximately $2.5 million in years one and two of implementation and approximately $2 million thereafter (General Fund) for nine staff positions and outside contracting. However, GO-Biz cautioned that its estimate is not precise because the tasks this bill assigns to it are “very outside of the current scope of work managed by GO-Biz.”

COMMENTS:

1. Purpose. The author intends this bill to “stabilize property values in disaster-affected areas, giving homeowners a fair chance to recover without being forced to sell at a loss.”
2. Background. On January 7, 2025, two wildfires, the Palisades Fire and Eaton Fire, ignited in Los Angeles County. Together, these fires destroyed over 16,000 structures. At least 30 people died. Economic losses are in the tens of billions of dollars. As a result, many residents in the areas damaged by the fires are trying to decide what to do with their homes. According to the author’s office, this bill:

allows victims various options. It funds non-profit organizations through Community Reinvestment Act dollars to purchase homes at fair market value to ensure that residents who wish to sell can do so with dignity and without fear of being taken advantage of. Non-profit organizations will then have a range of options for home construction and revitalization, such as land banking and coordinated rebuilding efforts.

State law establishes GO-Biz as the lead entity for economic strategy and the marketing of California on issues relating to business development, private sector investment, and economic growth. The office undertakes numerous promotional and educational campaigns, administers grant programs and performs other duties. GO-Biz cautions that it has neither experience with, nor in-house expertise on, the program contemplated by this bill.

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: April 22, 2025

ASSEMBLY COMMITTEE ON ECONOMIC DEVELOPMENT, GROWTH, AND HOUSEHOLD IMPACT

José Solache, Chair

ABPCA Bill Id:AB 797 (

Author:Harabedian) – As Introduced Ver:February 18, 2025

SUBJECT: Community Stabilization Act

SUMMARY: AB 797, also known as the Community Stabilization Act, proposes the creation of a program administered by The Governor’s Office of Business and Economic Development (GO-Biz) to help stabilize property values in disaster-affected areas. It allows qualified investors to purchase tradable securities, with funds allocated to investment entities that manage and resell residential land at fair market value. Profits from the investments would be shared between investors and the state, and the securities would comply with municipal bonding requirements. The bill establishes the Community Stabilization Fund, with funds allocated to qualifying investment entities in disaster-declared regions. It also provides tax incentives for investors and requires the bill to take effect immediately as an urgency statute.

Specifically, this bill:

1. Would enact the Community Stabilization Act and would require GO-Biz to develop and administer a program to issue a security.
2. Specifies that the purpose of the program is to help stabilize property values in disaster-affected areas by allowing qualified investors to purchase tradable securities, with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value.
3. Requires profits from the land investments to be shared among investors and the state according to certain percentages, with qualifying investment entities being reimbursed for their administrative costs.
4. Establishes various requirements for the security, including that it be tradeable, comply with specified municipal bonding requirements, and that it be funded by investments made by qualified investors using funds available pursuant to the federal Community Reinvestment Act.
5. Requires the security to repay the investment upon a liquidity event and within 10 years of the purchase of an investment property, and would describe a liquidity event as the refinance or sale of the investment property.
6. Requires funds raised from the purchase of the security to be deposited in the Community Stabilization Fund, which would be created by the bill, and would require all moneys in the fund to be continuously appropriated to GO-Biz.
7. Requires GO-Biz to allocate moneys in the fund to qualifying investment entities to be invested in a specific region of the state that is covered by a state of disaster declared by the Governor.
8. Requires a qualifying investment entity to meet certain requirements, including that it be a nonprofit organization formed under federal law, as specified, or a charity registered with the state.
9. Imposes requirements on the qualifying investment entity relating to the purchase and maintenance of the investment property.
10. Authorizes a qualified investor to defer up to 30% percent of the capital gains it realizes from its investment for up to 10 years or until any return is realized on the investment.
11. By establishing a new continuously appropriated fund, the Community Stabilization Fund, this bill would make an appropriation.
12. Would declare that it is to take effect immediately as an urgency statute.

EXISTING LAW:

1. Establishes the Governor’s Office of Business and Economic Development, also known as GO-Biz, to serve the Governor as the lead entity for economic strategy and the marketing of California on issues relating to business development, private sector investment, and economic growth.
2. Authorizes GO-Biz, in that capacity, to, among other things, recommend to the Governor and the Legislature new state policies, programs, and actions, or amendments to existing programs and advance statewide economic goals and to respond to emerging economic problems and opportunities.

FISCAL EFFECT: Unknown. According to the author, there will be some minor costs for Go Biz to administer, likely one time in the hundreds of thousands.

COMMENTS: This bill acknowledges that disasters can distort capital allocation, rendering land illiquid and forcing homeowners to sell at reduced prices. It emphasizes the importance of stabilizing property values to support community recovery. The proposed program aligns with previous legislative efforts to address housing challenges, such as Assembly Bill 239, which seeks to expedite housing recovery after disasters by creating a state-led task force to coordinate federal, state, and local efforts. Currently, GO-Biz does not have the explicit authority for securitization of housing. California's investment authority related statutes are prescriptive when it comes to authorizing local agency investments. If an investment is not specified in statute then it is not permissible. Section 53601 provides local agencies with the authority to purchase securitized investment products. Agency mortgage-backed securities are obligations issued by federal agencies and instrumentalities. Section 53601 (f) allows local agencies to invest up to 100% of their portfolio.

The State of California does engage in securitization for housing, primarily through the California Housing Finance Agency (CalHFA) and other programs. CalHFA, for example, utilizes securitization to promote affordable housing by providing market access through the purchase of affordable housing loans. Additionally, programs like those offered by Freddie Mac and Fannie Mae facilitate the securitization of tax-exempt loans and mortgage-backed securities for affordable housing. The committee recommends further study from the Department of Finance, California State Treasurer’s Office and involved State agencies to further determine implementation challenges and opportunities.

Author’s Statement: “AB 797 helps stabilize property values in disaster-affected areas, giving homeowners a fair chance to recover without being forced to sell at a loss. It prevents displacement, supports long-term recovery, and ensures communities can rebuild stronger.”

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

Analysis Prepared by: Carla Castilla / E.D., G., & H.I. / (916) 319-2090