Assembly BillPassed first houseGovernment
AB 158: Land use.
What AB 158 does, verified December 7, 2025
The bill aims to improve California's land use policies and environmental regulations. It requires the state's housing development and finance executive committee to make recommendations to the legislature on optimizing loan administration and aligning state housing funding sources. The bill also updates the annual report required by the governor's office of land use and climate innovation, making it more standardized. The bill defines "housing development project" for the purposes of the permit streamlining act, which regulates the review and approval of development projects by public agencies. It also updates the definition of "natural and protected lands" for the california environmental quality act (ceqa) to include lands identified for conservation in natural community conservation plans or other natural resource protection plans. The bill makes several changes to exemptions from c…
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Last action: In committee: Set, first hearing. Testimony taken. Further hearing to be set. (2025-09-10)Alert me
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| Sep. 10, 2025 | In committee: Set, first hearing. Testimony taken. Further hearing to be set. |
| Sep. 09, 2025 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on B. & F. R. |
| Sep. 09, 2025 | Senate Rule 29.3(b) suspended. (Ayes 28. Noes 8. Page 2568.) |
| Apr. 02, 2025 | Referred to Com. on B. & F. R. |
| Mar. 20, 2025 | Read third time. Passed. Ordered to the Senate. (Ayes 53. Noes 17. Page 742.) |
Latest bill textAmended version, September 9, 2025 · 5,194 words
| Amended IN Senate September 09, 2025 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Assembly Bill
No. 158
| Introduced by |
January 08, 2025 |
LEGISLATIVE COUNSEL'S DIGEST
AB 158, as amended, Committee on Budget. Budget Act of 2025. Land use.
(1) Existing law, the Governor’s Reorganization Plan No. 1 of 2025 (GRP), which became effective on July 5, 2025, reorganized specified state agencies and departments, including establishing the Housing Development and Finance Executive Committee (executive committee) within the Business, Consumer Services, and Housing Agency for the purpose of centralizing affordable housing finance policymaking across state government. The GRP requires the executive committee to, among other things, work to align state housing funding sources for the creation of a consolidated application for multifamily affordable housing developers and a coordinated review process for the application of funds. The GRP, beginning July 1, 2026, establishes the Housing Development and Finance Committee within the California Housing and Homelessness Agency, which the GRP also establishes, and transfers the executive committee to the Housing Development Finance Committee effective July 1, 2026.
This bill would state the intent of the Legislature that, in addition to the other duties required of the executive committee created by the GRP to align state housing funding sources, as described above, the executive committee be required to make recommendations to the Legislature regarding improvements the Department of Housing and Community Development may make to optimize loan administration, as specified.
(2) Existing law, the Planning and Zoning Law, requires each county and each city to adopt a comprehensive, long-term general plan for the physical development of the county or city, and specified land outside its boundaries, that includes, among other specified mandatory elements, a housing element. That law requires the planning agency of a city or county to provide by April 1 of each year an annual report to, among other entities, the Governor’s Office of Land Use and Climate Innovation, formerly known as the Office of Planning and Research, and the Department of Housing and Community Development.
This bill would require an annual report required by its provisions to be prepared using standards, forms, and definitions adopted by the Governor’s Office of Land Use and Climate Innovation, except as specified. The bill would also make a nonsubstantive change to update a reference to the Governor’s Office of Land Use and Climate Innovation in these provisions.
(3) The Permit Streamlining Act establishes requirements for the review and approval of applications for development projects by public agencies. Existing law defines “development project” for purposes of those provisions to include a housing development project that requires an entitlement from a local agency.
This bill would define “housing development project” for purposes of those provisions.
(4) The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment.
CEQA, for various purposes, including for the purpose of limiting certain exemptions from CEQA, defines “natural and protected lands” to mean sites located within specified locations, including, among other locations, lands protected as preserve areas or reserve lands, as provided.
This bill would instead include in the definition of “natural and protected lands” for CEQA purposes lands that are identified for conservation in an adopted natural community conservation plan, as provided, or other adopted natural resource protection plan.
(5) Existing law exempts from CEQA specified new agricultural employee housing projects and projects consisting exclusively of the repair or maintenance of an existing farmworker housing project.
This bill would make a technical, nonsubstantive change by amending and renumbering the above-described section of law.
(6) CEQA exempts from its requirements housing projects that meet certain conditions. Under the exemption for housing projects, CEQA requires a local government to notify and consult, as specified, with each California Native American tribe that is traditionally and culturally affiliated with the project site on the proposed project, as specified. For a development project exempt from CEQA pursuant to this exemption, existing law, the Permit Streamlining Act, requires that a public agency that is the lead agency for the development project approve or disapprove the project within 30 days from the conclusion of the consultation process.
Existing law, the Housing Accountability Act (HAA), among other things, prohibits a local agency from disapproving a housing development project that complies with applicable objective general plan, zoning, and subdivision standards and criteria, or from imposing a condition that it be developed at a lower density, unless the local agency bases its decision on written findings supported by a preponderance of the evidence on the record that specified conditions exist, as provided. When a local agency makes a decision as described above, existing law requires the local agency to provide the applicant documentation describing the reason for the decision within a specified time period.
For a development project exempt from CEQA pursuant to the exemption for housing projects, this bill would instead require the public agency to approve or disapprove the project within 30 days from the later of the conclusion of the above-specified consultation process or the above-specified time period under the HAA.
(7) Existing law, for a proposed housing development project that would otherwise be exempt from CEQA pursuant to a statutory exemption or specified categorical exemptions, but for a single condition, limits the application of CEQA to the effects upon the environment that are caused by that single condition, except as provided.
This bill would exempt from that limited application of CEQA a housing development project that has a project site or parcel size that exceeds 4 acres, if the project is a builder’s remedy project, as defined, and the project applicant applied, as specified.
(8) Existing law exempts from CEQA any aspect of a housing development project, as defined, including any permits, approvals, or public improvements required for the housing development project, if the housing development project meets specified conditions, as provided. Existing law requires, as one of those conditions, that the project site or parcel size for a builder’s remedy project, as defined, not be more than 5 acres.
This bill would instead require, as part of those conditions, that the project site or parcel size for a builder’s remedy project not be more than 4 acres. The bill would require, if a lead agency determines that CEQA does not apply to an activity pursuant to the above-described exemption and determines to approve or carry out the activity, the lead agency to file a notice of exemption with the Governor’s Office of Land Use and Climate Innovation and the county clerk of the county in which the activity will occur, as specified.
(9) This bill, notwithstanding exemptions from CEQA or the limited application of CEQA to housing development projects, would apply CEQA to a housing development project that meets specified criteria, including, among other things, that the project is located in a city with a population of more than 85,000 but less than 95,000, as determined by the 2020 Census, and a portion of the parcel where the project is located is within a regulatory floodway, as provided.
(10) Existing law establishes the Homeless Housing, Assistance, and Prevention (HHAP) program for the purpose of providing jurisdictions with grant funds to support regional coordination and expand or develop local capacity to address their immediate homelessness challenges, as specified. Existing law provides for the allocation of funding under the program among continuums of care, cities, counties, and tribes in 6 rounds, with rounds 1 to 5, inclusive, administered by the Interagency Council on Homelessness and round 6 administered by the Department of Housing and Community Development, as provided. Existing law establishes a round 7 of the program and states the intent of the Legislature to enact future legislation that specifies the parameters, as specified. Existing law, effective July 1, 2026, appropriates $500,000,000, as specified, provided that these funds be disbursed in accordance with specified requirements. Existing law authorizes the Department of Finance to augment Item 2240-001-001 of the Budget Act of 2025 by $8,000,000 to prepare to administer round 7 of the program.
This bill would instead require the department, during fiscal year 2025–26, to prepare to administer round 7 of the program with the goal that initial round 7 disbursements will be available to grantees meeting the statutory provisions for disbursement beginning September 1, 2026, as specified.
(11) This bill would appropriate the sum of $2,106,000 from the General Fund to the Governor’s Office of Land Use and Climate Innovation to support implementation of SB 131 (Chapter 24 of the Statutes of 2025).
(12) By increasing the duties of local agencies, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(13) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.
This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2025.
The people of the State of California do enact as follows:
SECTION 1.
It is the intent of the Legislature that, in addition to the other duties required of the Housing Development and Finance Executive Committee created by the Governor’s Reorganization Plan No. 1 of 2025 to align state housing funding sources for the creation of a consolidated application for multifamily affordable housing developers and a coordinated review process for the application of funds, the executive committee shall make recommendations to the Legislature regarding improvements the Department of Housing and Community Development may make to optimize loan administration to expedite the processing of awards and loan closings.SEC. 2.
Section 65400 of the Government Code is amended to read:65400.
(a) After the legislative body has adopted all or part of a general plan, the planning agency shall do both of the following:(1) Investigate and make recommendations to the legislative body regarding reasonable and practical means for implementing the general plan or element of the general plan so that it will serve as an effective guide for orderly growth and development, preservation and conservation of open-space land and natural resources, and the efficient expenditure of public funds relating to the subjects addressed in the general plan.
(2) Provide by April 1 of each year an annual report to the legislative body, the Governor’s Office of Planning Land Use and Research, Climate Innovation, and the Department of Housing and Community Development that includes all of the following:
(A) The status of the plan and progress in its implementation.
(B) (i) (I) The progress in meeting its share of regional housing needs determined pursuant to Section 65584, including the need for extremely low income households, as determined pursuant to Section 65583, and local efforts to remove governmental constraints to the maintenance, improvement, and development of housing pursuant to paragraph (3) of subdivision (c) of Section 65583.
(II) The annual report shall include the progress in meeting the city’s or county’s progress in meeting its share of regional housing need, as described in subclause (I), for the sixth and previous revisions of the housing element.
(ii) The housing element portion of the annual report, as required by this paragraph, shall be prepared through the use of standards, forms, and definitions adopted by the Department of Housing and Community Development. The department may review, adopt, amend, and repeal the standards, forms, or definitions to implement this article. Any standards, forms, or definitions adopted to implement this article shall not be subject to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2. Before and after adoption of the forms, the housing element portion of the annual report shall include a section that describes the actions taken by the local government towards completion of the programs and status of the local government’s compliance with the deadlines in its housing element. The report shall be considered at an annual public meeting before the legislative body where members of the public shall be allowed to provide oral testimony and written comments.
(iii) The report may include the number of units that have been completed pursuant to subdivision (c) of Section 65583.1. For purposes of this paragraph, committed assistance may be executed throughout the planning period, and the program under paragraph (1) of subdivision (c) of Section 65583.1 shall not be required. The report shall document how the units meet the standards set forth in that subdivision.
(iv) The planning agency shall include the number of units in a student housing development for lower income students for which the developer of the student housing development was granted a density bonus pursuant to subparagraph (F) of paragraph (1) of subdivision (b) of Section 65915.
(C) The number of housing development applications received in the prior year, including whether each housing development application is subject to a ministerial or discretionary approval process.
(D) The number of units included in all development applications in the prior year.
(E) (i) The number of units approved and disapproved in the prior year, which shall include all of the following subcategories:
(I) The number of units located within an opportunity area.
(II) For the seventh and each subsequent revision of the housing element, the number of units approved and disapproved for acutely low income households within each opportunity area.
(III) For the seventh and each subsequent revision of the housing element, the number of units approved and disapproved for extremely low income households within each opportunity area.
(IV) The number of units approved and disapproved for very low income households within each opportunity area.
(V) The number of units approved and disapproved for lower income households within each opportunity area.
(VI) The number of units approved and disapproved for moderate-income households within each opportunity area.
(VII) The number of units approved and disapproved for above moderate-income households within each opportunity area.
(ii) For purposes of this subparagraph, “opportunity area” means a highest, high, moderate, or low resource area pursuant to the most recent “CTCAC/HCD Opportunity Map” published by the California Tax Credit Allocation Committee and the Department of Housing and Community Development.
(F) The degree to which its approved general plan complies with the guidelines developed and adopted pursuant to Section 65040.2 and the date of the last revision to the general plan.
(G) A listing of sites rezoned to accommodate that portion of the city’s or county’s share of the regional housing need for each income level that could not be accommodated on sites identified in the inventory required by paragraph (1) of subdivision (c) of Section 65583 and Section 65584.09. The listing of sites shall also include any additional sites that may have been required to be identified by Section 65863.
(H) (i) The number of units of housing demolished and new units of housing, including both rental housing and for-sale housing and any units that the County of Napa or the City of Napa may report pursuant to an agreement entered into pursuant to Section 65584.08, that have been issued a completed entitlement, a building permit, or a certificate of occupancy, thus far in the housing element cycle, and the income category, by area median income category, that each unit of housing satisfies. That production report shall do the following:
(I) For each income category described in this subparagraph, distinguish between the number of rental housing units and the number of for-sale units that satisfy each income category.
(II) For each entitlement, building permit, or certificate of occupancy, include a unique site identifier that must include the assessor’s parcel number, but may also include street address, or other identifiers.
(ii) For the County of Napa and the City of Napa, the production report may report units identified in the agreement entered into pursuant to Section 65584.08.
(I) The number of applications submitted pursuant to subdivision (a) of Section 65913.4, the location and the total number of developments approved pursuant to subdivision (c) of Section 65913.4, the total number of building permits issued pursuant to subdivision (c) of Section 65913.4, the total number of units including both rental housing and for-sale housing by area median income category constructed using the process provided for in subdivision (c) of Section 65913.4.
(J) If the city or county has received funding pursuant to the Local Government Planning Support Grants Program (Chapter 3.1 (commencing with Section 50515) of Part 2 of Division 31 of the Health and Safety Code), the information required pursuant to subdivision (a) of Section 50515.04 of the Health and Safety Code.
(K) The progress of the city or county in adopting or amending its general plan or local open-space element in compliance with its obligations to consult with California Native American tribes, and to identify and protect, preserve, and mitigate impacts to places, features, and objects described in Sections 5097.9 and 5097.993 of the Public Resources Code, pursuant to Chapter 905 of the Statutes of 2004.
(L) The following information with respect to density bonuses granted in accordance with Section 65915:
(i) The number of density bonus applications received by the city or county.
(ii) The number of density bonus applications approved by the city or county.
(iii) Data from all projects approved to receive a density bonus from the city or county, including, but not limited to, the percentage of density bonus received, the percentage of affordable units in the project, the number of other incentives or concessions granted to the project, and any waiver or reduction of parking standards for the project.
(M) The following information with respect to each application submitted pursuant to Chapter 4.1 (commencing with Section 65912.100):
(i) The location of the project.
(ii) The status of the project, including whether it has been entitled, whether a building permit has been issued, and whether or not it has been completed.
(iii) The number of units in the project.
(iv) The number of units in the project that are rental housing.
(v) The number of units in the project that are for-sale housing.
(vi) The household income category of the units, as determined pursuant to subdivision (f) of Section 65584.
(N) A list of all historic designations listed on the National Register of Historic Places, the California Register of Historic Resources, or a local register of historic places by the city or county in the past year, and the status of any housing development projects proposed for the new historic designations, including all of the following:
(i) Whether the housing development project has been entitled.
(ii) Whether a building permit has been issued for the housing development project.
(iii) The number of units in the housing development project.
(O) The following information with respect to housing development projects under Section 65913.16:
(i) The number of applications submitted under Section 65913.16.
(ii) The location and number of developments approved under Section 65913.16.
(iii) The total number of building permits issued pursuant to Section 65913.16.
(iv) The total number of units constructed under Section 65913.16 and the income category of those units.
(b) (1) (A) The department may request corrections to the housing element portion of an annual report submitted pursuant to paragraph (2) of subdivision (a) within 90 days of receipt. A planning agency shall make the requested corrections within 30 days after which the department may reject the report if the report is not in substantial compliance with the requirements of that paragraph.
(B) If the department rejects the housing element portion of an annual report as authorized by subparagraph (A), the department shall provide the reasons the report is inconsistent with paragraph (2) of subdivision (a) to the planning agency in writing.
(2) If a court finds, upon a motion to that effect, that a city, county, or city and county failed to submit, within 60 days of the deadline established in this section, the housing element portion of the report required pursuant to subparagraph (B) of paragraph (2) of subdivision (a) that substantially complies with the requirements of this section, the court shall issue an order or judgment compelling compliance with this section within 60 days. If the city, county, or city and county fails to comply with the court’s order within 60 days, the plaintiff or petitioner may move for sanctions, and the court may, upon that motion, grant appropriate sanctions. The court shall retain jurisdiction to ensure that its order or judgment is carried out. If the court determines that its order or judgment is not carried out within 60 days, the court may issue further orders as provided by law to ensure that the purposes and policies of this section are fulfilled. This subdivision applies to proceedings initiated on or after the first day of October following the adoption of forms and definitions by the Department of Housing and Community Development pursuant to paragraph (2) of subdivision (a), but no sooner than six months following that adoption.
(c) The Department of Housing and Community Development shall post a report submitted pursuant to this section on its internet website within a reasonable time of receiving the report.
(d) Except for the housing element portion as provided in subparagraph (B) of paragraph (2) of subdivision (a), an annual report submitted pursuant to this section shall be prepared through the use of standards, forms, and definitions adopted by the Governor’s Office of Land Use and Climate Innovation. The office may review, adopt, amend, and repeal the standards, forms, or definitions to implement this article. Any standards, forms, or definitions adopted to implement this article shall not be subject to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2.
SEC. 3.
Section 65928 of the Government Code is amended to read:65928.
(a) “Development project” means any project undertaken for the purpose of development. “Development project” includes a project involving the issuance of a permit for construction or reconstruction but not a permit to operate.(b) (1) (A) Except as otherwise provided in subparagraph (B), “development project” does not include any ministerial projects proposed to be carried out or approved by public agencies.
(B) Notwithstanding subparagraph (A), “development project” includes a housing development project project, as that term is defined in paragraph (3) of subdivision (b) of Section 65905.5, that requires an entitlement from a local agency, regardless of whether the process for permitting that entitlement is discretionary or ministerial.
(2) “Development project” does not include a postentitlement phase permit, as that term is defined in Section 65913.3.
SEC. 4.
Section 65950 of the Government Code is amended to read:65950.
(a) A public agency that is the lead agency for a development project shall approve or disapprove the project within whichever of the following periods is applicable:(1) One hundred eighty days from the date of certification by the lead agency of the environmental impact report, if an environmental impact report is prepared pursuant to Section 21100 or 21151 of the Public Resources Code for the development project.
(2) Ninety days from the date of certification by the lead agency of the environmental impact report, if an environmental impact report is prepared pursuant to Section 21100 or 21151 of the Public Resources Code for a development project defined in subdivision (c).
(3) Sixty days from the date of certification by the lead agency of the environmental impact report, if an environmental impact report is prepared pursuant to Section 21100 or 21151 of the Public Resources Code for a development project defined in subdivision (c) and all of the following conditions are met:
(A) At least 49 percent of the units in the development project are affordable to very low or low-income households, as defined by Sections 50105 and 50079.5 of the Health and Safety Code, respectively. Rents for the lower income units shall be set at an affordable rent, as that term is defined in Section 50053 of the Health and Safety Code, for at least 30 years. Owner-occupied units shall be available at an affordable housing cost, as that term is defined in Section 50052.5 of the Health and Safety Code.
(B) Prior to the application being deemed complete for the development project pursuant to Article 3 (commencing with Section 65940), the lead agency received written notice from the project applicant that an application has been made or will be made for an allocation or commitment of financing, tax credits, bond authority, or other financial assistance from a public agency or federal agency, and the notice specifies the financial assistance that has been applied for or will be applied for and the deadline for application for that assistance, the requirement that one of the approvals of the development project by the lead agency is a prerequisite to the application for or approval of the application for financial assistance, and that the financial assistance is necessary for the project to be affordable as required pursuant to subparagraph (A).
(C) There is confirmation that the application has been made to the public agency or federal agency prior to certification of the environmental impact report.
(4) Sixty days from the date of adoption by the lead agency of the negative declaration, if a negative declaration is completed and adopted for the development project.
(5) Sixty days from the determination by the lead agency that the project is exempt from the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code), if the project is exempt from that act.
(6) Except as provided in subdivision (a) of Section 65912.114 and subdivision (a) of Section 65912.124, sixty days from the date of receipt of a complete application if the project is subject to ministerial review by the public agency.
(7) Thirty days from the conclusion of the process outlined in subdivision (b) of Section 21080.66 of the Public Resources Code, if If a development project is exempt from the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) pursuant to Section 21080.66 of the Public Resources Code. Code, 30 days from the later of the following dates:
(A) The conclusion of the process outlined in subdivision (b) of Section 21080.66 of the Public Resources Code.
(B) The expiration of the applicable time limit in paragraph (2) of subdivision (j) of Section 65589.5.
(b) This section does not preclude a project applicant and a public agency from mutually agreeing in writing to an extension of any time limit provided by this section pursuant to Section 65957.
(c) For purposes of paragraphs (2) and (3) of subdivision (a) and Section 65952, “development project” means a housing development project, as defined in paragraph (3) of subdivision (b) of Section 65905.5.
(d) For purposes of this section, “lead agency” and “negative declaration” have the same meaning as defined in Sections 21067 and 21064 of the Public Resources Code, respectively.
SEC. 5.
Section 50245 of the Health and Safety Code is amended to read:50245.
(a) Round 7 of the Homeless Housing, Assistance, and Prevention program is hereby established.(b) Effective July 1, 2026, the sum of five hundred million dollars ($500,000,000), less the amount of funding that has been transferred to Item 2240-001-0001 of the Budget Act of 2025 from the General Fund pursuant to subdivision (d), is appropriated, provided that these funds shall only be disbursed in accordance with both of the following:
(1) None of these funds shall be allocated until after enactment of legislation declaring that it addresses the issues described in subdivision (c).
(2) Funds from this appropriation shall only be disbursed to a city, county, tribe, or continuum of care for round 7 of the program after declaration by the director of the department, in consultation with the Director of Finance, that both of the following are true of the particular city, county, tribe, or continuum of care that is the subject of the disbursement, with respect to round 6 of the Homeless Housing, Assistance, and Prevention program:
(A) The department has substantially completed its initial disbursement of round 6 funds to the city, county, tribe, or continuum of care.
(B) The city, county, tribe, or continuum of care has obligated at least 50 percent of its total round 6 award.
(c) (1) Consistent with paragraph (1) of subdivision (b), it is the intent of the Legislature to enact future legislation that specifies parameters for round 7 of the Homeless Housing, Assistance, and Prevention program.
(2) The following conditions and priorities shall be incorporated into the implementation of round 7 funding, with subsequent legislation to specify the extent to which each shall apply:
(A) Having a compliant housing element.
(B) Having a local encampment policy consistent with administration guidance.
(C) Having a prohousing designation.
(D) Leveraging local resources to scale state investments.
(E) Demonstrating progress on key housing performance metrics.
(F) Demonstrating urgency and measurable results in housing and homelessness prevention.
(d) (1) During fiscal year 2025–26, the department shall prepare to administer round 7 of the Homeless Housing, Assistance, and Prevention program with the goal that, subject to subdivisions (b) and (c), initial round 7 disbursements will be available to grantees meeting the statutory provisions for disbursement beginning September 1, 2026.
(d) (1)
(2)
(A) The Department of Finance may augment Item 2240-001-0001 of the Budget Act of 2025 by eight million dollars ($8,000,000)(B) The Department of Finance shall provide notification of any augmentation within 10 days to the Joint Legislative Budget Committee.
(2)
(3)
(A) The administrative costs for round 7 of the program shall not exceed 5 percent of the total allocated for round 7 of the program.(B) The amounts provided in paragraph (1)(2) are included in the 5 percent to be allocated for this purpose.
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