Assembly BillVetoedGovernment
AB 797: Community Stabilization Act: Counties of Los Angeles and Ventura.
What AB 797 does, verified March 9, 2026
The bill aims to help stabilize property values in disaster-affected areas by allowing qualified investors to purchase tradable securities, which will be funded by investments made by these investors using funds available pursuant to the federal community reinvestment act of 1977. The funds raised will be deposited into a community stabilization fund, which will be continuously appropriated to the i-bank. The i-bank will allocate these funds to qualifying investment entities to invest in the counties of Los Angeles and Ventura and in areas covered by a state of disaster declared by the governor. The bill also establishes requirements for the security, including its tradeability and compliance with municipal bonding requirements.
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Last action: Consideration of Governor's veto stricken from file. (2026-01-22)Alert me
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| Jan. 22, 2026 | Consideration of Governor's veto stricken from file. |
| Jan. 22, 2026 | Stricken from file. |
| Oct. 13, 2025 | Consideration of Governor's veto pending. |
| Oct. 13, 2025 | Vetoed by Governor. |
| Sep. 16, 2025 | Enrolled and presented to the Governor at 2 p.m. |
Latest bill textEnrolled version, September 11, 2025 · 2,911 words
| Enrolled September 11, 2025 |
| Passed IN Senate September 08, 2025 |
| Passed IN Assembly September 09, 2025 |
| Amended IN Senate August 29, 2025 |
| Amended IN Senate July 17, 2025 |
| Amended IN Senate June 23, 2025 |
| Amended IN Assembly April 21, 2025 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Assembly Bill
No. 797
| Introduced by Assembly Member Harabedian |
February 18, 2025 |
An act to add Article 11 (commencing with Section 63049.80) to Chapter 2 of Division 1 of Title 6.7 of the Government Code, relating to economic development, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 797, Harabedian. Community Stabilization Act: Counties of Los Angeles and Ventura.
(1) Existing law, the Bergeson-Peace Infrastructure and Economic Development Bank Act, establishes the California Infrastructure and Economic Development Bank (I-Bank) in the Governor’s Office of Business and Economic Development. Existing law, among other things, authorizes the I-Bank to issue bonds, make loans, and provide financial assistance for various types of projects that qualify as economic development or public development facilities.
This bill would enact the Community Stabilization Act. The bill would require the I-Bank to develop and administer a program to issue a security, and to cease issuing a security on January 1, 2030. The bill would specify that the purpose of the program is to help stabilize property values in disaster-affected areas by allowing qualified investors, as defined, to purchase tradable securities, with the funding allocated to qualifying investment entities that purchase and manage residential land until it can be resold at fair market value. The bill would require profits from the land investments to be shared among investors and the I-Bank according to certain percentages, with qualifying investment entities being reimbursed for their administrative costs.
This bill would establish various requirements for the security, including that it be tradeable, comply with specified municipal bonding requirements, and that it be funded by investments made by qualified investors using funds available pursuant to the federal Community Reinvestment Act of 1977. The bill would require the security to repay the investment upon a liquidity event and within 7 years of the purchase of an investment property, and would describe a liquidity event as the refinance or sale of the investment property.
This bill would require funds raised from the purchase of the security to be deposited in the Community Stabilization Fund, which would be created by the bill, and would require all moneys in the fund to be continuously appropriated to the I-Bank. The bill would require the I-Bank to allocate moneys in the fund to qualifying investment entities to be invested in the Counties of Los Angeles and Ventura and in those areas that are covered by a state of disaster declared by the Governor. The bill would require a qualifying investment entity to meet prescribed requirements, including that it be a specified entity, including, among others, a nonprofit organization, as provided. The bill would also impose various requirements on the qualifying investment entity relating to the purchase, maintenance, and sale of the investment property, including, among other things, limiting the purchase of property to residential property that has been damaged or destroyed by the wildfires that began on January 7, 2025, in the Counties of Los Angeles and Ventura, as specified. The bill would require the I-Bank to submit a final report on the program to the Legislature, the Governor, and the Department of Finance no later than January 1, 2034, as specified.
By establishing a new continuously appropriated fund, the Community Stabilization Fund, this bill would make an appropriation.
(2) This bill would make legislative findings and declarations as to the necessity of a special statute for the Counties of Los Angeles and Ventura.
(3) This bill would declare that it is to take effect immediately as an urgency statute.
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, and shall cease issuing a security on January 1, 2030. 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 seven 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 the wildfires that began on January 7, 2025, in the Counties of Los Angeles and Ventura and in those areas 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 seven 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 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.
Within 24 months of a state of disaster declared by the Governor, a qualified investor may purchase the security authorized pursuant to this article.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.
63049.94.
(a) The bank shall submit a final report on the program to the Legislature, the Governor, and the Department of Finance no later than January 1, 2034.(b) The report shall include, but not be limited to, all of the following:
(1) The total number of properties acquired, held, and sold under the program.
(2) The total amount of capital invested and distributed.
(3) An assessment of the program’s effectiveness in stabilizing disaster-impacted property values.
(c) (1) The requirement for submitting a report imposed under subdivision (a) is inoperative on January 1, 2038, pursuant to Section 10231.5.
(2) A report to be submitted pursuant to subdivision (a) shall be submitted in compliance with Section 9795.
SEC. 3.
The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique need 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.SEC. 4.
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.
Text of AB 797 as enrolled, from the official record. Connect Plus keeps every version and highlights what changed.Compare versions