Bill would let CRA‑funded nonprofits buy wildfire‑damaged homes to preserve community ownership

Assemblymember Haribedian introduced AB 797, the Community Stabilization Act, to the Senate Business, Professions and Economic Development Committee on June 30, saying the bill would create a new pathway for CRA‑qualified investors to put private capital into mission‑driven nonprofits that can buy wildfire‑impacted homes at a floor equal to pre‑disaster fair market value.

Haribedian said the bill is aimed at Altadena and the Palisades and argued homeowners who lost their houses should have a dignified option other than selling to speculative buyers offering well below market value. “This bill creates a pathway for qualified nonprofits to purchase homes at fair market value using funds that banks are already required to invest under the Federal Community Reinvestment Act,” he said.

The bill would have the state’s IBank (the Infrastructure and Economic Development Bank) issue zero‑interest securities purchased only with Community Reinvestment Act (CRA)‑eligible capital. Those funds would be directed to selected community nonprofits to acquire and manage disaster‑impacted properties. When those properties are later monetized, the bill directs 90 percent of any profits to the CRA investors, 5 percent to the nonprofit manager and 5 percent to the state; Haribedian emphasized the plan uses private CRA dollars and “$0 of the general fund.”

Elise Borth of the California Community Foundation testified in support, describing the foundation’s wildfire recovery work and endorsing the bill as a market‑based tool to protect homeowners and neighborhood character. Dean Grafiel of Capital Advocacy said the Los Angeles County Board of Supervisors also backed the measure.

Committee members pressed the author on several points. Senator Nilo asked whether restricting the securities to CRA investors was legally permissible and whether the IBank would administer the program; Haribedian and staff said IBank would sell and administer the equity securities and that the financing is structured as equity capital rather than interest‑bearing bonds. Senators also questioned whether nonprofits would bid as aggressively as for‑profit buyers; Haribedian and supporters responded the bill requires nonprofit offers at least equal to the pre‑disaster fair market value (measured using appraisals or assessor records) and that the nonprofit option creates a floor for sellers.

Senators asked about what happens after acquisition. Haribedian said participating nonprofits would hold or develop properties and must monetize them within 10 years, through refinancing or sale, to return funds to investors and restore the homes to market inventory; the bill does not cap resale price at monetization but aims to stabilize neighborhoods during the short term.

Discussion also covered legal and implementation details — including the CRA’s federal role and the IBank’s authority — and senators suggested drafting clarifications on investor eligibility, nonprofit responsibilities, and appraisal methods. The committee voted to pass the bill out of the Business, Professions and Economic Development Committee to the Judiciary Committee.

The committee’s recorded roll call on the motion showed a majority in favor. The motion carried and the bill will proceed to the next committee for further consideration.