Community Stabilization Act: Counties of Los Angeles and Ventura.

Harabedian’s Community Stabilization Act creates a new, securitized program under the California Infrastructure and Economic Development Bank to mobilize CRA-backed investments toward stabilizing property values in disaster-affected areas of Los Angeles and Ventura counties and other Governor‑declared disaster zones. The core mechanism directs qualified investors to fund a tradable security that finances qualifying investment entities—organizations that will purchase and manage damaged residential land until it can be resold at fair market value. Profits from land investments are distributed among investors and the I‑Bank, with a portion allocated to qualifying investment entities to cover administrative costs. The act establishes a dedicated Community Stabilization Fund with moneys continuously appropriated to the I‑Bank for these purposes and declares the measure an urgency statute to take effect immediately.

The security is designed to be tradeable and non‑interest bearing, with repayment triggered by liquidity events within seven years of purchase, either through a refinance or a sale of the investment property. The security must meet municipal bonding requirements but need not be tax‑exempt, and it must be funded by investments using federal CRA funds. Profit distribution follows a fixed waterfall: 90 percent to qualified investors in proportion to their investment, 5 percent to the I‑Bank, and 5 percent to the qualifying investment entity as an administrative fee. The funds raised are deposited into the Community Stabilization Fund, which is continuously appropriated to the I‑Bank for the purposes of this article and allocated to investment entities for investments in regions affected by disasters declared by the Governor.

Qualifying investment entities are limited to specific organizational forms, including certain nonprofit organizations with California focus and governance requirements, state or local instrumentalities, local public entities, and certain nonprofit‑backed partnerships or LLCs. Entities must demonstrate the ability to receive funds and must use them for qualifying community development projects aligned with CRA objectives. The act prescribes valuation protocols for purchased properties—considering the property’s value minus insured amounts, with alternative valuation methods if insurance is insufficient—and requires ownership transfers and owner acceptance procedures within defined timelines. Properties may be held for up to seven years, with redevelopment pursued to preserve socioeconomic composition, local zoning approvals as needed, and a CEQA exemption for developments under the act. Profits from property appreciation are returned to the bank for distribution, and annual disclosures (including property counts, investment totals, expenses, and profit allocations) are required, with local jurisdictions allowed to cap participation and a final program report due by 2034, accompanied by a reporting sunset date in 2038.

The proposal positions the I‑Bank to oversee securities issuance, fund allocations, and disbursements, paired with a governance framework that permits removal of noncompliant investment entities and requires ongoing transparency. It builds on the existing infrastructure‑ and economic development framework, channeling CRA funds into a novel, disaster‑focused land stabilization and redevelopment mechanism, and it seeks to accelerate housing reconstruction while explicitly prioritizing owner occupancy and community stability. Find­ings attributed to the authors describe disaster‑related distortions in capital allocation and the illiquidity of land post‑disaster, framing the act as a targeted response to coordinate rebuilding efforts in the affected counties.