Second Neighborhood Infill Finance and Transit Improvements Act.

Senator Allen's proposal to modify California's Second Neighborhood Infill Finance and Transit Improvements Act (NIFTI-2) shifts the revenue structure for enhanced infrastructure financing districts while maintaining their core focus on transit-oriented development and affordable housing. The legislation replaces sales and use tax allocations with property tax revenue and eliminates the requirement that district boundaries align with city or county jurisdictions.

Under the revised framework, districts must dedicate 40 percent of allocated funds to housing for households earning below 60 percent of area median income, with half supporting those below 30 percent or permanent supportive housing for homeless individuals. The legislation preserves existing requirements that funded projects be located within a half-mile of major transit stops and that 10 percent of revenues support parks, urban forestry, or active transportation infrastructure.

The bill maintains NIFTI-2's public oversight mechanisms, including a three-hearing adoption process and provisions for resident protests. Districts must conduct annual audits, provide detailed reporting on project progress and expenditures, and ensure affordable housing remains available through recorded covenants - rental units for 55 years and owner-occupied units for 45 years. These changes apply to resolutions adopted after January 1, 2026.