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 and would require the I-Bank to develop and administer a program to issue a security. The bill would specify that 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 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 10 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 a specific region of the state that is 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 requirements on the qualifying investment entity relating to the purchase and maintenance of the investment property. The bill would authorize a qualified investor to defer up to 30% percent of the capital gains it realizes from its investment for up to 10 years or until any return is realized on the investment.
By establishing a new continuously appropriated fund, the Community Stabilization Fund, this bill would make an appropriation.
This bill would declare that it is to take effect immediately as an urgency statute.