SB 423

SB423:v94#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Senate Bill

No. 423

An act to add Chapter 3 (commencing with Section 4970) to Part 4 of Division 4 of the Public Resources Code, relating to inmate firefighters. An act to add Chapter 12 (commencing with Section 50360) to Part 1 of Division 31 of the Health and Safety Code, and to add Section 11914 to the Revenue and Taxation Code, relating to housing.

LEGISLATIVE COUNSEL'S DIGEST

SB 423, as amended, Smallwood-Cuevas Gonzalez. Inmate firefighters: local handcrew pilot program. Housing: real property transfer taxes: affordability covenants.

(1) Existing law, the Zenovich-Moscone-Chacon Housing and Home Finance Act, among other things, establishes the Department of Housing and Community Development and requires it to administer various programs intended to promote the development of housing and to provide housing assistance and home loans. Existing law sets forth various general powers of the department in implementing these programs, including authorizing the department to enter into long-term contracts or agreements of up to 30 years for the purpose of servicing loans or grants or enforcing regulatory agreements or other security documents. Existing law creates the California Housing Finance Agency within the Business, Consumer Services, and Housing Agency and authorizes the agency to make loans to finance affordable housing.This bill would allow a state or local agency administering an affordable housing program to enter into or modify a provision of a regulatory agreement regarding curing an event of default, if prescribed conditions apply. The bill would exempt a regulatory agreement entered into or altered pursuant to its provisions from any conflicting land use restriction, declaration of restrictive covenants, deed restriction, or similar instrument, as provided. The bill would specify that its provisions are not to be construed to supersede any other law governing the foreclosure of deeds of trust or mortgages and the extinguishment of junior interests.The bill would include findings that these changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.(2) Existing statutory law, enacted by Proposition 62, as approved by the voters at the November 4, 1986, statewide general election, prohibits a local government or district from imposing any transaction tax or sales tax on the sale of real property within the city, county, or district, except as provided. The California Constitution authorizes cities organized under a charter to make and enforce all ordinances and regulations with respect to municipal affairs, which supersede inconsistent general laws. Existing law, the Documentary Transfer Tax Act, authorizes the imposition of a tax by a county or city, as provided, with respect to specified instruments that transfer specified interests in real property.This bill would prohibit the City of Los Angeles from imposing a documentary transfer tax greater than a specified rate on a deed, instrument, or writing that conveys real property that was issued its first certificate of occupancy within the previous 15 years, except as provided. The bill would authorize the City of Los Angeles to impose a documentary transfer tax at greater than a specified rate on a deed, instrument, or writing that conveys real property unless the real property is a single-family housing property, as defined, and meets specified conditions, including that the dwelling unit on the single-family housing property was destroyed by a disaster that resulted in a declared local emergency. The bill would make these provisions operative on a specified date, but only if certain conditions are satisfied, as provided.This bill would make legislative findings and declarations as to the necessity of a special statute for the City of Los Angeles.

Existing law establishes in the Natural Resources Agency the Department of Forestry and Fire Protection, and requires the department to be responsible for, among other things, fire protection and prevention, as provided. Existing law establishes the California Conservation Corps and requires the corps to implement and administer various training and educational programs, including the California Conservation Camp program. Under existing law, inmates and wards in the California Conservation Camp program work on projects supervised by the department. Existing law requires the department to use inmates and wards assigned to conservation camps in performing fire prevention, fire control, and other work at the department.

This bill would authorize, upon appropriation by the Legislature, the fire chief of the County of Los Angeles Fire Department to establish the Local Handcrew Pilot Program for 5 years and would authorize the fire chief to enroll in the pilot program formerly incarcerated individuals who have successfully completed specified programs or work. The bill would require the fire chief to develop metrics for evaluating the efficacy and success of the pilot program, to evaluate the efficacy and success of the pilot program using those metrics, and to report the findings of the evaluation to the Legislature and the Governor, as provided.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Los Angeles.

Digest Key

Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

Chapter 12 (commencing with Section 50360) is added to Part 1 of Division 31 of the Health and Safety Code, to read:

CHAPTER 12. Affordable Housing Covenant Flexibility50360. For purposes of this chapter:(a) “Affordable housing program” means any program the purpose of which is to finance the acquisition, development, rehabilitation, preservation, or operation of housing affordable to households at lower or moderate incomes, as defined in Sections 50079.5 and 50093.(b) “First lien capital” means any loan or investment, secured by a first lien deed of trust on the property, and underwritten on the basis of repayment from project revenues. First lien capital does not include any loan or investment whose repayment is contingent upon or deferred or limited to surplus cash, residual receipts, or similar arrangements.(c) “Event of default” means the occurrence of any event that constitutes a defined event of default under an agreement for a loan or related security agreement or guarantee secured by the property.(d) “Regulatory agreement” means an agreement with a governmental agency for the purposes of any governmental program, which obligates the project sponsor to maintain the affordability of the assisted housing development for households at lower or moderate incomes, as defined in Sections 50079.5 and 50093.50361. (a) Notwithstanding any other law, except as provided in Section 50362, a local agency administering an affordable housing program may enter into a regulatory agreement containing a provision regarding curing an event of default or, with the consent of the project sponsor, waive, modify, amend, or delete a provision of a regulatory agreement within the control of the agency regarding curing an event of default, if all of the following conditions apply:(1) The provision regarding curing an event of default relates to any of the following:(A) Subordination to first lien capital.(B) Resale restrictions to specified entities that may be modified so long as entities identified in subdivision (d) of Section 65863.11 of the Government Code are given the opportunity to submit an offer to purchase the development.(C) Income or rent limits.(D) Target population or set-aside requirements.(E) Term of a regulatory restriction period that exceeds 55 years.(2) Rents for an affordable housing project subject to the regulatory agreement shall not exceed an affordable rent for lower income households set in an amount consistent with the rent limits established by the California Tax Credit Allocation Committee.(3) The term of the regulatory restriction amended pursuant to subparagraph (E) of paragraph (1) shall not be less than 55 years from the initial recording date.(b) An affordable housing project with a regulatory agreement entered into or altered under subdivision (a) shall be exempt from any land use restriction, declaration of restrictive covenants, deed restriction, or similar instrument that conflicts with any provision entered into or altered pursuant to subdivision (a), excepting any such instruments recorded by any state agency or to which any state agency is a party.50362. Nothing in this chapter shall be construed to supersede any other law governing the foreclosure of deeds of trust or mortgages and the extinguishment of junior interests, including, but not limited to, Sections 2910 to 2924, inclusive, of the Civil Code.50363. The Legislature finds and declares that allowing local agencies additional flexibility to cure defaults in affordable housing projects, including through new regulatory agreements that conditionally confer such authority only in the event of default, is necessary to preserve affordability, protect tenants, keep projects viable, and ensure that public and other soft funds are placed effectively and efficiently.50364. The Legislature finds and declares that the preservation of affordable housing, in light of the severe shortage of affordable housing in this state, is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this chapter applies to all cities, including charter cities.

SEC. 2.

Section 11914 is added to the Revenue and Taxation Code, to read:

11914. (a) The City of Los Angeles shall not impose a documentary transfer tax greater than the rate of seven dollars and fifty cents ($7.50) for five hundred dollars ($500) in consideration or value of the interest or property, or fractional part thereof, conveyed on a deed, instrument, or writing that conveys real property that has been issued its first certificate of occupancy within the previous 15 years.(b) Notwithstanding subdivision (a), the City of Los Angeles may impose a documentary transfer tax greater than the rate of seven dollars and fifty cents ($7.50) for five hundred dollars ($500) in consideration or value of the interest or property, or fractional part thereof, conveyed on each deed, instrument, or writing that conveys real property for a building receiving its entitlement after the operative date of this section if both of the following conditions are met:(1) The building is over 85 feet in height above grade.(2) The construction of the building did not meet the labor standards of paragraph (8) of subdivision (a) of Section 65913.4 of the Government Code.(c) Notwithstanding subdivision (a), the City of Los Angeles may impose a documentary transfer tax greater than the rate of seven dollars and fifty cents ($7.50) for five hundred dollars ($500) in consideration or value of the interest or property, or fractional part thereof, conveyed on a deed, instrument, or writing, unless the real property is a single-family property and both of the following conditions are true:(1) The dwelling unit on the single-family housing property was destroyed by a disaster that resulted in a declared local emergency.(2) The single-family housing property was issued a certificate of occupancy on a date that is both of the following:(A) Within the previous five years.(B) After the declared local emergency described in paragraph (1).(d) For purposes of this section, “single-family housing property” means a property containing a single dwelling unit that is not an accessory dwelling unit or junior accessory dwelling unit, as those terms are defined in Section 66313 of the Government Code.

SEC. 3. The Legislature finds and declares that, with respect to Section 2 of this act, 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 circumstances relating to the imposition of documentary transfer taxes in the City of Los Angeles.

SEC. 4. (a) Section 2 of this act, adding Section 11914 to the Revenue and Taxation Code, shall become operative on the applicable of the following dates, but only if the relevant conditions are met:(1) On January 1, 2026, if, as of that date, Initiative 25-0004A1, Initiative 25-0005A1, and Initiative 25-0006A1 have each been withdrawn by their respective proponents.(2) On the 39th day, excluding Saturdays, Sundays, and holidays, after February 25, 2026, if, as of that date, Initiative 25-0004A1, Initiative 25-0005A1, and Initiative 25-0006A1 have each failed to qualify to appear on the ballot for the November 3, 2026, statewide general election.(b) If neither of the conditions described in subdivision (a) are satisfied, Section 2 of this act shall not become operative.

SECTION 1.

(a)The Legislature finds and declares both of the following:

(1)Incarcerated individuals trained in handcrews and firefighting serve a crucial role in protecting communities from wildfires and other emergencies.

(2)A cohesive education and career training system reduces recidivism, strengthens public safety, and creates a more equitable and sustainable employment pathway for those who have served the public on incarcerated handcrews or in institutional firehouses.

(b)It is therefore the intent of the Legislature to build upon and strengthen the state’s current workforce development framework for incarcerated handcrew and institutional firehouse members in custody and postrelease.

SEC. 2.Chapter 3 (commencing with Section 4970) is added to Part 4 of Division 4 of the Public Resources Code, to read:

3.Local Handcrew Pilot Program

4970.

For the purpose of this chapter, the following definitions apply:

(a)“Fire chief” means the fire chief of the County of Los Angeles Fire Department.

(b)“Program” means the Local Handcrew Pilot Program.

4971.

(a)The fire chief may, in collaboration with an authorized employee representative of the County of Los Angeles Fire Department, establish the Local Handcrew Pilot Program. The program shall operate for five years.

(b)The fire chief may enroll in the program formerly incarcerated individuals who have successfully completed one or more of the following:

(1)The California Conservation Camp program crew.

(2)Relevant programming at Camp David Gonzales.

(3)Work at an institutional firehouse.

(c)Notwithstanding subdivision (a), the fire chief may end the program before it has operated for five years.

4972.

(a)If the fire chief establishes the program pursuant to Section 4971, the fire chief shall do all of the following:

(1)Develop metrics for evaluating the efficacy and success of the program.

(2)Evaluate the efficacy and success of the program using the metrics developed pursuant to paragraph (1).

(3)(A)Report the findings of the evaluation to the Legislature and the Governor.

(B)The fire chief shall submit the report described in this paragraph within 42 months of establishing the program and upon conclusion of the program.

(b)If the fire chief ceases program operations pursuant to subdivision (c) of Section 4971, the fire chief shall submit a report to the Legislature and the Governor explaining the reasons for ceasing operation of the program based on the metrics developed pursuant to paragraph (1) of subdivision (a).

(c)A report submitted to the Legislature pursuant to this section shall be submitted in compliance with Section 9795 of the Government Code.

4973.

The program established pursuant to this chapter shall not replace or restrict existing or future programs and training offered to formerly incarcerated individuals, nor displace, replace, or reduce currently employed firefighters, handcrew personnel, or other existing positions in the County of Los Angeles Fire Department.

4974.

This chapter shall become operative only upon an appropriation by the Legislature for its purposes in the annual Budget Act or another statute.

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, in January 2025, the County of Los Angeles suffered the state’s most costly wildfire on record displaying the unique need for opportunities for additional trained handcrews in the region.