SB 1388

SB1388:v98#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Senate Bill

No. 1388

An act to amend Section 50060.5 of the Government Code, relating to local government. add Chapter 20 (commencing with Section 50899.15) to Part 2 of Division 31 of the Health and Safety Code, relating to housing developers.

LEGISLATIVE COUNSEL'S DIGEST

SB 1388, as amended, Durazo. Local agencies: improvement and maintenance of natural habitat. Affordable Housing Risk Reduction Program.

Existing law establishes the Department of Housing and Community Development and requires it to administer various programs intended to promote the development of housing, including the Multifamily Housing Program, pursuant to which the department provides assistance in the form of deferred payment loans to pay for the eligible costs of development of specified types of housing projects, as provided.This bill would establish the Affordable Housing Risk Reduction Program, administered by the department, to provide technical assistance and supportive resources to affordable housing providers to help them mitigate risk in their portfolio and secure more affordable insurance options. Upon appropriation, the bill would require the department to provide affordable housing providers technical assistance and support and resources through loans or grants, and authorize it to contract with third-party consultants in the development and performance of these functions, as specified.This bill would require the department, in carrying out the functions of the program, to consult with the Department of Insurance, the California Tax Credit Allocation Committee, and the California Debt Limit Allocation Committee. The bill would authorize the department to submit a letter of support for a housing development project that is applying for low-income housing tax credits, as specified. The bill would require the department to adopt emergency regulations to implement the program, as specified.

Existing law authorizes a local agency to, as specified, establish a district to provide for the improvement or maintenance of natural habitat. Existing law authorizes the local agency to perform those functions or contract with the state, another local agency, or a special district to perform those functions, as specified.

This bill would additionally authorize a local agency to contract with a joint powers authority to perform the above-described functions.

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 20 (commencing with Section 50899.15) is added to Part 2 of Division 31 of the Health and Safety Code, to read:

CHAPTER 20. Affordable Housing Risk Reduction Program50899.15. The Legislature finds and declares all of the following:(a) The United States is facing an industrywide insurance crisis and affordable housing providers in urban, suburban, and rural communities across California are facing limited availability of insurance coverage, significant premium and deductible cost increases, with some facing price increases as high as 500 percent, and reductions in the scope and quality of coverage. These issues are present in property, liability, and builder’s risk insurance.(b) Affordable housing providers have limited options to manage increased insurance costs due to their mission and legal requirements to keep rents at affordable levels for low-income households.(c) As a result, affordable housing providers are particularly vulnerable to insurance cost increases, which now present an urgent threat to the fiscal solvency and stability of existing and new affordable housing across California. Without affordable insurance, some affordable housing providers may not be able to construct affordable housing projects.(d) In this insurance environment, affordable housing providers have demonstrated an interest in alternative risk financing options to help increase availability and affordability of coverage, as well as an interest in pursuing risk mitigation strategies to lower the risk profile of specific properties and their portfolios overall.(e) However, many affordable housing providers, particularly nonprofits, face challenges joining existing or starting new alternative risk financing entities due to cost and other access barriers.(f) Making technical assistance and supportive resources available to affordable housing providers can help make joining alternative risk financing entities more accessible and affordable.(g) Providing a statewide option for affordable housing providers to partner with public agencies may also help pool the resources of nonprofit housing developers to more effectively address rising insurance costs on a statewide basis.50899.16. (a) The Affordable Housing Risk Reduction Program is hereby established to provide technical assistance and supportive resources to affordable housing providers to help them mitigate risk in their portfolio and secure more affordable insurance options. The program shall be administered by the Department of Housing and Community Development.(b) For purposes of this chapter:(1) “Alternative risk financing entities” means entities that manage risk outside of traditional commercial insurance lines, including, but not limited to, captives, risk retention groups, and joint powers authorities.(2) “Department” means the Department of Housing and Community Development.50899.17. (a) Upon appropriation by the Legislature for purposes of the program, the department shall do both of the following:(1) Provide technical assistance pursuant to Section 50899.18.(2) Provide supportive resources through loans or grants pursuant to Section 50899.19.(3) Provide support for nonprofit housing developers applying for low-income housing tax credits pursuant to Section 50899.20.(b) In carrying out the functions of the program, the department may enter into and perform all necessary contracts.(c) In carrying out the functions of the program, the department shall consult, at a minimum, the Department of Insurance, the California Tax Credit Allocation Committee, and the California Debt Limit Allocation Committee.50899.18. (a) The department shall develop technical assistance to support affordable housing providers that are preparing for joining and joining alternative risk financing entities, or that are jointly pursuing commercial insurance pursuant to this chapter, including, but not limited to, all of the following:(1) Analyzing risk and identifying the most impactful risk mitigation measures.(2) Assisting affordable housing providers to implement risk mitigation measures, including, but not limited to, locating necessary funding.(3) Identifying alternative risk financing entities and assisting during the application process.(4) Bringing together multiple affordable housing providers to pool risk and apply jointly for insurance or join an alternative risk financing entity.(b) The department may contract with third-party consultants to assist with the development, implementation, and administration of the technical assistance described in subdivision (a).(c) The department or third-party consultants shall provide both individual technical assistance to affordable housing providers and develop technical assistance tools that shall be made broadly accessible to affordable housing providers, including, but not limited to, training and best practice guides.50899.19. (a) The department shall provide loans or grants to affordable housing providers, pursuant to this chapter, for the following purposes:(1) To facilitate affordable housing providers in implementing risk mitigation measures identified through the program’s technical assistance.(2) To fund upfront costs, including, but not limited to, capital contributions, required in order for an affordable housing provider to join an alternative risk financing entity.(b) The department may contract with third-party consultants to administer the loans and grants described in subdivision (a).50899.20. The department may submit a letter of support for a housing development project that is applying for low-income housing tax credits to the California Tax Credit Allocation Committee if a housing credit applicant determines that it cannot receive one from the applicable local agency in time to apply for low-income housing tax credits pursuant to Chapter 3.6 (commencing with Section 50199.4) of Part 1.50899.21. (a) The department, in consultation with stakeholders, shall adopt emergency regulations to implement this chapter.(b) Notwithstanding Section 11346.1 of the Government Code, emergency regulations adopted pursuant to this section shall remain in effect until the date that nonemergency regulations to implement this chapter become effective.

SECTION 1.Section 50060.5 of the Government Code is amended to read:

50060.5.

(a)A local agency may, by ordinance or by resolution adopted after notice and hearing, establish a district to provide for the improvement or maintenance of natural habitat. The local agency may perform those functions or contract with the state, another local agency, a joint powers authority, or a special district to perform those functions. If a local agency establishes a district, it may provide for the levy of assessments for not more than 30 years to pay the cost and incidental expenses of implementing a long-term natural habitat maintenance plan approved by the Department of Fish and Wildlife pursuant to Section 2901 of the Fish and Game Code. Any assessments levied pursuant to this section shall be levied only in accordance with a plan for the conservation of natural habitat approved by the Department of Fish and Wildlife. No plan shall be approved by the Department of Fish and Wildlife unless it contains provisions for the recovery of all costs incurred by the department in its review of the plan for the conservation of natural habitat.

(b)The legislative body of the local agency establishing a district shall serve as the legislative body of the district.

(c)Notwithstanding any other provision of this article, assessments levied pursuant to this article shall not be reduced or terminated if doing so would interfere with the implementation of an approved plan for the conservation of natural habitat.

(d)This article applies only to the implementation of a long-term natural habitat maintenance plan by a district, and does not alter, limit, or otherwise affect any other district that has been, or may be, established pursuant to law, including, but not limited to, any other district relating to wildlife habitat.

(e)The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, Division 3 (commencing with Section 56000) of Title 5, does not apply to a district formed pursuant to this article.