Do We Actually Need a Bill?
I wanted this Post to be an a specific one so the point did not get lost among the other ones yesterday outlining AB 797.
The quick answer is “no.”
The bill is an outline of sorts. It makes things a lot easier. But, if dysfunction or politics gets in the way, we can do it another way. The idea is there. It is just the path to getting it done.
AB 797 gives the Assembly the chance to do something, anything, productive. It provides a base to begin discussions or actually get something done. The State gets something to do basically very little besides being a pass through.
Ultimately, the State, via the bill, is not the only entity to “alchemize” the CRA money and put it into action.
Who could do it you ask? Logical question.
Well, any government entity could issue the security now that the model is public. Wherever they want to “tweak” it, they can. The goal is to have the municipal security “automatic qualifier” for CRA to “ease” compliance.
So, the County, with its bonding authority could issue the security. The City of Los Angeles (or any other affected) could as well if they issue bonds (and yes I know I am using bonds and securities interchangeably here, but the words are being chosen purposefully- “bonds” are how the CRA regulators see the "security” we are issuing, though it is not a “bond” per se).
The big outlier here is the State can also issue the security without any bill at all. Yes, you read that right. The Governor could begin “securitizing” the solution tomorrow (yes, it could be done without legislation though in Sacramento, they like to give the Assembly and Senate a chance to get solutions passed). Not to be outdone, the Governor is not the only one who can issue such a security. The Treasurer (who is running for Lt. Governor in 2026) can also do it.
So, yes, the solution does not need to wait for the Assembly to move AB 797. People could be moving faster and could have moved faster.
But wait there is more. The CRA funds can technically be directly allocated to a nonprofit since nonprofits qualify as CRA compliant, but, the CRA regulatory qualifiers increase in that scenario, which is why the municipal approach is the simplest (once the complexity of getting it through) to market and scale (which is a key piece here).
In other words, there are layers here, but having the bill or the government issue the security is a first layer to make things easier for all to participate. We do not need the bill per se, but man it makes life a lot easier to have the government “help” issue the securities.
Why has the delay been costly? Think about the losses being written about in the news media on the house values which otherwise would have been forestalled.
If there really is a 30% decrease in property values since the fires (as the Washington Post wrote about, as well as Newsweek), that could be an avoidable and significant loss for homeowners had the mechanism outlined in AB 797 been instituted. Whether the numbers are correct is subject to consideration (I have heard other information), but nevertheless leads to one to consider what has potentially been lost from a generational wealth perspective.
I am working on the “structure” of the nonprofit for those skeptics asking (“great you can come up with some esoteric financial solution, but how are you actually going to do this thing,” is the question I think is what would be asked).
I wanted to show the financial piece to show this is not an “idea,” rather a “plan” which can be implemented. We have ways to get there quicker and ways that can be slower. Nevertheless, the next piece is to show how it can be structured. Other entities looking to provide a solution to the fires (especially on the West Side) are “vertically integrated,” and without the proper organizational structure, this could be a “twelve legged horse” and never get out of the starting gate.
Yes, there is a business plan. I am going to write it a little later.