Bill
AB 2397
AB 2397 speeds Mello-Roos financing with a 30-day ministe rial review, requires透明 terms, protections for affordable housing, and HCD oversight for fairness and accountability.
AB 2397 proposes new, streamlined review and accountability requirements for local agencies issuing financing through bonds under the Mello-Roos Community Facilities Act of 1982. The bill aims to accelerate the processing of financing applications, increase transparency of costs and terms, and strengthen protections for housing developments that include affordable units. It adds guardrails to ensure decisions are data-driven and non-discriminatory, with oversight by the Department of Housing and Community Development (HCD).
Streamlined ministerial review of financing applications: A completed application for financing via a bond issued under the act would be subject to a streamlined, ministerial process rather than a discretionary review.
30-day decision deadline: Local agencies must determine whether to approve or deny a completed application within 30 days. If no decision is made within 30 days, the application is deemed approved.
Denying a financing application: If a local agency denies an application, it must support the denial with actuarial evidence showing the substantial, adverse impact on the agency’s insolvency risk.
Protection against selective denial: A local agency cannot selectively deny financing for housing infrastructure developers that meet specified requirements if it has approved similar projects in the same regional housing needs allocation cycle.
Appeal process: Applicants may appeal to the Department of Housing and Community Development, which must issue a determination within 30 days of receiving the appeal.
Fees and financing terms: Agencies may not charge application fees above the historical average for prior applications and must not coerce applicants into accepting unwanted financing.
Public disclosure and comparison: Cities and counties within a community facilities district must publish all terms of financing (including fees, bond purposes, and district boundaries) on their public internet sites for transparency and comparison.
Enforcement: HCD can enforce the provisions by investigating complaints, issuing findings within 90 days, ordering actions, and potentially recommending withholding state housing funds from noncompliant local agencies.
Housing accountability protections: The bill adds conditions specific to housing developments that include units affordable to lower- and moderate-income households. Denial or adverse conditions on such projects require written findings supported by substantial evidence that either (a) the denial or condition is based on specific, written reasons, or (b) the formation of the district would have a specific, adverse public health or safety impact that is not feasibly mitigated or avoided and that complies with state or federal law.
Consistency with Housing Accountability Act: Provisions are meant to be construed consistently with the Housing Accountability Act (HAA), as applicable.
Definitions: The terms “lower income household” and “moderate income household” align with definitions in applicable Health and Safety Code sections.
The bill was amended and referred through the California Legislature during the 2025-2026 session, with provisions applying to all cities (including charter cities) as a statewide concern.
Overall, AB 2397 aims to balance expedited financing processes with stronger oversight, transparency, and protections for affordable housing, ensuring actuarial scrutiny when approvals are denied and safeguarding against discriminatory or infeasible conditions on housing projects.
Compiled from official sources — confirm details with the bill’s official record.
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