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<ns0:Id>20250AB__221499INT</ns0:Id>
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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-19</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Jackson</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Jackson</ns0:Name>
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<ns0:Title> An act to add Section 16429.5 to the Government Code, relating to government finance, and making an appropriation therefor. </ns0:Title>
<ns0:RelatingClause>government finance, and making an appropriation therefor</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Local Agency Investment Fund: Community Reinvestment Account.</ns0:Subject>
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<ns0:DigestText>
<html:p>Existing law provides that all moneys in the Local Agency Investment Fund, which is continuously appropriated, is held in trust in the custody of the Treasurer and shall be deposited, invested, and reinvested in the same manner and to the same extent as if it were state moneys in the State Treasury. Existing law authorizes the Treasurer to invest the moneys of the fund in prescribed securities and to elect to have the moneys in the fund invested through the Surplus Money Investment Fund, as specified, so as to achieve the objective of the fund which is to realize the maximum return consistent with safe and prudent treasury management.</html:p>
<html:p>Existing law, for purposes of a savings and loan association or credit union being eligible to receive deposits of state funds, specifies which securities may be accepted as collateral, and includes within that list
of eligible securities a letter of credit issued by the Federal Home Loan Bank of San Francisco that, notwithstanding requirements that a savings and loan association or credit union deposit with the Treasurer securities in a value at least 10% in excess of the amount deposited with the savings and loan association or credit union, shall be in an amount in value of at least 100% of the amount deposited with the savings and loan association or credit union.</html:p>
<html:p>This bill would create within the Local Agency Investment Fund the Community Reinvestment Account from which deposits shall be made to institutions that meet specified performance standards including verified small business lending in underserved census tracts and first-time or first-generation home buyer lending. The bill would require the Treasurer to establish the percentage of funds, not less than 5% and not exceeding 10%, in the Local Agency Investment Fund that shall be transferred to the Community
Reinvestment Account. Because the fund is continuously appropriated, this bill would make an appropriation. Notwithstanding the provisions described above applicable to savings and loan associations and credit unions, the bill would authorize a letter of credit issued by the Federal Home Loan Bank of San Francisco accepted as collateral for a deposit from the Community Reinvestment Account to be in an amount in value of at least 90% of the amount deposited with the institution. The bill would require institutions that receive deposits from the Community Reinvestment Account to submit quarterly, nonidentifying, performance reports to the Treasurer and the Treasurer to publish the data it receives in a publicly available report.</html:p>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_36B42AAF-2C6C-4F93-9C0D-C49FE4C7588D">
<ns0:Num>SECTION 1.</ns0:Num>
<ns0:Content>
<html:p>The Legislature finds and declares that this measure is intended to utilize the Local Agency Investment Fund (LAIF) as a catalyst for small business lending, first-time home ownership, and community reinvestment connected to measurable community lending performance while prioritizing safety, liquidity, and yield.</html:p>
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 16429.5 is added to the
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,
<ns0:Positioning>immediately following Section 16429.4</ns0:Positioning>
, to read:
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<ns0:Num>16429.5.</ns0:Num>
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(a)
<html:span class="EnSpace"/>
There is within the Local Agency Investment Fund the Community Reinvestment Account from which deposits shall be made to institutions that meet the performance standards described in this section.
</html:p>
<html:p>
(b)
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The Treasurer shall establish the percentage of funds, not less than 5 percent and not exceeding 10 percent, in the Local Agency Investment Fund that shall be transferred to the Community Reinvestment Account.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
As determined by the Treasurer and provided in this section, the account shall operate with separate risk controls and liquidity thresholds than the fund, provided the account maintains the security of the principle, maintains daily liquidity access, and provides
competitive market yield.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The Treasurer shall determine those institutions that are qualified to receive deposits from the account pursuant to the requirements described in this subdivision.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A qualified institution shall demonstrate at least one of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Verified small business lending in underserved census tracts.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
First-time or first-generation home buyer lending.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
A formal partnership with any of the following:
</html:p>
<html:p>
(i)
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A community development financial institution (CDFI).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
A Small Business Development
Center (SBDC).
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
A state-approved nonprofit financial coach.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Verified brokerage of financing products, such as silent second lien disaster mortgages, for homeowners facing displacement and loss of home ownership seeking to rebuild their home following disaster.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Priority for qualification to receive deposits from the account shall be given to all of the following institutions:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Minority Depository Institutions (MDIs).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Community banks serving rural and urban low-wealth areas.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Community Development Financial Institutions (CDFIs) with a California lending footprint.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Collateralizaton may be tiered, risk weighted, and partially credit enhanced using loan guarantees, federal State Small Business Credit Initiative (SSBCI) funds, or state loss reserves.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Letters of credit issued by the Federal Home Loan Bank of San Francisco for a deposit from the Community Reinvestment Account, which shall be in the form and shall contain provisions as the Treasurer may prescribe, and shall include the following terms:
</html:p>
<html:p>
(A)
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The Treasurer shall be the beneficiary of the letter of credit.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The letter of credit shall be clean and irrevocable, and shall provide that the Treasurer may draw upon it up to the total amount in the event of the failure of the institution or if the institution refuses to permit the withdrawal of funds by the Treasurer or any other authorized state
officer or employee.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Notwithstanding Section 16611, the letter of credit shall at all times be in an amount in value of at least 90 percent of the amount deposited with the institution.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
Using federal State Small Business Credit Initiative (SSBCI) funds or a General Fund appropriation, the Treasurer may do any of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Buy down interest rates for qualifying entities.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Provide loan loss reserves for higher risk but creditworthy entities.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Stabilize lending during economic downturns.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
Institutions that receive deposits from the Community Reinvestment Account shall submit quarterly, nonidentifying,
performance reports to the Treasurer that include all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The number and dollar value of all small business loans it issued.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The number and dollar value of all loans it issued to first-time home buyers.
</html:p>
<html:p>
(3)
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The geographic distribution of borrowers who received loans described in paragraphs (1) and (2).
</html:p>
<html:p>
(4)
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The interest rates and terms at which the loans described in paragraphs (1) and (2) were issued.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The outcome or status of the loans described in paragraphs (1) and (2).
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
The Treasurer shall publish the data received from recipient institutions pursuant to subdivision (g) in a publicly available
report entitled “Local Agency Investment Fund Community Reinvestment Dashboard.”
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