AB107 appropriates General Fund dollars for housing, homeless services, infrastructure, and related community projects by directing the Department of Housing and Community Development (HCD) to allocate specified amounts to a long list of named local governments, nonprofit developers, and service providers. The statute includes broad implementation flexibilities—self-attestation as an acceptable form of verification, exemptions from key state contracting and Department of General Services (DGS) approval requirements, and authority for the Department of Finance (DOF) to create item numbers, move allocating authority, or approve alternative fiscal agents.
This structure is significant because it pairs highly specific, locally targeted funding with procedural shortcuts intended to speed disbursement. That combination lowers administrative friction for recipients but shifts compliance, audit, and legal risk onto HCD, DOF, local fiscal agents, and ultimately the Legislature and taxpayers.
Professionals responsible for implementation, auditing, or advising recipients need to plan for the unusual mix of statutory specificity and waived procurement controls embedded in the appropriation language.
At a Glance
What It Does
The bill directs HCD to allocate enumerated General Fund amounts to 77 named recipients for housing, homeless services, and community projects, and it exempts those allocations from specified state contracting and DGS approval requirements. It authorizes DOF to create item numbers, approve advance lump-sum payments (including retroactive use), and transfer allocating authority or fiscal agents to facilitate expenditure.
Who It Affects
Directly affected parties include HCD and DOF as administering state entities, the dozens of named cities, counties, nonprofit developers, and service providers listed in the bill, and any local fiscal agent designated to receive or disburse funds. Indirectly affected parties include state auditors, county auditors, and organizations that normally compete for state contracts but face waived procurement rules for these line items.
Why It Matters
Practitioners should care because AB107 combines targeted, place-based investments with statutory waivers that accelerate funding but reduce normal procurement oversight. That mix changes the compliance landscape for award administration, audit exposure, and the liability profile for local fiscal agents and state administrators.
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What This Bill Actually Does
AB107 is a budget appropriation that identifies a long series of named recipients—cities, counties, housing authorities, and nonprofit groups—and directs HCD to allocate the specified General Fund amounts to those recipients for housing and related projects. The bill does not create a competitive grant program; instead, it ties funds to projects and organizations by name and instructs the designated state entity to determine the best allocation method to accomplish the stated purposes.
To speed delivery, the statute authorizes several departures from ordinary state procurement and contracting rules. It explicitly exempts these allocations from a set of public contracting statutes and from DGS approval.
HCD (or the designated state entity) may accept self-attestation from recipients as an acceptable verification method if HCD determines that is appropriate. DOF may create item numbers where none exist, approve advance lump-sum payments that can be used for costs incurred before the bill’s effective date, and transfer allocating authority or permit alternative local fiscal agents when necessary to achieve the legislative purpose.The bill sets clear timing windows and a constitutional constraint.
Unless otherwise specified, funds are available to be encumbered through June 30, 2025 and expended through June 30, 2027, and no disbursements may be made for projects before September 30, 2023. The statute also bars using these funds for anything that would fall under Section 8 of Article XVI of the California Constitution; if DOF determines an allocation conflicts with that restriction, DOF must withhold the funds and notify the Joint Legislative Budget Committee.Operationally, the appropriation is highly granular: it names dozens of small to mid-sized projects across the state—ranging from predevelopment and acquisition to renovations, service centers, RV buyback programs, Homekey conversions, and infrastructure improvements—rather than funding a broad statewide program.
That specificity limits HCD’s discretion to reallocate funds among priorities, but the bill’s DOF authorities create a parallel channel of flexibility to adjust allocating entities or fiscal agents when necessary. Absent additional statutory reporting or performance requirements, accountability will depend on how HCD, DOF, and local fiscal agents design verification, reporting, and audit procedures under these relaxed rules.
The Five Things You Need to Know
The statute exempts these allocations from Article 4 (commencing with Section 19130) of Chapter 5 of Part 2 of Division 5 of Title 2 of the Government Code, from Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code, and from the State Contracting Manual — removing several standard procurement and personal services controls.
DOF may create item numbers where none exist, approve advance lump-sum payments (including for costs incurred prior to the act’s effective date), and transfer allocating authority or permit alternative local fiscal agents to facilitate expenditure.
HCD may accept self-attestation from recipients as an acceptable verification method if the department determines it appropriate, shifting verification responsibility toward recipients and the allocating state entity.
Funds are available for encumbrance through June 30, 2025 and for expenditure through June 30, 2027, and the statute prohibits disbursing funds for any project prior to September 30, 2023 unless otherwise specified.
The appropriation lists 77 named allocations to specific cities, counties, housing authorities and nonprofits for narrowly described projects, which constrains HCD’s reallocation flexibility while creating many small, administratively distinct awards.
Section-by-Section Breakdown
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Legislative purpose and allocation mechanics
Subsections (a)(1) and (2) state the legislative priority—housing—and require the designated state entity (HCD in this case) to allocate the listed amounts to the named recipients. The provision instructs the state entity to choose the ‘best method’ for allocation and explicitly allows self-attestation as one acceptable verification method when the entity deems it appropriate. Practically, this means allocations are not run through a competitive application process; instead HCD must operationalize a distribution method that honors the line-item directions while using lighter-touch verification where warranted.
Procurement and contracting waivers
Subsection (a)(3) strips these allocations of several standard contracting controls: the personal services contracting rules in Government Code Article 4, large swaths of the Public Contract Code, and the State Contracting Manual, including DGS approval and certain Chapter 6 requirements. Administrators retain discretion over how to implement disbursements, but this language eliminates routine procurement checks and competitive contracting obligations that would normally apply to state-funded projects.
Department of Finance authorities and administrative flexibilities
These paragraphs give DOF pragmatic tools: creating item numbers where needed, allowing advance lump-sum payments and retroactive reimbursement for incurred costs, transferring allocating authority to another state entity, and permitting alternative local fiscal agents. Any change of allocating entity or fiscal agent must be reported in writing to the Joint Legislative Budget Committee at least 30 days before the change (subject to the committee chair’s discretion for a shorter notice). That combination centralizes practical control with DOF while bypassing some formal approval pathways.
Timing windows and constitutional restriction
Paragraphs (7) and (8) set the financial cadence: encumbrances through June 30, 2025 and expenditures through June 30, 2027, with an explicit prohibition on disbursing funds for projects before September 30, 2023 unless otherwise specified. Paragraph (9) introduces a constitutional guardrail: funds cannot be used for purposes falling under Section 8 of Article XVI of the California Constitution; DOF must withhold allocation and notify the Joint Legislative Budget Committee if a conflict exists. These timing and legal constraints frame how and when HCD can act.
Appropriation and the named project list
Subsection (a)(10) effects the appropriation from the General Fund and subsection (b) contains the line-by-line allocation list naming 77 recipients and their intended projects — from small capital repairs and service programs to multi-million-dollar acquisition and development efforts. Because the bill ties amounts to specific entities and projects, HCD’s role is primarily ministerial: translate the statutory line items into disbursements under the flexibilities the statute provides, while ensuring legal and fiscal compliance under the timing, DOF, and constitutional constraints.
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Explore Housing in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Named local governments and counties (cities like Half Moon Bay, San Leandro, San Jose, and counties such as Sonoma and Tulare) — they receive direct, noncompetitive funding for specific projects, reducing the time and administrative burden needed to secure state support.
- Nonprofit housing developers and service providers (e.g., Habitat for Humanity chapters, GLIDE, Lao Family Community Development) — the line-item grants lower uncertainty and can fund predevelopment, acquisition, renovations, or operations without participating in competitive solicitations.
- Local fiscal agents and community organizations chosen as implementers — these entities gain direct access to funds and can receive advance lump-sum payments to accelerate project timelines.
- HCD and DOF — administering agencies gain statutory authority and flexibility to design tailored allocation and payment mechanisms that can speed project delivery and manage otherwise fragmented local requests.
Who Bears the Cost
- Department of Housing and Community Development — increased administrative workload to parse dozens of small, discrete awards, design verification approaches under self-attestation, and manage compliance without standard contracting safeguards.
- Department of Finance and Joint Legislative Budget Committee — DOF assumes increased decision-making and oversight responsibilities (item numbers, transfers, fiscal agent approvals) and JLBC must absorb reporting and monitoring expectations with limited forward directives.
- Local fiscal agents and smaller nonprofits — receiving advance lump sums or retroactive reimbursement shifts cash-flow risk and programmatic accountability to organizations that may lack robust financial controls.
- State auditors and taxpayers — procurement waivers and self-attestation increase audit complexity and potential for questioned costs, raising contingent fiscal and reputational liabilities borne ultimately by taxpayers.
Key Issues
The Core Tension
AB107 resolves the practical dilemma between moving money quickly to locally designated housing and service projects and maintaining the procurement and oversight safeguards that protect public funds: speeding delivery requires waiving controls that provide transparency and competitive discipline, but preserving those controls risks delaying projects that the Legislature expressly prioritized.
The bill’s most consequential trade-offs are procedural. By design, AB107 prioritizes speed and local targeting over the normal procurement and contracting controls that provide transparency and competitive discipline.
Self-attestation and multiple statutory exemptions reduce administrative friction but also weaken contemporaneous documentation and competitive market signals that protect against cost inflation, favoritism, or ineligible expenditures. For auditors and oversight bodies, reconstructing compliance after the fact will be harder, particularly where advance lump-sum payments and retroactive reimbursements occur.
Operationally, the statute creates an administrative fragmentation problem. HCD must convert 77 line items into executable awards across many jurisdictions with varying fiscal capacity; DOF’s authority to shift allocating power and permit alternative fiscal agents both mitigates and complicates that task.
The bill does not prescribe performance metrics, standardized reporting requirements, or uniform audit protocols for recipients operating under self-attestation, leaving meaningful design decisions to HCD and DOF. Finally, the constitutional carve-out tied to Section 8 of Article XVI introduces legal uncertainty: DOF’s determinations will materially affect whether particular projects proceed, and those determinations could prompt legal challenges that delay disbursement.
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