Senate Standing Committee on Budget and Fiscal Review

The Committee on Budget and Fiscal review will begin. Is beginning now. Will come to order. Sorry. All right. We are having both in person hearing today and via teleconference. And for those individuals who want to give us testimony via the teleconference, the number today is 877-226-8216. The access code is 621-7161. And that information is also on our Senate Committee website.

And as I always indicate, I will maintain decorum and any individual who's disruptive may be removed from the remote meeting service or have their connection muted. The committee meeting is here at Room 2100. So any Members of the committee, if you are in the building, come down, so we can establish quorum. The folks who are providing testimony to us are participating remotely. And I think all of you know the drill, that you will unmute yourself to talk.

But our It people will put you back on mute. If you want to respond to any questions from my Members, you can use the Raise Your Hand indicator on your zoom. So once we have heard from all of our presenters and taken questions from our committee Members, we will take the public testimony and we'll hear first from people in this room and then from the telephone.

Now, let's see if we have a quorum. Not yet. So we will start as a Subcommittee. And what we are doing today is a continuation of the informational hearing that we had on housing and homelessness programs, which we convened on February 2. But because of a little bit of IT glitches, we basically had to skip the panel on affordable housing. So we're doing that now.

And this is on investments in affordable housing. So we will just have a single panel and we will have all of our panelists speak, and then we will go to questions. And, of course, from our committee Members. And Vice Chair Neilo. Would you like to add anything?

I think you've covered it superbly.

Thank you. All right, we will begin with Lourdes Morales from the LAO and she will provide us with the opening remarks.

Good morning, Madam Chair and Members. Lurus Morales with the Legislative Analyst Office. Give me a second, please, while I share my screen.

Sure.

As you mentioned, I will be providing a brief overview of the recent investments related to housing for recent years.

Lourdes is just as a piece of information. We have the Handout, thank goodness. But the way the room here is designed, the screen is so far away, it is hard to see. But you proceed because we do have the Handout. Go ahead.

Thank you. And I'll also mention the Handout is available on the LAO website as well. And as you also mentioned that this is a continuation of the prior hearing. I'll be referencing just the final two pages of the Handout for my comments this morning. So the table on page 17 generally captures the major discretionary spending actions within the state entities, primarily responsible for administering housing programs. So those being the Department of Housing and Community Development, the California Tax Credit Allocation Committee, and the California Housing Finance Agency since the 2019 2000 and fiscal year, the table does not include any previously authorized base funding for some of these programs, such as funding from Proposition One, the Veterans Affordable Housing Bond Act of 2018, and SB 2, which established a reporting fee on real estate transactions.

So, for example, the multifamily housing program administered by HCD has historically been supported by bond funding. So the $325,000,000 for the program noted on the table reflects the additional actions the state has taken to expand the program beyond the 1.5 billion authorized for MHP by Proposition One. I will not go through every program, but as you can see, overall, over $15 billion in discretionary funding has been appropriated in recent years towards housing programs in these departments, most with an HCD which received about $12 billion.

In some cases, as I referenced MHP, state actions expand long standing programs. In other cases, the state has established new programs, such as the $2 billion provided for HCD's new accelerator program, which addresses funding gaps for shovel ready projects that have been unable to access Low income housing tax credits and provides instead resources immediately so that those projects can get started. Additionally, $2 billion has been provided towards state Low income housing tax credits.

Again, this is in addition to the ongoing annual state tax credits authorized for Low income housing of about $100 million annually. And finally, about $1 billion has gone towards CalHFA for programs that help finance some developments like accessory dwelling units and to assist with home ownership. On page 18, I provide some key takeaways from the recent state actions to address housing affordability.

Overall, as the state's housing affordability crisis has become more acute, the state has significantly increased its fiscal role by expanding existing programs and establishing some new programs that help subsidize housing development across the state. Overall, these investments have relied on primarily one time or temporary resources. That concludes my overview. Thank you.

Go to our other panelists before we take questions, get through all the panelists and then have questions. So I hope that you would be able to stay with us till that point. All right, apologies for me taking a bit to because I brought the wrong folder. Okay? I have my folder from Public Safety instead of them, but I have it here.

This is a safe place, no kidding.

But we will next hear from Zachary Olmstead, who is the chief deputy Director of the California Department of Housing and Community Development. Mr. Olmstead. Thank you.

Thank you. Thank you for that introduction. On behalf of our team, I want to thank you for the opportunity to meet with you today again and share information about the housing homelessness programs from our previous budget investments over the past few years, with support from the Legislature, Governor and stakeholders around the state.

We've worked together on several fronts to increase the supply of affordable housing and hopefully blunt some of the worst impacts of the housing crisis through targeted technical assistance, planning, grants, housing investments, and accountability efforts. Throughout the past couple of years, we've deepened our partnership in collaboration with other agencies and departments to align efforts to address housing need. This collaboration is evident in HCD and our work with CalHFA, the California Interagency Council on Homelessness, the Department of Veterans Affairs and the Department of General Services, among others.

And through those relationships and our work with federal, state and local partners, we collaborate to meet our mission and achieve these better outcomes together. And we implement investments in partnership with many of these entities that help address the entire spectrum of housing need and the response to and prevention of homelessness. I will say our hope is that these efforts are paying dividends.

Since the beginning of 2018, HCD has awarded over 13 billion in investments from voter approved bonds, state General funded fusions, and the use of federal funds. And these investments have resulted in nearly 10,000 units already built and completed through HCD programs. Another 22,000 are in construction right now and in the pipeline.

On top of that are 23,000 more already awarded units that will enter construction and come online in the coming years. So the state is on the precipice of realizing big gains in the affordable housing portfolios in our communities as a result of these large investments. Since 2018, these new homes constructed in the pipeline are throughout over 1000 new housing developments and will house approximately 125,000 California.

One of the most critical parts of these investments, which we are really trying to make sure everyone understands that they come with a required 55 year term of affordability. So this is not a one time public benefit. We will see when we have these units come online over the course of these 55 years.

A conservative estimate based on normal unit turnover means these recent investments alone should provide 875,000 current and future Californians who now have access to affordable housing. And often we talk about these units that are created, but these units, we have to remember, are homes. And while we cannot solve the housing affordability crisis overnight, it's an important reminder that every new unit is a home coming online for a needy household.

And that home now will be held affordable for 55 years. So these are investments that do not serve just one household, but generations of Californians to come. Our work is definitely not complete in 2023 calendar year.

This year alone, we'll have another 3 billion available through notices of funding, availability and HCD programs across probably 20 state and federal programs in our portfolio. And if that sounds like a lot of programs, it is. The affordable housing finance system is quite complex, where it's not unusual to see many local, state and federal sources combined to make an affordable project viable and ultimately built.

In fact, the foundation of most affordable housing financing continues to be tax exempt bonds and state and federal Low income housing tax credits, where an additional 4 billion annually is awarded to support affordable housing developments outside of HCD or Calh, Fer or other efforts. And through the Administration's advocacy, at least 1.5 billion annually of these resources are now even more deeply targeted to ensure the construction of housing for extremely Low income and homeless households. And because so much state and local funding is being directed at affordable housing development, these bonds and tax credits are also heavily oversubscribed, as you know.

So HCG and the state has worked to develop alternative pathways to financing without tax exempt bonds or tax credits. The LAO mentioned one such pathway the Accelerator Program, where we combined 1.75 billion federal funds and 250,000,000 state General funds to unlock ready to go projects that were still waiting for the overly competitive tax credits and bonds. All in all, 58 projects throughout the state were funded for over 5000 units in this program, and over 40% of these projects are already in construction.

And the overall complexity of housing finance is why we've been working to consolidate funding wherever possible, and why we've been working with the past few years with the Treasurer's Office to align both the public benefit outcomes desired and the timing of these resources to build affordable housing faster. One example of consolidation is the implementation of AB 434, which is a Bill a few years ago from Assembly Member Daily that directed HCD to combine several multifamily housing programs into one large notice of funding availability, which we call a Supernofa. This required our Department to restructure programmatic guidelines to retain the core goals of population specific programs, such as the specific delivery of housing to veterans or farmworker households, while combining those funds with multifamily housing program and infill and infrastructure grant funds.

The first round of this consolidated supernofa was released last year in 2022, and 700 million in awards were just announced earlier this month. Those awards will create nearly 6400 units across 72 additional affordable housing developments. We followed that multifamily Supernova with a Homeownership Supernofa for about 170,000,000.

Released in January from our Department, it combined eligible CalHome and Joserna farmworker funds that are designed for homeownership into one funding opportunity. We continue to learn a lot from these consolidations. We'll continue to refine and adjust as needed in order to balance the needs of achieving state policy objectives and offering the funds expeditiously.

The resources being awarded that result in these newly created homes are a critical component of addressing the vast housing needs of the state. But public financing cannot be the only intervention. This is why HD's housing accountability work is so critical.

While our team handles inquiries on many aspects of housing law and offers technical assistance and enforcement as needed, one of the most compelling results is that the work has unlocked more than 4600 new housing units, more than 1000 of those affordable homes just since the beginning of 2020. And what I mean by that is these units were approved as a direct result after HCD took action, where developments that were stalled or not being approved at the local level were approved after our intervention. This is a very important component of our work.

One of the major reasons California has the affordable crisis, as severe as it is, is from decades of underproduction, where many good housing developments were proposed but never approved or approved at far fewer units than could be accommodated. Our Administration is proud that we're trying to address production from these multiple directions, and accountability is a huge part of that work. We have been implementing many, many programs and policies, so it's probably too hard to mention them all.

But I'm happy to answer questions to the best of my ability on any topics I wasn't able to mention here. Thank you. Thank

you. I'm sure we will have some questions for you, but we will now turn to our next panelist. Who is Francesc R. Martí, The Director of Policy, Strategy, and Legislative Affairs of the California Housing Finance Agency.

Go ahead. Good morning.

Good morning, Chair Skinner and Members of the Senate Budget Committee. My name is Francesc Martin.

I'm the Director of policy, strategy and legislation for the California Housing Finance Agency, also known as College of A. Thank you for the opportunity to speak to you today about our agency and the work we do. As the state's affordable housing lending institution, CalHFA fulfills a unique role in providing innovative and effective financing programs to address our state's housing needs and to complement the work done by our sister agencies.

Our core lines of business include offering down payment assistance for first time homebuyers, as well as lending and bond issuance for the development of affordable rental housing. Our unique governance structure and our strong credit rating give us the flexibility and access to private capital necessary to fulfill our mission and to help the state address a variety of specific housing priorities. So, since 2018, CalHFA has received various investments from the state, including annual revenue from the recording fee in SB, two Prop One housing bond funding, and various sources of General Fund one time support.

Today, I would like to give you an update on how we have deployed these key state level investments. At CalHFA, one of our core areas of focus is serving homeowners and homebuyers right? Homeownership is a critical component in tackling our housing crisis, and the state continues to invest significant resources in homeownership programs. Some of these programs, such as Calhoun, are run by our sister agency, HCD.

Others, we run CalHFA using federal funding, such as our Mortgage Relief Program, which has helped 11,000 California families catch up on their mortgage. But I'll focus more attention on some of our state supported homeownership investments at College of A, my home offers down payment assistance supported by state funds and pairs it with federally conforming first mortgages from secondary market private capital. So with a leverage of over 25 private dollars for every dollar state support we're able to help between 5013 thousand households every year and by increasing access to equity building for many first generation homebuyers, our programs directly address the persistent intergenerational wealth gaps in our society.

So to further deepen our impact, in 2022 we introduced our Forgivable Equity Builder Loan Program which served households earning 80% or less of airmen income. This program was extremely popular and we deployed the entire 88 million we had available in just eight months to serve more than 2000 families at the lower end of the homebuyer income spectrum who have never before gotten this level of assistance. These homeowners were spread across 52 counties and two thirds of them came from communities of color.

Something that I'd like to emphasize beyond these numbers are the real human stories. For example, a single mother in Antioch who worked 13 hours days as a nurse to save money for her first home while also going to school. So now, thanks to CalHFA's down payment assistance programs, she has a lovely home.

She's close to work and close to her son school as well. So to continue our mission of helping Low and moderate income Californians become homeowners, we are now preparing to launch an exciting new program called the California Drink for all program. This program will be possible thanks to the support of this body and in particular to the President pro TEM in securing 500 million in state support in the last budget cycle.

We also want to thank the State treasurer in California Forward for the support they have lent in creating the vision for this innovative program. This is a shared appreciation program that offers a second loan for up to 20% of the home's purchase price, which covers the down payment and closing costs. And the repayment of that is based on a prorata share of the home's appreciation.

We expect to make this program available to our lender network in just a few weeks. And perhaps more than any other form of homebuyer assistance out there, this is a program that will help Californians that otherwise might have never gotten the chance to build wealth through homeownership. I would also like to thank the Legislature for the resources provided for the Adu grant program.

College FFA was able to deploy 100 million from various resources of state General Fund support which allowed us to provide grants to about 2400 homeowners to build their accessory dwelling units. This program offered a $40,000 grant delivered through a network of lending and nonprofit partners. And an earlier evaluation of this grant program is that it was a real catalyst for innovation in the Adu finance space.

For instance, we've seen our partners offer new products like second mortgages with a managed construction escrow and use rental income to underwrite construction loans in Trailer Bill AB 157 of last year. The Legislature also tasked LHFA with convening a Working Group to discuss the future of Adu financing. This Working Group process has been well underway and is actually nearing completion as we speak.

The Working Group is a cross section of practitioners, advocates and other stakeholders who have discussed various financing mechanisms and ideas to further promote the construction of ADUs. Last year's budget, the 2020 2023 budget also allocated 50 million to Fund future initiatives. Informed by the outcome of these Working Group discussions, now I'll turn to lastly to our multifamily business.

Over the last four years, we have deployed roughly $400 million through our Mixed Income Program, or MIP, also known as MIP, which provides financing for affordable rental housing, serving incomes generally from 30% to 80% AMI. But they also have an option to go a little bit higher, to 120 AMI. Funding for this program is provided through a statutory portion of the annual SB Two recording fee revenue, and it's also gotten a few supplemental funding allocations by the state in recent years.

This program finances new construction projects and has produced more than 7600 units since its inception. And after four years running this program, we could do consider it a success. Our projects have gone to construction nearly five months quicker than comparable projects.

Our projects take about twelve months to get to construction, which is pretty fast for the industry. And the broad range of incomes that we serve not only supports more integrated living patterns, but we believe that it also provides our projects with long term financial sustainability, which means that they're less likely to come back to the state later on years down the line for future preservation funding. So to just wrap up everything.

CalHFA is dedicated to addressing California's affordable housing needs and improving access to homeownership for underserved communities. We are proud of the programs we have established and the impact they have had, and we look forward to continuing our work in the future in partnership with the Legislature. And thank you for your time and your consideration. Thank you.

Thank you, Mr. Marti. We will now hear from our last panelist. Who is Linda Mandelini? She's the President of Eden Housing. Eden Housing is one of our nonprofit affordable housing developers that not only builds houses housing, but also manages properties that include properties that provide on site services. Though not all the properties, but it's a very mixed lots of different types of units. So, Ms.. Mandolini. Go ahead.

Thank you, Chair woman Skinner, good morning, and thank you to the Budget Committee for having me this morning. As you noted, my name is Linda Mandolini, CEO of Eden Housing. I'm really grateful for the opportunity to speak to you today.

For those of you unfamiliar with Eden, we are a nonprofit that develops, owns and manages service enriched affordable housing. Since our inception in 1968, we've developed and preserved more than 11,000 affordable homes for families, seniors, and persons with disabilities, and we currently have more than 3500 affordable apartments in our pipeline. As a developer, we clearly see the importance of the state's role in housing production.

Whether Eden or our partner locality initiates a new development, virtually all of the housing work that we do has needed state funding in order to be financially feasible. This is because the rents we charge are typically 25% to 50% below market rate rents. Charging lower rents regulated by state and local guidelines translates into lower borrowing power, which we backfill with state funding from deferred loans from the HCD programs that Zach talked about, or state tax credits.

The affordable housing industry as a whole has historically relied on the federal Low Income Housing Tax Credit as the financial backbone of most of the development we do in the state. It provides 25% to 50% of the development costs of the projects. But because we're in a high cost state, developers typically need matching funds from the state to take advantage of the federal credits.

For example, Eden has nearly 3000 units in our development pipeline that are seeking additional funding. In nearly every case, this involves state allocated tax credits and loans from HCD. We're not unique.

There are tens of thousands of units that could start construction immediately if they could just secure the funding. Key funding programs administered by HCD, including the Housing Accelerator Program, the Multifamily Housing Program, the Affordable Housing and Sustainability Program. ASIC is our nickname for that one.

We also use state tax credits administered by the Treasurer's office, and occasionally, we use funding from CalHFA's mixed Income Program. HCD has recently taken steps to streamline the financing process through the Supernofa. However, the Supernofa was dramatically oversubscribed, leaving more than 14,000 shovel ready affordable homes underfunded.

As an example, Eden had only one of its seven applications funded from the Supernofa, and we know that many of our colleagues had one or fewer, as in none. .

Ms.Mandolini, sorry to interrupt, but I think some Members may not know what the Supernofa is. So

Zach referenced the supernofa. So under AB 434, the state was instructed to streamline its Administration of the state HCD program. So they created a single notice of funding availability and called it a Supernofa.

So Zach, I think, can describe exactly how it went, but I think there was priorities for veterans and farm workers housing, and so it was substantially oversubscribed because a lot of projects came in all at the same time for the Supernova. So in the past year, the state was unable to fully allocate the federal credits because we didn't have enough projects with state matching funds. So if we're serious about our housing goals, it's critical that at a minimum, the state provide additional resources to leverage our federal credits.

But if we're truly, truly going to make progress, the state should also invest heavily in the housing accelerator program. Which enables housing projects to move forward without the Low income housing tax credit. This is a particularly smart strategy for permanent supportive housing, which has very limited ability to support any permanent debt.

Unfortunately, going into this budget, most of the voter approved bond funds have been depleted, and we're now in a position where it appears HCD will have less capital to invest. If the state budget does not appropriate more funding, the state's contribution will largely be limited to the ASIC or Cap and trade funds. This represents a drop in over 60% from the funding level that HCD has been investing for the last several years.

Not only will this impact the current pipeline, it means that developers like Eden will have to pull back on future projects in anticipation of very limited opportunities to Fund. As an example, Eden has an acquisitions Fund that we use to increase the speed and deliver projects more quickly at lower cost. However, that requires us to invest $2 million a project.

And without a clear sign that the state remains committed to funding affordable housing, it would be unwise for us to deploy more funding until we have a clear path forward. I hope that all of you have received the January 30 joint budget letter from the state's Affordable Housing Advocacy Organizations. That letter outlines a funding ask that would nearly double historic rates of affordable housing production at a moment in the economic cycle when very little market rate housing production is occurring.

This countercyclical funding would not only produce critically needed affordable housing, it would provide employment and economic opportunities to construction workers and businesses across the state. This is extremely important. As you might recall, in the last recession, California lost a huge portion of its construction workforce and businesses.

Given the recent national jobs Report, our industry is assuming that the Fed will maintain, if not increase, interest rates. This will undoubtedly extend the slowdown in market rate housing production. So if we want to maintain and build the state's construction workforce capacity, public investment in affordable housing is critical.

We believe the state ought to use this money to invest deeply in addressing homelessness and our affordable housing shortage with a $7.9 billion package of funding. I would note that we appreciate that the Governor recognizes the important work of investing in this importance of investing in this work, and we support his budget request, but only as a starting point. We propose 7.9 billion.

4 billion to unlock and accelerate production of 32,275 new affordable homes, 2 billion to the multifamily housing program, 1.5 billion to the housing accelerator program, and that HCD be given the authority, with Department of Finance approval, to transfer amounts between those two programs in line with demand. We propose doubling the current state Low income housing tax credit with an additional 500 million beyond what was allocated in the 22 23 budget. $2 billion.

In addition to funding for in additional funding for homeless housing assistance and Prevention Program HHAP in 23 24, for a total of 3 billion in ongoing funding for future years, allowing 94,000 households to exit homelessness. 1 billion to prevent displacement and homelessness for Low income households and preserve new affordable homes to include 500 million for the Community Antidisplacement and Preservation Program cap as proposed in Senate Bill 225 by Senator Caballero to preserve the preservation of to spur the preservation of 3600 homes preserving Low income housing for 39,600 households over the next 55 years. 500 million for affordable housing production through the Cal Home Program to provide homeownership opportunities to 5000 Low income Californians.

Lastly, as a long term owner, eden strongly commends the Senate's the state's recent commitment to preservation funding by creating the PRP Program Preservation Portfolio Program. We strongly encourage you to consider continuing to Fund these activities so we don't lose ground. We realize that these funding levels may seem daunting in the current budget environment, but affordable housing investment is one of the most effective uses of state money available.

It has a well documented multiplier effect on construction related jobs and eases pressure on housing costs and homelessness. With that, I conclude my testimony and we'd be happy to answer any questions.

Thank you so much. All right, so we will now go to Member questions. I will take a list. You're right, I need to establish a quorum first. Felise, go ahead. Let's call the role.

Senator Skinner, here. Niello, here. Becker. Caballero, Dahle, here. Durazo, here. Eggman. Grove. Laird, here. McGuire. Menjivar. Min, here. Newman. Ochoa-Bogh. Padilla. Roth, here. Seyarto. Smallwood Cuevas. We have a quorum.

Great thank you. Okay, like I said, I will take a list of those of you who want to ask questions, but I'm going to initiate some questions. I want to start with HCD.

Zach, I think it was only Mr. Marti that mentioned Supernova. Maybe I didn't hear your reference, but anyway, it was just explained better to the Members, and I'd like you to give me an update on the rollout and whether it's been oversubscribed. Just update on that rollout.

Yeah, I did mention it. Thank you for the question. It's okay. I'm happy to elaborate. So the first round of funding was released in 2022. We just made the awards from that first round earlier this month.

We call it a super notice Fund availability. It combines funding from four different programs. So the Multifamily housing program, the Veterans Housing and Homeless Prevention Program, our Josephiner Farmworker Program, and the Infill and Infrastructure Grant program.

And so we had to amend all those guidelines essentially to make sure we were still maintaining the statutory public benefits for those especially those population specific programs, as well as combine kind of the rules into kind of one. And so we were heavily oversubscribed. We did Fund 72 projects for about 700 million. And that's going to create about, I think, 6400 units, if I remember correctly. But we got well over 200. Applications. So it is accurate.

Could you just mention it's? 72 projects for funding, 6400 units. And what was the dollar amount?

700 million, a shade under 700 million. And that's the combination of sources of those four programs. And so our goal is to issue that as one notice of funding availability per year.

So we did that last spring, made awards, like I said earlier this month, so that they can then apply for tax credits and bonds should they have that as a part of their financing. So we will have another round of funding out this spring doing that and then again every kind of spring hereafter, so long as there's funding available in those programs.

Let me just interrupt for a second. So part of the motivation of that Bill and that program was to streamline. And you did note that you had to change a lot of the regs to make it work because there were preexisting programs that then were affected. But you also mentioned that the first round was the notice was put out in 2022, the awards only just recently granted. So has it streamlined, is it going to result in streamlining?

Yeah, the streamlining. Thank you for the question and I touched on this a little bit, my comments, but I think it's a really important part of the conversation. Ms. Mandalini also noted some aspects of this most affordable housing is building together many sources together. So might be local sources, it might be state sources, in some cases federal sources that are coming to localities, often paired with tax credits or taxes and bonds. And what we see, and we still see certainly is going from program to program in order to get your kind of financing together for that project.

So what this does in terms of streamlining is it's a one stop shop, at least for those programs, so they can come in with an ask and say, hey, fully Fund at least our state ask for this. We may still be applying for tax credits or bonds, but we don't need to seek other sources elsewhere. And so for that reason, it's streamlining for applicants, not the need to wait for another notice of funding availability for another program and those sorts of things.

So many of these projects should be applying for tax credits or bonds this year, now that they have their full complement financing from that supernova. And we're doing the same thing on the homeownership side, there are certainly other things that we are interested in doing and trying to help facilitate that, but it's also working in concert with our funding partners. So I alluded to our work with the treasurer's office.

We have tried to align not only the timing of when we make awards that people can apply, but also the programmatic rules. So many of our efforts over the last couple of years have been to in dealing with the pools within those tax credit programs. Also put as much as possible to serve extremely Low income homeless households to align with the public benefit of the programs that we're offering.

Because in HCD's programs we always kind of drive in terms of competitiveness to serving for the deepest need, especially for extremely Low income households. So those are often the projects that are getting awarded and funded and Ms.. Mandolin even mentioned in our accelerator program, right, it's a very good source for unlocking permanent supportive housing and the like.

Those same projects often are still going for those tax credits and bonds. And so that's part of the streamlining that I think was the goal there was combining the availability of those funds in one kind of uniform application.

I'm going to stick on the streamlining for a moment. I think all of us are aware, well, first, we all know that we have a great shortage, we have a housing shortage, but we also have a very serious shortage in housing that's affordable and that affordable housing. Ms..

Mandolin didn't so much speak to this. But the process from the point where the project is conceived to the point where ground is actually broken due to the fact of the complication of getting the financing and often the length of time to get a permit. That it can take twice as long, if not three times as long, to get an affordable housing project started then versus a market rate.

And yet we are now seeing a drop in market rate. So the point, and perhaps I should be asking this of the Administration rather than a particular Department, but the LAO gave us a chart. It lists a lot of different sources of funding.

just say one thing. I also referenced we are seeing the gains.

Well, maybe I'll

Certainly I think we are seeing homes in construction in greater frequency and greater amounts than we had previously. Already nearly 10,000 just from the HCD programs alone.

Nearly 10,000 homes already built and created and occupied. 22,000 in construction right now. Now another 23,000 already awarded.

We'll continue to make awards and other programs this year in the pipeline to come. So we are seeing that pipeline come to fruition, which is a good thing. I think our accountability work is helping there because it's the signaling that we're watching and we're seeing at least a little bit better compliance with the state laws, many of them that have been passed the last couple of years.

We're always trying to see if we can find some efficiencies. Like I said, we paired some of our homeownership programs together. We're following the statute and the will of those programs.

In many cases, the consideration I would offer is, when thinking about this, we do have a lot of programs that have a goal in mind, right. A population is seeking to address. Two of those were in Super NOFA are serving veterans and farm workers.

But it's something to consider, right? As you consolidate, you need to be careful about balancing the public benefit or the goal of those funding. In some cases, some of the programs we get are approved by voters through bonds. And so maintaining that public benefit or whatever the goal was there with kind of that consolidation or that streamlining, because we do see people will serve the easiest as possible, right? And so we still feel it's in our mission to make sure we maintain the push towards that funding that was allocated to serve veterans or farm workers or create permanent supportive housing and the like.

So it's just something to consider. There are many competing factors in terms of the policies that undergird many of those programs, but it is worth considering where those align, what makes sense.

Okay, I have a question for CalHFA, and then I'm going to call in Senator Niello. CalHFA, And of course, in my question, even though I'm asking a particular Department head, if any of those of you on the panel want to chime in, please just use the raise your hand function and I'll call on you. I'm curious about how the current economic situation has impacted various of Cal HFA's programs.

Is our money not going as far? Is there less take up? I'm just curious that both with interest rates rising, construction worker shortages, things like that, how is that affecting our well, also, if we have homeowner, if we're trying to support homeownership, there's not a lot of supply out there. So I'm curious on how it's affecting our programs.

Thank you, Chair Skinner. That's a very, very relevant topic at CalHFA. We are continually observing the market context we're operating in.

The nature especially of all of our business, of our single family, of our homebuyer systems business, is heavily dependent on the real estate market cycle. And we are very clear eyed that the interest rate environment continues to represent a very significant challenge to first time home buyers as it significantly reduces their buying powers. We have started seeing price declines in California, and although those price declines should be welcome news to low and moderate income first time home buyers, they do not yet offset the increases in interest costs.

Right, so I just kind of like to underscore that it is a very complex market environment. There is an incredibly wide range of forecasts amongst real estate market analysts and economists about how the housing market will behave in the remainder of 2023, how it will behave in 2024.

We're keeping a close eye on it, on all of that, not just for our existing programs, but for the new ones that we're also going to launch, but keeping a long term perspective. It is important to remember that Cal HFA programs are intertwined with that ebb and flow of the real estate market, but that we do adjust and adapt. Right.

And it is important to remember that over the long term, investing in homeownership has proven to be one of the most reliable sources of intergenerational wealth creation. Right, so I think we're very excited both about the continuation of our current programs and about some of the new programs that we're going to launch in this space.

And yet the Administration, the budget included last year the starting up of CalHome, and yet the Administration and this budget that they put out in January is delaying that. It's a homeownership program. You just spoke to the importance of assisting everyone for homeownership.

So comment on.

Our Department administers CalHome, and so there's money available right now for CalHome through our homeownership Super NOFA. So while there is a proposed reduction or trigger reduction, we still have resources for CalHome that are out and available right now.

Okay, I have a number of questions on that, but I will hold off to allow my other colleagues to ask some questions. And I have Senator Niello, followed by Senator Min, followed by Senator Durazo.

One comment to the point that Chair Skinner made about the number of programs. One of the consistencies of all of these informational hearings that we're having lately on the budget is in all cases a dazzling, even bewildering array of programs, which makes it very difficult to understand what the fundamental problems are. It's almost like we say, well, let's try this.

Well, let's now try that, let's try the other thing. Somehow consolidation would help. My question has to do, the challenge we have is affordable housing, but overall housing supply, and it hasn't always been like this.

In the 80s, California routinely approved over 200,000, permitted over 200,000 units a year. In fact, the information I have is in 86, it was 315,000 with a population quite a bit smaller than currently, and we can look to other states in 2021. Texas and Florida both permitted over 200,000 units, and they both have smaller populations than California.

So we can look to our own history and what happened in the 80's and 90's, what has happened since, and the experience of other states. So my question for anybody, any of the panelists, is do we look to our own past success, do we look to relative success in other states, to try to figure out what is it that's holding us back in California now.

I'm happy to address one component of that. This is why we have such an emphasis on accountability, of holding true to the laws passed by this Legislature over the last couple of years, and why we have seen, I think, great success in unlocking so much new housing production just since the beginning of 2020 with those efforts. I think for a long, long time we saw a lot of very viable housing developments, affordable market rate, you name it.

Just stymied stuck, not approved. Ultimately, if they were approved for far fewer units than they could accommodate or wanted to in their initial proposal, I think our work in technical assistance and then ultimately within accountability in those areas is a real important part of bolstering, permitting, bolstering housing production generally. So I think we have to remember that it's the implementation and enforcement of those laws, not just the funding that we provide.

The situation to which you appoint projects not being approved or being approved for fewer units, is that because of local approval processes or through challenges to projects by other folks once they are approved?

Given the gamut, certainly, but I think community opposition and local opposition that often does not desire development is a huge aspect of that. And now that we're enforcing things or paying attention to the Housing Accountability Act and others, it's at least forcing and requiring local governments to follow the laws at the state level.

Might those challenges be based on sequent challenges primarily?

I wouldn't say so. I would say actually most things that we're unlocking are other types of lack of approvals that aren't a result of CEQA stopping the project. CEQA is another aspect, certainly, but our work, we're not enforcing CEQA, we're enforcing other housing laws.

And already, those following of those laws has already unlocked thousands upon thousands of units. So the work that we do, since it's not we don't have the authority within accountability in that space, is what I'm speaking to.

Thank you.

Senator Min.

Thank you, Chair Skinner. I have a comment and then a couple of questions, and I think the comment I wanted to make at our last Budget Committee hearing, but I was not here when questions occurred. But when I talk to my local community organizations that deal with homelessness, one of the challenges they frequently describe to me is just the complexity of applying for different types of funding to be able to mix these funding, whether they're for social services, mental health, health and housing.

And to the extent that you all in the Administration are able to try to ease that and ease the burdens and barriers to applying to for these, I think that would be helpful. Many of these groups don't have the personnel to be able to fill out the forms to look through things. And I know that in the last hearing it was mentioned that outreach would be part of the efforts to try to get this funding out there.

But I think more than as much as outreach, I think it's also important just to make sure that we're streamlining this and making it as easy as possible for folks to mix these different types of fundings. Because obviously homelessness is a complex multilayered issue that is not just about housing at the end of the day. But my two questions relate to first, I see that in our Discretionary Housing Spending augmentation chart, it seems clear that there are a number of key signature programs from the Governor are going offline as far as their funding this year, most notably the HomeKey Program.

And I was just wondering if you had any comments, I guess this would be to Mr. Olmstead on the effects you expect to see from that reduced funding for some emergency type programs like that.

We still have another round of HomeKey funding that will be out this spring. Publishing under 750 million. In addition to that, we'll have a tribal specific HomeKey program. So we're still seeing significant demand there that will exhaust our funding right now, but that will allow us to fund quite a bit more this year up until this point, almost 13,000 units across the first two rounds.

So we are still working aggressively, right, with the local governments on this round of funding. And so happy to elaborate there. But we do still have some resources and they're coming out this year, that will exhaust what we have.

I guess then, the follow up question that obviously is what happens after that funding runs out? What do you see as the impacts of that? I mean, do we have enough units? I assume there will still be high demand for this. What can you expect to see when that funding exhausts?

Yeah, we'll have to see what the demand is. I think we're optimistic about significant demand like we saw last round. I mean, we're focused on implementing the programs before us and the funding before us.

I don't know if I can speak to the future, but we certainly still do see significant need. Maybe what I'll share is, I think something I shared in the last hearing, but I'm not sure, given that we got truncated there. We target all of our programmatic funding towards extremely low income households and homeless households.

It's not just the HomeKey program. So even the Affordable Housing and Sustainable Communities Program that was mentioned. The last round of funding, funded 4600 units I think? Over 1000 of those were to extremely low income households.

About 500 of those were permanent supportive housing units. Our accelerator program, right, that we mentioned, basically half of those funds went to projects that were serving extremely low income households. So it's not only that funky program that is creating new supply or increasing that portfolio in our communities, and we will continue to do that through all our programs.

In terms of meeting the public need, where the need exists, most in the greatest, the greatest need exists at our low income levels, right? Our homelessness levels. And so our programmatic scoring, it advantages those projects that are able to serve at the greatest need. And we still have, including HomeKey this year, calendar year alone, 3 billion in notices, funding availability out.

Right, so we still have a robust amount of funding out. And so we're focused on deploying that, of course, as effectively as possible.

Thank you, Director. Last question. I understand that in the 2021 Budget Act, we passed a requirement as part of a Trailer Bill to require the California Interagency Council on Homelessness to conduct a homeless landscape assessment, which was, as I understand it, to be completed and provided to the Legislature by December 31st of last year.

But as of this point, my understanding is that the report has not yet been submitted. I don't think any of you serve on the Interagency Council on Homelessness, but I was wondering if any of you had any knowledge of the status of that report. And maybe I could ask the LAO.

Lourdes Morales with the LAO.

That report was recently released, I will see that it makes it to your office.

Thank you very much. It must have been the last couple of weeks then?

Very recently, yes.

Okay, thank you.

I will just add we do serve on that, Council Member. There is a meeting this afternoon at 01:00 P.M., public meeting. I believe they're going to have a presentation on that assessment at that inter agent Council.

Look forward to reading it. Thank you.

Thank you. Senator Min. Senator Durazo.

Thank you. I'm just going to throw out three or four questions that I got from my constituents. So they're very specific to what their experiences have been.

And it relates more to buying, especially first time buyers. So if people don't have savings and little to no down payment, how do they access the program? What about ADU and Duplex opportunities? How do these interests get impacted with a first time buyer? Is there federal and or local programs that can be accessed in addition to state program? With average house price in LA close to eight to nine hundred thousand dollars and income eligibility around 70 to 80 thousand, it's hard to find homes when the market is hot. Cash buyers snatch up inventory very quickly.

How can we help first time home buyers secure homes when investors come in with cash offers and take away the opportunities for people who live in the community, to live in the community they grew up in? And then what about fixer uppers that don't qualify for FHA loans? Hopefully, there's an answer for those specific questions. Thank you.

Thank you, Senator. My name is Francesc Martí, I am the Director of Policy, Strategy and Legislation at Cal HFA.

Thank you for your questions. I'll just start by kind of describing how our programs work, how they can be accessed. Our core first time home buyer assistance program is called My Home, and it works through an established network of lending partners.

So we don't have, like, brick and mortar locations of Cal HFA. We work through a network of lending partners and mortgage brokers that offer the Cal HFA product as part of their offering. And it offers three or 3.5%, depending whether it's an FHA or a Fannie Mae loan paired with a first mortgage.

Right, so they will be able to access essentially 100% cumulative loan to value financing for that home through our product without having saved for a down payment. Right. That's the current offering.

Now, as I mentioned in my testimony, we're about to launch a really exciting new program that will provide 20% down through the Dream for All Program, and that is made possible by the support provided by the state in last year's budget. Right. And that program, we're going to start offering it to lenders in a matter of weeks, and then the lenders will build it into their product offering.

Just the comment you made about investors buying properties. We are very aware of this phenomenon, especially prior to the recent cooling of the real estate market. There's been a lot written about investor purchases in single family homes and how they contributed to the decreasing affordability and in driving up prices in some markets. This is primarily because investors have access to more capital.

Right, than the regular first time home buyer, are not subject to the same financing constraints as owner, as future owner occupants, and can bid up prices in competitive markets. This can make it difficult for first time buyers and lower income families to enter the market and find affordable housing. And then, additionally, investors may choose to rent out the homes they purchase, which can reduce the number of homes available for purchase and further increase prices.

Right? That's what we were observing before the market started cooling. Obviously, this has decreased in magnitude given the change in real estate market cycle. What I'll add is that this new program that's going to offer 20% down, the Dream for All Program, is actually going to be very relevant to the conversation because a lot of first time home buyers, a lot of them first generation homebuyers, are going to have access to a much larger down payment than they ever have 20%.

So we're very excited about this. And in terms of getting the work out, we work often with CBO's, community organizations, but we would be more than happy to work with your office. We can set up outreach events, webinars, all kinds of different strategies to get the word out in your community.

So we'll be happy to work with your office on that.

Thank you, Senator Durazo. Senator Seyarto, followed by Senator Becker and then Senator Smallwood-Cuevas.

Thank you. While we have Mr. Marti on the line, I'd like to ask him another question about the Dream for All program. Mr. Marti?

Yes, I'm here.

When it comes up, who's eligible for that program? Are there income requirements? What's the eligibility for being able to partake in that program?

Yes, absolutely. The Dream for All program would have income eligibility requirements that will be the same as our current My Home program. We actually have income limits by county.

They're listed on our website. I can provide those to you. But they generally would translate to roughly 150% of earnings and income.

So somebody that makes $80,000 to $100,000 is eligible for this? Depending on where they are at. Yes, I understand that. I'm using some numbers from my area.

Yeah.

So, they would apply and get a down payment and be able to do that. What about the people that are above that range? Because those are the people that are kind of locked into the more affordable apartments, town homes and things like that. They have income that will allow them to safely participate in the program, and then they vacate a unit that is more of an affordable, entry level type of home.

Have they looked at that? The kind of the dynamics going on with that type of issue in housing?

Perhaps, Mr. Marti, you could reference the California Dream for All that was included in last year's budget that would be specific to that income type. That homeowner category that the Senator is referring to.

Absolutely, Thank you, Senator. So, yes, the California Dream for All is designed to help a wide income spectrum within the homebuyer space. Right.

And our income levels are intentionally flexible to create the kind of dynamics that you were speaking about. Right. For example, in many counties, our current income limits go up to 160,000.

In the Bay Area, they go up to 280,000. So they're very flexible income limits precisely to promote the kind of trickle down dynamics and opening up the next unit for more affordable housing that you were describing.

Right, Mr. Marti that program is not launched yet, though, however, correct? And if you could just speak to that.

It was directed to develop it as you've described it seems like you've been working on it, but the administration's proposal for the budget delays it.

Senator, so let me speak to that, because the Governor budget proposes a reduction of 200 million of the original 500 million, which is actually subject to a potential restoration trigger if state revenues improve next year. But the proposal will actually not impact this proposed reduction does leave very significant resources in place if it is adopted and it does not impact Cal HFA's commitment or timeline for implementing the program. So there is no delay.

Yes. Well, right. There's a proposal for reduced funding.

We are going to be monitoring this throughout the budget process, but it does not impact our commitment or timeline or parameters about how we're launching the program. We are planning on launching the program to our lender network actually in just a matter of weeks, by the end of March. So I just want to be really crystal clear about that.

Right.

Alright, thank you so much. Now we're going to go back to ACD. I have a question about the housing accountability measures that are included in the last couple of years that you were talking about.

When cities aren't approving, what you feel is a good project. Because I, like many of my colleagues, were on the front lines of the growth periods through the early two thousands and I don't remember not approving any projects back then. Most projects got through. But most of the limitations of those projects were because of the requirements for the environmental impacts, roads, all of those different things, jobs, the jobs housing balance.

And now we've added the vehicle miles traveled to these requirements. So when you're doing this accountability, are we taking?

Because once those issues, if those are out of whack and you approve it as a council, that's when the environmental attorney comes in and sues the developer and the city for approving a project that doesn't pass environmental muster. And that environmental muster is something that we have created in California for the cities to administer. So when you're doing accountability, what are those accountability measures? Are they just disapproving those or saying, hey, you know what, we're going to waive that.

We're going to waive VMT and you get to build it anyway. What are those measures that you are taking

to force cities to approve projects?

Our accountability authorities are Housing Element Law, Housing Accountability Act. Many of the laws passed.

We don't have authority over CEQA or environmental things or environmental aspects that you're referencing. However, even within that body we are unlocking a number of projects that city councils, I'm glad to hear that your local governments were not some of those actors. But many cities do stymie or refuse to hear projects or find ways to try to not approve projects.

And we are paying attention to that. And when appropriate we are of course, first offering technical assistance, but when required we have to send some notices of violation we do that. And it is resulting in gains in housing permitting and housing production.

So we are utilizing the authorities that are granted to our Department underneath a variety of housing laws, ADU Law, Housing Element Law, Housing Accountability Act, et cetera. And when those are being violated, we are taking action.

Senator Becker, followed by Senator Smallwood-Cuevas and then Senator Dahle.

Thanks, I had two questions. One, I just got an email Thursday from the past mayor of one of my cities and his estimate was, for, to meet the arena numbers to build 2500 low and very low income, fully subsidized units and 1000 moderate income units that will still require some subsidy. His estimate was $2 billion to provide that subsidy.

This for Palo Alto City, about 60,000 people. So my question, I guess maybe it's for Mr. Olmstead,

With the housing accelerator funds, just looking at this sheet, we have housing accelerator funds down to 250 million. No redevelopment, obviously. How do you foresee a city like this meeting its RHNA target? I mean, you talked about accountability, which is very important, but no accountability is going to get us a $2 billion subsidy.

So how do you foresee a city like this reaching its targets?

Well, maybe first I want to just make sure to orient us all. The obligations under RHNA are to plan and zone for that need. So that is the first step.

We need more land and parcels available to develop. And that is what this effort, that is what the requirement, It's a planning requirement and a building target, as you noted. Yeah, so that is the first step.

Right? More land available will result in more opportunities for developers to meet those obligations. There's a number of things. Obviously, we have a number of financial programs that developers can apply to and cities can work with.

Cities themselves have a number of sources that are in their control, working with their housing authorities to get vouchers to help. Subsidize are quite helpful as well. So we can certainly work with any cities.

What happens then, is if they have an approved housing element with that appropriate zoning, that is a contract with us. They have to identify barriers for housing development, it could be financing. But we see that as a contract to work through over the course of that housing element. In terms of meeting the state obligations, it's that zoning requirement and that housing element that they must achieve.

In terms of actually developing, there's a number of strategies that jurisdictions are employing. We've seen a huge growth, for example, in the Accessory Dwelling Unit production. Before the laws, the suite of laws passed for the last several years, we were seeing 800 a year. Now we're well over 20,000.

And every year it's growing statewide. So many jurisdictions utilize those as a mechanism. There's certainly your typical multifamily development.

There are sources out there to help finance. I don't disagree. There's a tremendous need.

We are oversubscribed in many of our programs. But those are the types of things that we like to work with cities on. We have planning grants, we have other things that help facilitate things that we acknowledge cities for being pro housing, meaning they are reducing fees, often impact fees and others that may be an impediment.

So there's a suite of tools that are available, some of them are financial, some of them are regulatory, some of them are on the planning side.

I appreciate the response. Obviously we can meet the planning obligation, but I think ultimately we want to build these units. So I guess it just sort of points to this issue of I know we want these cities to build, but without significant subsidies and significant support for affordable housing, I think it's just important to be realistic of what is going to get built.

Just a couple of other quick comments. You mentioned vouchers. I think Dr. Galley said we have 48,000 Section Eight vouchers that are unfulfilled right now, so we have to fill those.

I'm not sure that point is going to be particularly helpful. This city actually just did a business tax over the opposition of businesses and ... business tax. I think that'll be about 35 million a year.

So that'll be helpful. But again, a drop in the bucket of what we're overall providing. So I don't know, just maybe puts in context a little bit our challenge there with affordable housing and the need for support.

I just mentioned ADU's I think are very positive. I think in my area, unfortunately, I'm not sure how many ADU's are actually being occupied for housing and I don't know if there's any way to look into that, but I think that's sort of a concern in our area. I guess my other second question was just this is something I've been pondering.

I'm just curious, anyone's response. If the population in the Bay Area has been essentially flat over ten years, how have housing prices risen quite so much? I'm just curious, anyone's thoughts around that? Let

Let me have an answer. We have a shortage, right? So you started from negative. So unless you build more housing, you won't be able to catch up.

So we have a huge supply problem, right? So we're 3 million units behind in California.

But is the population basically flat over ten years? I understand how yeah, I mean, that could lead to some increase. I'm really just asking. I don't have a point of view on this one.

I'm just wondering. Yeah, it just seems weird that prices could go up quite so much. I just don't know if there's any other speculation that people have.

Well, we've never had enough housing in the Bay Area, right? So we've had a highly constrained supply. So people live 2 hours away or 3 hours away to get to jobs. And so I think that's part of the challenge.

And so I think prices, because you're so land constrained and it's so, and Senator Becker, you're probably from one of the most desirable areas in the state. It's really hard to live there because we don't produce enough. So you can't solve a supply and demand problem without supply.

And I believe the other Senator pointed out the permitting challenges. I think, if I'm not mistaken, and Zach, probably you have these numbers. But, we only permitted a hundred and something thousand units last year.

So we've gone from 200,000 to significantly lower. But we've had rapid jobs growth without balancing out the housing growth. It just doesn't work.

Yeah, well, turnover. I also wonder about the role of vacant housing and investment people buying them for investment properties and that's certainly something we see in our area as well. But I appreciate your thoughts.

I'll turn it back over to the Chair.

Certainly, before I call on Senator Smallwood-Cuevas. There are some localities that have put limitations on the use of ADU's for short term rentals. So for things like, for example, Airbnb and such.

So that was those local governments effort to try to make sure that new housing units would actually be used for long term housing. Senator Smallwood-Cuevas.

Thank you, Madam Chair, appreciating the conversation and questions and presentation. I wanted to follow up on a question that Senator Durazo lifted up about homeowners and how do we support existing homeowners and future homeowners. Particularly in my district where we do have a housing shortage and also a community that had experienced decades of redlining in which property values and equity did not grow or disproportionately. So compared to some of our neighboring districts.

Now, these are sort of I would say the green line has opened and folks are coming in both commercial enterprises that are buying up private housing for corporate use. And at the same time we have a situation where disproportionate homelessness, particularly for black and brown communities, has been at crisis level for some time. My question is for Mr. Marti.

As you're looking at these homeownership programs, how are you factoring in issues of displacement and gentrification and who and what sort of preservation can be made to ensure that communities that currently have historically been a part of these neighborhoods or have been a part of the home ownership community, are able to actually be able to draw down on the equity in their homes and help to provide housing for their children and for their aging parents? I'm understanding the opportunity for the new homeowner, first time homeowner. I'm not understanding the opportunity for existing communities, particularly black and brown communities that have experienced redlining and now cannot fully participate in the equity that is in their homes to be able to ensure their families can stay in the communities that they have tended to.

So wondering, what are the opportunities for those homeowners who are cash poor but equity rich to be able to maximize the opportunities for developing property in their communities?

Thank you so much, Senator. Thank you for the question. I think what you're describing really goes to the heart of why we do what we do at CalHFA

Right. Our mission is really to redress those persistent racial wealth gaps, the legacy of government section, systemic racial segregation that you were describing. Right.

And I'm glad that you actually put the spotlight on existing homeowners as well. We're actually doing a lot on that space as well. It's federally funded, right? As part of the recent COVID legislation, a few years ago coming out from Congress, there was a federal program called the Homeowner Assistance Fund, and funds flowed to CalHFA.

And we started the California version of this called the California Mortgage Relief Program. When we designed the California Mortgage Relief Program, just kind of speaking very specifically to what you were talking about, we made sure that 40% of the funds were reserved for areas with high owner vulnerability, which are disproportionately areas of color as well. And we developed what that meant of that high owner vulnerability.

It's an index that was developed with UCLA, and we think it's a really good tool to make sure that underserved communities are served by this program. So what this program does is essentially it allows distressed homeowners, homeowners that are behind on their mortgage. It allows them to get caught up.

The program will pay off the mortgage arrears up to $80,000. It's been a very successful program so far. We've distributed about 322 million, served about just shy of 12,000 households.

The average assistant is about 28,000 per household. And one of the things that we're actually most proud of in terms of the Mortgage Relief Program is the outreach playbook we've developed. We have a whole kind of partnership network with CBOs.

I actually can provide you a list of the organizations we're working with you in your district, and we've really been able to get the word out through these organizations. Other than Mortgage Relief, there's also housing counseling is a very important component. There's a whole system of HUD approved housing counseling networks that we work with very closely as well.

But we are always happy to engage with legislators and stakeholders to see what more we can do to preserve the homeownership we have, especially in historically disadvantaged communities. And

And I appreciate that answer and I want maybe I need to unpack my question a little bit too. And I appreciate the homeowner vulnerability metrics and how you're supporting folks to stay in their homes. I'm thinking about folks who are current on their mortgage, but maybe they're retired and their home is worth millions of dollars now because of this influx of money coming into the community.

Folks paying cash for homes, corporate interest, buying single family homes in their neighborhood, but they can't afford to draw down on that equity to build out an in law unit for their mother or housing for their children. And so they are, and certainly their children will have to leave the community to find other opportunities because they can no longer afford to even participate with a 20% down to buy in this community. So I guess my question is, what are the financial tools to really support those homeowners, particularly those who were resistant to, like SB 9 and 10, who are really questioning how upzoning and developing is going to hurt their ability to stay in their homes? What are the ways in which we're helping them be able to navigate and have financial tools to be able to stay and to ensure that their families can stay there for generations by pulling down the equity and being able to participate in ADU and other opportunity to develop their own neighborhoods and their own properties?

Yeah, thank you. I think one of the most powerful tools in this space to what you're speaking about, Senator, is the Housing Counseling Network, right? Which can inform homeowners that are equity rich but cash poor what their options are in terms of kind of navigating that environment. I think that's a very valuable network.

CalHFA's ADU program did provide $40,000 grant to make it possible for a lot of homeowners in disadvantaged communities that might have not otherwise been able to access financing to make the kind of economics of building an ADU possible. And this supports building an ADU can support equity building. It can support income generation in the property.

Right. And it can ultimately, to your comments, kind of anchor existing homeowners in their communities. Right.

Right now, as I mentioned in my testimony, there's an ADU Financing Working Group that is actually well underway. It's mostly wrapped up, but a component of that discussion is also kind of how does ADU financing support these social equity objectives that you were describing? So I'm sure there's more that we can do in this space. We are open to talking more with stakeholders and with the Legislature about other initiatives and other ideas.

Well, I look forward to you and I'm glad to working with you and hearing about the work group and figuring out how we can work together on ensuring some solutions that allow folks to build on their properties and preserve the communities that they've loved for so long. I have two other questions and one is related to the Homeless Landscape Assessment. Glad to hear from Mr. Olmstead that that has been released.

I think when we had our initial hearing, there was a question that was raised about the disparities of homelessness. And we were just in a briefing and learned that now one of the fastest growing populations that are experiencing homelessness in real time are black seniors, mainly because they were locked into bad jobs that didn't provide living wages and retirement. And their children are also now at risk of homelessness and unable to provide the support.

So it's a very devastating situation. I'm curious. In our last conversation, the LAO office said that they had not started to set goals particularly focused around black homelessness, that there was a process in which that was underway to think about goals and benchmarks.

But there is, like I said, at 01:00 this afternoon, there is a public meeting of that Interagency Council and they are having a presentation, I believe on the landscape assessment. I hope it will be a robust discussion amongst all the stakeholders within the Council, which are many governmental entities as well as many public participants on those questions. So I know you likely have a busy schedule. Perhaps someone on your staff or others are able to view that or, at the very least, maybe the Interior Council staff can check in with you guys after that.

I appreciate that and I think it was the actually LAO that actually made sense.

Yes, but I think it was regarding the homeless and we're in the affordable housing part. Yeah.

Well, we'll follow up to make sure that those questions were answered in the process. And my last question just has to do with the conversation that we were having in terms of the need and the crisis and how our efforts to partner and to create the opportunity to address our shortfall. We still are needing a million more rental units to sufficiently address the crisis.

And I wonder how, on the housing side, how you all are working with the workforce development side, the LWDA side of the house, because we know that as we're building and building and working to catch up to the crisis. And I think the representative from Eden Housing spoke to this, that at the end of the day, this is about poverty and it's about affordability, and it's about the ways in which, in California, we have to get at some of the root cause of the problem. And I'm happy to see that there are a beginning conversation and steps around labor standards in the affordable housing development space.

But I'm curious. How are we building pathways for those most at risk of homelessness, of actually being factored in and written into these policies to ensure that we are actively using things like targeted local hiring? That calls in and requires that those at risk get access to the jobs to actually construct the housing that they need and at the same time keep folks from falling over the precipice into homelessness.

And what are the ways that we begin to build toward career that can go from prevailing wage to a skill-and-train model? That for sure helps us build the housing that we need but also lift people out of poverty so that we are cutting off the crisis where we need to most, which is at the root cause of affordability and opportunity. So I'll leave the question to whoever feels they can answer about the ways in which workforce factors in to the production.

Ms. Mandolini did you want--you have to unmute yourself.

I'll just talk briefly about what we're doing, and I know a lot of our colleagues are doing similar work, right? So we work very closely with our general contractors to make sure that they're looking at programs that would help bring people into our project. So, for example, in Livermore, unfortunately, a project that's being held up by a sequel lawsuit, we have a partnership with Youth Build to help bring in local youth to help build the project so that they can get skilled and trained capacity. And so I think we've worked very closely with our associations, the California Housing Consortium and the Nonprofit Housing Association, to look at how you balance local hire with union requirements, with prevailing wage requirements, and how you build that pipeline of apprentices.

And I know some of the unions have been working very hard to create high school sourcing programs in communities, disadvantaged communities. And most recently, we were at the Carpenters Training Facility in Las Vegas, touring their work and talking about that and how we ramp those programs up. So, I think there's programs out there, both on the union and the nonunion side, and I just think we need to expand them and really get people interested in the jobs and really target them.

Great. Thank you. And just back on the question that Senator Smallwood-Cuevas asked around, we know that we have--because housing values have increased--we know that we have people sitting in homes with high value but for whom it is very difficult to get the financing to do the type of project she's describing like ADUs, which is one of the reasons that the legislature fought for having the financing program in the approving a budgetary allocation for financing ADUs.

And part of the reason that we asked for the Working Group is because the program as currently designed doesn't necessarily--well, it's a good program, but it benefits a much wider income range than perhaps the Legislature had in mind when we first allocated the funds. So, I think we're looking forward to what the Working Group comes up with to see how we can make sure to assist those housing-rich, but monthly-income -poor residents do such projects.

And with that, I'll call on Senator Dahle and then I would like to go to public comment. I actually have one or two ERAP questions, and I also just wanted to mention--not yet I'll have you, Mr. Dahle, speak--but I wanted to mention that those of you who did not get answers to your questions, the staff have been noting them, and we're going to submit them to the Administration and try to get you answers. Senator Dahle, go ahead.

Thank you, Madam Chair and Members. I first just want to give observations from some of the material I have available to me here. Since 2000, in the last ten years basically, mandatory building standards and their effects to add cost to housing in California.

It's 22 to 30,000 as the estimate. So there are things like the energy efficiency standards, which was 2010, green building standards, which came in in 2011--added $2,000 per home. Fire sprinklers, 2011 as well, $5,000-6,000 per home. Energy efficiency standards, 71, 2014. Another 3000. And last couple I will name off is energy efficiency standards, again, 3000, and then solar mandates, which is from eight to 13,000.

So the cost of housing in California is directly attributed to the building standards that this Legislature has attached to them. I have currently here the major recent housing spending augmentations. And the total--this is project room key, housing accelerator programs, emergency rental assistance--all the monies since 2019 to present is $15 billion total. So $15 billion of taxpayer money, and we still have a housing crisis in California.

I happened to be able to, in my years when I was on the Board of Supervisors, was actually chair of the California Housing Finance Authority, where we did billions of dollars of first-time home buyer loans. And in those days, it was the down payment assistance was the major reason that people were not able to go from renting to own home ownership. And we were able to even go as high as 115% loans on homes to get them in their home, and then they were able to own a home.

So my question is that we've heard a lot about all these programs that these billions of taxpayer dollars have went to. But what I'm hearing from disadvantaged communities throughout the state--over the past year traveled around the state and heard from low-income people, people that are disadvantaged--that one of the major concerns is the cost of living. And when I say the cost of living, it's the cost of gasoline, it's the cost of transportation, it's the cost of food.

It's the cost of energy that is rising at a pace so fast that they aren't able to have those savings they had before. Because the cost of living wasn't so high to be able to get into a home. Has anybody in any of these panelists, have they looked at that as a deterrent to be able to get folks in their homes? Just average cost of living, food, transportation, energy in California, which we know has skyrocketed over the last three or four years.

Linda, Linda, you need to...

Keep forgetting to unmute myself. Apologies. If I could just address what we're doing at Eden. So on the question of energy, there's a big program that allows us to bring solar both to our common areas, but also to our residents. So we've been for all of our older buildings, wherever that's possible, we're working really hard to come in and retrofit our buildings so that we can reduce our residents energy loads.

We're also looking at the IRA money coming down from the federal government that would help us weatherize our buildings or make them more energy efficient, and that would actually flow through to the tenants. So that's real savings. We're also working hard on food and food insecurity.

We work very closely with the food banks in every county that we work in, which is close to 20 now, to help our residents get access to less costly food. And also, most of the state programs require us to be located or co-located with transportation. So our tenants don't typically need to have more than one vehicle, which is also a huge cost saving.

So, we think about this all the time. We're worried about some of the federal rules reducing eligibility for food banks and other negative impacts for our tenants. So, we think about this a lot. I'd say the biggest opportunity in the affordable housing space is really the money that would come down and help us retrofit our aging buildings so that folks can reduce their heating and cooling bills. Heating this month, since it's quite chilly here. But I think that's a big opportunity to help tenants with day to day costs.

We also do budget management and tenant counseling. So we're helping our tenants learn how to take their savings and figure out how to save and better stretch their budget. And that's strictly done as volunteers, so no one really helps pay for that. We really do that on our own to help our tenants really better able to manage. And we serve mostly folks below 50% of median income. So it helps. Every little bit helps.

Well, I would just comment the fact that I've supported these projects where we do double-pane windows so we can drive the cost of energy down for people at low income. But in the rural areas of California and also the inner cities or the folks that live in my district or when I was down in Senator Bradford's district, they commute a long ways. A lot of these people can't afford to live in their community and they're commuting a long ways because the cost of housing where their job is, the cost of housing is more affordable in places where they have to travel.

So those lower income people are really at a severe disadvantage to be able to get to work and then back to their homes because of cost of living. And then they can't ever get out of that place where they're stuck renting a home and actually end up with home ownership. So I just bring that to the light that on the ground, when you actually talk to somebody who is a disadvantaged person who is trying to get away from rent and into home ownership and be able to build that generational wealth, it is very difficult if we aren't able to incentivize.

And at the end of the day, the taxpayer is not going to be able to continue to be able to put $15 billion. We have a lot less of a budget this year, and we had windfalls and we put that money in. But the future does not look good until we drive down the cost of housing. That means building houses, number one. And number two, drive down the cost of living. And that's directly tied to a heck of a lot of policies that come out of this Legislature on a whole host of energy projects and building standards and the like. Thank you.

Thank you. Okay, I'm appreciative of all of our panelists so far. I do want to switch over to a few questions on the Emergency Rental Assistance Program before we go to public comment. It was not addressed so far, but we know that the Emergency Rental Assistance Program that we've had operating for some time now was very crucial to keeping many people in their homes. And there was a recent lawsuit against the state about that program. And as a result, HCD was prohibited from sending out further denial notices.

So what I'd like to know--and I have a number of questions--but before you answer, first one is: because of that being prohibited from sending out further denial, essentially was the program stopped, and then during that time period, how much money was the Administration paying its vendor every month, and what work was the vendor doing? And then lastly, how much money does the Administration currently have on hand for the emergency rental program?

Well, unfortunately, I am unable to specifically comment on this topic since it is subject to ongoing litigation. I can share what we've done up to this point. Largest single program in the nation, deployed nearly 4.4 billion in direct assistance.

Nearly 6360,000 households, unique households throughout the state. Sixty percent of those were at 30% of AMI or below, 85% at 50% AMI or below. But the program is currently subject to litigation, and we look forward to a resolution that will allow us to effectively distribute the program's remaining funds to eligible applicants and move past our emergency response and focus on long-term recovery needs. But unfortunately, I can't comment any further on that.

I appreciate we are under, in litigation. I think there was one or two of those questions that probably was information we could get even though we are in litigation because clearly, with the litigation, the program was ordered not to send out denial notices. So, I think it is legitimate to find out whether that means that we ceased any kind of activity on it.

But I'll submit them in writing and see what I can get. And we'll go to --I don't see any other questions for my colleagues. So we'll go to public comment. Let's see if there's anyone in the room, in the hearing room, who would like to address us. Please come up to the mic, state your name, and indicate--and as you're walking up, why don't we tell the phone operator to queue up any people that are calling in? And again, the participant number is 877-226-8216, and the access code 621-7161. Go ahead, public commenter, in the hearing room.

Hello, I'm Andrew Dawson with the California Housing Partnership. As part of the goals for the Roadmap Home 2030, of them is meeting the need for affordable housing, which requires 1.2 million new units by the next ten years. This requires an additional investment of $18 billion from local, federal, and state funding agencies or sources. While we understand that this is a deficit year, this humanitarian crisis of homelessness and unaffordable housing is an emergency. And the only difference is that's happening every day across the state. Thank you.

Thank you. Is there anyone else in the hearing room who wants to address us? All right, we'll go to the phone lines.

Thank you. For public comment, you may press one and then zero, and we will go to line eleven. Your line is open. Line eleven, you took yourself out of queue, so we will go to line 16. Your line is open.

Thank you, senators and panelists, for this hearing. My name is Katie McSweeney with CBHA, the California Council of Community Behavioral Health Agencies, which represents mental health and substances, community based organizations across the state. We're grateful for the focus of this hearing and for the ongoing legislative efforts to respond to the housing needs of some of our state's most vulnerable community members.

Housing is a critical component of overall behavioral health and well-being. Many of our provider members offer housing programs for those who are at risk of homelessness. We and our members stand ready to support and partner with the Legislature and its work to provide supportive housing solutions, along with the field and community-based treatment that helps people stably house. Thank you.

Thank you.

Thank you. And next, we will go to line twelve. Your line is open. One moment here. Better get line twelve.

That was line twelve.

Sorry. Line 16, your line is open.

That was me. I just spoke. Thank you.

Thank you. For any other public comments, you may press one and then zero. Madam Chair, we have no further public comments. Thank you.

Appreciate that. I did have--if Members would indulge me--one question for Eden Housing that I forgot to ask. And that is: other than you did make a pitch for the funding request that the various entities like yourself have signed, but other than the funding request, can you just illuminate us for what else could state or local governments do--we, the state or local governments--do to make it easier for more financially viable or faster to build the affordable housing that we need?

So, the one thing that I might encourage is a direct lane to CTCAC from the state. So besides the more money, the whole list of funding that I put out there, I think one of the challenges we see with HCD funding, without an accelerator program, if we can't get tax credits, we're in this--you get a super NOFA ward and then you're in a competition to get tax credits. So, I think you and or the treasurer, or the governor and the treasurer could be more coordinated on how HCD's projects get funded so the pipeline could go quickly.

And then on the what else side, I've talked at length about the approvals process and the expediting. I think the state has done a magnificent job of putting in place laws like SB 330, like SB 35. SB 35 has a sunset. So we need to extend all of the things that expedite the building of housing. So all of that, I think, is super important. And then on my wish list is if you could bring back redevelopment, which I know is not politically popular, the locals need more tools.

It's really expensive to build and build all the infrastructure that comes with these large scale projects without a tool to really pay for that infrastructure. And so we don't see a clear path there. And a lot of planning is happening at the local level, and there's just not enough funding to actually finance some of these larger scale projects.

I would point to the Concord Naval Weapons Station as a good example of that. But there's just a lot of need. And the locals are doing their part where they can, but they too are reliant on ballot initiatives. They can't pass their own ballot initiatives with a two thirds of vote threshold. It's too hard in almost every community. So there's a lot of things you could do to help the locals help themselves from redevelopment to lowering the vote threshold. And then all of these expediting programs that you've done have been enormously helpful.

And last but not least, the councils are voting yes because of all of the laws on the Housing Accountability Act. But we still have very wealthy NIMBYs out there who have unlimited budgets, seemingly in some locations, to sue us or take us to the ballot. So anything you can do to curtail that and get projects through the predevelopment hopper faster, I think would be helpful. So that's my long laundry list of what you could do to help.

Thank you. And with that, I want to give my thanks to the LAO, to HCD, and to CalHFA, as well as Eden Housing for participating on this panel and providing us the information you provided. And with that, and thank my Members for being here and asking their questions.