Assembly Budget Subcommittee No. 4 on State Administration

Good afternoon and welcome to our Assembly Budget Sub Four hearing. This hearing is taking place in room 447. With a few exceptions, the panelists listed on the agenda are preparing in person, are appearing in person. I asked the members of the committee if they could please come to room 447 so that we could dispense of the voting items. We will be accepting public comment at the end of this hearing, both in the hearing room and on the phone.

The phone number to connect is on the committee website and should be displayed on the screen. If you are watching this hearing online, the phone number is toll-free 877-692-8957, the public access code is 1315447. If you encounter any problems, please contact the Assembly Budget Committee at 916-319-2099 and a staff member will assist you. We encourage the public to provide written testimony before the hearing. Please submit your written testimony to budgetsub4@asm.ca.gov. Thank you.

For folks here in the committee room and those that are waiting to present, difficult to be in two places at the same time. So I had to present another bill and another room. And so here we are. We're starting. Since we don't have quorum, we're going to be waiting for more members to come to the committee room. Again, 447, so that we could dispense of our vote-only calendar. Until we have that, we will be starting with issue one. If I can have the panelists for HHAP accountability please come up. Let's begin. And I will ask that you speak very close to the mic because there's a very echoey room.

Great. Thank you, Chair Carrillo, members of the committee, Senator Wicks, pleasure today. My name is Myles White. I'm today presenting on behalf of the California Interagency Council on Homelessness and to provide an overview of the framework of the governor's accountability framework for homelessness funding. As mentioned in the committee background, over the last several years, we all know there's been significant investments in state homelessness funding targeted whether through capital investments or the flexible homeless and aid, particularly through the HHAP program.

The progress we've seen over the last several years also corresponds when you see 60,000 units of permanent supportive housing finance, another 24,000 units in the pipeline. We're really looking at an effort that when you're layering capital investments with these flexible homelessness funding, as with the HHAP program, really provides that full, comprehensive approach that is really what leads to these long-term successes and efforts that we're really looking to pursue through this accountability framework.

When we look at the last several years as well, when we made these investments and had this really targeted focus, we saw the results when 2020 to 2022, the State of California's rate of homelessness decreased at half the national average. So really, when we are looking at today, what I'll present on with the governor's proposed framework on accountability, we're looking at really two key areas. The first area is focused on actions, actions that support housing production and the strategic delivery of services.

The second component is rooted in regional coordination. What we've seen ultimately, time and again, and I'll extend upon in a moment, is the ability for a regional response that leverages both resources at the city-county continuum of care level. And that's where we're able to really leverage these resources most effectively.

So, first, turning to my item on actions, when we look at the efforts of not just the direct subsidies over the last several years, but even on the streamlining that the Legislature has pursued, really since the beginning of the 2017 housing package, when we see regulatory barriers removed at the local level, there's always a corresponding amount of increase of permanent supportive housing, affordable housing at large, and just units overall.

So when we look at the efforts we've done on planning, production, enforcement, these are really the efforts and that foundation that we've established and we hope to partner with the Legislature on in using as the framework for accountability. Ultimately, when we look at the dynamics we face with low vacancy rates, overcrowding, all of these factors are really a hindrance to our efforts and really the ability for us to leverage our resources most effectively.

The second piece here on regional coordination, just to use it as an example, even though this funding framework is really intended to transcend funding sources. So, not just exclusive to HHAP, but when we look at the regional coordination framework that we've established just over the last several years, candidly, through HHAP, the first round of HHAP, about three fiscal years ago, we only saw 11% of applicants apply jointly. This most recent round, we've seen 34%. And again, this is just joint applications for targeting and consolidating resources.

But ultimately, even when they haven't partnered, we've seen a lot of growth and technical assistance and a lot of progress when we look at the ability for the localities to have shared regional outcomes and corresponding actions that they commit to here. But again, that is just for a framework over the last several years. And this is a focus that we really look forward to partnering with Legislature on to expand upon through these conversations in the weeks to come.

So when we talk about these targeted outcomes and the strategic delivery of services, that is an effort that inevitably leads to a more targeted investments and a strategic approach that is able to accelerate. So when we say each locality has its own comparable advantages and resources, when you're looking at the cities, counties, COCs, state, federal, local resources, this is all the effort that we need to continue to build upon to make that progress in the long term impact. So again, I appreciate the committee's opportunity to provide us the ability to testify today, and happy to answer any questions.

Thank you. Before we proceed, since we have quorum, we're going to establish quorum and take our votes. Roll call, please.

[Roll Call]

We will now dispense, we only have two items for consideration on the vote-only calendar with a staff recommendation to approve as budgeted. Can I get a motion? Great. Roll call, please.

[Roll Call]

Thank you. See women getting stuff done. I love it. I love it. Thank you for the presentation. Let's go to going to LAO. Department of Finance, please.

Ted Doan, Department of Finance. Have no comment on this here.

Thank you.

Good afternoon. Lourdes Morales with the Legislative Analyst Office. We just have one comment related to the TBL provision related to establishing priority spending categories for the fifth round of HHAP. We would just note that the administration's categories really focus on maintaining and supporting recent investments related to homelessness initiatives, for example, providing operating subsidies for Homekey and supporting participants of the recently established care court program.

And so we would note that whether it's adopting these specific priorities proposed by the Administration or a different set of priorities, it does help ensure that the Hap dollars are used in a way that aligns with legislative priorities. We know that this does come at the expense of limiting a bit of the flexibility that local governments have had in recent years. But it is one mechanism to help enhance accountability, which, you know, the Legislature has been sort of thinking about diligently. Thank you.

Thank you. I'm going to open it up for questions from committee. Ms. Wicks.

So I know HHAP is currently one-time funding. How do you picture using this for long-term operation subsidies?

That's a great question, Wicks. When we think of the HHAP program. So five-year grant subsidies and the last several rounds, we are focusing, even with the LAO just reference of a focus on Homekey, a lot of the Homekey projects that we provided, initial operating subsidies, the focus here with providing some prioritization for HHAP, but at the same time goes back to when we look at the overall kind of totality of resources.

There are additional federal resources that are paired in terms of project-based vouchers or tenant-based vouchers that accompany a lot of the permit-supportive housing. So those are longer term duration. But within the resources that we have, even when you think of emergency solutions, grants at the federal level, an ongoing recurring resource, that's where we're trying to braid these different funding sources, given what we have available right at the moment. So again, to your point.

So I remember the resources five year, that is the confines of what we're administering. But then that's where it comes back to accelerating our efforts by leveraging these different funding sources, given the dynamics we're contending with.

So I know we have a huge need for money to pay for construction of housing, still especially affordable and publicly subsidized housing and permanent supportive housing. For both of these, there's not been enough operating subsidy money available. And I know, I'm just concerned about proposals to require prioritization of HHAP for operational subsidies, including residential care facilities and care court. It sort of feels like we're robbing Peter to pay Paul and we need sort of resources across the board, and that this would hurt our ability to have funding for housing production is a concern.

I think to that point, Assemblymember, when we, it goes back to focusing, whether it's Homekey or other capital investments, the ability for us to maintain and sustain that viability in the long run, that's where it's really a critical part of Homekey, for example, to partner with local governments and to have a shared kind of ownership in place when we provide a significant amount of capital investments.

Of course, the operating subsidies that we provided to start with, there's a lot of resources that we brought to bear ultimately, but that distributing that investment, so with our local counterparts here, that's something that we need to also continue to be mindful of is to your point, we have finite resources. We're trying to make the most strategic use of them as possible given kind of the confines of what we're working with.

Yeah, I mean, I think this illustrates the need for some sort of ongoing funding for affordable housing and the need for both housing production as well as the care that folks we know need in our communities, which I'm sure we'll have more conversations on.

Madam majority leader.

When local action plans were reworked, what metrics of accountability were put in place?

So when we looked at the local action plans, there's two particular metrics that we focused on the first metric was we really evaluated the unsheltered homelessness. And these again are metrics that we focus and leverage on the system, performance metrics from HUD. So we looked at unsheltered homelessness, but also to correspond to that is the permanent housing exits. And again, these two factors are really critical because one reinforces the other.

They correlate in terms of how do we expect a region to have a reduction, a meaningful reduction in sheltered homelessness if you don't have housing pipeline to sustain it. So the permanent housing exits. So in my presentation, semen, when we're focusing on the underlying dynamics, low vacancy rate but high overcrowding, all of these really help us articulate and understand what the health of the housing market is.

And that's really what we're focused on for overall production efforts across the board that helps relieve all of this pressure here. So we looked at those two metrics, in particular, to really focus the attention and the accountability of making sure that folks are not just more ambitious, but also the underlying actions help inform that progress.

We hope to see clearly the key word is accountability. We have the money, we put the money in, and the accountability becomes the biggest issue. And that's what our constituents and that's what the voters want to know about. Where is the accountability and what are we really doing specifically so that we are accountable and who are we accountable to? For me, I'm accountable to the very people who I represent in my district. But those issues are the issues that come up most often, and I'm sure you hear it all the time.

Absolutely. And to that point, just to your point, Assemblymember, when we look at accountability, one of the pieces that we have counterparts over at HCD here, and we'll talk a little bit more at length later on, but when we think of a lot of the team's effort that they've pursued on housing accountability, the enforcement, so a lot of the provisions the Legislature has expanded upon to hold accountable.

When we think of these resources and when we still are contending with jurisdictions that do not believe they have to adhere, they continue to challenge, draw it out, litigation taking multiple years, it's hard to make that progress. We all hope to see when on one end we're providing the resources. So you're putting your foot on the accelerator, and then we're also getting fought. So you're putting your foot on the brick at the same time. So that's really what we're trying to address here.

And in partnership with the Legislature, a lot of the framework in place that we are continuing to expand upon, hopefully, because that's really where we hope to see that progress. And the accountability, that's part of these resources as well.

That's where we want to see it too. Thanks. Thank you, Madam Chair.

Thank you. The bonus pot created under HHAP had an effect of having jurisdictions aim lower to ensure that they would reach their goals. How would the council evaluate plans and whether locals have met their needs to receive the bonus pot? And are there guidelines set on that regulation?

So, Assemblymember, when we really were focusing on the local action plans, the two metrics that I mentioned on unsheltered homelessness and permanent housing exits, these are the pieces that ultimately, when we talk about the viability. So to your point, and is referenced in even the committee backgrounder, the bonus structure in which the ability to meet that, of course, by default incentivizes kind of a counter to ambition, but at the same time, the viability, we wanted to make sure that when we were looking at the local action plans, that each plan had a viable kind of option to get to that level of whether it's unsheltered homelessness. And we looked at it specifically with permanent housing exits.

So one jurisdiction, for example, may be able to claim that we'll see a 20% reduction over the next several years, but if they didn't have a corresponding increase in permanent housing exits, that was one of the kind of telltale signs we could indicate of whether that was a viable outcome goal or not. So again, the structure of HHAP was focused on delegating that outcome goal setting at the local level along with TA from the council. But at the same time, we wanted to make sure we pushed back when there was clearly a non-viable kind of outcome goal that they put forward.

Out of the 20% reduction, when will that be evaluated?

Again, the 20% was just an example, but when we think of the most recent reduction for HHAP four that was announced, I believe, a month or so ago, that 15% statewide reduction in aggregate, that is evaluated based on the timelines in the HHAP four statute, which we're looking at 2025 ultimately. So from now until 2025, we're going to be evaluating, but again, that's codified in half, but we're looking at the totality of resources that they can bring to bear to help inform that goal.

So again, it's not just HHAP that they're utilizing, as is noted actually in the background here, but we're looking at the total amount of resources, state, federal, and local and these are all available in their local action plans and online. So we see the different resources that they can leverage.

With the flexibility on funds, does this allow local governments to utilize their funds to establish DMV documents so that they're able to move unhoused individuals and encampments to stable housing? And if so, should this be policy that we just have embedded into certain programs?

Assemblymember, the hep statue is pretty flexible. I think we'd have to evaluate that. I'm not familiar with that being a proposed use that I'm aware of, but we can look and evaluate that as being potentially an eligible use.

Well, it goes into documentation of individuals. Right? So if an individual doesn't have an ID, they don't have a driver's license, they don't have a birth certificate. And when you're taking in their intake form, you don't have any of that. Then that individual then gets delayed and is not able to receive the help. And then how does an individual that's unhoused and need services even get to a DMV? Right. So the DMV, the identification for identification purposes is critical. And so I'm asking if that can or should be something that's embedded in programs that we are moving forward.

Yeah. Assemblymember, the complete agreement that it's critical. For example, my colleague today, the deputy secretary for homelessness, is today, my colleague is actually helping at a mobile homeless connect event and actually Social Security Administration. So to your point. So we're at the DMV, at the state level or even at the federal level, the documentation is a critical component.

So the only hesitation is, I haven't seen that proposed use, but it would be consistent with the efforts and priorities that we are of continuing to make sure we move those barriers, because ultimately, having an administrative hurdle being what precludes someone from getting stably housed, that's unacceptable.

Good. Someone on this dais has a nill to address that. It's me, I have the bill. Another challenge that we have seen, and I see this in my community quite a bit. As a former journalist, I can tell you that many, many years ago, I interviewed a woman who had two small dogs.

And at every shelter that she would go to, she was denied services because she was unwilling to let go of the only connection that she had where she felt as a human being, even though she was living on the street. So the ability for unhoused individuals to receive care and resources through a homeless shelter or even domestic violence shelter is a hindrance. Can we discuss, or what are your opinions in terms of how unhoused individuals with pets should receive care?

I think this goes back to the policy of the state, the state being a housing-first policy, ultimately removing those barriers and impediments to services. And I know Legislature has explored efforts over the last several years on having a dedicated focus actually on pets. Of course, the ability for the resources that we have, and I know there's been separate appropriations over the years, so there is a precedent for that. And it is incredibly important. And what we really just evaluate is making sure it's consistent with housing first, which trying to remove many unnecessary barriers, right? That prevent folks from getting the help and the stable housing that they need.

Would HHAP dollars help fund with these challenges?

Assemblymember, I'm not familiar with that being. It would be again, within the contours of a pretty broad flexible use through HHAP. And again, I'm not familiar. It may have already, over the last several rounds of HHAP, been ineligible use. But I do recall that there have been also direct kind of resources targeted towards this issue in prior years. So I think there is a precedent, but I just can't recall exactly if HHAP was what was utilized in lieu of the other resources that have been provided at the state level.

My only concern is that if the governor is proposing a priority list, right, and helping unhoused individuals that have pets is not part of the priority list, then we're still leaving behind a community that is deserving of support and help.

Assemblymember, on the prioritization, it's a list really focused on the varying capital investments and street outreach, but again, not to foreclose on additional flexibility. Right? So we don't want it to be interpreted as being an exhaustive. These priorities are specific to what the exhaustive list of uses are, which is not the case. We want to make sure that we're just giving additional guidance to the localities to strategically pair, which a lot of them frankly, are already doing already. So it's not to foreclose on the ability for us to use those resources in that manner. And I think it's really consistent with what we've seen elsewhere. I'm just at this time not familiar with that being used.

Someone on this dais also has a bill related to unhoused individuals and their pets. It's me. It's me. I have that bill. So again, we're trying to figure out in a holistic approach, right? And how we use half dollars, how we have our investments, how we make California State investments on housing and homelessness, not just on the policy side, but most importantly on the funding side that we're not leaving communities behind. So thank you for that. If there are no additional comments or questions, we're going to move on to.

I do have a question, please. Can you give us the bill number for the DMV and for the pets?

I'm terrible with the numbers.

All right.

I'm terrible with the numbers, but.

I think it would be important, especially since this is an important topic. The pets is something for many of our unhoused, especially our veterans. I find that our veterans, who can more easily housed, will still not accept it because of their pets, because their pet are not being included. But thank you for carrying those two pieces of legislation, Madam Chair.

Thank you. I will get post haste those bill numbers. Thank you. We'll go on to issue number two. Thank you.

We are moving on to issue number two, an update on housing and homelessness investments and the proposed budget changes. Please introduce yourself, and we'll begin with the Legislative Analyst Office, please.

Good afternoon. Lourdes Morales with the Legislative Analyst Office. I've been asked to provide an overview of recent funding actions from the state to address housing and homelessness. So the table we put together is reflected beginning on page 11 of your agenda. The table generally captures the major discretionary spending actions in recent years amongst the departments that are primarily responsible for addressing housing and homelessness, these being HCD, Cal ICH, the Tax Credit Allocation Committee, and the Housing and Finance Agency.

We know there have been a number of very significant investments in other areas of the budget as well, including the Department of Social Services and DHCS, which have also allocated over $6 billion to those departments. But we're sort of focusing on the core departments here. We also, as another caveat, really focus on the discretionary actions the Legislature has taken.

We know that there's base funding for housing and homelessness programs, primarily in the form of bond funding that has been authorized in recent years, as well as through SB 2, that provides some ongoing funding for housing and homelessness. But these are the additional actions the state has taken since 2018-19 to support housing and homelessness, which is the first year the state began to take a much more active fiscal role.

So, as you can see from the table, the state has provided over $20 billion over this time period to address housing and homelessness, primarily within HCD that has received over $12 billion. In some cases, the Legislature has expanded long standing housing programs, as in the case of the Multifamily Housing Program, where there's about $1.5 billion in bond funding for that program, and the state has augmented that with General Fund in recent years.

In other cases, the Department has established brand new programs in recent years to address homelessness, I'm sorry, housing, such as the Accelerator Program. Additionally, the state has provided over $5 billion to the Interagency Council on Homelessness, here primarily for the flexible aid towards local governments. And then finally about $2 billion in tax credits and about over $1 billion to the Housing Finance Agency for a number of programs, primarily the recently established Dream for All Program.

So that provides sort of a brief overview of just the magnitude of funding in recent years related to housing and homelessness, and we'll sort of come back once the Administration presents just to provide our budget comments. Thank you.

Thank you. Let's go to HCD, please.

I'm just here to answer any questions you may have. No presentation.

Can you walk us through the proposals from the Governor?

I was not asked to do that by your Consultant. I think we're doing Department of Finance.

Finance.

Hello, Hannah Kohanzadeh with the Department of Finance. The Governor's Budget forecasts... Sure. The Governor's Budget forecasts a $29.5 billion General Fund revenue deficit. However, the Governor's Budget maintains approximately 88% of housing policy allocations made in the 2022 Budget Act. $350 million related to housing are subject to trigger restorations should the state budget conditions improve in January 2024. Thank you.

Any additional comments?

Not at this time. Thank you.

Comments or questions from Committee? Yes, Madam Majority Leader.

Thank you. I have a few questions. First, on CalHome. Last year, we worked really hard to allocate funding to promote home ownership opportunities through the CalHome Program. It was a two year commitment of 350 million for that program, 250 million was allocated in last year's budget, and we agreed to allocate the remaining 100 million in this year's budget. Nonprofit organizations have been planning and relying on these funds to build housing units in their pipelines throughout the state.

When the January budget proposal was released, I was really disappointed to see that the Governor proposed to remove the remaining 100 million that was supposed to be allocated last year, or this year. CalHome supports affordable home building for first time homebuyers. The program has been oversubscribed in recent years. Clearly, I have significant concerns about this proposal to cut the funding. If housing is a priority, why did the Administration propose to cut funding for this program?

Hannah Kohanzadeh with Department of Finance. So to note again that the Governor's Budget maintains approximately 88% of the housing policy allocations made in the 2022 Budget Act, and these programs. CalHome was chosen as a trigger restoration due to the state's economy. So it was among different selections that we had to review.

But if this is the one program that helps our first time homeowners, homebuyers, why was this particular program cut?

Yep. Andrew March, Department of Finance. So another thing that we would note is we took specifically in the housing space, the reductions that were made in the Governor's Budget were strictly to homeownership opportunities, as you noted, Assembly Member. And one of the reasons why the Administration took this approach was due to the fluctuation of mortgage interest rates. We didn't want to put homebuyers into an untenable situation with the fluctuation of interest rates that's happening at the moment.

However, even despite these reductions, there are still additional programs for homeownership opportunities within the state. In addition to the funding that was allocated in the 2022 budget, CalHFA operates a number of first time homebuyer programs that my colleague would be happy to speak to. So despite this reduction, there's still broad opportunities for first time home buyers in the State of California.

I'm sure there are. So your colleague is going to tell us about the others then.

I could elaborate on CalHome first. Department of Housing, Zack Olmstead, Department of Housing and Community Development. We have allocated and still are continuing to allocate CalHome dollars. The most recent notice of funding availability went out late last year. That application period just closed. It included $135 million in CalHome resources for homeownership. So we are still aggressively deploying the resources we have within CalHome, and we'll continue to make awards to those communities and those developments to support those activities.

But this was cut. Clearly, we have 100 million...

It's a proposed cut for next year. But all the funding that we have in this current year, we are aggressively deploying.

You are what?

Aggressively deploying and have been through those notices of funding availability.

All right. But I want to be very specific about my question. Why was this particular program cut?

I think across the board that what you'll see across the entire budget is that the Administration had to make difficult decisions across the board with any reduction that was made. Last year, the 2022 budget, we supported these proposals as the Administration and the Legislature together. So none of these reductions were made with a light heart. So across the board, these were difficult decisions that had to be made. But the Administration's responsibility to put forward a balanced budget was what drove these reductions.

All right, now I'd like to ask some questions on the housing voucher efforts. I have a bill to promote the use of federal housing choice vouchers. There are multiple components to the bill, and one component would require public housing authorities to report on their housing voucher success rate to HCD. If they have low success rates, the bill requires that they follow evidence based practices to increase success rates. I was thinking this is something that might be able to be administered under HCD's Housing Accountability Unit.

It seems like it is something that would fall under their jurisdiction, the jurisdiction of this particular unit. Does HCD have existing capacity to provide support to housing authority, to the housing authorities that need help in increasing success rates under the housing choice voucher program?

Well, any new activity, we'd have to evaluate the resources necessary. Obviously, I can't speak to the pending legislation until we do that evaluation. I will say we have grown our housing accountability efforts over the last couple of years, and there is a pretty insatiable need across the board to implement and hold to account the implementation of those laws within our communities. Right. So we can certainly do more.

One thing I would maybe think about suggesting is we do require a lot of reporting on an annual basis by local governments. Their annual progress reports, they were just due April 1. So there's a lot of stuff we've been asking local governments to report on. Public housing authorities are not the exact same thing, but there might be a connection there in terms of that sequence or that regularity of reporting that could make sense or something maybe for you to think about.

I think that, in reporting, and you're right, and I hear this from my local governments, hat we ask for so many reports. But it isn't just a report. It's somebody to evaluate the report to tell us what are we learning from this. So it isn't just put the numbers in and you've got it, you did whatever you had to do. But how do we look at that and then, like here, helping our housing authorities when they want to have greater success, specifically with the vouchers, with or without my bill.

Yeah. So I can give you a couple of examples. Right. And all this data is open data on our website, if anyone wants to look at it. We use the permitting data or the types of where development sits in that pipeline to do the SB 35 determination. Right. What jurisdictions are subject to those provisions of SB 35. That same data is used to determine if people are impacted by other legislation that has been passed over the last couple of years around streamlining efforts and the like.

So that data is used, of course, when we have a specific authority to use it. And of course we can use that. I think that data is very helpful and instructive as we work in our accountability work to see if communities that have established a housing element that's been approved, which we see as a contract with us as a state, to meet those goals or meet those programs within that housing element. We can use that data to see if they are making the adequate progress. Right.

So there's a number of ways in which that data is going beyond the reporting function. Right. And we're pretty happy to have that. I will say it's a lot that we've asked folks to report, but, certainly, that would be another element that could be evaluated depending upon if it was reported to us.

My last area has to do with the California Mortgage Relief Program. So regarding the ARPA funding, I understand 1 billion from the federal government has been granted to California for the California Mortgage Relief Program. Of these funds, it is shown that only 360 million have been utilized. What has led to the delay of the deployment of these funds, and what are ways to support funding deployment?

Thank you so much. So, first of all, let me provide you with some updated numbers on the mortgage.

What is your name?

Oh, sorry. I'm sorry. My name is Francesc Martí and I'm the Director of Policy, Strategy, and Legislation for the California Housing Finance Agency, which is the administering agency for this federal program. So I'll start with providing some... Can you hear me?

Move it closer to you.

The echo is really bad. So we hear the vents.

All right.

And so you just sound far. So if you can speak closer to the mic.

Is this better?

Yes.

Okay. So just to provide you some data, we've actually fully funded 360 million worth of mortgage relief applications. That comes out to a little bit under 14,000 households served. The average assistance is about 26,000 per household. And we're happy to provide you additional data. But in response to your question, what I want to emphasize is the Mortgage Relief Program that CalHFA is running is a partnership between the state CalHFA and US Treasury and the federal government.

And there are very strict rules that we have to follow. And CalHFA's program has actually been hailed by US Treasury as a gold standard in terms of the kind of national programs because of the efficiency of its operations, because of the processing time, and the pace of disbursement is on a very kind of comparable clip to what we're seeing nationally. Now, with that being said, CalHFA has been really kind of innovative and in the forefront.

We started with a vanilla program and then we've worked to expand it within those confines that are provided by US Treasury guidance and by the federal legislation. So we've expanded the program already to pay for... The program started as addressing just mortgage arrears, and now if you have separate property tax arrears, we're also covering that. We recently expanded the program. If you have a second mortgage that you entered as part of a Covid workout, we're paying that off too.

And so we're continually looking at ways to expand the program and to respond to market conditions. And I think the last thing that I'll conclude with is the program is also kind of heavily dependent on the delinquency rates and the foreclosure rates out there. Right. And the level of homeowner distress. And so that's something that kind of constrains kind of our ability to disperse more funding. Yeah.

We got $1 billion from the feds. We've spent 360, million, 640 million is still remaining from this 1 billion. Where is that money? Where is it housed?

That money has been disbursed from the Federal Government to CalHFA, from the Federal Government to CalHFA pursuant to the American Rescue Plan. And we are actively looking at ways of further disbursing that funding. And we welcome conversations with you and with other thought partners. We are looking, also, to do additional outreach. I know that we partnered with you very successfully last year, last June to do a webinar. We are looking to do more of those.

So we're still working on further expanding and doing further outreach of our program. But our program is, as I said, there's federal constraints and there's kind of some natural market limitations.

With the money... I said it was the last question. With the money that has not been used, is there a possibility we're going to lose that and we have to return that to the feds?

We have until, I believe it's September of 2026 to deploy those funds.

All right. September of 26? All right. And you say that you're looking at other ways to deploy this money?

Yes, we are always. I think one of the great things about CalHFA and one of the great things about how we've operated this program, if you look at the kind of the history since it started, is that we've been very flexible and that we've been very adaptive. The program started as a kind of program for specifically, like, there was that Covid hardship in the beginning, and then, as I just explained, we expanded it to different, what we call subprograms or utilities. And so we are actively monitoring the market and what the community needs are, and we will continue to be responsive.

All right. I think it's going to be an area that we need to look at because to know that we have $650 million sitting somewhere that has not been utilized when we have so many people in great need. But thank you so much.

Totally.

Thank you.

Ms. Wicks.

Thank you, Madam Chair. Two different types of questions here. One, how much Affordable Housing Bond money is left to be allocated, and do we have plans to authorize more?

I can't speak to plans to authorize more bonds, but we still have a little bit remaining in a couple of programs from Prop 1. We do show that figure on our website, so I can get you those exact figures to your office up to date. But for the most part, we deploy those resources through our Super NOFA funding pursuant to AB Assembly Bill 434 from a couple of years ago.

The next round of that funding will be out, and it'll be a combination of those bond funds as well as some of the state General Funds that we've received. We do anticipate probably at least one more year beyond this of resources, based on the current resources that we have in those bond funds, and then we...

And then we're running out of funds. Well, I have a bond, so we have a solution. Switching gears here a little bit, I think one of the main reasons, I think, why a lot of us care about homeownership in California is because it really disproportionately impacts communities of color who are really not afforded the choice to buy homes in the same way as white folks are because of some of the systemic racism that exists, which we could go on and on all day about.

But it is a problem. And I know we have developed programs, homeownership programs, with the hopes of trying to level that playing field as much as we can. Can you all discuss the process for selecting applicants for the California Dream For All program?

Yeah. Thank you so much. Can you hear me okay? All right. Ellen Martin, I'm the Director of Homeownership with the California Housing Finance Agency. So the California Dream For All program, like all CalHFA down payment assistance programs, funds are distributed through CalHFA's network of approved lender partners. So we have about 150 lender partners who are located throughout the state who originate the first mortgage loans that are then paired with CalHFA's down payment assistance.

CalHFA then works with those lender partners to approve the loans and purchase them from those lenders. So effectively, the distribution process is through those lender partners, which are, as I said, there's about 150 lenders that are located throughout the State of California.

And was there targeted outreach to communities of color? Did we offer in a variety of languages? What was the kind of the outreach done?

Yeah. Thank you for that question. So, as you know, the California Dream For All program launched on March 27. We saw unprecedented velocity in terms of the number of applications and the number of applicants that had queued up. Our lender partners did a great job of getting the word out to their communities. But unfortunately, because of the velocity of the program, we did not have the time that we anticipated to do the ongoing targeted marketing and outreach to those underrepresented communities that we typically do as part of our programs.

Yeah, I know there was some reporting on this that CalMatters did showing that it was disproportionately used by white homebuyers.

So actually, the demographics track fairly similarly with our typical programs. The number that was reported reported a combination of Hispanic and non-Hispanic white borrowers. So about 90% of folks who identify as Hispanic also identify as white. So the numbers that we saw were about 34% of our borrowers identified as Hispanic or Latino, another 34% identified as non-Hispanic whites, and then we saw another 18% of Asian homeowners, which was a very large uptake in that community, and about 4 to 5% in the black community.

I think as lawmakers, we come up with, I think, some great ideas, don't we, team? But really, the challenge is the implementation and making sure that we're doing it the right way and just being mindful of ensuring that obviously, California is such a diverse state. We want to make sure that the programs that are being accessed reflect the communities in which they're being implemented to ensure that we have equity on these issues. So I know that's something I think all of us here care about.

So we'll just ask that there's a lot of intentionality around that. I'm a big supporter of these programs, but also want to make sure they're helping those who need it most. So I think that's one thing. On the equity outcomes, and I don't know if you're the best person to answer this question or not. What are the equity outcomes for California Dream For All versus CalHFA's other homeownership programs like MyHome? Are they similar or do you see differences?

Yeah. So, generally speaking, we did see some shifts with California Dream For All. We saw a big shift in the geography served from the Central Valley and the Inland Empire. We saw a big shift over to the Bay Area, and that led some similar shifts in demographics. Generally speaking, in our other CalHFA programs, we see a much larger share of Latino homebuyers. I think our typical numbers are up around 54%.

And so what we'd like to do when we're thinking about equity outcomes and when we're thinking about these programs is look at all of our down payment assistance programs holistically. We do recognize that not every program is going to be able to meet the needs of every single community. And so we think it's really important to offer a diversity of programs that are targeting different needs. One thing that we saw a lot of success with, with Dream For All... And again, these numbers are super preliminary with Dream For All.

We're just seeing the first wave of loans for purchase and compliance reviews, so I don't want us to lock in too much on the numbers that we're seeing and that I'm quoting. But we have seen great success with that program in terms of increasing access to high cost areas. So that program really opened up access for folks in the Bay Area that heretofore really didn't access CalHFA's down payment assistance programs.

Our flagship MyHome program sees a lot of activity, as I mentioned, in the Central Valley and Inland Empire. So it really helps folks in those communities to access home ownership programs. So I do think it's important, as we're looking at this, that we think about the entire suite of homeowner assistance and down payment assistance programs that the agency can provide, and look at it holistically to understand how is each program hitting these various communities throughout the state.

Well, I know we have some of the worst homeownership rates in the country, and anything we do to both fund those homeownership opportunities I think is critical. But also ensuring that we're being very conscientious about the outreach, ensuring that we have a diverse pool of applicants, so we can try to level the playing field on some of the equity issues that plague our communities is really important. Thank you.

Thank you so much.

I have some follow up questions related to the California Dream For All program. Can you expand on geographical locations as to where in the State of California the majority of the programs, the majority of the applications were successful?

Sure. So I do just want to emphasize that the numbers that we're seeing and the numbers that I'll talk about have to do with funding commitments. None of these loans have undergone any compliance review as of yet. We are just starting to get these files in from our lenders. So these numbers will change. We're going to see fallout. We're going to see shifts. So I just want to offer that sort of caution before I'm talking about specific numbers. We did loans.

We saw at least one loan in 54 of the state's 58 counties. As I mentioned, we did see some significant shifts from our typical programs from the Central Valley and the Inland Empire to the Bay Area. We did also see some measurable, if not as much as desired, gains in San Diego, Los Angeles, and the Central Coast.

The top region remained the Central Valley region, which received about 21% of the funding commitments, and then we saw a huge gain in the Bay Area region, which typically receives about 6% of our down payment assistance funds. We saw that number jump to about 19%. The Capitol region remained a stalwart for us, coming in at about 16%, and then the Inland Empire was still very high at 14%. But as I mentioned, somewhat of a shift from our typical programs.

Excuse me. I want to go back to the demographic. There's so much. We hear that all the construction. It's so loud. Demographic area specifically related to white, Hispanic, not Hispanic. I also have a bill that we're moving forward that aligns with the Biden Administration's proposal to, on the census, Latinos under ethnicity identify as white under race, which is not how I personally identify. Then I think that complicates data. And so it's complicated to see the data that you are presenting.

And so when you have, I want you to be specific in the ethnicity versus the race, because to your point earlier, if under race, we have misclassified, self identifying Latino Hispanic communities under white. Right. But under ethnicity, they identify as Latino. And again, this is only one population out of a variety of different populations. What does that demographic look like?

So perhaps, can you clarify your question a little bit for me?

So if what we're reading. Right, if what you're sharing is that a large percentage of the applicants approved identify under race as white, and that's what we're seeing the largest applications be approved, out of that percentage, how many of them under ethnicity identify as Latino?

Yeah, that's a great question, and thank you so much for clarifying. 47%. So, as we're looking at the percentage of our borrowers that identify as white, 47% of those identify as Latino, versus the remainder identifying as non-Hispanic or Latino.

And what are the additional demographic shifts that you've seen on the applications that you can currently talk about? How many AAPI, how many African American?

The biggest shift that we saw was in the Asian community. We saw that number grow substantially for our MyHome program and our other suite of down payment assistance programs. In fiscal year 21-22 we saw about 4%. That number grew substantially to 18% with this original funding commitment. So that's the biggest shift that we noticed.

Is there an opportunity, as we think about how we gather demographic data moving forward. Not every, some families or some individuals may identify as mixed race. Right. So even then, our data is not accurate. Right. So if you're two different races or ethnicities, how can we compensate for that?

Yeah, I understand the question, and I agree with you. There's a lot of noise in this data, and it's really, really difficult. We do have federal HMDA, which is home mortgage data standards that sort of dictate how we're collecting data. But we're absolutely willing and interested to explore better ways to collect that demographic data that we feel like better characterizes the population, particularly of the state.

I think just even hearing my colleagues ask questions related to data is, there is a shift in the Legislature, and we can only speak on behalf of the Assembly. A shift in the Assembly to be equitable in our distribution, to ensure that the budget is a reflection of our values and is inclusive to all communities across California. I'm saddened to hear that, given the California Dream For All program's velocity.

I think it's the word you use. That given the success and the velocity of the program, it eliminated the opportunity to reach disenfranchised communities. That's not the intent of the Legislature. The intent of the Legislature in allocating funding for first time home buyers is that we have an equitable process.

So if at first glance, with the 150 approved lender partners, the majority of individuals receiving information happen to be white, and so then therefore the program diminished its capacity quickly, then it doesn't align with the values that we have set forward to actually help lower income communities of color. And I'm not sure that I can in good faith appreciate a program that doesn't do the outreach that the Legislature intended to do.

So I would just say likewise. We absolutely agree. And we really had two priorities with this program. One was to serve hard to reach, high cost areas and the other was to serve historically underrepresented communities. The data that we're looking at, as I mentioned, is extremely preliminary. As we work through that data, as we work through our compliance process and we see where things land, we absolutely will be evaluating those demographics.

We'll be looking at the delivery method, the loan product with an eye towards diversity, equity, and inclusion, and making sure that we are targeting those communities who most need the assistance and meeting as many objectives of the program as possible.

Any additional comments, questions?

So just to follow up on that. If the two areas were the one, the hard to reach areas, what were the two areas that you said?

High cost areas, like the Bay Area, and then historically underrepresented communities.

So it seems that you were more successful with the high cost areas?

The preliminary data would indicate that we were more successful in terms of reaching the high cost areas. But I do want to see how the demographic data shakes out as we move the loans through the compliance process.

So if that was the most successful, then there was more attention given to that, clearly. Those areas received the information they needed to make those decisions and participate in the program. So maybe to learn what it is we did right there so that we will duplicate that in the harder to reach areas.

If they're the most disadvantaged and the hardest to reach, then there has to be a greater effort to reach them. Because they're the very people, as the Chair has said, the very people we're trying to implement these programs for. Owning a home is the American dream. And as my colleague has said, it's that generational wealth that we're trying to build and allow all of our, everybody in California access to that.

And if we're putting the money into it. I'm sorry, but when I vote on this, I'm not looking to have the high cost areas assisted. I'm looking to help those who need it the most, who never have these opportunities, so that they have access and they have access to that American dream. So it would be important. You say this is preliminary data. When do you expect to have more concrete data?

Yeah, that's a great question. Thank you so much. We are undergoing the compliance review process, which we conduct as those loans close. So we expect that that's at least a 30 to 45 day period to close those loans and start to see some of that data come in. But it could be up to a full six months before we've securitized those loans and they've gone through all the levels of review that they will go through.

Do you require us to make a formal request or can you provide that to the Chair so that she can share it with us?

Absolutely not. Yeah, we would be happy to continue to provide that information and remain in contact with the Committee and the Assembly Members as we move through that process.

Thank you.

I think this is a highly important issue. So you have the Chair of Budget, Majority Leader, myself, as Chair of this Committee, wanting something. I'm sorry, the Chair of Housing. Chair of Housing, the Majority Leader, myself as Chair of this Committee.

Women, by the way. Continuing to ask about equity and inclusion and ensuring that, despite wanting to change the AMI to 150 and including more middle income Californians, the result is actually not in alignment with what we had hoped would be, and that would be actually creating generational wealth for communities that have not had access to this program before.

And even with the 150 approved lender partners, I'd be curious how many of them work within communities of interest, who they are, what their outreach is, who's on their list, what the language competency and language outreach has also been. Not only for Latino communities, but for all communities that require and need language access. It's an issue that we have discussed at great length in this Committee, specifically with EDD, DMV, and other services. So there's progress being made.

But I think the results, at least from the preliminary results that we're seeing, and the inaccurate, potentially inaccurate, way of self identifying on an application has led to perhaps incorrect data on self identifying that clearly shows that it is not communities of color and low income communities that have been impacted or have been offered the help. And I think that's a space that needs to be resolved for us to be able to continue to fund this program. Any comments?

I would just say we would be more than happy to engage with you on all of those items that you just talked about. We can provide information regarding our lender community and language competency, as well as sort of digging into the communities that were served. We did see a very, I don't remember the specific statistic, but we did see a very high rate of access in disadvantaged communities. And so we'd be happy to keep the conversation and dialogue going as we're starting to work through the compliance review and coordinate with you and talk about what we're seeing with the numbers.

Great. Thank you. If there are no additional comments or questions, we're going to move on to issue number three. Thank you very much. And to answer your question as we prepare for the next panel, Pets and DMV. Pets is Assembly Bill AB 1215. DMV is 1738. We'll connect with your office on that too. Issue number three is an overview of codes and standards. We can begin when ready.

Get this chair close here. Doesn't move very easy.

Good afternoon, Madam Chair. My name is Kyle Krause. I'm the Deputy Director of HCD's Division of Codes and Standards. Thank you for the opportunity to present an overview of codes and standards division as part of the 23-24 BCPs. I'll try to be as brief as possible and describe only the program work related to the BCPs. The Department in codes and standards was established in 1960 to serve the people of California to preserve and promote safe and affordable housing.

The division has changed much over the years, but retains the focus on our purpose to provide safe and affordable housing standards, consumer protection, responsive governance, and stakeholder education.

HCD's BCP request will really be the most impactful in mobile home parks, employee housing facilities and special occupancy parks with the services we provide homeowners and others in these communities and housing types. Looking at codes programs, slide two of the deck, the codes and standards has statewide enforcement authority for mobile homes, manufactured homes, factory built housing, mobile home parks, special occupancy parks, and employee housing facilities. This work includes responding to and investigating thousands of complaints each year for health and safety related issues.

Codes and standards is also responsible for registration and titling of manufactured homes and mobile homes, and implant quality assurance of manufactured housing and factory built housing through third party contracts. The division is made up of 11 programs with approximately 220 employees. Most employees are headquartered in our main office in Sacramento, but we also have area offices in Riverside, San Luis Obispo and El Cajon. Our inspectors that are out in the field work from their home offices and are each assigned geographic regions of the state.

Division is largely special funded, collecting revenue through fees for services. Onto slide three, a major function within the division is our field operations program, which functions as a building department and code enforcement unit within employee housing facilities, mobile home parks, and special occupancy parks. Special occupancy parks are also referred to as RV Parks.

As the cost of housing continues to increase, mobile home parks have been in the news more frequently and there seems to be much more awareness of mobile home parks as one of the most affordable sources of housing, and preserving this form of housing is more critical than ever. Identifying health and safety concerns in mobile home parks and taking enforcement action is a strong part of ensuring this housing resource is maintained and is healthy and safe.

Codes conducts construction inspections, investigates health and safety complaints and together with our local enforcement agencies, we have health and safety authority and issue operating permits to approximately 5200 parks statewide, 714 of which are RV parks. The work of these programs are critical to support health and safety of, in many cases, a more vulnerable population, many of whom are on low or fixed income. And looking at slide four, a little deeper into mobile home parks.

Of the 4472 mobile home parks in the state with almost 389,000 lots, 64,000 of these are RV lots and there's a total of 560,000 manufactured housing units or mobile homes inside and outside of parks statewide, housing approximately 1.6 million residents. HCD is responsible for 3646 mobile home parks with 295,954 lots. We're mandated to inspect mobile home parks as part of our Mobilehome Park Maintenance Inspection program with a goal of inspecting 5% of the parks annually.

That currently works out to about 185 parks per year or 38,000 lots. We perform over 64,000 of these inspections and almost 5000 complaint investigations per year. Slide five, employee housing codes, also issues annual permits to operate and conducts preoccupancy inspections of privately owned employee housing facilities, which are employer provided for five or more employees. This ensures employees have a safe and healthy place to live. Employee housing facility owners use manufactured homes, mobile homes, RVs and permanent site built structures to house the employees and their families.

There's 1079 employee housing facilities under HCD enforcement statewide housing approximately 35,000 employees, and HCD conducts approximately 820 preoccupancy inspections and re-inspections in these facilities each year. Looking at our special occupancy parks, there are 716 of these parks in the state. They're typically referred to as RV parks or campgrounds and there are approximately 590 SOPs with 45,000 lots under HCD jurisdiction.

The Mobile Home Assistance center, slide seven, is where we intake complaints regarding health and safety concerns within mobile home parks or manufactured housing units under our jurisdiction and we often refer complaints that we receive here to other resources for situations that are not related to health and safety, such as mobile home residency law issues, land use issues or civil issues.

So looking at the slides that I just went through, our field operations, we have currently only 52 field inspectors statewide and a small office support team to do all this work. Workload has significantly increased over the last decade for all the programs, mostly employee housing, but also significantly for parks due to large number of alterations and complaint investigations. What HCD is asking for as part of the BCPs is 10 new positions funded by current fees.

These positions includes two administrators, which are supervisors, four inspectors and four office staff. HCD, in collaboration with DOF, has proposed trailer bill language to establish a new employee housing special fund for the purpose of depositing revenue collected in the employee housing program, making our accountability much more fluid. This does not impact existing fees for services collected, it just eliminates the current barrier of depositing fees into the general fund just to then request reimbursement in full.

With these additional positions, we would increase codes, inspections, and investigations by approximately 350 each month, and the additional four program technicians would decrease application processing times by an estimated 35%. Moving on to registration and titling. This is the largest program within the division, and employees in this program secure homeownership through registration and titling of mobile homes, manufactured homes, commercial modulars, and floating homes. Onto slide 10, our registration titling program, the application inventory and processing times.

The incoming application volume is steady at about 70,000 per year, but the processing time is increasing. As complexity of transactions increases, applications that used to take 15 minutes now take 30 minutes each. The current processing time is approximately 12 weeks for transfer of ownership. Five additional positions would bring that closer to 60 days. Title transfer packages are becoming more complex over time as financial institutions consolidate or close or informal sales are performed and the associated documentation becomes more difficult to obtain and interpret.

In 2022, a workload analysis concluded that transaction processing times have nearly doubled in the last 20 years. We receive 72,000 titling applications each year, and 2000 applications are unable to be processed, resulting in backlog. Many of these are related to deficiencies, forms being incomplete or lacking documents or fees. We also process 205,000 annual registration renewals annually. Additional staffing is expected to result in a steady reduction in the volume of backlog titling application packages and help bolster resources at our small offices.

The additional four positions in R and T will allow HCD to meet health and safety code requirements and meet a 1999 recommendation of approximate eight to nine week turnaround time. We'll be able to operate more efficiently to maintain compliance with the statute. The requested staffing will provide an estimated 15% increase in application processing capabilities. Moving to factory built housing, this program factory built housing are residential structures subject to California building standards code, which are different than manufactured homes, which are built to federal standards.

HCD oversees the factory inspections and design approval in California and across the country and worldwide, with factories in China, Estonia, India, Italy, Mexico, Canada, and more. There's approximately 215 manufacturers producing factory built housing products for use in California. These manufacturers issue approximately 81,000 Insignia annually by our certified third party agencies. The factory built housing program has had inadequate staffing to conduct the periodic monitoring of third party compliance.

We're requesting one DR for the factory built housing, which will allow the program to conduct 115 implant monitoring inspections annually. I'd be happy to answer any questions. Thank you.

Thank you. We're going to go to Department of Finance.

No comment. Thank you.

LAO?

Lourdes Morales with the LAO. We have no concerns with the requested resources associated with this item. Thank you.

Thank you. Any comments or questions from Committee?

I wanted to know if HCD expects to have enough funding capacity on an ongoing basis to support the positions?

That's correct.

You do?

We do. We have fiscal health in the budget associated with this.

Wonderful. Thank you. Thank you, Madam Chair.

Sure. Can you please elaborate on what is the percentage of mobile home parks that are currently being inspected?

We inspect under the Mobilehome Park Maintenance program, 5% of the parks. That's about 185 parks per year just in that program. But we also respond to complaint investigations that we do in parks and perform field monitoring on top of the already permitted construction inspections that are done. So we're in many more than 5% of the parks statewide per year doing the multiple different categories, the MPM inspections, complaint investigations and permit related work.

And is the 5% high enough?

It's what the Legislature directed HCD to do annually. It's an inspection goal that's stated in statute to inspect mobile home parks for health and safety issues with a goal of inspecting at least 5%. We treat that as a mandate and we always hit our 5% or more.

That's good to know. Thank you. And what are the best practices for preserving this housing stock?

I think more staff will help us get into more parks annually where we can identify unidentified health and safety risks. Many of those health and safety risks are not identified through complaints. So it's really our field monitoring activities as inspectors have time during their day to drive into a park that they haven't been in for a while, take a quick drive through, look around. If they see something, they open a complaint.

Got it. And has this particular affordable housing stock grown in the last five years?

It hasn't. More parks are closing than are being built. There really has not been a lot of new parks being constructed. So we think preservation is really critical in this area to preserve what we do have in the footprint of parks statewide.

This might be a little out of left field, but do you happen to know what is the average cost of a mobile home versus the average price of a traditional home?

They vary greatly. Many parks that are very nice, you might have heard about in the news lately sell for millions of dollars. But generally new manufactured homes that are going into an average park are in the neighborhood of $200,000 to $300,000 for, like, a standard double wide type home.

And the average cost of a home across the state, not a mobile home.

I can't really speak with accuracy on this, but I believe we're well over $500,000.

Okay. That's good to know. Yes, madam.

I'm interested in having a town hall in my community specifically on the issues for mobile homeowners. Who is it that my staff can contact?

They can contact me, and my program can provide outreach and education as requested. We do it every year across the state.

Thank you.

Thank you very much. There are no additional comments or questions. The staff recommendation is approved as budgeted. All three budget change proposals and adopt placeholder trailer bill language for the Employee Housing Regulation Fund. I am going to make the motion, but I do need a second. Great. Thank you. Roll call, please.

[Roll call]

Thank you. And we'll wait for more Members to come back to get all the proposals out.

And again, I just want to say a special thank you to Mr. Krause for the great presentation. Thank you. We're going to move on to issue number four, workload resources. Please begin.

Good afternoon, Madam Chair, Members. My name is Matt Schueller. I'm the Deputy Director of Administration and Management at HCD, and I'm here to discuss our various workload proposals that we have that span 12 pieces of legislation that were enacted in the last session. Those include staff, administrative resources and consulting dollars. As noted in the agenda, there was a spring finance letter that makes technical adjustments to the January proposals, and the amounts are reflected in each request.

And those are corrections for display errors, not a reduction in the resources that are being requested. And then, in addition, there were two pieces of provisional budget bill language that were also outlined in the spring finance letter. I'm happy to answer any questions about any of the individual proposals.

Well, I've lost my Committee, so stuck with me. Well, let's go to LAO, please.

Lourdes Morales with the Legislative Analyst Office. We have no concerns to raise with these proposals. Thank you.

Department of Finance. And if you could introduce yourself, please.

Hannah Kohanzadeh with the Department of Finance. We would just like to note that the Governor's Budget includes necessary administrative compliments as more BCPs or as more positions-- Sorry. The Governor's Budget includes necessary administrative compliments as more positions are approved through BCPs and such. So those technical adjustments reflect all of those displayers and other such items.

Thank you. How will HCD work with the Civil Rights Department to implement SB 649? And additionally, how will HCD ensure that it isn't duplicating the work by the Civil Rights Department.

So for SB 649, the work that we are about to undertake with the Civil Rights Department is complementary and really bookends to the effort. So HCD is really responsible for, on the front end, providing technical assistance and guidance to local jurisdictions who are contemplating implementing local tenant preferences. And then ultimately we review and approve those policies to ensure that they are consistent with fair housing law.

CRD's effort is more on the back end to address any types of complaints or investigations or civil litigation that's associated with differences in the way those policies are implemented. So there's no duplicative work. It's really on the front end and the back end where we differ in the work that we're doing in order to be able to implement the bill.

Got it. Thank you. The recommendation is to approve the January budget items with spring finance modifications for all items except 6, 9 and 13. But we can't do it because I don't have a second. So we will hold the item open at the moment until Members return. Thank you.

Thank you.

We're going to move on to issue number five, spring finance trailer bill technical adjustment proposals. Please begin when you're ready.

Good afternoon, Chair Carrillo. My name is Pedro Galvao. I'm Deputy Director for Legislation at the Department of Housing and Community Development. Thank you for the opportunity to present our three technical trailer bill proposals this afternoon. So our three proposals collectively seek to create efficiencies in how we administer our programs and to deliver affordable housing faster for Californians. Our first technical proposal focuses on the state Excess Sites program, which is jointly administered by us, HCD, and the Department of General Services.

This program prioritizes excess state land for affordable housing development. Specifically, HCD is proposing two changes. The first technical change deletes an outdated expenditure deadline in the Local Government Matching Grant program, which is a part of the state Excess Sites program. The Local Government Matching Grant program provides funding for local governments to develop affordable housing on excess sites. This program was originally funded by the federal ARPA American Rescue Plan Act, but is now funded by the state general fund.

The original expenditure deadline of June 30, 2024 for the Federal American Rescue Plan Act no longer applies, and instead the Department is seeking for this program to be upon appropriation by the Legislature. The second change clarifies a sequencing issue in existing law pertaining to the Excess Sites program. So to identify which sites are viable for affordable housing development, HCD and DGS must first survey which sites can be developed.

Last year, two bills passed, SB 561 and AB 2233 that created a sequencing issue that require HCD to create the database of excess sites. HCD and DGS to create the database of excess sites before HCD and DGS have surveyed which sites are viable for affordable housing development to begin with, and so we're seeking a change to create the database of excess sites upon the conclusion of each comprehensive survey so that way it makes more sense for program administration.

Additionally, there's language that would be added to allow for annual updates of viable sites as additional parcels are determined to be suitable for development. So that's one. Proposal two, HCD's second technical proposal addresses drafting errors in the Infill Infrastructure Grant program. The Infill Infrastructure Grant program supports infill housing development by providing funding to local governments and affordable housing developers to pay for housing related infrastructure. These investments are made at two levels.

First, they're made at the level of a geography or qualifying infill areas and related infrastructure improvements in those geographies. And the second refers to infrastructure improvements made at a project level also known as qualifying infill projects. Department's proposed changes make clear that rating and ranking criteria for qualifying infill areas are separate and distinct from the criteria for qualifying infill projects.

Second, the language will provide clarity to applicants by correcting a drafting error that refers to qualifying infill projects more generally when it should refer only to documentation requirements for qualifying infill projects within catalytic qualifying infill areas. That's a mouthful. Happy to answer questions. Our third proposal pertains to the Joe Serna Farmworker Housing Grant program, which helps fund new construction, rehabilitation, and acquisition of owner occupied and rental units for agricultural workers with a priority for lower income households.

The first change would allow for for profit affordable housing developers to apply for the program. Most HCD funding programs, including the department's flagship housing program, the Multifamily Housing program, allows for profit entities to apply for funding so long as they're building housing that meets the program eligibility criteria. Historically, for-profit developers have been excluded from applying for funds under Serna. This prohibition has left Serna funding on the table when it could have otherwise gone to farm worker housing.

It has also led to inconsistencies with how HCD administers its super notice of funding availability, a process that bundles HCD's four major funding programs Serna, the Multifamily Housing program, Infill Infrastructure Grant program, and the Veterans Housing and Homelessness program into a single process and application. This change would bring Serna in line with other HCD funding programs.

The second change would update the definition of "rural" the Department uses in its programs to a more current definition used by the United States Department of Agriculture for their multifamily housing development programs. The existing definition of "rural" references a now defunct program known as Section 515 from the US Department of Agriculture that no longer receives any funding. This has resulted in ambiguity as to which communities meet the definition of rural.

As a result, HCD staff spends considerable time determining whether or not a project meets the rural definition. HCD has been advised by the US Department of Agriculture to use the definition before you today, which will not change which rural communities get access to funding, but will instead eliminate guesswork in determining which communities meet the definition of rural. So that concludes my presentation. I'd be happy to answer any questions you may have.

Thank you. LAO?

No concerns with these proposed changes. Thank you.

Department of Finance?

Department of Finance has no further comments.

Thank you. I just have some follow up questions to your presentation. Can HCD please explain who can currently apply for the Serna project?

Yes. So non-profit affordable housing developers can apply for the Serna program, as well as for-profits in partnership with a non-profit developer.

And what was the last round of applicants?

I'm sorry, can you clarify that?

Well, in terms of percentages of non-profits and for-profits in partnership, what did it look like?

I don't have that figure right off the top of my head, but what I can tell you is that we had some considerable funding left over in the Serna program. What happens is HCD is required to bundle our four main housing programs in the super notice of funding availability, and projects come in from multiple funding sources, including Serna. That program was very much oversubscribed, five to one.

What ended up happening is we spent down the other programs, what we had available for the other programs, but we ended up having several tens of millions left over for Serna. And what was cited to us by many of the applicants who were otherwise eligible for the other funding sources was that the prohibition in allowing for-profits to apply for Serna made it impossible for them to access the funds. And so we're proposing to make that change to help address the problem.

The housing that the for-profits would build would have to meet the same standards as the non-profit housing, and it would have to meet all of our regulatory and monitoring requirements.

If you can, at some point would love for you to be able to provide that data to our team because it actually goes to my next question, which is, how would allowing for-profits fix and assist with the situation? So I'd like to know if it's working, not working.

I will get to data on the number of for-profits that applied for Serna through a partnership and number of for profits that wanted to apply but could not. For the second one, it may be a little bit limited because it depends on them just telling us they were interested but couldn't apply. But I will get you that information.

Great. Thank you. Any additional comments or questions? Majority leader?

Yes. What's prompting the need for for-profit developers to be able to apply for the Serna fund?

So essentially, the issue is that we have the Serna funding available that would go to housing farm workers, but it's not being used because the program requirements for Serna doesn't allow for-profits to apply, whereas they're allowed to apply for all of the other major HCD funding programs like MHP, the HHP, IIG.

And so what happened is we have money left over on the table, but we do have interest in the program to build the housing that would still be deed restricted, affordable, meet all of our regulatory requirements, but cannot proceed because the developer is a for-profit entity.

And I don't know if the question was asked whether there are any issues with allowing for-profit developers to apply for this program consistent with the rules of Multifamily Housing program?

They would have to meet the same requirements as non-profits do currently. So from the department's perspective, we don't see an issue because the housing would still need to be affordable, they would still be subject to a regulatory agreement. They would still need to be inspected by us periodically.

So because the housing that is being built is still the same kind of housing, we don't see an issue beyond creating efficiencies, ensuring that that money doesn't sit there and can go out the door to address interest and also get people housed.

Is there thought to making this a temporary permission? In other words, going back to the non-profit, but for the time being, because of the amount of funding that is there that you're trying to spend for this farm worker housing, is there some thought to allowing the for profits for this period of time, but to have it sunset basically.

We can certainly look into that.

Okay. Thank you. Thank you, Madam Chair.

Thank you. I think just a general concern or observation, but first, let me ask, who requested the change to the TBL?

This came from our program staff, our division of state financial assistance.

So your program staff is advocating for for-profits to have more access?

Because we have money left over and we had this interest, and because the housing that would be developed would still meet all of the criteria under the Serna program.

My concern is that from experience and what we have seen, for-profit developers are not as in tune or as invested in certain communities as non-profits are. So a non-profit may be more invested in farm worker development, not housing development, because they're in with the community than a for-profit coming in and partnering with a non-profit to do that work. So that's a concern that I'd like for you to address.

I completely understand and hear that concern.

As I said previously, the housing would still need to meet all of the criteria, but what we can do, and when I get back to you with the information you requested, I can look in to see what are the different ways that the Department can ensure and currently ensures that the housing that is being built is serving the community and that there is all of the necessary programming that typically goes along with affordable housing, and also whether or not we have seen any discernible difference with for-profits doing this work within our other programs.

And I want to just bring up a conversation that we recently had and also the work that Assemblymember Freddie Rodriguez is doing with his Committee on Emergency Management, as well as our chair of AG, Assemblymember Rivas, who represents the Pajaro area, who recently experienced massive flooding, most of which impacted farm worker housing.

In an already vulnerable community that needs housing, that needs attention, that needs resources, my concern, of course, is ensuring that these vulnerable communities in our farm worker communities have access to dignity and to homes where they're able to live and thrive. And right now, as Pajaro tries to, the community of Pajaro tries to recover, that we're focusing on efforts that obviously put the community's needs first.

And just given some very serious, I think, conversations related to for-profit housing, I want to make sure that what we are approving or what we're considering has those communities at the forefront. So look forward to getting that data from you as well.

I will definitely follow up with that information.

Thank you. We're going to hold this item open for the moment, and I'm going to go back to issue number four. So the recommendation is to approve the January budget items with spring finance modifications for all items except 6, 9 and 13, which we will hold open. I will make the motion. Can I get a second, please? Thank you. Let's do the roll call.

[Roll call]

Thank you. We're going to move on to issue number six, separate the California Housing Finance Agency from the Department of Housing and Community Development.

Hello. Hannah Kohanzadeh with the Department of Finance. So this proposed change separates the California Housing Finance Agency from the Department of Housing and Community Development. The proposed change makes no material or functional impact to CalHFA. It eases administrative funding burdens for CalHFA and HCD and allows CalHFA's budget to be displayed on its own rather than rolled into a part of HCD.

Thank you. LAO?

Lourdes Morales with the LAO. We have no comments for the Committee on this proposal.

Okay, any comments or questions?

Are there expected implementation issues for this split?

No, this is all back of the house. Just display issues primarily.

And will CalHFA be at a deficit for resources to properly operate after split?

None.

Andrew March, Department of Finance. Just to clarify, so, currently, CalHFA is funded by fees that they collect from the loan products that they offer. So it's funded entirely separately from resources. There's no overlap between the resources between the two departments. They're just functionally, or not even functionally, but just in statute, they exist together.

Okay, thank you.

Thank you. We're going to hold this item open for the moment and move on to issue number seven, the housing program reporting requirements. Let's begin.

Hannah Kohanzadeh with the Department of Finance. This proposed change requires HCD to report-

Gonna ask you to speak closer to the mic, please.

Apologies. So this proposed program requires HCD to report on pro-housing jurisdictions rather than the Department of Finance. Currently, finance is required to post this information on our website, and HCD currently collects that information and has it on hand.

Thank you. LAO?

Lourdes Morales, LAO. No issues to raise for the Committee.

Any comments or questions? Okay, seeing none, the recommendation is to adopt the placeholder trailer bill language. I will make the motion. Can I get a second? Thank you. Roll call, please.

[Roll call]

Thank you. We're going to move on to issue number eight, spring finance letter for the 2020 Community Block Grant-Disaster Recovery. Please begin when ready.

Good afternoon, Chair and Committee Members. Thank you for having us. I'm Sasha Hauswald. I'm the Deputy Director with the Department of Housing and Community Development for Federal Assistance. I am here to request expenditure authority and position authority so that we can receive and use our $23 million allocation from HUD for long term recovery from the 2020 wildfires. As you may know, the 2020 wildfire season was one of the most destructive in California history, according to CAL FIRE.

And this proposal requests authority for the 20 positions that we need to implement our CDBG-DR or California, sorry--Community Development Block Grant-Disaster Recovery program allocation. This funding is funds from HUD that we receive to address long term needs that remain after other disaster assistance programs, such as FEMA assistance, small business administration funds and private insurance payouts, have been exhausted in these presidentially declared disaster areas.

And so, with your approval, we look forward to using these funds to serve individuals, families, businesses and municipalities as they take the next steps toward long term recovery in fire impacted parts of the state. Thank you so much, and I'm happy to answer any questions.

Thank you. We're going to go to the Department of Finance, followed by LAO, please.

Hannah Kohanzadeh with the Department of Finance. So we would like to note that the funds were allocated in its whole, rather than parsed out over a multi-year to allow flexibility for HCD to roll these dollars out as quickly as possible. And up to 15% of the federal grant is allowed to be used for state administration. So Department of Finance will be approving and working with HCD to have dollars shifted for state administration as needed.

And this approach is consistent with past practices for large federal grants for HCD.

Thank you. LAO?

Lourdes Morales with the LAO. No issues to raise here. Thank you.

Thank you. Can the Department of Finance please explain the provisional language related to item two, the state operations, where exactly in state operations the funding will be distributed to?

Sure. So, as HCD expresses need for state operations dollars as allowed up to the 15% threshold allowed by the federal grant, the Department of Finance will be approving executive orders to move those funds as needed. So it will be shifting through the program.

Not sure I understand. So where in the operations would that be moved to?

Andrew March, Department of Finance. So the provisional language allows the funding just to be transferred to another budgetary item so that HCD could use it for their staff costs. So the 20 positions that are being requested. So this 34.7 million is for HCD to fund staff for this program, but also to hire technical assistance consultants to reach out to communities. So it's the 15 burns that's allowed for what we call state operations.

It's not funding that's necessarily going to go out to communities directly for the communities to recover from the fire.

Thank you. So it's going towards operation costs and implementation of the program. Got it. Additional comments? Questions?

Once the federal funds are depleted, what do you anticipate is going to be the request to us to continue these 20 positions?

Yeah, that's an excellent question. Authority or we do have the funds through the six year period from grant receipt, according to HUD rules. And as we're requesting under this and during that time, we do see the full life cycle of the grant program. We hope that during that period, there will not be any other federally declared disasters, such as wildfires in the state.

And at that point, as we progress toward 2028, we would want to return to the Committee and discuss with you what the future plan might be for those positions. Did you want to add anything to that?

No, I have nothing to add other than yes. Hopefully, we'll be in a situation where we aren't faced with additional disasters that need to be federally funded. But as my colleague mentioned, we do have an extended period where we're able to spend the administrative dollars through 2028.

So I see that six years, we've got the funding. Are these employees told, this is a six year employment?

We do not hire people for six year terms. When they are hired, they will be hired under a duty statement that is for this particular program. However, they will come on as permanent employees per the rules that we operate under. And we would then need to be responsible for identifying other positions under funded programs for those individuals as appropriate.

And I will add, too, that as we have more than just these 20 positions within the division, we have the ability to move those positions into other roles that do have permanent funding. If we are faced with that situation.

Well, we will still be here in six years, so we'll find out what happens in six years.

Thank you. Putting a note on it now. What item are we on? Item eight. Okay, we are going to hold this item open. Thank you very much. We're going to move on to issue number nine, and all the issues moving forward are related to the Civil Rights Department. Issue nine, housing voucher discrimination prevention. Please begin when ready.

Good afternoon, Chair Carrillo and distinguished Members. My name is Mary Wheat. I'm the Chief Deputy Director of the Civil Rights Department, and I'm joined by Adam Romero, our Deputy Director of our Executive Programs. I'll start with issue nine, our housing voucher discrimination prevention item. This proposal is a request for resources to support Senate Bill 329, which went into effect January 1, 2020 and prohibits housing discrimination based on source of income, including government housing assistant vouchers.

As you may recall, CRD's original request for resources to support the workload associated with this bill was pulled in 2020 due to Covid. In practice, SB 329 requires landlords to accept otherwise qualified applicants who use such vouchers to pay rent and participate in housing voucher programs like Section 8. SB 329 created a new class of housing discrimination complaints that CRD is required to investigate, mediate, and litigate. CRD originally estimated that SB 329 would yield approximately 163 additional annual complaints.

The estimate increase in complaints only focused on Section 8. SB 329 also covers other public assistant programs, such as the housing opportunity for people with AIDS and Veterans Affairs supportive program vouchers. In 2020, CRD received 484 housing complaints based on source of income discrimination. This increased to 793 in 2021 and 959 in 2022. In the first four months of 2023, we have received 301 source of income complaints, which is on track to exceed 2022 volumes.

This data demonstrates the need for this request of four positions to undertake the increased workload associated with SB 329. We're happy to answer any questions that you have regarding this item.

Thank you. We're going to go to LAO, followed by the Department of Finance.

No issues to raise for this item. Thank you.

Department of Finance has no further comments.

Any comments or questions?

Just one. What factors will be monitored to ensure that, in fact, discrimination is reduced?

So, of course, the volume of complaints that we receive each year will be looked at. But it's kind of a double edged sword, because the more we educate people on source of income discrimination, the more complaints as they become aware of the situation, arise. But we have a robust education and outreach program that educates both housing providers and the public about discrimination. And we do training sessions and education and outreach to different housing providers, and hopefully we'll reduce the amount of discrimination.

Thank you. I appreciate the education, because if you have a program and nobody knows about it. That's not what we want. We want a program, and we want everybody to know about it. And you're right, the complaints will increase initially because people are aware that they have a right. They now have somewhere where they can complain. So the education is very important. Thank you.

Thank you. We agree.

Thank you. We're going to hold this item open for the moment and go on to issue number 10, legislative resources. Please begin.

Thank you. The next issue relates to six Senate Assembly Bills that were enacted last year, and we are requesting resources to successfully implement and support the bills. I'm happy to go over each of the bills with a short explanation of what we're going to do, if that is what you'd like me to do. But in the interest of time, I can also just open myself up questions.

I'm sorry. Give me one moment. Of course.

Of course. We have six Senate Assembly Bills that are being presented today with resources to support the work associated with the increased workload. I'm happy to go over each separately, but there's six of them, and I was just wondering if you wanted me to go over a brief of each of the bills.

Yes, please, if you can keep it succinct, in short.

Senate Bill 649 is the affordable local tenant preference. This creates a state policy in support of local anti-displacement tenant preferences in affordable housing developments that use low income housing tax credits or tax exempt bonds. The purpose of the bill is to prevent the displacement of low income individuals residing in neighborhoods experiencing displacement pressures in gentrification due to rapid growth or increasing housing prices. It remains in effect only until January 12033.

The bill provides that any local government preference is subject to the Fair Employment and Housing Act, unrest, Civil Rights Act, and other existing state federal fair housing laws that CRD enforces. As the state entity charged with these housing discrimination laws, we anticipate that the enactment of SB 649 will result in an increase in workload as we receive complaints and or initiate investigations of due or existing local tenant preferences that may not comport with those housing discrimination laws.

Such investigations and civil actions will be complex and resource intensive, involving, for example, substantial investigative discovery, research and data analysis to determine whether a particular local tenant preference is having an unlawful, disparate impact and substantial legal briefings. Such investigations and lawsuits generally require outside experts and take several years to resolve. We're requesting 1.2 million in general funds in 23-24, 24-25, 25-26 and this is the one we're coordinating with HCD.

Correct. For the remaining legislative resources. If you could limit that to, like, one or two sentences, please.

Of course. Okay. Assembly Bill 2188 is next. It's discrimination employment use of cannabis, and it adds a new section of the Fair Employment and Housing Act, which makes it unlawful for private employers of five or more and California public employers from discriminating against a person in hiring, termination, or of any other condition of employment, otherwise penalizing a person for their use of cannabis off the job and away from the workplace. Assembly Bill 1041, employee leave and bereavement leave, which is 1949.

They go hand in hand and support proposal supports the two bills. AB 1041 expands the persons for whom an employee can take job protected leave under the California Family Rights Act to include at least one designated person who is related to the employee by blood or whose association with the employee's equivalent of a family relationship.

AB 1949 adds a new section to the Fair Employment and Housing Act to provide eligible employees with up to five days of job protected leave for the death of a family member to be taken within three months of the death. CRD estimates that both bills will generate an additional complaints and request 1.2 million in general funds for 23-24, 24-25, and 25-26. Assembly Bill 2448, discrimination and harassment of customers, responds to the increase in reported hate crimes in California over the past several years.

To implement this program, CRD will need to hire staff and develop program requirements. We request one position in $243,000 annually through 2728 to cover it costs to build and maintain the required database, to create, translate resources and training, outreach and travel costs, among other operational expenses. And the final is Senate Bill 1162, which is employment, salary and wages.

It amends the pay data reporting law enforced by CRD to increase the number of employers required to file, including those who hire through labor contractors, and requires all employers to include median and mean hourly rates of employee groupings by job category, race, ethnicity and sex for each establishment, among other changes. Can I answer any questions regarding?

Thank you, Department of Finance followed by LAO.

The Department of Finance notes that the Governor's Budget. Hannah Kohanzadeh today with the Department of Finance.

The Governor's Budget includes any necessary administrative compliments as more positions are approved through BCPs.

Lourdes Morales with the LAO as the agenda nicely lays out. Overall, the proposals roughly align with what was approved or what was expected during the appropriations process, with some slight variations. Overall, we think these are sort of reasonable to implement legislative intent, and these can sort of be adjusted over time should the true workload amounts vary in what is expected. Thank you.

Thank you. How will CRD work with HCD to implement SB 649 specifically? And have the two departments already discussed implementation?

Yes, they have, and I'll let Adam talk about the coordination efforts.

Adam Romero with the Civil Rights Department. As my colleague from HCD mentioned before, our departments are our jurisdiction is complementary in this area, and so there's work that HCD will do on the front end when a locality wants to have a local tenant preference, but because those local tenant preferences, depending on the demographics of a jurisdiction, may raise concerns about who is getting that benefit, disparate impact concerns on the basis of race or other protected characteristics, our department may receive complaints related to the creation of those policies and how they're implemented in particular projects.

And so that's what these resources are for. We have not yet coordinated with HCD, but certainly look forward to doing so.

So when is the coordination with HCD? When will that begin?

As soon as possible.

Like right now. Right now. Just kidding. Any additional comments or questions on this issue, Madam Majority leader?

When the bill was going through the process, the Appropriations Committee estimate was much higher than you have. It looks like yours is absolutely on the lower end. So the question is, how will the work of the department complement the work done by HCD on this issue?

I think, again, with respect to, I think what we are asking for, because we're not exactly certain what the workload will be. We're requesting three years of funding to sort of monitor and evaluate the type of complaints that we receive and the workload, the actual workload increase for our department as well. Again, we look forward to working and coordinating with HCD.

They will be working at the beginning of the process, and we will be sort of doing our work at the end of the process, always to ensure that these programs comply with fair housing law and affirmatively further fair housing.

Thank you. Thank you, Madam Chair.

Thank you. If there are no additional comments or questions. Questions. The recommendation is approved as budgeted. All legislative resources except SB 649, which we will hold open for the moment. Can I get a motion? Thank you. Roll call, please.

[Roll Call]

Thank you. And Assembly Member Lee, thank you for coming to the hearing.

I know you have your own Committee at the moment, so we're going to go back and add you to the votes. Can we have the roll call, please? Can you announce.

Vote only calendar for issues? Vote only, issue 1 and 2. The recommendation is to approve as budgeted. Lee. And then issue number three is. The motion is to approve as budgeted and adopt placeholder trailer bill language. Lee. Issue number four is to approve everything except for 69 and 13. Assembly Member Lee.

Issue number seven is to adopt placeholder trailer Bill Language. Assembly Member Lee.

Great. Thank you very much. You are free to go. It's so challenging to be in between two buildings as committees. Thank you again. Assembly Member, are we on our final issue? Oh, no, two more. Which. zero, we're on issue 10, 11, issue 11, program 1500, elimination. Please begin.

Thank you. This proposal is a net zero cost technical adjustment that would streamline spending and provide our department with additional flexibility to secure legal representation.

By removing a restriction in our budget which dictates funding for only one specific purpose. The Civil Rights Department maintains direct authority to prosecute violations of the Fair Employment and Housing Act in Trial courts. Existing law also provides that the Department of Justice represents state agencies in judicial and administrative proceedings. Within the CRD budget, program 1500 specifically appropriates funding for the cost of these legal services provided by DOJ to CRD. These funds are dedicated and may only be expended on DOJ services in multiple years.

These allocations have exceeded expenditures and we were unable to expend the funds. As program 1500 funds are solely dedicated to reimbursing DOJ at any time. CRD must seek outside counsel. The funding for those legal services must instead come from CRD program 1490. Administration of civil rights law and the dedicated funding in program 1500 remains unspent.

Approval of this proposal means that CRD will continue the same process of using DOJ as the primary source for legal services related to appeals and writs, and consult with DOJ when situations arise that may require the appointment of outside counsel. By eliminating program 1500 and instead placing the funds in 1490, CRD will have more flexibility to use funds to pay either DOJ or outside counsel or appropriate legal experts when needed.

The process to hire outside counsel will not be impeded by CRD having to identify funds to pay for the services, which means CRD will be better able to execute its mission. Thank you for your consideration, and we're happy to take questions.

Department of Finance.

Hannah Kohanzadeh with Department of Finance. We have no further comments.

LAO.

Lourdes Morales LAO, no issues to raise for the committee.

Any comments? Questions? I have a few questions for you. How often has CRD had to seek outside representation?

It doesn't happen very often, but when it does, litigation can go on for several years and we're in constant contact with DOJ when situations like this are in play. An example of this is when DOJ represents a state entity and the defendant is involved in a civil case lawsuit with CRD.

So that's kind of covering a bit of the conflict then, correct? Can you elaborate on that?

So we are one of the few entities, state agencies, that can also take suit against another state entity, and when it goes into appeal, DOJ would represent the state entity that is on appeal. And when that happens, there is a conflict, and so we request outside counsel.

Thank you. That helps address my question. Thank you. How much of CRD's allocated budget last year went toward the retainment of private law firms?

One moment. A little under $250,000.

And do these private law firms, when contracted by CRD, get compensated for the billable hours alone, or do they also get a portion of CRD's settlements?

Billable hours.

They don't get a portion of CRD's settlements. Okay. What is CRD's policies on engaging private law firms to represent the agency? Is this a written policy or informal?

I'm sorry, can you rephrase that?

What is CRD's policies on engaging private law firms to represent the agency?

Sure. Adam Romero with the Civil Rights Department, we would follow the statutory requirements for hiring outside, you know, specific subdivisions. I don't have the code section in front of me, but that authorizes us to hire outside counsel and then upon approval by the Department of Justice. And so the process is, or historically has been, when we need to hire outside counsel because there's a conflict with the Department of Justice, their inability to represent us.

We seek approval from the Department of Justice, they provide it, and then we hire outside counsel.

So there is a set of, like a policy, a code section that you follow in law with relations to how a private law firm is contracted?

Yes, it's set out in the statute.

Can you send that to us when you have an opportunity, please? Well, we'll follow up and make sure that we have the correct one. According to CRD's 2020 annual report, there was more than a 50% drop in the number of complaints it received, from 28,739 in 2019 to 23,898 in 2020.

Given that for years, CRD has argued that it is understaffed and consistently investigates only about 25% of the complaints it receives, one might logically think that a drop in complaints in 2020 would have led to an increase in investigations. Rather, CRD investigated only 5784 complaints in 2020, compared to 6636 in 2019. Can you explain the drop in investigations?

I can, and thank you for the question. So, in 2020, we did have a 28% vacancy rate, and we had requested additional funding for some additional investigators.

We received those positions, which led to a slightly higher vacancy rate. We've been working consistently on filling those positions in the last two years. We're now down to a 13% vacancy rate, and the number of complaints for 22 has risen significantly. And we're seeing a trend of that same upward trend in our investigations that we're investigating. Trend upward.

So in 2020, the department, as you just mentioned, reports opening 5784 active investigations in which only 706 were settled out of the close to nearly 6000.

Can you elaborate why the department has a low rate of settlement, which is currently at 12%? And can you provide the average time it takes from the filing of a complaint to the opening of an investigation to the resolution of the complaint. So take us from step a to the end.

Okay, well, I'll start with that before I get into the numbers, because I think that'll help put it into perspective.

So we receive our intake forms through either a paper format or through electronic portal, and those are assigned to one of our investigators for what we call an intake interview. At that point in time, our investigators will question the complainant to see what the issues were and to see if CRD has jurisdiction. And it's a civil rights issue that we have jurisdiction over that involves a good deal of work.

In some of those cases, we do not have jurisdiction, but we do take the time to refer them to another place where they can obtain help. If it is something that we have jurisdiction over, we file a case and it goes into where we do additional investigations onto the case. Those are the cases that may move to mediation or they may move to our legal department for litigation.

While our number of settlements, as you mentioned, was 706 in 2020, the dollar amount of the settlements remain about the same annually. We're on an average of about $10 million in settlements through our mediation.

So can you elaborate on the timeline?

Yes. So CRD has a statutory timeline of one year for most cases. So we work our cases within that one year period of time from the time that we conduct our intake interview, file the complaint, and close the case.

We have one year, statutorily, to do that. So we do have cases that between the time that the complainant files the intake interview to the time that we actually conduct the interview, we were up to 120 days. For that. We requested some additional resources to combat that, and now we're at 90 days. So those additional resources have helped us move our time from intake to time.

We actually work the case in a positive manner in a less time frame for our complainants to receive communication from CRD.

Thank you for that. Can you go back and just elaborate a little bit more on the 12% settlement rate?

So the department has a settlement rate of 12% based on the 2020 numbers of close to 6000 active investigations of only which 706 have been settled. So you mentioned a bit related to staffing. Right. You had a vacancy of 28%, which is now 13%.

My concern and the question is, out of the folks that are putting in an investigation, what is the response rate and why are we only seeing a 12% settlement?

In order to move a case from our investigation staff to our mediation staff, both parties have to agree to mediation, and in some cases, both parties don't want to mediate those cases. So we try very hard. We move many more cases of that to our mediation staff.

But in some cases, we're only successful in a smaller percentage of getting both parties to agree to mediate.

That's helpful to know. Can you provide us, I'm not sure if you have it now, but at a later date, the percentage of cases, the percentage of individuals that agree to mediation so that we can have a clear understanding as to the numbers.

I absolutely can. I don't have them at my fingertips, though.

Great. I think that would be helpful. And again, according to your 2020 report.

Sorry. The legal division's work settling the 13 cases resulted in restitutions or settlements equally, approximately about 2.5 million, while other divisions settled cases totaling approximately 9 million. Given the disproportionate resources allocated to the legal division, including outside counsel costs, in your opinion, are the CRD's resources being allocated in a manner providing the greatest benefit to the majority of victims of discrimination and abuse?

I believe they are, because our investigative staff and enforcement by far is the largest division and that is concentrated on serving Californians who have been in a position where they've been violated in their civil rights that we have jurisdiction over. So, yes, I do believe that we're appropriately staffed and that we're addressing that.

In addition, our education and outreach unit division does work on educating the public and getting the knowledge out there about what we can help with and educating housing providers on what they should and shouldn't do in accordance with Viha.

I'm going to ask a question that I tend to ask related to just issues on equity and identifying pockets in which we can improve upon.

Would love to know if you track or have stats related to the complaints related to the victims on discrimination and abuse, how many of them need language and cultural competency resources? What does it look like in relations to interpretation and translation services, if you happen to be.

I can elaborate. And what we have seen is an uptick in the number of translation services that have been required, especially during our intakes. We've seen a drastic uptick in that.

So yes, we are seeing that, and we have translation contracts in place. We're also trying to do better with translating all of our education materials in several languages. In fact, that's what Adam's group specifically takes care of for us. But yes, we have seen a definite increase in the need for translation services with our complainants.

Can you elaborate a bit on the languages that you've seen an uprising or an uptick on.

I don't have the percentages in front of me.

I know the majority of it is Spanish. I have seen some need for Korean, and I don't have the stats for the breakout, but we can get them for you because we do track them.

Okay, that would be great, I think, if we can figure out what that potentially looks like, and then the follow up question to that is, and please let us know if it's appropriate and how I'm asking also because I'm also trying to understand how your department works.

Does the CRD have the resources to be able to assist non English speakers with their complaints?

Yes. We currently have contracts for a language line, so any of our complainants that call in that are non English speaking, they indicate the language in which they need the interpretation services, and we are able to provide that through our contract with language line.

Curious if contracting out your services is financially the appropriate response or whether you need in house staff working for the department.

We do have a percentage of bilingual employees that receive bilingual pay. We find that Spanish is one of the main languages that we have employees that have the certification for. We do have one Korean bilingual pay, but it is difficult to find all of the different languages that we need to translate and serve the public with just employees. But we do take advantage of the bilingual staff that we do have and contract out when we don't.

You follow the same when you're hiring in staff, like in agency staff, do you follow CalHR's guidelines towards testing? So in another hearing with CalHR, we were discussing whether the testing models are in language of how people speak or whether they're in language of how education institutions may look at a potential test, which is often a barrier in the hiring process.

So, wondering if you can do a comparison of the open case or the various different cases that you have and the complaints that you receive based on how many of them can be done in house and how many of them you use your contract services for. I'd like to see if there's a correlation there as well as the percentage of folks that can wait longer periods of time, perhaps because there is a language deficiency. Does that make sense?

It does. I can provide you the numbers, the breakout for you after this. Because we do have a contract in place for translation services, it has not impeded the wait time for any of our complainants to receive services.

That's very good to hear, but I think we would also like to know what that percentage of your complaint intake looks like and how many of those complaints are beyond English. As a primary.

Chair Carillo, if I could just add that you might be interested in our Department just launched the California Versus Hate resource line and network, which is a phone based and online system for victims and communities targeted by hate to access services, and a care coordinator who can help somebody understand their options when they've been targeted for hate online. You can access that portal in 14 different languages.

And if you call the phone number, 209 languages are available, again through a contract where essentially someone calls, says, I need services in this language. The contractor is available to provide that language services immediately. And so with our complaint investigation program as well, the challenge can be if, when you have in house speakers of a particular language, they may be occupied by other matters and not available immediately when someone calls and needs assistance.

And that's why it's helpful to have these language services sort of on the ready through contract. So we can not create delays by trying to free up time of someone who may speak the language of the person seeking services.

That's helpful to know. Thank you. Especially for those harder to reach languages. We also have seen indigenous communities that need additional support, that have indigenous languages are just also very difficult. And so if there's any support or resources that we can also think about when it comes to indigenous languages, we see complaints related to farmworking in the Central Valley as well, a growing rise of Oaxacan and Sapodec speakers.

And if there's any concerns there, it's something that I think a lot of us would be interested in trying to figure out. Yeah. Final question. What efforts have been made to confirm that there are no conflicts of interest arising from pre existing relationships between any members of the CRD staff and the private attorney CRD has potentially engaged?

I want to be very careful here. We can't comment on any pending litigation, but our legal division has worked to ensure that no one has raised a complaint to us, that there's any conflict of interest. And if someone raises a complaint between our outside counsel and in house counsel, we certainly would evaluate and try to address it.

Any additional comments related to this? Thank you. I appreciate that response. I think we're trying to just figure out how do we ensure that this program is answering and addressing as many complaints as possible and that you have the resources that you need. Also to ensure that we have a higher percentage of cases that are resolved in an appropriate manner. So I appreciate your detailed responses to my questions. We're going to keep this item open for the moment.

And we are now off to our last issue, workload and administrative resources. Please begin when you're ready.

Thank you. In recent years, our department has grown in budgets, staff and responsibilities. To match this growth, the department requests two positions to handle two administrative functions, internal audits and a recruitment and retention of a diverse and talented workforce. The first position, an internal auditor would conduct objective, impartial assessments of our program processes and policies.

It is recommended under California government code when an entity's spending exceeds 50 million or more annually. In this current fiscal year, CRD's budget exceeded this amount at 55 million. The second position would be a supervisor in our human resources unit who would serve as a recruiter and diversity and equity officer to support efforts to identify, attract and retain a wide range of qualified team members across multiple platforms.

Recognizing that an agency that better reflects California will be better situated to serve the needs of Californians, the position will build on ongoing efforts to foster and maintain an engaged and inclusive workplace culture which is integral to excellence. I would be happy to answer any questions.

Lourdes Morales, LAo, no issues to raise for the committee.

Thank you. We'll go to the Department of Finance first, followed by LAO.

Hannah Kohanzadeh with the Department of Finance. We have no further comments.

Very similar question, as I had for the previous panel, but it just relates to CRD and any challenges with recruitment, retention of staff and where does CRD usually recruit new talent from?

So currently we use the CalHR website. We use our own website. We used LinkedIn and we use Simplicity, which reaches out to colleges. We would like to reach out to more diverse workforce, using job fairs and really delving into what would be better methodologies for us to recruit.

But once we recruit, we also want to make sure that we retain those folks and we just feel like an extra resource would really help us be able to do that.

Thank you for that. In the previous panel, again, you addressed some deficits related to your vacancy rates, right? 28% now 13%. What is your retention rate?

I don't have that specifically.

Okay. That might be helpful. Also. You can hire folks, right? But if they leave within a year, then you're back.

You're back to square one. Okay. I think that would be helpful for us to know as well. Seeing no other comments or questions from members that are not here, we're going to hold this item open for the moment. Thank you very much. And we are done. My goodness. Now we just have public comment. So all of our hearings have been about 7 hours long, so this is really quite refreshing.

We will now be accepting public comment in the hearing room and on the phone. The phone number to connect is on the committee website and should also be on the screen if you are watching over the Internet. The phone number toll free is 877-692-8957 the public access code is 131-5447 is there any public comment in the hearing room? Please begin. Let's make sure the microphone is on.

Good afternoon. Justin Garrett with the California State Association of Counties representing all 58 counties in California. Thank you for the discussion today on homelessness funding. Counties share the goals of ensuring that homelessness funding is used as efficiently as possible, of ensuring that there are strong accountability measures in place, and that we make real progress in reducing the number of unsheltered individuals in our state.

Toward that end, through a months long all county process, CSAC has developed the ATHOME Plan that we are presenting for the Committee's consideration that has clear lines of responsibility, accountability and sustainable funding. ATHOME stands for accountability, transparency, housing outreach, mitigation and economic opportunity. And within each of these six pillars, it's a full slate of policy recommendations related to establishing a comprehensive homelessness system in our state.

Specific for the Budget Committee discussions, we present the accountability pillar that really would establish a comprehensive system in the same way that we have systems in place for other key policy areas in our state. What we propose to do differently than.

Ask that you wrap up, please. The public comment is 1 minute.

Yep, definitely. We will follow up as needed on our letter and ask that you consider this and we'll follow up. Thank you.

Holly Fraumeni de Jesús with Lighthouse Public Affairs here to speak specifically to the reductions that were made by the Governor on homeownership on behalf of Habitat for Humanity Spur and the Bay Area Council. We're hoping for the restoration of those cuts. The committee analysis and staff recommendation and most of the conversation today was focused on the reductions to, not just to the California Dream for all program, which we are supportive of restoring those cuts as well.

But I want to specify my comments today on the CalHome program, which did not get much attention. Specifically, this program is oversubscribed. This last round of funding just last month was $250,000,000 was requested. So 137,000,000 in project applications are not going to be funded. 30% of those applications are from Habitat for Humanity, and those Habitat for Humanity homeowners are 80% or below of the AMI.

So by design, that program is serving a much more diverse demographic and that includes 49% Hispanic, seven to 12% black and African American, 18% Asian or Pacific Islanders, and only 20% are white and non Hispanic and 3% are two or more races of non Hispanic. So our impacts that Habitat for Humanity we do keep track of our demographics definitely are much more diverse by design because it is serving 80% of the below of the AMI.

So just wanted to make sure we made those comments and hope the committee supports restoring those cuts. Thank you.

Again, just please limit your comment to 1 minute.

Yes, good afternoon. Kim Lewis, representing the California Coalition for Youth and we submitted suggestions to the Hap trailer bill to make it work better for our young people because we know that exits to permanent supportive housing may not always be the best solution for our young people if we can connect them with family.

Exits to safe and stable locations should also be a successful measure for our youth. We also recommend supporting promising practices and data informed solutions because we know that there hasn't been a ton of research around evidence based solutions for our young people. So we want to make sure that they're not being left out of the uses of funding for the Hap ongoing funds.

And so we provided a lot of suggestions around that and so we wanted to just raise this to your attention and know that youth specific coordinated entry is very important for our young people. Because just adding a question to your questionnaire of saying, oh, have you traded sex for a place to sleep as a way to determine your vulnerability seems very invasive and a tool that you just met somebody on. So really need our youth specific, coordinated entry systems across all of our COCs. Thank you.

Chair and members Lance Christensen of the California Policy Center. We submitted to the committee and to the members of the legislature report we just have done and completed on the Civil Rights Department and some of the challenges it's had over the last few years see a lot of mission creep here happening, and this evolution, we believe, has some repercussion for workers and business in California.

We really think the Legislature would do themselves well to go and think about some policy changes that will refocus this mission and make sure that it accomplishes the task. We're happy to be a part of that conversation and appreciate you receiving that report and have a nice day.

Hello Chair and members Caroline Cerencioni on behalf of the League of California Cities, really appreciate the conversation today, Cal Cities is requesting an annual $3 billion appropriation beginning in the 2023 Budget act to prevent homelessness and boost the supply of affordable housing. A recent statewide survey that Cal Cities conducted shows that 87% of our cities have fiscal concerns about supporting other existing homelessness services long term. And it also shows that eight in 10 of them have invested General Fund dollars to address this crisis.

While cities appreciate the funding in previous state budgets to address homelessness, one time funding really stifles ambitious planning and gets in the way of long term efforts with regards to accountability, calcities completely understands that for state funding, cities need to be held accountable for state programs and funding. This kind of accountability is not new for cities. We expect to be held accountable and we look forward to working with the legislature on a number of measures this year related to just that.

So with that, we look forward to conversations after the May revision and thank you so much.

Hello, my name is Donna Tang and I'm the acting manager of government affairs at LAHSA, also known as the Los Angeles Homeless Services Authority. Thank you Chair Carrillo and the governor's office for presenting on the Hap trailer bill today. As the leading continuum of care in the Los Angeles County, we are willing and ready to work with the state to address accountability.

We want to highlight the importance of continuing to prioritize funds to address prevention and from people from falling into homelessness. We won't be able to effectively end homelessness without turning off the faucet. Flexible funding used towards problem solving and other prevention measures have kept tens of thousands housed and from falling into homelessness. Thank you so much for your time today.

Vanessa Chavez with the California Association of Realtors. We're asking full restoration of the Dream for All program funding of $500 million.

While we appreciate the current funding that has been allocated for the Dream for All program, it is clear that the funding for this program is critical and will assist to bridge the state's persistent wealth gap through wider opportunities for homeownership. The Dream for All program funds were quickly depleted in less than a two week period, leaving many Californians eager to take advantage of the program.

We are hopeful that the legislature will move forward in committing to its original funding of $500 million for the year, which will assist California's families achieve the dream of homeownership. Thank you for your consideration.

Hello, I'm Mari Castaldi. I'm the senior legislative advocate on homelessness at Housing California. Thanks for the conversation today at Housing California, we're part of a coalition of over 150 organizations statewide that put together a set of housing and homelessness budget priorities.

We would love to see those funded at the highest level possible. I also wanted to dig in quickly on HAPP and HAPP accountability we're excited to see the $1 billion for HAPP included in the governor's proposal. We would love to see that expanded and turned into an ongoing investment, including with stronger accountability.

And we've been working with the Bring California Home Coalition, a big coalition of service providers, local jurisdictions, folks with experienced homelessness to think through accountability that asks the state to step up and set goals alongside local jurisdictions. That really ramps up approaches to regional planning and aligning state and regional goals, and then also tries to figure out how to maintain flexibility while still creating balanced systems that have interim, permanent and prevention solutions as part of them.

So we're really grateful to work with the committee to collaborate on a path forward for accountability along with the rest of the legislature and the governor's administration. Thanks.

Good afternoon. Mark Stivers with the California Housing Partnership. On behalf of ourselves, the California Rural Legal Assistance foundation and the California Coalition for Rural Housing, we do oppose under item five, the allowing for profits to apply for the Cerna program. It's been working well for 30 or 40 years with nonprofits, and it's oversubscribed. We support separating CalHFA from HCD under item six. We support the resources to do more source of income discrimination investigations for the CRD under item nine.

But most importantly, we urge the committee to put the highest appropriation possible to the suite of programs that was in the coalition letter that Maury mentioned. That includes the production of affordable housing, preservation of existing housing that could go market rate or be subject to rent increases, homelessness, as well as tribal and farm worker housing.

So as bond funds are decreasing, we have a greater need, but we have fewer and fewer resources to meet that need, and we really need the budget to come through on this. Thank you very much.

Good afternoon, Chair and members. My name is Jennifer Armenta with the California Housing Consortium. I would like to echo the remarks made by Mr. Stivers and in particular highlight the need for deep investments in the multifamily housing program and in additional state tax credits.

We currently have 14,000 units that are shovel ready, and without the necessary funding, these units will remain unbuilt in the affordable housing pipeline. Thank you.

Thank you. Operator before we go to public comment over the phone, we're going to take an opportunity to take Assemblymember Patterson's vote while we prepare for that roll call to the housing and homelessness advocates that are in the room, that are watching and have been a part of the presentations.

I think one thing that I would just like to say and maybe potentially work with you on is that our data related to the information that we have heard today and that we have heard in other presentations related to housing and homelessness is inaccurate when reflecting ethnicity and race.

We have a current bill that I've made into a two year bill because we need more policy discussions and stakeholders to engage, and that is Assembly Bill 1682 that we are currently running, which tries to tackle the conversation in the state related to ethnicity and race.

And I think in an effort for us to get appropriate data, we need to figure that piece out, especially for the Latino community, on race and ethnicity, which doesn't always quite align, and so look forward to hearing from all of you and moving that policy forward so that we get accurate data. With that said, let's call the roll call for Assemblymember Patterson. Please.

Vote only calendar the motion is to approve his budgeted Patterson.

Aye.

Issue number three. The motion is to approve his budgeted and adopt placeholder trailer Bill Language. Patterson. Issue number four. The motion is to approve the workload resources except for 69 and 13. Patterson. Issue number seven is to adopt the placeholder trailer Bill Language. Patterson. And issue number 10 is to approve the work reload resources except for SB 649. Patterson.

Thank you, operator.

We're going to move on to comments on the phone, please.

As a reminder, if you need to comment and have not already pressed 10, please press 10 at this time. We do have one commenter in queue. We'll go to line 32. Your lines open? Go ahead, please.

Good afternoon, I'm Sharon Rapport with Corporation for Supportive Housing. We urge the adoption of the homeless accountability framework of AB 799 by Assemblymember Luz Rivas for any trailer bill language and funding homeless programs.

I also want to align with the comments of Mari Castaldi and Mark Stivers in strong support of the coalition budget request from the housing and homelessness advocates. We are supportive of the increase in ongoing funding for the HAPP program as no jurisdiction has been able to reduce homelessness sustainably through one time funding.

We also urge the committee to consider funding for housing subsidies to address homelessness among older adults and people with disabilities, and so support the budget requests that are included among Assemblymember Wicks requests as part of the coalition budget request. And we finally support Assemblymember Reyes, AB 653 and the corresponding budget request to fund incentives to landlords.

This funding would allow the state to ensure Californians are able to use federal vouchers rather than lose tens of thousands of vouchers every year because voucher holders cannot find landlords to take them. Thank you very much.