Senate Budget and Fiscal Review Subcommittee No. 4 on State Administration and General Government

For individuals wishing to provide public comment via the teleconference service, the participant toll free number and access code is posted on our Committee website, and I will announce it right now. Today's participant number is 877-226-8163 and the access code is 718-778-718-778. I will maintain decorum during this hearing, and any individual who happens to be disruptive may be removed from the remote meeting service or have their connections muted. Obviously, we're holding our hearing today in the legislative office building, room 100.

All Members of the Committee are present so we can establish our quorum and begin hearing in just a minute to allow the public access. We have admitted Members of the public in the hearing room and will be using a teleconference service for those individuals who wish to testify today. Public comment will be heard after all discussion items have been presented, so let's now establish a quorum. Consultant, if you would please call the roll.

[Roll Call] Mr. Chair, you have a quorum.

Thank you very much. We will be taking the vote only calendar at the end of session at the session for public comment. At this point in time, we are going to move to items for discussion. Issue number 18 will start around 11:30 a.m. due to panelist timing issues. So at this point, we will begin with issue number 19. Issue number 19, number 1700, Civil Rights Department. I see we have folks joining us at the table in front of the dais.

Starting to my left, your right. Ladies and gentlemen, if you would identify yourselves for the record. Good to see you, ma'am. Sweet. Thanks for joining us. All present and accounted for. Who would like to proceed first? Ms. Wheat.

Is that better? Sorry.

That's perfect.

I fail my first test.

Actually, these mics are so sensitive, you could probably be talking and mine would pick you up.

My apologies. I'm going to start with issue 19, transfer funding and spending authority for contract legal services, program 1500 elimination. 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 within our budget that dedicates funding only to 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 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 fund. As program 1500 funds are solely dedicated to reimbursing DOJ anytime CRD must seek outside counsel.

The funding for those legal services must instead come from CRD's program 1490. Administration of civil rights law and the dedicated funding in program 1500 remain unspent. Approval of this proposal means 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 appointment of outside counsel.

By eliminating program 1500 and instead placing the funds in program 1490, CRD will have more flexibility to use the 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 these services, which means CRD will be better able to execute its mission. Thank you for your consideration, and we're open to any questions you may have.

Thank you, ma'am. LAO, any comment?

Lourdes Morales, LAO, we have no issues to raise for the Committee on this Item.

Finance, any comment?

Andrew March, Department of Finance. We would just note that existing law control Section 26 already authorizes Department of Finance to transfer funding between programs. So there's currently a request that's been sent to the Joint Legislative Budget Committee to transfer funding from program 1500 to program 1490 in the current year as a result of the problem that was outlaid by the Department.

Thank you. I'll bring the item back to my colleagues on the dais. Senator Niello, any questions?

Just one question. Or should I just rely upon your microphone to speak? That's a joke. I understand the reasoning. How will we know that, looking at this from a budgetary as opposed to operational standpoint, how will we know whether this change will result in greater or lesser expenditure?

There's currently a certain amount of money within the 1500 program. We're spending that amount of money and we're tracking it. We have not gone over that amount but we have had to transfer monies from that account into our 1490 to pay for legal services. So we haven't seen a trend of using anymore. We're tracking it closely and we're keeping our eye on it.

Okay. Thank you.

Senator Caballero.

Thank you very much. I appreciate the explanation. Let me make sure I understand it. There's two funds that can pay for legal services, and when you need to move between the two funds, you can't. Okay, I appreciate that. And flexibility is important. And the other part is that. Does DOJ bill, is it a billing or is it--yeah, I think that's a question.

It is a billing. Yes.

I thought I recalled that the different agencies have a fund against which DOJ bills for their services. Very good. Thank you. No further questions.

Thank you. As I noted before, we'll take public comment at the end of the session. Let's move to issue number 20, item 1700. Civil Rights Department on issue 2240 Department of Housing and Community Development. Implementation and enforcement of local tenant preference legislation. We have a new member joining us at the table in front of the dais. Sir, would you identify yourself for the record, please?

Good morning, Chair, Members. My name is Matt Schueller. I'm the Deputy Director of Administration with Housing and Community Development.

Schueller, good to have you here. Please proceed.

Thank you. So issue 20, the implementation and enforcement of local tenant preference legislation, is an ask for resources from both the Housing and Community Development Department and the Civil Rights Department. As SB 649 explicitly authorizes local governments to enact local tenant preferences in relation to affordable housing created using subsidies from specific government funding sources.

Both HCD and CRD have a responsibility to affirmately further fair housing in relation to these local tenant preferences, and therefore, we're asking for resources at Housing and Community Development from the General Fund for $445,000 annually through 25-26 for a consulting contract in order to support the work at our Department. And I'll let CRD speak to their request for resources.

Sure. Adam Romero with the Civil Rights Department, and our request is $1.2 million in General Fund in 23-24, 24-25, and 25-26.

Hello. Andrew March, Department of Finance. We would just note that requests before. You are for limited term funding for three years due to the new nature of local tenant preference policies and the uncertainty around how many local jurisdictions will create local tenant preferences. So the departments will closely monitor how many local tenant preferences are received, and then at a later date we'll determine sort of what the ongoing need to implement this bill is.

Thank you. Hopefully in your responses to my colleagues questions, you all, both of you from HCD and Civil Rights Department will tell us how you're going to resolve issues so we avoid differing conclusions, since your conclusions are pretty significant to the people who receive them. But first, let me turn it over to my colleagues and ask if colleagues have any questions. Senator Caballero, it looks like you're moving your mic.

Thank you very much, Mr. Chair. So one of my frustrations from the legislative perspective is that many times people will put the work in a Department that doesn't have any history of doing the work. It doesn't really get fixed, and we create a bigger bureaucracy when maybe there wasn't necessary. So I'm not saying that's the case here, but can you explain why there are two?

I understand that both of your departments do work in this area, but it seems to me that we need to be very clear that we're not, one, duplicating work and, two, as the Chair said, having a situation where there's different conclusions about the situation that then creates confusion. So maybe you can help me on this.

Of course. So one of the things that we have currently as a responsibility is the review of local tenant preferences as jurisdictions apply for our funding opportunities. So that's laid out in our uniform multifamily regulations. So we're already looking at local tenant preferences, although we are assuming that there will be some additional uptake as a result of the legislation that was passed.

As my colleague from Department of Finance mentioned, we don't know exactly how much that uptake will be in terms of other jurisdictions looking to apply the preferences, but we are already doing that work. And then there is a true, really distinction in the division of labor between what it is that we do at HCD and CRD. We're really looking at that upfront technical guidance to jurisdictions that are considering using the preference, and then we review and approve those as it relates to our application for funding.

CRD is really looking at the back end of the process to see if those policies are correctly applied in terms of responding to complaints, investigations, and any type of civil litigation that may result. We do intend to work together not only on the front end, but then also on the back end, sharing information where those complaints may come to light.

That makes a lot of sense. Your explanation is really good. You mentioned that you advise communities as well. I'm hoping that includes creating a matrix or a punch list or something that helps communities go through an analysis, because this tenant preferences is all relatively new in terms of, in many communities.

Correct. And we do plan on jointly providing additional information available to, like, in the form of frequently asked questions for folks that are interested in proceeding.

Thank you. You're welcome very much.

Senator Niello, any questions? So just make sure I'm clear. So there's not an issue when you have enforcement agencies and you have agencies that are supposed to provide assistance and help. Sometimes we need to set firewalls so that people can ask questions freely and get information and not fear that whatever they're talking to you about is going to be passed on to an enforcement agency. Is that an issue here, and if so, how do we deal with it?

I think if the Civil Rights Department receives a complaint that, say, a particular local tenant preference is not being applied in a way that comports with our state's fair housing laws, we would investigate that complaint, do our own independent analysis of the issue, but look to request HCD's analysis to understand what they did, what they saw when they were looking at the front end of the policy itself, not the actual application of it in the instance that we might be asserting.

And so their analysis would be relevant to our investigation but would not determine it. And so that also, I think, speaks to the duplicative outcomes question that you had before, which is that again, HCD would be on the front end looking at a policy that a locality may be trying to adopt and helping guide them in that process. But then CRD would be looking at actual complaints of the implementation of the policy in particular projects. And so it may be that a policy is perfectly fine and legal, but the actual application, how it was implemented may run afoul or at least raise concerns.

Is it likely that during--I don't want to belabor this--but is it likely during the process that HCD would collect information from individuals about this local tenant preference and how it works or how it doesn't work that could then be passed on to the Civil Rights Department for use during its investigation?

I certainly would hope so. We would appreciate knowing HCD's analysis of the local tenant preference as we were looking again at a complaint about the implementation of it. HCD surely would do a thorough and complete job in its analysis, and we would benefit from learning from what they saw.

I think perhaps I need to do my own spade work to understand a little bit more. I'm thinking about Cal/OSHA and the piece of Cal/OSHA that helps employers, and then there's a piece of Cal/OSHA that comes in and investigates, and the piece that helps employers has a firewall and they don't talk about what the people that they're trying to help are telling them to, the piece of Cal/OSHA that does the enforcement, because that would be unfortunate and sort of stifle the free flow of information. But this may be totally different. So I'm going to shut my lips at this point and move on.

Just respond, Senator, I appreciate the flag. And as we figure out how we are going to coordinate together, it's something that we should consider.

Okay, Senator Caballero.

That's a really good point and one that I hadn't thought about, but I think to the extent that this is an area that you want some uniformity around the state in terms of how it's protecting civil rights, is protecting civil rights.

Having the opportunity to cure the issue would partially resolve the issue that Senator Roth is talking about, rather than using information you got through what I think is probably an iterative and education process to then slap them upside the head if they get it wrong before allowing them to fix the situation. Anyway, my preference is always to try to go in and to say, look, the application of this is not correct because here's how it's hurting people, or here's how it's depriving them of their rights. But I think that's a subject for the future to look at.

And I would only add that our Department has a robust mediation service that could be utilized in those instances. And among the cases filed with our Department that are referred to mediation, we settle about 50% of those. So we have terrific outcomes.

Great.

Thank you for the great work. Seeing no other questions, let's move on to item 2240. Department of Housing Community Development. Issue 21 through 24. Issue 21 is calhome reduction with restoration trigger. We have some new faces joining us at the table in front of the dais. Let's start to my right, your left, sir, please identify yourself for the record.

Good morning. Chairman and Senators Kyle Krause, Deputy Director, HCD's Codes and Standards Division.

Krause, thanks for joining us.

Good morning, Chair Roth, Members of the Committee. My name is Pedro Galvao. I'm Deputy Director for Legislation at the Department of Housing and Community Development.

Thank you for joining us. Please proceed.

Good morning. Andrew March, Department of Finance. So, due to lower than projected General Fund revenues, the Governor's Budget forecasts excess of $20 billion budget deficit. To balance the budget, the Administration made difficult decisions to reduce, delay, or defer various one time and limited term General Fund investments in many areas, specifically in the housing area.

The Governor's Budget maintains 88% of the funding committed in the 2022 Budget Act and proposes $350,000,000 in reductions, of which there's $100 million reduction before you right now and the Cal Home reduction. If General Fund revenues are higher than anticipated, the Governor's Budget, then this reduction would be restored via trigger mechanism. Happy to take further questions or comments.

Finance? Oh, LAO, I'm sorry. What happens when you step into a Committee?

Lourdes Morales, LAO. So, as noted in the agenda, our office does anticipate that the budget problem will be larger than anticipated in January. At this point, we're anticipating about $7 billion larger, although we will be revising that as part of the May revision. And so as the feature associated with this proposal that would have a trigger restoration. That is not something that we would anticipate coming to fruition given the nature of the budget condition.

And it's just more broadly, as the Legislature considers this and other reductions as part of the agenda today, as the Legislature thinks about sort of the package of solutions, the Governor is proposing one approach, the Legislature could make different decisions about which programs to adjust.

And as the Legislature decides whether to maintain a similar level of cut within housing and homelessness or a different amount, it would just have to make sort of like adjustments in other areas of the budget in order to address the overall budget problem identified across the state. Thank you.

Thank you. Do we know what outcomes this program, this Cal Home program is achieving? And more importantly, what do we project the impact of these cuts to be?

I can take that one. Pedro Galvao, Deputy Director for Legislation at HCD. Thank you so much for the question, Senator Roth. So, between 2019 and 2023, the state has made about $360,000,000 available for the Cal Home program. Of those, we currently have an open notice of funding availability for $135,000,000, and we are expecting another $115,000,000 next year that has been held back to be released in the future notice of funding availability. Of the three funding rounds that we do have data for totaling $184,000,000, approximately 80% of that funding has been used for first time homebuyer programs as well as owner occupied rehabilitation programs.

These are programs that help low income homeowner make necessary repairs to their homes so that they can stay affordably housed. Some of that funding also went towards the development of ownership affordable housing, the kind that's built by self help organizations like Habitat for Humanity and Self Help Housing.

As I mentioned, while the Department is still evaluating applications for this year's home ownership notice of funding availability, between 2019 and 2021, the Department has assisted about 2,400 units through Cal Home, corresponding to about 6,000 Californians who have been helped to either become first time homeowners or stay affordably housed. Cal Home has also been used to help the state in its disaster recovery efforts. So, separate from the regular NOFAs, last year we had a disaster notice of funding availability that made $41 million available.

That funding was used to help counties that lost structures due to natural disasters recover, and most of that funding was also used for first time homebuyer programs as well as owner occupied rehabilitation.

The results were 171 units assisted and 428 Californians helped. To the second part of your question about the impact of these cuts, while we do not have exact figures for you, we are expecting to see a significant reduction in first time home buyer programs across the state, as well as owner occupied rehabilitation because that's where most of the funding goes. Given that this program assists several thousand households with each funding round, we expect several thousand households to be impacted. I don't have exact figures for you on the number of units assisted.

What about the instability or rise, I guess, of interest rates? Do you see that as having any particular impact on this particular program? We do in the Senate, too.

I was just like hop mic, too. So, yes, I would say that as actually the LAO noted in their analysis, the impact of interest rates, we are expecting the higher interest rates to dampen interest in this program. Homebuyers still have to work within our existing housing market and they're still limited by those higher interest rates. So I would say that is part of what prompted the proposal that you're seeing before you today.

Well, thank you for the response. Very important program. We need to make sure that it can continue. Colleagues, any questions? Senator Niello?

Thank you, Mr. Chair. The commitment of these funds was part of the 22-23 budget, correct?

That's correct. The 22-23 budget committed $350,000,000 for Cal Home, $250,000,000 in 22-23 in the current year, of which HCD has put out a notice of funding availability for $135,000,000 with $115,000,000 to come out next year. And then $100 million was slated for 23-24.

And was that included in the governor's January '22 budget proposal?

No.

It was added as a legislative priority.

That's correct.

One does not make a trend, but I think when we see cuts, we might be seeing a trend.

Thank you, Senator. Senator Caballero.

Thank you, Mr. Chair. Question and I apologize. I had understood there was a first time home buyers program at CalHFA and that they put out $200 million. And my facts may be wrong with the reason for the apology and that it was basically scooped up within 11 days. Is that different than this program or was this the program that got expended?

So I think what you may be referencing, Senator, is the Dream for All program of which there's $500 million budgeted in the current year in 22-23. The Governor's Budget also proposes a reduction for that program of $200 million, and CalHFA will be up shortly to speak about that program.

Okay, that's very good.

And to the second part of your question about Cal Home, there is a difference. HCD does not provide assistance directly to homeowners. This program provides funding to local governments and nonprofits to set up these types of programs. So while we are funding first time home buyer programs, it's indirectly through local governments and nonprofits, not directly to homebuyers.

That's great. Thank you for that. I thought they were different programs. I just wasn't sure. At some point if you could get me a copy of the jurisdictions that have taken advantage of the grant program so I can get a sense of where in the state they're utilizing this first time home buyers program. The reason that I'm asking, and I'll talk to Kelly Chave about it, is that I had asked if we could do some outreach into the particular, into rural California.

The home prices are much more affordable still, but they're still out of reach for most of the salaries in the region. But people need to know how to access a first time home buyers program. And so I'd ask for some, even if it's electronically, a workshop and was told that we could arrange it. But if the money goes out in 11 days, my guess is it's a more sophisticated first time home buyer and that they don't need a tutorial on it.

And my guess is that it's more urban areas and so I'm a little concerned about making sure there's equity. So I appreciate your comment and we can talk offline about where most of the resources go on some of these programs. That would be great.

We'd be happy to follow up with that information.

Thank you, Senator. Seeing no other questions, let's move to issue 22, employee housing regulation fund establishment and increase in inspectors. Same players. Please proceed. Who wants this one?

Thank you. Kyle Krause, Deputy Director. HCD's codes and standards we are requesting in budget trailer bill language to establish an employee housing fund. HCD currently deposits the fees that we collect into the General Fund. We're proposing to create this new fund to deposit the funds that we collect by fees and simplify accounting processes. Since we currently request reimbursement from the General Fund, this would streamline paying for those expenditures. We're also requesting 10 positions. These will be used to handle increased workload and provide improvements in programs.

It would allow us to improve inspections by approximately 350 each month, additional inspections, and decrease application processing times by 35%. These are critical health and safety needs in mobile home parks and special occupancy parks across the state, and as identified in the state audit of 2019, where the Auditor made recommendations that HCD enter more parks as part of our field monitoring activities. We look forward to these positions to help us with that work. Thank you.

LAO.

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

Finance?

Andrew March, Department of Finance. I would just note that the trailer bill language before you is really to increase transparency for the Department with the fees that are deposited for employee housing and then the expenditures that are associated with those fees.

Thank you. Let me ask a couple of questions before I turn it over to my colleagues. This employee housing and the inspection of employee housing facilities is a very important role that we have as state government and state departments and agencies. But of course, the mobile home inspection program extends far beyond that. I know that this particular Subcommittee's chair in his district has seen unlicensed parks spring up. Apparently there is one in Calexico involving 35 homes with improperly installed sewer lines. And I guess my first question is, will this proposal help to reduce situations like that?

Thank you, Senator. It will because it will enable us to identify more unknown violations. We do have 52 inspectors currently that are spread across the state to respond to complaints that we receive and investigate those complaints. In addition to the MPM workload where we inspect 5% of the parks per year and also perform permit related inspections in parks where construction is going on. So we do have limited resources to identify all instances across the state where violations are unreported or complaints have not been made.

So it's really through our expanded ability to enter more parks on our own, using our discretionary ability to have an inspector perform what we call field monitoring inspections as part of their daily inspection duties. If they drive by a park that they haven't been in for a while, they can enter that park, or if they see a park spring up that is not permitted, not on our radar, they can go to open up a complaint and take enforcement action. So we believe that this would help with that.

Well, you mentioned the MPM, the mobile home park maintenance inspection program. What is the status of the program? My understanding is it expires at the end of this year. Is that correct?

Yes. It typically is a five year extension historically, and we are aware that there is a bill to extend that year or extend that date by one year.

And I'm aware of that effort, too. And while there is that policy bill, I'm just given the MPM program has a structural budget deficit, does it not?

Correct. The fee was set by statute in 1990 at $4 per lot. $2 of that $4 fee can be passed on to the park tenants. So that generates approximately $1.1 million of revenue for the MPM program, which we currently spend in excess of 1.5 to 1.6 million per year on that program.

And again, I'm aware of the effort to do the one year extension, but given the fact that it's my understanding this program has been extended in five year blocks ever since it was first established in 1990 or so.

I'm just wondering if this isn't the place and the time and the budget to do a further extension of the mobile home park maintenance inspection program and take a look at whatever fees are required in order to pull the program out of a structural deficit as opposed to trying to deal with it in a policy bill. That's a rhetorical question. I know you're not in a position to answer, but when we get to finance, perhaps Finance can answer it. So let me ask this. If the mobile home park maintenance inspection program goes away, what does that leave the Department with in terms of staffing?

Well, the positions that we have, these 52 inspectors also have other duties in addition to MPM or mobile home park maintenance inspections. Those are permanent employees. We would find other work for them. It would be a catastrophic change, I would say, for local government. If the state HCD was no longer performing mobile home park maintenance inspections, that function would shift to local government and they would be saddled with the burden to perform inspections.

Clearly, this would be a legislative change to create such a dynamic, but we feel that that would really create a catastrophic chain of events that would further burden local government, creating widespread nuisance conditions that were unaddressed.

Well, let me ask this. The staff report indicates that HCD conducted 197 mobile home park inspections between January 1, 2022 and December 31, 2022. The report also tells us that we have between mobile home parks at 4,472 and RV parks at 716, we have about 5,188 parks in the state. So how often are these inspections required?

The current legislation, the 5% goal, would equal every park would be inspected at least once every 20 years based on the math. We exceed that because we're in a lot of parks in addition to the MPM work that we do annually, we always meet that or exceed the 5% inspection goal. But like I said before, we also do complaint investigations and permit related inspections and field monitoring activity in addition to the MPM work. So we're in many more parts than 5% of the parts per year.

Now, does the Department believe that once every 20 year inspection is adequate?

I think the writings on the wall, Senator, that there seems to be clearly an increased need for identification of substandard conditions within mobile home parks and special occupancy parks under our enforcement authority. And that's why we're here before you today, to request additional resources so we can enter and identify situations earlier than before they become public nuisances.

Now, with these additional resources, how often do you project parks will be inspected, if not once every 20 years?

Well, I think, like I said before, we're already inspecting more parks not as part of the formal mobile home park maintenance inspection program. And these resources wouldn't necessarily increase the number of parks that we inspect as part of the mobile home park maintenance or MPM program. These resources are being requested to cover all of the services that we perform, which are employee housing inspections, complaint investigations, and permit related work, and will help support the MPM inspection program as well. Because these 52 inspectors that we employ do all the different kinds of inspections. They're not specialists in any one category.

Well, I'll just ask one more, since this isn't an oversight hearing, this is a budget hearing. But how much additional staff, how much additional money in terms of resources would you need to drive the inspection rate down to one and a park every 10 years, for example?

I think that exceeds what I'm prepared to talk about here today related to the BCP, and I think it gets into other areas. That would be fundamental changes for the division's programs. We're certainly open to performing more inspections, but would, of course, need additional revenue and position authority to do that.

Well, I'll leave that to the regular attendees, but I certainly appreciate your response. Where are we in the process? Did I hit LAO yet? LAO, you're up.

Lourdes Morales, LAO. As I mentioned today, we don't have issues to raise with the trailer bill language specifically. Thank you.

Finance.

Andrew March, Department of Finance. We are aware of the structural deficit for the MPM program. Currently, the Governor's Budget does not propose any fee increases for the program. And we would just note that if there was a desire to increase the frequency of park inspections, it would similarly require a revenue increase, which we are sensitive to increasing fees on this certain population. But happy to take your comments back.

Thank you. Senators. Questions? I must have asked them all. I'm exhausting them is what they're saying. Issue number 23, community development block grant disaster recovery.

Good afternoon. Good afternoon, chair and Committee Members. I am Sasha Housewald. I'm a Deputy Director at the Department of Housing and Community Development over federal programs, federal financial assistance programs for the Department. And on this item, we are requesting expenditure and position authority to be able to receive and use our $231,000,000 federal allocation from HUD for long term recovery for the 2020 wildfires. Now, as you know, the 2020 wildfire season was one of the most destructive in the state's history, according to CAL FIRE.

And this proposal is requesting that we have authority for 20 physicians to be able to implement our CDBGDR, or community development Block grant disaster recovery program. This is funding that we received from HUD to address long term needs that remain after all, other disaster assistance, such as FEMA assistance, small Business Administration funds, private insurance payouts have all been exhausted in these presidentially declared disaster areas.

So with your approval, we are looking forward to using these funds to serve a wide array of businesses, individuals, families, 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. LAO?

Lourdes Morales with the Legislative Analyst Office. As the agenda knows, there seems to be some questions around the state operations portion of the request. And so we would just note for the Legislature that it does have options if it wants to enhance oversight, one of those being the JLBC process, to allow for notifications should the Legislature want additional transparency in that area. Thank you.

Andrew Marsh, Department of Finance speaking specifically to the state operations issue, the grant that's been awarded to the State of California authorizes 15% of the funds to be used for state operations or implementation of the program. The budget Bill Language authorizes the entire 15% to be utilized over the time period of the grant program as finance and the Department see fits.

Finance.

Rather than requesting annual allocations where we wouldn't necessarily know specifically of how much funding the Department may need on any year, we're requesting it all up front and then to be able to transfer it as the years goes by until 2028.

I gather you wouldn't object to a JLBC notification.

We can certainly take that back. Thank you.

Senators. Any questions? I did it again. Issue 24 changes to the definition of rural areas for the purpose of housing funding and changes to the Joe Serna, junior farm Worker Housing grant program. I guess it goes without saying these have all been hold open items. Who wants to start?

Good morning, Senator Roth, Members of the Committee, Pedro Galvan, Deputy Director for legislation at the Department of Housing and Community Development. The Department is proposing two changes to the Joe Serna Farm Worker 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. These changes collectively will increase efficiencies in the program and allow the Department to serve more farm workers who need affordable, decent quality, affordable housing.

The first change would allow for for-profit affordable housing developers to apply for the program in order to build more affordable homes for farm workers. Most HCD housing programs, including the department's flagship program, the multifamily housing program, allow for profit entities to apply for funding so long as they are 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 been otherwise gone to farm worker housing that is desperately needed. It has also led to inconsistencies with how HCD administers its super notice of funding availability, a process that bundles together the department's four main funding programs, Serna, the Multifamily housing program, the Info Infrastructure grant, and the Veterans Housing and Homelessness program, into a single process and application.

This change would first and foremost result in more housing options for farm workers throughout the state, as it would expand the number of organizations that could build housing for farmworkers. It would also bring Serna in line with other HCD funding programs. The second technical 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 rural definition. I'd be happy to answer your questions. Thank you.

LAO.

Lourdas Morales, LAO, no comments to raise on this item at this time.

Finance Andrew Martin's Department of Finance nothing to add.

So, with respect to the rural definition, it's simply going to make it easier for you all to determine what places qualify.

That's correct.

With respect to the Serna farm worker housing program, what's the take rate. Has it been undersubscribed? Oversubscribed?

It has been undersubscribed. It was folded into our super notice of funding availability process with the latest funding round that released a total of $700 million. Initially, on paper, the program had been oversubscribed slightly. There was 80 million made available. We had 88 million worth of applications. Once we looked at the eligible applicants, it turned out that nine of the applicants were for profit entities that were automatically disqualified because of this prohibition on allowing for profits to apply. At the end of the day, from that 80 million we made available, we were able to award 49.5 million, but we still have 30.5 million outstanding.

So with the change to allow for profits to apply, you expect to be certainly sufficiently subscribed or oversubscribed.

We definitely expect an increase in uptake and we hope that through additional marketing we would get it oversubscribed. It has been the trend that all of our funding programs have been significantly oversubscribed. And in fact, this super notice of funding availability was oversubscribed by five to one.

Thank you, colleagues. Any questions? Senator Caballero?

Thank you very much, Mr. Chair. A couple of questions. Want to make sure that this is my personal preference. So obviously, if we need to discuss it further, we can do that. But because there are a number of issues related to the reduction in the number of people that are working in the farmworking community, mostly aging out and some of the immigration issues, there is a need for workers in agriculture.

And so the H2A program, which is a federal program that brings in workers to work the season and then to go back home, has resulted in a push out of farm workers that live in the community as farmers bring in H2A workers to do the work and are required to house them. In other words, we provide housing to the H2A workers. And everybody else can find housing as catches come cant.

And so as a consequence, some apartments have been bought and the residents evicted and they're used for H2A workers. So I'd hate to see the Joe Serna program be utilized to house H2A workers when we have incumbent workers that are living in really overcrowded housing situations. The reason that Covid just went so that had such a devastating impact on the farm worker community is, one, that they were essential workers and two, they live in overcrowded.

So if someone got sick and you say you have to quarantine or you have to not be around anybody, it was impossible. They take it home and everybody would get sick. So H2A and Joe Serna, I agree that it's a good idea to allow the private market to access the funds. And number two, I'm not sure I understand how. I absolutely agree that USDA, whether it's a defunct section or not, they define rural very narrowly.

The last time I saw their statute, it was 5000 in a community or less. When we have very few cities that are 5000 or less that could qualify for USDA funding. I want to make sure that our rural definition is broad enough to capture the communities that we think of as rural. How is the definition being interpreted or how are we operationalizing it?

Thank you for that question, Senator Caballero. I've asked our program staff to look into this several times now and they've assured me that there is no material change in which communities qualify as rural. The same communities that currently meet the rural definition will still meet the definition in the statutory changes that we're proposing. The population threshold remains at 40,000 people. That hasn't changed.

What has been added is just some updated terminology, like, for instance, their references to the census so that the data can be updated periodically. Their references to specific groupings in the census that weren't in the initial statute. So existing statute references census draft. In the changes we reference census block groups. And there's a couple of other terms that are not coming to me, but just, it's very technical, those changes. Also, USDA and the census both have maps that identify which communities meet the rural definition.

And so if you have questions about any particular community, we'd be happy to look that up and provide you with a response.

Thank you. It's helpful. At least the number is helpful that communities of 40,000 or less, and that would be cities and unincorporated areas. And so it's helpful just to kind of have a sense there are lots of communities that are larger that are still what one would consider rural. But I'm really concerned with the smallest. The smallest communities cannot access grants because they have very few staff members. Everyone, city, their budget is $750,000 and, yeah, it's tough for them.

Thank you, Senator. Senator Niello.

Thank you, Mr. Chair. My question doesn't go to the essence of the proposal itself. It goes to the way we're handling it. Last week, week before, a couple of weeks ago, whenever it was we approved, well, we Republicans did not. About 10 or 20 empty vehicles for Trailer bills. When I was here in the Assembly, before I was Vice Chair of the budget, and I mean, 10 or 20 Trailer bills would have been a lot.

I am troubled by the level of policy decisions we're making as part of the budget these days, and this is a perfect example of it and I think Senator Caballero's questions kind of go to that. Well, it may be that the vast majority of the Capitol community is watching this hearing in rap detention. I rather doubt it.

And this is really a policy issue that really should go through policy committees so that other Senators and Assembly representatives who represent rural areas would have the same kind of questions. And I believe it's wholly inappropriate for it to be included in trailer Bill Language when it should be deliberated as a policy issue. Now, that's a statement on my part, but I'd be interested to hear your perspective on that, particularly the Department of Finance.

Thank you, Senator. We would note that there are a number of programs or trailer bills or proposals that are proposed throughout the budget process, specifically as it relates to the Joserner farm worker housing grant program. There was funding in the current year for this program. So we do believe that there's a budgetary nexus here.

There's a budgetary nexus with a significant number of policy bills that we deal with. One could argue maybe even all of them, but there are things that aren't directly budget related. But there are lots of examples of policy bills that most definitely have budgetary impacts. This is another one.

Good questions, but you broke my heart. They told me I was going to get good market share if I stepped in to chair this Subcommitee.

Sorry.

Okay, let's move on to issue 2245. We do have issue 18 to get to with a large group of panelists there, but we're going to try to get through 2245 expeditiously. California Housing Finance Agency issue 25 is the first California dream for all. Program reduction with restoration trigger.

You must be Ms. Martin.

Yes. Good morning. Chair Roth and members of the committee. Ellen Martin, Director of Homeownership with the California Housing Finance Authority.

Please proceed.

Andrew March, Department of Finance. So, as previously noted, the Governor's Budget does project an excess of $20 billion deficit. So, in order to balance the budget, the Governor's Budget includes various one-time or reductions to one-time or limited-term general funding. Specifically, as it relates to this program, $500 million was appropriated in the 2022 budget for 22-23. The Governor's Budget proposes a $200 million reduction for this program to bring the total to $300 million.

LAO:

Lourdes Morales, LAO: the comments that I made previously apply here as well related to our anticipation that the restoration component associated with this proposal would likely not be able to move forward given the anticipated condition of the state budget. Thank you.

Okay, colleagues, I think this was a program that Senator Caballero was asking a question about before. Any questions on this particular issue? Senator Caballero?

Thank you very much. Yes. The question I had was, this looks like it was tremendously successful in rolling out, and do we have an idea of where geographically these homes that were purchased were, number one, and number two is what was the subsidy required to get people? What was the median subsidy required to get, or the range from this to this? I'm interested in understanding how far we need to subsidize a home in order to get people in for the first time.

And I'm wondering if it's, and I would expect it'd be different by region. And I'm concerned that, for lack of a better word, it sold out so quickly that we don't have an opportunity that we may need to make some changes so that less-resourced communities have the ability to access resources as well. Less resourced, less informed.

Thank you so much for the question. So, to begin with, I'll sort of start with the second part of your question and then move to the first part of your question. So, this program offered up to 20% down payment assistance in the form of a shared appreciation loan. So, a home buyer, a prospective first-time home buyer who meets our income limits, could take out a down payment assistance loan for up to 20% of the home purchase price.

When that homebuyer then goes to sell or transfer that home, they will repay the original principal amount of the loan plus a commensurate share of the appreciation in the value of the home. So, if they took out a 20% down payment assistance loan, they would pay back that 20% plus 20% of the increased value of the home. And so that is the mechanism by which the program is expected to recycle funds at a level that it can then help future homebuyers.

You're absolutely correct that the program funds; we launched the program on March 27 and committed all available funds within an 11-day period. So the data that we have with regard to geographic distribution is very preliminary. This is reflective of funds that have been committed. Every loan that was made is currently undergoing a compliance review process in house. So, we do expect to see some shifts in these numbers as CalHFA purchases those loans, undertakes our compliance review, and then purchases those loans.

But what I can tell you is we saw the Central Valley region lead the way in terms of the number of households that received assistance from this program. So they received about 21% of the funds as compared to their composition of the California State population, which is about 11%. So, the Central Valley has always been sort of a stalwart for CalHFA in terms of our down payment assistance.

We see a lot of our down payment assistance typically going to the Central Valley and the Inland Empire region. We did see, interestingly, a significant shift in some of the high-cost areas of the state. So we did see the Bay Area start to come in and meet its kind of pro rata share of the population in terms of households that we were able to help.

And so we were interested in seeing that shift because I think, as we all know, there are many, many essential workers in the high-cost areas, like the Bay Area, San Diego, the Orange County, you know, there's a lot of nurses, a lot of teachers, a lot of social workers that struggle to find homes and access home ownership in the communities where they work.

So we were glad to see that we were able to help low and moderate-income homebuyers in those areas and to see some increase in our down payment assistance going to those areas. Great.

And so when you say, was there an income requirement in terms of how the grant was applied?

Yes, it is a loan. So, the funds will be repaid. But the income limits are based on Calhfa's income limits, which are roughly 150% of area median income. That varies from county to county. I do want to mention that there also is an additional social equity component to the program whereby borrowers that are under 80% AMI receive a more favorable appreciation share. So, in other words, there's an element of the program that seeks to accelerate equity building for lower-income households that benefit from this program.

That's great.

Thank you so much. I appreciate that information and appreciate kind of how it's been organized. I think it's going to be a great addition.

Thanks, Senator. Senator Niello.

This was part of the 22 Budget Act. Was it part of the Governor's January Proposal for the 22 Budget Act?

No, it was not.

So it was a legislative priority?

Yeah.

It was ultimately included in the 2022 Budget Act that the legislature passed and the governor signed it.

Yes.

So, in my previous similar question, I said one does not a trend make, but with two, we're getting there.

Thank you, Senator. Thank you. It's an important program. I think it would be important to see what it looks like when we're able to scale it up. And I think scaling it up is probably going to be pretty important in order to allow the revolving piece to work properly.

So I look forward to watching this grow, probably not in this job, but in my next life, hopefully on Earth. Issue 26, accessory dwelling unit grants reduction with restoration trigger.

Good morning again. Andrew March, Department of Finance. So as previously mentioned, the Governor's Budget forecasts an excess of $20 billion budget deficit. So, before you, similar to the Dream for All program in CalHome, there is a reduction to one-time funding, specifically $50 million in the current year for the accessory dwelling unit program at CalHFA.

Lourdes Morales, LAO: So this is the third of three proposals for reduction proposed by the administration related to housing and homelessness. All three have that restoration trigger. And so, once again, we wouldn't anticipate that going into effect.

But sort of overall, as the legislature thinks about addressing the state's budget problem, it could make a package of very different decisions from the governor, ultimately just looking to balance the budget if it decides to make a different level of reductions, perhaps lower or higher than proposed by the governor in this area specifically. Thank you.

Thank you. Didn't leave anybody out, did I now? Colleagues, any questions? Just curious, do we know how many actual ADUs have been constructed as a result of our efforts?

Senator Roth, thank you so much for the question. So, the ADU grant is for pre-development costs associated with constructing an ADU. So those funds have gone in really at the very outset of the project, and as I'm sure you're aware, the construction process for an ADU is typically a 12 to 18-month period, even longer sometimes. Nowadays, much to the consternation of many of our borrowers, one of the requirements of the ADU grant is that the funds be deposited in a managed construction escrow.

So construction progress is monitored and we ensure that the ADU actually gets built. So while we've only received a handful of certificates of occupancy to date. We do expect that the ADU grant program will result in the actual production of 2400 ADUs.

Well, I hope so, and I think that's certainly the goal, and we hope we attain it. I've anecdotally heard stories from some of my friends and at least one of my colleagues. In one case, local jurisdictions, for example, require the installation of a sprinkler system in an ADU at great expense.

So I think we'll have to see how this all plays out, less the state being an obstacle and, in some cases, more the local jurisdictions, perhaps for a variety of admirable reasons, but we'll see how it works. No further questions. Let's move on to issue 27, separating CalHFA from HCD.

Morning. Andrew March with the Department of Finance. This proposal separates the California Housing Finance Agency from the Department of Housing and Community Development, also known as HCD and CaLHFA, and establishes CaLHFA as an entity under the business and Consumer Services and housing agency similar to HCD or the other entities that are currently under BCSH, such as Department of Consumer Affairs. Originally, CalHFA and HCD were separate entities. However, under Governor Brown's reorganization plan number two, CalHFA was placed within HCD.

For all intents and purposes, the two departments are separate from each other. They don't share any funding sources, any administrative resources or anything. So we view this strictly as a technical proposal to allow CalHFA to be displayed budgetarily separately from HCD and also to ease administrative burdens when there are general fund investments specifically to CalHFA, such as the Dream for All program and the ADU program, which you just heard about.

Thank you, LAO.

Lourdes Morales, LAO: no issues to raise for the committee on this Item.

Thank you, colleagues. Questions, concerns? Senator Caballero.

Just to be clear, separating the two doesn't incur any cost?

No, it does not because the two entities operate entirely independently. CalHFA is funded by fees on their loan products, and HCD is funded by general fund in addition to their special funds and federal funds. So, yeah, they are entirely separate.

The reason I asked the question is anytime you change a name of an organization, it costs a lot of money, although we don't talk about it. It's new letterhead, it's a new website, it's everything. And so I just want to make sure that whatever we're doing, it's a technical issue related to kind of the budget accounting, as opposed to something that costs us a lot of money at a time when we don't need to do that.

Yes, exactly. We don't anticipate any costs with this. If anything, there may be some minor cost savings due to administrative ease.

Thank you all. Let's now move to our final discussion item. Issue number 18, homeless housing assistance and prevention grants and accountability for state homelessness spending generally. I will say at the outset that this is a very important issue to all of us and our constituents around the state. Obviously, this is a budget subcommittee, and recent budget spending has been robust. Proposals have been robust, as they should be.

But we have an opportunity and a responsibility, of course, to reexamine how these investments are performing and to consider making adjustments in how these programs work as those adjustments appear to be necessary. The bottom line, obviously, is, as with all budget line items, budget expenditures should and must lead to results. So, I want to thank you all for joining us today. I look forward to the conversation.

Ms. Morales, we know who you are, so let's start with my left, your right next, and have you all identify yourselves for the record, please.

Good morning. Chris Silva, Department of Finance.

Thanks for joining us, sir.

Good morning. Myles White, Assistant Secretary at the Business, Consumer Service, and Housing Agency.

Thank you. Yes, ma'am.

Good morning. Megan Marshall, Executive Officer for California Interagency Council on Homelessness.

Perfect. Who wants to start first?

Thank you, Senator. I'll begin. Pleasure. Chair Roth, members of the committee, Myles White, testifying on behalf of the California Interagency Council on Homelessness. So as was shared in the committee background or really beginning of this year, the administration signaled its intent to partner with the legislature on an overall accountability framework, a framework that really focuses on two distinct areas. First is the focus on actions, actions that underlie increased housing production and the strategic delivery of services. Second component is really rooted in regional coordination.

So, a collective effort for us to continue to leverage our resources in a coordinated fashion. First, turning to actions, as was really discussed in additional detail in the backgrounder, the states made significant investments in housing and homelessness over the last several years. The effort has resulted in directly financing 60,000 permanent affordable units for supportive housing supports and an additional 24,000 that have been awarded and are in the pipeline.

These resources have been strategically paired so capital investments, along with flexible state homelessness aid through the HHAP program, for example, that provide that long-term, comprehensive approach that we know leads to the best outcomes and sustainable outcomes as well. When we see and evaluate the progress we've made between 2000 and 2022, the state has led to an increase at half the rate in unsheltered homelessness compared to the national average.

When we look at that progress along with these investments, we also acknowledge that more must be done, and more that must be done ultimately in the underlying actions that we continue to pursue, whether it relates to our front-end efforts on housing planning or production, and even with enforcement.

So in large part, when we look at a framework to partner with the legislature on focusing on real, tangible actions that lead to the outcomes we all hope to witness, this effort really focuses on the regional response that we've seen some initial progress in through our efforts with the HHAP program. This regional response has really led to an increase of the first round, 11% of applicants that applied jointly. This most recent round, we've saw a collective 34%. So again, some progress.

But at the end of the day, even when the applicants for these programs do not apply jointly, we still require a level of coordination, technical assistance, and underlying outcome goals that transcend the region as a whole. So this level of coordination tied to the resources that we're investing, along with federal local resources that are brought to bear as well, able to really strategically direct these resources and leverage the comparative advantages and resources as a whole in a targeted fashion.

So ultimately, when we think through the administration's framework, again a focus first on actions and a second focus on a regional framework, these are all efforts that we know are rooted in the best practices and progress we've made to date, but also trained to find ways to accelerate that progress in a unified fashion. So appreciate the opportunity to testify today. Happy to answer any questions.

Thank you. Who's next? Finance how about you?

Chris Silva, Department of Finance, we have nothing to add.

LAO.

Lourdes Morales, LAO: as is laid out well in your agenda, there's been significant evolution in the hat program since it was first established, really starting with heap before it, where the legislature has made modifications in an effort to increase accountability and oversight of the program.

The most major changes were implemented as part of the 21-22 budget, perhaps where rounds three and rounds four had a local action plan component as a way to ensure that the local government set goals for themselves that we could track to over time.

While these modifications sort of may be really helpful over time, one of the key challenges today is that the information from that first round, round three, information about whether local governments are meeting those outcome goals just won't be available in the near term as the legislature is making budget decisions around round five. That timing issue is one of the challenges.

More broadly, the proposal by the administration this year for HHAP TBL does include prioritization categories for the use of HHAP dollars, really focusing on supporting and maintaining prior investments, such as providing operating subsidies for Homekey and supporting participants in the newly established care court program.

So using spending category prioritization, whether it's the same categories established by the governor in the TBL or proposed by the Governor in the TBL, or different categories that the legislature identifies, could be one mechanism to ensure that locals are using dollars in a way that aligns with legislative priority. We do recognize that this would be sort of a shift and limit, to some degree, local flexibility, at least to the extent that locals have enjoyed in prior rounds of HHAP.

But speaking more broadly, HHAP is a key, but not the only, homelessness program, as well as a suite of other housing programs across the state. And one of the challenges has been that these programs have very different objectives. Some programs really focus on building units, others on providing services.

And so making sure that the suite of information the legislature requests back, really tailored with the specific goals and objectives of the program, make it just more challenging to really see how all the programs are working together and get a full picture. Thank you.

Thank you. It's my understanding that we have some panelists on the remote line: Adrian Granda, if I pronounced that correctly, Lisa Bates, and John Joya.

Yes, that's correct.

And you are, sir?

I'm John Gioia. So, you pronounced it correctly.

Okay. Supervisor, would you like to speak first?

Thank you very much for this opportunity. I'm John Gioia. I'm chair of the Contra Costa County Board of Supervisors, and I also serve on CSAC's Executive Committee, which, as you know, has also been really working on how we can better structure our homeless system of care in California and let me just start by saying I think there is no more important topic in addressing homelessness than really having accountability at state, county and city levels of government.

Sure.

I can tell you, just to start, in Contra Costa, we are pleased that we've received two homeless housing assistance and prevention allocations. We are the administrative entity for both those allocations. That's maximized efficiency, and we have very good, well-established relationships with our regional partners, with cities, with service providers, with our housing authorities, and with people with lived experience. But let me say this.

Despite all of the increased funding, and we really appreciate this increased funding that California and local governments have made in addressing homelessness, we do not have a comprehensive homelessness plan that assigns roles and responsibilities to all levels of government. And because of that, we have not been able statewide to make significant progress despite the increased money we are spending. As you all know, we have comprehensive systems addressing child welfare and education and transportation, and other major state policy areas.

But we do not have a comprehensive system with regard to homelessness. Contra Costa County has been actively participating, along with other counties in California, through a CSAC process to develop a comprehensive homelessness system that has clear lines of responsibility, accountability, and sustainable funding. And we have called this plan At Home, and At Home stands for accountability, transparency, housing, outreach, mitigation, and economic opportunity. And each of these pillars has a full series of policy recommendations that work together.

So I think for today's hearing, the accountability pillar is specifically relevant because we are looking at that proposal for homelessness accountability trailer bill language and the plan would do three things to improve accountability for the state's approach to homelessness. First, it would require, not just encourage, but require, the submission of a countywide or regional plan to ensure all local entities come together on the local response to homelessness that is so important of getting all the cities and county on the same page.

We have 19 cities in our county of 1.2 million. Second, it would require counties and cities to agree to a defined set of roles and responsibilities as a condition of receiving funding. So while we believe there should be more funding, that funding needs to be linked to roles and responsibilities of who's getting that funding so that there is transparency and accountability.

Finally, the plan would require ongoing funding for homelessness response and for that funding to be distributed in a manner consistent with the countywide homeless plan that we develop. I believe that working through this process, taken together, would ensure that every local entity is clear about what their role is in the homelessness response system, that these entities are. Their funding is aligned with those duties because that doesn't happen always today, and that all of us can be more clearly held responsible for those responsibilities.

Counties believe we have an important role and want to be accountable. With increased funding, we know this is a lot and this is not going to be easy or quick to get through. But our county, Contra Costa, and counties in California are committed to looking forward to working with the Legislature and the governor to discuss and implement this plan. And I will just close with a couple of comments with regard to what kinds of conditions, at a minimum, should be laid out.

When we talk about our roles, things like counties have the responsibility for health and the social safety net programs on behalf of the state. I was timing myself, and we administer these in ways that reach individuals. Cities are responsible often for siding and funding and supporting some shelters along with counties and for housing. So there's a lot of opportunity for each of us. cities and counties to define these roles and be more effective with the increased money we're getting. So thanks.

Thank you, supervisor. Do we have Adrian Granda on the line? City of San Diego?

Yes, Adrian Granda here.

Please proceed.

Thank you, Chair Roth and honorable committee members. My name is Adrian Granda. I'm the Director of Government Affairs for the City of San Diego under the office of Mayor Todd Gloria. It's my pleasure to be here representing the city perspective, specifically the City of San Diego, the second largest city in the state. I'd like to also note that Mayor Todd Gloria serves as the chair of the California Big City Mayors coalition.

This is a group, a bipartisan group of the mayors representing the 13 largest cities in the state who have advocated for the HEAP and HHAP programs from their beginning. California's homelessness and housing crisis is the biggest issue facing cities and mayors, just as it is likely the top issue for US state lawmakers. Homelessness and lack of affordable housing stifle equity and economic opportunity, exacerbate disparities in our education system, worsen health outcomes, and overburden our public safety system.

Cities, including San Diego, share your sense of urgency, are committed to results, and welcome accountability. I hope to cover a few key items today, mainly to tell you what San Diego and big cities are doing with HHAP dollars, illustrate the collaboration with our counties and continuums of care, and also share what, from the city perspective, we think accountability should mean legislatively. We thank the Legislature and the Governor for the unprecedented investment in homelessness over the last few years.

The big city mayors put out a report last year highlighting what we have done with the first three years of funding through the HEAP and HHAP programs and are currently collecting data and hope to share an updated version of that report with you all soon. Cities are on the front lines of homelessness and we are getting the hard work done. Our split is roughly 330 million of the $1 billion figure that you have all budgeted the last several years.

Collectively, our cities have added 9000 badly needed shelter beds to our emergency response homelessness system statewide and served over 25,000 people through a number of homeless programs. Our city has set up congregate and noncongregate emergency shelters, safe parking lots for people living in their cars, coordinated outreach, and rapid rehousing, and with these programs, we've housed thousands of people. San Diego was able to grow its shelter system to nearly 1800 beds, 1300 which are directly supported by half dollars.

We have offerings for different populations, meeting people where they are, including seniors, families, LGBTQ plus, youth, and others. San Diego's hat-funded shelters housed nearly 500 people from 2021 to 2022. A couple of examples from other cities. Sacramento grew its shelter system in just about five years from 100 beds to 1100 beds. San Jose has invested in modular, quick-build housing. Oakland operates safe parking and cabin communities, and Bakersfield has shelters with enhanced mental health services located at the shelters.

I do want to highlight on this conversation around heightened investment, the lack of perceived progress. The funding that you all approved in the budget in June of 2021 just was received by local governments in January of this year following a very high-profile conversation with the governor's office last fall. Those funds from HHAP round three also marked the height of the funding for the HAP program at the current mark of $1.0 billion a year.

And again, I bring this up just because we have yet to see the impact of these dollars actually being deployed by local governments. On collaboration, it's been a major priority here in the City of San Diego. The reality is every level of government has a big role to play here, from federal Section Eight vouchers to state funding like HHAP and Homekey to shelters, housing, and services provided locally in San Diego.

The HHAP program requires the city, counties, and continuum of care to use the same baseline data at the county level and set the same goals. Our partnerships are strong, particularly between the city and the county, thanks to leaders like county Supervisor Nora Vargas, who's the chair of our Board of Supervisors for Project Homekey, for example, the city has secured 370 permanent units to date, and the county funds the services for those.

Collaboration is strong, and we hope to be a model for the rest of the state. Lastly, I want to go and touch a few points on accountability. It's important that the goals we set as part of this conversation be clear and measurable. When local governments met with the governor last fall, the goals we were asked to meet were simplified to two very focused goals, reducing unsheltered homelessness and placing more people into permanent housing. This makes sense.

We know that program cities fund, with state funding, creates places for people, and those are people who would otherwise be on the streets. But you need clear information from the agency on the direct impacts of your investments through the HHAP program and other funding you approve. We do need to put into greater context the broader economic conditions. One figure that we use in San Diego County is that for every ten people we are getting off the streets, 13 people fall newly into homelessness.

We're not unique in that figure. Sacramento, for every ten people housed, 12 people become homeless and become newly homeless. In Los Angeles, each day, 209 people are housed, but 221 people become homeless. We must do more to focus on upstream and prevention to address the inflow into homelessness. On the broader context, accountability should also factor in low vacancy rates, high rents, sunsetting of many COVID-era relief programs, and rental protections.

This broader context cannot be ignored as to why people are falling into homelessness, and this leads me to a conclusion, which is we do need more resources and continuous funding as a consideration in this conversation. The big city mayors currently have a request for HHAP to be funded at 2 billion a year, ongoing or at minimum, sustained funding for multiple-year investments.

Once we agree on accountability and what that looks like from a legislative perspective, we also recommend the Legislature look at bonus funding as we do have a crisis today, and these are already budgeted dollars. Between HHAP rounds 3 and 4, there are $360,000,000 sitting on the sidelines while we have a crisis today on our streets. Lastly, most importantly, we really ask that HHPP remain flexible.

HHAP is emergency funding and we need it to fill gaps where HUD and other traditional sources of funding allocated toward permanent housing are too rigid. We caution against limiting abuses and ask that the legislature consider grandfathering in current uses to avoid leaving people on the streets that are being served by existing programs. With that, I really thank you all for the time today to share the city perspective, and I'm happy to answer any questions.

Thank you, sir. Now let's see if Lisa Bates is on one.

Good afternoon.

Thank you.

Lisa Bates with Sacramento Steps Forward. We are a lead entity for Sacramento's continuum of care. As a regional planning body, we really appreciate the focus on encouraging and requiring regional collaboration, regional plans and setting system level measures that are focused on solving, just not managing the problem. Instrumental to the HAPP program has been the flexibility for local communities to calibrate their interventions and investments. As each community is unique, local context does matter in the array of solutions that we're able to deploy.

We appreciate the HAPP eligible uses are largely grounded in best practice interventions and approaches that work, particularly when funded at scale and when coordinated across the regional system. The state's focus on system planning, requiring an actionable plan with measurable targets such as the local homelessness action plan, has helped Sacramento come together and focus on system level coordination, moving away from siloed and nonalived approaches to more of an aligned and integrated approach.

Just this last Monday, we launched in front of 300 plus individuals with our elected leaders. Our first year actions for the local homelessness action plan that were measurable actionable and will be reported on quarterly. Inclusive in this agreement is a legally binding partnership agreement between our city and county that has identified roles and responsibilities for increasing capacity, shelter capacity, coordinating and using joint funding on shelters, outreach, behavioral services and a new coordinated access system and a more comprehensive housing plan.

We appreciate the focus on system level outcomes on the use of common data measurements, but the Legislature also should understand that communities are different levels of data quality and not all communities conduct an annual point time count each year.

The system changes that we are seeking, that we're all seeking in homelessness, as the other speakers have indicated, are often a result of many other factors than just what the city, county and the COCs can control or influence, and so that should be taken into consideration when setting expectations or the use of bonus funding. We welcome the continued engagement with the Interagency Council on Homelessness.

They have been extremely helpful in reviewing and discussing our local plans and our targets, and we've been working in partnership with them. We think the model of the specific roles and responsibilities as outlined in the Sacramento county and city partnership agreement is a model that could be used in terms of accountability. Going forward, we would like to see that we can continue to lean in on accountability, such as what CSAC has represented and also the big cities.

But we also support continued flexibility for providing funding that addresses not only a crisis response, but also the need to prevent and end homelessness with continued funding for housing approaches. And we would hope that the Legislature in the state would consider a measured approach for those communities that may fall short with more encouragement and support prior to any withdrawal funding. With that, I'd be happy to answer any questions.

Thank you. Ms. Bates. Let me just lead off on the subject of accountability. The county wide plan as presented by Supervisor Gioia, counties and cities getting together to agree on a set of roles and responsibilities. I note that the intent language contains a requirement that counties and cities have a compliant housing element. So what happens if one, a city who wants to participate, doesn't have a compliant housing element when the counties and cities are attempting to get together?

Or in the alternative, perhaps the city has a compliant element, but the city doesn't want to participate one or more or can't agree with the county. And obviously, we need to have some broader accountability process in place, and we need to assign accountability to, I think, entities who receive funding. But how does this all work?

It's a great question, Senator. Really, when we think of the tie into housing element, it comes full circle in terms of the focus on housing. Housing element law is really just the predicate of, at the very minimum, making sure localities are planning for their fair share of housing throughout the state. So in large part, if we have jurisdictions that can't even meet that minimum threshold of having a compliant housing element, really begs the question of whether they can make progress in meeting this really fundamental challenge.

So, specific to your question, Senator, the effort to tie in housing element compliance to the condition of resources is already existing precedent. SB $2 2017 huge effort the Legislature was able to enact at that time had that as a very specific condition for counties to receive that ongoing revenue source and the permanent local housing allocation. So there's other similar poems, but I think really what we're focusing on here is to make sure that jurisdictions are doing everything they can right in this collective effort.

And really, when we see jurisdictions that are not able to have a compliant housing element, there's already consequences in existing law, different remedies on the enforcement side of things with HCD in the state Attorney General's Office. But really looking at when we're targeting these finite resources and being most efficient, counterability is rooted in making sure we can meet this housing goals that we all hope to accomplish in the corresponding.

Reduction in homelessness and moving beyond the compliant housing element issue in this particular subject area. Housing and homelessness Historically, cities and counties haven't always agreed, and the relationship between some cities and some counties has not always been the best. So how do we incentivize an accountability system that wraps them all in together and coordinates accountability and assigns responsibility at the right time.

Can I address that after.

Absolutely.

So I've been on our Board of Supervisors for 25 years and I've seen the ebbs and flows of funding. I've seen the ebbs and flows of relationships between our 19 cities. While some of the individual comments about what we need to do are important, I just want to step back for a second and say we have been unable to make a substantial dent in addressing homelessness despite the great additional money the state has put on the table.

And it's because we need broader reform on accountability that right now a lot is encouraged by the state. It's not mandated. And when I work with the 19 cities in our county, each coming from different places, they take different levels of responsibility. There's finger pointing. They say it's the county's responsibility, others say it's the cities. Until we link the funding that you provide at the state to clear acceptance of responsibility by various levels of government, we're not going to make a dent on this issue.

The housing element example you gave is an important one. Housing and homeless and mental health services are inextricably linked to addressing homelessness. The problem is we've gone beyond the need for individual amendments and individual reforms. We need a systemic reform. There is no issue more on people's minds in the district I represent in the west part of our county than homelessness. And them saying, we hear you're getting all this extra money from the state. Why isn't the problem getting any better?

So the answers of, well, we need to fix this on the housing element, they're not going to get us there. We need broader reform. And that's the point I think we're trying to make in county government is, yes, there's cities doing some great things around the state, others not stepping up until you mandate that ability for us to work together with cities and we're talking to our cities about this. That's my point.

We need to look at this more holistically to address the issue rather than individual changes.

Let me just ask, by the way, those participants on the remote, we don't have in this hearing room the computer that tells us who wants to speak. So if someone wants to speak, who is on the TV screen remotely, just speak up because we want to hear from you. I just don't know who has a comment at any particular point in time. One more quick follow up to that, though. So if you're a county and you have 10 cities and two of them are recalcitrant.

What's the process to get everybody to agree? Do you deny funding for the whole bunch and force them to the table, or do you piecemeal it? Supervisor, maybe you have an idea about that.

What I have found the best way to get a county or a city on board is not just to incentivize them, but also to have some mechanism that allows them to get funding or more funding if they agree. I think most cities and counties will say we want to do the right thing. And when money becomes the leverage, it's an amazing tool to get folks to step up and agree.

And so I do think you can leave it to us at the local level to figure out the politics, but it's easier for us to work with the city if we say, hey, we're not going to get funding if you don't come on board with us. Homelessness is a problem in your city as well. I think how we do the details of this still needs to obviously be addressed, but using money as both a carrot and a stick in various ways is important.

Senator, if I might be able to add something to what the chair just said, I think there's a lot of good in the at home proposal, and we're still looking at it in conjunction with league of cities and our city partners. That said, to your point, I think you're raising something that's very important on the very first iteration of this program heap that was limited to cities and cocs only and came with a requirement that a city declare a shelter crisis.

To your point, on recalcitrant cities, we found a disturbing trend that some cities that were not welcome to, typically housing and definitely not welcome to homelessness programs were very fine not receiving the funding. So I think that's something that we need to be careful of here with respect to this particular issue. That said, we are supportive of the governor's proposal to have housing element compliance via precondition. It's something that bears further consideration on the delegation of roles and responsibilities as proposed by the at home proposal.

It's also important to understand some of these things aren't as clean and clear as cities are responsible for shelters and housing, and counties are responsible for services. Perfect example is the no place like home program. Some of the most needed housing actually falls under the guise of or falls under the responsibility of cities and counties, that is, the housing that comes with clinical services attached. So it's really important that we not cleanly define the lines in that way and are able to consider those needs.

As well, yeah, good point. We're building housing as well. So I think that was a good point. In some jurisdictions, we may agree to some different things and leaving it up to countywide plans will allow cities and counties to figure out what works in their county.

This is a great discussion. Let me just, somebody mentioned carrot and stick. The analysis speaks to something, I guess, that occurred prior where cities, I think it was cities were allowed to set goals and the goals were set low and then the city qualified for the particular. Have I got the right subject? Additional bonus. And if you're going to use a carrot and stick approach, how do you protect against that? Because we obviously want more. We want the problem solved.

This is not about setting low goals and shoving money to cities when we're not solving the problem. Is that a question that makes sense?

Thank you, Senator. It does. I think ultimately what we're grappling with is that while we have financial incentives that sure could elicit certain behavior the end of the day, when we focus on the underlying actions that inform those results, the structure that underpins the third and fourth round, which is focused on this bonus framework, it does, I think, applied in your point, Senator, focus on an incentive actually to incentivize, actually under ambition. So to make sure that you can meet a corresponding goal.

Of course, if you really stretch and push the envelope, that's going to really make it far more difficult. Right. By extension. But when we're focusing on these actions, and again, the actions that I even think the supervisor and Mr. Granda were referring to is these actions and these roles and responsibilities that have to be part of a full spectrum of a coordinated response. And the outcome goals are only good if we do Legislature and the administration pursue that effort.

That is only as good as the underlying actions that are informing those goals. Right. So again, really moving away from this focus on numbers for the sake of numbers, but what are those actual actions and those clear roles and responsibilities that will actually inform what the progress we hope to see?

Thank you. I have been an extremely rude chair, and I'm sure Senator Padilla will spank me when he gets back. So I'm now going to turn it over to my colleagues for any questions or comments. Senator Niello.

This is a big problem. And historically, counties have been health and human service providers in our state, including homelessness efforts that changed really fundamentally about five years ago when the state, I may be overstating, but essentially took it over.

We have a seemingly endless alphabet soup parade of projects that have been initiated at the state level for the state and counties to, and cities to implement. We have, I think the number is 35 separate programs to serve people who are at risk of becoming homeless or homeless. Maybe we're at a turning point and we ought to go back to the model of health and human services delivery that was certainly more successful than the last five years have been.

In that period of five years, homelessness has increased rather significantly. So that certainly wouldn't bode well for a recommendation that we keep doing what we've been doing. I met with the Association of Counties yesterday, and they presented to me their at home project. And by the way, the most unique part of that plan was the last e economic opportunity. In all of the discussions we've had about homelessness, I've not seen anybody or heard anybody actually articulate that.

And here's why it's important, because what is the ultimate goal of curing homelessness? The ultimate goal is to get people that are languishing on the streets, whether on hard economic times or because of substance abuse or because of mental illness, but to get those people not just in shelters and not just in treatment, but to self sufficiency. That should be the ultimate goal.

And frankly, since I've been here, I've only been back for a few months now, but since I've been here, I haven't heard one person actually articulate that as the ultimate goal of homelessness. And the county plan has that. Now. The advantage of counties being the primary service provider is that one size all approach generally doesn't work. And I think our lack of success sort of demonstrates that it hasn't worked in the last five years or so.

It seems to me that the accountability ought to be the results that are achieved, rather than telling counties what they're going to do. Providing counties with programs that the state will fund. Let counties come up with the solutions along. The Association of Counties has this program that would guide what they would do. Obviously, they all buy into it. Their association came forward with it. It's an excellent document.

The role that the state can play is to provide funding, yes, but accountability for that funding by virtue of the actual results that they achieve. How many people do they get to shelters, get to treatment and. Oh, yeah, how many people do they actually get to self sufficiency? We have an audit that the State Auditor is going to do. I was involved in the request for that, and I hope we see an assessment of so far how many people have gotten to self sufficiency.

I think the number, unfortunately, is probably rather small at this point, but provide the accounting and the authority, provide the resources and the authority to counties to pursue this issue in the best way that they can. The solutions are going to be different in Modoc than they're going to be in Los Angeles. So the state can help. In terms of assessing the results that counties achieve and reporting on that.

And with regard to collaboration between cities and counties, I will grant that that success has been varied around the state. But the state government can do a lot to encourage that good collaboration. And with regard to the testimony of the panelists on TV, and specifically with regard to the counties, and was mentioned in this report, too, ongoing funding is essential. A program like this can't challenge like this can't be solved by just committing to counties 12 months at a time.

Funding we have a shortness of mental health beds that requires construction. We have to know what we can do in out years relative to services and treatment, and we need flexibility. And I can't stop my comments until I say something that I've said many times before. And that is the exclusive approach of housing first does not provide flexibility. I'm not saying housing first doesn't work. In some areas it does, but there are other approaches that work.

And the other approaches, many of them are ineligible for state funding because it doesn't meet actually housing first. So ongoing funding and flexibility is absolutely essential. I say don't spend any more money until we come to a realization of what hasn't worked. And in my opinion, the solution to that is get the counties to be the primary service providers again, provide them the resources, assess their results toward the goals, encourage collaboration between cities and counties.

And I've got to think that that's going to provide more productive results than what we've been doing for the last five years.

Thank you, Senator. Senator Caballero.

Thank you, Mr. Chair. I have some questions in terms of the accountability and transparency. One of my frustrations is that when we finally started funding homeless services, it was part of the budget negotiation. It was done kind of at the twelveth hour, and we decided to utilize a system that had been set up by the Federal Government and that was to fund the COCs. The COCs, in my mind, are different depending on which county you live in.

And the challenge with the COCs is everything is done in private, as far as I've been able to tell in the COCs in my region, which means that they have none of the conflict of interest protections that you normally have as a city. When we got money through the CDBG grant program, it was transparent. We did public hearings to discuss how we were going to allocate the money.

And we also could ask how much people were making from the different provision of services so that we had an idea of whether the fact that we got a lot of money in to do a program meant that the salaries could be raised commensurate with the fact that there was funding at the city level. So my point, I guess my question is, number one, should the money go to the COCs or should it go to the counties and cities in partnership?

Two, with the requirements that there be public hearings about how the monies should be spent? The number one issue that I'm asked when I'm out talking to community groups is what's the state doing for housing to reduce the homeless problem? And they have no clue that the cities and the counties are getting a lot of money.

And the reason for that, apart from the fact that there's no more reporters at the newspapers, is that there's no public hearings on it, at least in the region that I represent. So public awareness, transparency, should the money go to the cities and the counties? And then how do we make sure that the people who are getting the services, and this goes to not only accountability, but also rewarding good behavior and good services.

How do we make sure that the people that are getting the services are the people that really need it? I happen to know some of the staff that work in the homeless service area, and some of the complaints that I've heard is that the system is rigged so that if you can get a family Member in, they can get one of the apartments that's available, as opposed to someone who's homeless or has been on the streets for a long time.

So that your data that's collected is really reflective of the homeless population, and it's not reflective of trying to have a good outcome. So, Supervisor Gioia, I really appreciated your comments in regards to your county and the cities, but I'm wondering if you have any ideas in terms of where the money should go, and then kind of the transparency and whether brown act application to the process would be good in terms of public buy in.

Because part of the issue, and I just visited a homeless facility that was created in Santa Barbara that is really incredible. And part of the success of that program are volunteers in the community that come in and make donations and make sure that the residents have what they need when they come in off the streets.

And so it occurs to me that the only way you get that kind of buy in is if the public knows that there's an opportunity for them to participate, and that the opportunity to participate is not handing out sleeping bags that then end up on the street and create problems for the cities, that there's a real practical solution in housing.

Senator, thank you. Those are all really good points and good questions. And I'll speak about this from a really on the ground perspective, that first, our process in our county is pretty public. And I think you're right. The more the public is involved and there's transparency, better decisions are made. These kind of things shouldn't be backroom deals. There needs to be a lot of public visibility about it.

I think we know that ultimately, when we get local officials from cities and counties working together, we're generally pretty good at coming up with solutions that work. We're an urban county, urban suburban in the Bay Area. It's going to be different in LA or Mono, but where the state can be most helpful and you don't have to determine as part of a plan, does the money go to a city or a county?

Because every sort of local county network of city and county officials can decide what makes sense, that there may be cities that are working with the county and say, we're going to work on these housing projects and permanent supportive housing projects. We'll help build them county.

You can come in and do mental health services like we're using, for example, a half cent sales tax that we passed in the middle of the pandemic, and we're using some of that money for a housing trust fund that we invest in every single year. And we're using that to close the gap of the federal and state funding. We're getting to build 50 units of permanent supportive housing in a city.

And the city said, hey, we don't have the money on this project, but we're going to help you get this entitled and we're going to support it. And that worked in that city, another city saying, we want to help put money in with you. So I don't think you have to in advance say, does the money go to a city or county? But if you give not just the incentive but the structure to force cities and counties to work better together?

Look, some of us work together, but look at the numbers. As you've all said, the numbers aren't going in the right direction with everything we're doing, which tells us that the system isn't really working. So you at the state level, through legislation, can play a major role in helping us work better together with our colleagues and other levels of government. So in some cases, the money may go to the county for services, in other cases to a city.

But as other speakers on this panel have said, there's no one size fits all. Your ability to get us to work together and then have us show you, are we making a dent in the number of individuals who are homeless? Because, as you know more than anyone, there's different reasons that people are homeless. Some is mental health, some is substance abuse, some is loss of a job, housing cost, many reasons.

And so the types of things we need to do with cities will try to address that whole continuum of homeless individuals. So I have optimism that if we're working stronger together, we can achieve more substantial results.

Senator, if I can take a just quick second to build upon what the supervisor just said, too. While I won't speak against COCs or counties here, I do feel the need to advocate for cities. And as a former mayor and council member, you know very well cities are on the front lines of this and so accountable because everybody knows who their mayor is. There's just a heightened level of sensitivity there with cities.

We also have land use authority in the most highly urbanized areas are directly impacted. And when individuals don't get the services and the help they need or the housing they need through the social service net, which I think Sandra Neela was mainly referring to, Cal Works, all these traditional social service programs typically would go through the county.

When that doesn't happen, there is a duty to respond, just like an emergency room has MTALA requirements and has to take people in regardless of status or ability to pay. Our first responders, our police officers, our emts, our firefighters become that last social service snat when communities are concerned, when things escalate to the point of violence or to an issue where a public safety threshold is met. So to that respect, I think that's where cities really felt a heightened need to step into the game.

We do site shelters in our cities, right? The largest cities is where we know the impacts are seen the most. And that is why we advocate very strongly for this funding, because it really is a lifeline for us to be able to keep thousands of people off the streets. So I just bring that up because it is very unique to the issue of cities and why this funding is so important to cities.

And I do think there's a difference in model in counties, right? There are many counties like ours in which we're 1.2 million people. So we're urban, but we don't have one big overriding city. We have 19 cities, and there's a lot of counties like that, and I respect that large cities have a unique role and are on the front lines. Much of this state is composed of counties where you don't have big cities in that county.

And the partnership between cities and county becomes even more important because you need that cooperation among many multiple mid sized cities.

I think, Senator, this exchange is actually a great example of why we continue to focus on a regional approach here, I think is frankly, the dynamic, which I would love to hear from Ms. Bates, who represents the continuum of care for Sacramento as well, or her thoughts. But ultimately, when we think of the existing resources, as the supervisor mentioned, there are a significant amount of resources at the state level, provided mental health service funds for the last 17 years.

And I think really, to Mr. Granda's point on siding which land use authority transcends county and city authority as well. So looking again through those comparative advantages, and even with COCs, as you know, Senator, the resources made available on a continuous basis, they all have a role to play here to pair, because ultimately avoiding this focus on silos, but again, there's comparative advantages and even acknowledging the point that's been made about different kind of capacity challenges as well.

So there's very tough in a state of 40 million people to have a one size fits all approach here. But I would just briefly want my colleague, Ms. Marshall to share some from her perspective, actually from local government.

Briefly, Marshall, please proceed.

Thank you. So, as my colleague mentioned, I have quite a bit of local experience that I can see, too, and was very fortunate to actually speak at the all in Sacramento event that Ms. Bates highlighted and would just like to commend their tremendous efforts at local coordination and cooperation with one another. And my organization will continue to use their local homeless action plan as well as their memorandum of understanding with their respective entities as an example to communities who might struggle in those areas of collaboration.

Perfect. Senators, any other questions or comments? Seeing none. Well, this is an open item. I appreciate the rather robust conversation. I'm sure the conversation will continue as we move forward with the budget process. I think there were some excellent ideas that were discussed, and I trust the administration will take those into account as we move forward.

Thank you.

Thank you to our participants remotely. Excellent comments and conversation. Let's now move into the section where we take public comment on the items on our agenda. For those on the remote teleconference line, today's participant number is 877-226-8163 and the access code is 71877-871-8778 due to constraints regarding the length of hearings and technology considerations, which we seem to experience frequently, and, of course, cleaning protocols. The committee chairs around here may Institute time limits on testimony.

I'm going to, at this point, simply ask the participants, either in person and certainly on the line, to try to be as brief as possible. I do reserve the right to impose a time limit if public comment tends to go long. So first, let's begin with any witnesses here in the hearing room. Please step forward.

Mark Stivers Of the California Housing Partnership. Just on one issue under item 24, we just want to oppose the idea of allowing for profit entities to apply for the Joe Cerna Farmworker Housing grant program.

But more generally, I want to speak to an item that was not on the agenda, which is that we are encouraging the committee to make the highest appropriation possible for affordable housing programs consistent with the program priorities and the proportions that over 100 affordable housing, homeless and tenants rights groups submitted in a coordinated letter.

Among those priorities are additional state low income housing tax credits, the multifamily housing program, the Housing and Homeless Assistance and Prevention Program, HAPP, which you just discussed, the Community Anti Displacement and preservation program that Senator Caballero is championing, the Joe Cerna Farmworker Housing grant program, and a tribal grant program that is being authored by Senator McGuire. But we know it's a difficult budget year, but at this time, we are seeing the proposition in one in two bond funds from 2018 are drying up.

We are at a time of growing housing need. We are actually seeing state investment decline significantly, and we have thousands of units that are shoveled ready to go and just need that last little bit of state investment. So thank you for your consideration. I appreciate your time.

Thank you. Excellent example of brevity. Next, please.

Good morning. Kim Lewis, representing the California Coalition for Youth, advocating on behalf of our young people experiencing homelessness and encourage you to do ongoing funding for youth and increase the set aside and the leadership the Legislature has had for our young people. We know the point in time counts are actually an underrepresentation of our young people. They do not capture our youth who are couch surfing. And we even know from the point in time count, 70.5% of our youth are unsheltered.

We also want to support accountability. We have provided some suggestions to the trailer bill to make it stronger and actually work for our young people because exits to permanent supportive housing for youth aren't always the best exits and outcomes for them. We want to maybe ensure that there's connections to safe and stable locations. If we can support reunifications and connections to auntie or somebody, for example, those often turn into permanent locations, and that is a successful win for our youth.

And so we want to make sure that we're having a robust continuum of services, not just shelter, not just permanent supportive housing, but transitional time, limited housing for our young people as well, because that is important for them to achieve self sufficiency and get off assistance and move on and be growing adults in the future. Thank you.

Next, please.

Hi, I'm Mari Castaldi. I'm the senior legislative advocate on homelessness at Housing California. I'm also speaking on behalf of the Corporation for Supportive Housing today. Want to align my comments with Mr. Stivers and encourage the highest level of possible investment in the suite of housing justice budget. Asks that many organizations across the state have been supporting and also wanted to thank the committee for the robust discussion about accountability.

I'm part of a coalition called Bring California Home, which brings together service providers, local jurisdictions, people who have experienced homelessness, and advocates across the state around homelessness. And what we've really been hearing about accountability is a couple of things, the need for accountability on the state as well, which came up today, having the state set its own goals, really asking the state to align some of our funding across programs and reduce the administrative burdens on local systems, echoing the need for regional accountability.

Appreciate a lot of the thoughts that CSAC has put together, which are really represented in a piece of legislation that our coalition is behind, AB 799, which we're working on with Assemblymember Luz Rivas. And then finally, accountability to people who are experiencing homelessness, we really want to make sure that we're investing in long term solutions that work. Long term solutions really require those long term, ongoing investments.

And we also want to make sure that we are eliminating some of the disparities that we see in our system and continuing to see racial equity at the center. So as we're looking about accountability for outcomes, keeping that in mind and driving incentives to reduce disparities, and then finally making sure in accountability we're not punishing people experiencing homelessness when their local jurisdictions aren't stepping up.

That's what makes us feel cautious about taking funds away from jurisdictions because the people who are the most impacted are those who are experiencing homelessness. So thank you so much for the discussion. We look forward to continuing to work with the Committee.

Thank you for joining us today. Next, please.

Hi, Justin Garrett with the California State Association of Counties. Supervisor Joy did a tremendous job covering the at home plan, so I won't repeat any of that and just wanted to say thank you for this robust discussion today. Thank you for the county perspective on the panel, and thank you for consideration of the at home plan, and we look forward to working together on this critical issue. Thank you.

Thank you for the comments. Thanks.

Good afternoon. I'm Brian here on behalf of Habitat for Humanity California. I'm here today to speak to the elimination of the administration's $100 million for the CalHome program. This is the only program funded by the state for new construction of low income homes for people to access home ownership opportunities. This rationale for the reduction of the governor's January budget was misguided because unlike the California Dream for all program, the CalHome homeowners have zero interest in mortgages.

Beneficiaries of the Cal home program are not affected by the recent changes in the market. This program, in the last NOFA, was oversubscribed by $130,000,000. 30% of these applications were for Habitat for Humanity people. Finally, the demographics of the Calhoun program are extremely diverse. These people are Latino, Black, Asian. Because this program only serves these people, are making less of the 80% of the income of California's medium home income.

For these reasons and the Legislature, for these reasons, we hope that the Legislature and the Governor restore these funds. A Habitat for Humanity looks forward to continuing working with the Administration and the Legislature as we approach the final budget. Thank you.

Thank you for the comments. Next, please.

Chair and members, good to be with you again. For the California Policy Center.

We just commissioned a report on the civil rights Department and some of the challenges that were seen in the mission group that's happening and wanted to make sure that this was available to you. We have a series of recommendations that we approved to make sure not missing out on enforcement opportunities that really benefit the people in the State of California. To really center back with the purpose of a civilians Department.

I've sent this off to your staff and others, so I encourage you as you anticipate further action.

Thank you. Any other witnesses here in the hearing room? Seeing none, let's turn to witnesses waiting to testify. Provide public comment on the teleconference service moderator if you would, please prompt any of those witnesses who are on the line, and we will take their testimony now.

Thank you and to provide public comment at this time, please press one, then zero on your telephone keypad and we will go to line 16. Please go ahead.

Thank you members of the committee. Jennifer Speck, on behalf of the California Association of Realtors, we're in strong support of returning funding to the California Dream for All program, as well as to the ADU grant program established both in CalFHA. It's vitally important that we continue to offer additional resources to increase some ownership opportunities for our low and moderate income families. As noted by Senator Caballero in her comments earlier in the hearing, the program was wildly successful.

And while there are clearly some updates that we need to do to programmatic activities and application process with Calfha, we look forward to continuing to work with the Senate Budget Committee and supporting the pro tems efforts, along with a lot of the Senate leadership and Calfha in creating more opportunities for homeownership through programs like California Dream for all. Thank you.

Thank you. Next, please.

And Mr. Chair, no further questions in queue at this time or comments in queue.

Thank you, Mr. Moderator colleagues, any further comments?

To make just one quick comment, I have read or reviewed the policy center report that Mr. Christensen referred to, and it is very interesting reading. I personally am a bit troubled with the trend that's taken place in the last few years there, and I would commend that report to all of my legislative colleagues.

Thank you, Senator. Okay, let's now move to some votes. We're going to take the vote only calendar.

Having heard public comment, we will be organizing the items on the vote only calendar into three separate voting groups. The first group we're going to take are item 515, issue number two, item 1700. Civil Rights Department. Issue number three, item 2240, issues number 10 through 12 and 14 through 17. Do I have a motion on those issues? Please call the roll.

The motion is approved as budgeted. [Roll Call]

The motion is approved as budgeted. [Roll Call]

Mr. Chair, you have three to zero on that item. That group.

Motion carries. The second. The second group is issue number one under item five. 15. Issues number four through 7 and 9 on item number 1700, Civil Rights Department. Do we have a motion on the issues Senator Caballero moves? The items or the issues, rather. Please call the roll.

Vote is two to one. Motion carries. Moving on to the third item of issues. It includes one issue, issue number 13, and item 2240, Department of Housing and Community Development. Do I have a motion on the issue? Senator Caballero moves the item. Motion is. Okay, please call the roll.

The motion is approved as budgeted. [Roll Call]

The vote is 2-0. The motion carries, and I believe that concludes our business today. I want to thank all the individuals who participated in testimony today.

If you were not able to testify or you have something else to say, please submit your comments or suggestions in writing to the Budget and Fiscal Review Committee or please visit our website to do so. Your comments and suggestions are very important to us and we certainly want to be able to include those and include your testimony in the official hearing records. I want to thank my colleagues and those participating today for tolerating me stay calm.

I can absolutely assure you that your much smarter and better looking chair will be back the next time budget sub four is in session. And one final item, although she's talking, Senator Caballero postponed her birthday meal today with her husband in order to be with us today and actively participate, which she did. So let's wish Caballero a very happy birthday. We have concluded the agenda for today's hearing. The Senate budget and fiscal review Subcommitee number four hearing is adjourned.