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

All right, welcome. The Subcommitee will be in order. Let's go ahead and establish quorum. The consultant can call the role.

For purposes of establishing a quorum, [Roll Call].

Thank you. We have a quorum. Docketed items for discussion, under two headings: the Civil Rights Department and Department of Housing and Community Development. That's composed of Item Issues 3-12. We will take those items first, on the docket, just for information purposes for those that are interested in the Subcommittee's hearing today. As we work through presentations and comment on each issue for discussion, we will follow with welcoming public comment. So we'll take it issue by issue just to keep it more beneficial and clear.

I would respectfully make a request of those that wish to speak under public comment to each issue. Come forward after each issue if you want to speak specifically to that issue.

If you have a general commentary overall, perhaps about Housing and Community Development or about the Civil Rights Department, please wait until we take sort of general comment at the end if you want to provide a broad commentary and not address the specifics of the issue, and then we'll bring it to the Subcommitee after the comment on each issue. So it just sort of moves us a little bit more efficiently, I think, and also with a little more clarity.

And if you haven't noticed, we have a good amount of interest joining us here today in the hearing room and in the hallway. So with that, we will proceed to the items for discussion. First, the Civil Rights Department Issue 3: Reductions in Enforcement, Investigation and Conciliation Enhancements. Presenters, please come forward. Welcome, and state your names for the record, and please proceed when ready.

Good morning. I'm Jamie Gillette, Deputy Director of the Enforcement Division with the Civil Rights Department.

And Adam Romero, the Deputy Director of the Executive Programs Division with the Civil Rights Department. Good afternoon. We're here to present one item, and before I launch into the item, I'd just like to give some background on the Civil Rights Department. We enforce California's robust civil rights laws in the areas of employment, housing, public accommodations and businesses, state-funded programs and activities, human trafficking and hate violence. CRD works to accomplish this responsibility in a state as large and as diverse as California with approximately 330 positions.

Each year, CRD serves the public interest by investigating thousands of complaints of discrimination, conciliating and settling as many of those cases as possible, and prosecuting high-impact civil rights actions intended to benefit large numbers of Californians. In addition, among other initiatives to advance civil rights, CRD conducts extensive outreach and education to ensure Californians have critical information about their civil rights and their obligations, and CRD recently launched the California vs. Hate Resource Line and Network, which provides services to those targeted for hate.

As background for this budget item, in the 2022 Budget Act, the Legislature approved a BCP titled Enforcement, Investigation, and Conciliation, which provided three years of funding to CRD to hire additional staff to decrease the wait time between when a member of the public files an intake with CRD and when they are interviewed by our investigators to initiate our investigation process. The BCP funding also aimed to increase the number of complaints that our Department is able to conciliate and, when appropriate, settle in our enforcement division.

Since July 1, 2022, the number of intakes filed with our Department has been increasing, and because of the resources this BCP provided over the past two years, wait times for the public decrease and conciliation numbers went up. So Deputy Director Gillette and I are able to answer any questions that you may have.

Thank you for the presentation. If that concludes that, I'll invite public comment on this issue first, and again, with respect to this particular issue only. If you'd like to address the Subcommitee, please come to the microphone. State your name for the record, and I would ask, given the volume of folks interested, that we limit your time to about 1 minute. Does anyone want to speak to the Subcommitee on this matter? All right, I'll bring it back here to the Sub.

First and foremost, the commentary notes that there's a direct correlation between the modest infusion of funding that was characterized as temporary and the impact on wait times and access by folks who are seeking a number of avenues of redress. Here, you lay that out pretty clearly about how effective it has been in terms of impact, but yet then conclude that we should foster the Governor's proposal here, and I see an incongruity there. Would you like to address that?

And do you think you'd be able to maintain the improvements that have been accomplished if, in fact, we hold back funds?

I'd invite the Department of Finance to answer the first question. Then we can take the second.

All right, thank you. DOF.

Andrew March, Department of Finance. So, as my colleagues from the Civil Rights Department noted, this was temporary funding that was provided in the 2022 budget under a very different General Fund scenario, a very large surplus. The idea of sort of providing the temporary funding was given the projected outlook at the time that there may be resources in the future to continue this type of work.

However, given the General Fund deficit projected in budget year and the ongoing General Fund deficits, it's unlikely that the General Fund would be able to support this type of discretionary funding. So this is why this was proposed as a reduction in the Governor's Budget, although a very difficult decision to be made. However, the Civil Rights Department still maintains a very robust budget of over $50 million General Fund, which has increased by over double since 2019, when it was around $25 million.

So reading between the lines, thank you, internal efficiencies may be able to accomplish the task in the interim, given the scope of the existing budget?

That's certainly a possibility. The Department of Finance and the Civil Rights Department works each year to determine potential savings. However, it's difficult to project savings that will happen in the budget year, but it's something that the Administration can continue to work on to make sure that the work of the Civil Rights Department is not so negatively impacted by this sort of reduction.

Thank you for that. Concludes your presentation from departmental level? All right, does LAO have any comments?

Thank you, Mr. Chair. Ginni Bella with the Legislative Analyst Office. Nothing to add, but happy to provide any technical assistance you may need.

Thank you. Members of the Subcommitee? Senator Smallwood-Cuevas.

Thank you, Mr. President. And I was glad to hear how the investment was able to be measured and we could see a reduction in the wait time and in receiving some remedy. I'm curious if your Department currently has a backlog of cases in terms of how you are moving the enforcement phases and your capacity to be current with all of those complaints. Does the Department currently have a backlog?

Jamie Gillette, Deputy Director of the Enforcement Division. Yes, we do currently have a backlog, our current wait time for complaint-related discrimination cases is about 95 days from the time you submit it to our Department and we will discuss the allegation. And on our housing it's about a 75 day wait.

And so you're saying that this reduction will not have any impact on the current status in terms of the wait time and the delays?

I think it's likely that this reduction will have an impact increasing the delays. There's a lot of factors that go into the wait time. One of those is the number of intake we receive, the number of cases. So that's one big factor. And additionally, we're doing what we can to streamline our processes and move resources around to create less of an impact to the public. But I do foresee this at least slowing down our ability to decrease the wait time.

And I know the Legislature has done quite a bit, and good work of protecting more and more classes. And so it's not just protecting. I think the Department of Finance talked about a doubling of the budget, but we've also increased significant numbers of folks who are protected in terms of from cannabis to equal pay and other important policies. Is there partnerships that the Department works with to sort of help, especially if we're going to reduce, at such a significant rate, the budget?

Are you looking to partnerships to help sort of address what will be an increase in complaints and also the current backlog and delay that you have? And how do you facilitate those kinds of partnerships? Where are those kinds of partnerships, and what is the relationship between the Department and those organizations or other agencies that you work with?

Sure. We meet quarterly with different advocate groups and discuss any issues that they're having with the complaint process or if there's any areas that they feel the Department can improve upon. So we meet quarterly, request their feedback, and work through their feedback to try to improve our processes the best we can.

And like I said, we look to where we can streamline our processes, where we could do more, perhaps intake triage to maybe not have someone wait the full 90 days for their appointment if there's something we can reach out to them about sooner.

And there was also a mention that there was potential additional funding. Can you share where there are other areas, specifically that CRD has saved additional funding? And what are those programs where you're seeing an opportunity for savings?

The main area is in the vacancies at the Department and our funded positions.

Got it. And what is the vacancy rate right now within CRD?

Currently it's around 12% or 13% for the Department, in line with comparable state agencies.

Well, I appreciate you bringing this forward. I am confused as to how reducing the budget, knowing that it will impact delays, knowing it will impact backlog, knowing that it comes at a time when we're trying to protect more and more Californians. I'm not sure how this formula works.

I appreciate the partnerships, but we know so many of those organizations and agencies are also overburdened and understaffed, and so I will continue to listen to what the strategies will be, but I am not understanding how reducing your funding at a time when it seems the Department needs to be ramping up and have more capacity to do the work that Californians expect. So thank you for the information.

Senator Niello.

Thank you. Thank you, Mr. Chair. My comment doesn't address this issue specifically. The Governor's proposal in January does not meet the budget gap that we know now that we have. I realize there's some differences in numbers from the Department of Finance and the LAO, although, as I've said before, I'm inclined to have more trust in the assessment of the budget advisor than the budget writer. And no offense, but there's difference in pressures there.

And so we have a larger deficit to plug now than we did in the Governor's proposal in January. And so we are going to have to come up with many more reductions in the budget from what we're currently looking at between now and June. And every reduction that is currently proposed that we reject, we're going to have to cut something else. And the budget that's adopted in June is probably going to have details to irritate everybody.

I'm sorry, but that is the reality of the nature of the budget hole currently that we have to plug.

Thank you, Vice Chair Niello. All right, this item will be held open. We will then move to the Department of Housing and Community Development. Thank you for your presentations. At top line, issue four, is the governor's proposed housing spending reduction in context. Typically, as you know, we've gotten in the habit of sort of directly being responsive to individual items proffered by the Administration. And often, we miss the opportunity to more broadly contextualize that conversation, which I think is much more complete and clear. And so to that, we have asked the LAO to present with respect to that here today. So without further ado, please proceed.

Thank you, Mr. Chair. Ginni Bella with the Legislative Analyst Office. And we were asked today to provide a high level overview of the reductions proposed in the governor's 24-25 budget for the Department of Housing and Community Development and talk a bit about how those reductions are nested within the broader state funding for housing. So as you know, over the last few years there have been significant discretionary state resources provided to HCD for housing programs.

But given the budget constraints that Senator Niello just laid out in the governor's 24-25 budget, there are about 1.2 billion in reductions across seven major programs within the Department of Housing and Community Development. Those reductions are primarily to programs that received new discretionary temporary funding for programs, with the exception of the reduction for the Housing Navigator Program, which is an ongoing program, that the reduction would be an ongoing reduction.

So this really accelerates the end of the state funding for that program and really reduces the overall augmentation that is provided. We will walk through each of those reductions in detail as we go through, so we won't talk about each one specifically, but at a high level, each of the reductions is around a couple of hundred million, adding up again to that 1.2 billion total. Again, with the exception of the Housing Navigator Program, which is just a smaller program.

So a necessarily smaller reduction is being proposed. In terms of how the funding really fits within the broader state funding for housing, many of the programs that are proposed for reduction have historically received bond funding for their ongoing operations. And independent of the governor's proposals, that bond funding is winding down. So along with the expiration of the General Fund and that bond funding, some of the funding for these programs will end once that money is gone.

And we can talk about which ones of those specifically as we go through the agenda today. Additionally, the state annually provides about 120,000,000 annually for the Low Income Housing Tax Credit. And in recent years, the state has been supplementing that temporarily on a one time basis with an additional 500 million, and that is also expiring.

Although those state funding streams may be winding down, there are some ongoing state funding streams that continue to be available in the Governor's Budget for housing, and that includes revenues from SB two and also from the Greenhouse Gas Reduction Fund, which funds the affordable Housing and Community Development programs, Sustainable Communities Program.

So to answer the other questions in the agenda about how to assess these reductions and how to think about alternatives, as we've talked about already today, given the budget problem, you are going to be faced with difficult decisions this year. It's going to require a combination of reductions, revenue increases, using some of the reserves, Fund shifts, all the tools in the toolkit, really. And we see the Governor's Budget as one option for you to consider.

Of course, the Legislature's ultimate budget may reflect different priorities, and so we think your time today should be spent really hearing from the Department about both the rationale for the reductions they're putting before you, but also hearing from them whether there are other areas, other General Fund within these programs that the Governor did not propose to reduce and areas that you may want to consider. So you have the whole package in front of you of your options.

On that note, we actually just released a report where we tried to look statewide at one time funding that was provided in prior budgets that maybe hasn't gone out yet, hasn't been fully spent as sort of showing you the different options before you, not just in HCD, but across the state budget. And we did preliminarily identify about 16 billion in funding there. So that could be things that you could consider going forward. And with that, I will conclude my opening comments. Thank you.

All right, we will look to any additional comment you want to provide, then I'll ask for comment from Members of the public who want to comment broadly on context.

Matt Schueller with the Department. I'm the Administrative Deputy Director, don't have any comments specifically on this time.

Address yourself specifically, issue to issue as we talked about at the beginning of this. All right. Couldn't persuade you? All right, let's ask for anyone who wants to comment sort of broadly, again, not issue or program specific. Please come to the mic, state your name for the record, and try to limit your comment to one minute please. Welcome.

Mr. Chairman, Members. Julie Snyder, representing the Association of Bay Area Government, sorry. And the Metropolitan Transportation Commission. We are the parent agencies to the Bay Area Housing Finance Authority, and, you know, actually appreciate the opportunity to comment generally. I'll talk later about the REIT program and some of the specific programs, but I want to share yesterday we met with a former Budget Committee Chair.

This person, who will remain nameless, pointed out that housing and homelessness programs and climate programs are continually on the chopping block because their General Fund appropriations have been on, quote, one time basis, when the state has extra funds. Therefore, they're easier, quote unquote, to cut than permanent programs. But frankly, that's exactly the problem. Housing, which is foundational to every single person's life, is still considered something the state only funds when it has extra money.

But the relentless gap between rents and home prices and incomes in the state means that it's time to look at funding affordable housing in a different way. The shortage that was decades in the making is going to take sustained investment to dig our way out of that hole. And the longer the state delays in making these long term commitments, including to replace the billion dollars, there's a billion dollars in redevelopment housing funds that were swept into the General Fund in 2012 and have never been replaced.

The longer it takes to fill that gap, the more expensive it's going to be, not only in dollars, because we know construction costs are going up rapidly, but also in lives. So you can start today by rejecting all of the cuts and starting to think about housing funding in a different way, making it a permanent priority in the state budget so that we can just as relentlessly make progress towards the day that every Californian has an affordable place to live. Thank you.

Good morning. Mark Stivers of the California Housing Partnership. And I just add a little bit of context to the eloquent staff write up. I don't need to remind the Committee Members of the 181,000 people, fellow Californians, who remain unhoused every night, or the hundreds of thousands of families who are paying way more than they can afford in rent. And we know that the solution to both is creating more affordable housing.

We estimated that a couple of years ago that the state needs to build 1.2 million units of affordable housing over 10 years, or 120,000 a year. At the peak of our production two years ago, when we had access to state and local bond funds, we were at 20,000. So one 6th of a total. That number is now declining fast because of the combination of the bonds running out at both the state and local level.

The governor's proposed budget, when you look at both the clawbacks and the kind of not renewing additional funding for the state credits and some of the other programs would reduce that production by another 6,400 units. And remember, those are homes that are affordable for each of 55 years. So over the long term. More importantly, we use those state funds to fill gaps in developments that allow us to access federal low income housing tax credits.

So losing that 1.6 billion, we actually lose an additional 1.6 billion in federal resources by not providing that gap funding. So we're leaving federal resources on the table. Ultimately, we'll speak to the individual items.

We would love to have the Legislature restore all of the housing money, but our priorities are for the state on the production side, for the state low income housing tax credits for 2025, anything we can do to Fund the multifamily housing program, which is the most General, that can serve all needs, and on the homelessness side for the HAPP program as well, through the tax credits. They actually don't count against this budget.

They are scored in a way that they have an impact two to six years from now. And then lastly, this budget is the year that will bridge us to hopefully having a housing bond on the ballot where we can Fund some of these programs in a different manner. Thank you very much.

Good morning and thanks for the opportunity to speak. My name is Natalie Spievak and I'm with Housing California, a statewide nonprofit advocacy organization focused on ending the affordable housing and homelessness crises. With these crises growing worse and the bond funding from 2018 running out at the end of this year, this isn't the time for these massive cuts to the state's critical production programs.

And although the environment for permitting affordable housing has never been more favorable, thanks to critical laws that you all have played a role in passing in the last few years in the state Legislature, state funding that makes these programs and developments financially feasible hasn't kept up.

So additionally, the Multifamily Housing Program that Mark mentioned, the state's flagship affordable housing production program, is oversubscribed at a rate of 10 to one, which represents 15,000 permitted, shovel ready affordable housing units that only need state funding to begin construction. When projects languish in developers pipelines, development becomes more expensive and housing instability and homelessness continue to rise. Additionally, cutting the state Low Income Housing Tax Credit Program will prevent the state from drawing down federal funding, leaving billions of dollars for affordable housing production on the table.

Investing in permanent affordable housing has and will continue to transform the lives of millions of low income Californians facing homelessness and housing instability. We are due to restore these cuts to these critical programs. Thank you.

Thank you. And again, just a friendly reminder, the Subcommitee welcomes everyone's testimony now and on each item, but please restrict your comments to about a minute. Okay? Thank you.

Good morning. Kim Lewis, representing the California Coalition for Youth. And I would just say globally align my comments with many of the people around. We need additional dollars for creating affordable housing and development. But I'd ask you to think about what are our needs for our young people, particularly those 18 to 25 transition age youth who struggle and have lack of credit, lack of rental histories, just given their ages.

And how do we think about preventing them from becoming our growing chronic homelessness population if we aren't supporting them and moving as far upstream as possible because they are underrepresented, undercounted in many of the homeless counts. And so globally asking you to think about where do our youth fit into creating housing for them? Because many of our programs don't necessarily work that well in creating housing for our youth and working with those, particularly those who've experienced homelessness. Thank you.

Honorable Chair and Members. Excuse me. Amy Hines-Shaikh with the California Community Land Trust Network. The Community Land Trust Network and its 52 member organizations regretted learning of the Governor's proposal to cut $248 million of the $485 million budget, 51% from the Foreclosure Intervention Housing Preservation Program.

We understand that there is a tough budget outlook, but we implore you all to reconsider cutting half of the FIHPP's funding, which will undermine the program at this critical juncture. The need for this program is too great, and both HCD and other key stakeholders have sunk too many resources into this pioneering housing strategy to hobble it now. We urge your reconsideration. Thank you so much.

Mr. Chair and Members, Rand Martin on behalf of the AIDS Healthcare Foundation and its Healthy Housing Foundation, one of the largest low-income housing providers in the City of Los Angeles with more than 1,500 units now for people who are extremely low-income. Bad time to reduce the amount of money going to affordable housing, especially with the number of unhoused people going up. But if cuts are inevitable, we would encourage the Department and the Administration to do more with adaptive reuse of existing buildings. Comes in at $120,000 a unit as opposed to 5, 6, 700,000 dollars a unit for ground-up construction. Thank you.

Hello. My name is Tamika L'Ecluse. I'm the Executive Director of Sacramento Community Land Trust, and I'm here today on behalf of our statewide coalition and all the Community Land Trusts across California to ask you to please not cut the Foreclosure Intervention Housing Prevention Program funding any more than has already been proposed. You know, COVID, folks are still trying to recover. There's still folks here in Sacramento on our streets, your neighbors and your staff members, who are still trying to recover.

And we know that as of January 2024, there are still about 235,000 1-25 unit buildings that are at risk. And those are families, those are people that end up on the streets. And so we urge you today to keep as much funding in the FIHPP program as possible.

I appreciate everybody's input. I just want to remind the audience, perhaps I didn't articulate it as clearly as I should have and because the noise in the hallway made it difficult for everyone to know. We're asking for your input on the conversation the committee is considering now, which is the contextual conversation of the presentation the LAO gave, not to come up and ask not to cut or to advocate on behalf of specific issues or programs.

Conversation is about what is the methodology we utilized here, what were alternatives, encouraging the broader understanding. I wanted to give everybody an opportunity to be part of that conversation, not just the Committee. But perhaps we won't repeat that again because folks are just using it as an opportunity to testify twice to the same issue, and I'm not going to allow that either.

So just to be clear, I want testimony from the public as to this discussion, not to a specific issue or program that we're going to take up in more detail. I apologize if I did not make that clear, and I do thank everyone for their participation. If there is not any more public participation on this issue, number four discussion, we'll bring it back. Are there additional responses or comments you want to make to this broad discussion? If so, we'll take them now, and then I'm going to come to the subcommitee.

Mr. Chair and Members, Matt Schueller again, for the Department. I would defer to the Department of Finance to talk about the rationale behind the reductions that were made in the Governor's Budget, and then I would be more than pleased to answer the question that you had with respect to any remaining funding to delve into that discussion.

Additional comment, DOF?

Andrew March, Department of Finance. Just to speak broadly, since 2019, the Legislature and the Governor have provided $5.2 billion, approximately, General Fund for affordable housing programs. Despite the reductions proposed in the Governor's Budget, that leaves around $4 billion of General Fund investments over the last four to five years. Generally speaking, for the reductions in the Governor's Budget, there are programs or funding that hadn't already been issued in a notice of funding availability.

So these aren't funds that generally were accepting awards, although they may have been included on the Department's NOFA calendar, Notice of Funding Availability calendar, alerting people that, in the future, this funding would be available. They weren't actively accepting awards for these, so we viewed it as difficult decisions to make, but however, trying not to disrupt the affordable housing construction industry, although we do acknowledge that there will be fewer affordable housing units created given the lack of funding.

However, we're not able to verify some of the numbers presented by stakeholders because there may be other funding that's able to be utilized that wasn't utilized in the past, whether it be through local funds that may be coming online or reprioritization of existing ongoing funding, such as the Building Homes and Jobs Trust Fund at the local level or the Affordable Housing and Sustainable Communities Program.

All right. Can you dig a little deeper, either from the programmatic driver or the final cut folks over here at DOF. A little bit deeper about the rationale employed and what alternatives did we consider programmatically in terms of how we assess the relative value? I mean, they all have value, but we have to do that sort of relative assessment in terms of constrained revenue. Right? So how did you arrive at this identification of these particular cuts and what were alternatives, if any, that were discussed?

Andrew March, Department of Finance again. I wouldn't say that these reductions necessarily speak to the efficacy or efficiency of any particular programs. They're difficult choices that were made to help balance the budget. So given that there is significant funding that hadn't been noticed in a notice of funding availability, there was an opportunity for the administration to sort of rebalance its overall General Fund strategy.

I think the LAO and others have noted that due to the delayed tax receipts last year, we might have been in a different situation where we were sort of talking about this last year. However, given the delay, we're talking about it now. So hindsight's 2020. If we were able to go back in time, we may have reprioritized some of these investments, given the information that we know now.

I'll bring it to my colleagues on the Subcommitee. Are there questions on this particular issue? Senator Smallwood-Cuevas.

I'm appreciating the conversation and the public comment because this is a very, very, very, very hard time for all of us. And in my district, where we have such a visible and visceral daily encounter with human suffering on our streets that the State of California has made commitments to address, whether it's having a previous administration come and point out California's crisis of homelessness to local communities and organizations working to try to just make sure families, and particularly many of them working full-time but still cannot afford housing, have what they need.

I am just wanting to speak the very, very, very difficult decisions that we have to make here. I guess, in terms of the proposed cuts, a lot of these cuts, and I guess I'm directing this to Department of Finance. These are funds that have not been used or have not been released primarily, and these are also funds that have been utilized and that communities are relying on.

Can you clarify in terms of these sort of across-the-board, very diverse sets of housing funding pots, what percentage of these recommended cuts are coming from monies that are not relied on right now, and what percent are coming from programs that are actually relying on these dollars to come down in the budget? I want to get a real sense of that. To me, that makes a lot of difference. We live in California and this is ebbs and flow, right?

And so we know that once dollars are released and folks and communities and organizations and cities and counties are relying on them, we do have an obligation to make sure, particularly around homelessness, that we continue to protect the progress that we must make. But there's also the reality that some of these dollars have not been used, they have not been let go yet. And we have a little bit more of an opportunity to deal with our fiscal challenge. Can you give me a sense of, when we think about the cuts, if it's a pie chart, like how much of it is in-use funds, how much of it is money that's in play?

Yeah. So maybe break it up into two different buckets. So there's approximately about $900 million that's for funding that was committed to, to come out in future years for some of the programs that we'll get to as we go down the reductions sort of list and then funding that had previously been budgeted but it hadn't been awarded yet. The Department wasn't accepting applications for it.

So it'd be difficult to say whether communities were relying on that funding because the Department hasn't received applications for it, although it was previously budgeted funding. So it's difficult to sort of comment specifically on what communities were relying on because we weren't accepting applications, and we haven't been evaluating those applications for that funding. But it wasn't released.

And then there's another bucket of funding that had been noticed. And I think you'll hear from stakeholders, and we'll get to this program, the Regional Early Action Planning Program, where that funding had been awarded but not all utilized to date.

You mentioned evaluating impact, and that just stuck out to me, particularly when we think about something like dealing with homelessness and our housing crisis. My sense is there a separate criteria in terms of how are you measuring what is the direct impact? Is there some sort of evaluative tool that the Department is using to really determine what the measured impact will be if we cut these funds, particularly on individuals? Is there a metrics for that? Is that data available to us as Legislators to see that data? These are really hard decisions that the Administration is proposing.

And I want to understand and be able to not just measure the numbers, right? But to measure the impact, which helps with our decision-making. And so, on issues like this, oftentimes at the local level, there are tools to really look at the impact and how we mitigate cuts and make choices weighed on that. I just, I'm curious what you're using and is that metrics available to us to review and see in real time?

Yeah. So we don't necessarily have an estimate of how many units would not be created absent this funding. As noted by some of the stakeholders, there is an estimate of approximately, I think, 6,400 units would not be created if this funding was not put forward. It's difficult for us to determine that because we award funding on a project by project basis, and the Department can definitely speak to this. And so the costs for each project may vary.

So coming to sort of an estimate of how many units are being foregone by reducing this would be difficult to determine. However, we do note that there would be fewer affordable housing units created. Although we're not able to come to an immediate number because there may be other funding that comes online, either through, there may be philanthropy or other sources of funding at the local level. Either, whether it's a local bond or other things. It's difficult to say that it's a zero sum game right now, that there's not going to be other funding that would come in behind this funding and supplant it.

For our agencies, I'm relying on you all to help us understand what the impacts are. I understand what you are proposing. I understand sort of how you're looking at it from a spreadsheet and accounting perspective. But the human perspective is what I'm interested in. If we're going to make cuts, we need to know how many units, we need to know where, we need to know what is the most vulnerable communities.

And, Mr. Chair, I hope that we will get more detailed information on that, particularly around homelessness. I mean, we just heard from the Civil Rights Department, and when folks are discriminated against, that is a job killer. That means they're not working. That means they're not earning an income. That means they're not in the economy, and that creates another crisis.

What we're dealing with here on homelessness, these things are integrated. They are intersectional, and we need to understand the human impact, the material impact, on these cuts on our progress, and be able to make decisions based on that. I don't know if you have some of that data to share. So we can see not just the numbers, but what the impact of these numbers mean. Because we will have to make some cuts here.

We want to know that we're making them in a way that is doing the most that we can to continue to protect our communities. So I'm sorry to take so much time, but I'm struggling with the decisions that we're having to make and the data that we have to make them.

Please, feel free to answer.

Matt Schueller with the Department. As our colleagues from Finance represented, some of those numbers are hard to tease out with respect to the number of units that are being forgone with respect to the reductions, but we do have and provide information with respect to the outcomes of our programs. Now, those vary from program to program, as also mentioned, but we certainly share all of that information. I'm going to talk a little bit about a program overview that we've provided, but I'll let my colleague from the Department speak a little bit more to how we actually assess that efficacy within our funding programs.

Hi. Good morning. Jennifer Seeger Deputy Director with the Division of State Financial Assistance at the Department. So to my colleagues point, yes, we did create a program summary which details program by program some of the outcomes that we have seen in our programs in terms of the total number of units that have been created through the funding streams that we've allocated to date.

Now, while we don't have an actual estimate of what these cuts may cause in terms of reduction of units, we can look to see what we've already funded and what the results are of that. So I think through the conversation here today, we hope to kind of go through those documents, and if you have any questions related to that, I think we can answer those as well.

I would like to see that and also any projections. Because certainly, you know, by what impacts these dollars have already created, you can project what will be missing should we cut these programs. I think that is critical information that the Legislature will need because we haven't been here before. Homelessness was not a crisis back when we were having major cuts. This is a new day and a new time, and we need a new criteria to understand where the deepest impacts are. And I'm really disappointed that we don't have that information to help us make these kinds of decisions.

Yeah, I would also say that it's hard to take a dollar amount and say that will result in a specific number of units reduced because of that cut. Because of the complicated funding stack that occurs in order to move projects forward, they receive multiple funding sources.

So if you're looking at a cut to the MHP program, it's hard to make a projection in terms of just cuts to MHP will result in a reduction of this many units when there's so many other funding sources that also come into play. Right. So it's not kind of a one for one type...

I will say this. When we had the surplus, the projections were showing that these programs were working and needed more funding. So when we are now on the other side of showing when these cuts are going to have impact, we need to be able to do both. If we can justify it to get the money, we should be able to justify the cuts to save the programs that work the most. That's the point I'm making, and I know that that is a common practice. So I'm sure we have to develop a common practice in this hard time, particularly around this issue.

We can't do it for every issue, but I think when we talk about housing and homelessness and what it means to pull a billion dollars or more out of that process, we've got to be able to have real data. So I appreciate your efforts to help us get as close as we can to understanding the process.

Thank you. Senator Niello.

Thank you. Just briefly, the entire state is in this unhappy boat together, not just state government, but local governments and local entities. And as I said before, we're probably going to end up with a budget in June that's going to irritate everybody. And there's no doubt going to be negative impacts of cuts in this area.

The one qualification that I would throw out is to the extent that entities or local governments, based upon commitments, have already spent money but have not been reimbursed, we ought to avoid that. That might be a little bit difficult to define because I'm sure that there are some who will say I have a contract I can't get out of when maybe they can get out of it. So there's probably going to cause a little bit of conflict on that.

But as a general rule, I think it would be a mistake to not fund commitments that have already spent, local entities have already spent money based upon the presumption of the funding. I don't think that's going to be a majority of it, certainly, but I do think that's a legitimate point.

Thank you, Senator Niello, and I do appreciate that. And I very much appreciate Senator Smallwood-Cuevas's input. I think, first and foremost, circumstantially, because of the exhaustion of bond funding and the constraint scenario, where no matter how we do this, we are looking at a substantial slowdown or reduction in opportunity costs, frankly, in production. And I'll beg to differ, due respect, as I appreciate the work the departments do, but I've worked at every level of government, local, regional, state. And I've done policy work in the federal level. And what's always sort of interesting is how different levels handle their approach to constrained scenarios.

What's interesting here, and to the Senator Smallwood-Cuevas's point, is when we look at surplus, we find it a little easier to look at how funding availability, financing is composed and what that translates to programmatically into capacity. We have no problem doing that. I would beg to differ that we don't have the ability to make estimates, well informed estimates, about programmatic impact of the reduction of elements of a funding stream. We can do that. We're just not doing that.

That's a fancy way of saying, I don't know, that we're being as performance based or strategic as we could be. And when we look at a constrained scenario, I think to the Senator's point, it is not just a spreadsheet where we look at the numbers only and how we get the numbers down to where we need to meet requirements constitutionally and on and on. But that it should be more program driven and there should be, department by department, an internal process that prioritizes based upon impacts and efficacy and circumstances. Right.

And ranking that and then trying to achieve ways to close the gap based upon that framework, not just the totals. Because the totals are irrelevant except for they're attached to program, and they have impacts in people's lives. And I think that's the point, and I think it's a very good one, and it needs to be clearly articulated here. It might be, for some, a different way of looking at this. It may not be the way we've always done it in Sacramento.

Sorry, but that isn't good enough. Bottom line. So to that, I'll just say, are there other existing departmental plans that were more deeply examined that could be utilized in terms of being held or that are unappropriated that could achieve savings here? And what are they? And if not, why not?

Mr. Chair Members, Matt Schueller again, for the Department. In response to that question, and then also Senator Niello's observation with respect to funding that is currently out for consideration.

We've paused proactively any of our notice of funding availability that may include a General Fund component. So the information that we've provided through this program overview that I referenced, this overview that we've provided to staff, is an accurate assessment of how much General Fund availability we currently have in the Department. And while the reductions are unfortunate, to our colleagues point, of the approach, we took consideration not to impact those past awards or any NOFAs that were open at the end of 2023.

Right at the release of the Governor's Budget. So those reductions that were proposed in January that we're talking about right now wouldn't impact any NOFAs that were active or would have any awards that would be announced imminently, such as our Multifamily Super NOFA, which funds four different programs. So there's very little General Fund outside of the data that we've already provided to the Committee that is not already awarded. And any reductions to those programs that are currently active would really require pulling back awards.

And we feel that that would create significant disruption. So that's kind of where we are currently. And again, we can talk through some of the information, but that has been provided to staff in terms of those amounts of General Fund that are remaining and not currently out for consideration.

Yeah, and I appreciate that. And I think you can hear at least from Members that perhaps going forward it would be helpful that we have a more detailed and a more clear understanding of what that internal methodology and analysis look like and why. Because otherwise we're left to ask and tease it out, which I get is part of the process. But to me, it seems that should be fundamental, right?

It should be fundamental to explain how we arrived there, not just how we get the numbers down, but how we arrived at that prioritization. I think that's the point. Senator Niello.

Thank you. Just one more comment that I think is important, particularly in the context of assessing what results the cuts may end up imposing and perhaps looking at how we can do more with less. Perhaps, particularly in a time of crisis, perhaps we can take a look at requirements imposed by this body at the state level, as well as other governmental entities that make it difficult and more expensive to build housing. Local fees, delays in bureaucratic approval processes, might I add, CEQA lawsuits that have nothing to do with environmental impacts, and other things that add to the cost of housing by virtue of state or other local government regulations.

We really have not done that. And maybe with limited funding and therefore trying to achieve closer to the results with increased funding, achieve that with reduced funding by reducing costs, by reducing burdens. That might be a way for you to look at and bring recommendations as part of the budget process.

Thank you. Senator Smallwood-Cuevas.

And I want to just echo the Chair's statements about the impact. I understand you've provided this to staff. What I'm saying, and I want to be clear, for me, it's not enough. We need an impact assessment of these very large cuts in these areas that have been laid out before us. However you projected the amounts for investment, we need a projection of what the cuts will create in terms of impact to those programs. And to the last statement made, we didn't just get here yesterday.

We are trying to build back a housing infrastructure in this state that dates back to the 80s and 70s. It's not something that we can do overnight, but I think it's something that this Legislature has made a priority in this Administration, and our goal is to get our people housed and off the street.

And this is not the time, as we have inflation, as we see uncertainty at the national level, this is not the time for California to pull the rug from underneath this very important endeavor that we are involved in to protect our communities, but also to ensure California is a place where we take care of our own. So I want to just reinforce the need for us to have more data to be able to see those impacts and to see it before this comes before us again.

All right. Thank you very much. Appreciate that overarching presentation. Appreciate the LAO's input, appreciate the responses for sort of setting the four corners here and the engagement by the Members of the Subcommitee. With that, we'll move to issue number five, which is reductions to Regional Early Action Planning Grants, REAP 2.0. Bit of musical chairs.

Yes, exactly.

All right. With issue five, please state your name for the record. Please proceed when ready.

Hi, I'm Megan Kirkeby, our Deputy Director for Housing Policy Development at the HCD, where the REAP 2.0 program is situated.

And again, Matt Schueller, admin Deputy Director for the Department, and we would defer to the Department of Finance to start the conversation on...

DOF, please proceed.

Yes. Blair Huxman, Department of Finance. So the Governor's Budget includes a $300 million General Fund reversion for the Regional Early Action Planning Grants Program, or REAP 2.0. REAP 2.0 provides funding to advance implementation of adopted regional plans by funding planning and implementation activities that accelerate infill housing. The 2021 budget included 600 million one time General Fund for the Regional Early Action Planning 2.0 program. And with the proposal in front of you, approximately 300 million General Fund, or about 50%, remains for this program.

All right, does the LAO have any additional comment?

Thank you, Mr. Chair. Ginni Bella at the Analyst Office. We would just say that this is one of those ones where we have, although the reimbursement rate is somewhat low at this point, as your agenda points out, we have heard from stakeholders that actual expenditures on the ground may be more and that more reimbursements will be coming in. So I think that's an area for the Subcommitee to explore today.

All right. Thank you very much. As I indicated earlier, we will invite comment as to each issue specific before we take up sort of a dialogue. But to that end, because one of the elements of discussing this particular issue is, frankly, some of the planning or capital improvement program progress that may well be interrupted or frustrated in ways that are not perhaps pragmatic or appropriate, and that involves a lot of regional planning entities.

I'm going to first, in this vein, invite Bill Higgins, the Executive Director, California Association of COGs. Mr. Higgins, welcome. Thank you. I know that you're presenting sort of a multi-organizational, broad, topically appropriate area, so five minutes or so be suffice. And again, please state your name for the record. And welcome.

Thank you very much. Bill Higgins, I'm the Executive Director of the California Association of Councils of Governments, and we represent all 18 metropolitan planning organizations that are getting the $510 million pot. We also represent 30 other regional entities that will be suballocated some of these funds, as well as participating in the two competitive funding pots that are included in REAP. And I want to address two things, and hopefully I won't take all my five minutes.

And I want to address first this idea that these funds are not allocated. And I just want to explain the process that this fund has. This is a new fund for us in the state, and it's just a little bit different. So when this was passed, and realize we're 30 months into this program. And when it was passed, the first thing our members had to do was engage in public engagement to get feedback on what we should prioritize for the program.

And then we had to develop a budget to explain what we were going to do with the funds that we presented to HCD. And HCD also had to share and get feedback with OPR and ARB, and they gave us comments back. When we agreed on a budget, we had to enter into a contract with HCD, and then we awarded the funds in which we had to engage in a grant agreement with the sub-awardee.

They had to actually start their own contracts, obtain contractors, incur an expense, submit that expense to us, and then we have to submit it to HCD. That's an unusual process, and it suggests why there might be more of a balance on HCD's books, despite the fact that there's 30 months of work done on this. So what does that mean? Well, in the most extreme example, there's a project. I just want to highlight what's going on in Tulare County, three projects for all affordable housing.

One of them is a homeless shelter. All located close to transit centers in some of the most disadvantaged communities in the state. All these projects have electric car share that is designed to work with the neighborhoods. They have pre-negotiated aftercare with the local school district. They're located on a planned cross county rail line that would eventually bisect high-speed rail. And these two of the projects are done, starting occupancy, and the developer is still carrying costs because we can't get the reimbursement on that project.

So to say that these funds are sitting in the state and they are not allocated, I think is the process has been that. Now, there's also been delays in this. And my friends at HCD, our partners, we facilitate a meeting with our project directors and HCD monthly. And HCD has been a little bit slow at times in approving even the budgets because they're overworked, they're doing housing elements. But to give you an example, MTC submitted their budget and it took 11 months to get it approved.

So if you look at MTC's allocations right now, they look like they're not doing anything, but they couldn't do anything. Work has been done on this money. So that's number one. Number two, I just kind of want to... This funding is unique. It's new because it sits at the nexus of two important California goals, climate and housing. And I want to introduce the idea that California will sow what it reaps. That's my hashtag. But our members are the entities that distribute the RHNA.

We're also the ones that develop the sustainable community strategies. And when you look across these projects, whether it's the Green Means Go Program in SACOG that's doing early first time investment, I think you'll hear in public testimony more about that. The sewer pipes and the infrastructure that's needed to build the affordable housing in communities across the SACOG region. Or it's the HIT grant that SANDAG got in San Ysidro that's allowing rent to own programs. Or there's affordable housing trusts across the SCAG region.

The Ventura County Transportation Commission is funding $5 million to a program that looks, when they leverage it with all the other funds that they'll get, is estimating 650 units produced. And this is the type of analysis that has them... And I can go on and on about these projects because there's a lot of them. But I think what I would suggest to you is take a harder look when you are allocating these funds. I appreciate the LAO's report that has identified a lot more potential funds.

I think you have to look hard at what has already been obligated and not just handed out, but what work has been done. And then the second element is how many critical California goals is this fund seeking to achieve. And here It's not just housing, it's also climate and it's how we grow. So California will sow what it reaps.

Came with the A game, and very well said. I like that. I appreciate that, sir. Thank you for your time and input. All right, I'll invite other members of the public who would like to comment specifically with respect to issue five and REAP 2.0. Thank you for your participation. Come forward. State your name for the record. Please limit your time to about 1 minute. Thank you. Welcome.

Thank you, Chair and Members. Nick Romo on behalf of the Southern California Association of Governments and today on behalf of the County of Sacramento. Urge you to protect the REAP 2.0 program. As Bill Higgins mentioned, when we echo everything he just said, and his hashtag. This program is about very real projects. To Senator Smallwood-Cuevas's line of questioning, we have the data to tell you. Senator Niello, Senator Padilla, Senator Cuevas, Smallwood-Cuevas, what exactly is that risk at stake from this program? Should it be cut?

And we're happy to provide that to each of you. So we thank you for taking a deeper look at this program. We hope that we can find solutions for this year and many years to come for the REAP 2.0 program.

Good afternoon, Mr. Chair and Members of the Committee. Kiana Valentine with Politico Group on behalf of a couple of clients this afternoon, the first being the Coachella Valley Association of Governments. Would just suggest to you that they are going to see very similar impacts as those that Mr. Higgins described. Two of their projects are infrastructure projects that are going to support close to 6200 infill housing units in the Coachella Valley.

And there's also additional infrastructure projects related to additional connections for CV Link and a multimodal transit supportive rail station. So lots of good work going on in your district. Additionally, I represent the Tulare County Association of Governments. So I just want to add on to what Bill shared about their projects. They have a really unique, fantastic relationship with self help enterprises building affordable housing projects in disadvantaged communities in an area that desperately needs it. And they are ready to give up at this point, I think, because the process has been so frustrating. And so just want to really emphasize his testimony on behalf of TCAG as well. Thank you.

Good afternoon, Mr. Chair and Members. Julie Snyder, again, representing MTC, ABAG, and the Bay Area Housing Finance Authority. Our state mandated sustainable community strategy will reduce greenhouse gas emissions by 19% and support 400,000 new affordable homes if we can fully implement it.

REAP provides the only flexible state funding to bring this vision to reality after two years of back and forth with this very overworked state staff, as Mr. Higgins mentioned, we did recently get our plan approved. Two thirds of that grant is dedicated to direct housing production and to providing award winning technical assistance to our localities to help them meet their housing element goals.

This includes a pilot program to model new approaches to building affordable housing on large capacity sites like aging malls, parking lots, those sites that we all want to see redeveloped in our communities. And it's designed to accelerate the use of land, in particular in transit rich areas, and really create some showcase, precedent setting projects. Our second housing program is going to preserve affordable housing in disinvested communities that have no funding for this type of activity.

The production programs will build and preserve up to 1600 apartments and, over the long term, deed restrictions will house an estimated 14,000 households. So you want to talk about impact? There's some impact for you. The remainder of our grant is focused on rider improvements in our transit system, trying to make both our fare coordination and our mapping more aligned across the Bay Area, so that, as a rider, we reduce both cost and the challenges of navigating from bus to ferry to rail.

So last thing I want to say is that although we have been working on getting the final plan approved, we have actually signed contracts to start some of this work. We've issued NOFAs, we've hired staff. So a 50% cut at this point would really be unprecedented given where we are in implementation. So thank you.

Thank you. And I just want to check the audio there. Is it just too close to the mic? All right. The mic is sensitive, so... Not at all. Hey, I do it all the time, and we want to be heard, so it just depends. I hear you. Thank you again. Please proceed. Welcome.

Members, James Corless, Executive Director of the Sacramento Area Council of Governments, or SACOG, in the 6th County Greater Sacramento region. I want to echo the comments earlier.

These funds are a relatively small amount in our region, about 34 million. They are critical to meeting the state's, the state's climate and housing goals. We have awarded these funds. They are not going to show up as reimbursements yet, just like Mr. Higgins had said. So you won't see that yet, but they have been awarded competitively to jurisdictions. We have 26 grants out there to do water, sewer, and utility upgrades all across our region that will unlock 8000 units of housing. Our local governments have bids.

They are not going to move on those because they do not know what's going to happen with these funds. So they are waiting for the outcome of the state budget and these REAP funds. A small amount of money to make a big difference to meet the state's climate, housing, and really good jobs doing infrastructure. So this is critical for our region. Thank you for your attention to this. Happy to answer any questions.

Good afternoon, Mr. Chair and Members. Consuelo Hernandez from the City of Sacramento following up on James's comments. We are one of the SACOG cities and just wanted to give you a local example of one of these projects and how critical they are. We have been awarded $3.9 million to make sewer improvements in the Del Paso Boulevard area. It's one of our infill areas. We're an old city.

We've got aging infrastructure that was never intended to support the number of residents that we have now, much less the number of residents that we hope to have. One of the key projects in there is the Bridge Housing Project. This is actually a state surplus property that is meeting the Governor's goals of turning that into affordable housing. All of the projects in the area will create about 600 units of housing, much of which will be affordable housing.

Because our infrastructure is so old, we have had a lot of vacant properties that developers just aren't able to develop if they are required to make all of the necessary infrastructure improvements. So this small amount of money will see a boon in housing development all up and down the scale. Thank you.

Mr. Chairman, members of the committee, thank you for hearing me out. My name is Robert Phipps, Interim Executive Director with Fresno Council of Governments, echoing earlier comments in our region, the cutoff under the Governor's proposal affects our most disadvantaged city. Unfortunately, the City of San Joaquin will lose a trails connection project that is only $1.0 million. Unfortunately, that is the hard math of it.

That connects affordable housing developments under a housing authority program that multifamily developments that was awarded with HCD sitting on our Subcommittee awarding that project along with a couple of others, one of which is also being cut, our funding primarily going into transportation infrastructure to support infill development, but necessary infill infrastructure to support future development for affordable housing. That sets the stage for these developments that are desperately needed to accommodate our growing low-income populations. Thank you.

Good afternoon Chair and members, Chris Lee with Politico Group here on behalf of a couple of clients. First, the Merced County Association of Governments has a $3.9 million award from the REAP program. The vast majority of that funding, about $2.7 million, is going to support a capital project, an affordable housing project in downtown Merced. It's transit-oriented development. It's close to existing Amtrak and bus service, but more importantly, close to the future California high-speed rail station in that jurisdiction.

The remainder of their funding has been allocated for rezoning, for implementing the housing element, the RHNA allocations made by the Association of Governments to their small cities and pay for the environmental review and all of the things that are necessary to plan for that future growth in climate-friendly areas that support MCAG's sustainable community strategy and achieve those greenhouse gas emissions reductions. And then finally for the Sonoma County Transportation Authority, Regional Climate Protection Authority.

Just want to reiterate the concerns expressed by MTC, ABAG, and for both clients, urge you to reject the reversion of re-funding.

Good afternoon, Mr. Chair and Members. Lauren De Valencia, representing the American Planning Association. Our members are the folks at the local level who are implementing all of the laws that have passed year over year, working very hard to update housing elements and all these projects that my colleagues have already echoed.

But what we are hearing from our members is that they are underresourced and they are very much under capacity for what they need to do to get this work done. And so the REAP 2.0 program has really been helpful to be able to do some of that good planning work. And we are now very concerned to see that this could potentially be clawed back.

And we really urge the Legislature to reject this proposal and continue to Fund that planning work that needs to be done to be able to reach our climate and housing goals that we all share. Thank you,

Mr. Chair and members, Amy Brown on behalf of the City of West Sacramento, we align our comments with SACOG and the Green Means Go program in particular. In West Sacramento we have already matched $4 million in Green Means Go funding with a million in city funds to implement the Washington district underground utility infrastructure and infill upgrade project. And so we oppose the proposal. Thank you.

Good afternoon Chair, members. Kirk Blackburn here on behalf of San Diego Association of Government, SanDAG, who's a regional collaborator with working side by side of the state to meet our climate, housing and transportation needs. SanDAG is deeply concerned with the proposed cuts to REAP 2.0, as doing so would only exacerbate the state's climate and housing crises. SanDAG has utilized these critical REAP funds to address regional housing issues by launching its Housing Acceleration Program, or HAP.

Through this program, SanDAG has already awarded $12.3 million in REAP 2.0 funding for 15 projects to implement local housing elements, accelerate development, affordable housing and help the region reach its greenhouse gas reduction goals. This includes fundings for critical housing projects in Imperial Beach and National City. With the proposed cuts to REAP 2.0, these projects are now placed in serious jeopardy. So as such, Sandig strongly urges the Legislature reject the Governor's proposed cuts and preserve existing funding amounts for REAP 2.0. Thank you.

Hello, my name is Marisa Brown. I'm representing the City of Citrus Heights today. Thank you for having me. I am here today because when you think of Citrus Heights, I'm sure you think of shopping at Sunrise Mall. Sunrise Mall has stood as a landmark in Citrus Heights for a long time now, but in recent years, it's lost its shine. The Sunrise Tomorrow Specific plan, which is a recipient of Green Means Go funding, allows us to breathe new life into our city.

If you haven't had the chance to look at the plan yourself yet, let me give you a glimpse of what this could hold for our residents, businesses and our community. This plan transforms 100 acres of current retail space and parking lot into mixed-use, transit-oriented village with 2200 residential units, 480 hotel rooms, retail space, office space, community and institutional uses, and 25 acres of open and green space.

For a city that's 14.6 square miles are built out, 2200 new residential units will make a huge impact on our availability to provide affordable housing for people who are looking to live in Citrus Heights and in the Sacramento region. Using these 100 acres allows us to create infill housing in a more economical, environmental, and fiscally sound way. The Green Means Go funding is needed to plan the infrastructure capacities and phasing required to make redevelopment and infill housing possible for the individuals and families looking to call Citrus Heights home.

While many malls in our area are beginning to experience the same hardships as Sunrise Mall, the Sunrise Tomorrow specific plan looks to be an example for our region and for our state on what a bright future can look like. Green means go funding is critical part in making this a reality. The $1 billion price tag to build out the site to completion requires $100 million in new infrastructure to support this growth.

In addition to providing much needed housing, the project is anticipated to result in $99 billion. Thank you.

Thank you. Please conclude. Hi. Welcome.

Hi, Jeanie Ward-Waller on behalf of Transform, which is based in the Bay Area Housing and Transportation Group, we urge you to reject the proposed cut to REAP. Thank you.

Get back to Sub, any additional comments? I have a couple of questions. Senator Niello, do you want to go first? Go ahead.

No questions. Just that points out the difficulty here. A few of those testifiers are directly from my district. The gentleman from the State Association of COGs illustrated the difficulty in identifying the funds that have already been spent or irreversibly committed.

But beyond that point, relative to the priorities of the state and funding beyond that point, I would just point out that every dollar that is not in every dollar of cuts that's not included in the eventual budget will have to be cut someplace else, and then we'll have to find more cuts because we're not there yet. So just further pointing out the extremely difficult situation we're faced with.

Thank you. Senator. Can we shed to the defined answer to the Department? How did we end up landing on REAP 2.0 as a program appropriate for cutting? And if so, if the Legislature were ultimately to accept the proposal, how would this be implemented and what would be the qualifying thresholds? Programmatically, either or both? Please address that.

Andrew March, Department of Finance I'll take the first part and then defer to the Department. But specifically, as you know, the January budget, it was an all of the above approach.

In an effort to present a balanced budget, the Administration had to look through various programs that received significant funding over the last few years. I would just point out originally the REAP 2.0 program had $500 million of federal funding and $100 million of General Fund.

At the urging of stakeholders that there's difficulties complying with some of the federal requirements for the funding, that funding was swapped to provide more flexibility with General Fund, the Federal Fund with General Fund, which is how we get to the $600 million General Fund total. So despite the reduction, 300 million still remains, which is just sizably large investment for this type of program, albeit understanding that various councils of governments are in different situations and it may be difficult to prioritize.

However, this proposal doesn't include any prioritization. However, the Department would ultimately implement whatever is adopted in the budget. So if the Legislature has certain priorities or thoughts on how to prioritize remaining funding, if there is a reduction, the Administration is open to discussing that. And if there are any questions or defer to my Department to clarify anything that I've said.

Appreciate that, I think I would just point out that it's clear from the testimony and a lot of the further input that by virtue of how these funds are administered, there's a de facto encumbrances for portions of this funding from a planning and implementation standpoint. So on a ledger, we can say those align with more broadly unencumbered funds, General Fund, and align with funds that are, in layman's terms, free for the sweeping. Programmatically, it doesn't sound like that's the case. And so I think that's the concern anywhere.

I would defer to the Department. They've been working closely with councils of governments to determine exactly how much funding has been spent.

Yes, absolutely. So this does differ from the other programs you heard about today and that these funds have been awarded. And that long period you are hearing about is because this has been a partnership, we've worked really closely with each of the allocated agencies on those plans to really make sure that they match the state's priorities.

And so I can't help but be a little proud hearing out loud some of the things we worked on in this program. That said, this is the year we're in and 300 million is not nothing to keep going with this program. We have tried to be very transparent with our awardees as soon as we learned of the proposed reduction, and we're trying to be cautious about reimbursements at this time to help people plan ahead as far as they can.

So we are aware there are reimbursements coming in and we're aware that there are contracts in place. Contracts do typically have language about budget changes in budget and fiscal environment. And absolutely, when the dust settles, we are pausing reimbursements beyond 25% so that when we know what the final decisions are here, we can have informed conversations with all of our awardees about prioritizing among the remaining funds available.

As you have shared, obviously there's a place for the Legislature to provide additional guidance should they so desire in that space. And I think you asked me one more question that I forgot to answer.

Implementation and a criteria for how, given the programmatic impacts and the different stages of different, various projects that are actually affected directly, how would we achieve that?

At the moment, other than the proposed reduction, there's no specific proposal about how to activate that.

We are requesting that every single awardee come talk to us if they believe that they are going to exceed even 25% of their awarding. And so we have heard from some of our awardees there, but that's sort of the path we're on right now, is trying to figure out where is everybody at so that we can provide as much information to decision makers as possible.

All right, we'll hold this item open. Thank you for the presentation.

We'll move to item issue number six, reductions, the multifamily housing grant program. Welcome back. When the time comes, you'll need to reiterate your name and title again and Department of Finance, please proceed.

Blair Huxman, Department of Finance. The Governor's Budget includes a $250,000,000 reversion for the Multifamily Housing grant program. The Multifamily Housing grant program offers low-interest, long-term deferred payment loans for new construction, rehabilitation, and preservation of permanent and transitional rental housing for lower-income households.

The 2022 budget included $325,000,000 General Fund over two years, and the 2023 budget included an additional $100,000,000 in 23-24 for a total investment of $425,000,000 over two years. In this proposal, $175,000,000 General Fund, or 39%, remains for this program.

All right. That concludes. LAO.

Thank you. Are there members of the public in the hearing room that would like to address the Subcommittee on issue number six? State your name for the record. Please limit your comments to a minute.

Nothing to add.

Just want to make clear that the multifamily housing program is the department's core rental housing finance program. It's flexible, it can serve various needs, it can serve all populations, and it's those critical resources that, along with the state tax credits, allow us to draw down those federal tax credits that are free for the taking to the state and about a one to one level. So of all the cuts proposed for the department, we are most interested in opposing the cuts to the multifamily housing program. Thank you.

Mr. Chair and members. Julie Snyder again with MTC ABAG. This is the last time you'll hear from me today, but I would like to share the remarks that we would also say for the infill infrastructure grant program and the foreclosure intervention prevention program as well. I think they're all the same from our perspective, these funds, and this gets, I think, to Senator Smallwood-Cuevas's comments, these funds are essential for our localities to be able to meet their housing element goals.

And while we might have signed contracts, might not have signed contracts on these funds, we certainly are anticipating the state sticking with those commitments in order to meet our housing element goals. We have in the Bay Area a production pipeline right now in pre-development of more than 44,000 affordable homes that we have identified waiting only for subsidy. That gap is about $7.6 billion and growing, and these funds are crucial to help us fill that.

So please consider this when you look at this program, you look at IIG, you look at the foreclosure prevention preservation program. Thank you.

Anyone else present like to speak to issue six? Welcome. State your name if you have a minute.

Good afternoon. Graciela Castillo-Krings here on behalf of California Housing Consortium, All Home, and Enterprise Community Partners.

Enterprise just actually has a report that they will be issuing later this week that actually quantifies some of the cuts and the impact that it will actually have to the units that are currently in the production pipeline. So going back to what Senator Smallwood-Cuevas was talking about, right now, there's about 50,000 units that have gone, are in the pipeline, have actually spent money to do entitlements, and we are probably going to lose them if additional funding is not provided through the LITEC program and MHP.

So these are really critical dollars. We have real data that we can now share with the Legislature, and we look forward to updating you next week about it. Thank you.

Thank you. Anybody else? All right, bring it back to the Subcommitee. All right, this item will be held. We'll move to item seven, reductions in the Infill Infrastructure Grant, IIG program. Please proceed.

Blair Huxman, the Department of Finance. The Governor's Budget includes a $200 million reversion for the Infill Infrastructure Grant program.

The Infill Infrastructure Grant program provides gap funding to local jurisdictions and developers for infrastructure that supports higher density, affordable, and mixed-income housing in locations designated as infill. The 2022 budget included $425,000,000 General Fund over two years, and with this proposal, $225,000,000 General Fund, or 53% remains for this program.

Thank you. LAO.

Ginni Bella with the Analyst Office. We would just note that it also means that there is about 25 million available for IAG that has not already been out for award.

All right, thank you.

Anyone from the members of the public that like to speak to this issue, specifically issue number seven, seeing no one will come back to the Committee. We're getting into territory where we're talking hypothetically about bond proceeds, and it's very perspective, and it's a little nerve-wracking, given the particular impact of some of these proposed cuts. I'll just note that for the record, Senator Neillo? Nothing. All right, this item is also held. We'll move to issue eight, reductions to CalHome program. Please proceed.

Blair Huxman, Department of Finance. The Governor's $152.5 million General Fund reversion for CalHome. CalHome provides grants to local public agencies and nonprofit corporations for first-time homebuyer and housing rehabilitation assistance, homebuyer counseling, and technical assistance activities. The 2022 budget included $350,000,000 in General Fund over two years, and the 2023 budget reduced 2023-24 funding by $50 million, leaving the total amount for the program at $300 million. With this proposal, $147.5 million General Fund, or approximately 49%, remains for this program.

LAO.

Nothing to add.

All right. Anyone in the hearing room like to address the Subcommittee on issue eight? All right, thank you. We'll move to issue nine reductions in the Veterans Housing and Homeless Prevention program, and issue seven will be held open. Please proceed.

The Governor's Budget includes a $50 million General Fund reversion for the Veterans Housing and Homelessness Prevention program. The Veterans Housing and Homeless Prevention program provides long-term loans for the acquisition, construction, rehabilitation, and preservation of affordable, multifamily housing for veterans and their families. The 2022 budget included $100 million in General Fund over two years, and that's $50 million each in 2022-23 and 2023-24. And with this proposal, $50 million General Fund, or about 50%, remains for this program.

LAO?

Nothing additional.

Thank you. Are there members in the hearing room like to address the Subcommitee on issue number nine. Please come forward. Welcome. State your name for the record and your time is limited to 1 minute.

Hi. Thank you. I'd actually like to comment on issue eight, if that's okay. I'm speaking on behalf of Habitat for Humanity California, on behalf of their 33 affiliates on the reversion of the CalHome funding. We'd just like to express our disappointment about the disproportionate cut, especially in comparison to rental.

It's the only program here that's tailored towards homeownership in the state budget, so it will be helping our low-income minority communities build out that generational wealth for decades and decades to come. We're looking at up to 2000 units being left unbuilt in the state if this program is in fact reverted, 53 million of which is being put to work by our habitat affiliates. Thank you so much.

Thank you for participating. Anybody else? All right, bring it back to the committee.

Let's please proceed to issue number 10, counting this right? All right, moving along. Please proceed.

Blair Huxman, Department of Finance. The Governor's Budget proposes $13.7 million in ongoing General Fund reductions for housing navigators. These funds are used for grants to counties based on each county's percentage of the total statewide number of young adults aged 18 to 24 in foster care or in probation systems. The 2022 budget included $13.7 million in General Fund ongoing to supplement county funding for housing navigators to assist formerly foster youth.

LAO?

Nothing additional to add, we did notice the question in the agenda that suggested that we were asked whether or not the funding was used to draw down the vouchers. And it is our understanding from stakeholders that some of this funding can be used for the case management support to secure those vouchers.

Thank you. Are there members of the public that would like to address the Subcommitee on issue number 10? Hi. Please state your name and your time will be limited to 1 minute. Thank you.

I am from Butte County and I am a local foster youth. This funding has helped many foster youth in our county stay home and stay off the streets. Butte County has a huge problem with homelessness and I believe that this funding will help keep youth off the street. Thank you.

Good afternoon. My name is Jennifer Vasquez and I'm here on behalf of Lutheran Social Services as a Housing and Navigation Case Manager.

I asked the Committee to preserve funding for the $13.7 million Housing Navigation and Maintenance program, which is proposed to eliminate to be eliminated as a program. This program and different agencies come together to serve over 1300 former foster youth with federal housing vouchers, keeping youth housed while leveraging 32 million in federal housing assistance. This program, like many other housing and navigation programs, teach youth how to become a good tenant, navigate existing barriers, and give this youth an opportunity to find a home.

I ask you today to help with us and serve these youth to obtain their own housing by preserving these funds for this program. Thank you.

Hello. My name is Wednesday Pope and I am a current, well sorry, current Folsom Lake College student and a former foster youth of California. I am here to request that the legislature preserve funding for the housing navigation and maintenance program in the state budget. When I exited foster care upon turning 21, I had no housing options.

I had no family I could stay with and certainly could not afford to rent my own apartment. Most apartments required three times a monthly rent and income and even with a job and financial aid from school, I could not afford this. The housing navigation and maintenance program both increases communities' access to seeking housing vouchers from the Federal Government and funds the support youth receive with turning their voucher into actual housing.

If the $13.7 million state-funded Housing Mavigation and Maintenance program and the $22 million in federal vouchers it leverages were available when I exited care, I likely would not have experienced homelessness. Please preserve the Housing Navigation Maintenance program. Thank you.

Thank you.

Hi, my name is Rosella Wilhelm and I'm a former foster youth. I used to attend American River College. I'm here to request the Legislature preserve funding for the housing navigation maintenance program in this budget.

Thank you.

Hi, my name is Trinicia Jones and I am a former foster youth. I attend Sacramento State. Currently, I have experienced the foster care system for 13 years of my life with no support system. I have seen the benefit of this program providing housing vouchers to keep former foster youth like me from being homeless. I am asking the Committee today to preserve $13.7 million funding of the Housing Navigation and Maintenance program that faces elimination. Thank you.

Thank you.

Good afternoon. My name is Simone Turek Lee. I'm here with John Burton Advocates for Youth and I'm here representing a coalition of more than 100 public agencies and organizations statewide, and over 200 young people have also joined our coalition. A little short. Move this down. I'm here respectfully asking that you preserve the $13.7 million housing navigation and maintenance program and continue to stand with foster youth. We really appreciate the Legislature, the Senate's support over the years.

We know that you recognize the needs of this population and appreciate that. This is a small state program that plays a critical role in helping us access $22 million in federal housing assistance from HUD via housing choice vouchers that are special population vouchers. And this is for young people coming from the foster care system, do not have family support, cannot afford housing. This is one of the most competitive housing markets in the country. We have the largest foster care population in the country.

Also, the large homeless youth population in the country. We simply cannot pass on this federal funding and the size of the state funding relative to what we can get federally. I say really, the math maths out there in terms of us sustaining that in the budget.

My last thing I'll share before I will leave is that experiencing homelessness as a young person is the most common pathway to chronic adult homelessness, which I know has been a priority for the Governor, the Legislature, citizens for some years now. And this is our evidence-based solution to preventing chronic adult homelessness. Thank you.

Good afternoon, Mr. Chair, members. Martha Guerrero, representing the Los Angeles County Board of Supervisors, also in opposition to the reduction, as you heard from Jay Bay, how critical this funding is for our most vulnerable youth in Los Angeles County. And we urge that you reject the proposed cut and thank the Los Angeles County delegation, the legislative delegation who signed on in preserving this funding. Thank you.

Thank you.

Hi, Denny Choicelock with California Coalition for Youth. We align our comments with others urging you to consider rejecting this cut and appreciate the comments in the write-up around jeopardizing federal funds. Thank you.

Hi, my name is Khalil Villius and I'm here on behalf of Butte College to ask the Committee to preserve funding to the $13.7 million housing navigation and maintenance program which is proposed to eliminate in the Governor's Budget.

This program serves over 1300 former foster youth with federal housing vouchers, keeping youth housed while leveraging 22 million in federal housing assistance. Thank you.

Thank you.

Hello. My name is Kai Buckles and I'm here with Butte College and Inspiring Scholars. I'm here to ask the Committee to preserve the funding for the $13.7 million Housing and Navigation and Maintenance program which is proposed for elimination in the Governor's Budget. And this is a program that is heavily needed in Butte County for current and former foster youth.

Thank you.

Hello, my name is Laura Katie, and as a formerly homeless foster youth myself, I respectfully urge you to not reform the funding for this program as it has already shown to struggle with its offensive small budget and would only serve as a detriment to foster youth aging out of the program.

Decreasing the budgeting for housing navigation and silk will only hurt aging-out foster children as they, with the support of this program, have already shown that they are still struggling extraneously to survive and desperately need any assistance they can receive.

Thank you.

Hello. I'm coming on behalf of Lutheran Social Services as a case manager for youth connections ages 18 through 24 youth. I urge this Committee to reconsider the proposed elimination of the Housing Navigation and Maintenance program from the Governor's Budget. This program, with its $13.7 million funding, is a lifeline for over 1300 former foster youth, providing them with federal housing vouchers and leveraging $22 million in federal assistance. It's not just about keeping a roof over their heads. It's about providing stability and hope for those who have faced unimaginable challenges. By preserving funding for this program, we are not just investing in the housing. We are investing in the potential of our youth to become advocates, mentors, and leaders in their communities. Thank you.

Hello, Chair, Members. My name is Christopher Hernandez. I'm a former foster youth as well as lead the legislative department at California Youth Connection. California Youth Connection says not these cuts, not these kids. This program is really important to young people when they're suffering from homelessness and they need a place to stay. So we ask today that you please preserve the housing and navigation maintenance funding. Thank you so much.

Thank you.

I'm Gina. I am a former foster youth and I am here to, I'm sorry. Nervous.

Doing great.

Thank you for more funding for this program. It's very important. A lot of foster kids that are in the system don't really have the tools once they age out of it, and this program is really important for that. Thank you.

Thank you.

Hello. I'm Ella Holman Burst, and I am the supervisor for the Housing Navigator Program in Stockton. And I get to get up every day, as you guys have heard from them, to assist them in their living. They've expressed how important the funds are and how it helps them navigate. So the program helps them each day give them hope to continue on another day. So we just ask you to keep those funds in the budget as best as possible.

Good afternoon and thank you for the opportunity to speak today. My name is Breonna Vaughn. I'm a former foster youth and I'm also a full time nursing student at Butte College. I respectively urge the California Legislature to preserve the Housing Navigation and Maintenance Program for former foster youth. As former foster youth, I have firsthand experience at how difficult it is after aging out of the system, especially while caring for my little brother, who was also in the foster care system and raising my own daughter. This program is a beacon of hope and stability for all foster youth like us, striving to build a better future for ourselves and our families. Thank you for your time.

Hi, I'm Jasmine Terry. I'm here representing Butte college. I'm actually one of the kids in your program that you're trying to shut down right now. I urge you to not do that because it helps me out a lot. If I didn't have this program, I would honestly be on the streets doing drugs like how my family always did. Thank you.

Thank you.

Hello, my name is Desiree Patterson. I'm here to speak on the behalf of California Youth Connection. I'm a guardian scholar at Sacramento State University and I urge you to support or to preserve the funds for the Housing Navigation and Maintenance Program. I'm so sorry. I'm nervous.

And I just want to point out that a lot of young women who exit the foster care system resort to living with their significant other and are at risk of domestic violence because their only options are to have housing with someone else or to go homeless. And I just want to point out that this is really important.

Thank you.

Be patient with me. I am nervous as well. I'm here on behalf of Lutheran Social Services. I was actually a former foster youth. I am now a housing navigation case manager. So I really feel like I am here to advocate for the tables that can be turned around the stereotype for foster youth. We are actively achieving reducing homelessness through using vouchers, FYI and Housing Choice, voucher included. I would like to say that foster youth are at. Excuse me. Hold on.

You're doing great.

Thank you. We have more risk for imminent danger just because we are exposed to more violent and drug related crimes due to significant relocation through group homes and foster placements. If you are lucky to be placed in a foster home, which again, you are subjected to amounts of abuse in those homes as well, we oftentimes are entering the juvenile justice system.

So by the time that we are adults and we are ready to prepare ourselves for adulthood, we are already losing out on chances and we already have a stereotype surrounding us. We often lack the ability to acknowledge ourselves on credit building. AB 167 was put into place for us to preserve our right to be able to graduate high school because due to relocating through group homes and foster placements, we often do not get to complete our diplomas or we lose motivation to.

It is from the deepest part of my heart for myself and my community today that you please preserve this funding for this program. Like I said before, this was a great opportunity for me as well. So, thank you.

Thank you very much.

Hello and good afternoon. My name is Jessica Fuentes and I'm a legislative committee member from the Bay Area with California Youth Connection. I'm here to say not these cuts, not these kids. As a foster youth who was homeless, having access to these resources helped youth become successful and thriving adults. Today, as a graduated aircraft mechanic, I am proof that access to these resources allow us to not become a part of the statistics that are usually given to foster youth. Thank you.

Thank you and welcome to those in line and joining us. Just a friendly reminder, come forward, state your name for the record and limit your time to 1 minute, please. Thank you so much. Welcome.

Hello, my name is Eternity Hernandez. I'm a former foster youth, and I'm here to just let you guys know how much LSS Housing Navigation Program has helped me out. It has kept me out of sex trafficking. It has given me an opportunity to have a home for address, to have opportunity to get a job, and to help me also have affordable housing, to be able to pay off college as well. Thank you.

Thank you.

Yes, hi, my name is Derek Clark. I'm from Bill Wilson Center. I am the chief program officer. And so I wanted to just mention today what the young people have already mentioned. As you already know, we're in a housing crisis. Right?

Like, as far as our young people, we are the largest in the actual nation. And so that 13.7 million that has been approved has really started to help on helping us identifying housing for young people. If that funding goes away, the picture that we're all going to look at is these young people ending back up at places like the Wilson Center in our homeless shelter.

We're going to see these young people out on the street because we're not going to be able to identify certain type of housing. Yes, we will provide case management, but we will not be able to house. We will be able to help with employment, but they will lose their jobs because they have no place to live. So these funds are very important as far as us battling this housing crisis. So thank you very much.

Thank you.

It's kind of up here.

Feel free to push it down. If it is beneficial to you, you can pull it down. Thanks for the assist. There you go.

Hello, I'm Jackson, and I'm here with Inspiring Scholars and California Youth Connection. I believe that Housing Management and Navigation Program is very important because as someone who is leaving transitional housing programs soon and have been accepted to receive an FYI voucher thanks to the HMNP program. The HMNP program has been able to help with housing. I have a one bedroom apartment that's absolutely stunning.

The HMNP program is also working on providing foster youth such as myself with housing vouchers that will assist with helping me pay to keep this nice apartment. Because it's a nice apartment. I can personally confirm that this program allows me to be a successful student, a leader and an advocate for people in my community and have hope for my future. Without this program, I am prone to homelessness and if this happens, I will not be able to continue being successful.

There are more than 50 people in Butte County who are on the waitlist for FYI vouchers and they deserve housing stability and assistance as much as anyone in this room. Thank you.

Thank you.

Hi, my name is Parker and I experienced the foster care system. I am a student at Butte College studying for nursing. I am here to ask the Committee to preserve funding for the $13.7 million Housing Navigation and Maintenance Program, which is proposed for elimination in the Governor's Budget. This program serves over 1,300 former foster youth with federal housing vouchers, keeping youth housed while leveraging 22 million in federal housing assistance. Thank you.

Thank you.

Hi there. Thank you for your time. My name is Vance Edwards. I'm from Butte College and I'm here in support of the Housing Navigation Program. It supports students that, unfortunately, at age 21, some of them are not ready to be transitioned fully to independence and face homelessness in Butte County and so our request is that you preserve that funding. Thank you so much for your time.

Thank you. And just briefly pause. Sergeant Arms, what's the queue look like out there? All right, sir. Thank you and welcome, everyone. Please state your name for the record. You're timely limited to 1 minute.

Hi everyone, my name is Dr. Jenny Espinoza and I am here on behalf of the nonprofit Back to the Start to ask the Committee to preserve funding for the $13.7 million housing Navigation and Maintenance Program, which is proposed for elimination in the Governor's Budget. Our organization works with incarcerated individuals in the California prison system to help them process and write about their childhood traumas as a means of healing and growth, as well as to raise public awareness about how to disrupt the cradle to prison pipeline.

Through our work, we have heard many powerful stories from incarcerated individuals about their experiences in the foster system at inflection points in their lives, including the stark choices they've had to make around finding and affording housing as they transition from the foster system. Some recounted how they were faced with this choice between homelessness and returning to a violent home environment in which their friends and their family members were killed due to gun violence or drug violence.

Since the currently incarcerated participants can't be here on their behalf, we are passing along the following message. We've only got one shot to get this right for these kids. It's life or death for many. This is one of those moments where we don't want to fail them so that hopefully they don't end up where we are in prison or even worse. We are not just looking at the budget, we're looking at the lives of our most vulnerable youth. Thank you.

Welcome. And remember, the mic is very sensitive, so you don't have to get on top of it. There you go.

Thank you.

Welcome.

Good afternoon. My name is Jan Judson. I am a co-founder and board president for a nonprofit in Yolo County called Make it Happen for Yolo County. We provide household furniture and items for transition age youth, largely youth from 16 to 24, that are moving out of foster care into independent living. We are here also to support the Housing Navigation and Maintenance Program continuation.

We are currently working right now with a youth who will be aging out of foster care next month at age 21 and she is desperate to find housing. Has been looking, but doesn't have a credit rating. So we are relying a lot on nonprofit organizations like ourselves to help with getting security deposits, all that. But it's just a persistent issue and taking this away would be detrimental. So thank you for your time. I appreciate it.

Good afternoon. My name is Emerald Evans and I'm here on behalf of Grace and Child Poverty, California, but also as a former foster youth. And I want to ask the Committee to preserve the funding for the Housing Navigation and Maintenance Program that is proposed to be eliminated in the Governor's Budget. This is a critical program that's serving over 1,300 foster youth to ensure that they are housed, but not only housed, but are able to sustain housing. So thank you.

Thank you.

Hello, my name is Purva Bhattacharjee. I'm here representing the California Alliance of Child and Family Services. We represent over 165 different community based organizations that serve current and former foster youth. And I'm also here in support of preserving the funding for the Housing Navigation Maintenance Program. These housing vouchers are crucial to our transition age youth population, and we believe that this is just a preventative measure to solve or help maintain the current youth homelessness crisis.

Forty percent of the homelessness population consists of former foster youth, and cutting these services, cutting these programs, will just cost the state so much more in the interim. Thank you so much.

Thank you.

Susanna Kniffen with Children Now here in support of the Housing Navigation and Maintenance Program.

Thank you.

Jenn Rexroad with California Alliance of Caregivers, also in support of the funding for the Housing Navigation and Maintenance Program. Thank you.

Thank you.

I am Valerie Hartley, and I'm the supervisor for the HNP Program in Shasta County. And I'm asking you not to cut any funds. This program has removed so many barriers for our youth to not be homeless or removed barriers so they could get out of the homeless situation. So thank you.

Thank you.

Good afternoon. I'm Mercedes Parker with California Youth Connection. You've heard from several of our staff and members already today. So I just want to reiterate, not these cuts, not these kids. The Housing Maintenance and Navigation Program across the state represents one area of hope for young people. We are in an affordable housing crisis here in California, and foster youth are more severely impacted by that than almost anybody else. And so we want to preserve that life support, that lifeline for them. And so I urge you not to cut the $13.7 million Housing Maintenance and Navigation Program. Thank you.

Thank you.

Anne Quirk with Children's Law Center of California representing children in the foster care system in Los Angeles, Sacramento, and Placer counties in support of the Housing Maintenance and Navigation Program.

Thank you. Anyone else in the Committee room would like to address Subcommitee? All right. Thank you for participation. We'll bring it back to the Committee. Is there a consensus and input that, in fact, there's a potential to lose an opportunity to draw down federal voucher funds if, in fact, we took up the recommendation? Feel free to respond.

Andrew March, Department of Finance. So although some stakeholders have noted and the witnesses today that some of the funding is used to support the required activities for various foster youth housing vouchers, it's not necessarily a requirement of the funding. The funding is very flexible in what it can provide, and some counties have chosen to utilize the funding for that. I'd also note that this isn't the only source of funding that counties can use for this type of activity.

There's existing ongoing funding that counties receive from the Building Homes and Jobs Trust Fund that they can redirect or utilize for this. It's a flexible pot of funding that counties can use. And then additionally there's the Homeless Housing and Prevention, the HAPP funding that can also be used for housing navigation. And I would look at this program in concert with the program that's noted on the agenda, the Transitional Housing plus Housing Supplement Program, which receives $42.3 million a year. So we have 42.3 million and $13.7 million, and that 42.3 million is maintained in the Governor's Budget.

Thank you. Anything, Senator Niello?

A question. This is not a housing program in the sense of the other programs that we're considering. It's really a safety net foster care assistance program, would seem to be more appropriately considered under Health and Human Services. So I'd like to see what various staff members here would have to say about that.

I don't pretend to be an expert on the foster care system, but my understanding is that due to various constraints of realignment, this funding was put at the Department of Housing and Community Development several years ago along with the Transitional Housing plus Housing Supplement Program. Due to some of the constraints with realignment funding

The funds don't increase the supply of housing though. It provides assistance to foster youth aging out foster youth to find and acquire housing. Do I have that right?

That's one activity that counties can choose to use for funding or use the funding for. It's very flexible funding, and counties can use it how they see fit within various parameters. And as you've heard, some counties have used it for that purpose.

Any additional comments from HCD on that?

Jennifer Seeger, Deputy Director for the Division of State Financial Assistance at the Department. So as my colleague at DOF mentioned, yes, this is one of various eligible uses under the program. To your point of whether or not it actually results in new units, there are like maintenance type activities. So there are health and safety kind of issues that are addressed through some of these program funds. It's, of course, dependent on the ultimate recipient of the funds and how they choose. But under the program, there's a wide variety of uses. As we've heard, many of the counties choose to use them for case management and navigation programs.

LAO?

Ginni Bella with the Analyst Office. I would just note that I actually work on the human services issues as well, and it's something that is on our radar as we're considering the other reductions proposed on the foster care side. So it is something that we intend to bring up in those subcommittees too, sir, is that sort of cross learning and understanding as well.

We're considering this in the context of priorities, choices of priorities for funding in an area that I don't think it's comparable to. I get the point of flexibility, but based upon the testimony, and I think probably based upon actual execution of this, it is largely a foster care benefit program and probably should be considered in the context of other foster care programs. So it seems to me this is misclassified and in the wrong area of state governance.

All right. Thank you for that. This item will also be held. I'll make a note for the docket today. Issue number one under the Civil Rights Department, we're going to move from vote items to an item of discussion. The Members have some additional questions on that item, so we won't take that up for vote. Meanwhile, we have two remaining issues, 11 and 12.

I think what we will do at this moment, bear with us, is we'll take a brief recess to stretch bio recess, give Senator Smallwood-Cuevas an opportunity to make her way back.

Mr. Chair?

Absolutely. Testing the limits here, and then we'll reconvene and dispose of the final item. So thanks for your patience. The Committee will stand in recess for about 5, 6 minutes.

Subcommitee will come to order and reconvene under items for discussion. With the noted changes to the docket, we'll take up issues 11 and 12, and then we will go back to the Civil Rights Department and take up issue number one as a discussion item. So with respect to issue 11, reductions to the Foreclosure Intervention Housing Preservation Program, please proceed.

Blair Huxman, Department of Finance. The Governor's Budget includes a $247.5 million reduction for the Foreclosure Intervention Housing Preservation Program over the next three years. And that includes 85 million in 24-25, 100 million in 25-26 and 62.5 million in 26-27. The Foreclosure Intervention Housing Preservation Program provides funding to purchase multifamily properties that are at risk of foreclosure. The 2021 budget included $500 million in one time General Fund for this program.

The 2023 budget reduced the program by $15 million to $485,000,000 and deferred 247.5 million to out years. With this proposal, 252.5 million General Fund, or approximately 50% remains for this program.

LAO?

Ginni Bella with the Analyst Office. We would just note that that 252,000,000 that was referenced, that money has not yet gone out either.

Thank you. All right, are there members of the public who would like to address the Subcommitee on issue number 11? Please come forward. State your name for the record. Your time is limited to 1 minute. Thank you. Welcome.

We are really interested and worried about the type of investment that the patient has set here. At the end of the day, it has to take some time to get the program up and running. But this is another innovative way of preserving and actually adding stock of affordable housing. Because we're not doing new construction, we are actually in the market that's going to be foreclosed and making sure that people are staying house, making sure that we're adding to our stock as we're losing is incredibly important. So we would ask that this actually continue to be funded. Thank you.

Thank you.

Honorable Chair and Members. Amy Hines-Shaikh with the California Community Land Trust Network. I'd like to offer a statistic about the per unit cost for the FIP versus new construction. So it's $276 to $480,000 per unit for a FIP acquisition, whereas new construction is approximately $480,000 to $1.0 million per unit for the new construction. And so this is a lot more bang for your dollar in understanding the significance of the program and its intended effect.

An array of stakeholders have dedicated resources to prepare for the FIP implementation. The team at HCD has led the way, working for two and a half years to stand up the program. Philanthropy and nonprofits have also been active throughout providing feedback and preparing for future FIP recipients through the trainings, business planning, and technical assistance. The California Community Land Trust Network to address Senator Smallwood-Cuevas's exact like who would be harmed.

We have 42 nonprofit community land Trust Network members who develop and steward permanently affordable community owned housing. Our member organizations span California from Humboldt County to San Diego. Eighty percent of CLT residents are black, indigenous, and people of color. And 60% of CLT households have annual incomes below $40,000. Thank you.

Thank you.

Hello again. Tamika L'Ecluse from the Sacramento Community Land Trust. Thanks for having us. In 2023, 34,766 unit house homes, including over 9,000 rental units got notices of default that were eligible for this FIP funding. 100,000 people will be impacted by these defaults and that's 100,000 people who are at risk of homelessness. FIP keeps speculators from buying up these homes and it keeps people housed and preserves affordable housing as a tool to mitigate our homelessness crisis.

So we urge you to keep the remaining funding of the original $500 million intact. We urge you to use and see this as a tool for the state to have in its toolbox to increase housing affordability. And we urge you to keep the future commitments for FIP intact and funded as well. Thank you.

Thank you. All right, seeing no one else, we will bring it back to the Subcommitee. Senator Smallwood-Cuevas.

I have one question. Using this funding for FIP, how many properties are there currently that have used these funds to be refurbished and then turned into housing? This funding was allocated, but your agency did not get that money out.

Yeah, there was a slight delay in the implementation of the program due to the need for a statutory change, which we received last year. And since then we've been moving forward with a program, but we haven't yet encumbered those funds into a standard agreement to a provider that would offer those services.

So I would just add, Matt Schueller with the Department, that we've gone through the solicitation process for the Fund manager. Right. We've made an award to the Fund manager, but we're currently in contract negotiations, so we haven't fully executed the contract that would then manage the funding. So to my colleague's point, we haven't started yet, but that's precisely where we are in the process.

I'm just being new to the Legislature. I'm trying to figure out when were you directed to establish this Fund and to be able to implement this program? How long has this delay? Because it feels like now the crisis of our budget has caught up to the delays.

I believe this funding was in 2021. Yeah. So this is from the 2021 budget. But as my colleagues from the Department of Housing and Community Development noted, this is a pretty new and novel program for the state. So there was requirements from both the stakeholders and from the state and changes to the program statutorily to really allow this program to work as intended. And so those changes were made last year.

So prior to that, there was a lot of work happening to try to stand up the program, and that's where these different nuances and the statutory language were flagged. We were able to enact those changes last year with the help of the Legislature and this Committee. And the Department has the $252,000,000 which was noted, was awarded to a Fund manager. And then this is really looking forward. So there's funding that was proposed to be appropriated in 24-25, 25-26, and 26-27. And so this proposal is really looking forward toward those commitments and saying we can't afford them right now.

So the contract that you're referring to that is funded? There is funding to execute this new relationship with this Fund manager and to release these funds?

Through the process.

Correct.

And as the agenda states, there's roughly $190,000,000 in grants. There's a portion that's the administrative cost for the Fund manager, and then there's a portion that's state operations for the activity that needs to occur at HCD.

Okay. Thanks for clarifying that.

Questions? No. All right, we'll take up. Thank you. We'll take up issue 12, additional staffing for Administration and permanent local housing allocation program. Please proceed.

Blair Huxman, Department of Finance. HCD requests for positions in 24-25 and ongoing to monitor the Permanent Local Housing Allocation Program, disperse funds, and report on affordable owner occupied workforce housing outcomes. Since the Permanent Local Housing Allocation Program was established in 2020, nearly 300 jurisdictions have received their funding allocations, creating a year round need for contract monitoring and Administration.

There's a potential for 350 contracts in total based on the total number of eligible jurisdictions, and the increasing number of contracts requires additional positions to continue to properly monitor the program.

No concerns to raise.

All right, anyone like to address the Subcommitee on issue number 12? All right, let me, hang on just one second. All right. Just to note, issue 11 will be held open. Issue 12 is an information only item, and we're going to return to what was noticed as issue one. All right, thank you very much. I appreciate it. And we'll come back to the Civil Rights Department and take issue one, reduction in Community Conflict Resolution and Conciliation funding, as an item for discussion. Welcome back. Please proceed.

Thank you. Adam Romero with the Civil Rights Department. I invite Finance to present this matter.

Blair Huxman, Department of Finance. The 2022 budget provided three years and limited term general funding to provide resources and training to communities facing hate incidents or other conflict over discriminatory practices. The Governor's budget proposes to withdraw the final year of the three-year limited term funding previously committed to the Civil Rights Department for a cost savings of 883,000 dollars, given the current General Fund outlook.

LAO?

We have nothing to add.

All right. Additional comment from the Department?

Sure. As background, as I mentioned before in my comments, in addition to investigating thousands of complaints per year and prosecuting high-impact cases on behalf of large numbers of Californians, one of the most important services that our Department offers is free conciliation in the form of our investigators conciliating cases or in the form of our trained mediators in our Dispute Resolution Division conciliating individual cases.

What this funding did was create a new community conflict resolution program in which we were not just responding to or providing conciliation services to individual complaints, but actually going out into communities and offering dispute resolution services and other types of conflict resolution services to communities experiencing tension and conflict around hate violence and discrimination.

In the two years of funding that we have had this, that we have been able to launch this program, we hired three staff into permanent positions, and it has been, I think, very successful. It has exceeded the goals set out in the BCP.

Just as a couple examples--or there are numerous examples in the agenda today that I think outline the various types of services that we've offered--as just one example, just yesterday, our Department partnered with the LA City Civil and Human Rights Department and the federal U.S. Attorney in the Central District of California to host a program for religious leaders in Los Angeles around building bridges and understanding what resources are available at the state, local, and federal level available to religious leaders who are on the front lines of their congregants coming to them facing discrimination and harassment.

So we had a terrific event yesterday, and that's just one example of the type of program that this unit is offering. Obviously, because of the budget shortfalls this year, the Administration is proposing to withdraw this funding. However, the Department will intend to use savings from other places to keep these three positions going.

Thank you. We'll bring it back to the Subcommittee. Senator Smallwood-Cuevas?

Yeah. I'm curious. I see that this money that the Administration is recommending, that this money be pulled back. This is a program that seems to be working. I want to talk a little bit about the partnerships that you have, and I want to point out a study by UCLA that talked about and looked at, for example, the Labor Commissioner's Bureau of Field Enforcement.

And through that model, they have identified community organizations that work directly with the Labor Commissioner's Office to build high-quality, in-depth, investigative capacity and partnership to address issues that face vulnerable populations in the workforce. And it makes me sort of ask the question, especially as more of the state investment in the kinds of programs that you mentioned is going to be declining by this proposal, has CRD considered adopting a similar strategic enforcement model where you are increasing capacity and also leveraging resources both at the city level, the county level, and at the federal level?

You gave that example, which is great to do events, but when you do strategic sort of partnerships for enforcement, there's a lot of opportunity to maximize investment. So could you talk a little bit about how you're looking at these partnerships and what ways and what you might need from us to be able to leverage more out of these partnerships?

Partnerships with community groups, partnerships with religious leaders, partnerships with Chambers of Commerce, all of these are opportunities for us to increase our capacity, and one of the ways in which we do that is through outreach and education.

And those aren't just one-off events but are strategically planned, in which we work with different community groups or the other types of organizations that I mentioned, as well as local and federal government as well because there's an interplay of the different agencies and the services that they can offer. And it's important that we do that work because for, I think, the average Californian, we need to reduce the silos and reduce the barriers to accessing services.

And so we come together with these different agencies and community groups in order to strategically provide information to Californians about their civil rights, about the services that are available to them, and how we can be helpful.

And I appreciate information. I guess what the proposed cuts would do would affect our backlog. It would affect our delays. And so it's more than information in terms of what concrete capacity that can help the state better address the needs of these protected classes that rely on us for enforcement.

So it sounds like there isn't sort of a more sort of strategic collaboration to actually look at ways to reduce backlogs and to reduce the kinds of enforcement barriers that we have at the state, which are going to be exacerbated now that we are now cutting more and more of the budget. So I would like to see more information about ways in which those partnerships are and can be leveraged to help the state address its backlog.

And I'm particularly concerned because, as you know, we are in the process of having an unprecedented amount of federal dollars come in the state for our climate-resilient infrastructure. When we talk about infrastructure, the number one history around infrastructure is who is excluded from actually doing that work, and CRD is going to be called on to ensure that as we're investing federal dollars, that women, workers of color, immigrant workers, have fair and equitable access.

And I think CRD needs to think long and hard around how do we leverage partnerships to help us build capacity, and what are the ways that the state can ensure that we can meet this moment of having to protect more classes but also this unprecedented opportunity that has to be a multiplier in these communities that have long been excluded from this sector?

So do you have a sense of what CRD's plan is to utilize some of this federal funding to maybe strengthen your enforcement capacity and ability to really track, monitor, and ensure fair opportunities for all Californians?

The federal funding that our Department received is in the form of reimbursement from the U.S. Equal Employment Opportunity Commission and the U.S. Department of Housing and Urban Development. When there's a dual filed case that could be filed in the federal venue or with our Department, if we investigate that, those federal agencies provide us a partial reimbursement of our costs for investigating those cases. And so those are the mechanisms in which we obtain federal funding.

We've also received a grant from the federal government to support our California versus Hate Program. We applied for the Jabara-Heyer Grant and received it. I'm not aware of other funding--federal funding--that is available to our Department, but I certainly would welcome learning about those opportunities from you.

Yeah, and I appreciate that. I know that through the Biden Administration's efforts around the Good Jobs Initiative, around creating its equity, executive orders, and partnerships in the Heyer Program at the EEOC, that there is an emphasis on making sure there's anti-discrimination protections within the federal funding that is coming to the state and that we are trying to leverage to ensure good jobs for all Californians.

I think it is important to think about those partnerships--local, county, state--that we can work to leverage those funds and in this moment, make sure CRD is prepared to meet the challenge that we have. So I look forward to seeing what other funding streams might be available as the Administration, the Department, is proposing these cuts.

Thank you. I very much appreciate that and the importance of the partnerships that you're talking about. I would only just add that our Department enforces the rules that apply nondiscrimination in state-funded programs and activities, as well as to state contractors. And so we do receive complaints under those provisions and do investigate them and take other appropriate actions as necessary.

And yet all potential of 114 billion additional dollars to come into that program, we've got to scale the ability to be able to monitor, to ensure, again, this sort of institutional and historic exclusion is not happening in this new climate-resilient space. So I think it's meeting the moment and requires us to look more deeply and to think about the strategic partnerships that we'll need to make it happen, particularly in this deficit time. So thank you for that, and look forward to working with you on it.

Thank you.

Thank you very much for your patience and your work and for working with us on moving this to a more deeper discussion. That item will also be held. We'll move back to the items for vote only, which is only Issue Number Two under HCD, which is additional staffing to administer federal-funded programs. And I'll entertain a motion. All right. Motion is to approve as budgeted. Is there any conversation from the Subcommittee? Hearing none, Consultant, please call the roll.

Motion is approve Item One as budgeted. [Roll Call].

All right. That item is out. Thank you all for your patience. Thanks to everyone who participated today in the hearing. More work to be done at this time. The Subcommittee--Budget Sub Number Four on State Administration is adjourned.