Assembly Budget Subcommittee No. 5 on State Administration

Good afternoon and welcome to the Assembly Subcommitee 5 on State Administration. Today our hearing will focus on Department of Housing and Community Development, Business, Consumer Services and Housing Agency, and the Civil Rights Department. I'm going to be making a few comments about housing before we begin.

As chair of this budget Subcommitee, I know that every decision we make carries real consequences for families, for communities and for the long term health of our state. Housing is not just an economic issue. It's a question of dignity. It's a question of opportunity.

It determines whether a family can put down roots here in California or even decide to move out of California. It's whether a young person can afford to live near where they work and whether an older Californian can retire. With stability for too many in California, it's the difference between security and crisis.

We've taken meaningful steps over the years with putting billions of dollars into housing, streamlining housing production, expanding tenant protections and making historic investments in affordable housing. But to be clear, while significant, this is not enough. Too many barriers remain. High cost, outdated regulations and over regulations, local opposition continue to slow development.

By local opposition, I mean NIMBYs, I mean elected officials who find every way to stall or delay housing. Find every way to find a way to not create the housing we need. The housing we need is still not being built fast enough. And the housing we have is still not affordable.

While there are budgetary concerns and things can seem bleak, we must continue to push forward however we can. When we add all of the destruction of the fires, not just in Los Angeles, but from the north to the south, we have even lower units of housing available.

If we pull back now and we allow funding to dry up, if we step away from our commitment to housing, then this crisis will only deepen the cost of inaction. More displacement, more, more homelessness, more economic instability is far greater than the cost of continued investment.

California has always led the way and that's why I've been so proud to work under the governors, Governor Jerry Brown and Governor Gavin Newsom, who not only said that housing was important, but backed it up with dollars. However, this budget does the opposite.

When we find a path forward in the face of this economic uncertainty, when we prove that smart investment and smart policy can go hand in hand, then we will not only meet this moment, we will set an example for the rest of the nation.

And it's with that and with this serious, serious topic of $0 in the housing budget that we're going to begin this hearing. Housekeeping details this is an in person hearing with all panelists testifying in person. We will take questions from Members of this Subcommitee after each panel.

Public comment will be taken at the end of this hearing and will be limited to 30 seconds to one minute. If you are unable to attend this hearing in person, you may submit your comments via email to [email protected]. We're going to call up our first panelist, the Department of Housing and Community Development.

Welcome, and please make sure you introduce yourself as you testify. Welcome.

There we go. Thank you. Good afternoon, Madam Chair. My name is Zach Olmsted. I'm the Chief Deputy Director for the Department of Housing and Community Development. Happy to be here this afternoon. And I'm here to provide an overview of kind of the housing landscape, recent progress and some ongoing efforts at the Department level.

I want to start by saying overall, California's house, California's housing activity is is up construction. From the most recent data that we have, which I'll be talking about some pieces of data today, the most recent year of data we have is from 2023. It's our annual progress report data. We'll get 2024 data in the coming months.

But from 22 to 23, housing activity, housing construction was up 13%. And that's marked consistent growth from every year since 2018. So to put it a little perspective, in 2018 we had built just under 70,000 housing units that year. Every year since, we've seen the completion of housing go up.

So for that most recent year in which we have data available, in 2023, it was just under $113,000 sorry 113,000 units a year. So I believe we can say these increases are a result of the aggressive action that you noted in your opening remarks, certainly supported by the Assembly.

We've been happy to implement many of these laws, implement that and distribute that funding. And I do think we can say that we have streamlined processes, we have reduced red tape, and we have boosted affordable housing production. Certainly we want to keep going on that right trajectory.

So I'll highlight a few successes which I want to point out. First, our density bonus program entitlements for deed restricted affordable housing units, they grew from 29,000 in 2021 to 48,000 in 2023.

Additionally, the streamlined ministerial approval process, or SB35, we saw a little over 21,000 units approved between 21 and 23, and that was a 79% of those targeting lower, very low income households. Our excess equity Excess sites program has created 4300 units across 32 projects with improvements underway to Enhance developer partnerships in an ongoing way on those sites.

And overall, in terms of our affordable production, since the beginning of 2019, HCD has funded 60,098. So just a little bit over 60,000 multi family units. 18,406 of those are already constructed. 27,442 of those are actively in construction. And the remaining 14,250 have been awarded but are not yet in construction.

So the state does remain poised to see continued significant affordable homes come online and available to be occupied in the coming years as a result of those previous investments. A bit more about the current funding pipeline. We've AC has awarded just since October, 4.6 billion in various programs.

And there's quite a bit of active and ongoing funding right now. That includes Proposition one, which, which we call HomeKey Plus, and that's about 2.2 billion that's already available. We're already receiving applications. About 1.03 billion of that is for veterans. The remaining 1.11 billion is for the other target populations of that Proposition.

The Affordable Housing Sustainable Communities Program. I believe that NOFA should be being released today for about 775 million. We have released our multifamily Supernofa, and that was 382 million made available in February of this year. And that has four programs within it.

But the primary funds that come from there are from the multifamily housing Program, the JOSERNA Farm Worker Program, and our infill and infrastructure grant program. And we would expect to have awards for that supernofa in August. We also have a separate tribal multifamily supernofa, which is an additional 50 million through that Supernofa just for tribal entities.

We released our homeownership supernofa last fall and that has just closed. So that was released in November. 161 million. We expect awards there by May. So that's the funding we have available right at this, at this time. So still quite a bit of funding coming out this year.

A little bit more though about our production, other aspects of production and accountability. So funding is great, it's very important. But we of course need to accelerate production at all levels. Right. We have a housing shortage across the board. And so we, while we can't control many inputs, materials, labor and the like, we can control development timelines.

The work that you guys have done in the Legislature here, the laws that we're enacting have helped to hopefully streamline and accelerate development across the board. And we have seen those development timelines improve significantly. So for example, Entitlement processing has been reduced from 145 days on average in 2018 to 64 days in 2023. And construct.

So that has shortened construction timelines by a third, by 33%. And that matters, right? That is, that is cost savings. It's less costly, of course, you know, the longer or the Shorter I should say takes to get to development. We've seen affordable housing production grow concurrently.

Very low, very low income completions have increased by 44% and low income completions of housing have increased by 75% just in that 22 to 23 year age range that we have the most recent data for.

And under the current sixth arena cycle, we have seen 43,464 very low and low income units permitted and a total of 238,217 units achieved to date. Just a couple more items I think that are important, then I'll take your questions. We're very proud of the work of our Housing Accountability Unit.

It successfully reviewed 616 individual requests which have unlocked nearly 8,000 units. Nearly 3,000 of those are affordable units, but the remainder are not. So you can see that accountability work does flow across the board. Board. We continue of course to support local governments through technical assistance on laws, education and enforcement, of course, when necessary.

The surplus lands program has facilitated the potential for another nearly 32,000 units across California, 20,000 of those affordable. And then through the HAPP and ERF programs for homelessness that are now administered by HCD, we're obviously continuing to monitor expenditures there, support underperforming grantees and enforce compliance to ensure the effective use of those funds.

So I hope that's a good picture of the trajectory that we're on. Happy to answer any questions you may have and thank you for the opportunity to come here today.

Thank you. I think we'll go ahead and go to LAO.

Paul Steenhausen with the Legislative Analyst Office. We didn't prepare any comments for this issue, but we're happy to take any questions you might have.

All right. And Department of Finance.

Blair Huxman, Department of Finance. Nothing to add at this time, but we're available to answer any questions.

Assemblymember Ward. Questions.

Thank you for being here as always. One of our more important hearings for this Subcommitee.

So I've mentioned in years past and I'll mention again here today, that one I appreciate we are hearing more information about, you're attempting from more of an accountability and a look back perspective and you're trying to add up exactly the impact that we're having here.

And so I definitely want to appreciate, you know, some of those summaries that are here it is and will continue to be very helpful for us as we are looking at the individual programs and deciding within this area, the subject area which are more effective to kind of get an understanding and an evaluation of multifamily housing program, affordable housing studies, sustainable communities program, the low income housing tax credit, you know, the contribution that we can really attribute the production of those units to the success and that past performance, notwithstanding that we've got changes in costs and labor and other factors that affect the total production that we can have.

How much if we can argue for $1 billion here or carved up there. Right. Where is that best shared?

You know, I've mentioned this at the very beginning, I think our first hearing of this Committee, my severe disappointment in the January draft that we are in effect doing this dance again where last year we had an arguably greater budget deficit to solve for and things were effectively zeroed out or many programs were somewhere close to that.

And here we are again in a relatively better year. Still had its challenges, but. But we're dealing with hopefully trying to be able to replenish many of these programs. And the evidence really should be there in front of us about the work that we've done.

And so I'm wondering when was the last time this is kind of an open question that we saw a proposal with no new dollars for affordable housing production in the pipeline.

Sure. You know, and I'm very pleased, just if I may opine, like having worked in this for a long time, you know, it is relatively recent that we've seen seen the General Fund even come in for housing. And so obviously we're very pleased to implement those dollars. I think you would probably go back to 2017 2018.

Yeah, that sounds about right. Because that's right before there was a big housing package being done that was kind of the first foray right into really leaning into housing, which, you know, those of us that work in housing, we're very happy to see.

And there was a, there was affordable housing bond placed on the ballot, of course, as part of that package. So we, we had or the state had been, there'd been a couple small infusions of General Fund, nothing that like about 100 million I want to say like in the like early 2010s.

But those and those were, those are tacked onto the last housing bond before that bond we passed in 2018 that was funding all those major core programs was in 2006. So those funds had essentially remained dry. There was still funding happening. Then we had the No Place Like Home program. So that was kind of a precursor. Right.

That was a bond program at that time. So we did have some dollars flowing. They weren't General Fund Dollars, they were bond dollars. But I think you'd go back to 2017 2018 to see when we didn't kind of get large scale investments.

Right. And when we don't have those investments, I think it's easy to be accountable to zero. You don't expect that the state's contribution towards affordable housing production would be zero. And I can't have that this year.

We've got to keep our foot on the pedal and make sure that we're doing as best we can our part. It's never enough that we know the need in our home communities and we're asking for local support as well too.

And we have a big question mark about federal support, which, you know, it all ties together for an individual project to be able to pencil out how they're going to make that project work. And so I don't want us to be certainly not the element there that is causing these potential projects to fail.

We're aware from some housing advocates that there are probably today an estimated 40,000 housing units in the development pipeline that need additional funding. And I'm wondering if that is something that the Administration has been made aware of as well. Those that have already been approved to date and given the rising costs that we seen.

I know these are sunk costs, but we don't want those projects to fail. What are we doing to be able to ensure that they're able to complete those projects and open their doors?

I think those are prospective projects. So the projects that we've already funded certainly are still moving to the pipeline. So right when you're stepping in, you know, I was talking about the previous investments and how many units we already have under construction, for example, you know, the current.

So we are still going to see big amounts come online as a result of the previous year investments. That's just the nature of kind of the housing transit. And so we are I think, luckily still poised to see the fruits of that investment.

We are very attuned, I think at our Department level there's a lot of money still available this year. Certainly what you see is what you get for the most part and what we have available. So there are sources out there available for developers to apply to.

One thing that we have done with the biggest source we have, which is the resources from Prop 1 is we actually have created different than previous home key rounds, kind of a gap financing lane.

So while of course you still need to serve the target population that the voters Approved in Prop 1, if you are maybe a project that was doing permanent supportive housing or serving homeless households, there is a lane there essentially to do some gap financing. We're really pleased that we have seen significant interest.

So some of those projects that for lack of better term may feel stuck. Right. Have, have that as an opportunity and they're coming in for resources there. So we're hopeful to be able to fund some of those.

And like I said, like we still have the low income housing tax credit for the, for the moment and that's usually the last piece of financing that partner with bonds that you will see. So even projects that you're seeing funded now, they will be able to access those dollars in the coming years.

But I do think it's important to think about like homekey does, these alternatives to that tax credit financing and bond financing. Right. Because that is the linchpin of most affordable housing traditionally those deals and essentially we are capped.

We're, you know, have tried for reforms at the federal level to unlock some of those dollars in a better way, but that's unknown at this time. So your point's well taken. I mean we'll implement whatever we can receive.

There are some resources still available to us certainly and we're focused on those and getting them out as fast as we can and like I said, to fill the gaps as fast as we can. But no, no, no disagreement that the. There's a significant need that remains.

There's an urgency. Yeah. To it to be able to try to deploy as fast as we can so that home communities are able to put those to better use and get this housing underway. The last question I would just have sort of circles back to, you know, kind of my initial conversations around the work that we're doing.

Trying to do, I think, you know, an unprecedented amount of policy on supporting more housing production and trying to tie that then to the administration's deployment of dollars connected to some of that policy. How are you tracking say SB4 or the affordable Housing Sustainable Communities program?

Are we hearing any want to commend again the Governor for say the home, the dashboard that he has, right, on a lot of our homeless dollars? I think we'll talk about that in a different issue area. But how are you tracking the kind of production success or lack of success through some of these programs?

Yeah, some of that is tracked through and I certainly I know it's never a satisfying answer to say please go check all our dashboards. Right. But we have been trying to be very transparent about our data. Right. The annual project report data that we get from cities and counties does track a number of those things.

So if you want to look at like, hey, how much ADU production did we do, for example? Because there's been a whole suite of laws on ADU production. How much have we done on SB35 and those related things? Right. So we do have some of that data within the dashboard.

Some of the more tools in the toolbox ones, you know, maybe are a little more difficult to measure. But that's why I wanted to give that picture of that trajectory because we see different communities access different tools. Right. Maybe they're leaning in more to that ADU suite of tools.

Maybe they're leaning in to partner with faith based organizations. Maybe they have transit corridors and are able to use some of the streamlining there. Right. SB4, or sorry is not one that we track because it's locally administered, but it is something we do have enforcement authority over.

So certainly like a breakdown of, we of course never wanted to get to enforcement in our accountability work. We always want to do technical assistance first to help communities. But certainly we do track that stuff as well in terms of what those types of inquiries are. We don't necessarily track it by Bill per se.

And it's the same thing where you were talking about funding, right. Those numbers I was giving you about production, that's the overall collective like production for HCD, Right. Because you may have a project that has both multifamily housing program dollars and AHSC dollars in it.

If we said, oh well, they each produce this much, you would be getting an incomplete picture of what that did. So that's the aggregate and the nature of housing finance. And that's why when we talk about gap financing

There's a way to report things. Out in that kind of a space.

And we have, and we have tried to do that whenever asked. But I do think it is important to understand that collective.

You know, if you just add up what all those programs have supported, you would get an over inflated number than what we have produced because we have sometimes due the complexity of and the difficulty these projects have to go to, seek so many different sources. So I may have gotten a little far afield there from your question.

But certainly I would say based on what we are seeing with the trajectory of increased housing production overall, that the suite of tools we are giving is working right I think it's a little more difficult, say what's working better than others, because not all reforms are exactly the same. Right.

A land use reform may take a little bit longer to bear fruit than like a direct incentive or funding or something like that. So.

Okay, thank you.

We have a new Member who's joined us, SMA Member Wallace. Do you have any comments that you would like to make? Just, is it your first. All right. Well, thank you for, for joining us. I have some questions I'll be asking them throughout the, the hearing and

again, I'm not trying to be obstinate or grouchy, but I am. I'm actually more than that. I'm pretty horrified because I get the progress. I really do. And you showed that in your dashboard show additional housing production.

And if we compare it to whether we go back to 2017 or 2018, there has been progress made, of course, and we appreciate that. And we do appreciate the Governor leaning into this and making this a platform in many ways. And so there, there has been progress.

Why I'm even angry is because it's like going down a road and then all of a sudden making a U turn.

And so when we looked at the budget last year and we had to fight for these dollars to retain them, that was good news, but it was a fight because we're fighting for mental health dollars, all these other intersecting dollars.

And then when we come to this budget and we see a zero, whether it's either you responding or the Department of Finance, I'm trying to understand why you go from making progress all the way down to zeroing out the budget, even though now I've been told a few times, oh, well, we've got a lot of money in the budget or out there, it's fine.

But when you stop, you stop funding something, there's going to be impact. So if you can speak to that, like, how did we arrive at zero?

This is Allison Hewitt, Department of Finance. I'll just say at the outset, I don't know that we have anything more to say than what our Chief Deputy shared earlier this year at the full budget hearings.

I think this is one of the areas of the budget where tough decisions, one of many areas of the budget, I should say, where tough decisions were made. And I think I'll just reiterate, we see this as a starting point and plan and look forward to continuing those conversations.

I think at the full budget hearings, it was certainly was clear that this is a priority for the Legislature. So understood that and we'll be continuing those conversations.

All right, I'm going to appreciate that for now, but I'm not buying it because it almost feels like you want us to beg for the dollars. And it's kind of this game, and it doesn't feel like a good game because people's lives are on the line because we know what happens when people don't have housing.

They're going to be pushed onto the street, and shelters are not a great option. Matter of fact, I have two bills that talk about the shelters and how they're really not working. So we're looking at people dying on the street. And so to me, it isn't a game.

And I'm flabbergasted that it's kind of like, well, we heard you at the big budget, so now we're going to go back and take it seriously.

I just, I don't understand how the Administration, or I will say our Governor can go down a road and then make a U turn of these last two years that are so imperative.

Because when you make progress, remember I was a classroom teacher, so you make progress with the student, you make progress and then you go, okay, you're looking pretty good. We're going to take out all the support services away, and then you can fly on your own. Well, we don't have the foundation that's solid enough to do that.

We haven't seen us fly. We're just making the progress. We're not to the A plus level. And that's what you do when you feel really confident, when you don't have thousands of units that are short, when you don't have thousands of people who are homeless, when you don't have fires that have pushed people out of their homes.

So it's just shocking. But I will ask the question presented to me here. So when we talk about housing production and preserving affordable housing, it's not only important that we create more, but we preserve what we have. Can anybody here speak to our mobile homes?

As we know, some burned in the fires, we've had more and more of them being not used as mobile homes owners trying to change them into, move people out of them to build something new. Can we speak about. Oh, mobile home.

Yeah, I can certainly give you a picture of where the state sits on mobile home parks. Let me refer to someone. Make sure I get the numbers right for you. There are approximately 4,503 mobile home parks here in the state. Only about 82% of those fall under HCD's authority and jurisdiction. And the others are local enforcement agencies.

Right at the local level. And so our estimate is there are about 540,000 manufactured homes or mobile homes in California. So that includes ones that are both inside parks and those used on private property outside of parks.

And there has been some recent legislation to try to allow existing mobile home park owners, of course, to expand their available lots. That was just chaptered last year in 2024. Senate bill 2387. And so, you know, there are some opportunities there. There were three parks that did burn in the recent LA fires.

You know, the investments you spoke of earlier, one of those was we did create increase more funding for a mobile for mobile home assistance in terms of trying to produce more units, deal with health and safety. We call it the MORE program.

We are exhausted of those resources at this point, but have been happy that we've been able to deploy those to create more.

Where were those funds for the mobile home assistance?

They were within HCD's budget. What do you mean by where?

I'm just saying what category? If somebody was trying to access them, where would they find those?

Well, they're not for. They weren't for individuals per se. Right. They were for like park owners. There were a number of activities that were eligible under that program. And so sometimes the recipients were local government, sometimes recipients were park owners. It had a number of types of. But it wasn't like an individual based assistance.

We the Department doesn't typically work in individual based assistance, but more towards local governments or developer facing programs. But those have been exhausted. It was called the MORE program. We advocated for some one time some funds there a couple years ago in the budget, hoping that it's creating some good outcomes.

Obviously the scale of what I talked about. Right. In terms of how many folks we have in those homes is pretty significant. Right. But it is an important as you know, type of housing for our community, for our communities is certainly sometimes for some communities more than others.

Thank you. Appreciate that. Any other questions? All right, any comments before we go to the public? All right, if you'd like to speak on this, please come up. 30 seconds or less. All right. See our. Okay.

Yeah. Kim Lewis, representing the California Coalition for Youth. And I just want to ensure that as we're thinking about how creating housing that we're creating housing for our young people as well and our youth and young adults. There's about, according to California Homeless Youth project, there's about 20,000 housing beds needed for our young people. So just wanted to elevate that in our conversations. Thank you.

Thank you.

Kristin Power with the Alliance for Children's Rights and similarly want to encourage the Committee to consider the need for housing for our youth in extended foster care. Those that are 18 to 21 who are continuing in foster care post permanency at 18. Thank you.

Thank you.

Good afternoon. Marina Espinoza with the California Housing Consortium. We're in support of the proposed trailer Bill language to make it possible to access equity for housing projects. However, I would like to share our concerns with the lack of investment in affordable housing programs in the January budget proposal.

There are about 45,000 shovel ready affordable housing homes that just need state funding to move forward and it's really important that the budget include funding for these purposes. Thank you.

Thank you.

Good afternoon. Natalie Spievack with Housing California. Thank you for the discussion of the importance of affordable housing and homelessness resources.

Just wanted to mention that Housing California and our colleagues, including the California Housing Consortium, California Housing Partnership and 75 other organizations have been advocating together around a set of priorities for affordable housing production and preservation, homelessness and affordable homeownership opportunities. And we urge you to consider funding these programs in the budget.

We have a letter that's aligned with the one that was submitted by Assemblymember Haney and 35 other Assembly Members. Really appreciate your leadership on those and hope to see the state LIHTC program, MHP, another round of HAPP, the Joe Serna farm worker program and CalHome funded in the budget. Thank you.

Thank you.

Good afternoon. Mark Stivers with the California Housing Partnership. And first of all, just a huge thank you to the Members for not only signing the letter but with the comments you've made today, we're really appreciative. Part of the package that Natalie just mentioned is the Low Income Housing Tax Credit as well.

And I know you guys had a hearing recently on the film Tax Credit and there was a lot of talk about the return on investment. So I want to give you a couple statistics about the return on investment from the Low Income Housing Tax Credit Program.

California has produced an additional 6,253 affordable homes per year because of the state's investment of an additional $500 million. That's 36% of the total affordable housing production over those four years.

Each dollar that the state invested in the Low Income Housing tax credit leveraged $6.37 in total federal, state and private funds, including $2.70 in federal tax credits that California otherwise would have left on the table. By my math, that's a return on investment of 670% for the record. Each year's production supports 4,080 additional solid construction jobs.

Each year's production reduces greenhouse gas emissions by 7,600 metric tons. And I would point out that the state credit system is probably the closest thing we have to a one stop shop that we've all talked about. So we're supportive of all the programs, MHP and HAPP and the others that are in the HCD portfolio.

But since there was a focus on tax credits in one hearing, we wanted to give you that data. Thank you.

Thank you.

Holly Fraumeni de Jesus with Lighthouse Public Affairs here today on behalf of Habitat for Humanity, SPUR and Abundant Housing Los Angeles. Yes, we know that tough decisions are to be made, but zeroing out the budgets, we agree with the chair, just seems unfathomable. And we're confident that the Legislature is going to restore some of the cuts.

But like you all, it feels like a game. But all the decks seem to be stacked against us. So we hope that we can see funding coming back to the much needed programs, but especially just to bring to the attention of the Committee and the Administration, the CalHome program now has zero in their budget.

No money is left over after this next nofa. And we just hope in addition to all the other programs to make sure that new construction of home ownership in CalHome is included. Thank you.

Thank you.

Hello, Bill Higgins, Executive Director of the California Association of Councils of Governments that represents all 20 councils of governments that distribute the regional housing needs assessment. We appreciate the housing conversation that's gone on today. We're here today to remark on the staff comment on page 16.

This Committee helped restore the REAP funds last year, but that caused a pause in the project and we appreciate having some flexibility to continue that project going forward. Thank you.

Thank you.

Chair Members Nick Romo, on behalf of the Southern California Association of Government, SCAG following up to Calco's comment, definitely appreciate stakeholder engagement to provide some flexibility to the REAP 2.0 program so we can deliver on these projects quickly and, well, as quickly as possible. Chair thank you.

Thank you. Thank you for those comments. We're going to move to issue number two, accessing equity to facilitate housing production. To welcome panelists.

Good afternoon. Jennifer Seeger, Deputy Director of the Division of State Financial Assistance at HCD. We're here today for our trailer bill language, Accessing Equity to Facilitate Housing Production. An excess equity policy administered by the Department would allow the state to utilize previous investments in affordable housing to support the preservation of across the state's portfolio of projects.

This policy would enable development—or developers—to withdraw cash from existing HCD projects, to promote the preservation, rehabilitation, or development of additional affordable housing projects. Existing affordable housing projects have excess equity that can be extracted and used to preserve existing, or build new affordable housing projects, with greater financial need.

However, HCD currently lacks the statutory authority to allow developers to extract those equity gains. Without these statutory changes, HCD cannot access this excess equity to be removed from over subsidized housing projects, to support new and existing projects that need subsidy funds. Happy to answer any questions you may have.

Thank you. Appreciate that. Comments from our LAO?

Paul Steenhausen, again with the Analyst Office. Our understanding from speaking with the Department and with developers is that by providing the statutory authority, potentially tens of millions of dollars could be unlocked, as are a number of projects and properties within HCD's portfolio with equity.

As the agenda notes, members have pursued legislation within the past couple of years to permit this.

As currently drafted, the proposed trailer bill has fairly broad language, including on the issue of whether what exactly reinvested funds can be used for. The trailer bill language permits the Department to come up with the policy, and so, there's a question in your Agenda—page six—about whether details of what's allowed should be in statute or HCD guidelines or regulations.

Now, HCD has explained that this more open-ended language in the proposed trailer bill is intentional, that HCD would have flexibility if the language is approved in the budget.

HCD would then proceed to consult with stakeholders and others to decide on the specific policy—specific guidelines—and HCD says it anticipates learning more about the exact criteria to use, through this consultation process, which would give the Department insight into how exactly to craft the guidelines.

So, if the Legislature is comfortable with that approach, Legislature can go ahead and approve this language and have—direct—HCD to go ahead and draft the specific details.

If the Legislature is concerned about HCD's final policy and that it's—whether it's—aligned with legislative intent, one option could be to direct HCD to seek feedback on a potential policy, then report back to the Legislature with findings and the language that it's developed and honed, speaking through this process, on what it would like the potential uses of reinvestment funds to be, in other policies.

The Legislature could then review that proposal and if it's acceptable, go ahead and incorporate the policy with the guardrail, so to speak, in statute, rather than in straight through, you know, straight into guidelines. Thank you.

Thank you. Appreciate that. Any comment? Members, Committee?

Want to thank you for working hard on this preliminary language. It aligns with a bill that I've tried, twice, to run, that made all the sense in the world.

Existing equity that, you know, otherwise would be a part of some other project not funded through HCD, is something that we can tap into to creatively reuse, if financing terms got better, the ability to extract some of that equity and repurpose that for some sort of seed funding, for new housing production, without new allocations of state dollars.

And I want to take a little closer look at this, as well, too, to make sure I see a lot of alignment with the past work on some of these two bills, and grateful that this is something that the three parties can work together to possibly see if this is—makes sense to be able to exercise through our budget.

What I don't want to see happen is a situation where we are setting up either parameters through the statutory language in the trailer bill, or successive regulatory processes that are going to—I don't think it's the intention to have any poison pill in here but essentially render this renewed option here unworkable.

And so, I just want to make sure that we get the language right. I am today agnostic on which direction we go, but if we are scripting the language correctly here that makes it work in practice. I think that we have something here that is going to be close to agreement.

Barring that, my deference is that let's be a little bit more clear in statute. Right? That we know sometimes those additional approvals, those additional checks, while authorized, is there a timeline that that would be expected to turn around on HCD's part?

If they're trying to make sure that proposals to be able to use some of that equity are, whether or not they meet the intent of this trailer Bill Language, I wouldn't want to see a six-month period of review. Right?

Just to be able to decide whether or not the terms have been met, when the terms are pretty clear about what the expectations are for being able to exercise this option. So, look forward to working with you on this, and I'm grateful that, you know, we've made some progress here today on this. Thank you.

Any other comments here? I just—as when we're talking about the equity, what type of dollars are we talking about here, potential dollars?

So, it's really going to be dependent on the individual project sponsors and what the, what the excess equity is on their property, and when they have a need for the funds. We have been in communication with a handful of project sponsors that are very interested in this and are very interested in moving forward quickly, as are we.

Right? As soon as—if this were to be approved, we would immediately begin that outreach and the development of either guidelines or regulations on this.

You know, we really believe that this would create a revolving source of funds that could be one of the most significant investments that the state could make in affordable housing, especially in a time of, you know, a tight budget. Right? We could be unlocking hundreds of millions of dollars right through this, and annually.

We don't know exact figures, as I mentioned, but we definitely know that there's a great amount of interest.

And I concur. I think it is—there's a lot of potential out there. One of the guardrails that I'd be interested in finding out is making sure that those funds stay within the project or region. In essence, they don't go into a General Fund.

I'm assuming that anybody who wants to work on a development would want to see that, as well, as it's revolving back to the original—either local jurisdiction or developer, so forth.

But I appreciate my colleague up here, who we can see has worked on this for two tries, and hopefully we'll be able to get it done this time.

Appreciate that.

All right, with that, let's open it up to the public. Anybody wishing to speak on Issue Number 2.

Marina Espinoza with the California Housing Consortium. I got ahead of myself earlier, but we are supportive of the proposed trailer bill language and also registering support for The California Housing Partnership.

Thank you. Any last questions? Comments? All right, we will be moving then to Issue Number Three. Thank you.

Thank you.

Encampment Resolution Funding. Okay.

Not my favorite item.

Not your favorite?

No, unless you can convince me that it's really—has a huge change—and all these incredible things are happening with these dollars. But welcome.

Thank you. I'm Megan Kirkeby. I'm our Deputy Director for Housing Policy at HCD. And hopefully I can warm your heart a little on this one. This is not about broader funding for the Encampment Resolution Program, this is about the fact that the expenditure deadlines for these programs are set based on the date of appropriation.

The way the Program works is there's a NOFA inviting applications. Applications are developed, they come in, they are reviewed, and awards are made. However, those, those applications come in across various windows, in order to create an expeditious process. So, while we're reviewing applications from the first window, new proposals can be coming in for the second window.

But that can create an issue where everybody's expenditure date is set based off that appropriate original appropriation date, not after—off of—the award.

And so, that can, you know, we feel like instilling a sense of urgency in the grantees is really important, but the way it's written right now, it's sort of the grantees' time is shortened by things outside of their control—the time where a NOFA is being developed and the application process is happening, TA and feedback is given, and then awards are made, and they don't get to sort of recapture any of that time.

And so, we do even hear from some grantees, that might be in later windows that, you know, that's effectively now shortened their time period where they really can't accomplish the 50% expenditure deadline by the two-year mark, when they only have, say, nine months left on that first two years, or a year left on that first two years.

And so, you know, we, we think the original intent, you know, I can't speak specifically, but the gist, or what it appears, is that the intent was around creating a sense of urgency on the grantees to take action very quickly.

And so, we feel like this sort of still maintains that, because it still sets a fairly tight clock, compared to other grant programs on the grantees, but sets it from the start of the award, which is really the start of when they're allowed to sort of take action in response to the proposals.

So, our grantees have asked for this, we are supportive of it. We think it's a good idea. It's not part of a broader discussion, but you know, always happy to kind of share. I think that the Encampment Resolution Fund is really focused on housing outcomes.

It's not, it is not just about clearing encampments, it's about resolving encampments, meaning that every single person needs to be, be helped with permanent housing, or interim housing with a path to permanent housing, as a result of this grant.

And so, in that way, you know, it's something I feel like I've grown to love as part of our portfolio that we took over stewardship of in July.

Thank you.

Paul Steenhausen, again with the Analyst Office. We don't necessarily have a concern with this specific proposal, before you need to set spending deadlines based on the date of award. Instead, we raise broader issues with the Program.

As we wrote in our March 5th report on Encampment Resolution Funding, to date, the Legislature knows relatively little about the Program's results and impact. As your agenda notes, the Legislature began funding this Program in 2021- 2022 and, to date, has provided a total of $900 million for the initiative, with another $100 million in the Governor's Budget Plan for '25-'26, the budget year.

The purpose of the funds is to—of these state funds—is to transition people who are living in encampments into housing. That's with the state money.

And then locals, by and large, are required to use their own local money for the cleanup part and to restore the area to its intended purpose, or put up fencing, or whatever it is. Grantees have set a target, collectively, to house more than 20,000 people living in encampments, with this money, with this state money.

To date, though, the Legislature does not know how many people have actually been housed, or the type of housing they've received, and whether they've stayed housed. The Legislature lacks other key data on the Program, such as how many units have been created with this money, permanent units or otherwise.

In a number of instances, grantees simply haven't been reporting their quarterly data to HCD, on their progress toward addressing the encampment. There's other outstanding questions on this program, like if the targeted encampment was closed, did the inhabitants to simply go form an encampment somewhere else, maybe in another jurisdiction?

And our office did notice, when we looked at some grantee comments, that there are—there is—some information available on the HCD website, and we noticed some comments that the targeted encampment was coming back after being closed. Now, there is, you know, good news here, in terms of data, in terms of information.

Fortunately, grantees are required and required by statute to report on their activities and their outcomes. It's actually within the next week or so that they have to submit this information to HCD, and then HCD turns around and will make that information public on their site. So, it's part of their April annual reports.

And HCD, we understand, is also working to hone their current dashboards and other information. So, all of this, we think, will give this give the Legislature much better sense of the extent to which this initiative is meeting its intended goals.

And we recommend the Legislature use this information, this data as it comes in, to help decide—to help to decide—whether to provide funding for this program in the budget year, as proposed and as planned in the Governor's Budget. Thank you.

Thank you. Appreciate that. Comments? No comments. Comments from our panel?

Thank you, Madam Chair. So, I—at the risk of getting my information wrong—seemed to recall this conversation last year and reports that we had through Committee, maybe even some analysis through LEO too, that had talked about the Encampment Resolution Fund having some of the lowest performance, in terms of successfully ending homelessness for clients served.

I think it was something—3% of those that were reached were successfully housed sometime later. And that number sticks out again. I would stand corrected if I'm recalling that incorrectly.

So, we do need this information about the impact that we're having right now, because if we're on this item, starting to consider what we're doing with unexpended funds, and we're in a budget crunch, and we have a lot of proposed zeroing out of other dollars that we know does produce housing units, those are the kind of tradeoffs that I would rather consider, as one Member, that would rather see funds go to something I know is more likely to have success for housing somebody, than a Program that has made valiant efforts and can make contributions if done right.

But, since—and when we had better times in a budget, it was great to be able to try something additive and new on top of our existing programs.

But if it's not working, and if we're starting to see success rates that fall far below other programs, we may need to think about recapturing some of these unspent funds and redirecting them. Thank you.

My colleague's always so graceful, and I really do appreciate that, and I appreciate the comments from the LAO, and I agree that, you know, you have to try things and sometimes you get results that are surprising in a positive way, and sometimes you're like, that just did not work.

And we're close to $1 billion into this funding, if it was to move forward this year, as put in the budget. And it isn't just some of the data that, I know that, and I really do appreciate Ms. Kirkeby, your showing us and sitting there.

And for those watching us, she did a up close and personal dashboard review, and I really did, you know, I found it fascinating, and I've seen the progress of, not only the data that you're getting, but how it's being added to the dashboard.

And we're a little untimely, in the sense the report is coming out next week and we're having this hearing this week, so, we certainly want to hear the updated information.

But intersecting with other critical topics, which is our permanent supportive units, even if we move an encampment or clear an encampment, we have seen over and over, where are they going? So, are they going to the nearest shelter, if they accept that? Are they going down the block?

But with the Grant's pass decision, we're even in more of a predicament, as now we know that any local municipality can say, and now they are actually bringing new ordinances, but they can just say, you either need to move on or you're going to be arrested.

And so, the clearing of camp—encampments—is certainly something that I know local governments want, and I understand that, because sometimes these encampments are, whether they're close to a school, whether they're close to a neighborhood or a business, it certainly is something that is upsetting to neighbors, to community members, to public safety.

But the data doesn't show—and I have a hard time believing that when somebody's going out there, they're getting ahead of the line of people that have already been in the queue for permanent support housing. So, my assumption is, they're either moving on to somewhere we don't know, or they're going into a shelter temporarily. And so, it's a lot of shuffling.

And we see cities doing this more and more, pushing them to an underpass which seems to be nobody's jurisdiction. If you look at our freeways, or our underpasses, or our CalTrans land, this seems to be an area that nobody is really taking responsibility.

So, I do give accolades to the effort, I really do, because I know that many things have been tried and we really, I've said this before on a few discussions, we're really pretty new to homelessness in California. We're about a decade into this, and so we have to try things.

And sometimes they're going to work and sometimes they're not. But I would like to see the data coming out next week, but I would say, in the list of things that we know work, like the low-income tax credits, the reap dollars, the HHAP Dollars, this would go down on the list.

But I do appreciate your efforts, and I know that you're working hard in this space. That being said, any other comments from panel up here?

Just one on the, on the success rate piece, and I don't recall that that number from last year, but I don't challenge what we, what we talked about then. But you know, as you said, much of the work has been to make that data really work on people were reporting things. We weren't making it public. Right?

Like a lot of that has changed and the evolutions are coming. But in terms of that success rate, the fir—we only had one round of the Program conclude, so far.

And half, half of the awardees there met the definition of resolved or partially resolved, which, in both cases, mean that every single resident of the encampment had received housing, be that interim housing and, or interim housing, sorry, interim housing with a path to permanent housing, or permanent housing.

And so, you know, more than half of that first round is ending there, and then you are able to see what the progress is. And in some cases, it is only as much as the encampment was returned to its original—it was resolved, it was returned to its original use, and there are now an encampment resident, or two, has like returned to the space. And so, that's a place where you have a much more manageable situation.

So, you know, I think we are in a better place of being able to describe what's going on now, than we were a year ago. And so, talking through some of that might be helpful as you, as you explore how this Program fits into the broader landscape. Thank you.

Thank you, Madam Chair. Just a kind of follow up question. How have those that are receiving these grants, how closely are they and how, how well are they working with Caltrans in our local districts?

And that seems to be one, you know, a good percentage of the issues that we are trying to be able to resolve. And when I hear from our local representatives, there are state employees, their maintenance dollars, which is where they're drawing from, largely are not nearly meeting the demand that is out there.

And they triage and prioritize what all the requests are coming in, and my hope was, is that we were coordinating a lot of this effort, doesn't seem to be happening, at least in my district.

So, I think one of the things that is valuable about this Program is the CalTrans partnership.

So, when we now have all the awards listed on our website, and they show whether it's a state right-of-way project or not, and if it was a state right-of-way project, they received sort of a letter of CalTrans, a letter from CalTrans, as part of their application, talking about how that partnership would work.

Now, are all of those partnerships working as intended? You know, are there conversations about how the communication could be better? Yes, we're hearing those things. And that's, I think, you know, we've taken on a lot through this transition of bringing on these new programs, and I think there are things where we're still in that place of evolution.

I think improving that community—it's a, it's a stated and intended part of the program, and it's working to some degree, but I think it's a place where we think, think we can create stronger, stronger connections and ensure that that communication loop is really clear. And CalTrans has reached out for exactly the same reason.

So, this is not just from the HCD side. CalTrans has absolutely reached out to try and make sure that we are really fulfilling that part of the program, that relationship with CalTrans, aspect. But you do need to apply and get in the queue to be part of that, as well.

Not to prolong, but I guess I'll add two things. Is, if I look at the cities that applied, sometimes they're the most aggressive cities that aren't doing the things, even within their cities, to support the homeless population.

So sometimes, you have cities that are hosting shelters, and some of the cities have figured it out, oh, if I apply for those grants to clear an encampment, it gets cleared, but I still don't have to do X, Y and Z. So, you have many cities, usually the bigger cities—San Diego, San Francisco, Los Angeles—hosting a lot of these resources, while other cities are getting these grants to clear the encampment.

So, it is—can be—seen as a way for cities, again, to get out of their responsibility. And it can be very frustrating. But because I know how hard you're working, I'll leave it there.

Thank you. And I'll leave it there as well.

All right, hearing from the public. Anybody on encampments? Anybody else up here? No. We are moving on.

Appreciate you.

All right. Our next item is Issue Number 4, which is HCD Trailer Bills, Bill Language proposals.

Good afternoon, Madam Chair, Members. My name is Matt Schueller. I'm the Deputy Director of Administration at Housing and Community Development. We have two additional pieces of trailer bill language. The first is our default Reserve Fund. This proposed language creates a centralized, continuously appropriated, default Reserve Fund, consolidating various default Reserve Accounts into a Single Fund for improved administrative efficiency.

Statute authorizes HCD to set aside a portion of funds appropriated for rental housing construction, as a default Reserve. The purpose of the Default Reserve Funds is to serve as a resource to cure or avert projects from defaulting over their 55-year regulatory period, which would lead to a loss of affordable housing supply.

Currently, these Default Reserve Funds are allocated across multiple accounts, resulting in increased administrative workload and complexity in management. Additionally, HCD requires ongoing active appropriations, within each respective Fund, to effectively administer the Default Reserves. By consolidating these Default Reserves into a centralized account, HCD can streamline operations, thereby reducing our administrative burdens and improving overall efficiency and fund management.

And this approach will help to ensure more effective resource utilization. And then, for the second piece of trailer bill, which is the HHAP monthly fiscal reporting, current statute requires annual and final reports for all six rounds of the Homeless Housing Assistance and Prevention Program, otherwise known as HHAP.

This Proposal clarifies statute to specify that annual and final reports are also required for HHAP Rounds 1 and 2. This section of Health and Safety Code also refers to the council, which is an outdated reference, as these programs were being formally administered by Cal ICH, the California Interagency Council on Homelessness, and will be changed to "department."

This solution will clarify the legislators—the Legislature's intent—for grantees of all HHAP rounds, to provide required data and reduce confusion around reporting requirements. And with that, we're happy to take any questions on the two pieces of trailer bill.

Thank you.

On the first part of Issue Number 4, we agree with the Administration that the proposed trailer bill language has the potential to improve administrative efficiency at HCD, with regard to Fund Management.

To address questions on—in—your agenda on Page 9, a disadvantage of what, of the continuously appropriated approach, which is in this trailer language—a disadvantage of continuous appropriation, generally speaking, is that there's no natural oversight mechanism for the Legislature, when funds are continuously appropriated. That's because, unlike Appropriations or Reappropriations through the budget process, Continuously Appropriated Funds don't require regular legislative action or notification.

So, as proposed, the Legislature would have no built-in way of knowing how often HCD is having to draw from reserves, or whether down the line, years from now, Reserve levels are becoming depleted.

So, one option for the Legislature would be to approve the trailer bill language, but with an added requirement that requires the Administration to report to the Legislature when reserves are drawn and by how much, and then how much is left over—how much in reserves are remaining.

That approach would give HCD flexibility in managing the Reserve, while at the same time, giving the Legislature more oversight of the Reserves. And just on the second part of Issue Number 4, we don't have any issues with that Proposal on HHAP.

It would clarify that program recipients have to submit monthly reports, as well as other reporting, for Rounds 1 and 2, which is consistent with the later rounds. Thank you.

Thank you.

Allison Hewitt, Department of Finance. We'll just add—hearing our colleagues' concerns that about an oversight mechanism. I think we, the Administration, are open to discussing that. In, in this case, this is really inefficiency and so, there is no intent to remove oversight.

In fact, changes made in 2018 kind of allow for some of these pots of funding to be moved around, without any specific reporting mechanism. So, again, I think we're open and HCD will be tracking it. So, it's certainly not an intent to, to remove any legislative oversight.

Certainly. And I would just add the clarification that a majority of the default Reserve funds are already continuously appropriated. You know, there's a certain portion of General Fund that is not, that would require renewal, but we are certainly open to continuing the discussion.

Okay, thank you. Any additional questions? And I concur with our LAO's remarks. I think it still gives you the flexibility with some oversight. All right. Taking it to the public. Any comments on Item 4? Seeing none. Thank you for your presentation. Appreciate it. Moving to Item Number 5, HCD Chapter Legislation.

So, I'm going to cover this one as well.

All right, great. Thank you.

So, this request includes eight bills that HCD will need resources, in order to implement.

Those bills include, but are not limited to, a new tribal housing program, reporting requirements for voucher success rates, an HCD report on transitioning seasonal migrant housing to year-round housing, and an HCD report on the installation of rainwater catchment systems, for non-potable uses in newly constructed residential dwellings.

For this Chapter Legislation, HCD is requesting $7,081,000 in General Fund in '25-'26 and $1,638,000 ongoing, $578,000 in Special Fund in '25-'26 and $189,000 ongoing, and nine positions in '25-'26 and ongoing. Happy to take any questions.

Thank you.

We don't have any issue here. The budget change proposal is consistent with what appropriations committees have already identified as the cost to implement the legislation.

Thank you. From our panel? Seeing none. From our public?

Natalie Spivak with Housing California. Just wanted to register our support for resources to implement what was AB653 to improve voucher utilization. We were a co sponsor on that Bill and think it'll be extremely effective in making sure that the state is making the best use of the vouchers that we have. Thank you.

Thank you. Any last comments on item number five? All right. We will then move to item number six, other HCD budget change proposals.

And in this item we have three budget change proposals to consider, the first of which is the 2023 Community Development Block Grant Disaster recovery grant. And in this proposal, HCD requests six positions to help implement the disaster recovery grant provided for the January 2023 storms, winter storms, which included flooding, landslides and mudslides.

And the total grant amount is $115 million. The second proposal is for the May Lee State Office complex relocation support. HCD is requesting $5.6 million General Fund for cost associated with rent increases at the complex. And then the third proposal is a technical adjustment for reappropriations.

And we are requesting to extend liquidation deadlines for the Home Key General Fund appropriation from 2022 to allow grantees sufficient time to meet the expenditure and liquidation requirements in the Home Key round three notice of funding availability.

Additionally, HCD is requesting an extension of the encumbrance and liquidation deadlines for three United States Department of Housing and Urban Development Community Development Block grants to align with the deadlines provided by Housing and Urban Development. Happy to answer any questions regarding those proposals.

Thank you. We don't have any concerns with items on this issue. Members of the Committee, go ahead.

Thank you. Just a really horribly novice question on the relocation of the office and the expense that goes with that. It's something that is very difficult to explain to constituents as well.

So we were at a private facility and having to lease 4.3 million for the prior budget year, and now we're going to a facility which is owned by the state. That's correct. But we're paying more for that. Why are we paying ourselves and why would that have a budget impact?

Well, I can't speak to the overall cost of the facility in terms of what it takes.

We need to pay ourselves $10 million.

In terms of what it takes to maintain because Department of General Services does work off of cost recovery. What I can tell you is our old location was only half the square footage.

I see that you know all for it if that's what the need is, that we have appropriate accommodations of office space, but we literally are paying from one part of the state budget and putting it into another part of the state budget.

That's correct.

Okay.

So I would probably defer to the Department of General Services in order to be able to address questions regarding, you know, specific space, space cost.

Allison Hewitt, Department of Finance I'm not an expert, so we'll have to take your question back. And happy to follow up. But it's not a revenue generating scheme for the state. It's, it's literally collecting on the cost of the space and operating the facility. But happy to follow up with more.

Okay, thank you.

And on that topic, but more General, we've had a lot of proposals related to buildings this year.

As some of you who are watching, I'm not sure if that is something that we can get more of a concrete analysis of because there's some and again, not this item, but we have some employees moving to one building now we're hearing that that might be too small, things like this.

So maybe we get a type of analysis just on all the moving parts. Get it? All right. So yeah, if we can get more information on that. Any other questions for the panel? The public.

Good afternoon, chair and Members. Chris Lee, on behalf of the Sacramento Area Council of Governments, appreciated the comment in the staff analysis on this item about the potential need for a technical fix on the timing for expenditures under the REAP2 program.

Want to have a conversation with the Committee and the Department about that and echo the earlier comments of the California Association of Councils of Government. Thank you.

Thank you.

Good afternoon. Kirk Blackburn here on behalf of the San Diego Association of Governments, or SANDAG. We also, too, support an extension to the REAP 2.0 expenditure deadline. 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 awarded over $12 billion in REAP 2.0 funding to local jurisdictions for 15 housing projects, both for capital and planning. However, last year's spending freeze put many of these projects on hold. So therefore, the extension would be appreciated in this context. Thank you.

Thank you. And I do want to ask that question. For the technical adjustment, is there any adjustments, is there any concern that the REAP 2.0 program may need an adjustment due to the delay during last year's budget?

We're certainly open to the conversation about an extension for that program.

I know that we've been told many times that this really important program for planning. Okay, thank you. See nobody else at the microphone. Any last comments on this item? All right. Thank you, we appreciate it. All right, we're on issue number seven, Governor's reorganization.

Hello and good afternoon. Melinda Grant, Undersecretary to the Business, Consumer Services and Housing Agency. We are here to talk about the Governor's Reorganization Proposal. And it is our intent to hopefully continue to warm the hearts of the Committee. As we have come off of the wonderful testimony from HCD.

We are planning a proposal to split the Business, Consumer services and Housing Agency into two separately separate agencies, one being the Housing and Homelessness Agency, the second being the Consumer Protection Agency. We are going to be providing a high level overview today.

The proposal has not yet been submitted to the Little Hoover Commission, but it is our hope that with the presentation we have, you'll be able to get a very good sense of our purpose, our intent and the structure that we'll be proposing.

But first, I thought it would be helpful to kind of take a little trip down memory lane and just tell you a little about who we are today.

So today, BCSH we are an agency consisting of 12 entities ranging everything from promoting affordable housing, as we just heard, to preventing and ending homelessness, to protecting consumers and safeguarding civil rights. We are very eclectic in the nature of how we do things.

One, starting on the consumer protection side, within the Department of Consumer affairs alone, it has 36 boards and commissions that licenses and enforces everything from nurses to doctors to pharmacists to acupuncturists to security guards, you name it. And we do that through about 250 different license types and 4 million licensees and businesses.

And it's all under the oversight of the Department of Consumer Affairs.

We also extend our oversight into the integrity of the California Horse Racing Industry, alcohol regulation and education financial services sector, which obviously includes banks and credit unions, to the regulation of cannabis businesses, to providing loans and grants to housing developers and setting housing policy, to providing first time homebuyers with mortgage assistance, to protecting against housing discrimination and employment discrimination, to leading the all of government approach to preventing and ending homelessness through the California Interagency Council on Homelessness, which consists of 19 entities alone.

As you can see, we are comprised of a mosaic of different issues that all interconnect in and out of each other every day. But although we're talking about a restructure, we're obviously very much talking about the people.

Really appreciate your comments earlier, Madam Chair, about the crisis that we are in and very much we are thinking about the services to the people. How do you find us? How do you access us and does it make sense and so I just wanted to at least just frame a little bit of where we came from.

So rewinding back a little bit to 2012, back when BCSH was formed, we have grown more than 50% in just Department staffing alone.

With the increased focus obviously on housing and homelessness and the numerous and wonderful bills that this body has passed, and obviously the billions of dollars of investments, the workload has increased, but in a very positive and beautiful way, we would say.

But on the other side of the house, on the consumer protection side, we've also expanded the Department of Cannabis Control, which in less than five years has consolidated from three entities and is its own Standalone Department.

The Department of Business Oversight, which is now known as the Department of Financial Protection and Innovation, has also gone through a reorg and restructure in the last couple years. So we've seen kind of this trend of looking at where we've been, who we are now, and where we're going towards.

So in the spirit of the restructure, we really tried to use a few guiding principles to try to figure out what was kind of the next best thing of how we look at it and look at our best thinking. The first piece that really guided us is around operational efficiencies.

We truly, truly believe that at the end of the day, this comes down to streamlining government operations. The other piece was around ensuring that the reorg would maintain the continuity of operations, ensuring that nothing would be interrupted or disrupted in the way to not create anything less than what we're already doing now.

Also thinking about, excuse me, also thinking about the current connections we already are doing, the connections between the housing and the consumer side, whether you're talking about the financial services sector and how it relates directly back to housing finance, whether you're talking about the Department of Real Estate, the Civil Rights Department and how it interfaces those connections.

We don't intend to be broken or lost of anything built upon. The other piece that's really been driving the reorganization in our thinking is around fiscal prudence, to be quite honest. You know, really looking at, at the end of the day, how do we continue to build on our existing resources as part of this reorg?

Two, obviously really looking at our special funded departments, which obviously relies on fee structures and fee schedules, and how do we ensure that this reorg was not going to cause any additional financial burden or associated cost just by the mere fact of Reorgang.

So those are kind of the pieces that really has grounded us in ensuring that if we're going to do a reorg what is the guiding principles that's going to get us there? The other piece I just wanted to address was why now? Why does this matter now?

In the midst of even the conversation we've had today and just thinking about how we continue to build upon our existing resources sources, we understand the crisis that's at hand. We also understand the importance of looking inward and looking at what are the better ways and how we can do things.

And that is where we would argue, not argue, will promote that we need to continue to do more. Status quo is just not necessarily good enough. We're not necessarily okay with just being okay. We really are trying to get to the next level of creating impact and output and outcome.

And that definitely comes with a restructuring reorg, which is what you're about to hear today. So I am going to pass it along to my colleague here who happens to be celebrating a birthday, Pedro Goval, who is our strategic initiatives and policy advisors to go into more detail for the high level overview we'll be providing. Thank you.

Good afternoon. Good afternoon, Assembly Members. So I'm going to start off by going through the California Consumer Protection Agency. So the focus of this protection agency. Oh, thank you. All right, thank you. I'll say it's my birthday, so I get to make a couple of mistakes.

But the focus of this protection agency is to enhance consumer protection focus by creating a nimble, dedicated agency that can react to emerging consumer issue. It will also focus on increasing regulatory efficiency. So a focused regulatory approach is essential to address rapidly evolving industries and issues. It will also strengthen oversight.

California needs a more effective agency to align regulatory functions with consumer protections to ensure swift, impactful actions to protect California's consumers.

So within the California consumer protection agencies, we have the Department of Alcoholic Beverage Control, the Alcoholic Beverage Control Appeals Board, the Department of Cannabis Control, the Cannabis Control Appeals Panel, the the California Horse Racing Board, the Department of Consumer affairs, the Department of Financial Protection Innovation, and the Department of Real Estate.

All of this we see as enhancing consumer protection in the state by providing greater focus on efficiency in business and professional licensing. And this focus is necessary for the agency to truly specialize in regulatory best practices.

So in the future, we see sharing best practices across the agency, evolving agency staff to become licensing specialists and lead our departments in continuously evaluating existing processes and improving on them. We also see this agency as providing a faster and more agile response to emerging issues. As Undersecretary Grant covered.

Back in 2012, we didn't have a legalized cannabis industry.

Now we have the Department of Cannabis Control and the Cannabis Control Appeals Panel to regulate that industry and CCPA will enhance disability Moving on to the California Housing and Homelessness Agency, we see the purpose of this agency to provide dedicated leadership at the state level to improve coordination of California's comprehensive response to the twin crises of housing and homelessness.

This agency will provide streamlined funding and compliance to simplify the process for affordable housing development. The Chair mentioned earlier the fact that we don't have enough affordable homes and that they're not getting built fast enough. And we see this agency as being critical to advancing that and accelerating progress by centralizing functions.

The California Housing and Homelessness Agency will accelerate California's progress towards meeting its housing goals, including the target of 21/2 million new homes by 2030.

The departments included in the housing agency are the Department of Housing and Community Development, which will focus on policy, planning, research and government to government grants the California Housing Financing Agency, which will focus on continuing the providing financing tools for the development of low and moderate income housing California Interagency Council on Homelessness, which will provide continued focus on implementing the homeless data integration system and interagency coordination the Civil Rights Department, which will continue to provide focus on civil rights laws in General as well as fair housing and the New Department of Housing Development and Finance which will be focused on affordable housing finance for the state and a Housing Development Finance Committee which will be focused on creating more transparency and funding alignment.

So all of this we see as advancing housing solutions in the state. It will lead to improved efficiency and housing development. More specifically, the Housing Homeless Agency will work on creating a single application and award process for state affordable housing funding to significantly cut down on the time to build and the cost of affordable housing.

We'll also focus on one set of rules for compliance. As you know, it takes multiple funding sources to build affordable housing coming from multiple state entities, each with their own regulatory requirements. And this agency will seek to align those requirements to make it easier for developers of affordable housing to comply with.

It will also create more increased transparency and funding by providing a public and transparent process for aligning affordable housing funding switches. And all of this will accelerate housing and homelessness solutions in the state by consolidating resources and expertise at the agency level.

The California Housing and Homelessness Agency will drive faster policy implementation and more cohesive action on homelessness and housing affordability.

We have appreciated the legislature's partnership with us in this work and we see this as a culmination of these efforts. Here we have actually all Assembly bills around funding consolidation and compliance monitoring. And we, as I mentioned in my remarks, we see the Housing and Homelessness Agency as taking a leadership role in implementing these bills.

So I'm going to turn it back to my colleague Under Secretary Grant.

Thank you, Pedro. As it relates to next steps, we are in the process of submitting the actual plan to the Little Hoover Commission in the coming weeks. It is our understanding that there at the time of submission, a 30-day review process begins.

Following after the Little Hoover review, the plan will be transmitted back here to the Legislature for a 60-day review and then the Legislature can vote to reject the plan or it will become effective on the 61st day. With that, thank you again for allowing us to be here and to discuss the reorg and provide a brief overview.

Thank you.

Thank you. Just wanted to make some comments first on the reorganization process and then our initial reaction to this proposal. Again, the plan hasn't been submitted yet, but just something for the Legislature to be thinking about. On the reorganization process, just wanted to call your attention to page 18 of the agenda.

It shows the main steps as laid out in statute for reorganizations that go through the Little Hoover Commission. The figure shows that Little Hoover Commission has 60 days to review and issue a report with nonbinding recommendations on the plan.

You can see that halfway through in day 30 there, the Governor will formally submit the same plan to the Legislature for its review. And that starts the Legislature's own 60-day clock. During the Legislature's 60 days, it's going to review and assess the plan through regular policy committees in both houses.

Once the policy committee's report, the plan goes to the floor for an up or down majority vote. If neither house rejects it during the legislative 60 Days, it goes into effect on that. So about three months into the entire process, it would go into effect.

Based on conversations we've had with the Administration, Budget Committee Members could see one or more budget change proposals at the May revision related to the reorganization. We just recommend the Legislature refrain from acting on those budget change proposals until the Legislature has completed its review, which will be sometime in the summer.

It's going to of course, depend on when the clock starts, which is when the Administration submits the reorganization plan to the Little Hoover Commission. With regard to the reorganization proposal itself, it's of course difficult for the Legislature to do a full evaluation without the actual plan.

But last month our office offered in a report some key questions for the Legislature to ask and keep in mind as it does its review and I'll go through a few of them. One is would the organization make programs more effective?

You just heard from the agency staff about reorganization would allow for an opportunity to strengthen consumer protection, help the state more effectively address homelessness, be more swift and nimble and flexible to change. So the Legislature will want to see in the reorganization plan.

Exactly how that would happen, more detail that outlines how exactly the new structure will lead to better outcomes or the ability for the state to make changes and adapt to changes. Another question is would the reorganization improve efficiency?

The administration and the department and agency have shared some information with Legislature that the reorg would improve administrative efficiencies and the Legislature will want to see and get clarification on how exactly these efficiencies would be made and would be created. The Governor's proposal would split the agency in two.

So presumably the state the Legislature is going to need to fund two secretaries and support staff and potentially additional space. So the governor's proposal isn't necessarily going to lead to savings from administrative costs. But there's something the Legislature can look for. Is is there some opportunity there?

Is there a real reason to believe that there's going to be more efficient programs, maybe homelessness programs, for example? You have homelessness programs within HCD, within other agencies as well, or other departments in the state like Department of Social Services.

The Legislature will want to, we think, look at the plan and see is there some sort of proposal there? Or with this reorganization, an opportunity to have better integration or coordination between these various homelessness programs.

The Administration says it's like to see a streamlined process for developers to apply for state funds for affordable housing with a single application and a single awards process.

That sounds like a promising idea, but the Legislature will want to take a look at is it necessary to create a new department to do that with this proposed Department of Housing Finance?

Or could it come under the existing Department of Housing and maybe be more efficient without incurring these additional costs of starting up a whole new department? Last thing I'll just mention is on accountability.

A reorganization should result in a government structure where the Legislature and the public can easily identify the person or entity responsible for managing a program. Clearly establishing who's responsible for the program will better enable the Legislature to hold that person or that entity responsible and accountable for outcomes and whether goals were met.

So something to look for, we think and ask is when the Legislature gets the plan, is there any potential confusion that could be created by creating these various housing entities within the agency? Is it clear who's in charge of what and which entity is responsible when problems emerge?

So under this proposal, there would be a Department of Housing, a Department of Housing Finance, a California Housing Finance Agency, which would be within the California Housing Agency, and then a Housing Finance Committee as well. So looking at, are there clear lines of responsibility and accountability?

Just a number of questions for Legislature to be thinking of as it reviews the plan when it arrives. Thank you.

Thank you. Nothing to add? Nothing. All right, Bringing it to the members. I think we're going to go to Miss Ortega. Okay. Assemblymember Ward and then, Assemblymember Ortega first? Okay.

Thank you to the LAO. I think you outlined some of the questions that I still have. Too often we're asked to approve budget items without getting a lot of details and information, which is exactly the questions that you laid out. Will the reorganization lead to more efficiency?

Will it address a lot of the questions that we're seeing on the ground in terms of all the different agencies that you laid out? So I have a question about one thing I didn't hear. So currently we allocate about, is it $326 billion to the departments as a whole? Am I reading this right?

What page are you referring to?

And then it has on page 17, so it says BCSH has a total budget of 326 billion.

Allison Hewitt, Department of Finance. I think the total state funds is somewhere around 2 billion across all of the departments within BCSH. And then if you add on the federal funding, I think that's four.

Yeah, that's right. Okay. And then with the total staff of 8172. So with the reorganization, what kind of, are we still looking at the same amount of funding for the same amount of staff? Or is that going to be, or is that going to change?

I'll take a stab at that. Thank you. Thank you for the question. In the reorganization, in the department split that we will have, that 8,000, some odd staff would ideally kind of be split, I won't say necessarily in half.

It'll be split based off of the current allocations within those departments as it relates to one of the guiding principles we had about utilizing as many existing staff as possible. That's our first priority in that.

Also, I would just mention that as we're kind of going through the process and determining what our needs are, that is the only place where you might see some adjustments in staff. But at this point is to use as many of our existing staff resources.

And are we looking at the same amount of money in terms of what you guys are currently getting when you have the new reorganization?

We're still assessing the cost at this point because we're still finalizing the plan. But the principle is to keep the cost as minimal as possible.

Thank you.

Of course.

What question?

Thank you, Madam Chair. Thank you very much for the presentation. I know we talked about this 67 weeks ago when you came before the full Budget Committee, and a lot of curiosity about where we were heading, especially with the timeline that we're on.

I know we're past a time point by which we can actually get this done, around June 15th.

All the same, we want to make sure that I'll just start as an offset at the outset by saying that I'm very interested and encouraged by, I think, this bifurcation, that we can have this focused and concerted effort, specifically on all things housing, that allows that focused attention that the state deserves to be able to give it and then make sure all the important functions as well that are otherwise interesting lumped in with BCSH are going to be able to see their focus due.

And I recognize that this will require another secretary, some support staff.

But I'll align my comments, you know, and I'll align my, you know, upcoming study as well with that of the LAO to try to make sure one, that administrative costs, if you are separating this agency, I don't want to just say like, are minimized, but are essentially negligible.

And so I'd like to really try to make sure that we are doing something functionally that makes sense without, especially in a very difficult budget year, incurring additional administrative function for the same outputs between the two future agencies as well.

I know that our opportunities might be a little bit more limited in the future given that these would be reviewed by Policy Committee as opposed to the Budget Committee. It is what it is. I really appreciate the LAO for walking us through the process.

This is unique and what a special time to be here to be able to be a part of this consideration.

But for the Legislature to, I think, have its full effect of making sure that this is done the right way and that we're having our oversight in its launch, I think is going to demand us to be as involved as possible. So I'm looking forward to seeing those details and what comes out of that.

I would note, as I did back in our earlier hearing, that it's also difficult to, you know, be a fan of a new agency that is also, at the same time being proposed for drastic funds, reduced, a drastic cut in those funds. We need those housing dollars.

And I want that agency to be successful in implementing a lot of those programs. And I'm not talking about, of course, the administrative talk about the programmatic dollars that we need to get out the door.

So if we're doing this for efficiency's sake, for effectiveness's sake, let's make sure that we're also giving it a first year's amount of resource to meet our expectations for that success. And that's where I would like to see all of our efforts align. But I want to thank our LAO as well.

I'll take that very strongly about, you know, our decision about when to authorize some of those BCPs that are going to be able to align with the, you know, our proper review of this, because we could just as well do that in August when all of this is said and done on that timeline.

But thank you for being here.

Thank you so much for the comments.

Assemblymember? I also appreciate the comments by our LAO here. And when we look at the graphics that you gave us or the handouts, there certainly is a lot of work being done under, if you want to say both agencies, if that happens in the future. At this point, it's proposed to separate them. So I have several questions.

One would be particularly under the California Consumer Protection Agency, there's very specified jobs there that have to do with public safety, safety, particularly under cannabis with enforcement. So, when we look at splitting these, it will be, I think, much more difficult than it sounds initially.

It's not like you can just say, okay, cannabis enforcement person, you're staying here and you're doing this. I mean, everybody has their special expertise.

So I think one of my questions is are we in fact going to be coming back with additional employees that we want to need to hire in both agencies, which would be a cost increase. So that's one question. So additional admin and additional employees.

Second is right before this, we started to talk about our buildings, our state buildings. We know there's been a lot of discussion about this group moving here, that group moving there, this group moving, not enough spacing. How will these groups be housed?

If you're in now two under two administrations, are you going to be able to keep all the housing people with the housing people? How is that going to play out? So that's number two. And then simply the timeline.

We heard about this budget proposal in January and now here we are almost in April, and it's just going to be submitted to Little Hoover. If we know that it's going to take 60 days, plus another 60 days, that is going to be past our budget deadline in June. So the timelines are not matching up at all.

I mean, it's certainly not going to prevent us from doing work in August, but it's not going to be in time for this budget. So I need to understand why this hasn't been submitted almost as early as the middle of January as this was proposed to us from the governor's January 10th budget.

And now we're two and a half months later. What is happening on the timeline? So I'll just stop there for those three questions and then we can.

Sure. No, thank you, Madam Chair. I will start with your last question as it relates to the timeline. We are obviously trying to be very diligent and strategic and thoughtful about how we are presenting the reorg.

And therefore, when we had signaled in the eight pages that a reorg was coming, we were still very much in the process of putting the plan together.

Obviously, there's been a series of catastrophic events and other things where, especially for this particular agency, because of our involvement in some of those things relating to the LA fires, some timelines have shifted, but our focus has never been shifted or lost, if you will.

So, we have always committed in the eight pages that we would submit it in spring. And here we are in spring, as of about a week ago, and in very, very short order, it is our hope that we'll be submitting the formal proposal in the next couple weeks.

But that timeline's never going to match up with our budget timeline.

Understood.

So that's the problem. So even if you were always going to do in the spring, it's never going to match up to our budget.

Zero, sure.

If I could add. To your earlier question, but also getting to the budget question. We are working to minimize costs as much as possible, but to the extent that there are any additional costs, they will be submitted to you through the regular budget process.

And so while we, while we understand around the desire to have had the information earlier, it is our intent that if, to the extent that there are any budget impacts, they will follow the regular budget process.

Well, let me ask you this.

Is there any way to take what you want to do, which is a major proposal, a big proposal, I am not disputing that it could have some very meaningful effects, but put it forward in next year's budget cycle so that you get the Little Hoover, then we're not forced into decisions without having the time.

I mean, I get the initiative. But like you said, there are other overlaying issues that you've had to deal with. We certainly know that this is not the right way to do it. What is the urgency to do it this year versus next budget cycle?

Excellent question.

I think in our from our perspective and all of the things that we've been looking at and building towards in this reorganization is that although the timing doesn't seem ideal going to your point, Madam Chair, we do think that the level of urgency, given the need and the crisis that we're in is really what's prompting and motivating us each day to continue on the pathway of where we are.

Throughout the guiding principles, and I say guiding principles because we're always checking ourselves and really trying to ensure that this is getting to the other side is ensuring that all the sacrifice and or cost or loss or investments, if you will, the benefits always outweigh.

So from our perspective in looking at what the reorganization is intended to do, that is what's driving us forward with the aggressive timeline that we have.

And Madam Chair, if I may, Megan Tokunaga Block Department of Finance. Understanding that we're looking at accomplishing a reorganization which would be accomplished through a phased approach, we believe that the first year of implementation is important for that goal.

And we understand that you don't have the proposal in front of you and that it's going to be going to the Little Hoover Commission in the coming weeks.

So it's an uncomfortable position that we can't speak to the details but you'll have them before you shortly and then we would be happy to continue those conversations at that time.

Just do want to make that point or accentuate the point about the Administration has expressed to the Legislature and staff its intent to phase this in over multiple years, implement it over a multi year process and then the department has even said in the agency that they want to do so so as not just to disrupt current program implementation.

So given that, but also given the more important issue that you've raised, Madam Chair, about the timing and the need for the Legislature to know and understand the plan and know what its position is on the plan before giving it any money through a May revision type process, we're recommending the Legislature hold off use the budget year to decide its position, you know, in the summer and then use that next year throughout 25-26 to align any sort of policy changes that need to be made or funding that needs to be provided with the Legislature's final vision.

Thank you. Appreciate that. Any other last comments from panelists up here, any other comments from our panelists?

Madam Chair, you had also asked a question about additional employees and staff. And in that earlier assessment of our fiscals, we're currently going through that process as we speak. The other question you had was relating to state buildings.

Obviously, with our special funded departments on the consumer protection side and on the housing side, we are also exploring creative solutions within our own departments of office space that is available especially as we transition into in-person. So just wanted to finish those statements as well.

I'm going to put a note on that because it is a much more a bigger conversation than you might be thinking about in the sense that we already have employees that are being asked to come back to work.

And then if we're splitting two agencies and if you are moving, and again, I don't know what the plan is because we don't have it, but if you're planning on moving housing people, maybe they're already all together and there's plenty of room in the building they're at. I don't know that.

And then the cannabis and the consumer people are, there's going to be plenty. But it looks like then you would have two buildings that are half-filled if that's the case. Is that how these buildings are operating?

Well, at this point, the departments in general, they are kind of spread out, as you mentioned. And so when we're talking about the agencies itself, it's not necessarily about making sure that every single department is in the same location.

At May Lee, that is as close as you can get with at least 60% of our agency is housed at the one building. But the agencies itself, which are relatively much, much smaller, is a little bit more different strategy and where the space facing needs are.

I hear you. It's just hard to imagine. It's like taking a school going back to and saying, okay, you're over there and you're over there, but we're going to work better. And it seems like if you want to be working in a more streamlined fashion, you want to be in the same place.

And because we have all these other state buildings that are in flux, I think that's a big part of your plan that we need to know more about it because in fact it could end up costing us a lot more to get people where they need to be and so forth. So I'm not absolutely against the plan.

Obviously you've heard me speak passionately about housing and how we have to get where we need to get. It's sometimes slowing down to get where you need to get is more prudent in the end. But we'll continue to talk about this and can't the Little Hoover move faster? Is there any way to shorten their timelines?

It has to be 60 days.

We would have to consult the Little Hoover Commission to know that it's in statute.

So all the more reason that if this was submitted at the, you know, middle January, we'd already have that plan by now. All right, I think I've hit it more than a few times. We do appreciate your efforts. I know this is not a small thing to imagine, and we certainly applaud your looking towards the future.

Likewise, and thank you for inviting us even in these circumstances of not having the full plan. We look forward to continuing to share more and I'm sure we'll be back here again soon. Thank you.

Hearing from the public. Hang on. Do we have anybody speaking to. oh, we do have a few wanting to speak on this. 30 seconds and under, please.

Good afternoon, Assemblymembers. I'm Rich Cirallo, Regional Director of Housing Development for Mercy Housing California Sacramento Office. I'm here today to express my support and concept for the administration's proposal to create the California Housing and Homelessness Agency. How we are structured now is not working well.

The uncoordinated mix of state agencies, programs and approaches makes the already challenging work of building affordable housing even more difficult, more expensive, and inefficient. Creating a centralized point of accountability would make the process more efficient and ensure that the state's resources are being used as effectively as possible. I hope you consider and move forward the proposal before you.

Appreciate it. Hi again. Natalie Spivak with Housing California. Sometimes it takes an external shock to our institutions to create an opportunity for some of the reforms that we've been chasing for a long time. And we are hopeful that the creation of this new agency can be that opportunity.

Thank you.

And it's important that this isn't just a reshuffling of government functions, but an opportunity to create real improvements in effectiveness and efficiency.

So on the production side, the key goal should be to save time and money by streamlining the provision of affordable housing resources through the creation of a one-stop shop that awards all resources across state agencies according to a single rating and ranking system that's agreed upon by all of those agencies.

And it's important to build on what works here. So TCAC and Sidlock's infrastructure, including its transparency and governance, are well liked by developers.

And those principles should be emulated in a one-stop shop and Additionally, on the homelessness side, it's important to take this opportunity to ensure that homelessness programs that are currently spread out across many different agencies are brought under one umbrella in the new agency to make sure that they can be most effectively administered.

So we look forward to continuing to work on this. Thank you.

Thank you.

Mark Stivers of the California Housing Partnership. And we very strongly support the creation of the Housing and Homelessness Agency. We think having a cabinet-level secretary that can focus on affordable housing will bring us also allow us to be more proactive in how we address the issues.

We also like the idea that there will be more transparency in public process and alignment along the program. So we congratulate those efforts.

And then echoing what Ms. Spievack said, we do think the focus we have as the details come out, we think the focus really should be on improving or making it more efficient to get affordable housing dollars into the hands of the affordable housing developers.

So the one stop shop that she mentioned, we did a study a couple years ago that each additional state agency or source that a developer has to go to adds $15,800 per unit. And you think about that each development has two or three sources already at least. So we're talking about up to $47,000 per unit.

We'd like, like Ms. Buak, we think that the system probably it should, it needs to, one stop shop needs to include not just the administration's programs, but the tax credit and bond programs and should use the tax credit system as the base since that's the program that everybody uses today, the developers are most comfortable with.

And it is the closest thing to a one stop shop that we have right now. Thank you.

Thank you.

Holly Faumeni De Jesus with Lighthouse Public affairs here today on behalf of SPUR, a think tank in the Bay Area and just want to bring in everyone's attention. If you missed it, last January, SPUR published a report that was titled Structuring for Success and how to Reform Housing Governance in California and the Bay Area.

And of the 11 recommendations, number one was to create a standalone agency at the state level to have a greater role in housing and provide better leadership at the state level that will trickle down to the regional and local levels.

Even though we also share your concerns not having any details, we're confident that the benefits will outweigh the risks and that by consolidating the housing financing programs, it'll create more money. And more money means more homes and more lives that can be touched.

And we hope that at the end of the day more transparency and accountability will build our trust, your trust, and the public trust in what is now a broken system. Thank you.

Good afternoon, Chair and Members. Elise Borth here on behalf of Enterprise Community Partners to express support in concept for the Administration's proposal to create the California Housing and Homelessness Agency.

Enterprise Community Partners is a national nonprofit organization that offers financing, asset management and project development support and expertise with the goals of increasing housing supply, advancing racial equity, and building resilience and upward mobility. Enterprise has been conducting focus groups across the state that include finance and development partners, and the message is clear.

The status quo is not working. The current approach of assembling funding from a mix of state departments and agencies is duplicative, inefficient, and costly. We need a system where all financing, including tax credits and bonds, are packaged together and the application process is streamlined.

While we don't know the details of the Administration proposal, it is certainly a step in the right direction. However, a reorganization without meaningful investment is not enough. To echo my colleague's previous comments, in order for this effort to work, state funding needs to be allocated to the Multifamily Housing Program, the low income Housing tax credits and HHAP.

We look forward to working with the Legislature and the Administration on increasing much needed investment and collaborating with this reorganization. Thank you.

Good afternoon. Marina Espinoza with the California Housing Consortium. We appreciate the administration's interest in creating a new housing and homelessness agency. There are lots of opportunities to promote program alignment and efficiency. However, we're concerned about simply rearranging state entities without addressing the core issues that exist within these agencies.

If the Administration and the Legislature decide to move forward with this proposal, we strongly urge you to ensure that the new agency focuses on streamlining the production of affordable housing.

This must be done by improving the customer service experience of those who interact with the state's housing agencies, promoting program transparency, and improving the culture that exists within these entities. We look forward to learning more about the reorg plan when additional details are available. Thank you.

Thank you.

Good afternoon, Madam Chair and Members. David Neben, on behalf of the Institute for College Access and Success, better known as TICAS. As the plan for the reorganization of the BCSH goes through and is considered, we just really want to ensure that there is focus on one of the smaller components, the Bureau for Private Post Secondary Education.

It is the first line of defense for protecting students, especially BIPOC students, single mother students, veterans, foster youth, and other student subgroups.

As the current higher education landscape is shifting with the Federal Administration, we want to ensure that there are safeguards for these students and especially the taxpayers, safeguards against predatory and other institutions that are not high quality. We do have a number of recommendations for a modernized fee structure.

I'm not, in the interest of time, I'm not going to go through those. But they are outlined in our upcoming letter that we will be submitting to the committee. And we thank you for your support. Thank you.

Thank you. Any last comments? Seeing none. We will move to our next item. Thank you so much for your presentation. We are moving to issue number eight, California Interagency Council on Homelessness.

Welcome. And then there were two Members. Thank you for staying for this item. Madam Chair, I'm Meghan Marshall. I'm the Executive Officer for the California Interagency Council on Homelessness. Happy to spend some time with you all today.

Would like to take a few minutes to orient the Subcommitee to Cal ICH, who serves as California's statewide facilitator, coordinator, and policy leader to support both state and local efforts, to prevent and end homelessness. Our statutory mandates cover a broad range of responsibilities from promoting systems integration, to identifying best practices and ensuring accountability in state-level homelessness strategies.

As was mentioned earlier, Cal ICH convenes 19 state departments and two legislative appointees to break down silos and create coordinated and effective strategies. Two of those council Members, I will just quickly highlight, are the Department of Housing and Community Development, who you spent a lot of time here with today, this afternoon, as well as CalTrans.

I think there was a mention of, you know, the level of coordination that exists within programs, that is within the purview of Cal ICH, and something that we are leaning heavily into this year.

So, through these partnerships, we are working to achieve reductions in administrative burdens, not just for the State of California, but for cities, counties, and continuums of care, as well as tribal entities. Cal ICH also manages the Homeless Data Integration System, or HDIS. It is the first statewide system of its kind in California and across the nation.

Each continuum of care is required by the U.S. Department of Housing and Community—I'm sorry—U.S. Department of Housing and Urban Development, to maintain a Homeless Management Information System, or HMIS, which tracks data on people served, through local homelessness response programs.

HDIS, the statewide system compiles, processes, and validates data from California's 44 continuums of care, to create the most comprehensive and accurate homelessness data set in the state. The data in HDIS is limited to HMIS' participating programs, and the fields collected in HMIS are specified by the Federal Government.

Not only does Cal ICH provide data from HDIS to state partners and to members of the public, Cal ICH also provides interactive data tools to our local COCs, so they can use—to drive local policies and decisions, in terms of funding allocations.

HDIS has over 300 data fields that create the most detailed data set available to measure the provision of homelessness services and outcomes for programs.

Through this data, HDIS provides information on three areas, first being the projects serving people at risk of, or experiencing, homelessness, the second being the individuals and households accessing services, and lastly, enrollments and programs designed to prevent and end homelessness.

So, now that I've given sort of an overview of HDIS, I wanted to share some of the ways that Cal ICH is using this data to inform practices for the state. First, is that Cal ICH uses data from HDIS to measure statewide and local impact of programs and strategies, allowing for improvements based on data and evidence.

Second, of course, is HDIS allows us to take a data-informed intersectional approach to understand and address disparities in who is experiencing homelessness in California.

A very recent example of how we, sort of, brought this to actualization is that we brought a recommendation to our council, which they voted to adopt to ensure that there was representation on our Advisory Committee, which supports the work of the Council in three specific demographic areas, that the data indicates are overrepresented and unsheltered homelessness.

So, HDIS enables us to analyze program effectiveness to ensure that state-funded programs are delivering meaningful outcomes, including placements into permanent housing. Under AB 977, California now has standardized reporting across all of our homelessness programs. This data allows us to track consistent comparable metrics across 14 state-funded programs that were identified in AB 977.

As, as was mentioned, sort of earlier, there are a number of departments who have investments—current investments in housing and homelessness. AB 977 allows for us to standardize those measurements for each, regardless of the department or agency they're associated with.

HDIS also provides us with the data we've used to develop our Action Plan to Prevent and End Homelessness goals that was recently adopted by our council earlier this month.

That Plan has five goals, and this is the first time the Council has adopted numerical goals to strive for and providing us with a clear framework to hold ourselves accountable. We talk about local accountability quite a bit these days. This is the state's first, first attempt at, at state, state accountability.

Cal ICH has provided baseline data for these goals, from HDIS data, as well as data from other state departments, and we will publicly report on progress towards those goals each year.

So, next fiscal year, Cal ICH will be releasing public dashboards, pursuant to SB 914, which will measure the state's progress toward ending homelessness for survivors of domestic violence and their children and—apologies—accompanied women. Cal ICH is also continuing to expand on its data sharing agreements with council member departments.

This is our first attempt at matching data from HDIS, which is mostly self-reported information from program participants, to other massive data sets in the State of California, including, but not limited to, data from the Department of Social Services and the Department of Healthcare Services.

Those data sets are not self-reported, they are reliant on, you know, entitlement programs mostly, so, this is our first opportunity to align between those—between various data sets accessible to the state. So, as we work to address homelessness in California, it's essential for us to recognize both the value and the limitations of data.

So, while tools like HDIS provide critical insights into trends, no single data set can fully capture the complex and dynamic nature of homelessness. For example, HMIS provides detailed service data, but does not include fiscal data, which is, which is a challenge we hope to solve for with the resources requested in our budget change proposal for AB 799.

Not to be confused, of course, with 977. So, with that, I'll thank the Chair and Assembly Member Ward for your time and answering questions you might have.

Thank you. Let's start with the LAO.

On this budget change proposal to provide funds to Cal ICH, to implement legislation AB 799, we don't have any issues with that. We looked at the Proposal compared with what the Appropriations Committee had identified the cost to be, and found they're very closely aligned. So, we don't have any issues.

Thank you. Any comments from DOF? Nope. I don't have any comments about the budget proposal, but I do want to ask about the Council. How many members do you have on the Council?

That number is 21, I believe, we just—so, 799 also added the Secretary for the Governor's Office of Tribal Affairs. So, I believe that brings our number up to 21.

And how often do you meet?

Quarterly.

And I should, I should add that Legislative staff receive a briefing before each of our quarterly council meetings on, on the topics of the agenda. We are also open to receiving, you know, requests from, from staff on, on agenda topics if there's a desire there.

And do you meet in person or Zoom?

The council meets in person.

And do you meet up here, or where do you meet?

Typically, we meet at—our Health and Human Services colleagues have been gracious enough to lend us space at the Allenby Building. Cal ICH is also moving though to the Meilee Complex and will hopefully have a large enough dedicated space where we can convene the council in our own facility.

And then, with the data that you're collecting, we just—from the group that just presented, there's all these other homeless agencies. Do you present that data to them as well?

So, AB 977 Programs, there are 14 currently. Within our existing BCSH structure, HCD is the only department under BCSH that has AB 977 Programs.

But the other groups could go on and look at your data?

On, on what's publicly available, yes.

There are AB 977 dashboards that are specific to the programs, and those are limited to the departments, because it is available—it's person level data.

And what is the—if you want to say, trend in homeless of the individuals that are falling into homeless fastest. I mean, I think. I know, but I want to just see if it's different from them, what I think.

Sure. Our colleagues at UCSF have recently published a study. We are seeing, you know, a faster growing population of older adults falling into homelessness. There was an extensive presentation that was provided to the Senate. Happy to provide the PowerPoint presentation to staff.

More women than men or just seniors?

We know that typically, more men experience—I mean, we're talking like within a few percentage points between the, between the two genders, but most alarming is that we're seeing older adults. We know that African Americans are four times more likely than others to experience homelessness. We know that Native Americans—we participated yesterday in the Tribal Nations Summit—we know that this population accounts for roughly 1.7% of California, but 12% in homelessness. So, there are incredible disparities that exist within specific racial groups.

Thank you. Appreciate that. Any last questions for panel? Let's hear from the public. Anybody wishing to speak on this? Seeing none. Then, thank you for your presentation. Appreciate it.

Thank you. Madam Chair.

Moving to Item Number 9, Tax Credit Allocation Committee.

I go first, yeah?

Yes.

Good afternoon. Marina Wyatt. I'm the Executive Director of the Tax Credit Allocation Committee. I know you're both very familiar with our programs, we just, but a little bit of background. TCAC administers the federal and state Low-Income Housing Tax Credit Program. The Federal program has two sides: the 9% Program, the 4% Program.

The 9% Program has always been an oversubscribed program, and in acknowledgement of that, back in 1987, just a year after the federal program was created, the state created its own State Tax Credit Program to help augment the amount of production we can do using the 9% program.

In today's dollars, the statutory state credit is around 126 million a year. The 4% Program tax credits are derived from a project's use of tax-exempt private activity bond financing, that we allocate from CDLAC. I'm also the Executive Director of CDLAC. Prior to 2020, our bond financing program was largely under subscribed.

And in acknowledgement of that, and in a way to drive more demand into the tax-exempt bond program, thereby unlocking additional federal 4% tax credits, the Legislature and Governor approved an additional 500 million of state credits, that was intended to help fill that gap and allow more projects to be funded using bonds and 4% credits.

It was so successful that, combined with other funding that came through the General Fund and Prop 1 Housing Bonds, we've been oversubscribed on the bond side, as well, since 2020. The demand for state—these enhanced state, we call them enhanced-state credits—has been very high.

And just in last year alone, we had over 2.2 billion in requests for what was 500 million available. So, happy to answer any questions about the Program, or the interaction between the State Tax Credit Program and the Federal Program.

Thank you.

We don't have anything else to add.

Assemblymember Ward.

Thank you for this overview, and I appreciate you're doing exactly what I would hope to see for all of our programs too, which is really trying to tease out the number of units that were attributed to the utilization of those funds, and appreciate that very much.

We know that, you know, we're still going to have to debate whether or not we're going to reallocate hopefully another $500 million of low-income housing tax credits.

You know, without that due, it would be accurate to say, kind of given the trend lines that you're here, and I'm not sure would we, would I add up these two tables here, between the credits allocated as well as the enhanced LIHTC awarded? And without sort of this continuous appropriation, we might be risking an estimate of 20,000 housing units?

I think it's challenging to tell what the behavior is going to be in any given year. So, in years prior to 2024, there was a very high demand of projects that were reliant on state credits.

And once we were out of enhanced state credits, we were then—had additional surplus bonds available that were able to go to other sort of lower priority projects.

This last year in 2024, there was an extreme demand on the Program, far beyond what we had anticipated, both for projects, as I noted, that needed the enhanced credits and also projects that were able to find a way to finance their deals using other sources.

So, it's difficult to predict what the behavior would be like if next year we were out—we did not have the additional 500 million in state credits.

But what I can say is that looking at the past, in year—as resources dry up, projects that may have been feasible stop being feasible, and demand on the bond and the 4% program will go down, and additional resources, in the form of state credits, or local or state resources, are that much more critical to fill those financing gaps.

Yeah. Again, looking at the six-year history here, I do see more or less consistency in its application and the outcomes that, I think, we're hoping to achieve. And so, I know what going from $500 million a year over the course of those six years down to zero—the threat that that would place.

If I may, also, changes at the federal level are also likely to have huge impacts on housing production. Just the uncertainty around HUD financing, USDA financing, that support housing will create that much more of a need for, for additional resources.

Thank you. And I know you might get into this in the next item, but you know, the commensurate staff—staffing—workload for administering the LIHTC program, you know, were we not to be able to reauthorize that, do you expect there'd be some changes there with staffing levels?

I do not. So, when we first got the influx of the state credits in 2020, we did not have additional DCPs associated with administering those resources, because they have to be paired with the federal credits. It sort of just changes how the financing stack of these projects look, as opposed to like drastically impacting—it's not like one-time funding that then makes us staff up and then step back down.

Right. That's the—very low overhead is something we should celebrate. Thank you. I don't have any further questions.

In line of the same questions, how would programming the Low-Income Housing Tax Credit for more than one year at a time help to stabilize the tax credits?

Yeah, you know, as you've seen, we have these booms and busts of how housing—affordable housing—gets financed in the state. There's always going to be some sort of bottleneck, and whether it's sort of a federal bottleneck or a state bottleneck, it's always going to exist.