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

The Senate budget and fiscal review subcommittee four will come to order. We are holding our subcommittee hearing here at State Capitol Room 113. I ask all members of the subcommittee be present in Room 113 so we can establish our forum. The focus of today's hearing is affordable housing and civil rights. Both are incredibly important topics.

Not so surprisingly, we have a lengthy and a dense agenda to work through today. Much of the agenda involves review of budget proposals brought to us by the administration back in January. As you are hopefully aware, however, the Senate recently put out its own plan for the 2026 budget foundation for the future. While sharing many goals with the Governor, the Senate budget plan diverges from the Governor's proposal in several ways.

One of those differences is with the respect to state funding for the production of affordable housing.

Since that is one of the topics of today's hearing, I wanted to take a moment here at the outset to highlight key components of the Senate's plan as they relate to affordable housing and combating homelessness. First, the Senate's plan calls for $2,000,000,000 of investment in lowering the cost of housing.

That includes $1,000,000,000 to fund the construction of multifamily apartment complexes with rental rates that are typically no more than 30% of a household's income through initiatives like the multifamily housing programs, the enhanced state low income housing tax credits, and $1,000,000,000 to help move more Californians purchase their own home with a particular emphasis on first time and first generation homebuyers who have not been able to access the wealth generating power of homeownership before. Through programs like cal home and California dream for all.

I am proud of these proposals for thousands of California families that will lead directly to real and tangible reductions in their housing cost.

Exactly the kind of concrete affordability solutions my constituents and Californians across are demanding and deserve. Second, the Senate plan offers a path forward on homelessness. Over the past several years, the state has poured significant resources into getting people off of the streets and into permanent housing. It has been a long and frustrating slog, but at last we are seeing clear indications that our efforts and our investments are making a difference.

As homelessness numbers in other states have exploded, the growth of homelessness in California slowed to a trickle in 2024.

And in 2025, we saw our first overall outright reductions in unsheltered homelessness in over a decade. The worst thing we could do now is to walk away and squander that momentum. So the Senate plan fully funds round seven of the homeless housing assistance and prevention program

and commits to full funding of round eight, giving our local partners across the state, including my partners in Fresno, Bakersfield, Kings and Kern Counties, the resources and the assurance they need to keep moving forward. We will not be taking votes on these Senate plan proposals today, but I wanted to highlight them here at the outset. We welcome your thoughts on them as part of today's public comment.

And before we turn to the rest of our agenda for the day, I want to invite my colleagues on the dais to offer any opening remarks that they may have. And since our vice chair is not with us just yet, we'll begin and end with Senator Cabaldon. No comments? Okay.

We cannot establish a quorum just yet, but we'll go ahead and move on and begin with agenda item number one. Item number one on our agenda involves a proposal from the administration to significantly restructure the state's affordable housing funding system. There are several different state government entities involved, and we are honored to have staff and leadership from all of them here to present. If you would all come forward, please, at this moment. Thank you for being here. And when you're ready, feel free to begin.

Good morning. Good microphone on? Great. Good morning, chair and members. My name is Tomiquia Moss, and I serve as the secretary of our business consumer services and housing agency.

Really excited to be with you all this morning to talk about the governor's reorganization plan and the trailer bill, language proposals that we have, coming up. So, would love to just provide a quick overview and then introduce my colleagues who have joined me, at the dais. So last year, we worked together to create two more effective and focused agencies, our California Housing and Homelessness Agency and the Business Consumer Services Agency. As of 07/05/2025, the reorganization plan became effective.

Our Trailer bills today codify the reorganization changes in statute to ensure that existing laws align with statute and build the changes actualized in what we all want to see happen with the reorganization plan.

We would like to use this opportunity this morning to update you on our progress toward implementing all of our reorganization changes. I am joined by two of my amazing colleagues, our direct director of HCD, Gustavo Velasquez, and our director of, CalHFA, Tony Serdich. And I'd invite them to say a few words.

Good morning, buenos dias, chairman and Hurtado, committee members. I wanna echo the comments from secretary Moss and thank you for the opportunity to present to this group which Harabedian instrumental delivering the investments needed to address California's housing and homelessness crisis. Last year alone, ACD announced, nearly 2,800,000,000 in funding despite the current economic conditions. Homekey, from rounds one through three has delivered more than $4,000,000,000 in funds to open 16,000 new homes supporting up to a 175,000 Californians during the life cycle of the program.

Homekey Plus, the new iteration, which is funded through proposition one, has awarded already $600,000,000 supporting an additional 1,800 homes serving veterans and unhoused individuals with significant health needs.

More than a $100,000,000 to support recovery and rebuilding efforts after the Southern California LA fires and federal funded programs under which HCD has awarded $600,000,000 to nearly 300 projects. This is very important. These investments are critical. Thank you for supporting all of that. But beyond investments, HCD has also helped turn policies into progress through housing accountability and enforcement.

We are beginning to see the results of this work. In 2024, homelessness increased nationally by over 18%. California limited its overall increase to 3%, a rate lower than 40 other states. California saw the largest decrease in veteran homelessness nationwide in 2025, and yearly residential construction grew by nearly 60% from 2018 to 2024. And the time it takes to entitle new housing today has been cut in half.

These results are the product of sustained, targeted, and accountable investments in collaboration with local governments, local developers, service providers, and of course the state legislature. As the secretary mentioned, in July, we will transition this further centralized our finance programs. One aspect of all of the reforms here in the state has left undone and this will reduce duplication, bureaucratic delays, something developers, advocates, experts has been asking for decades.

I remember my time back at the Urban Institute, a national policy research thing town where these reforms were being, published, and we are here talking about these reforms right now, integrating competitive programs into one stop application center under this new committee. It's critical to providing certainty, predictability, and transparency that have not been fully addressed until now.

And if I may without integrating the housing portion of the Cap and Invest program, the affordable housing and sustainable communities, this vision could not be fully realized. The one stop, one application. We are here today in full support of that vision, and I'll turn it over to my colleague, Tony Serdich.

Thank you, director. Good morning, madam chair and committee members. My name is Tony Sertich. I'm the executive director of the California Housing Finance Agency. I'm very happy to be here alongside secretary Moss and director Velasquez to discuss our shared vision for how the our departments can work together to better address California's housing crisis.

I've been working on housing policy and finance within our state government for more than two decades. For the past several years, much of my work has been focused on finding better ways to integrate the state's various housing funding programs. Assembly bill five nineteen helped expand these consolidation efforts by creating cross sector working groups for sharing ideas to create more housing faster and at less cost.

One of the main reasons I took this position at CalHFA was the opportunity to lead our organization into this era of increased collaboration with our state partners because the time is now to do this work. Progress has been made over the last several years, particularly with bill packages aimed at reducing construction barriers and costs, as well as the approval of the governor's reorganization plan last year.

The housing finance and development executive committee members sitting here at the table, each brings teams with varied program expertise, years of experience, and a dedication to ensuring a successful implementation. I'm excited to be here today to discuss the proposals, to address ongoing barriers to housing production, such as long timelines, duplicative and overlapping applications, and a lack of alignment between multiple programs in supporting the same project. And I look forward to answering your questions.

Thank you both. The transformation of the current agency, BCSH, is really working to shift our approach to consumer protection, business regulations, civil rights, housing, and homelessness. And, chair Hurtado, I think you led with this. It is our responsibility as government to figure out how we can deliver our programs and services in the most effective way that we can, and this is really our attempt to do so. It's more than just an organizational shift.

It's a strategic shift designed to improve how we as government provide better access to housing and civil rights protections, consumer protections to our communities and industries that we work with. And we are on track to meet our deadlines, which I'm super excited about. Since the reorganization became effective, our teams have been hard at work. We've established work groups to implement changes necessary for both agencies, as well as the new housing development finance committee.

We've partnered with gov ops, department of finance, and the state comptroller's office to stand up all the necessary fiscal and administrative infrastructure.

We've developed operational plans with the department of consumer services consumer affairs and HCD to ensure that personnel and fiscal services have transferred smoothly. And one of the things I'm really proud of is the the robust engagement that we've done with our stakeholders, developers, local governments, our tribal partners, all folks who are, integrated in the success of this effort have been at the table to help that these agencies will build the kind of system that works best for them.

And we are actively recruiting, our new staff that is going to be required for the new reorganization, so I'm excited about that. We started that process in May. We hope to have those positions filled as soon as we can.

And then lastly, we are working toward establishing draft guidelines and a charter for the new committee for HDFC. The Governor's budget proposal utilizes this new organizational structure to really streamline California's housing finance system so that projects can move from a ward to construction much faster than we're used to.

Through HDFC, which I think is the innovation of this reorganization, we are implementing, as as Director Velasquez talked about, long standing calls from legislators, from our housing partners, from many stakeholders about a more coordinated and streamlined housing fund funding system. Just to provide a little bit of context of what we experience now, in our current system, we know that every additional funding source adds about four months in additional time and $20,000 per unit when we have delays in our funding system.

The HDFC executive committee, which are the three committee brings about the increased transparency, consistency, and predictability that, is necessary for our affordable housing finance programs.

We also talked A Bit about the one stop shop. This will be really incorporated into the design of HDFC. All of the work that AB 519 working group has been leading in, implementing a single application with a single review and award process, creating a more streamlined post award process, increased and more effective coordination with our partners on the asset management side of the house as well as compliance, and identifying new tools and ideas to continue to increase our program's efficiency and impact.

This budget builds on the work that you all have been committed to for a really long time and that the administration has been putting forward for the last seven point five years, and I'm really excited about its potential. And I know that there are a lot of questions about how we will realize the transformational aspects of this plan, but I think this is really

our first step. Colleagues, Christina Moon and Meghan Kirkabee, who can provide more details, on our trailer bills when that time is right.

Thank you, secretary Moss. Do we have any comments from the department of finance?

Blair Huxman, department of finance, no comments at this time.

Any comments from the LAO?

Paul Steenhausen with the legislative analyst office. We will have comments after the the subcommittee hears the trailer bill proposals. We'll comment then. Okay.

Questions from committee members? Senator Smallwood Cuevas? Madam secretary, do you have further presentation on the trailer bills?

Yes.

Please, can you present those? Thank you.

I didn't know if y'all wanted to interlude for this moment or if you are ready to hear from my colleagues.

We are ready.

Okay. Thank you. Good afternoon, Madam Chair and Members. My name is Christina Moon, Deputy Secretary of Housing Finance with BCSH.

I'm here to speak about our proposal, which, as the secretary mentioned, really builds upon all the work that we've done in the rework and takes advantage of this moment, of opportunity with federal changes to the tax credit system to really bring more capacity and streamlining to our finance system.

Is that gonna okay. Okay. So I'll I'll get into this soon. This is just a a little preview. But just some context to start.

Why now? We've created the infrastructure, right, in the reorg through the housing development and finance committee, and there's increased bond capacity, from a federal change to, something that you may have heard called the 50% test.

Changes that with the federal, tax credit system now, allow 25 of a project's total financing to be eligible for the 4% tax credit. So this is a monumental change from 50 to 25% and really brings a lot more capacity to our bond system.

And so we're bringing those together in this, proposal, of opportunity. Before I go into our proposal, I just wanna take a moment to give some context of what it takes to put a housing project together.

You probably have heard a lot about how hard it is to build housing in California, and we make it extra hard for affordable housing developers. You know, you have to compile a lot of different sources.

Each of those has different timelines, different requirements, and there's a sequencing that happens in the current system that really creates some friction and and kind of challenges that we're trying to address.

And as the secretary mentioned, each time we wait, it costs money, and that will cost more subsidy. And so we're really trying to bring that efficiency back to when we invest our subsidy. This is just a a look at what has to happen for affordable project to build their capital stack.

Often, they're coming for local subsidy. They come in for state subsidy, which could include programs like MHP from HCD or ASIC, or MIP, and then there's a step where they also bring in private activity bonds and tax credits, to really fill out the whole capital stack.

So you need all of these different sources together to be able to get to construction. And as I mentioned, in the current system, you have to go through a lot of sequential steps.

So first, you might go to your local city government and ask for some early subsidy, then you might be ready enough to come to the state and ask for MHP, and then you might need a little more so you go to the ASEC program.

And then when you have enough soft subsidy, then you'll apply for tax credits and bonds, and hopefully you'll get those, and that's each step of that is a competitive process. And then when you run that gauntlet, hopefully you'll have all your findings secured.

But you know this is a real challenge. Each of these steps there could be a different timeline, there could be a place where you get stuck because you're appealing one before you ask for more money from another.

And we have in our pipeline 89 projects, for example, you see that arrow, 89 projects that are waiting to apply for tax credits and bonds, and about half of those have already tried once before. Right?

So there is this kind of iteration that happens in the life of a project that we're trying to address. So we're already working on this, right? Through the reorg, we created HDFC.

HDFC is gonna consolidate subsidy that HCD and CalHFA have for multifamily affordable housing, but it doesn't yet include some extra steps.

So it doesn't yet include ASEC, which is why it's part of our proposal, and I'll speak to that soon, and it doesn't include the tax credits and bonds that are the real vehicle to get to final financing.

And so that's what we're trying to address in our proposal, and the real reason for that is right now, all projects have to even after they get their subsidy, again, they have to go compete for tax credits and bonds,

and they have to compete with projects that don't need subsidy and maybe have a different, set of priorities. So we're really trying to align all of these systems together to be more streamlined.

And an example of an externality of what can happen is even though we have a lot of success that came out of accelerator, you may remember the accelerator program, we put in billions of dollars to really unlock stuck projects over the past few years.

You know, we invested HCD invested 3.7 billion to kind of take those stranded projects and move them to construction. That's because there was just a lot of scarcity in the system for tax credits and bonds that created that churn.

And while this is successful because those projects, made it to construction, it's really an inefficient way to spend subsidy when you could really be leveraging federal resources through the tax credit program.

And so our proposal aligns everything under HDFC to create that true one stop shop. We have a single application.

It includes all the programs already under HDFC, multifamily supernova, MIP, but then it brings in ASIC as well to really have that one stop shop for subsidy, and then we're able to say if you have your subsidy award, you will also have your bond and tax credit award,

so we're able to pair those together to get to final funding in a one stop process. And more specifically, the proposal will have, out of the total volume cap for the state, it sets aside 90% for housing, and then out of that 90%,

half would stay with CDLAC to administer for projects that don't need subsidy, and then the other half would go through HDFC to pair with its subsidy. And so it really creates these two doors, so that projects can move forward.

Even if they don't need subsidy, they can just go straight ahead to the treasurer's office. And if they do need subsidy, it's still a one stop for them, and they can come to HDFC for that. And this has come out of some a lot of the conversations we've had with our partners and stakeholders.

The AB 519 group has been really critical to provide input on this, on what can be really workable here for the partners that are doing the work.

And one thing I want to mention too, anything that HDFC does not allocate with its subsidy, say there are lean years where there are not many subsidy dollars to administer, the unused allocation would just revert back to the treasurer's office, and they would roll it into their next round or carry it forward.

And a little more about the ASEC program, but before I do, I just wanna mention part of this has been how do we build the right team and transition the right staff.

And so our, proposal also includes a net zero transfer of 14 positions from HCD over to HDFCs, so that team is ready to really implement some of these program transitions. And a really important part of this proposal is the statutory changes to really modernize the ASEC program.

You know, we're maintaining the climate integration of this program, all the priorities necessary to build sustainable communities, but we're streamlining and modernizing it so that the administration really aligns with the one stop shop as well as the

needs of the sustainable community side. You may have heard from folks in the field this this program, it's really important, but it's also really complex.

You know, there's a lot that projects have to do to be competitive for this program, and the main things that we wanna emphasize are that housing, affordable housing, being placed near jobs and transit.

It's a critical part of our state's climate strategy, and this program will continue to do that. What we are trying to do is bifurcate the program so that 70% of the funding will go to housing, so that it's really location efficient prioritizing, location materials and methods,

and really coming through that one stop shop. And then 30% would stay with the strategic growth council to invest in sustainable communities. And again, really need to have that subsidy together to implement the one stop shop.

And on the sustainable community side, that will enable the more kind of regional corridor level scale that transportation, pedestrian, and bike improvements, really need.

And a lot of this will continue to be designed as we move into, the next round, and we would really focus on getting community driven, input here. And to that end, we've really maintained the program's goals of having 50% of expenditures benefiting disadvantaged

communities that maintain is maintained in the program, and we believe that actually integrating these funds into our one stop shop will really enable us to have communities better served overall by by all of our housing programs in a more coordinated way.

So that's all I have today. Thank you for the opportunity, and we welcome your questions.

Do do we have any further, testimony on the trailer bill? Okay. Going back, department of finance, any comments?

No, nothing to add.

LAO?

Thank you, Madam Chair. A little over a year ago, I met a I was talking with a long standing affordable housing policy analyst and administrator and talking about how California has affordable housing programs scattered throughout its government,

some in department of housing community development, some affordable housing programs there, some within CalHFA, and then you have, through strategic growth council, the affordable housing sustainable communities program, and then you have not even under

the governor's purview but under the state treasurer's office, really key affordable housing programs and, which you'll be hearing from in in item two.

And the this administrator was saying to me that if California could finally get the its affordable housing funding system to work like a system, he could finally retire.

And so this is kind of what the state is after right now, what the governor with the reorganization plan last year trying to do, which the legislature, of course, approved last July, and then we see the governor's set of January proposals is really building on that effort from last year's reorg.

So overall, we see it as promising. We see a lot of merit to what the administration is proposing to do. We do have some comments and recommendations.

First, we do see merit with the administration's concept of automatically awarding private activity bonds and thus 4% federal tax credits to projects receiving an award from this housing development and finance committee, HDFC.

We do have some concern with the proposal to set in statute a minimum of 50% that must be set aside for HDFC awarded projects each year and then only allow unclaimed private activity bonds to be used for other types of projects at the end of the year.

We see that as really unnecessary, and it's it could result in funds being tied up for most of the year, which undercuts the state's priority of quickly deploying these resources for developer projects.

So we recommend the legislature consider one or two options. First, the idea is to approve the concept of the set aside but remove that 50% floor and just let the administration with this treasurer's office staff determine an amount to set aside each year based on anticipated demand.

But another option you could do instead is keep that proposed 50% set aside, but allow the unused funds to be reallocated earlier in the year and not wait until November or after when that money can be reallocated to other projects.

In addition, though, we see it as a good start. The governor's budget is in some ways incomplete, and it only addresses the 4% federal tax credits.

And so the federal tax credits, those 9% tax credits generally provide more than double the equity for projects, and then when they're combined with the state credits, can be a very powerful tool to fund deeply affordable projects, affordable housing for the lowest income Californians.

It does not address what to do about the federal 9% tax credits, which also is a lot of funds, federal funds, nor does the administration address the state tax credits.

So we recommend the legislature direct HDFC and the treasurer's office to prioritize awarding those 9%, federal tax credits and the state tax credits to HDFC funded projects that are that are targeting the lowest income residents.

So just finally on the affordable housing sustainable communities proposal, placing the affordable housing program, at HDFC has the potential to further streamline that process, further create really more of a system of affordable housing in the state.

But the legislature might want to consider a couple of modifications, first by giving flexibility to developers that may want to continue to submit an integrated application.

Developers might, in some cases, want to have an integrated application keeping out affordable housing with the transportation component together.

We recommend the the administration provide some flexibility so that developers can do that and submit one application instead of two applications, which seems to kind of which otherwise would seem to undercut the whole goal of streamlining the process.

And then also, we recommend the administration report back at the end of the 26-27 budget year on the demand for the affordable housing component versus the transportation component, that sustainable communities component.

And the legislature can use that information to decide whether the proposed split of 70-30% really makes a lot of sense or should it be adjusted. Thank you.

Thank you. Questions from comments from committee Members? We'll go with that, Senator Cabaldon.

Thank you, Madam Chair. Thanks, secretary Moss and and and our other administration colleagues. First, it's it's incurred we obviously spent a lot of time on this issue last year as well, the reorganization in particular, and it's encouraging to see the progress that's happening.

I did I have a question. I'm trying to make sense of the the trailer bills and the language reasons.

So that the trailer bill describes the executive the HDFC DFC Executive Committee as going into the committee on July 1, but all the trailer bill only refers to the executive committee in every other way.

Is there are these two distinct committees, or or is there is the executive committee the committee at this stage?

The executive committee is the committee

Okay.

That will govern HDFC.

Okay. So why why do we have another name for the same thing?

I think it might stem from right now, HDFC is an executive committee that is housed within BCSH, and then July 1, it becomes its own Department. Department, essentially.

Okay.

And that's when staff would be able to start. Right now, we are only able to have two positions, the ED and the general counsel, and those are under recruitment. So there's sort of this transition phase that's happening.

Well, we start just calling it one thing at that point and not this I mean, it's just like we have so many housing. That's part of our existing problem.

We don't need more boxes and but it also raises for me and and it raises this question last year both here in Little Hoover, and it kind of is highlighted a little bit by their by the APA issues and other things that are in here. It's like, why are we doing this as a committee?

I mean, the it's an odd committee, so, you know, we all serve together on this one, but I don't work for Senator for the for Senator Hurtado. We are both we are all peers in the Senate, and she just happens to Chair the committee.

But on this committee, there's the secretary, at least on the org chart, there's the secretary and then reporting to the secretary is the HCD director, and then within the secretary's world, and I don't know reporting to is the right word or not, is the CalHFA director,

but it's I mean, it's not a it's not three peers just having to sit together. Hey. What do you think? What do you think? What do you think? It's what do you think, boss?

So I'm trying to understand why are we organizing it this way and then having Bagley Keene and and APA and all these other stuff apply when it could just feed up the administrative ladder and have the secretary make the decision rather than the what seems a bit theatrical.

But I'm I'm probably missing something that you can enlighten us on why the committee structure is necessary here.

No. It's a great question. A lot of what we heard around this entire process was creating transparency and input in the public sphere around how our housing funding programs are operating.

So as we were working through the little hoover process and wanting to establish this HDFC committee as a way to have the formality of that transparency. So it would have public meetings.

We would have an executive committee decisions around its funding and prioritization of calendars and resources would all be done in the public sphere just as we do at CDLAC and TCAC, just as we do at other formalized committees that really encourage and have external participation.

So that is why it's not sort of an enclosed process within our agency. We wanted to make sure that there was active and transparent participation from stakeholders.

Alright. I mean, for me, it's still an open question because I mean, those those things then induce time time delays, costs, what have you. So I serve on yesterday, we had the state allocation board meeting. We did the same thing for school facilities, and that's the same concept.

And other than folks who are applicants, it's not like the public is participating in any sort of, broad way, and there are a lot of other ways for stakeholders, for folks who are appealing a decision and what have you to get in a gift.

So I'm no. This is not I don't have a hard opinion here, but it seems like if because I'm gonna get to my very profound reservations about the ASIC piece in a moment, but we're sort of, you know, to every possible thing, we're saying streamline, streamline, streamline.

Let's go as fast as possible, as fast as possible, and then in this situation, we've we're creating a structure that is not really does is not designed to do that.

It's designed for this public accountability, but is that really what's gonna happen in this space more than a secretary who is also accountable to the to the people as well? So to me, it's just an open question.

It's not a I don't have a hard objection, but I hope we continue to think about that, whether that structure is real also. That if I go and testify at that one of the at an HCE at an executive committee meeting, and I'm directing my comments to the whole committee, but in my head,

I'm like, am I really only talking to the secretary who's making this decision? So we should be real about these procedures that we create for public engagement so that they're authentic, and not theatric.

But I wanted to get to the ASIC piece because I think we're, you know, we're partly in this situation where we're looking at ASIC as the how do we get this in the how do we get this arid affordable housing program that seemed to, like, find its way somewhere else?

How do we bring it back into the family, which it never was in the family, to to to become partly, we're in this situation because there's no other money here.

So we're doing we're we're doing a lot of good work here to try to to streamline, to integrate to all of that for for for programs that have no funding proposed for them.

And we we have to do both of those things at the same time, and I know there's broad agreement in in the room about this, but, I mean, that's you know, as I get to ASIC in just a second, I think that's the that the reason why this feels like it's a big deal is because we're

not investing directly in MHP and and the other programs that we absolutely must be doing at a large scale.

And so when we when we don't do that, when we zero the whole thing out as is in the governor's budget, we don't do what's in the foundation for the future plan that the chair raised, then we're looking around. Okay. What's left?

Oh, there's this what's not a huge amount of money in ASEC? Let's let's capture that and let that'll be the center of our entire streamlining and, quote, unquote, modernization proposal.

So just just for context, not a question, but we have to fund these programs both in a bond and also in the budget. That's why the the Senate plan is is is so important.

I think the other but but so I was here you know, I was around the world when when ASIC was created, and it it was not an affordable housing program that happened to be in another budget.

It was, look, we've done cap and trade, we've got GGRF, and affordable housing folks and others, and mayors like me at the time said, hey one way that we can achieve breakthroughs on, transportation and land use based, climate emissions, breakthroughs we're gonna

lead the world in this space is through, creating a program that integrates transportation, land use, and housing together and recognizes the important contribution that housing has to play in concert with transportation and and and and other sustainability elements.

And that was a fight to win that, and it was a fight within the world of of sustainability and climate emissions. And the our the climate and sustainability policy folks to their great credit were magnanimous, and they recognized the reality, and they said, okay, We agree, and ASIC was created.

But it wasn't an affordable housing program that just happened to have sustainability features, and it wasn't two programs that happened to be married together that now should be decomposed or probably more appropriately said, dis integrated.

It wasn't it that was the core of that of of that program. And so when we talk about modernizing and streamlining, this is not one of those programs. I still feel lucky that we have this money from the Jujira Fund.

It feels a lot this proposal feels a lot like the administration's, you know, prior efforts to use the GGRF funds for high speed rail, for CAL FIRE, very important things, also not necessarily core to what the sustainability, environmental, and climate program is,

and I think we I'm fully committed to both things. So I'm very worried about this proposal because it does seem like it's like this mindset that we have now that this is our money. It always has been.

It's we're it's our right. We're entitled to it, and we wanna make this, just an extension of MHP is not correct, and and we there there has to be more attention paid to it. So that's that's appearing in a couple ways. So one is the two pieces are not connected at all now, in in this proposal.

So the housing component, and I'm being charitable to use the component word because I don't see it that way, but the Housing Dollars would pretty much be purely based on location efficiency, which almost by most affordable housing projects are going to accomplish that.

So, yes, you say, well, though, we're modernizing. It's still gonna account for the goals of GHG reductions. That's mostly gonna be accomplished by most affordable housing developers saying, look, we happen to be in the right in a location efficient place that will make

transit work or walking or whatever, or it's just near jobs and and other housing, but that's not that's not breakthrough, work.

And then there's a separate pot of money that has been in the SGC's, space, where the statute currently lays out, like, here's what it's for, like, in detail, And they're it's mostly transportation investments and some, AG land preservation, but they're very specific investments.

We the trailer bill proposes to erase all of that and just say, you know, it's for GHD rejections and planning and efforts and and activities, not the kind of capital investments in transit and bike biking and walking and other stuff that that is in the existing statute.

So that's a substantial watering down of even a divided program, but there's also no linkage between them. So I you know, I'm the very first ASIC project to to come out of the ground, to break ground, was in my own community, and it was very tightly a a connection between

the, streetcar line on the sustainability side if it had been split and the housing project together.

It made no sense that you couldn't do them it made no sense to build a street car line if you weren't gonna build the housing, and it made no sense to build the housing if you didn't have the transit connection. They made each other work.

And so when we say two eight, now we're gonna split that decision up, two different agencies are gonna do it, they will never talk to each other, and the projects, even if LAO gets its way, and we say, well, you can voluntarily submit an integrated proposal,

we've lost the entire point of this program, which was to find at this nexus point and instead focus on location efficiency, which will heavily advantage San Francisco and open in places where location is everything, but in places where actual investments have to be made

in transportation and in transit and walking and biking at a serious scale to enable this at all, they're gonna be at a significant disadvantage.

That's rural places, that's places that aren't in the center LA you know, Downtown LA, but other parts of LA, And so I'm very concerned about about the that aspect of of this proposal.

I understand the why, but I think part of the why is because we're not making enough we we should be spending a billion dollars on the core affordable housing programs.

I think the other piece of it I would just add and then I will stop Madam Chair, and thanks for the indulgence here, is that that these are infrastructure having again, having been a mayor, and I know affordable housing project developers are very focused on their building,

but Bridge Housing or whoever, they're not capable of of being able to integrate the full the full infrastructure plan that makes these communities work. It's it's not possible. And so IIG, the ASIC investments like this, they are not just about that project.

They they are the reason why these investments make sense is they reduce the infrastructure cost for other projects that are not on the applicant list. And if we simply say we're gonna allocate we're gonna do it 730 and we're gonna allocate it on a location efficiency basis,

we're not gonna make those investments. And if we don't do those things, that's what's driving up the cost of impact fees and connection fees and everything else.

We have to use these kind of dollars for investment investments that don't just advance a single project, but also reduce the the the cost burden, the infrastructure cost burden on all projects that are in that district.

So I'm very appreciative of this the secretary and I have have talked about this offline as well, I don't know if she's committed to all these same things.

So, you know, notionally, we're we're in the in the same direction. I think there are there is a path there are paths here, but I just wanna you know, because ASEC is is because it straddles two lines, I think sometimes we don't put the pieces together,

and it's just such an important program. It is by definition hard. That was the point is, like, can folks come up with breakthroughs? And so it's not supposed to be something that just every single project is has has a has a lane into.

It's supposed to be folks that are gonna, like, be on the leading edge of innovation and infrastructure and transit.

So I don't think just hard is necessarily a bad thing, but so and I'm very supportive of maximizing the streamlining and the connections, but but keeping keeping at the center the core purpose of the program and particularly the communities that are that are otherwise left behind. So thanks, Madam Chair, for that.

Thank you. Megan Kirkby, Chief Deputy Director for HCD. I mean, I think heart in this, and I think we're probably aligned on a lot of the things you're talking about in terms of, the types of future we're trying to build.

But I think a few things that might be worth talking about are in caring about those climate goals, one of the things that's happening right now under the affordable housing sustainable communities program is you are building those partnerships between affordable

housing as well as, broader strategies. But one of the things that's most important to me about this, HDFC proposal, and really bringing, you know, seven full multifamily programs together with bonds and tax credits for an effectively simultaneous award is right

now, today, when we make an affordable housing sustainable communities award on the state side, we do not control our own destiny. So that project actually cannot move forward until it has its complete financing.

And so when we make that award, we're building on trust. Right? We're hoping that it goes and it gets its next piece of the pie that it can move forward towards readiness.

It makes it extremely difficult for us to hold that, already accountable, for the the readiness milestones that they commit to. Because to a certain degree, their destiny is wrapped up in their next, funding award.

The only way we can truly be sure that we're awarding the best projects possible is to be looking at all the resources we have and be looking at all the projects at the same time, and to be able to make complete financing awards that allow us to say that project

now is leaving our door fully financed and it is moving to readiness.

And if it does not hit those readiness dollars, we as a state get our funding back. Does not meet its readiness deadlines, then we get as the state get our funding back.

And absolutely, there should be pathways for those projects that are that are they're ready to do it.

They're active transportation investments at exactly the same time as they're tran at the as they're trying to move forward on their housing side.

But I think a lot of the, affordable housing sustainable communities awardees that we see, we are talking about. We are talking about different actors with different timelines.

And so I think that accountability piece is also really important in the sustainable community side of the equation as well, because you might be ready to move forward with part of the project or the bike lanes or to your point,

the really critical pre development work that that helps make additional density possible in the infrastructure work.

That might be at a totally different time line and a different actor than the of the dent the the the dense transit oriented development that's trying to move forward on the affordable housing side.

And so I think this gives us a lot more control of our state dollars to ensure that we meet, not only meet our GHG reduction goals that are envisioned through the affordable housing sustainable communities program, but ensure that we're getting,

we're able to hold, our awardees accountable for those climate goals, in a much more concrete way and so.

How is how is accountability towards the GH goal GH goals advanced?

If we fund a project and it's not able to to move forward for years and years at a time, we're not getting any greenhouse gas reduction during that time. And that's that's a lost a lot of lost climate benefit to to the state.

Yeah. So I guess this is the fundamental disagreement I have, which is the notion that the housing, by its its mere existence, is GGRF advancing.

Its mere existence with no other and that's why the they're like like striking out every single line about infrastructure investments and putting in plans and activities and if is the project meeting its GHQ's goals or not?

Or did it add 82 units of parking the day after it opened? Right? That

And I'm sure we could talk further about this, as well, but I do wanna make sure that I wasn't misunderstood on that point is in no way would the project be less greenhouse gas reducing by putting it through a one stop shop.

What we're guaranteeing is that whatever we fund, whether it's the sustainable community side or a on on the housing side, that it's moving right away after award, and that does not happen today because we are not complete we are not able to fund that project

to its completion with that award. So we sit in limbo. So no matter how great that, like, even if you use exactly the same criteria we use today, we don't get to start the moment that we pick that project.

We have to wait for another constitutional office to make the same decision as us and say that they agree that that's the right project to fund.

Under this, we are saying we are controlling our destiny. And so that great GHG project that we wanna fund and we wanna rank it to be the best GHG project in the world, we're saying, we're giving you this award. Now you need to go.

And we and right now, we can't do that. And similarly, on any other complimentary investments, right now, because of those the them being tied to each other, they're on similar timelines.

And so that is a way to reduce our risk and get climate meet our climate goals faster. so.

Senator, I also just wanna add, I sit on, SGC and have been a part of the awards for the last two cycles. And I don't disagree that this is not a housing program.

I actually think that the combination of its intent is what makes it special and what makes it difficult for a lot of our applicants to move through the process.

For example, we have not had tribal partners be able to actually access our ASIG program in the way that we want to because it requires so much complexity.

We are working at it, and we and I think that is another goal of integrating these programs together so that we can actually make sure that all communities who need these kinds of resources get access to them, and that we are easing difficulty where we can,

but not diluting impact where we can.

And I think that is our ultimate goal. And the other thing you were talking about in terms of our, urban communities, you are right. ASIC advantages urban communities because it's often near transit.

It's aligned with our climate goals. We wanna make sure our rural communities are accessing ASEC. We wanna and right now, that is not as easy for our rural communities to access these kinds of programs.

And so when they're coming in securing funding in our subsidy programs, and there's an opportunity for them to access ASIC with all of its program requirements, we wanna make sure that that's a streamlined process.

You did make, I think, three recent awards to rural communities in my district, so look, I get this, the the the the rationale here. The challenge, and I'm actually more concerned than I when we started because the the like like folks that take on that complexity Yeah.

Which that and then have a shot at it, if our entire mindset is everything is about how how fast and how certain it is, like, that's the only metric that we care about or it's so overwhelming, then that's that's going to cause, an affordable housing developer to to to say, you know what?

We're gonna we're proposing to meet our GHG targets by both location, and we're gonna make sure that the the common, the common, cooking area has a notice about how to access van pools, because that's easy, and you're nobody in HTD nobody at

the at the HDFC is gonna say, well, we're concerned you're not gonna be able to implement that.

Another project that says we're gonna we're gonna close the gap in the in the bike lane network that connects this project to the major employment center a mile and a half away, they will get they're like, well, they but they don't control the bike lane,

and the funding's not fully secured for the bike lane, and so they will then not do as well in this process. That's what, that's how this sounds, is that that we are putting speed and Certainty Uber Alice without really paying attention to the stuff that makes a

difference in that that sustainability stuff, which is not is not the most if it were the cheapest and the most certain, we wouldn't we wouldn't be getting there anyway. So I look forward to continuing the the the the conversation here.

I think this is a obviously, you can it's a big deal, and the governor's proposal is a big one. But I think that just to reinforce one more time, if the governor would come back and say, hey, we're funding these larger programs, this would not be so high

stakes that ASIC was the only money that we have.

I appreciate that. I know that we should move on, but I cannot help but emphasize, I don't think that's what we're trying to communicate, that absolutely you can put GHG as a priority here.

I think I nothing we're trying to say communicates that that would be a diminished priority.

What we're asking is that all across seven different programs that have lots of unique goals, that we are asking those seven different programs to be able to look at where there's university where there is universality, and to not force, the same development to go

through the same process over and over again. But to maintain the spirit of each of those unique funding sources, those funding sources must go to meet the goals of those programs.

We are only trying to make the goals of those program we're trying to meet those goals faster. We're not trying to erase those goals. And so I do wanna make sure that that's clear in the the goals we're trying to meet here.

This is just beginning the process to say, can we do the ones that we know are gonna be consequential to making sure the construction from award to construction moves faster and cheaper.

And just one last, comment, Senator. I really believe that this is the starting point. This is gonna be an iterative process. And in my mind, currently, we have Housing and Homelessness Dollars across 16 different departments and agencies in the state of California.

This does not mean that we don't want our HHS colleagues. We don't want our CDCR colleagues, all of the others who have much more resource, frankly, around the other places where this could be important.

We wanna build the table to invite those resources to be consolidated over time. So I just wanna be very clear. This is not the end game. This is just the beginning of the conversation.

Thanks. Okay. Senator Smallwood-Cuevas.

I really appreciated the discussion and the detail of it and the perspectives. And I guess my and I think we want to see consolidation. I just want to say that.

I mean, I think your last comment and the last we often say the problem, we're spending the money. We're putting it in the budget.

Where are the units? Why isn't it happening? Why is it so slow? Why does it feel like we just can't reach these goals? And I think you just said very plainly what our problem is.

It's not always the cities and the counties. This is also our problem of having silos and forcing folks to go through these silos which delay, delay, and cost money. So I really appreciate, that last comment.

And I appreciate the work, of this team of trying to put together a proposal that is, I wanna say, like a shotgun, though we don't have a lot of time to see how this is gonna work, you know?

So, you know, this is, the the deep questioning and conversation is that we want this to work, but we already know we are starting late in the game.

And so we are going to have to see how this unfolds and we are all going to have to watch it closely. And we want I want to see this move forward so that we can show it can be done, and hopefully, this is a signal to other agencies and other parts of our

government to see the opportunity of of bringing, tearing down these silos and making it easier for everyone to do business with us. And I want to say that we are not disagreeing with what you are putting forward. We agree it's fragmented.

It's too slow. It's too expensive. It costs developers. My question is a little more fundamental. Which is the proposal creates a new structure to better move housing dollars. But where is the housing dollars?

We have a budget that has no money allocated to affordable housing and no money allocated to homelessness. So can the administration explain how this restructure will result in more affordable housing units if the budget does not include significant new investment in affordable housing production?

That is a fundamental question, Senator. I guess I would answer it in a couple ways. The first is when I agreed to come and do this job with the governor, it was really because I've spent more than two decades in community trying to figure out how do we address

our homelessness and housing crisis now. And what the reason I said yes was because we actually need cabinet level leadership in infrastructure to make sure that housing and homelessness is not an optional policy investment.

That no matter who sits in the seat of governor or in the seats of legislature, that it can change depending on their interest or or political interest.

And so part of the design of what we're proposing is to to create that permanent infrastructure, so that we can think about policy over a long period of time.

We can imagine what it would look like to actually fund, and resource 2,500,000 homes over the the next decade. We've spent years trying to figure out how to help streamline those processes locally, right, so that local communities can move their developments forward,

and we are not impediments to that. We're now introducing opportunities to streamline our financing system, Right? That then allows those local projects, to come to us and get funded in one swoop so that they are not going to multiple doors.

So I offer that the infrastructure that we are trying to build with the new committee, with the new agency, seeds the opportunity for resources when they come. We know that we are in a lean budget time, and that is not a permanent fix for California.

We know resources ebb and flow, but I want our state departments, our teams to be ready for if it's a dollar or a billion dollars a year, we need to make sure we are responsive to taxpayers and how we are fund spending those resources.

I don't wanna be able to tell my neighbor it's gonna take you five years to get into your temporary housing unit. I wanna be able to say, call this number, figure out how to get connected with the assessment center, and there's a home waiting for you.

And I think that's what this gives us the opportunity to do, and it costs money. So we are doing our internal advocacy. I've had this conversation with many of you that the administration has maintained its prioritization around housing and homelessness,

and we know that resources inform where your priorities are. And so we are in spirit and acknowledgment that those resources are critical, but we're not waiting for them to do the work that is our job to ready the system for efficiency.

No. And I appreciate that answer, but I know that my constituents are gonna call and say, why would you support creating a structure that doesn't have any funding? And those are the questions that we are going to have to answer to.

And that's why I have to continue to push that very fundamental question. And specifically, you know, thinking about how we're streamlining affordable housing financing, I think, is is key.

It's so important. But will the administration support funding for HAPP, for example? The multifamily housing program, CalHOME, other core affordable housing programs also have not received sufficient recent funding.

Otherwise, we have a proposal that we know we are setting up to be underfunded. And therefore, even with all of this great infrastructure work, with all the things that you've done, we will be condemned for it not working.

And so the proposal for me is how you know, how can we stress the significance and the importance of making sure that there is both the infrastructure but also the resources to make the infrastructure successful.

My final question is that the proposal includes a November timeline with some potential callback of reallocation of unused bond authority.

And my understanding is that after that point, the remaining allocation could be opened up more broadly. Can you elaborate a little bit on how that process would work?

Who would be eligible at that stage and how the administration would ensure that the housing projects will have enough time to move forward? The proposal appears to have key actions by July 1.

So I' m a little confused by how the trailer bill will not be enacted until the close of that date. So if you could just clarify that, that would be helpful for me.

Sure. And I might have Christina give you some more detail on that, but I would be remiss not to say, you know, the the governor did propose $500,000,000 for HAPP in the January budget.

We recognize that there are many jurisdictions across the state who are still spending rounds three and four of HAPP. We are now proposing round seven. So there are resources still.

I don't wanna say that there were the tank is completely empty. I think your point is well taken that we need ongoing supports to really realize the potential of what we're trying to do together.

And I would also be remiss not to say that we are actively in partnership with our human services agency in administering our prop one resources. We have $2.6 billion of those resources still, being, allocated and implemented.

Our Homekey Plus program, is still active. And so we are we have a a new super NOFA program through our MHP program. So we we are not at zero.

So I just wanna be clear that your point is well taken that we need ongoing investment, but we also have resources still in community that need to benefit from a much more efficient and effective process.

And then, Christina, if you could talk a little bit about the senator's other question.

Sure. Thank you. The November date, we wanted to put in a a deadline by which the bonds could still be used in the same year. And so if they are not used by HDFC, say there's lean years like we're experiencing or expecting to, we would revert those back to the pot.

And so CDLAC could administer them through their typical rounds, in the way that they would for any project that doesn't need HDFC type subsidy. That doesn't mean it has to be on October 31. Right? Like, that is a deadline.

We wanted to put it in there, but recognize that that determination could happen much sooner, especially when as we get into a more regular cadence, aligned calendars, which is what we're working on in partnership with the treasurer's office.

So we'll have more visibility into that, need for pairing, and then we'll be able to return it much sooner in the year.

And, the action that would happen is that the executive committee at one of its public meetings would make that determination and notify the treasurer's office at CDLAC, what is needed and what is being reverted back.

And then just to the July 1 date, in the statute that really created or the the legislation that really created the reorg. There was, homework for the executive committee to do around recommendations for process improvements and aligned asset management.

That is all underway, so there's no change to that. And we are planning to convene the executive committee for the first time by June so that they can really review and adopt those recommendations, so that they are kind of formally, discussed.

Thank you.

Just to add yeah. Just to add something. So right now on the proposed trailer bill language from January, it states that if funds of private activity bonds have not been claimed by these HDFC awarded projects by November of each year.

If they haven't been claimed by November, then they can go to this general pool. And so what we're suggesting is either not say something about a 50% minimum amount every year or just move that date earlier.

It could be, for example, October, August even, by August, if those monies haven't been allocated as HDFC funded projects, then they can go to the general pool.

Otherwise, you have developers waiting for these private activity bonds for projects that haven't got an award and they're just waiting and waiting when everyone knows that money is not going to be claimed in November.

Thank you. I just have a few quick questions, one of them being under the proposal, you're looking to bring the housing programs together under the multi housing multifamily housing program.

And if that happens, what will become of the the joe serna farmworker housing grant program as an example? So that's great.

The legislature is a wonderful body that has given us many bills before us to Kinda, like, lead us down the path toward this single single door.

So the the Joe Serna, firm worker housing program is one of a number of programs that under, under, prior legislation AB 434, was already part of this sort of pilot of being able to blend programs together,

identify those sort of places where where they are similar, and then where they have unique attributes. And so when we refer to the multifamily super NOFA, the Jo Serna farmworker, housing grant program is is one of those.

The multifamily piece runs through our multifamily super NOFA programs. Again, so that it can be one application and actually helps us it really helps us actually fund better farmworker program projects that way because we're able to make the process so much easier.

And so that that that that already has been blended into our multifamily super NOFA. It would be all all of the multifamily super NOFA is being blended into this this full complement and complete financing.

So it'd be a huge benefit for that program because, again, it'll have that certainty of receiving its state funding at the same time as it's bonds and, effectively, simultaneously receiving its funds at the same time through the set aside.

But TCAC and CDLAC would would still be doing the administration of those bonds and tax credits.

And then my next question is, do you see any potential impacts to the sustainable agricultural lands conservation program as part of the proposal?

You know, I we may wanna invite our colleague from SGC to answer that.

Good morning. Is this on? Okay. Erin Curtis, Executive Director at the Strategic Growth Council. In regards to SALC, what is being proposed is maximum flexibility for the 30% sustainable allocation and SALC being included within that 30% and maximizing the

flexibility for the strategic growth council to consider, how much to allocate towards SALC on an annual basis based on priorities and availability.

Okay. Great. Thank you. I don't know if this this your next question is gonna make any sense, but as you were all talking and I just it kind of came to my mind in terms of meeting GHG goals and when it comes to the need to build more, right, in California.

My understanding is that homes have a certain lifespan, right? Like you build a home, a new home, and they're they could probably hold strong for about one hundred years, maybe one hundred and twenty years.

It' s also my understanding that California the majority of homes in California are were built prior to the 1970s, 1980s. Is that something that you' re also kind of thinking about as some of these homes many of these homes are becoming a lot older in terms of funding? Yeah. Okay. Perfect.

Sorry about that. My mind is everywhere.

It's actually it's super relevant because as we think about policy and program priorities, preservation of housing is so critical to maintain our stock and also maintain affordability.

And so what's happened in the scarcity of bonds and credits and other kind of fluctuations and available subsidy is that we really haven't been able to pay enough attention to preservation in the way that we need to.

And part of what, we look forward to doing with the additional capacity in our system with bonds and credits is really go back to be able to do more of that and do it in a way that is very strategic at the portfolio level.

And so some of the work under the reorg that we've been doing and thinking about is how do we collectively, across agencies, coordinate how we how we asset manage, but how we kinda re help reposition these portfolios of our partners,

so that they can be sustained and invested in the way that they need to. So we don't lose any more units as we build new ones.

Thank you. I really appreciate that response and that you' re thinking about it and I represent the Southern Central Valley and I see that many homes are falling apart. Some don't even have central heat and air.

Some I know in my former home we relied on it we relied on the swamp cooler for a very long time.

And so that's the those are real stories that people are facing across the Central Valley and other parts of California, I assume.

But our region is a bit warmer, as you know, in during the summer and when we talk about climate change and the impacts. It's those committees also that are being left behind in it's something I'm hoping we don't continue to do that as we're considering this proposal

And an others when it comes to finding because I think that there an important piece to housing and keeping at not only just adding but maintaining what we already have as well. I'm thinking appreciate your answers and I don' t know if there' s any additional one? Okay. There' s a follow-up.

Just a follow-up on the Chair's question with respect to the Joe serner program as an example. The and this is on the trailer bill itself. So the trailer bill includes new language.

It's the intent of the legislature to designate the multifamily housing program as the state's primary omnibus affordable housing subsidy program to fundamentally simplify access to state housing resources, replacing today's patchwork of overlapping programs with a clear pathway to complete financing.

The administration doesn't usually care that much about intent language in the world, so I what what are your intentions with this language?

Since it's not self executing by itself, it doesn't do anything, Is this a placeholder that some for something we should be expecting and may revise? Or what what is the what is what is the meaning of this?

I could start, and then I invite my colleagues to join in. We are doing a lot of the work right now to really go deep on the regs and guidelines and say what like Megan was saying, what's universal across all our programs and what's bespoke for each program?

We have a lot of programs we're trying to do that across, and we're trying to make that more legible so that our partners know what we're looking for and how they can be compliant.

And so part of that is trying to signal that work and also that, you know, while we do that, it would be great to keep it to that list of programs as we do.

And so we really, you know, recognize MHP as one of those kind of more omnibus kind of flexible programs that really gets to a lot of the policy goals and is the base of what we're doing as we do that guideline work.

But, you know, there's a lot more to come through HDFC of just making those programs more legible, so folks understand what they're even signing up for when they're pulling from these different pots.

So this is purely a letter to the future. Please don't add any more.

A little bit.

Yes. It's it's not it's not a signal that you're that that we should expect your proposal to to to eliminate the children's current program.

No. No. No. There's no suggestion. No.

Okay. Alright. Thanks, manager.

Thank you. Last call for questions or comments on this item. Okay. Seeing none, thank you so much for your presentation today. We're going to hold this item open and we are going to move on to our next agenda item, item number two.

And we're going to establish a quorum in the process if consultant, can you please call the roll?

For purposes of establishing a quorum. [Roll Call] Madam Chair you have a quorum.

Quorum established. Thank you so much. So onto agenda item number two, which involves a report from the California Debt Limit Allocation Committee and the California Tax Credit Allocation Committee, who together award and manage a major part

of California state financial support for affordable housing. We are grateful, to be joined by representatives of this CDLAC and TCAC, I'm sure you have your own way of saying it, to provide an update on what they've been up to and including the response,

to the federal enactment of HR1, as well as an opportunity to discuss the role of enhanced state low income housing tax credits and what impact it will have if they are not included in this year's budget. Thank you, and please proceed.

Great. Thank you. Good morning, Chair and Members. Marina Wiant. I'm the executive director of the California Debt Limit Allocation Committee, CDLAC, and the California Tax Credit Allocation Committee, TCAC.

Between those two committees, we allocate a significant amount of federal and state resources. At TCAC, we run the federal 4 and 9% tax credit program.

The state back in 1986 or 1987 augmented, our tech our federal tax credit program to add the state low income housing tax credit program, which allows us to, provide additional equity into each of the affordable housing projects that we finance each year.

Just to give a little bit of context, the federal 9% tax credit, provides more equity in each project, but that is limited by a a formula from the Federal Government. So each year, based on per capita, we get a certain amount of resources to allocate.

In 2025, we allocated a 115,000,000 of federal 9% light tax. That seems like a very small number, but each project takes each investor takes that amount over ten years.

So it's really by tenfold the amount of resources, that we're leveraging of federal dollars. The 9% program, so for that 115,000,000, we awarded 58 projects or nearly 3,000 units using that program. HR 1, augmented the 9% tax credit program by 12% in perpetuity.

What that means is for 20 by by comparison, for 2026, we'll have a 136,000,000 in federal 9% latex available compared to that 115 that we had in 2025. But the scale is still so small and when you compare it to what we can do with the 4% tax credit program.

The 4% program, as was mentioned earlier, is reliant on projects receiving federal financing from our tax exempt bond financing program. This is really just lower cost debt for projects to take on.

Sometimes bonds get confused with general obligation bonds and other types of bonds.

And so HR 1 so prior to July 5, a project needed to finance at least half of its total cost using tax exempt bond financing provided by CDLAC in order to access the 4% tax credit program. After HR 1 was passed, this threshold, which was referred to earlier, was reduced to 25%.

It was important to us as we've talked about the program has been highly competitive since 2020 with a large pipeline of projects that have been seeking bonds and not able to move forward.

So it was important to us to implement that change as quickly as possible, and we took emergency regulations in August, adopted August 5, so just one month after federal legislation, to implement the 25% test and also encourage awardees that had received bonds,

that would be able to take advantage of that 25% test to return some of their bonds that they were allocated. As a result of that program, we had we were able to award a 195 projects nearly over 25,000 units last year in the 4% program.

That totals over 630,000,000 of federal 4% credits. So in comparison to the 9% program, we're talking five and a half times more units produced with the 4%.

And that was a result of just sort of us implementing about half of a year's worth of increase, volume. In 2026, we are likely to do far more. So, we in comparison to 2024, last year, we awarded 10,000 more units.

So that '25 thousand was 15,000 in 2024. And this year, we expect to do yet another 10,000 by being able to use the 25% test over the entirety of the year. So it's a really significant change for the country, but also in particular for us in California.

That being said, the 4% program provides a smaller amount of equity for each project. Many of these projects rely on additional state subsidy or local subsidy in order to be able to access that the program.

This is why between 2010 and 2020, the 4% or private activity bond program was under subscribed because there was far less local resources and state resources to be able to pair with those projects.

We talked a lot in this in the previous panel about sort of projects that are stuck in the pipeline. Many of those projects, as miss Kirkavya talked about too, they come in, they get financing from the state, and they still need more subsidy.

They either need it from if they get an I ASIC award, they need additional MHP funds, or they get resources from the super NOFA and then are still reliant on either 9% tax credits to help fill that additional gap or they need state tax credits to also help fill that gap.

And that's where a lot of those, you know, the 44 projects that were referenced that are still waiting to get through, many of them are still what they really need are not the not just the bonds and credits, but also need that the state credits or other additional subsidy.

Last year, with the change of the 50% test, we were able to fund every project, every new construction project that came in for an allocation that did not request state credits. Right.

So the pinching point, now that we have far more bonds available and therefore more tax 4% tax credits available comes down to the subsidy that's available.

And I'll just finish with, you know, we in our program, we use set asides and pools and geographic apportionments in both the four the 9% tax credit program and at CDLAC in order to lift up state priorities. It's very common.

In our 9% program, we use set asides to support rural projects. 20% of all 9% credits go to rural areas. We use it to support at risk projects as their projects at risk of losing affordability. And we use them to for homeless priority projects in the 9%.

On the 4% side, we similarly have instituted set asides for you for the last five years in our scoring system to ensure that again, we're we're lifting up projects that meet top priorities.

At CDLAC, we have a homeless a set aside for homeless assistance projects. We have a set aside for projects that are serving extremely low income and very low income households, as well as a set aside for mixed income projects.

So much of what was being discussed as part of the trailer bill is very consistent with the way we've been administering a program. We would just now just I'm jumping in and just answering some of the questions that were in the agenda.

The proposal from the administration to create a set aside for HDFC is very consistent with many of the ways we've been running our programs, historically, period.

And that concludes my presentation, but I'm happy to answer any questions.

Do do we have any comments from the Department of Finance? Okay. Comments from the LAO?

No. Other than just kudos to CDLAC and TCAC for moving so fast, you know, after HR 1 passed to be able to adopt regulations so that the state could take advantage of all this new federal money coming down.

Thank you. Questions from committee Members?

If I may, I actually wanted to address your question about, projects from at the end, that was about rehabilitation projects.

So mindful of sort of the focus on new construction the last few years, we've had we've really prioritized new construction at CDLAC, but with the 25% test this year, we set aside 20% of all of our taxes and bonds that are for multifamily projects to support the

acquisition and rehabilitation of existing affordable housing projects to to give a real path for those projects to be able to remain in the system.

But that's only if there's an acquisition right? It's not if

It's it's if they're already affordable, we call it AC rehab, but it's it's a Okay. So yeah.

Okay. Great. And, Senator Cabaldon.

Yeah. Thanks. And and and I also I wanted to just give huge kudos for the quick the quick response to the the federal tax credit legislation, which shall go unnamed to take advantage of that in every way.

And also for they're still here, but for avoiding being taken over by HDFC and still being an independent entity.

So But to the to the to the point on with the state program, like, can you give us a sense of, like, if for, like, what the leverage is, you know, the the the administration has proposed nothing for the state tax credit program.

If it were if it were funded at, you know, various levels, what is what is the leverage we're looking at, particularly in light of the federal actions?

It's hard to quantify exactly sort of what that pipeline exists. Last year, we had well over a million dollars of state credit request. The year before that, 2,000,000 in state credit requests for projects.

So comparatively, I don't have a note. Last year, we funded 43 projects, with 4% tax credits plus the state enhanced light tax. So it helps move another 40 projects that need subsidy forward.

Dollar amount would

It really ranges. So some projects come in and they only need a small amount of gap. They will they compete better the less gap that they need filled with the state credits. And so it really depends.

We have some projects that come in and need 20,000,000 of the 500 that's available. Right? And so that can use up those resources quickly.

Okay. Thanks.

We have no additional questions from committee Members at the moment. Okay. Well, thank you so much for your presentation. And that item was, for information only.

And now we're moving on to agenda item number moving on to agenda items three and four, which involve California civil rights department.

Item three involves the impact of recent federal civil rights policy on enforcement of civil rights in California. And on your department in particular.

Item four provides an opportunity for updates and oversight over the, over three programs at CRD that run out of funding at the end of this fiscal year. Before I ask you to proceed with that, I want to note that CRD also has a series of budget requests.

I want to note that CRD also has a series of budget requests seeking resources to implement or continue enforcing civil rights legislation, as well as a request to pay for increasing security at your public counters on our vote only agenda today.

Thank you for being here and, please proceed.

Thank you, Chair. Thank you, Senators. I'm Kevin Kish, director of the Civil Rights Department. I'm joined today by our chief deputy director, Jamie Gillette. The civil rights department, as you know, enforces a wide range of civil rights protections in our state.

We do that by investigating thousands of complaints filed with us each year, mediating and resolving as many of those disputes as we can, and litigating cases in court as a public prosecutor. We have a robust education and outreach program.

We have regulatory authority. We support the Civil Rights Council and the Commission on the State of Hate and a number of other special projects. As you mentioned, Chair, we have a number of BCPs on the vote only agenda, part of the agenda.

I won't be summarizing those, but, happy to answer any questions that you all may have. Instead, I will move directly to the agenda item number three, and address, in broad terms, the question posed by the committee,

which are changes to the federal approach to civil rights enforcement and the impact of those changes on California. I would say two major things. One is decreased or stopped funding for a number of civil rights functions at the federal level. HUD offices have closed.

The community relations service of the Federal Department of Justice, which is the federal counterpart of our community conflict resolution unit is shuttered.

And the Federal Government has withdrawn support from, for example, nonprofit fair housing organizations that help people in our communities understand their rights and enforce them. I'd also point to changes in legal interpretations and and enforcement focuses.

So this means that some claims are not being heard at all by our federal agencies like HUD and the EEOC, and it means that some claims are not being pursued by those agencies. So what is the impact on California?

I think there are impacts to every single Californian. We all have civil rights. For our department, one major impact is caseloads. We have seen, for many years, the number of cases complaints filed with us go up.

What we've seen in the last year is something different. As I sat in this room at this time last year, we had 8,700 open matters. As I sit here today, we have more than 12,000. So we went over 10,000 open matters for the first time in our department's history since 1959.

In the fall, we hit 11,000 at the end of last calendar year, and as I sit here today, it's over 12,000. That is an immediate direct impact that we are trying to manage in the best way we can. We have teams working overtime to process these these complaints.

The other impact on our department, I would say, is confusion and uncertainty in terms of our relationship with our federal partners.

We are processing all of these complaints without contracts that we have historically had with EEOC and with HUD, for the past forty five years, and we don't know.

When it comes to the HUD contract, the State of California has sued HUD over terms that we find unacceptable in that proposed, contract. We are negotiating with the EEOC.

What this means for complainants is they don't know if their cases will be dual filed or not with the Federal Government, and what it means for us is that we don't know if we will be reimbursed for processing these cases in the way that we historically have been, again, for the past forty five years.

So those are the the the changes and impacts that I'll focus on. Happy to take questions on this agenda item now or move on to the next one up to you all.

We could move on to the next one, and then we'll ask questions on both items

Thank you.

At the end of your presentation. Thank you.

So the next agenda item number four is, for this committee to conduct some oversight onto three highlighted programs that are not slated to continue in the next budget. One program is California versus Hate.

This is the first statewide hotline, nonlaw enforcement, nonemergency hotline for individuals and communities to report hate incidents to a government entity and crucially be connected with support.

We have received more than 6,300 requests for assistance through this hotline in the three years that it has been running, and it's a it's a program that we are proud to have launched and to have shown as a model of success for the nation.

The second program highlighted is the community conflict resolution unit.

This is a unique statutory authority that our department has to provide confidential dispute resolution services to communities that are experiencing tension or unrest because of civil rights violations for free.

This is not focused on legal rights and remedies for individuals. This is focused on helping communities live together in peace and prosperity. The requests for this particular program have also skyrocketed.

This is because, no doubt, the federal counterpart is shuttered. So we have now conducted more than 424 community engagement sessions since the launch of the program three and a half years ago.

And in the first calendar year of the program, we had about 28 community meetings at the request of of community members. And in the last year of the program, we've had a 154. So the numbers the requests for this type of service have gone up.

The third program is our enforcement, BCP from four years ago, investigations and conciliation enhancement.

This, limited term funding allowed us to hire 12 limited term investigators with the goal of reducing wait times, and increasing conciliations. We were able to do that, as the agenda points out.

This number of positions, I will say, has been somewhat overwhelmed by the increase in filings. As I sit here talking to today, our wait time to interview somebody who files a complaint with us asking for our for our investigation is six months.

That is, for us, too long, but that's what the numbers are looking like today. So those are my overviews of those programs. Happy to take questions from any of you about any of it.

Do you have any, comments from the Department of Finance?

Isabel Fairclough, Department of Finance. Nothing to add, but here to take questions.

Thank you. And any comments from the LAO?

Same with LAO. Nothing to add.

Okay. Great. Questions and comments? Senator Smallwood-Cuevas.

Thank you. And thank you for that update. And I wanna say there's no surprises there.

I think when we started two years ago, eighteen months ago, we anticipated that this administration, which had signaled that attacking the civil rights infrastructure this country was priority number one, that Californians would be hurting.

And the question at the time, I think we were pushing for some investment in the ways that we invested in legal services for those who are being most brutally attacked on the streets of Los Angeles to have legal support.

We also felt our state civil rights agency and their partners in our counties and cities needed additional resources to deal with what we knew would be a flood of complaints.

And if you're showing that these numbers are skyrocketing, those are the complaints we know about. Right? So for every one complaint, they say there are a thousand discriminatory actions behind them.

So that means our people are catching hell, all over the place, whether it be on the job, in the workplace, contracting, etcetera. So I'm not anything to be severely disappointed, but not anything to be surprised about.

My question, I have a couple of questions on both of these. On item number three, I wanted to get a sense of you mentioned folks working overtime.

So if you could say more about what that means and then what steps has CRD taken in response to these federal changes? What additional departmental capacities shifting?

What have you done to sort of address it to make it work given the the funding and then also and these actions? And then also has it impact how does it impact the sort of elephant in the room, which we always talk about, which is our backlog?

If you could just talk a little bit more about that. And then my second question on that, local fair housing organizations, other nonprofit partners who have less capacity and I'm hearing from them in my office about their challenges.

In fact, the city of LA civil rights office has in this moment are fighting some pretty big cases because there's anti civil right, tone that is emboldening very large employers as well as small employers to discriminate in massive ways.

And so the city is trying to consolidate it's resources to deal with the big ones and so I'm curious where then are California is being directed for help if the cities are trying to consolidate to deal with the big actors and we are trying to capture all the overflow.

So those are my questions there. And then, of course, I cannot understand how we would at a time of this gross attack on civil rights and this overwhelming need in our community be questioning whether we continue to have programs that help people report and resolve hate in California.

These are not abstract programs. These programs actually tackle the problem where it happens. If someone is experiencing discrimination, there is a timely response. The hate incidents, we are looking at the support services that are there.

We' re trying to usher those services to people and making sure that we deal with any conflicts that may be may escalate. So, it is, what is the alternative if we get rid of our programs that tackle hate directly?

What would be an alternative to that? Given the scale of what the department is already dealing with. In closing, I will say without continued funding, Californians, will be asking CRD to do more with less.

And the Federal Government is becoming more and more escalated and sophisticated in its forms of attack on civil rights, on people of color, on all of the protected classes that we hold dear. I just we can never do this administration's work for them.

And, unfortunately, it's the fiscal challenges that we're facing that forces California to begin to do the work that this administration is doing, which is cutting communities off from the rights of their constitution of the civil rights act that protect them.

And, I do not want to participate in that. And I find it very hard to support any budget action that further threatens and enables threatens our citizens, our residents, but also enables this kind of racist targeted dismantling of the protections for our communities

of color for our vulnerable and protected classes. So I just, there are some questions inbeded in there, but it's more of a statement and again, we're not surprised, but we also know that it's not over.

And so if we're anticipating now, then when does, you know, project 2025 phase 2, 3, and 4, because we're only 500 days in. How do we stem this tide at the civil rights department level?

Thank you. A couple of responses, and I'll start with the most concrete and direct, which is how do you make this work given the increase in filings.

One thing that I wanna say on a broad level is a lot of what we see going on at the federal level is intended not just to remove federal protections that have existed for people for a long time, but also to make people frightened of coming forward at all.

And so there is a sense in which I am heartened by the fact that Californians are turning to our state government in increasing numbers.

It means that some people at least have not been cowed or deterred, and they are looking for a place to go to resolve disputes that arise in their lives.

Right? Everything that's happening in the world and in our country plays out in our workplaces.

It plays out in our housing developments. It plays out in businesses and on the sidewalks, and a lot of people are not being cowed, and a lot of people are bringing their complaints forward more than we have ever seen.

So in that sense I think we would all like to live in a world where none of these structures are necessary, but that's not the world that we live in, it's not the world that we will live in, and I am heartened by the fact that people are coming forward.

I think it's also a testament to the work of our education and outreach unit in making sure that people understand that they can still come to California.

One of the things that's happening at the federal level with the funding is that our local fair housing nonprofits are not permitted under new funding terms to do language access, language outreach. We are in California, and we continue to do that.

And so that is another way in which we're stepping in to try to fill this void or step into this breach. In terms of processing the complaints, we are doing continuous process reengineering, but our system is is pretty nimble and pretty effective.

We are a cloud based filing system. Of course, we accept complaints however they come to us by phone, by mail. Most people file online. They are provided with an interview date. Our interview dates are connected in the cloud to our investigators' calendars.

It is automated, and the first available dates come up. So in terms of technology and process reengineering, there is not a lot more for us to do than what we have done over the past years. We have done some new things in response to this surge in complaints.

We have for a long time been triaging at the intake level cases that appear to involve situations that really require expediting. So someone is caring for a sick or dying family member, and they have been denied leave.

Someone who is facing an eviction where evidence suggests that the eviction might be retaliatory. We already have been going in and pulling out those cases and prioritizing them because of the time sensitivities involved.

We also now have a team of investigators. These are the ones who are doing this on on overtime, who are triaging cases that we don't actually think are going to result in investigations.

The complaint alleges a violation of wage and hour laws or health and safety laws or the complaint doesn't the complaint raises a a dispute, that doesn't appear to implicate the civil rights laws that we enforce, so a landlord tenant dispute, for example, that doesn't implicate discrimination.

So we'd rather tell these people today that they are not going to have an investigation at the Civil Rights Department, and then that in turn opens up more interview slots that those people, those people's cases have vacated.

So we have people going in and actually pulling these cases and talking to folks and closing out cases early that are unlikely to result in an investigation if the person waits six months for an interview.

So triaging on two levels, one case is that we think at the intake phase, which it can always change, have strong evidence of of priority that there are time or severity considerations that that mean that we pull them forward,

and then also cases on the other end that are unlikely to result in complaints and we're trying to move those out. The six months is with that triaging. Right?

So if we did not have teams working overtime to pull out cases early, it would be longer given the the volumes that we're seeing. Where are Californians being directed? This is a really good question.

Again, our education and outreach team has been doing really incredible work with community partners and also with other state agencies to get people to the right place. Right?

To get people not just to the civil rights department, but to local, perhaps city or municipal organizations or nonprofit organizations that can help them in the what they have.

This is kind of the point of California versus hate too when it comes to anti hate work is getting people connected to the services that they identify as being useful to them, whether those are legal services or housing assistance or mental health, counseling services

or whatever it is that they decide. So we view ourselves as playing this role of connecting people to the services. One of those services is the civil rights department and our complaint investigation process and our public prosecutorial role in our mediation division,

but there are, as you know, hundreds and hundreds of services all around the state that we're trying to get, people to. But I think that this is a this is the crisis.

Right? This is there are increasingly few places where people can turn, and so we are trying to be the place where they can come and and receive some meaningful engagement, some meaningful support.

And when there are civil rights violations involved, some meaningful conflict resolution and public prosecutorial action.

Thanks, madam chair. I just had a couple of, maybe just one quick question following my colleague's excellent exposition and exploration of some of the fundamentals that we're experiencing here.

Just to go to California versus hate specifically and picking up on the conversation that you were just having. So I understand that in 2025, there were just under 4,000 contacts to the line, is that?

In 2025, there were about a thousand reports of hate. There were more contacts of people contacting the line, who did not report a hate incident.

So 4,000 contacts of which a quarter were reports of hate incidents.

I'm not sure about the 4,000 number. I don't have that number but yes, there were some number of contacts that is larger than the number of the thousand that were hate incidents.

Then three thousand referrals to law enforcement, to the department or elsewhere?

I don't have that number.

I was trying to figure out from the stock background but then 211 LA provided more.

Oh, yes. 211 LA might have provided more numbers than I have sitting here today but yes.

To your point about the triage elements, that's three times as many referrals that we're providing compared to the number of hate incidents that have been reported.

Every agency that interfaces with the public, if it's any good, does its best to try to make sure everybody gets everything that they need.

Of course, the trade off then is six months, so what's the level of effort or resources or investment that's required for the the 2,000 non hate incident referrals to get?

I see. So let me clarify that, California versus hate is a hotline that is administered through contracts with the statewide 211. That is a separate stream from complaints that are filed with our department requesting investigations of civil rights disputes.

So when it comes to the California versus hate hotline, people are connected within three minutes, when they call that hotline and then they choose whether they want to be connected with a care coordinator. This is what they're they're called and then they work with that person.

So that's really an immediate service. Typically, I will point out that the care coordination relationship on average lasts a month and a half, two months. It's not just one call somebody reporting. It's repeated follow-up to ensure that the person is being actually connected with the services that they've identified as needing.

So I don't have the 211 information in front of me but the three referrals per call, what that makes me think is that people are asking for multiple different types of help. Right?

So somebody experiences racist flyering at a housing development. They might look for assistance in moving. They might look for some mental health counseling. They might be looking for some support for their kids.

That would be, referrals made through that process. Separate and apart from that is our CRD civil rights complaint filing process. That's the six month timeline.

So if somebody says, I was discriminated at work on the basis of my disability. I want you to investigate and we are getting to them six months from the time they make that filing. Does that clarify?

It does, I mean you noted the 3,000 referrals, aren't 3,000 unique individuals necessarily. So it could be, I'm just using the 211 numbers. It could be the roughly 1,000 hate incident, hate cases, which then result in 3,000 referrals.

If the overall number is 4,000 contacts, or I guess the the question is through the contracts, are we spending a couple months on the care coordination, even for cases that aren't determined at the outset to be hate related?

I see. I understand the question and I don't have the answer for you but I can take a look at that.

Yeah, I mean it's clear that the referrals alone even to the department without adequate resources to follow-up and investigate and do all that work, that's a false promise too.

So I'm just trying to between, fully funding the line or adding additional capacity in the department or just finding money for both or what have you?

I think part of our job is try to figure out how to, where if we're able to, secure more resources for this overall effort along the lines of what my colleague was saying, where is that best spent? In terms of getting actual resolution.

I appreciate that question and it gives me the opportunity to talk briefly about our mediation program, which is where a majority of the cases that come to us resolve, when they resolve. This is a very successful program.

We consistently see settlement rates over 70% each month. Historically, there have been times in the department's past when cases are kind of randomly sent to mediation. Right?

If we have 12,000 open matters, we can only refer maybe a thousand to mediation each year. We have 14 mediators in the state of California. That is no longer what we are doing. So to Senator Smallwood Cuevas' question and to yours, this is part of the triage. Right?

We're trying to identify those cases that involve the most serious civil rights violations, cases with evidence of civil rights violations, not cases that have weak or little evidence of civil rights violations to get them into that dispute resolution process as opposed to a case that where, clearly there's a dispute,

But it might be a landlord tenant dispute without elements of discrimination. So in addition to the triage of the investigation phase of the cases filed with us, we're also exercising this this kind of executive function to move cases that raise weighty questions of discrimination and unfairness into dispute resolution.

Then, of course, at the end of all of this, there is the decision about which cases to move forward into court, into state or federal court as lawsuits.

I just want to reiterate a point that you made and it just reminded me, I'm so grateful that our residents are taking advantage of the laws that we have to protect them but it is such a disservice if we don't have the adequate investment and scale of response to meet that.

So, I think we have to recognize that as the California versus hate conversation, the increase in folks accessing the agency and we're still one of the most underfunded civil rights departments given the scale of the problem and particularly now in the midst of this federal assault.

I want to say I'm glad to hear that Californians are exercising and utilizing our protections but at the same time, if it's not funded where we can actually respond, then is it helping?

I just want to say I appreciate that point and I wanted to reiterate. We've got to make sure that we're funding to meet the scale of the problem.

Any other questions, comments? Okay, well, thank you so much for your presentation today on items number three and four. Those items were for information only, we appreciate your time.

Thank you.

Now we're moving on to agenda item number five. So agenda item number five concerns a trailer bill proposal from the Housing and Community Development Department that would give HCD authority to raise a variety of fees mostly related to mobile homes.

I'd like to ask the representatives to, be up here. It looks like they're all here now and present the item when you're ready.

Good afternoon, madam chair and members. My name is Kyle Krause. I'm the deputy director of HCD's division of codes and standards. Before I get into the details of the proposal, I would like to take a little bit of time to tell you, a bit about HCD codes and standards, what we do and the importance of our work.

Many years ago, the legislature declared that manufactured housing, both inside and outside of mobile home parks, provides a safe and affordable housing option for many Californians and therefore charged charged HCD with protecting these communities and residents.

The division of codes and standards is responsible for enforcing a broad range of health and safety laws, regulations and building standards across several program areas that are critically important to protect Californians.

Codes and Standards acts as a statewide enforcement agency, title and registration agency, code enforcement agency and consumer protection agency.

Focused on ensuring minimum health and safety for mobile home parks, special occupancy parks, employee housing, factory built housing, manufactured housing, commercial modular and special purpose commercial modular units.

Codes and standards is also called upon by state and local agencies to support post disaster efforts related to mobile home units and park permits as well as registration and titling needs.

Okay.

HCD's mobile home parks and special occupancy parks programs enforce statewide health and safety standards for the hundreds of thousands of residents who live in these over 4,300 mobile home park communities under HCD enforcement responsibility.

HCD performs mobile home park maintenance inspections, including over 800 park wide inspections and reinspections and orders correction of approximately 10,000 health and safety violations every year.

Identified violations are health and safety issues, such as accumulation of rubbish, trash and combustibles that can pose fire risk to the community. Additionally, HCD issues approximately 30,000 construction and alteration permit applications each year and as a statewide building department for all manufactured homes.

HCD protects public safety by ensuring that the structures are installed, altered and maintained to meet established health, safety and habitability standards. HCD's mobile home assistance center, or the MAC, as we call it, provides direct assistance to the public in handling and coordinating the resolution of complaints.

In 2025, the MAC processed over 3,600 complaints. 2,000 of which were mobile home park complaints and handled over 9,000 phone calls, intaking complaints, providing customer resources and information.

Many of these complaints and investigations result in HCD issuing notices of violation that require correction of health and safety violations.

HCD secures homeownership and monitors manufactured housing sales. HCD maintains ownership documents for over 690,000 mobile homes, manufactured homes and commercial modulars. The program establishes or modifies titles of approximately 60,000 applications annually.

Further, HCD promotes fair and accountable manufactured home practices by licensing 1,400 dealers and salespersons, investigating complaints and conducting place of business inspections to protect consumers throughout the home buying process.

The employee housing program ensures that privately operated housing for five or more employees is constructed, maintained and occupied in a manner that protects residents' health, safety and general welfare.

HCD helps ensure healthy, safe and dignified living conditions for workers by permitting and conducting a thousand employee housing facility inspections each year.

HCD also supports the production of safe, affordable homes by certifying and overseeing 230, third party agencies and inspectors for manufactured and factory built housing, ensuring consistent monitoring and quality control to help lower housing costs and speed construction.

To do all of this important work, HCD's funding mechanisms need to be updated. HCD's codes and standards division is funded by fees for services. However, the fee structure is outdated and many of the fees set in statute are no longer adequate to cover expenses as they have not been updated in decades.

HCD is requesting authority to make reasonable and incremental increases to statutory and regulatory fees to meet the expenses of providing these services. I will now turn the microphone over to my colleague, Matt Schuler, to discuss the request and how we'll begin to address the projected deficit.

Good afternoon, chair and members. My name is Matt Schuler, I'm the chief operating officer with Housing and Community Development. As my Kyle or as my colleague Kyle noted, codes and standard is projected to have a fiscal deficit due to the current fee structure no longer being adequate to cover expenses.

Without fee increases, the fiscal deficit is approximately $3,200,000 starting in fiscal year 2930, growing to 13,200,000 in the following year and increasing.