California Governor Gavin Newsom (D) released an initial state budget proposal for fiscal year (FY) 2022-2023 on January 10. The proposal outlines $4 billion in one-time investments allocated to affordable housing and homelessness programs. Advocates in California, including NLIHC state partners, are pressing for deeper investments to address the state’s housing crisis.
“While we are grateful for Governor Newsom’s unprecedented focus on housing affordability and homelessness, the scale of investments included in the governor’s proposed budget fails to meet the scale of need in California,” said Chris Martin, policy director of Housing California. “To end homelessness and provide affordable housing for all those in need, the state must implement a long-term, evidence-based, strategic plan with ongoing investments, as outlined in the Roadmap Home 2030 [policy plan].”
To afford a two-bedroom home at fair-market rent in California, full-time workers need to earn $39.03 per hour, which makes California the least affordable state for renters. For every 100 extremely low-income renter households, there are only 24 affordable and available rental homes – the second-highest deficit of any state in the nation. Because of the affordable housing shortage, California faces a crisis of homelessness: according to estimates, more than 160,000 people sleep in shelters, cars, or on the street each night across the state. In 2021, Governor Newsom signed a $12 billion package to address housing needs, which included funding for hotel and motel conversions through the Homekey initiative. This year, Governor Newsom has proposed a set of one-time housing investments totaling $4 billion.
The budget blueprint includes $1.5 billion for the Department of Health Care Services’ (DHCS) Behavioral Health Continuum Infrastructure Program (BHCIP) to provide interim housing for individuals with behavioral health needs. The funding will support the purchase and installation of tiny homes to be utilized as Behavioral Health Bridge Housing, or interim housing for people experiencing homelessness who have behavioral health conditions, and to provide temporary operational supports in other bridge housing settings. The budget also proposes $500 million in Encampment Resolution Funding Program grants, which support local jurisdictions’ efforts to implement short- and long-term housing solutions for people experiencing homelessness in encampments.
The remaining resources address housing affordability, development, and preservation. The budget proposes $500 million for the Infill Infrastructure Grant (IIG) Program, which would accelerate development for qualifying infill projects in brownfields and downtown-oriented areas. The budget also proposes a $500 million expansion to the state Low Income Housing Tax Credit program and an additional $200 million for the California Housing Finance Agency’s Mixed-Income Program (MIP), which provides loans to support the construction of affordable multifamily developments for Californians earning between 30% and 120% of area median income (AMI).
The proposal includes $200 million for the Portfolio Reinvestment Program, which allows the Department of Housing and Community Development (HCD) to restructure loans in an effort to preserve and increase affordable housing supply. The proposal specifies that this funding will target preservation in downtown areas while increasing the state’s affordable housing stock. The budget allocates $100 million to the Mobilehome Park Rehabilitation and Resident Ownership Program (MPRROP), which funds the preservation of existing affordable mobile home parks.
In addition, the proposal includes $300 million for the Affordable Housing and Sustainable Communities Program to achieve affordable housing and climate goals, mitigate greenhouse gas emissions, and reduce the exposure of residents to the lasting impacts of climate change.
While housing organizations acknowledge the governor’s proposal as a promising starting point, advocates are calling for deeper investments that meet the scale of the state’s immense need for sustainable and affordable housing, specifically for Black and Indigenous people and people of color (BIPOC) who have been disproportionately impacted by historical injustices and systemic racism in housing policy.
Advocates point to the Roadmap Home 2030 as a blueprint for the long-term investments they want to see included in the budget. Published in 2021, the proposal offers a comprehensive framework of equity-centered, evidence-based policy solutions to create structural change in California’s approach to housing and homelessness over the next decade (see Memo, 4/19/21).
Housing California, an NLIHC state partner, outlined its budget priorities in a letter sent to the chairs of the state Senate and Assembly Budget Subcommittees on January 20. The letter’s recommendations focus on the importance of meeting the high demand for homelessness services, investing in affordable housing and preservation, expanding rental assistance, and providing housing solutions for residents facing systemic barriers to stable housing.
Drawing from the Roadmap Home 2030, the letter emphasizes the need for California to invest $17.9 billion every year over the next decade to create affordable homes, protect low-income renters, and end homelessness. In particular, the letter requests that investments in the FY 2022-2023 budget include:
- $5 billion over the next 5 years to move 50,000 people experiencing homelessness into housing utilizing direct rental assistance;
- $5 billion to increase production of affordable housing through the Multifamily Housing Program (MHP), which exists to preserve and construct permanent and transitional rental housing for low-income renters;
- $960 million allocated for solving homelessness among older adults;
- $500 million towards acquiring and preserving unsubsidized affordable housing;
- $500 million to permanently expand the California Low-Income Housing Tax Credit Program;
- $500 million to establish a disaster relief revolving loan fund;
- $300 million to preserve aging and expiring deed-restricted affordable housing;
- $200 million to establish the Reentry Housing and Workforce Development Program;
- $200 million to supplement the Homeless Housing Assistance and Prevention Program, specifically designated to address the workforce crisis within the homeless services workforce;
- $200 million for new construction of single-family homes through CalHOME, a grant assistance program focused on enabling low- and very low-income households to become or remain homeowners; and
- $100 million to create a Tribal Housing Grants Program.
The Southern California Association of Nonprofit Housing (SCANPH), an NLIHC state partner, welcomed the proposed $2 billion in new investments, $1.3 billion in continued funding for Homekey, and $400 million for the No Place Like Home program, which is used to develop and preserve permanent supportive housing for people experiencing homelessness or at risk of chronic homelessness. SCANPH outlined the need for further long-term investments that align with the Roadmap Home 2030 and plans to prioritize increased resources for:
- the Multifamily Housing Program (MHP) and the Housing Accelerator Fund, which can use funds to address the backlog of shovel-ready funding requests at the California Department of Housing and Community Development and fulfill new affordable housing development funding requests;
- the Capitalized Operating Subsidy Reserves, which offset the cost of operating deeply affordable housing with supportive services; and
- the preservation of deed-restricted affordable homes that are at risk of conversion to market-rate housing when affordability covenants expire.
Over the next few months, California advocates will continue mobilizing to urge the legislature to expand on Governor Newsom’s proposal and incorporate sustained, large-scale housing investments in its budget. Governor Newsom will submit a revised proposal in May, with a target deadline of June 15 for the legislature to pass and the governor to sign the final FY22-23 budget.