The 2022-23 California Spending Plan: Housing and Homelessness

The 2022-23 California Spending Plan: Housing and Homelessness Translate Our Website This Google ™ translation feature provided on the Legislative Analyst's Office (LAO) website is for informational purposes only. The LAO is unable to guarantee the accuracy of this translation and is therefore not liable for any inaccurate information resulting from the translation application tool. Choose your language: × Skip to main content Home --> Policy Areas Capital Outlay, Infrastructure Criminal Justice Economy and Taxes Education Environment and Natural Resources Health and Human Services Local Government State Budget Condition Transportation Other Government Areas Publications The Budget Propositions and Initiatives Staff Careers About Us Search LAO Contact Lourdes Morales See More Publications Like This Back to the Top --> Tweet September 16, 2022 The 2022-23 California Spending Plan Housing and Homelessness Significant Funding Largely Continues Existing Efforts. The 2022-23 budget authorizes an additional $7.2 billion over three years to 20 major housing and homelessness programs within the Housing and Community Development Department (HCD), the California Housing Finance Agency (CalHFA), the California Tax Credit Allocation Committee, and the California Interagency Council on Homelessness (Cal ICH). The vast majority of funding is one time or temporary. However, the budget does provide $34 million in ongoing funding beginning in 2022-23 for housing assistance for foster youth and former foster youth. Most of the funding—$5.4 billion—is primarily for housing-related proposals, while $1.9 billion is allocated primarily towards homelessness-related programs. The vast majority of spending is General Fund, including $2 billion in emergency spending related to rental assistance that is funded through the California Emergency Relief Fund and $500 million is in the form of tax credit authority. Some of the major uses of housing and homelessness funding in the budget would support encampment resolutions, provide flexible aid to local governments to help address homelessness in their communities, fund affordable housing development, and establish a new homeownership program. The budget also provides funding that could be used to help address homelessness and/or housing affordability in other program areas, including the behavioral health, courts, and higher education areas. Figure 1 provides a summary of the major housing and homelessness augmentations in the 2022-23 budget. Some of the key augmentations in the 2022-23 budget package are described below. Figure 1 Major Housing and Homelessness Augmentations in the 2022 23 Budget (In Millions) Department Proposal 2021 22 2022 23 2023 24 Total Major Housing Related Augmentations HCD Emergency Rental Assistance $1,950 — — $1,950 HCD California Dream for All Program — $500 — 500 CTCAC State Low Income Housing Tax Credit Program — 500 — 500 HCD Infill Infrastructure Grant Program — 200 $225 425 HCD Adaptive Reuse — 150 250 400 HCD CalHome — 250 100 350 HCD Multifamily Housing Program — 100 225 325 HCD Housing Accelerator Program — 250 — 250 HCD Portfolio Reinvestment Program — 50 100 150 HCD State Excess Sites Development — 25 75 100 HCD Manufactured Housing Opportunity and Revitalization Program — 25 75 100 HCD Veteran Housing and Homeless Prevention Program — 50 50 100 HCD Transitional Housing Program a — 25 25 51 CalHFA Accessory Dwelling Unit Financing — 50 — 50 HCD Joe Serna Jr. Farmworker Housing Grant Program — 50 — 50 HCD Los Angeles County/USC General Hospital Campus Reuse — 50 — 50 HCD Housing Navigators Program a — 9 9 17 Subtotals ($1,950) ($2,284) ($1,134) ($5,368) Major Homelessness Related Augmentations Cal ICH Homeless Housing, Assistance, and Prevention Program — — $1,000 $1,000 Cal ICH Encampment Resolution Grants — $300 400 700 HCD Homekey Program $150 — — 150 Subtotals ($150) ($300) ($1,400) ($1,850) Grand Totals $2,100 $2,584 $2,534 $7,218 a Funding is ongoing. HCD = Housing and Community Development; CTCAC = California Tax Credit Allocation Committee; CalHFA = California Housing Finance Agency; and Cal ICH California Interagency Council on Homelessness. These budget actions add to major recent discretionary housing and homelessness spending in recent years aimed at addressing housing affordability and homelessness. We provide a summary of these previous budget actions in Appendix Figure 1. Housing-Related Spending Actions Below, we provide a brief summary of some of these key housing-related augmentations. Incentives and Support to Increase Housing Development Continues State Low-Income Housing Tax Credits. The 2022-23 budget provides HCD additional state housing tax credits. In addition to the $100 million annually that the state makes available for housing tax credits, the budget makes available an additional $500 million one time for tax credits to builders of rental housing affordable to low-income households. This is the fourth consecutive year in which the Governor has proposed a one-time expansion of the state’s housing tax credit, for a total of $2 billion in tax credits. As with the prior one-time expansions of the state tax credit program, up to $200 million would be available for the development of mixed-income housing projects. Continues Infill Infrastructure Grant (IIG) Program. The 2022-23 budget provides HCD $425 million General Fund over two years ($200 million in 2022-23 and $225 million in 2023-24) for the IIG Program. The IIG Program provides funding for infrastructure that supports higher-density affordable and mixed-use housing in locations designated as infill. Under the program, developers and local governments can partner to apply for infrastructure funding for the construction, rehabilitation, demolition, relocation, preservation, acquisition, or other physical improvements that are necessary to facilitate the development of an infill project. For example, development or rehabilitation of parks or open space; water, sewer, or other utility service improvements; streets; roads; sidewalks; and environmental remediation. Budget-related legislation also expands the definition of eligible applicants to include specified governing bodies of Indian reservations or rancherias and tribally designated housing entities. This funding continues recent one-time discretionary General Fund augmentations for the program, for a total of $975 million. However, historically, the program has been supported through bond funding. Establishes Adaptive Reuse Program. The 2022-23 budget provides HCD with $400 million General Fund over two years ($150 million in 2022-23 and $250 million in 2023-24) for a new adaptive reuse incentive grant program. Adaptive reuse is the process of adapting and rehabilitating unutilized or under-utilized, generally commercial, buildings for housing. According to the administration, the program would prioritize projects located in infill and low-Vehicle Miles Traveled areas. Continues CalHome Program. The 2022-23 budget provides HCD an additional $350 million General Fund over two years ($250 million in 2022-23 and $100 million in 2023-24) for CalHome. The program provides grants to local public agencies and nonprofit corporations for first-time homebuyer and housing rehabilitation assistance, homebuyer counseling, and technical assistance activities to enable low- and very-low-income individuals to become or remain homeowners. Historically, the program has been supported through bond funding. Extends Housing Accelerator Program. The 2022-23 budget provides HCD an additional $250 million General Fund one time to expand the Housing Accelerator Program. The 2021-22 budget established the program with $1.75 billion one-time American Rescue Plan (ARP) fiscal relief funds. The program is intended to alleviate the backlog in affordable housing construction. Specifically, to expedite construction of projects that have successfully acquired some state funding, this program provides accelerated funding in lieu of waiting for state tax credits. Provides General Fund Support for Multifamily Housing Program (MHP). The 2022-23 budget provides HCD with an augmentation of $325 million General Fund over two years ($100 million in 2022-23 and $225 million in 2023-24) for MHP. MHP provides financing for affordable multifamily rental housing developments. Historically, the program has been supported through bond funding. Most recently, the Veterans and Affordable Housing Bond Act of 2018 (Proposition 1) authorized the issuance of bonds in the amount of $1.5 billion for the program. Extends Portfolio Reinvestment Program. The 2022-23 budget provides HCD $150 million General Fund over two years ($50 million in 2022-23 and $100 million in 2023-24) for the Portfolio Reinvestment Program. This program was established in 2021-22 with $300 million one-time federal ARP fiscal relief funds. Similar to last year, the funding would support capital improvements to affordable housing developments with covenants that are due to expire, which would transition housing units to market-rate housing, in order to preserve the state’s affordable housing stock. However, the funding provided in the 2021-22 budget was intended to support developments with covenants expiring within five years, while this new funding would support developments with covenants expiring within ten years. The funding would provide HCD the flexibility necessary to maintain the supply and quality of the affordable rental housing units for which there has already been a significant public investment. Continues State Excess Sites Program. The 2022-23 budget provides HCD $100 million General Fund over two years ($25 million in 2022-23 and $75 million in 2023-24) for affordable housing on state excess land sites. This funding builds on $45 million provided for the program in 2021-22. Direct Housing Assistance Funds Local Cashflow Loans for Emergency Rental Assistance. Chapter 2 of 2021 (SB 115, Skinner) authorized the Department of Finance to provide local governments with cashflow loans in 2021-22 in order to more expeditiously administer qualifying applications seeking assistance through the federal emergency rental assistance programs established as a response to the COVID-19 public health emergency. While the state anticipates some additional federal funding could be available to offset the cashflow loans, the budget provides HCD up to $1.95 billion using emergency spending that is routed from the General Fund through the California Emergency Relief Fund to cover the cashflow loans. Establishes California Dream for All Program. The 2022-23 budget provides $500 million General Fund one time to establish the California Dream for All Program to help first-time homebuyers purchase a home. Specifically, the program assists low- and moderate-income homebuyers in the purchase of owner-occupied homes. By January 10, 2023, and annually thereafter, HCD is required to provide a report to the Legislature with details of program implementation, including, but not limited to, the number of loans made and the characteristics of the borrowers. Manufactured Housing Opportunity and Revitalization (MORE) Program. Legislation related to the 2022-23 budget renames the Mobilehome Park Rehabilitation and Resident Ownership Program to the MORE Program. The budget provides HCD $100 million General Fund over two years ($25 million in 2022-23 and $75 million in 2023-24) for the program. The program makes loans or grants available to mobilehome park resident organizations, nonprofit entities, and local public agencies for the reconstruction and replacement of mobilehome parks, including to address health and safety deficiencies. Continues Accessory Dwelling Unit (ADU)Financial Assistance Program. The 2022-23 budget provides CalHFA $50 million General Fund one time to provide financial assistance with ADU development to homeowners with qualifying incomes. Additionally, budget related legislation requires CalHFA to convene a working group to develop recommendations to help bolster the ADU program. Farmworker Housing Joe Serna Jr. Farmworker Housing Grant Program. The 2022-23 budget provides an increase of $50 million General Fund one time for the Joe Serna, Jr. Farmworker Housing Grant Program, which helps finance the new construction, rehabilitation, and acquisition of owner-occupied and rental units for agricultural workers, with a priority for lower-income households. Historically, the program has been supported through bond funding. Homelessness-Related Spending Actions The 2022-23 budget provides augmentations of $1.9 billion to three major homelessness-related programs within Cal ICH (formerly the Homelessness Coordinating and Financing Council) and HCD. The funding is entirely one time or temporary. Below, we provide a brief summary of some of these key housing-related augmentations. Continues Homeless Housing, Assistance, and Prevention Program (HHAPP). The 2021-22 budget provided Cal ICH $1 billion General Fund for HHAPP for two consecutive years. The 2022-23 budget continues this practice by providing $1 billion General Fund in 2023-24 for HHAPP. The program provides flexible funding to local entities and tribes to help address homelessness in their communities. Prior budgets have provided one-time and temporary discretionary augmentations for this program since 2019-20 for a total of $3.95 billion over five years. Expands Encampment Resolution Grants. The 2022-23 budget provides Cal ICH $700 million over two years ($300 million in 2022-23 and $400 million in 2023-24) for competitive grant program for cities, counties, and continuums of care to support encampment resolution and the transition of individuals into housing. This is a significant expansion of the program, which was established in the 2021-22 budget with a $50 million appropriation. Continues Homekey Program. Amendments to the 2021-22 budget provide HCD an additional $150 million General Fund for the Homekey program. This is in addition to $3.55 billion (all funds) authorized previously since 2020-21 to Homekey. Homekey allows properties, such as hotels and motels, to be converted and rehabilitated to provide permanent housing for persons experiencing homelessness and who are also at risk of COVID-19 or other communicable diseases. Appendix Appendix Figure 1 Major Discretionary Housing and Homelessness Spending Augmentations Since 2018 19 a (In Millions) Program 2018 19 2019 20 2020 21 2021 22 2022 23 2023 24 b Program Total Housing and Community Development Homekey Program — — $800 $1,600 $1,300 — $3,700 Housing Accelerator Program — — — 1,750 250 — 2,000 Emergency Rental Assistance — — — 1,950 — — 1,950 IIG Program c — $300 — 250 200 $225 975 Local Planning Grants — 250 — 600 — — 850 California Dream for All Program — — — 500 — 500 Foreclosure Prevention and Preservation — — — 500 — — 500 Portfolio Reinvestment Program — — — 300 50 100 450 Adaptive Reuse — — — — 150 250 400 CalHome — — — — 250 100 350 Multifamily Housing Program — — — — 100 225 325 State Excess Sites Development — 3 — 45 25 75 148 Transitional Housing Program e — 8 8 17 43 43 118 Joe Serna Jr. Farmworker Housing Grant Program d — — — 50 50 — 100 Manufactured Housing Opportunity and Revitalization Program — — — — 25 75 100 Veteran Housing and Homeless Prevention Program — — — — 50 50 100 Golden State Acquisition Fund — — — 50 — — 50 Migrant Farmworker Housing Deferred Maintenance — — — 30 — — 30 Housing Navigators Program e — 5 — 5 14 14 37 Subtotals (—) ($566) ($808) ($7,147) ($3,006) ($1,156) ($12,684) California Interagency Council on Homelessness f Homeless Housing, Assistance, and Prevention Program — $650 $300 $1,000 $1,000 $1,000 $3,950 Encampment Resolution Grants — — — 50 300 400 750 Homeless Emergency Aid Program $500 — — — — — 500 COVID 19 Emergency Funding — 100 — — — — 100 Family Homelessness Challenge Grants — — — 40 — — 40 Homeless Landscape Assessment — — — 6 — — 6 Homeless Data Integration System — — — 4 — — 4 Subtotals ($500) ($750) ($300 ) ($1,100) ($1,300) ($1,400) ($5,350) California Tax Credit Allocation Committee State LIHTC g — $500 $500 $500 $500 — $2,000 Subtotals (—) ($500) ($500) ($500) ($500) (—) ($2,000) California Housing Finance Agency Mixed Income Program (MIP) h — $200 $50 $45 — — $ 295 Accessory Dwelling Unit Financing — — — 81 $50 — 131 Homebuyer Assistance — — — 100 — — 100 Subtotals (—) ($200) ($50 ) ($226) ($50) (—) ($526) Grand Totals $500 $2,016 $1,658 $8,973 $4,856 $2,556 $20,560 a This table generally captures the major discretionary spending actions within the state entities principally responsible for administering housing and homelessness programs. The table does not include augmentations within departments that have other primary missions, for example, health and human services. The table also does not include the No Place Like Home Program Act of 2018 and the Veterans and Affordable Housing Bond Act of 2018, which were authorized by voters. The table reflects all fund sources. b The 2022 23 budget authorized some spending actions in 2023 24. c Bond proceeds have also supported the Infill Infrastructure Grant (IIG) Program—$850 million from Proposition 1C (2006) and $300 million from Proposition 1 (2018). d Bond proceeds from Proposition 1 (2018)—$300 million—have also supported farmworker housing. e The 2022 23 funding is ongoing. f Formerly the Homeless Coordinating and Financing Council. g Does not include the annual $100 million available for Low Income Housing Tax Credit (LIHTC) from the state. h Revenue from Chapter 91 of 2017 (SB 2, Atkins) also supports MIP, $87 million in 2021. 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