On July 5, Governor Gavin Newsom’s Reorganization Plan(link is external) (GRP) went into effect with the goal of ushering in the structural changes needed in California to effectively address the affordable housing and homelessness crisis.
The GRP divides the California Business, Consumer Services and Housing Agency into two agencies—the California Housing and Homelessness Agency (CHHA) and the Business and Consumer Services Agency—so that housing functions and authorities (such as multifamily affordable housing lending, and homelessness programming) are consolidated into a single agency and consumer services (such as business licensing and cannabis regulation) in another.
For housing, the GRP attempts to streamline state housing funding programs, better coordinate homelessness and housing policy, and initiate the cultural changes needed to foster stronger partnerships with housing stakeholders—affordable housing developers, financial institutions, local housing agencies, advocates—to meet the state’s housing goals.
“This bold plan shows we are being more aggressive in prioritizing change for the better,” Secretary of the Business, Consumer Services, and Housing Agency Tomiquia Moss said in a news release from the governor’s office(link is external). “This will enable us to better reach our goal of 2.5 million new homes by 2030, with one million of them being affordable housing.”
Streamlining the Process
A recent commentary co-authored by Enterprise Community Partners and the Terner Center for Housing Innovation at UC Berkeley(link is external) outlines how the current affordable housing finance system at the state level is challenged with fragmentation, inefficiency, and duplication because of the multiple agencies and departments awarding affordable housing funding and overseeing compliance.
An affordable housing development typically requires four to six funding sources, with each source having unique and separate requirements for applications, scoring/evaluation, compliance/reporting, and inspection.
An affordable housing developer often applies for several rounds of funding before all the needed funding is secured including tax credits and bonds awarded at the last step. After construction, the annual monitoring and compliance process is also duplicative with the state often requesting the same information for each funding source. According to the Terner Center, this fragmentation is costly and inefficient,(link is external) adding, on average, a four-month delay to construction and increasing the cost by $20,460 per unit in total development costs for every additional public funding source.
Affordable housing developers, the primary users of the system, are seeking a more streamlined process where applying and securing funding for affordable housing developments can happen at once from the various state programs versus the drawn-out process described above. This means fully awarding affordable housing developments with all the needed state funding and then guaranteeing the award of tax credits and bonds. Affordable housing developers are also seeking to eliminate lengthy closings and redundant compliance reporting.
The GRP begins to lay the groundwork for full consolidation of the state’s affordable housing finance system, which is necessary for a desired streamlined and predictable process. The GRP first addresses the fragmentation by restructuring the affordable housing finance system so it is more similar to other states where housing finance functions are consolidated into one or two agencies.
“Many other states administer their affordable housing financing through their housing finance agency or have otherwise sought to consolidate and streamline their affordable housing funding system. California is somewhat unique in that the responsibility for awarding affordable housing is spread across two separate constitutional officers,” said Sarah Karlinsky, Director of Research and Policy for the Terner Center for Housing Innovation.
Key Changes Under the Plan
The main housing components of the GRP outlined in the statute(link is external) include:
California Housing and Homelessness Agency (CHHA)–The entities that sit within CHHA will include the Department of Housing and Community Development (HCD), the California Housing Finance Agency (CalHFA), the Civil Rights Department, the California Interagency Council on Homelessness, and the newly created Housing Development and Finance Committee.
Housing Development and Finance Committee (HDFC)–The statute creates the HDFC to centralize affordable housing funding programs under the Governor’s purview, which are currently scattered across multiple departments. These programs include but are not limited to:
- Joe Serna, Jr. Farmworker Housing Grant Program
- Multifamily Housing Program
- Infill Incentive Grant Program
- Infill Infrastructure Grant Program
- Transit-Oriented Development Implementation Program
- Housing for a Healthy California Program
- Veterans Housing and Homeless Prevention Act
- Affordable Housing and Sustainable Communities (portion currently administered by HCD at the direction of the Strategic Growth Council).
The executive director of HDFC reports to an executive committee that consists of the Secretary of CHHA, the HCD Director, and the executive director of CalHFA. The executive director can also appoint a general counsel who can assist with streamlining the awards process, particularly closings. The activities under HDFC’s authority include:
- Create a consolidated applicationfor multifamily affordable housing funding programs (this is currently underway through the AB 519 Affordable Housing Finance Working Group tasked with creating a “One Stop Shop” for funding programs)
- Create a process to fund awardsfor the multifamily affordable housing funding programs that includes accepting, reviewing, and scoring applications and providing recommendations on awards
- Establish timelinesfor the allocation of awards to streamline program funding, minimize delays, and facilitate simultaneous awards across state government if possible
- Develop an appeals processfor program qualification and scoring adjustments
- Monitor the administrationof affordable housing finance programs and make recommendations to improve alignment and administration of those programs including recommendations for CalHFA
- Streamline the compliance monitoringof affordable multifamily rental housing developments that are subject to a regulatory agreement with more than one state entity
- Produce an annual report(similar to the California Tax Credit Allocation Committee report) that includes the total amount of funding, the total number of units assisted by income level, and the amount of funding awarded to each project
Stakeholder Outreach– To implement this restructure, the GRP calls for the outreach to the following stakeholders: Department of Housing and Community Development, the California Housing Finance Agency, TCAC, the California Debt Limit Allocation Committee, nonprofit affordable housing developers, for-profit affordable housing developers, local governments, and tribal governments.
Alignment with other Agencies and State Funding– CHHA is directed to coordinate and align with the Transportation Agency and Health and Human Services Agency’s policies, programs, and funding to achieve the state’s housing priorities and maximize public resources. This may eventually include shifting programs with a strong housing component to CHHA. HDFC is specifically empowered to look across all state agencies to identify and align relevant funding opportunities that could fall under CHHA’s authority.
The state budget includes $4.2 million in 2025-26 for the restructure and creation of CHHA(link is external) and a commitment of $6.4 million in 2026-27 and $6.2 million in 2027-28. The restructure will go into effect on July 1, 2026.
Progress Toward a Simpler System
It is important to note that a critical piece to the state’s affordable housing finance system that is not included in the GRP is the consolidation of tax credits and bonds. Tax credits and bonds are issued by the state treasurer and not within the GRP restructure since those authorities are outside of the governor’s powers. Despite not having tax credits and bonds, the GRP will still greatly improve the system in terms of transparency and efficiency while reducing duplication. The next step is to figure out how to incorporate tax credits and bonds into a streamlined awards process.
The centralization of the state’s affordable housing funding programs with the oversight of these programs by the Housing Development and Finance Committee begins to lay the ground for full consolidation of the state’s affordable housing finance system as well as brings forth the change management and staff retraining needed for new systems. Most importantly, the restructure will foster partnerships with housing stakeholders who share the common goal of ending housing insecurity and homelessness for everyone in California.
Earlier this spring, Enterprise played an active role in advocating for the GRP by organizing and participating in a range of efforts—including focus groups, coalition work, and public testimony before the Little Hoover Commission and Assembly hearings. As implementation moves forward, we remain committed to partnering with the state and housing stakeholders to help shape an effective and streamlined affordable housing finance system for California.
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