Governor Gavin Newsom's 2019-20 Budget Proposals to Address Homelessness

Considerations for Governor’s Proposals to Address Homelessness

In January 2019, Governor Newsom released his proposed budget summary. The entire budget is just over $209 billion, with approximately $2.375 billion designated for housing and homelessness initiatives.

The initiatives discussed in the Governor’s Proposed Budget Summaries on Housing and Homelessness are innovative but fall along familiar lines. Within both of the summaries, you will find discussions on regulatory reforms to increase the pace of housing development, the available housing inventory, and funding proposals to:

• Bolster localities’ housing development planning efforts;
• Increase funds for developers of affordable and moderate-income households; and
• Increase services for people who experience or are at risk of experiencing homelessness.

 

Interested grantmakers can read about the proposed policies and budgetary decisions below.

 

Governor’s Homelessness Proposals 

The Governor’s proposed budget includes additional funding for:

• Pilot programs that focus resources for people who are both experiencing homelessness and have high medical needs;
• Grants to assist jurisdictions engaged in planning and developing emergency shelters and navigation centers; and
• Regulatory reforms are designed to increase emergency shelter inventory and reducing the time it takes to develop shelters, navigation centers, and permanent supportive housing.

 

 

Expanding Whole Person Care (WPC) Pilot Programs and Health Services Funding

The Governor proposes $100 million for WPC pilot programs, which would supplement existing housing and medical services for those at-risk or currently experiencing homelessness and high users of multiple health care systems.

WPC would address an existing gap in care as it relates to housing assistance. Currently, the state’s Medi-Cal program, California’s implementation of federal Medicaid, uses federal funds for indirect housing costs, such as referrals to agencies that will provide rental assistance, landlord mediation, housing search assistance, other general client intakes, and housing search costs.

The Governor’s proposed pilot program would use flexible state dollars for jointly-funded County Housing Pools. These Housing Pools leverage state or local entity contributions to pay for costs not eligible under Medicaid, including housing subsidies or rental payments. The proposed $100 million would help fill the “housing assistance gap” and provide more County Housing Pool dollars to fund direct housing costs.

The budget did not specify if the Governor will limit what types of housing assistance are eligible or if the state will match all County Housing Pool funding for medically necessary housing services.

 

Additional Funding for Services Supporting People with Disabilities and Experiencing Homelessness

The proposed budget would also set aside an additional $25 million to permanently establish a county matching program to fund outreach, case management, benefits advocacy, and indirect housing support for participants of county Housing and Disability Advocacy Programs (HDAP) seeking assistance in enrolling for Supplemental Security Income (SSI).

 

Financing Regional Planning of Shelters and Navigation Centers and Increasing Production

The proposed budget would provide $300 million for coordination between counties and cities intending to develop homeless shelters and navigation centers. Like shelters, navigation centers provide emergency room and board. Unlike shelters, these navigation centers generally:

• Have fewer barriers to entry;
• Have intensive case management to assist with public benefits, health services, and housing; and
• Allow people with partners, pets, and possessions.

 

Financial Rewards for Meeting Construction and Permitting Milestones

The proposed budget also includes an additional $200 million for jurisdictions progressing towards new supportive housing units, emergency shelters, and navigation centers.

The proposal states that counties may demonstrate progress with new supportive housing unit permits or construction status for emergency shelters. However, there are no other details explaining eligibility, the application process, or restrictions (if any) on using these funds.

 

Additional Housing Production Strategies

Streamlining the California Environmental Quality Act (CEQA)

The budget summary stated that the Administration would propose legislation to accelerate the construction of supportive housing units, homeless shelters, and navigation centers.
 

CalTrans Airspace for Shelter Development

The budget summary also states that the Administration will develop a statewide plan for Department of Transportation airspace within the state’s highway right-of-way jurisdiction for emergency shelter purposes.

Both of these items require additional yet-to-be-announced details.

 

Governor’s Housing Proposals 

The budget includes funds to subsidize new housing production and grants for jurisdictions to plan and produce more housing.

 

The budget also includes non-financial policy strategies to provide more land for housing development, improve monitoring of whether jurisdictions meet their housing production goals, and revise procedural aspects of municipal financing tools to make them easier to use.

 

Subsidizing Developers to Increase Affordable and Moderate-Income Multifamily Housing

Moderate Income and Mixed-Income Housing

The budget includes a proposal for $500 million in loans for mixed-income household developments. These developments would consist of units for people of varying household income levels, including moderate area median income (AMI) households (60 to 80 percent of AMI). A Los Angeles County moderate-income household of four, earns $41,598 – $55,464 a year.

Moderate income households are generally not eligible for affordable housing, which often targets people experiencing homelessness, extremely low-income households (less than 30 percent of AMI, or less than $20,799 for a LA County household of four), and very low-income households (less than 50 percent of AMI or less than $34,665 for a household of four).

 

Expanded State Housing Tax Credit Programs

The proposed budget includes $300 million to expand the state tax credit program, which supplements the Federal Low-Income Housing Tax Credit (LIHTC) program. From 2011-2018, the state tax credit supplement leveraged funding for approximately 18,000 affordable units.

LIHTC is the most extensive single public investment program for affordable housing. The 9 percent version of LIHTC helps developers acquire approximately 70 percent of a project’s total costs through a transaction where nonprofits exchange tax credits for private equity.

The budget also includes $200 million for new state tax credits that would target moderate AMI households, a household population not typically funded through state and federal housing subsidies.

 

Financing Regional Planning and Increasing Jurisdiction Production

Short-Term Planning Grants

The budget includes $750 million for short-term planning grants, of which $250 million would be reserved for technical assistance and staffing costs related to the development of housing development plans to reach new, higher short-term statewide housing production goals for households in each AMI bracket. Governor Newsom requests the California Department of Housing and Community Development (HCD) to establish new production goals.

 

Financial Rewards for Meeting Housing Production Milestones

The State would award the remaining $500 million to city and county jurisdictions that reach these milestones for what the budget calls "general purposes.” However, there are no other details explaining eligibility, the application process, or restrictions (if any) on using these funds.

 

Additional Housing Production Strategies

More Active Review and Oversight of Regional Housing Production

The Newsom Administration states they will “revamp” the statewide process that determines the amount and type of housing needed and the regional apportionment of development to meet the need. This process is known as the Regional Housing Needs Assessment (RHNA).

HCD establishes RHNA goals. With new powers enacted in 2017, the state agency will move from an advisory role in RHNA to an overseer and enforcer of regional housing goals and production.

 

Excess State Property for Housing Development

The Administration has identified state properties suitable for expedited housing development.  The budget proposes an ‘innovation challenge’ whereby developers would competitively apply to receive low-cost, long-term ground releases of these sites. The state will request that developers find innovative techniques to produce more units at a more cost-effective rate than traditional projects.

 

Streamlining Financial Tools that Incentivize Housing Investment and Raise Local Revenue

The budget proposes to make it easier to develop financing districts by reducing regulatory requirements related to housing development.

Specifically, the budget proposes to remove the 55 percent voter approval requirement needed for Enhanced Infrastructure Financing Districts (EIFD) to issue debt. EIFD issued debt can support the creation of more affordable housing units.

The budget also proposed modifying eligible costs for the federal Opportunity Zones program to make them more useful tools in affordable housing development. The Administration will also explore layering additional programs on Opportunity Zones and EIFDs to increase and incentivize the production of affordable and moderate-income housing.  

SCG will continue to monitor the 2019-2020 Governor’s proposed budgets on housing and homelessness. The Governor will issue an update to his budget in May, known as the “May Revise,” and the Legislature has until June 15 to pass a budget.