The 2021-22 California Spending Plan

Housing and Homelessness

The 2021‑22 budget provides $10.7 billion ($5 billion General Fund) to 50 housing and homelessness-related programs across 15 state entities. Some of the major uses of housing and homelessness funding in the state budget support the Homekey Program’s acquisition of properties for use as permanent housing, provide flexible aid to local governments to address homelessness in their communities, provide funding to address the backlog in affordable housing development, and help local governments plan to meet their housing production goals. The budget also provides funding in other areas of the budget that could be used to address homelessness and/or housing affordability, including, the health, human services, veteran services, courts, transportation, higher education, and labor areas of the state budget.

The vast majority of funding in the 2021‑22 budget is one time or temporary. Specifically, funding in the budget declines to $5.4 billion ($3.9 billion General Fund) in 2022‑23 and continues to decline through 2024‑25 when the budget provides $223 million ($184 million General Fund) in ongoing funding. The ongoing funding largely supports expanded bed capacity at state hospitals, as well as assistance for foster youth and former foster youth, and resources to enhance local governments’ compliance with state housing laws. Most of the funding in 2021‑22 is primarily for homelessness-related proposals ($7.3 billion all funds), while $3.5 billion (all funds) is allocated primarily towards housing-related programs in 2021‑22. In addition, 54 percent of funding in 2021‑22 is nonstate funds, primarily federal American Rescue Plan (ARP) fiscal relief funds, while 46 percent is state funding. In particular, the state allocated $4.9 billion of its $27 billion in American Rescue Plan (ARP) fiscal relief funds towards housing and homelessness. Figure 1 provides a summary of overall housing and homelessness spending in the 2021‑22 budget. Figure 2 identifies the ARP fiscal relief funds for housing and homelessness. The major spending actions in the 2021‑22 budget package are described below.

Housing-Related Spending Actions

The 2021‑22 budget provides $3.5 billion ($1.7 billion General Fund) to about 20 housing-related programs within various state housing departments, as well as to the courts and labor areas of the budget. The vast majority of funding is one time or temporary. Specifically, funding in the budget declines to $10 million ongoing General Fund by 2024‑25 for housing programs. The ongoing funding largely provides resources to enhance local governments’ compliance with state housing laws and addresses other workload needs at departments. In addition, 51 percent of funding in 2021‑22 is nonstate funds, primarily federal ARP fiscal relief funds, while 49 percent is General Fund. Figure 3 provides an inventory of housing related spending actions. Below we provide a brief summary of the major housing related proposals. (In order to better align our accounting of housing and homelessness budget actions with the administration, the affordable housing backlog item is discussed in the homelessness spending actions section below.)

Planning and Enforcement

Regional Planning Grants. The 2021‑22 budget provides $600 million ($100 million General Fund) one-time funds to the Department of Housing and Community Development (HCD) for planning and implementation grants to regional entities for planning activities such as infill developments, targeted towards the state’s climate goals and reducing vehicle miles traveled. HCD is required to develop and administer the program in collaboration with the Office of Planning and Research, Strategic Growth Council, and California Air Resources Board. Regional agencies will apply for funding to address housing, land use, transportation, climate change, equity, and other planning priorities. Funds should be expended by June 30, 2024. While planning is generally a local responsibility, the state has previously provided resources to aid local governments’ planning efforts. In 2019‑20, the budget provided $250 million one-time General Fund for this purpose.

Housing Law Assistance. HCD is responsible for reviewing every local government’s housing element to determine whether it complies with state housing law. In 2017, several bills were enacted that increased HCD’s accountability and enforcement authority to review any action or inaction by a local government that HCD determines is inconsistent with state housing element laws or the local jurisdiction’s own adopted housing element. HCD can revoke housing element compliance if a local government’s actions do not align with state law, which limits access to state housing resources. In addition, HCD can notify the California Office of the Attorney General that the local jurisdiction is in violation for noncompliance with state law. The 2021‑22 budget includes $4.7 million General Fund to provide continued technical assistance to local governments in meeting Regional Housing Needs Allocations, comply with new state housing laws, and help facilitate housing production. The intent of this funding is to facilitate affordable housing production through monitoring, technical assistance, and enforcement of existing housing productions laws.

Incentives and Support to Increase Housing Development

Foreclosure Intervention Housing Preservation Program. The 2021‑22 budget provides $500 million one-time General Fund to HCD for the newly established Foreclosure Intervention Housing Preservation Program. The program provides loans and grants to preserve affordable housing and promote resident ownership or nonprofit organization ownership of homes at risk of foreclosure. Specifically, the program would require the preservation of units acquired through this funding for use as affordable housing. Funds are available through December 31, 2025.

Affordable Housing Preservation. The 2021‑22 budget provides HCD $300 million one-time ARP fiscal relief funds for 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. The funding would provide the department 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. (The budget also provides an additional $1.75 billion to address the affordable housing backlog. In order to conform with the administration’s categorization of spending actions, we discuss this proposal in the homelessness section below.)

Infill Infrastructure Grant (IIG) Program. The 2021‑22 budget provides HCD $250 million one-time General Fund and reallocates $284 million in remaining Proposition 1 (2018) funds for the IIG Program. This provides a total $534 million for the program. Of the newly appropriated $250 million General Fund, the budget provides $160 million for selected capital improvement projects for large jurisdictions and makes $90 million available for projects in counties with populations under 250,000 and the cities located within those counties.

The IIG Program was created in 2007 within HCD to provide funding for infrastructure that supports higher-density affordable and mixed-income housing in locations designated as infill. Under the program, developers and local governments can partner to apply for infrastructure funding, including the development or rehabilitation of parks or open space; water, sewer, or other utility service improvements; streets; roads; sidewalks; and environmental remediation. Originally, bond funding was provided for the program through the Housing and Emergency Shelter Trust Fund Act of 2006 (Proposition 1C) and the Veterans and Affordable Housing Bond Act of 2018 (Proposition 1). In 2019‑20, the budget provided $300 million General Fund for the IIG Program. The 2019‑20 allocation for the program also included a set aside for small jurisdictions.

Golden State Acquisition Fund. The 2021‑22 budget provides HCD $50 million one-time General Fund to the Golden State Acquisition Fund, which will be matched by various community development financial institutions in a revolving fund to leverage additional capital for the acquisition or preservation of affordable housing.

Mixed-Income Housing Program. The 2021‑22 budget provides $45 million one-time General Fund to the California Housing and Finance Agency’s (CalHFA’s) Mixed-Income Housing Program to provide loans to developers for new mixed-income housing. The budget last allocated $500 million one-time General Fund for this program in 2019‑20.

State Low-Income Housing Tax Credits. The 2021‑22 budget provides 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 $500 million for tax credits to builders of rental housing affordable to low-income households. This is the third consecutive year in which the Governor has proposed a one-time expansion of the state’s housing tax credit, for a total of $1.5 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.

Scaling Excess Lands Development. The 2021‑22 budget provides HCD $45 million one-time ARP fiscal relief funds to expand the state excess sites program with funding for brownfield remediation, and trailer bill language to expand the state excess sites program with local government matching grants that aims to incentivize further affordable housing development on excess lands.

Direct Housing Assistance

Homebuyer Assistance, Economic Impact Relief. The 2021‑22 budget provides $100 million one-time General Fund to CalHFA’s First Time Homebuyer Assistance Program to help prospective homebuyers, particularly in disadvantaged areas, make a down payment, secure a loan, and pay closing costs on a home.

Accessory Dwelling Unit (ADU) Financing Program. The 2021‑22 budget includes $81 million one-time ARP fiscal relief funds to expand CalHFA’s ADU financing program for the construction of new ADUs. This supplements $19 million currently appropriated for the program, providing a total $100 million to support low-cost production and increase the number of housing units statewide.

Farmworker Housing Maintenance and Development

Farmworker Housing. The 2021‑22 budget provides $50 million one-time General Fund 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.

Office of Migrant Services (OMS). The 2021‑22 budget also provides HCD $30 million one-time General Fund for critical deferred maintenance needs at the OMS centers for migrant farmworkers. The OMS within HCD operates 24 migrant centers with 1,885 housing units and provides housing-related services to more than 11,000 migratory farmworkers and their families. Most of the centers include apartments of between two and four bedrooms per household. While HCD contracts with local housing authorities or nonprofit organizations to operate the centers, HCD ultimately is responsible for repair and maintenance. A 2018 analysis of OMS housing units identified $10.1 million of critical needs recommended for completion within a year, $14.8 million in additional repairs, and the need for an ongoing commitment of funds for maintenance to prevent an increase in the backlog of repairs. The 2019‑20 budget provided $1.5 million to address some of the deferred maintenance costs at housing units operated by OMS.

Additional Housing-Related Spending

Student Housing. The 2021‑22 budget provides $500 million for affordable student housing with an additional $1.5 billion provided over the subsequent two fiscal years. The newly created Higher Education Student Housing Grant program that will provide one-time grants for the California Community Colleges, California State University, and University of California to plan for new student housing developments, construct additional student housing, or acquire and renovate commercial properties into student housing. Subsequent legislation is anticipated to approve specific student housing projects submitted by the higher education segments.

California Dream for All First Time Homebuyers Program. The budget provides $3 million one-time General Fund to the State Treasurer to provide a report on the feasibility of establishing a self-sustaining state program that can help first-time homebuyers purchase a home. Specifically, the spending plan includes budget-related legislation that requires the State Treasurer, in consultation with CalHFA, HCD, and other relevant stakeholders to develop a framework for the California Dream for All First Time Homebuyers Program to reduce barriers to homeownership, and submit a report to the Legislature as soon as April 1, 2022, and no later than one year from the effective date of the legislation. In addition to reporting on the feasibility of establishing such a program, the legislation directs the report to address, “the costs and risks to society of continuing current barriers to homeownership for working families and not combating systemic racism and inequities that have kept generations from building wealth and thriving in the middle class.”

Homelessness Spending Actions

The 2021‑22 budget provides $7.2 billion ($3.3 billion General Fund) to about 30 homelessness-related programs within various state housing departments, as well as to the human services, health, veterans, transportation, higher education, and emergency services areas of the budget. The vast majority of funding is one time or temporary. Specifically, funding in the budget declines to $213 million ongoing ($175 million General Fund) by 2024‑25 for homelessness programs. The ongoing funding largely supports expanded bed capacity at state hospitals, as well as assistance for foster youth and former foster youth. In addition, 55 percent of funding in 2021‑22 is nonstate funds, primarily federal ARP fiscal relief funds, while 45 percent is General Fund. Figure 4 provides an inventory of homelessness-related spending actions. Below, we provide a brief summary of the major homelessness-related proposals.

Flexible Aid to Local Governments

Homeless Housing, Assistance, and Prevention Program (HHAPP) Round 3 and Round 4. The budget provides $1 billion in 2021‑22 (Round 3) and an additional $1 billion in 2022‑23 (Round 4) for HHAPP. The program provides flexible funding to local entities and tribes to address homelessness in their communities. The program is administered by the Homelessness Coordinating and Financing Council (HCFC). The Round 3 and Round 4 funding is allocated as follows.

• Allocates 80 percent of funding ($800 million per round) to local entities using the same formula as prior HHAPP rounds, which relied on a county’s proportionate share of the total homeless population of the region serviced by the continuum of care (CoC) within which the county is located. Population will be based on the 2019 homeless point-in-time count for Round 3 and the most recent homeless point-in-time count for Round 4.

• Cities. $336 million to cities with populations over 300,000 based on each city’s share of the 2019 point-in-time homelessness count for the CoC in their region. Requires HCFC to allocate no more that 45 percent of this allocation to a single city.

• Counties. $224 million to counties based on each county’s share of the 2019 point-in-time homelessness count for the CoC in their region. Requires HCFC to allocate no more that 40 percent of this allocation to a county.

• CoCs. $240 million to CoCs based on each COCs share of the state’s total 2019 point-in-time homelessness count. Requires HCFC to allocate no more than 40 percent of this allocation to a CoC.

• Allocates 2 percent ($20 million per round) of funding to tribes.

• Allocates 18 percent of funding ($180 million per round) towards bonuses for entities that meet program goals, at the discretion of HCFC.

Previous years’ budgets provided $950 million in HHAPP funding to cities, counties, and CoCs provided in the prior two rounds, as well as $500 million in flexible aid provided to cities and CoCs through the Homeless Emergency Aid Program in 2018‑19.

Expanded Housing Assistance

Homekey Program. The budget provides HCD $2.75 billion ($1.45 billion in 2021‑22 and $1.3 billion in 2022‑23) to fund additional Homekey projects that can be converted and rehabilitated to provide permanent housing for persons experiencing homelessness and who are also at risk of coronavirus disease 2019 (COVID-19) or other communicable diseases. The total funding is comprised of $2.2 billion one-time ARP fiscal relief funds and $550 million one-time General Fund.

The 2020‑21 budget and subsequent action allocated $800 million in one-time funding for the then newly established Homekey Program. The program provides for the acquisition of hotels, motels, residential care facilities, and other housing that can be converted and rehabilitated to provide permanent housing for persons experiencing homelessness or at risk of homelessness, and who also are impacted by COVID-19. Homekey provides grants to local governments to acquire these properties, which are owned and operated at the local level. This prior funding has been fully disbursed through 94 awards to local entities (some acquired more than one site). The administration indicates that the existing Homekey funding will create over 6,000 housing units for individuals and families. The average statewide cost to the Homekey Program per housing unit is $124,000 and the average local match is $24,000, making the average total cost per unit $148,000.

Affordable Housing Backlog. The 2021‑22 budget provides HCD $1.75 billion one-time ARP fiscal relief funds 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.

Project Roomkey. The 2021‑22 budget provides the Department of Social Services (DSS) $150 million one-time General Fund to support transitioning Project Roomkey participants into permanent housing in 2021‑22. Emergency action established Project Roomkey in 2019‑20 to address immediate housing needs following the emergence of COVID-19. At the outset of the COVID-19 public health emergency, the state provided $50 million General Fund (later offset by federal funds) to help local governments lease hotels and motels to provide immediate housing to vulnerable individuals experiencing homelessness that were at risk of contracting COVID-19. Overall, the goal of this effort was to provide non-congregate shelter options for people experiencing homelessness, to protect human life, and to minimize strain on the state’s health care system. In November 2020, the state authorized an additional $62 million in one-time funding from its Disaster Response Emergency Operations Account to continue operating the program while transitioning people to permanent housing.

Support for Encampments

Encampment Resolution Efforts. The 2021‑22 budget provides HCFC $50.3 million one-time General Fund to establish a competitive grant program for cities, counties and CoCs to support encampment resolution and the transition of individuals into housing. Prioritization for funding will be given to applicants with encampments of 50 or more individuals.

The budget also provides funding to the California Department of Transportation (Caltrans) in 2021‑22 to address encampments, including (1) $2.7 million General Fund for encampment relocation coordination and homeless services liaisons, (2) $20.6 million special funds for the removal of hazardous material at encampments, and (3) $25 million General Fund is set aside from the larger Clean California budget action to clean up encampments.

Planning, Coordination, and Data

Family Homelessness Challenge Grants and Technical Assistance Program. The 2021‑22 budget provides HCFC $40 million one-time General Fund to provide cities, counties, and CoCs grants and technical help to develop action plans that will address family homelessness and accelerate local rehousing efforts. Seventy five percent of the funding ($30 million) will be distributed in two rounds of grants to local governments, another 20 percent ($8 million) will be set aside for local government technical assistance. Program funds must be expended by June 30, 2026.

Homelessness Assessment and Data System. The 2021‑22 budget provides $5.6 million one-time General Fund for HCFC to contract with a vendor to conduct an analysis of the homelessness service providers and programs at the local and state level. In addition, the budget provides $4 million one-time General Fund to support the state’s Homeless Data Integration System, which would allow the state to access and compile standardized data collected by CoCs.

DSS Administered Homelessness Programs

DSS Housing and Homelessness Programs. The 2021‑22 budget also provides $2 billion ($1.6 billion General Fund) across two fiscal years for various housing and homelessness programs administered by DSS.

• California Work Opportunity and Responsibility to Kids (CalWORKs) Housing Support Program Expansion. The budget includes $190 million General Fund in both 2021‑22 and 2022‑23 to expand the existing CalWORKs Housing Support program.

• Housing and Disability Advocacy Program Expansion. The budget includes $150 million General Fund in 2021‑22 and 2022‑23 to assist older adults and persons with disabilities who are experiencing homelessness. This augmentation is in addition to an ongoing annual appropriation of $25 million General Fund for this purpose.

• Bringing Families Home Program Expansion. The budget includes $92.5 million General Fund in both 2021‑22 and 2022‑23 (with spending authority through 2024‑25) to expand the existing Bringing Families Home program. This program provides housing-related supports to eligible families experiencing homelessness in the child welfare system.

• Home Safe Program Expansion. The budget includes $92.5 million General Fund in both 2021‑22 and 2022‑23 for the Home Safe program for access to health, safety, and housing supports for individuals involved in or at risk of involvement in Adult Protective Services.

In addition, the 2021‑22 spending plan includes budget-related legislation that provides the programs above broader eligibility for the use of funding and temporarily waives requirements that counties provide matching funding.

Additional Homelessness-Related Spending

Community Care Expansion Program. The budget provides DSS $805 million one time in 2021‑22 ($355 million General Fund) for the construction, acquisition and/or rehabilitation of projects to preserve or expand adult and senior care facilities to serve people experiencing homelessness or who are at risk of becoming homeless. Specifically, the funding would support Adult Residential Facilities and Residential Care Facilities for the Elderly—often jointly referred to as board and care facilities or assisted living facilities. These facilities are generally privately owned residential facilities that serve adults and seniors who cannot live safely on their own without personal care assistance and nonmedical care. These facilities serve individuals with varying needs, including persons with disabilities, cognitive impairments, and mental and behavioral health needs. Services include meals, housekeeping, medication management, and assistance with daily tasks such as eating, dressing, bathing, and toileting.

Behavioral Health Continuum Infrastructure Program. The 2021‑22 budget provides $2.2 billion ($1.7 billion General Fund) over three years to fund the Behavioral Health Continuum Infrastructure Program, which will provide grant funding to local entities for behavioral health facilities or mobile crisis infrastructure (contingent on these entities providing matching funds and committing to providing funding for ongoing services). Grants provided for facilities under this program are intended to fund a variety of community behavioral health facility types to treat individuals with varying levels of behavioral health needs. Estimates vary on exactly how many individuals experiencing homelessness also struggle with behavioral health issues—which include mental illness and substance use disorder—but there is some degree of overlap between these populations.

COVID-19-Related Actions

Eviction Protections and Emergency Rental Assistance Program. Chapter 27 of 2021 (AB 832, Chiu) extended existing eviction protections provided to tenants that owe rent due to a COVID-19-related hardship experienced through September 20, 2021 and provides additional protections through March 31, 2022 for households applying for emergency rental assistance. In addition, the legislation makes several changes to the existing emergency rental assistance program, including providing 100 percent reimbursement (up from 80 percent) for both arrearage and prospective rent payments. These changes to the emergency rental assistance program are in response to additional federal funding made available through ARP, which will be appropriated in subsequent action. As of mid-October 2021, the state awarded $897 million to about 75,800 households from the original round of federal emergency rental assistance, prior to ARP. The average amount of rental assistance has been $11,800 per household. (This data does not reflect awards in jurisdictions operating their own local rental assistance programs.)

Legal Assistance for Renters. The budget provides $40 million federal funds to the Judicial Branch in 2021‑22, and $20 million annually thereafter until 2023‑24 ($80 million total), to provide legal aid services for renters and homeowners to avoid eviction and foreclosure.