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.

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