The 2023-24 California Spending Plan

Housing and Homelessness

Significant, Prior-Year Funding Augmentations Generally Maintained. Previously enacted budgets authorized significant, albeit primarily one-time and temporary, funding for housing and homelessness, including authorizing some spending actions for 2023-24. The 2023-24 Budget Act largely maintains those spending actions. In all, the 2023-24 budget provides $3.3 billion for various housing and homelessness programs within the Department of Housing and Community Development (HCD), the California Interagency Council on Homelessness (CalICH), and the California Tax Credit Allocation Committee.

$672.5 Million in Housing and Homelessness Spending-Related Solutions. The budget package includes $672.5 million in housing and homelessness-related spending solutions (6 percent of overall budget solutions). The solutions can be categorized into three types: spending delays, reductions, and reductions subject to trigger restoration. Nearly all of these solutions would apply to one-time and temporary spending enacted in recent budgets. Below, we provide a description of the spending solutions by type.

• 605 Million in Spending Delays. A spending delay is an expenditure reduction proposed for the budget window (2021-22 through 2023-24) with an associated, offsetting cost increase in a future year of the multiyear (2024-25 through 2026-27). That is, the spending would be reduced in the short term and moved to a future year. Previous budget actions allocated $360 million for use as Homeless Housing, Assistance and Prevention Program (HHAPP) bonus funds to supplement the base HHAPP grants of local entities that achieved specified outcome goals. These funds have not been awarded or obligated. The spending plan eliminates the use of bonus funds and instead allocates these funds for use as base grants. The shift results in a net delay of $260 million to 2024-25. Additionally, the budget achieves budget-year savings through the delay of $345 million previously allocated to HCD’s Foreclosure Intervention Housing Preservation Program (this spending will instead be spent over several years through 2026-27).

• $50 Million Reduction Subject to Trigger Restoration for CalHome. The Governor’s budget and May Revision proposed making $350 million of housing and homelessness spending-related solutions subject to trigger restoration language. The final budget package, however, ultimately only included this trigger restoration language for $50 million in spending reductions for CalHome. Under this language, these amounts will be reduced unless, in January 2024, the administration estimates there are sufficient resources available to fund these expenditures. In that case, the programs would be restored halfway through the 2023-24 fiscal year.

• $17.5 Million Reduction for Downtown Rebound Program. The budget reverts $17.5 million of unexpended funds originally appropriated for the Downtown Rebound Program in the 2000-01 budget package. The funds were originally provided for adaptive reuse of commercial and industrial structures.

$600 Million in New Discretionary Spending and Tax Credits. The 2023-24 budget also includes new discretionary commitments related to housing and homelessness.

• $500 Million One-Time Expansion of State Low Income Housing Tax Credits. In addition to the approximately $100 million annually that the state makes available for housing tax credits, the budget continues the recent practice of providing an additional discretionary $500 million in 2023-24 for tax credits to builders of rental housing affordable to low-income households. (Because these credits would not be claimed until the housing units are complete, the General Fund impact of this expansion would be observed in a few years.) This would be the fifth consecutive year in which the budget has proposed a one-time expansion of the state’s housing tax credit, for a total of $2.5 billion in tax credits.

• $100 Million One-Time Augmentation for Multifamily Housing Program (MHP). The 2023-24 budget authorizes an increase of $100 million in one-time General Fund spending for MHP administered by HCD. The budget action augments previously authorized discretionary funding for the program for a total of $325 million in 2023-24.

Discretionary Spending on Housing and Homelessness Will Soon Be Exhausted. There is limited discretionary spending authorized beyond 2023-24 for housing and homelessness programs. That said, some sources of discretionary funding have multiyear expenditure authority, which spreads out the impact of current funds. In particular, HHAPP allows local jurisdictions five years to expend program funds, meaning the $1 billion in 2023-24 can be used through 2027-28. Moreover, over the next few years, a larger share of the units supported by the recent augmentations are expected to become available. This will give the Legislature a better understanding of the impact of recent budget actions.

Budget-Related Legislation Increases Oversight and Accountability. The spending plan included budget-related legislation aimed to increase oversight and accountability of the state’s housing and homelessness programs. At a high level, this legislation makes the receipt of HHAPP funding contingent on the creation of a regionally coordinated homelessness action plan. It requires each plan to coordinate homelessness funding and services across the region, assign specific roles and responsibilities to each member of the regional plan, and set forth key actions that each member will take to reduce and prevent homelessness. Additionally, the legislation requires updated regional plans by January 31, 2026, including updates on the metrics and corresponding key actions carried out. The state could withhold additional HHAPP funds for failure to comply with regional action plans.

Budget-Related Legislation Updates California Dream for All Program. Budget-related legislation directs the California Housing Finance Agency (CalHFA) to make changes to the California Dream for All program, a shared appreciation loan program for first-time homebuyers, intended to better target loans to people who could not purchase a home otherwise. Legislation also requires a report to the Legislature by March 1, 2024 evaluating options for financing an expansion of the available loan pool. Additionally, supplemental reporting requirements direct our office to (1) report by July 15, 2024 on the shared appreciation loans, including demographic information on loan recipients and geographic distraction of the loans and (2) report on these same items in a second report once CalHFA allocates the $200 million remaining for the Dream for All Program.

Additional Legislation. Budget-related legislation transfers the administration of HHAPP from Cal ICH to HCD beginning in the 2023-24. Intent language identifies a legislative interest in enacting future legislation to further focus Cal ICH’s role in providing statewide policy coordination and development by transferring grant administration responsibilities to HCD. Legislation also removes CalHFA from within HCD. Instead, CalHFA would be a separate entity within the Business, Consumer Services, and Housing Agency.