Analysis of the 2007-08 Budget Bill: General Government

Housing and Community Development (2240)

The mission of the Department of Housing and Community Development (HCD) is to help promote and expand housing opportunities for all Californians. As part of this mission, the department is responsible for administering a variety of housing finance, economic development, and rehabilitation programs. Some of the programs administered by the department, such as California Homebuyer’s Downpayment Assistance, provide financial assistance so that low- and moderate-income families can purchase a home. While other programs, like Multifamily and Supportive Housing, provide assistance for the construction, rehabilitation, and preservation of permanent and transitional rental housing for low-income and disabled individuals and households. The department is also responsible for implementing and enforcing building standards. In addition, the department provides policy advice and statewide guidance on housing issues.

The budget proposes expenditures of $969 million for 2007-08. This represents an increase of $315 million (or 48 percent) over estimated current-year spending. The increase is mainly due to expenditures of bond funds authorized by Proposition 1C. The department has a proposed staffing level of 597 positions.

Designate Lead Department for New Program

The budget requests $685,000 and two positions for the department to implement a new Housing Urban-Suburban-and-Rural Parks program established by Proposition 1C. We recommend that instead of the Department of Housing and Community Development (HCD), the Department of Parks and Recreation (DPR) be designated as the primary administrator for the new program. This is because DPR has administered various park grant programs for many years, while HCD has only limited experience in park development and funding. Consolidating park grant programs in DPR would result in lower administrative costs and better coordinated project selection. Accordingly, we recommend that the positions and support funding be rejected. (Reduce Item 2240-001-6071 by $685,000.)

We further recommend appropriating $30 million in Proposition 1C park funds to DPR instead of HCD for allocation to local parks projects. (Reduce Item 2240-101-6071 by $30,000,000. Augment Item 3790-101-6071 by $30,000,000.)

New Bond Funds for Local and Regional Parks. In November 2006, the voters passed Proposition 1C, which provides funding for various housing and development programs. One of the programs in the measure, Housing Urban-Suburban-and-Rural Parks, provides $200 million to add parks in the vicinity of housing developments. Although Proposition 1C does not specify an implementing department for these funds, the administration is proposing that HCD administer them.

Budget Proposal for Local Parks Funds. The budget proposes two positions and $685,000 for HCD to begin implementing a grant program for housing-related parks. The funding request includes $350,000 to reimburse DPR for work on the program. In addition, the budget requests $30 million in bond funds to be allocated to eligible park projects under the program in 2007-08.

Designate DPR Administrator of Proposition 1C Park Funding. The HCD has only limited experience administering park programs, while DPR has had an established process to implement bond-funded grants and loan programs for park development for many years. Over the last decade, DPR administered approximately $1.7 billion in bond-funded grants for local and regional parks.

As discussed in our piece “Implementation of the Housing Bond” (in the “Crosscutting Issues” section of this chapter), we believe that designating DPR as the primary administrator of all bond funding for parks would result in lower overall state administrative costs, more consistent project evaluation and better coordinated project selection, than if the two agencies (DPR and HCD) administer separate grant programs for park development. Accordingly, we recommend that the Legislature designate DPR as the primary administrator for the parks program funded by Proposition 1C.

Delete Funds for Staff Support for HCD. Consistent with our recommendation that DPR administer the Proposition 1C park funds, we recommend that HCD’s request of $685,000 and two positions be deleted. We, however, do not recommend adding staff to DPR to implement the Proposition 1C parks program at this time. This is because DPR has an existing park granting program and it is proposing additional staff to administer Proposition 84 local park funds as well. Specifically, for 2007-08, the budget proposes $1.4 million in Proposition 84 funds and ten positions for DPR to plan and develop grant guidelines, and carry out other administrative tasks related to the grant program. With these staff resources, it is likely that implementing the Proposition 1C funds would require minimal additional staff.

Appropriate Local Assistance Funds to DPR. Consistent with our recommendation that DPR be the primary administrator for all parks programs, we recommend shifting $30 million in Proposition 1C funds requested for projects from HCD to DPR.

Specify Funding Amount for Parks

Proposition 1C allocates $850 million for the Regional Planning, Housing and Infill Incentive program to provide incentive grants that promote infill housing and development. The measure allows up to $200 million of the amount to be used for park development or rehabilitation, but does not allocate a specific amount for these purposes. We recommend the enactment of legislation to specify what portion of the $850 million should be allocated to parks.

Proposition 1C authorizes a total of $850 million for a new Regional Planning, Housing and Infill Incentive program. Funds may be used to provide grants that can go for a number of purposes, including water, sewer, transportation, and other infrastructure development. Proposition 1C also allows up to $200 million to be used for park grants to encourage infill housing and development. However, for that purpose, the measure does not specify a particular amount of funding.

In the section above, we recommend that DPR be designated as the administrative agency to implement the Housing Urban-Suburban-and-Rural Parks program established by Proposition 1C. Consistent with that recommendation, we also recommend that DPR be designated as the agency to administer the portion of park funding out of the $850 million infill incentive program. In this way, all parks-related bond programs would be consolidated under DPR. Accordingly, we recommend the enactment of legislation specifying what portion of the $850 million allocation is to be spent on parks, and would be administered by DPR. Annual funding would then be appropriated through the budget.

Return to General Government Table of Contents, 2007-08 Budget Analysis