2009-10 Budget Analysis Series: General Government

Department of Housing and Community Development

Suspension of Employee Housing Program

Employee Housing Act. The Employee Housing Act applies to two types of employee housing: (1) living quarters provided for five or more employees by their employer and (2) housing accommodations in rural areas for five or more agricultural workers that are not provided in connection with any work place. The act requires the owner to maintain these types of housing in compliance with certain minimum health and safety standards, developed by the Department of Housing and Community Development (HCD), and to obtain a permit from HCD prior to allowing the housing to be occupied. The HCD has primary enforcement authority unless a city or county assumes the enforcement responsibilities pursuant to the act. Currently, ten counties enforce the program (Kern, Merced, Monterey, Napa, Sacramento, San Joaquin, San Mateo, Santa Cruz, Stanislaus, and Tulare). Fresno recently discontinued its program, returning enforcement in its county back to the state.

HCD’s Role in Enforcing the Act. The HCD’s responsibilities under the act are to annually inspect proposed employee housing facilities, issue permits to conforming facilities, and reinspect non–conforming facilities; locate employee–housing facilities operating without permits and prosecute serious offenders; and monitor local government enforcement of the act. The department estimates that 765 facilities with approximately 19,600 beds for workers are subject to the act’s requirements. It further estimates that 90 percent of the facilities are for the agricultural workforce, while 10 percent are for other industries (such as railroads and ski resorts). Currently, the fee structure for state permitted facilities is $35 for issuance of the Permit to Operate, plus $12 per bed or lot. The average fee is about $400 per facility.

Recent Funding History. In 2007–08, the program had a budgeted level of $1.1 million, which was funded with a combination of the fees charged to owners of the housing units ($231,000) and General Fund monies ($846,000). Last year, when the Governor proposed reducing the General Fund share of program support by $85,000, the Legislature adopted budget language allowing the department to increase fees to offset the reduction. However, the Governor subsequently vetoed the language as well as the remaining General Fund support ($761,000), leaving only $231,000 in fee reimbursements to fund program activities.

Governor’s Proposal Has Some Potential Problems. The 2009–10 budget proposes to suspend the program for an unspecified period and grant local jurisdictions the discretionary authority to take over the state’s Employee Housing Act duties. Accordingly, the budget proposes elimination of the fee authority for 2009–10.

We have several concerns with the proposal. While the proposal grants local jurisdictions the authority to enforce the act, it does not require them to do so. Thus, there is no assurance that there would be any level of enforcement while the state program is suspended. Since local governments currently have the option to provide these services and most choose not to do so, we have no reason to believe that a significant number of jurisdictions will rush to take on the enforcement responsibilities under the Governor’s proposal. Moreover, under the Governor’s proposal, there would be no state oversight of local jurisdictions to ensure that cities or counties that opt into enforcement actually meet their responsibilities.

Alternatives to Continue a Program. The Legislature has the following options to maintain an employee housing inspection program:

Analyst’s Recommendation. We recommend the enactment of legislation to shift the program’s enforcement to local governments while maintaining their authority to collect fees to offset the cost of these activities. We believe local governments have the ability and expertise to perform the function. The state probably should maintain some minimal level of oversight of local enforcement to ensure that employee housing critical health and safety laws are being enforced.

Return to General Government Table of Contents, 2009-10 Budget Analysis Series
Return to Full Table of Contents, 2009-10 Budget Analysis Series