Report finds state agency mismanaged and lost $2.7 billion slated for affordable housing

California State Auditor Elaine Howle delivered a scathing review of the state’s efforts to support affordable housing projects in a report released Tuesday. In it, she concludes: “the State must overhaul its approach to affordable housing development to help relieve millions of Californians’ burdensome housing costs.”

 

 

The audit focuses on affordable housing project financing from four state agencies – the California Department of Housing and Community Development (HCD), the California Housing Finance Agency, the California Tax Credit Allocation Committee (Tax Committee), and the California Debt Limit Allocation Committee (Debt Limit Committee).

Howle specifically points to California’s failure to develop an effective approach to planning and financing affordable housing at the state and local level. Without a coordinated strategy, Howle says the state is unable to meet the housing needs of California residents.

“For example, the State does not have a clear plan describing how or where its billions of dollars for housing will have the most impact. In fact, the absence of a comprehensive and coordinated plan allowed the Debt Limit Committee to mismanage and ultimately to lose $2.7 billion in bond resources with little scrutiny, a loss that the committee failed to publicly disclose and struggled to explain. These bond resources could have helped support the construction of more affordable housing,” wrote Howle in the public letter accompanying the report.

According to the audit, California needs to add approximately 125,000 units of affordable housing annually through 2029 to keep up with demand. From 2015-2019, California supported the development of about 19,000 affordable housing units each year.

Howle also describes the four agencies’ “misaligned and inconsistent” requirements for the affordable housing projects they run. This, she says, can slow down development, increase project costs, and make it difficult for developers to get the resources they need.

Howle notes that there are also issues at the local level. Some local jurisdictions have created barriers, such as restrictions on the number of units developers can build, which impact the amount of affordable housing available.

“At the local level, state law and state oversight are not strong enough to ensure that cities and counties are doing their part to facilitate the construction of affordable housing,” she adds. ‘Therefore, the State needs to improve its statewide housing plan, harmonize its funding programs, and strengthen its oversight of cities and counties,” Howle concludes.

To address some of these issues, the audit includes a series of recommendations for the state legislature:

  • Require HCS to prepare a yearly addendum to the state’s housing plan that includes detailed information on all of the financial resources available to develop affordable housing, the number of units expected to be built, where resources will have the most impact, and outcomes to measure the success of investments.
  • Create an interagency workgroup to coordinate financing resources for multifamily housing projects and remove administrative burden.
  • Strengthen standards for mitigating barriers to ensure local jurisdictions can move projects forward in a more streamlined fashion.
  • Create an appeals process for developers to resolve disputes in a timely manner.
  • Eliminate the Debit Limit Committee and move its authority to the Tax Committee.