Why California’s housing reorganization isn’t enough

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OPINION—As California’s affordability crisis continues to worsen, few Californians are aware of an approaching July 1 deadline for creating a new state agency to administer the state’s affordable housing programs.

This impending state government reorganization has been touted as a way to lower costs of producing new affordable homes in California. But the agency is at risk of falling short of this goal without further action by state policymakers to address how state affordable housing finance programs are administered, not just who administers them.

For decades, state leaders have layered programs and agencies—each well-intentioned, but producing a labyrinth of requirements that slow development, confuse applicants and increase costs. That history framed the creation of Gov. Gavin Newsom’s Housing and Homelessness Agency, which he argues will deliver the structural shake-up needed to streamline California’s housing finance system.

As part of the reorganization plan, by July 1, 2026, there will be a new housing agency—the California Housing and Homelessness Agency and, within it, the Housing Development and Finance Committee (HDFC).

HDFC will be responsible for administering multifamily rental housing finance programs and promote transparency, coordination, and alignment of state affordable housing resources.

In theory, this would create the long-promised “one-stop shop” for affordable housing funding. The inconvenient truth is that California has tried versions of this before without success.

In 2019, CalHFA pursued improved efficiency and effectiveness in affordable housing delivery not through a sweeping structural reorganization, but by launching the Mixed‑Income Program (MIP).

MIP achieved the most significant streamlining of multifamily rental housing finance in decades, earning a National Award for Program Excellence from the National Council of State Housing Agencies. The award recognized MIP’s simplified financing model, which enabled housing to be produced more quickly and with substantially less public subsidy.

In 2025, MIP financed 2,319 units using $40.3 million in state subsidy, approximately $17,380 per unit, while the Department of Housing and Community Development’s Multifamily Housing Program (MHP) funded 769 units with $244 million in state subsidy, or roughly $317,029 per unit.

As a result, MIP delivered housing at nearly 18 times the cost efficiency of MHP, underscoring how program design and implementation largely determine the impact of each public dollar.

These efforts reflect a lesson policymakers keep rediscovering. Coordination of housing funding happens at the program level, not the org-chart level.

The Little Hoover Commission, an independent agency that must review reorganization plans, agreed that the governor’s impending reorganization should proceed; however, it also delivered an equally important message. Structure alone isn’t a strategy.

Without deeper reforms and review of housing funding programs, a new housing agency risks becoming just another box on the state’s org chart.

The commission’s endorsement of the governor’s plan came with critical guardrails, serving as a roadmap for success, rather than optional add-ons.

These recommendations acknowledged fundamental gaps within the plan, including the exclusion of some of the most essential housing finance entities, especially the Tax Credit Allocation Committee (TCAC) and the California Debt Limit Allocation Committee (CDLAC).

A reorganization that excludes the agencies responsible for tax credits and bonds, which are the backbone of affordable housing finance, cannot deliver a true “one-stop shop.”

Rather than creating a new Housing Development and Finance Committee (HDFC) within the proposed Housing and Homelessness Agency, the state should consider leveraging the existing California Housing Finance Agency Board.

That board includes a balanced mix of gubernatorial appointees, legislative appointees, and ex officio members, including the State Treasurer. Each appointed position is tied to a specific statutory qualification, ensuring representation from affordable housing finance experts and tenant advocates, with public oversight and transparency.

The governor’s plan reflected a well-known impulse. If the housing system appears too complex, reshuffle the boxes. Yet history demonstrates that the core problem lies elsewhere.

Persistent misalignment between state housing funding program requirements and program implementation conflicts with efficient processes for allocating low-income housing tax credits, private activity bonds and standard practices in the real estate finance industry.

Reorganization can help, but only when paired with evaluating housing funding programs and eliminating requirements and processes that contradict lending norms.

California cannot allow reorganization to substitute for substantive reform. Gov. Newsom was right to call for structural change, but structure must follow strategy, not precede it.

The Legislature and administration must still act to align housing funding programs and demand measurable improvements if this reorganization is to achieve meaningful results.

Absent that follow-through, the newly created HDFC risks becoming just another bureaucratic layer rather than a true solution.

Tia Boatman-Patterson is the CEO of California Community Reinvestment Corporation (CCRC).