California is set to create a state agency exclusively focused on housing issues after the state’s legislature declined to veto a plan introduced earlier this year by Gov. Gavin Newsom to shake up the Business, Consumer Services and Housing (BCSH) agency.
The legislature had until July 4 to veto the plan, which calls for two new agencies to be created – one for housing and homelessness-related departments and one for everything else, according to an Associated Press report. The new housing agency will consist of the current agency’s housing-related entities along with a new Affordable Housing Finance Committee, which will be tasked with coordinating the housing subsidy programs currently under the governor’s control.
Supporters of the plan say it is long overdue, as housing issues consistently rank among the top concerns among Californians. The plan’s critics, however, say it is merely another agency reshuffle that doesn’t get at the heart of the state’s housing problems.
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BCSH, which itself was the product of a reorganization of California’s independent transportation agency, has been something of a catch-all wing of state government, wrapping affordable housing and urban planning in with cannabis and alcohol oversight and professional licensing, among other regulatory functions.
Under the new structure, housing and homelessness will have a dedicated place on the government organizational chart and will aim to simplify affordable housing financing systems, the report said. Under the current structure, affordable housing developers apply for loans through one organization, work with a second organization for grants, and engage with a third agency to apply for federal tax credits. Additional agencies are involved for bonds and one-off programs for veterans, transit-oriented development and short-term housing for homeless people, said AP.
The tax credit and bond funding programs are administered by the state’s treasurer rather than the governor, which adds complexity and costs to the construction process in California. A Terner Center analysis estimated that each additional public funding source delays a project by, on average, four months, and adds an additional $20,460 in costs per unit, the AP report noted.
However, the California constitution requires that the major funding sources managed by the treasurer’s office remain where they are. Some view this as a significant shortcoming of the plan. The Little Hoover Commission, the state government’s independent oversight agency, which reviewed the governor’s plan, recommended that the governor and treasurer strike a formal deal to “create a unified application and review process” for all the affordable finance programs under their respective purviews, according to AP. Others disagree. The California Housing Consortium stressed that the application systems administered by the treasurer’s office already function extremely well, said the report.
Past legislation has already mandated the creation of a working group to propose a consolidated application. Findings are due July 1, 2026, the same day the current BCSH is set to officially dissolve.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
