Blistering Audit Roasts California Leaders Over Housing Crisis

SACRAMENTO, Calif. (CN) — Faced with unrelenting homelessness and cost-of-living problems in a state where the average home costs nearly $600,000, California is clearly failing in its fight to cure a much-ballyhooed housing crisis.

Along with the highest percentage of overcrowded rental homes, the Golden State is the king of the overburdened renter, as an estimated 1.6 million spend over half of their income on housing costs. The damning statistics are reinforced by the fact California — which makes up 12% of the U.S. population — owns 27% of the nation’s homeless population.

After years of broken promises and billions squandered, the state auditor on Tuesday ripped the state for navigating through the escalating crisis without a viable blueprint. 

“The state does not currently have a sound, well‑coordinated strategy or plan for how to most effectively use its financial resources to support affordable housing,” State Auditor Elaine Howle said bluntly. “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.”

Though the state has had an insufficient affordable housing supply for decades, Howle says California’s plan is still rickety and in need of a renovation despite politicians’ recent promises.

In her latest update to the Legislature, Howle blamed a lack of coordination between the state agencies tasked with managing and doling out affordable housing funds, as well as a litany of red tape for routinely slowing or sabotaging projects. 

According to Howle, “the absence” of a clear plan allowed one state agency to waste $2.7 billion in bond money that could have gone toward affordable housing.

The audit details a jarring administrative failure within the Debt Limit Committee, which along with three other agencies issues loans, tax credits and bonds to developers. Howle uncovered the agency let $2.7 billion in tax-exempt federal bond revenue simply expire between 2015-17.

As a result, the state missed out on the chance to jumpstart thousands of new affordable units as well as an additional $1 billion in tax credits for developers. Even worse, the committee kept the blunder out of public view and still hasn’t provided an adequate explanation, Howle found.

“Despite the magnitude of this mismanagement, the Debt Limit Committee did not disclose the $2.7 billion loss in its public meeting minutes and corresponding documents, and during our audit, committee staff struggled to identify and explain the extent and cause of the loss,” the audit states.

Experts have pegged California’s housing shortage between 1-3.5 million units, a gap unlikely to be filled in the near future considering the most homes ever built in a single year was 322,000 in 1963.

Nonetheless, Governor Gavin Newsom said on the campaign trail he would strive to get 3.5 million units built by 2025.

“I realize building 3.5 million new housing units is an audacious goal — but it’s achievable,” Newsom wrote in a 2017 column.

But over the last two years, efforts to relax zoning laws and spur high-density housing have failed in the Democratic-controlled Legislature, despite Newsom’s call for a “historic housing production bill.” Furthermore, housing production dropped 7% in 2019 as the state issued just 110,000 housing permits.

Notwithstanding Newsom and the Legislature’s recent inability to pass housing reforms, a bevy of barriers at the local level are also prohibiting developers.

Howle points to existing city and county caps on the number of units developers can build and lengthy approval processes as obvious production hurdles. In addition, the state isn’t doing enough to crack down on local jurisdictions that shirk regulations or intentionally slow projects.

“The state needs a timely enforcement mechanism — such as an appeals process developers can use — for situations when local jurisdictions fail to approve eligible affordable housing projects. Without substantial changes to address these issues, the state will continue to face a patchwork of local housing efforts that limit Californians' access to affordable homes,” the audit continues. 

To address the “patchwork” of issues, Howle encourages the Legislature to force the Department of Housing and Community Development to issue an annual report that identifies how much is available for new affordable housing, how many units could be produced and where in the state the money would be best spent. She also calls for the creation of a workgroup focused on awarding funding to multifamily housing projects and the elimination of the Debt Limit Committee.

In response to the audit, the housing department said it “stands ready” to work with the Legislature and that it concurs with Howle’s recommendations.

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