“Don’t tell anyone, but I have no earthly idea what’s going on.” California Department of Housing and Community Development Director Gustavo Velasquez. Graphic courtesy of The Real Deal.

Last week CalMatters – which has become a prime go-to source for coverage of news, and especially politics, in California – published a story that can only be described as infuriating. Titled “California pledged $500 million to help tenants preserve affordable housing. They didn’t get a dime,” it’s about the a state initiative called the Foreclosure Intervention Housing Preservation Program (FIHPP).

The legislature created the FIHPP in 2021 to help low income and fixed income Californians avoid losing their homes. The concept was straightforward: Tenants whose landlords are considering selling their properties to new owners or developers could create housing land trusts, nonprofit corporations that existing laws allow to purchase the properties and maintain them as affordable housing in perpetuity. The trusts typically raise the money by applying for loans, meaning that while they preserve the property and homes, tenants are still on the hook for interest payments. That interest effectively acts as a rent increase, albeit a considerably smaller one than a new owner may impose. And paying a bit more per month is a sight better than losing one’s home altogether. The FIHPP would have provided funding assistance in the form of interest free grants, further lowering the barriers to preserving that badly needed stock of affordable housing. Lawmakers seeded the program with $500 million. That’s not a lot in terms of the overall need for affordable housing funding in California, but it was a start.

At least, it should have been.

According to the CalMatters story, the state was supposed to start distributing funds this year. Instead, three years after its creation the program had not delivered a penny. Adding insult to injury, in a cost-cutting move the legislature killed the program altogether in June, with Governor Gavin Newsom and lawmakers citing the state’s looming $68 billion budget deficit as justification. For the mathematically inclined, that means they addressed 0.007% of the deficit by screwing low income Californians. For the politically inclined, the deficit is a direct result of breathtaking shortsightedness on the part of the state’s political class. During the COVID pandemic, when “emergency” federal funding fell like rain, they spent money like poets on payday as if the temporary funding would last forever. Vulnerable Californians are being punished for the political class’s own incompetence. You just cannot make this stuff up.

What was supposed to be a “game changer” (how often do we hear that cliche?) in the housing affordability crisis instead has turned into yet another failure by lawmakers and, especially, state bureaucrats, to follow through on their promises and responsibilities. It’s the latest installment in the ongoing litany of failures that started with then-Governor Jerry Brown’s decision to disband the state’s community redevelopment agencies in 2011. It includes the Newsom administration’s failure to oversee the pandemic era Project Homekey program, their failure to meaningfully account for the $20 billion in taxpayer money they’ve thrown at the crisis since 2020, and their inability to deliver promised “tiny homes” for homeless people in the state.

In an emailed statement, Department of Housing and Community Development (HCD) spokeswoman Alicia Murillo said the quiet part out loud. She told CalMatters that the FIHPP failed because “the unprecedented nature of the housing preservation program created a steep learning curve for agency staff.” She said the program “was very different from any other program HCD manages, both in terms of the types of projects (small-scale acquisition/rehab vs. our usual larger-scale new construction) and in terms of the mechanism for fund disbursement (using external nonprofit lenders rather than disbursing funds ourselves).”

Translation: “The program failed because we didn’t know what we were doing and didn’t bother to learn.”

Imagine telling your boss that a major new multi-million dollar initiative for which you were responsible failed because, gosh darn it, you just couldn’t figure out how to make it work. You likely would not have your job much longer. Then again, you don’t work in government. The name of the game is failing upward.

As noted, this latest excuse comes on the heels of other instances of incompetence at the highest levels of the state’s housing and homelessness complexes. In April the State Auditor released a withering report detailing the state’s failure to track spending and outcomes in three of five major homelessness programs. The audit found that the administration could not account for more than $20 billion in spending over the last five years. In May, Democratic and Republican members of the state legislature grilled Newsom’s top homeless official, Meghan Marshall, who weakly defended the administration by saying their data administration system was undergoing “a transformation.” Lawmakers rightly told her that sounded like “an excuse.”

Most recently, two weeks ago Newsom vetoed a bipartisan bill that would have increased accountability over state homelessness spending. In his typical verbal bouillabaisse, on September 19 the Governor said, “We’re strengthening and we’re tightening up our efforts around the accountability frame.” Well, then.

In contrast to the failures, the Auditor’s report concluded that the Newsom championed, HCD managed Project Homekey program “appeared to have been cost-effective.” The Auditor may be interested in the investigative series I wrote along with Westside Current publisher Jamie Paige, exposing that more than 70% of Homekey rooms in the City and County of Los Angeles remain vacant years after purchase. Other outlets have reported on similar failures in other parts of the state, including in the city of San Jose as well as San Bernardino, Ventura, and Monterey counties. In June, the Los Angeles Times committed a rare act of journalism by exposing rampant corruption in the Homekey program involving an L.A. based developer called Shangri-La Properties.

The Brown-Newsom Era has been one of the most grim in state history. In that context, the failure of the FIHPP isn’t surprising. It’s sad, it’s infuriating, and it was entirely predictable. The only remaining question is, how many ways can this state’s political class come up with to fail? They’ve made every conceivable mistake, and now they’re coming up with new ones just in order to make them. Their arrogance is exceeded only by their incompetence.

Amid the political detritus, HCD stands out. The agency is responsible for administering and — more frequently — enforcing new state housing mandates. Through a process known as the Regional Housing Needs Allocation (RHNA) HCD determines how many new units of housing cities and counties must approve by 2029, 2030, or 2031, depending on regional schedules. The problem is, the agency’s numbers amount to delusional magical thinking. For example, the City of Los Angeles is required to approve 456,643 new units by 2029. At the City’s average household size of 2.8 people that’s enough new housing for nearly 1.3 million people — at a time when L.A. is actually losing population. More than two years ago, in March 2022, the State Auditor released a report that concluded “HCD does not ensure that its needs assessments are accurate and adequately supported.” Sound familiar?

Despite this and other independent analyses identifying serious problems with the agency’s math, it is plowing ahead. Cities that fail to meet their mandates at the midpoints of their seven year RHNA cycles face all manner of consequences from HCD, including fines, withholding of homeless funding, and a de facto stripping of their ability to control development in their own communities. Make no mistake: HCD is punishing cities by rewarding often unscrupulous developers and their deep-pocketed financial backers.

[UDATE 10/15/2024: For another deep dive into HCD’s and the political class’s myriad failures on housing and homeless, check out this recent piece in The Current by the inimitable Tim Campbell.]

As worthless as the current political class is, the responsibility ultimately is on us, the people of California. We are the ones who keep electing these clowns. Unless and until voters wake up, more failure is guaranteed. The good news is that the last few years have seen the people starting to wake up, and rise up. L.A. voters are about to kick the worst District Attorney in County history, George Gascon, to the curb. In San Francisco they politically defenestrated an equally egregious failure, D.A. Chesa Boudin. And California voters are primed to pass Proposition 36, which will make badly needed changes to the misguided-in-retrospect Prop. 47.

These are promising developments, but there is a long way to go. Kudos to CalMatters for bringing the FIHPP story to light. Hopefully more people will wake up, and demand real change at all levels.