Governor Gavin Newsom’s May Revision to the 2021-22 California budget demonstrates the administration’s clear commitment to affordable housing and proposes bold, historic investments in housing and homelessness programs. This investment is made possible by a $75 billion budget surplus that provides the state with the opportunity to meaningfully respond to the immediate needs of Californians, while also putting our communities on the path for a more equitable recovery.

We urge Governor Newsom and the California Legislature to move forward with the May Revision and to also include several additional priorities that are essential to meet the comprehensive housing needs of our state. Following are the May Revision budget highlights and opportunities.

Financial Relief for Renters and Landlords

The May Revision builds on the resources made available in January to provide a combined $5.2 billion for rental assistance. These federal resources for rental assistance are critical for California households to stay stably housed, despite the impacts of the Covid-19 pandemic.

Informed by the lessons learned over the past several months and the modifications to the Emergency Rental Assistance Program guidelines from the U.S. Treasury, we believe there are clear modifications that can be made to ensure the state’s rent relief program reaches low-income tenants and their landlords, including providing 100 percent support to eligible landlords and tenants, lifting the caps on prospective rent, offering full relief of utility payments and ensuring that access barriers and delays do not result in an eviction.

The May Revision also includes $60 million to the Judicial Council for legal assistance and services. Given the precarity facing many tenants and the complexity of the current protections and relief, additional funding is likely necessary to meet the need.

Affordable Housing Acquisition, Preservation and Conversion

Building on the momentum of the last year, the Governor’s May Revision includes an additional $7 billion for Homekey -- $3.5 billion for the acquisition, conversion and operations of hotels, motels, and underutilized residential properties, and $3.5 billion for acquisition and renovation costs for board and care, residential care and care for elders and people with disabilities.

The Homekey conversions of hotels and motels are designed to provide much-needed housing for people experiencing or at risk of homelessness. For these properties to be sustainable, it is critical for the final budget to include funding for both acquisition costs and ongoing operations.

The May Revision also includes $300 million in one-time funding to preserve existing affordable housing developments to ensure their long-term sustainability and affordability as well as $30 million for upgrades and maintenance for farmworker housing.

Importance of CAPP illustration

In addition to these proposed investments, there is an opportunity to invest in the acquisition and preservation of private rental housing where most low-income Californians live today. We are calling on the Governor and the Legislature to include a $500 million investment in the Community Acquisition and Preservation Program (CAPP), which would provide the first state funding for acquisition and preservation – preventing displacement and housing insecurity, while also increasing the supply of affordable housing. 

This program builds on local proof of concept and lessons learned to provide an innovative financing program that meets the needs on the ground to acquire and preserve a variety of housing types, from single-family homes to large multi-family properties. This proposal is being championed by the Stable Homes Coalition, alongside a complementary investment in the proposed Foreclosure Intervention Housing Preservation Program which would provide funding specifically to acquire and stabilize one- to four-unit homes facing foreclosure.

Affordable Housing Production

The Governor’s Draft Budget in January and the May Revision includes significant funding to unlock the pipeline of affordable housing developments across the state, including $500 million for the Infill Infrastructure Grant Program, a $500 million expansion of the State Low Income Housing Tax credit and sustained investment in the Affordable Housing and Sustainable Communities Program (AHSC) estimated to be over $425 million in the next year.

The May Revision also included an additional $1.75 billion for shovel-ready developments and $420 million for the Transformative Climate Communities Program. It is essential that these new investments are paired with the necessary administrative and regulatory adjustments to allow for more efficient and equitable production of affordable housing.

Regional Innovation

The May Revision proposes a new $500 million grant program to provide regions with funding to pursue planning and programs that will advance integrated housing, transportation, and land use planning to reach our climate goals and reduce vehicle miles traveled.

We are also calling on the Governor and the Legislature to provide complementary resources to meet the regional housing affordability needs through an $18.5 million seed investment to the Bay Area Housing Finance Authority. This appropriation would fund five pilot programs and launch the regional housing infrastructure needed to address the regional housing crisis more efficiently and equitably.