California creates office dedicated to housing, homelessness issues

In a move to overhaul how California manages its housing and homelessness response, Gov. Gavin Newsom has proposed to divide the state’s Business, Consumer Services and Housing Agency into two distinct entities — the California Housing and Homelessness Agency (CHHA) and the Business and Consumer Services Agency.

With no veto coming from the California State Legislature before a July 4 deadline, the split is set to go into effect on July 1, 2026.

According to the proposal, the restructuring aims to “create a more integrated and effective administrative framework for addressing the state’s housing and homelessness challenges.”

It adds that CHHA is envisioned as a more specialized body that aligns California‘s housing programs with transportation, climate and health policies.

Areas of focus

In tandem with launching CHHA, Newsom’s administration is setting out three core housing policy principles:

• Lower costs. Remove bureaucratic red tape and reduce legal and permitting barriers to housing construction.
• Stronger accountability. Enforce compliance with state housing laws like the Housing Accountability Act and Permit Streamlining Act.
• Integrated planning. Align housing production with transit and climate strategies, particularly around infill and transit-oriented development.

Future proposals will also seek to give the state’s Department of Housing and Community Development‘s more flexibility in recycling funds, along with expanded streamlining of the California Environmental Quality Act to fast-track infill housing projects.

Approach to homelessness

Newsom’s budget includes $100 million in ongoing grants for local encampment resolution, but he warns that future funding will come with strings attached.

Local governments must demonstrate progress, comply with state planning laws and maintain transparent reporting. The proposal outlines the following enforcement strategies:

• Requiring local governments to have a compliant housing element and a local encampment policy to be eligible for funding.
• Allowing reallocation of funding from local governments that fail to meet program requirements to those that are acting with what’s deemed as necessary urgency.
• Prioritizing funding for “local governments with Pro-Housing Designations where appropriate.”

State officials said they will conduct in-depth reviews of local programs, host regional meetings to improve coordination, and step up enforcement through the Housing and Homelessness Accountability, Results and Partnership Unit.

Record-breaking production is not enough

Newsom’s administration notes clear progress in boosting homebuilding activity, which credit given to state investments and regulatory reforms.

The proposal points out that housing production increased from just over 70,000 homes annually before 2018 to more than 115,000 in 2023 — a jump of roughly 64%.

This growth stems from billions of dollars invested in affordable housing initiatives since 2019, as well as streamlined permitting processes and the repurposing of excess state-owned land for development.

Still, the homebuilding pace remains far short of what’s needed to tackle the crisis, according to the proposal.

According to a report from the Harvard Joint Center for Housing Studies, roughly half of California renters spend more than 30% of their income on rent — a common threshold for affordability.

In 2023, an estimated 396,494 people nationwide were experiencing sheltered homelessness — the highest number recorded since 2014, when the total reached 401,051, according to the U.S. Department of Housing and Urban Development (HUD).

Between 2021 and 2023, HUD added, the total number of people experiencing homelessness grew by 70,642, representing a 12% increase.

Newsom has supported calls to build 2.5 million homes during California’s current housing planning cycle — including at least 1 million homes affordable to lower-income households.

More specifics of the plan are expected to be submitted in the near future to California’s Little Hoover Commission.