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California State Auditor Logo COMMITMENT • INTEGRITY • LEADERSHIP

California's Housing Agencies
The State Must Overhaul Its Approach to Affordable Housing Development to Help Relieve Millions of Californians' Burdensome Housing Costs

Report Number: 2020-108

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Appendix A

Debt Limit Committee-Awarded Bond Resources

The Audit Committee directed the California State Auditor (State Auditor) to determine the amount of bond funds the Debt Limit Committee has allocated to affordable housing over the last five years. Table A presents the Debt Limit Committee's total bond resources awarded for multifamily affordable housing, single-family housing, and nonhousing projects from 2015 through 2019.

Table A

Debt Limit Committee-Awarded Bond Resources From 2015 Through 2019
(In Millions)

Multifamily Single-Family
Total Bond Awards HOUSING Nonhousing*
2015 $2,861 $1,711 $73
2016 4,821 1,335 220
2017 3,350 322 644
2018 4,067 286 185
2019 4,593 348 219

Source: 2015 to 2019 Debt Limit Committee Estimated Public Benefits summaries.

* Nonhousing includes bond resources that support other purposes such as recycling facilities, landfills, and wastewater treatment facilities.


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Appendix B

Tax Committee Distribution of Tax Credits Awarded

The Audit Committee directed the State Auditor to determine the geographic distribution of tax credits awarded by the Tax Committee for affordable housing in the last five years. Table B presents the Tax Committee's tax credit awards—including federal and state tax credits—and units supported by those awards by county from 2015 through 2019.

Table B

Tax Committee-Awarded Tax Credits by County From 2015 Through 2019

County Household Population Tax Committee Supported Lower- Income Units Tax Committee Tax Credits in Dollars—Federal Tax Committee Tax Credits in Dollars—State Tax Committee Tax Credits in Dollars—Total Units Per 1,000 Household Population
Alameda 1,624,962 5,723 $113,385,054 $12,495,728 $125,880,782 3.5
Alpine 1,125 24 558,093 1,717,620 2,275,713 21.3
Amador 33,458 0 0 0 0 0.0
Butte 216,551 111 1,409,956 3,652,957 5,062,913 0.5
Calaveras 44,578 0 0 0 0 0.0
Colusa 21,739 97 2,644,709 1,983,518 4,628,227 4.5
Contra Costa 1,140,146 4,683 54,921,166 1,739,142 56,660,308 4.1
Del Norte 24,143 20 1,033,111 0 1,033,111 0.8
El Dorado 188,313 216 1,237,523 0 1,237,523 1.1
Fresno 997,567 3,187 39,410,114 47,831,024 87,241,138 3.2
Glenn 28,368 23 403,107 0 403,107 0.8
Humboldt 128,469 279 7,448,114 0 7,448,114 2.2
Imperial 180,208 812 10,394,856 12,593,638 22,988,494 4.5
Inyo 18,168 0 0 0 0 0.0
Kern 875,991 1,157 11,185,641 9,346,007 20,531,648 1.3
Kings 136,791 221 1,573,507 1,363,863 2,937,370 1.6
Lake 63,136 123 4,577,684 1,119,889 5,697,573 1.9
Lassen 21,577 53 216,302 0 216,302 2.5
Los Angeles 10,000,528 20,096 317,446,662 173,078,869 490,525,531 2.0
Madera 150,812 146 1,475,740 0 1,475,740 1.0
Marin 253,957 221 4,693,114 0 4,693,114 0.9
Mariposa 17,350 23 494,810 0 494,810 1.3
Mendocino 86,424 308 8,306,291 744,016 9,050,307 3.6
Merced 273,643 235 2,331,268 5,280,611 7,611,879 0.9
Modoc 9,287 0 0 0 0 0.0
Mono 13,181 0 0 0 0 0.0
Monterey 420,834 1,648 $20,934,277 $18,384,783 $39,319,060 3.9
Napa 135,109 635 9,779,758 0 9,779,758 4.7
Nevada 96,625 339 6,239,885 0 6,239,885 3.5
Orange 3,141,552 6,400 87,303,983 4,246,537 91,550,520 2.0
Placer 391,992 972 11,056,381 14,681,643 25,738,024 2.5
Plumas 17,945 94 1,272,795 2,085,783 3,358,578 5.2
Riverside 2,389,015 3,449 34,127,941 13,358,940 47,486,881 1.4
Sacramento 1,518,290 3,538 35,503,366 3,229,352 38,732,718 2.3
San Benito 61,077 238 4,140,466 10,219,740 14,360,206 3.9
San Bernardino 2,131,951 2,549 31,920,394 4,959,964 36,880,358 1.2
San Diego 3,230,523 9,826 128,299,978 18,688,621 146,988,599 3.0
San Francisco 865,218 8,505 203,958,957 2,077,872 206,036,829 9.8
San Joaquin 749,729 1,604 18,765,352 10,564,116 29,329,468 2.1
San Luis Obispo 262,169 897 15,282,547 24,617,853 39,900,400 3.4
San Mateo 764,823 1,361 28,926,679 6,141,804 35,068,483 1.8
Santa Barbara 430,553 1,256 18,012,458 3,912,219 21,924,677 2.9
Santa Clara 1,924,619 6,487 105,793,709 29,522,502 135,316,211 3.4
Santa Cruz 257,838 253 7,007,703 0 7,007,703 1.0
Shasta 175,002 397 5,381,554 0 5,381,554 2.3
Sierra 3,177 49 816,128 0 816,128 15.4
Siskiyou 43,988 29 874,302 3,409,157 4,283,459 0.7
Solano 427,370 1,052 9,345,077 0 9,345,077 2.5
Sonoma 486,798 1,386 22,474,990 7,934,925 30,409,915 2.8
Stanislaus 547,377 431 8,346,014 5,361,257 13,707,271 0.8
Sutter 102,154 215 3,706,376 9,578,815 13,285,191 2.1
Tehama 63,789 0 0 0 0 0.0
Trinity 13,246 0 0 0 0 0.0
Tulare 471,923 678 9,598,156 11,100,217 20,698,373 1.4
Tuolumne 51,044 96 1,574,513 0 1,574,513 1.9
Ventura 834,844 1,995 25,034,264 0 25,034,264 2.4
Yolo 207,693 769 9,715,635 15,771,525 25,487,160 3.7
Yuba 76,223 90 1,275,510 2,506,823 3,782,333 1.2
Totals 38,844,962 94,996 $1,451,615,970 $495,301,330 $1,946,917,300 2.4

Source: Tax Committee tax credit award data from 2015 through 2019 and 2019 household population data from the Department of Finance.


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Appendix C

Scope and Methodology

The Audit Committee directed the State Auditor to conduct an audit of the Tax Committee and the Debt Limit Committee to assess their efforts to provide tax credits and financing for affordable housing projects throughout California. Table C below lists the objectives that the Audit Committee approved and the methods we used to address them.

Table C

Audit Objectives and the Methods Used to Address Them

AUDIT OBJECTIVE METHOD
1 Review and evaluate the laws, rules, and regulations significant to the audit objectives. Reviewed and evaluated relevant federal and state laws, rules, regulations, and other relevant information related to affordable housing development.
2 Identify and evaluate the following:
  1. The Tax Committee's and Debt Limit Committee's efforts to fulfill their missions related to increasing the supply of affordable housing for low-income Californians.
  2. Any challenges they face in fulfilling their missions, leveraging local and private investments, and ensuring that the State serves its most vulnerable populations, such as people experiencing homelessness.
  3. Any opportunities for the Legislature to assist the Tax Committee and the Debt Limit Committee in fulfilling their missions.
  • Analyzed the missions, responsibilities, and efforts of the State's four housing agencies—the Tax Committee, the Debt Limit Committee, HCD, and CalHFA—to increase the supply of affordable housing.
  • Using information from HCD and other housing experts, quantified the State's current and future needs for affordable housing units.
  • Obtained data from the Tax Committee and Debt Limit Committee and determined the amount of financial resources each awarded and the number of affordable housing units those funds supported over the last five years (2015 to 2019).
  • Interviewed key staff and reviewed funding processes from the four housing agencies to identify challenges with fulfilling their missions and leveraging local and private investments.
  • Evaluated the State's plan for ensuring that the State is serving its most vulnerable populations, such as people experiencing homelessness, seniors, individuals with disabilities, and farmworkers.
  • Identified recommendations for the Legislature to assist state agencies in fulfilling their missions.
3 Review the Tax Committee's and the Debt Limit Committee's management and operation practices, management structure, and internal controls to ensure that they are operating effectively and efficiently.
  • Interviewed relevant staff at the Tax Committee and the Debt Limit Committee.
  • Evaluated the management structure and practices of each committee by reviewing their organizational charts, regulations, regulation-setting processes, and other documents.
  • Reviewed each committee's internal controls for its processes to award tax credits and bond resources and identified any inefficiencies.
4 Analyze the transparency of the Tax Committee's and Debt Limit Committee's processes and governance, such as whether the rules and processes are sufficiently clear for developers, and whether topics discussed at meetings are properly placed on the agenda.
  • Determined whether the committees' processes and governance were transparent by reviewing the committees' public meeting agendas and minutes from 2015 through 2020. We found that topics discussed at meetings were generally present on the agenda.
  • Assessed the clarity of the committees' information for developers by interviewing a selection of 10 developers and reviewing state agencies' processes.
5 Determine and analyze the geographical distribution of funds awarded by the Tax Committee for affordable housing in the last five years, including the following:
  1. Where additional affordable housing is needed most.
  2. Whether rural and infill projects are adequately represented.
  3. Whether farmworker projects are adequately represented.
  • Obtained data from the Tax Committee for all active projects to which it awarded funds from 1987 through October 2019 and determined the number of housing units that received funding in each local jurisdiction.
  • Analyzed HCD's housing needs and building permit data for each local jurisdiction to determine the extent to which local jurisdictions were meeting housing needs.
  • Using data from the Tax Committee, the Department of Finance, and the U.S. Census Bureau, created a map that displays each local jurisdiction's Tax Committee-funded units per 1,000 population and indicators of housing needs.
  • Performed additional analysis of Tax Committee awards at the county level from 2015 through 2019 to determine whether it distributed funds equitably, such as to those areas of high need.
  •  Evaluated HCD's process for overseeing local jurisdictions' housing development by reviewing state law and HCD documents and by interviewing HCD staff.
  • Selected eight cities—based on information such as their locations, demographics, housing needs, and housing development—and analyzed publicly available documents, such as their municipal codes and housing elements (local housing plans) to determine potential causes for their different levels of affordable housing development.
  • Reviewed HCD's 2018 state housing plan to determine whether housing for people experiencing homelessness, seniors, individuals with disabilities, and farmworkers were adequately represented.
  • Identified that infill projects are supported by HCD's infill infrastructure grant program, which recently made nearly $280 million in total awards for fiscal year 2019–20; amounts were awarded for both large and small jurisdictions. The State had invested lower amounts in previous years—HCD awarded $42 million in fiscal year 2014–15 and $50 million in fiscal year 2017–18, according to HCD's award lists.
6 Review the Tax Committee's and Debt Limit Committee's competitive and noncompetitive processes for deciding which projects to fund.
  • Interviewed key staff at the Tax Committee and Debt Limit Committee and reviewed regulations and other documents to obtain an overview of the committees' processes for awarding competitive and noncompetitive funding.
  • Selected 14 applications for tax credits and bond resources and evaluated the two committees' processes for making competitive and noncompetitive awards.
  • Compared the Tax Committee's and Debt Limit Committee's program requirements and deadlines to other housing agencies.
7 Review the Tax Committee's efforts to recruit applicants that would provide affordable housing throughout the entire State, including the San Joaquin Valley and rural areas. Interviewed Tax Committee staff and reviewed conference and workshop documentation to evaluate Tax Committee developer recruitment efforts between 2015 and 2019.
8 Determine the amount of bond funds the Debt Limit Committee has allocated to affordable housing over the last five years. Evaluate the Debt Limit Committee's methodology for allocating tax-exempt debt to housing and other purposes.
  • Using the Debt Limit Committee's awards information, determined the number of bond resources it allocated for affordable housing and other purposes from 2015 to 2019.
  • Evaluated the Debt Limit Committee's methodology for allocating bond resources to housing and other purposes to determine whether the allocations aligned with past use, demand, and legislative priorities.
  • Interviewed Debt Limit Committee staff and reviewed existing data and documentation to determine—to the extent possible—the amount of bond resources that expired from 2015 to 2019 and the reasons they expired.
9 Review the Tax Committee's process for ensuring that developers have met all program requirements and continue the affordability and habitability of their developments into the future.
  • Established an overview of the Tax Committee's monitoring process by interviewing staff and by reviewing its Compliance Monitoring Manual and other documentation.
  • Using lists of projects the Tax Committee monitored between 2015 and 2019—which we determined were sufficiently reliable for our purposes—selected 10 projects and evaluated whether the Tax Committee followed its monitoring process to ensure that developers have met all program requirements and that projects remain affordable and habitable.
  • Identified 10 projects that the Tax Committee reported to the IRS for noncompliance both in 2016 and 2019—and obtained all available inspections for those projects—to evaluate the Tax Committee's disciplinary actions against projects that show patterns of noncompliance.
10 Analyze the Debt Limit Committee's and Tax Committee's efforts to work together to prioritize projects to ensure that there is enough private equity bond funding for projects approved by the Tax Committee. Further, analyze the Debt Limit Committee and Tax Committee housing priorities, how they may conflict, and how this conflict is resolved. Interviewed staff at the Tax Committee and the Debt Limit Committee and reviewed documentation of their processes—including regulations that establish housing priorities—to identify conflicts.
11 Identify the sources and amount of funds developers typically used on a selection of Tax Committee projects, including ways to incentivize non-state resources.
  • Using the Tax Committee and Debt Limit Committee applications selected for Objective 6, identified the sources and amounts of funds used for those projects.
  • Reviewed housing studies and other reports to identify types of sources developers typically used for financing affordable housing projects.
  • Reviewed housing studies and local organizations' practices, such as incentives to increase housing development, to identify strategies for leveraging non‑state resources.
12 Identify any best practices that encourage the creation of additional affordable housing throughout the State, including balancing the needs of high-cost and rural areas.
  • Interviewed a selection of stakeholders—including a housing advocate, building association, and local government association—and reviewed an existing survey of local governments to understand statewide affordable housing problems and best practices.
  • Reviewed existing affordable housing research from governmental and academic sources to compile a list of the main barriers to and solutions for increasing affordable housing development.
  • Reviewed recent housing-related legislation to identify remaining gaps in state law that, if amended, could provide for more affordable housing development.
13 Review and assess any other issues that are significant to the audit. We did not identify any additional issues that are significant to the audit.

Source: Analysis of the Audit Committee's audit request number 2020-108, as well as information and documentation identified in the column titled Method.

Assessment of Data Reliability

The U.S. Government Accountability Office, whose standards we are statutorily obligated to follow, requires us to assess the sufficiency and appropriateness of computer-processed information we use to support our findings, conclusions, or recommendations. In performing this audit, we obtained electronic data from the Tax Committee and Debt Limit Committee related to awarded tax credits and bond allocations. To evaluate the Tax Committee's data, we reviewed existing information about the data; interviewed staff knowledgeable about the data; and performed electronic, completeness, and accuracy testing. We found these data to be sufficiently reliable for our purposes. Further, the State lacks a single source of data to show all affordable housing units created with state financial resources. Because the four housing agencies indicated that most affordable housing projects receive tax credits and our analysis verified that the Tax Committee's data contained many of the projects from the other housing agencies, we determined that the Tax Committee's data were reasonable to represent state-supported housing. To evaluate the Debt Limit Committee's data, we reviewed existing information about the data, interviewed staff knowledgeable about the data, and performed electronic and completeness testing. We found them to be sufficiently reliable for our purposes.

Moreover, we obtained publicly available federal data related to cost burden, overcrowding, and vacancy rates to identify cities and counties with indications of affordable housing need. We performed general completeness testing of the data and found them to be sufficiently reliable for our purposes. We also obtained a list of HCD's enforcement actions and performed electronic testing and interviewed key staff knowledgeable about the data. We found these data to be sufficiently reliable for our purposes.

Lastly, we obtained annual progress report data from HCD to help identify local jurisdictions that were not meeting their affordable housing goals. We performed limited testing of the data and found them to be of undetermined reliability because they are self‑reported data from local jurisdictions. Although this determination may affect the precision of the numbers we present, there is sufficient evidence in total to support our findings, conclusions, and recommendations.


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