Vacancies in this California government department are slowing Newsom’s housing agenda
Gov. Gavin Newsom’s ambitious plans to build houses and reduce homelessness in California depend on a state department that is understaffed, lacking permanent leaders and struggling to adjust to change, according to documents and interviews.
The Department of Housing and Community Development, which administers most of the state money for housing, has one of the highest vacancy rates among large state departments, with about 21 percent of its positions unfilled, according to figures provided by the department and the State Controller’s Office.
Voters in the last two years have approved at least $6 billion in new money for affordable housing in the state. That money, plus more in federal grants and additional state funding, has to pass through the funnel of the housing department, which had 170 vacancies and 672 employees this month, according to Deputy Director of Administration Russell Fong.
The director’s job is vacant, as is a deputy director position overseeing the grants and loans. Officials are serving in temporary roles at both jobs. In the offices processing the money, 84 jobs are unfilled, according to Fong.
“It’s a struggle,” Fong said. “If we don’t fill these positions, there will be big backlogs. We’ve got to ramp up quickly.”
The department has pulled some of the only available levers in state government to try to hire quickly, including hosting a rapid-hire job fair in Sacramento in November. But even as it hires workers, the department is adding new open positions to try to keep up with the housing-related responsibilities the state Legislature has assigned to it in recent years. Its operating budget and the amount of money it distributes have each increased by more than 70 percent in the last five years, Fong said.
The department’s struggle underscores the enormity of California’s homelessness crisis and the difficulties of mounting a response using the tools of a large bureaucracy.
“The agency is struggling to implement the housing laws we’ve passed in the last few years,” said state Sen. Scott Wiener, D-San Francisco. “They’re doing a great job considering the circumstances, but the circumstances aren’t acceptable.”
Money for housing
An estimated 150,000 homeless people live in California, the most in any state. Last week, Newsom called the prevalence of homelessness in the state a “disgrace,” dedicating his entire State of the State speech to the issue.
Newsom campaigned before his November 2018 election on a pledge to build 3.5 million new housing units in seven years, a rate of 500,000 new units per year.
In his first 10 months in office, he approved $1.75 billion in new spending on housing programs and helped pass a statewide rent cap and other housing measures, yet production lags behind his ambitious goal. Last year, the number of home building permits actually dropped nearly 6 percent to 111,000.
California voters in 2018 approved Proposition 1, a $4 billion ballot initiative for low-income housing. More than half the money is designated for veterans and for families who make 60 percent or less of the median income in the areas where they live.
On the same ballot, voters approved Proposition 2, which authorized the state to take out $2 billion in bonds for homelessness prevention.
The housing department disburses the money to developers, cities and counties and nonprofits.
Staffers are “overwhelmed,” and have been forced to de-prioritize some programs, said Ben Metcalf, the last director of the department, who left in September.
“There are not enough people there to do all the work that has to happen, so HCD is very much in a triage mode,” Metcalf said. “There are some sacrifices that are being made … if there was more staff capacity, you could move more of that money out more quickly.”
In October, the department announced it would delay making funding available for six affordable housing funding programs because of its increased workload due to new laws, including the voter-enacted measures. The delayed programs included Proposition 1 funds for housing near transit and farmworker housing.
In its October announcement, the department said it will get money to projects more quickly once it hires more staff and re-engineers its processes. Funding for three of the six programs has since been made available, and all programs are on track to meet the targets outlined in the new schedule, according to the department.
Jennifer Seeger, the department’s acting deputy director of financial assistance, said the delays gave the department time to make their process for reviewing applications more efficient. The new streamlined process should shorten the time between receiving applications and getting money out the door, she said.
Since January 2018, HCD has awarded about $2.2 billion in state and federal housing and community development funds, according to numbers provided by the department.
But the department’s responsibilities are adding up quickly, and more vacancies are coming.
Newsom’s budget plan for the year ahead calls for 33 new positions for the department, which, until filled, will ratchet up the vacancy rate.
State hiring challenges
The hiring problems at the housing department are familiar: The state pays less than its competitors for many jobs, and it faces the added challenge of convincing candidates to move to Sacramento.
Assemblyman David Chiu, D-San Francisco, said state recruitment in California is a “fundamental challenge.”
“A lot of folks they’re trying to recruit are people doing similar jobs in high-cost parts of the state,” Chiu said. “It’s not easy to recruit someone to move to Sacramento for what is likely a pay cut.”
Officials and experts say the lack of a permanent director is contributing to the hiring delays.
“It is really unfortunate, particularly given how much of a priority the governor has placed on housing and homelessness,” Metcalf said. “It’s just too long for the position to be vacant given how important the work is.”
In January, Newsom promoted one of his top aides, Jason Elliott, to be his senior counselor on housing and homelessness. He also appointed former University Health Systems Foundation President Lourdes Castro Ramirez secretary of the Business, Consumer Services and Housing Agency, which oversees Housing and Community Development.
“Since taking office, the Newsom Administration has been urgently focused on addressing California’s housing and homelessness crisis,” Newsom spokesman Jesse Melgar said in a statement. “He intends to appoint a director of Housing and Community Development in the near future and that appointee will be empowered to build their team to best execute the Governor’s housing agenda.”
Some advocates still say he needs to do more to elevate housing issues within his administration because of the magnitude of the state’s housing crisis. Wiener argues it’s “long past due” for the housing department director to report directly to Newsom.
“Housing is the top issue in the state, along with homelessness, and we need a cabinet-level housing agency with a secretary of housing that reports directly to the governor,” Wiener said.
Despite the challenges, the department has been making progress on the vacancies as it grows, Fong said.
At the end of 2018, the department had 571 workers and 186 vacancies, according to State Controller’s Office data.
By the end of 2019, it had 640 workers and 205 vacancies, according to the data. The department reduced the 205 vacancies to 170 by February, Fong said.
At a November job fair, 500 people applied for 27 positions. The department interviewed 100 and made 20 offers the same day. The fairs are extremely rare in California state government, where the hiring process often takes months.
Fong said the department is planning more of the fairs, and it is trying to fill key leadership positions so the leaders can hire more employees.
The department is recruiting on LinkedIn and putting the word out in counties, cities and among the mortgage divisions of banks that it is hiring, Fong said.
“It’s hard for a department to achieve its goals if the vacancy rate is high; we definitely get that,” Fong said. “But we should be able to meet our goals if we have the right people and the right hires.”
This story was originally published February 26, 2020 at 11:05 AM.