After years of rising rents and stagnating home prices, along with an enduring homeless crisis affecting every part of California, the state is finally establishing a dedicated agency to address housing issues.

It’s a valid question, really—what took so long?

This year, Governor Gavin Newsom proposed splitting the existing business and consumer services agency into two separate entities, one focusing solely on housing and homelessness. Initially, Congress stalled this plan until July 4th; some Republican lawmakers even attempted to intervene. Now, efforts have begun to form California’s first housing agency.

Advocates for this restructuring argue that the move has been a long time coming. Studies reveal that housing costs and homelessness consistently rank high among Californians’ concerns. Rapearl, the executive director of the California Housing Consortium, which champions affordable housing, remarked that establishing a new cabinet-level advisor to the governor would help elevate the housing agenda.

“Having a Cabinet-level secretary who collaborates with other secretaries will elevate housing issues… this brings it to a more prominent level,” he said.

Most experts consulted for this article echoed Pearl’s perspective, labeling the reorganization as merely a “first step” toward creating a more organized and efficient affordable housing fundraising program in California.

“Just shuffling people around and offering new business cards isn’t enough to change the system,” he noted.

A spokesperson for the governor pointed out that the new agency is part of Newsom’s broader strategy to tackle one of California’s most pressing issues. Since 2018, he has ramped up pressure for local governments to develop more housing and to clear encampments where inconsistent policies have prevailed.

“This administration has made it a point to incorporate homelessness into daily discussions, scrutinizing it and finding ways to effectively tackle it. These structural changes can have lasting effects,” said spokesman Tara Gallegos.

Within the state’s seven cabinet-level departments, the business and consumer services and housing agency has often appeared as the “catch-all” wing, encompassing a wide variety of topics including affordable housing, cannabis regulation, and even horse racing oversight.

“We referred to it as the ‘Misfit Toy Island’,” Claudia Cappio, former director of California’s housing finance entities, recalled. “Can you imagine the meetings discussing all these different areas? I learned quite a bit about horse racing in the process.”

Beyond simply organizing housing and homelessness under distinct sections, the main appeal of the reorganization is its potential to simplify the complex financing structure for affordable housing in the state.

Currently, if a developer seeks funding for affordable housing, they might find themselves navigating through various organizations and separate applications for loans, grants, tax incentives, and bonds for each aspect of their project. This doesn’t include specific programs geared towards veterans, transit-oriented developments, or short-term housing for the homeless—all of which are scattered throughout different state departments.

To complicate things more, the tax credit and bond programs that are crucial for financing affordable housing aren’t under the governor’s purview; they’re managed by independently elected officials. This is somewhat unusual, as many states have centralized housing finance institutions that typically oversee such funding.

Some analysts, like Sarah Kalinsky from the Terner Center for Housing Innovation, have noted that California’s fragmented system contributes to higher construction costs. A recent analysis found that additional funding requirements could delay projects by an average of four months, costing an extra $20,460 per unit.

Building affordable homes in California is already notoriously expensive. In fact, public funding projects here can cost over two and a half times more than similar projects in Texas or Colorado.

Will this new housing agency be the solution? Opinions are mixed.

From various perspectives on housing affordability, the “reorganization alone” doesn’t exactly rank high on the essential changes needed, suggested Napa Democrat Sen. Christopher Cabaldon. He remarked on the frequency of such executive reorganizations in California governance over the years.

“We tend to dance around these issues with great aspirations,” Cabaldon commented. “They promise focused attention and streamlined efforts, but how is that supposed to happen?”

As proposed, the new housing agency will merge current housing-related entities with the newly formed Affordable Housing Finance Board, while funding sources managed by the treasurer will stay unchanged due to constitutional limitations that prevent the governor from redistributing those functions.

This limitation raises concerns, according to the Little Hoover Committee, an independent oversight body that reviews the governor’s plans. Among its suggestions was for the governor and treasurer to collaborate on creating a unified application process for all affordable housing financial programs.

Neither the governor’s office nor the state treasurer has provided clarity on how they plan to address that goal.

A unified application system for California’s affordable housing financing has been sought by developers and bureaucrats since the mid-1990s. While the reorganization doesn’t directly fulfill that request, it may enable better coordination between the respective departments in the future, according to Matt Schwartz, president of the California Housing Partnership, which advocates for affordable housing.

“It will take some diplomatic efforts,” Schwartz explained, noting that there have been pushes for a more cohesive process. “This is a long-term goal that many of us are aiming to achieve.”

Some advocates for affordable housing are urging caution about integrating various bureaucracies too quickly.

The California Housing Consortium pointed out in recent communications to influential Democrats that the current application system managed by the treasurer is “working effectively.” Pearl, the consortium’s director, suggested that instead of merging bureaucracies, they should simply establish a dedicated agency.

He and the Consortium also highlighted that existing laws already call for working groups to recommend integrated application processes, with findings expected by July 1, 2026, coinciding with the official dissolution of the current agency.

That timeline means a month before statewide elections, presenting voters with the chance to weigh in on the direction of California’s affordable housing policies.