Administration outlines plan to split Business, Consumer Services and Housing into housing and consumer protection agencies

Undersecretary Melinda Grant of the Business, Consumer Services and Housing agency told the California State Senate subcommittee that the administration plans to divide the current agency into two separate entities: a California Housing and Homelessness Agency and a California Consumer Protection Agency.

Grant said the reorganization would be submitted to the Little Hoover Commission and then transmitted to the Legislature for a 60‑day review, and that the proposal aims to improve operational efficiency, maintain continuity of services and exercise fiscal prudence.

The proposal would move departments and programs now housed in BCSH into two specialized agencies. The consumer protection agency, as described by Pedro Galbao, would include the Department of Alcoholic Beverage Control and Appeals Board, the Department of Cannabis Control and Appeals Panel, the California Horse Racing Board, the Department of Consumer Affairs, the Department of Financial Protection and Innovation, and the Department of Real Estate. Galbao said the consumer protection agency would “enhance consumer efficiency to respond to rapidly evolving issues and industries and strengthen oversight.”

Grant and Galbao described the new housing and homelessness agency as focused on “streamlining funding and compliance” and on accelerating the state’s housing goals; in the presentation they cited a target of “2,500,000 new homes by 02/1930.” Galbao said the agency would concentrate state affordable housing funding into a single application and award process and would align compliance rules across programs to reduce time and cost for developers. The speakers referenced AB434, AB519 and AB2006 as prior work that the new agency would build on.

Subcommittee members, LAO staff and public commenters urged more detail. Heather Gonzales of the Legislative Analyst’s Office (LAO) outlined the Little Hoover process and the parallel 60‑day legislative review: the Little Hoover Commission will hold a hearing, produce a nonbinding report, and the Legislature reviews the plan through policy committees and an up-or-down floor vote. Gonzales also cautioned that the administration could still pursue budget change proposals related to the reorganization during May revise and recommended the Legislature avoid making related budget decisions until it completes its review.

Senator Smallwood Cuevas pressed specifically on the placement of the Department of Civil Rights inside the proposed housing agency. She described an existing backlog of civil‑rights complaints and said she feared civil‑rights enforcement beyond housing (for example, employment discrimination) could be overlooked if the department’s leadership and resources were not clearly preserved. Grant replied that the administration intends to preserve the department’s connections across consumer protection, employment and housing, and said the reorganization will maintain and, where appropriate, strengthen interagency linkages through steering committees and working groups. Pedro Galbao added that fair‑housing functions are typically embedded within HUD at the federal level, and the state plan preserved housing discrimination as a core tenant of the housing agency’s work.

A broad set of housing advocates testified in support of the concept. Natalie Spivak of Housing California said a dedicated state housing agency would provide a needed moment for structural change, and urged incorporation of tax credit and bond systems and a single state regulatory agreement to reduce duplicative compliance. Speakers from MidPen Housing, California Housing Partnership, All Home, SPUR and Enterprise Community Partners urged both consolidation of state funding processes and additional funding, warning that reorganization without more money would not bring projects online faster. Several public commenters asked that the new agency be empowered to coordinate homelessness programs currently spread across multiple departments, including the Department of Health Care Services and Department of Social Services.

Several senators asked for greater specificity about how the reorganization would lead to cost reductions and regulatory simplification. Committee members requested an accounting of what was assessed, why the administration chose this structure over alternatives (for example, moving programs to labor or workforce entities), and what formal lines of accountability would accompany the new secretaries. Senators also asked the administration to return with contingency plans on funding and specifics about whether the reorganization could be completed within the current administration.

The administration said it will submit a full plan to the Little Hoover Commission in the coming weeks and invited further questions during the Commission and legislative review.

Ending

The subcommittee did not vote on the reorganization plan at the hearing; the administration will submit a formal plan to the Little Hoover Commission. Committee members said they expect further briefings and budgetary detail before the Legislature acts.