Little Hoover Commission to recommend Legislature approve governor's housing reorganization with companion legislation

The Little Hoover Commission on Tuesday signaled it will recommend that the Legislature approve Gov. Gavin Newsom's plan to split the Business, Consumer Services and Housing Agency into a California Housing and Homelessness Agency and a separate business and consumer services agency, while urging companion legislation to sharpen accountability, metrics and implementation details.

Chair Pedro Nava opened the meeting by saying the commission is required by law to study the governor's reorganization proposal and issue a report; staff will return a draft for the commission's review before the statutory deadline on June 4. Executive Director Ethan Rarick summarized the commission's guidance to staff at the end of the meeting: approve the plan as submitted but include companion measures addressing which homelessness programs should move, reporting requirements and permitting timelines, application streamlining, and several consumer-protection reforms.

Commissioners repeatedly praised the plan's potential to reduce fragmentation and focus attention on housing and homelessness. Commissioner David Beyer said the change "offers the opportunity to focus more acutely on housing and homelessness," while Commissioner Gail Miller said staffing for the initial transition is expected to be handled through existing vacancies and that any new requests would pass through the normal budget process.

Several members cautioned that organizational change alone will not guarantee improved outcomes. Senator Roger Nilo, a legislative member of the commission, called many of the problems "policy based and executional" rather than purely structural and warned that a reorganization without accompanying policy and operational changes might not reduce homelessness. Commissioner Dion Aronner and others urged the report to spell out measurable goals and clear lines of accountability.

The commission asked staff to draft companion legislation and report language that would: scope a study of transferring additional homelessness programs into the new agency; require reporting on specified metrics (including permitting timelines and program outcomes); pursue application consolidation or a "one-stop" approach for housing finance programs while cautioning that homelessness programs are more varied and could produce overly complex applications; require an MOU between key finance entities (TCAC and CDLAC) rather than immediate consolidation; and propose consumer-protection reforms such as separating enforcement from licensing boards, independent fee review (without a proposed general-fund backstop), revised board composition rules, and better complaint transparency.

Executive Director Ethan Rarick told commissioners staff would produce the draft report for consideration at the commission's next meeting on May 29 so the commission can meet its June 4 deadline to provide recommendations to the Legislature and the governor.