May 10, 2024

Honorable Gavin Newsom 
Governor, State of California
1021 O Street, Suite 9000
Sacramento, CA 95814

Re: Restore Promised $152.5 Million to increase Affordable Homeownership Supply in the 2024-25 Budget – CalHome Program (New Construction)

It is with profound disappointment in your May Revision Budget Announcement that we write to you today. Habitat for Humanity California and our network of affiliates -serving 42 counties across the state - find your decision to maintain the reversion of $152.5 million from the CalHome program in 2024-25 deeply troubling.

CalHome, as the sole state funding source for ownership supply production, plays a vital role in addressing California's housing challenges. The budget revision not only slashes 100% of budgeted funding for CalHome but disproportionately targets owner-occupied, equity-building low-income housing compared to state rental housing and homelessness programs. Decimating support for ownership production is shortsighted and jeopardizes the proven success and progress achieved through CalHome - not only by Habitat for Humanity chapters statewide, but by other affordable ownership developers.

In 2022, the allocation of funding for the construction of homeownership units through CalHome marked a significant milestone in California's history. We are grateful for your previous commitments to funding this program, which has already had a tangible impact on our communities. The abrupt reversal of these commitments undermines the state's ambitious housing goals and weakens the opportunity for stability and prosperity for thousands of California families.

While acknowledging the complexity of California's budgetary constraints and the necessity for fiscal responsibility, it is our belief that the current budget decisions are short-sighted. The prioritization of immediate fiscal balance overlooks the long-term implications, particularly concerning Californians' ability to attain homeownership. Without proactive measures to address housing affordability, Californians face an increasingly daunting reality of being priced out of the ownership market, perpetuating socioeconomic disparities, and hindering the state's overall prosperity.

The ramifications of these cuts extend beyond budgetary concerns. By zeroing out CalHome, we risk exacerbating existing inequalities and perpetuating the cycle of housing unaffordability for vulnerable populations, most specifically for families of Color. The decision to divert funds away from affordable homeownership initiatives contradicts the state's stated objectives of promoting economic growth and racial justice. CalHome serves as a lifeline for first-time, lower-income (30-80% AMI) homebuyers, providing them with the opportunity to achieve homeownership and build intergenerational wealth. By cutting funding for CalHome, we not only hinder the progress towards closing the racial wealth gap but also undermine the long-term stability of our communities.

We urge you to reconsider the decision to zero out the CalHome program. Restoring this funding is not only a matter of fiscal responsibility but also a moral imperative. Investing in affordable homeownership is an investment of California’s most precious resource – its people.

Sincerely,

Debbie Arakel | Executive Director
Habitat for Humanity California

CC:
Joe Stephenshaw, Director, Department of Finance
Teresa Calvert, Program Budget Manager, Department of Finance
James Hacker, Deputy Cabinet Secretary
Jason Elliott, Deputy Chief of Staff