Gov. Gavin Newsom’s proposal to create a new Housing and Homelessness Agency in California government should be approved, though with additional steps by the Legislature to make the plan more effective, the state’s Little Hoover Commission said in a report released Monday.

“The governor plainly believes that structural reforms can increase the state’s role in facilitating the construction of more — and more affordable — housing. We agree,” the report said. “We believe that the changes envisioned in this plan can, if properly implemented, make concrete improvements in the lives of Californians, and in the services they receive from state government.”

Newsom proposed in April that the existing Business, Consumer Services and Housing Agency be split in two, creating a new Housing and Homelessness Agency and a new Business and Consumer Services Agency.

As part of the state’s governmental reorganization process, the plan was submitted to the commission, which is required by law to issue a report to the governor and Legislature assessing the plan and making a recommendation regarding its fate.

The Legislature has until July 4 to consider the governor’s proposal, and either house may veto it by a simple majority vote. Absent legislative rejection, the plan will take effect on July 5.

The commission’s report recommends the Legislature allow the plan to go into effect, but also that it pursue five additional steps that would help ensure the reorganization achieves its stated goals:

• Consider whether any additional homelessness programs should be overseen by the new California Housing and Homelessness Agency.
  • Streamline and align program, reporting, and application requirements across the state’s homeless programs.
  • Require progress reports from the new agencies.
  • Establish a formal mechanism for stakeholder feedback on implementation.
  • Enact a Memorandum of Understanding between the Governor and Treasurer to better coordinate across the state’s affordable housing finance programs.

The report also notes that the Administration should move forward immediately with one of its key goals — creating a “one-stop shop” for state financial assistance to build affordable housing.

That reform cannot wait until the reorganization takes effect, the report says.

“California doesn’t have enough housing,” said Commission Chair Pedro Nava. “When we do build housing, it’s often too expensive or located far from available jobs. This is a crisis, and Governor Newsom is right to think that state government needs to change so that it can better address this critical issue.”

As part of its review, the commission held two days of public hearings in April, taking testimony from 20 witnesses and receiving additional written comments.

“The state’s reorganization process holds real value — the governor proposes a plan, our commission conducts a nonpartisan and thorough review, and then the Legislature has the final say,” said Commission Vice Chair Anthony Cannella. “We hope this process is used in the future to help ensure that California has the government our citizens deserve.”

The governor’s transmittal letter, full plan and proposed bill language are available for public review on the commission's website.