California Proposes New Affordable Housing Finance Regulations

Comments on the first draft are requested by September 18, 2026, followed by a second draft subject to formal public comment and a public hearing.

Governor Newsom signed Assembly Bill 179 as part of the 2026-27 budget package on July 13, 2026. The legislation, among other things, established the Housing Development and Finance Committee (HDFC) to coordinate state affordable housing finance policy and oversee funding for several programs.

HDFC will administer and award funds for the Multifamily Housing Program (MHP), the Joe Serna, Jr. Farmworker Housing Grant Program, the Infill Infrastructure Grant programs, the Transit-Oriented Development Implementation Program, the housing allocation of the Affordable Housing and Sustainable Communities Program (AHSC) and the Mixed Income Program (MIP) funding loan. In 2027, HDFC is expected to make available approximately $530 million in housing funding through its programs. HDFC will also coordinate with programs administered by the Department of Housing and Community Development, the California Housing Finance Agency, the California Debt Limit Allocation Committee, and the California Tax Credit Allocation Committee.

On August 31, 2026, HDFC published a first draft of regulations that would provide, among other things, for a single application, coordinated review, unified scoring and an aligned award process. The regulations would apply to HDFC-funded projects beginning in 2027. Projects with existing awards would remain subject to the requirements governing their original awards. If those projects later seek HDFC funding, however, they would need to comply with both the final HDFC regulations and their original awarding agency's requirements during the transition.

The proposed regulations address scoring criteria, application requirements, construction-readiness standards, affordability and financial requirements and disbursement procedures. They also propose significant requirements concerning ground leases, lien priority, subordination, transfers, refinancing, residual receipts, regulatory agreements, tenant protections, monitoring and enforcement.

The final regulations could materially affect cities, counties, housing authorities, developers, investors, lenders and other public funding partners. Stakeholders should evaluate whether the application deadlines, scoring structure, financing limitations, document-priority rules and HDFC approval rights are workable for planned 2027 projects and existing projects seeking additional state funding.

Interested parties are encouraged to review the proposed regulations and submit comments to HDFC by September 18, 2026. Following the initial public feedback period, HDFC will make a second draft available for public comment and hold a public hearing before adoption.

For more information or if you have any questions, please contact Ethan Walsh and Matthew Cody.