When government creates barriers that undermine the very purpose of a law, and we believe that the Department has done that with their final Loan Portfolio Restructuring Guidelines, we have an obligation to speak up.

For more than three years, in 2023 (AB 515), 2024 (AB 2638) and in 2025 (SB 686), we worked to advance legislation that would create a practical pathway for affordable housing providers to unlock equity from successful, performing developments and reinvest those resources into other affordable housing opportunities. The vision we had for the legislation was simple. We wanted HCD to allow the early payout or refinancing of their loans in order to free up equity trapped in performing projects and put it back to work producing and preserving affordable homes. When Governor Newsom picked up the language that we’d crafted as part of AB 686 and dropped it into AB 130, we celebrated. The legislative intent to allow the extraction of equity would essentially create another way for a developer or owner to tap into their own earned equity reducing the need to use more precious government subsidy.

When the draft LPR guidelines were released earlier this year, stakeholders throughout the affordable housing community raised concerns about whether the program would achieve that vision. CCAH participated extensively in the process, providing detailed feedback and practical recommendations. You can see our intial letter from February 2, 2026 here. We remained hopeful that the final guidelines would address those concerns. Unfortunately, the final guidelines moved in the opposite direction. Rather than creating a pathway that encourages participation and investment, the guidelines impose new restrictions, fees, and requirements that many in the industry believe will discourage participation altogether. More troubling, several provisions appear to extend beyond what the Legislature authorized and raise serious questions about private property rights and the Department’s authority to control earned equity after state loan obligations have been satisfied.

Let me be clear: CCAH strongly supports keeping these resources within affordable housing. We made the suggestion that equity unlocked through the restructuring process should be redeployed to support affordable housing. Our concern is not with that objective. Our concern is with a framework that risks making the program so restrictive, expensive and burdensome that organizations choose not to participate at all. We crafted language that was meant to create a cycle of reinvestment. Owners and developers can redeploy unlocked equity into affordable housing, and HCD can redeploy repaid loan proceeds into new loans that support additional affordable homes. It was an elegant solution that squeezed more juice from the same fruit. Layering unreasonable fees onto these transactions and claiming 50% of an owner’s equity runs counter to the very intent of the legislation.

It is often easier to accept decisions, avoid conflict, and move on. But effective advocacy requires a willingness to respectfully challenge policies when they stray from legislative intent or create unintended consequences. It requires standing up not only for our members, but also for the affordable housing goals shared by our entire industry, members or not. Our hope is that HCD will reconsider these provisions and engage with stakeholders to create guidelines that truly advance housing production while respecting the rights of affordable housing providers. We believe there is still an opportunity to get this right. Having said that, we are prepared for further steps should we not be able to reach a resolution with the Department. 

Sometimes, and this is one of those times, it is about having the courage to respectfully say, “This is not what was intended, and we can do better.”

In partnership,