LDC is Hiring Interns!

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LeSar Development Consultants is looking to hire two, part-time paid Research Analysts. One position will focus on Housing Policy, while the other on Real Estate and Land Use. This position will provide the Research Analyst with in-depth exposure to an array of disciplines, including housing policy and planning, economic development, workforce development, real estate, sustainability, and active transportation.

The analyst will work with our team to demonstrate that a thoughtful and strategic interdisciplinary approach will create strong, healthy, and sustainable communities. For more information, please go to: http://www.lesardevelopment.com/internshipopportunities/

Pam Patenaude to Serve as HUD Deputy Secretary

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HUD Dep SecThe White House announced on Friday, April 28th that Pam Patenaude has been chosen by President Trump as the new HUD Deputy Secretary, serving under Dr. Ben Carson, Secretary of HUD. The Secretary, like other Cabinet positions, is the public face of the department, conducting meetings with housing leaders around the country, listening to local concerns, and celebrating milestones. The Deputy Secretary, however, handles most of the day-to-day operations and is therefore considered to be a significant “power” position.

The White House notice states:

Ms. Patenaude is currently the President of the J. Ronald Terwilliger Foundation for America’s Families. Previously, she served as Director of the Bipartisan Policy Center Housing Commission. Ms. Patenaude earned her B.S. from Saint Anselm College and her Master of Science Community Economic Development degree from Southern New Hampshire University. Her awards include: HousingWire 2013 Woman of Influence and the Saint Anselm College Alumni Award of Merit 2006.

According to HousingWire, Patenaude is a former adviser to Presidents Ronald Reagan and George W. Bush. During the younger Bush’s administration, Patenaude served as HUD assistant secretary for community, planning and development.

During her career, Patenaude held these positions:

• Executive vice president of the Urban Land Institute and founding executive director of the ULI Terwilliger Center for Workforce Housing
• HUD assistant deputy secretary for field policy and management
• HUD assistant secretary for community, planning and development
• State director and deputy chief of staff for U.S. Senator Bob Smith
• Vice president of Manor Homes Builders
• Administered the Section 8 rental assistance program at the New Hampshire Housing Finance Authority

Patenaude will now go through a Senate confirmation before taking over officially at HUD, if approved.

For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

Carol Galante Presentation at the Terner Center for Housing Innovation

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Photo courtesy of BRIDGE Housing.

Photo courtesy of BRIDGE Housing.

On April 14th, I had the opportunity to hear a guest lecture from Carol Galante of the UC Berkeley Terner Center for Housing Innovation (and formerly a HUD deputy with the Obama Administration). The Terner Center is a relatively new center, connected to the Haas business school, public policy school and school of environmental design.

In addition to describing some of the exciting research projects currently underway at the Terner Center, Galante offered her perspective on state and federal housing policy and identified four key areas of focus that are particularly important for the housing industry. These include: 1) Expanding supply and lowering the cost of housing; 2) Expanding access to high quality homes (financial structuring – improving access to credit); 3) Achieving sustainability goals; and 4) Using impact assessment to evaluate existing programs and how to change them so they work better.

Concerning the current federal landscape for housing policy, Galante noted:

• The federal election and cabinet team matter. Most work gets done at the subcabinet level, and the Trump Administration is far behind in making second tier appointments.
• “Winning is easy – governing is harder.” The Administrative Procedures Act dictates that most executive orders direct agencies to go back and review their rules. That process takes years, and people are throwing tacks in the road, both internally and externally.
• The budget situation was already dire and is getting worse. That is the biggest threat, especially to projects like Rental Assistance Demonstration (RAD), and Affirmatively Furthering Fair Housing.

The Terner Center’s work on federal policy includes several exciting new projects. These include a survey of residents living in Low Income Housing Tax Credit (LIHTC) properties to determine if living in LIHTC property affect residents’ housing stability, economic opportunities, or educational opportunities. The survey, interviews and focus groups with residents are important because most of the existing opinion research comes from public housing towers, which are very different than being in a LIHTC building.

The Center is also evaluating the Rental Assistance Demo project (RAD), which allows distressed housing stock to have restructured financial deals and rehabilitation of the properties. The Center is also undertaking an “Opening Doors to Homeownership Series” that will publish reports on strategies for expanding homeownership.

We can also look for an upcoming report from the Terner Center identifying the drivers of construction cost increases in California residential development. Housing development costs have gone up double digits every year over the last four years. At the same time, productivity is lagging in the construction sector, which has been slow to innovate relative to other sectors.

Housing Development Dashboard: The Terner Center has built a development calculator, “Housing Development Dashboard,” that helps make decisions more transparent and fact-based. The Center is in the process of scaling this for the entire Bay Area and LA. The Dashboard predicts how likely it is that a project will get built based on public policy and market factors. This tool has a map-based feature for Oakland, Pleasanton, and San Francisco that shows how changes in Inclusionary Zoning, parking requirements and other policies would facilitate more or less construction of units on existing vacant, multi-family parcels. Rates of return vary. In addition to looking at total project rate of return, which is generally in the low double digits, we have to consider what the returns are in other forms of investment, which these projects are competing against.

Autumn BernsteinAutumn Bernstein, Principal, Estolano LeSar Perez (ELP) Advisors, is an expert in urban planning, transportation, housing, and environmental policy. She has 15 years of experience as a policy advocate, strategic advisor, non-profit executive and facilitator in communities across California. Autumn is a native of the San Francisco Bay Area and lives in El Cerrito. She may be contacted at: Autumn@elpadvisors.com

New Affordable Housing Online Tool Estimates HUD Budget Cuts to States and Communities

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Photo credit to: Gage Skidmore.

Photo credit to: Gage Skidmore; License: https://goo.gl/OOAQfn.

On March 16th, the Trump Administration released its proposed FY18 blueprint budget, which requests $6.7 billion in funding cuts nationwide for HUD affordable housing programs, compared to FY16 levels.

To help states and communities assess the impacts of the proposed HUD budget cuts, Affordable Housing Online has created a new online tool that calculates the potential funding losses to individual states and local jurisdictions. Data includes cuts to specific programs, such as CDBG, HOME, Housing Choice Vouchers, Section 811, Section 202, and the Public Housing Capital and Operating Funds.

Based on HUD data, the estimated impact on California overall would be a loss of $711,552,739 in FY18, broken down by program as follows:

Affordable Housing Online Tool Snippet of Table in Article

The impacts on the state’s largest counties and cities are estimated as shown below.

• The City of Los Angeles will lose $116,162,950 annually; in addition, the cuts could impact up to 5,269 households per year. Los Angeles County will lose $80,995,941 annually, affecting up to 2,677 households per year.

• San Diego County will lose $20,041,260 annually, which could impact up to 121 households per year. The City of San Diego will lose $23,877,065 annually, impacting up to 76 households per year.

• San Francisco County will lose $39,693,335 annually as a result of the proposed HUD budget cuts, which could impact up to 6,535 households per year.

• Sacramento will lose $11,314,344 annually as a result of the proposed HUD budget cuts, with up to 1,868 households impacted per year.

HUD Secretary Ben Carson initially attempted to calm reactions concerning the pending budget cuts, stating that it was just a blueprint, or talking tool, subject to negotiation and revision. However, on March 16th, the date the budget was published, he issued an endorsement of the blueprint: “The discretionary budget plan released today by President Trump aligns with Agency plans to provide rental assistance to low-income and vulnerable households and to help families achieve self-sufficiency,” Carson said. “The budget also promotes fiscal responsibility at HUD by promoting better efficiencies and leveraging IT modernization. I look forward to working with the President and remain keenly focused on HUD’s mission and core values.”

For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

Job Announcement, CEO – Regional Task Force on Homelessness, Greater San Diego Area

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RTFH-Logo_400x400The Regional Task Force on the Homeless (RTFH) has created a new CEO-level position to lead its new combined organization, and help RTFH deliver on our mission of ending homelessness across the greater San Diego region.

Candidates should have direct experience working with programs and organizations related to homelessness. Specific strategic priorities for this role include providing direction at the system-wide level to pull the San Diego region together under a unified, collaborative effort to affect real change.

Applicants are encouraged to apply via LinkedIn: (https://www.linkedin.com/jobs/cap/view/263650263/?pathWildcard=263650263&trk=job_capjs), or they can reach out directly via email to Trevor Blair at: trevor@blairsearchpartners.com

HUD’s Section 3 Program – A Winner for Everyone

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Photo courtesy of: advantage4parents.com

Photo courtesy of: advantage4parents.com

With the nation’s attention focused on federal budget cuts to key programs, LDC and its Los Angeles-based affiliate, Estolano LeSar Perez Advisors (ELP), strongly support the preservation of HUD’s Section 3 program as a lesser-known and underutilized resource for connecting businesses with talented individuals from disadvantaged communities who are seeking promising career paths. A recently hired ELP team member, Grethel Fuentes, was directed to the firm after applying to the Housing Authority of the City of Los Angeles (HACLA) for an employment opportunity. HACLA’s Human Resources Department informed her of a job announcement posted by ELP and in February she came on board as a fulltime Administrative Assistant.

Grethel notes that “The transition from college to ELP has been great. I recently graduated with a Bachelor’s degree in Business Administration with a focus in Accounting and plan to go back to school to pursue a Master’s degree. Programs like Section 3 really help out families in poorer neighborhoods who want to be self-sufficient and need access to well-paying jobs and affordable housing.”

Section 3 helps foster local economic development, neighborhood economic improvement, and individual self-sufficiency by requiring that recipients of certain HUD financial assistance provide job training, employment, and contracting opportunities for low- or very-low income residents in connection with projects and activities in their neighborhoods.
Public agencies and businesses who self-certify that they meet one of the regulatory definitions of a Section 3 business may be included in the Section 3 Business Registry, a searchable online database. The Registry is used by agencies that receive HUD funds, developers, contractors, and others to facilitate the award of covered construction and non-construction contracts to Section 3 businesses. To search the database for businesses, visit: www.hud.gov/Sec3Biz.

As Ben Carson, the new Secretary of HUD, conducts a state-by-state “listening tour”, culminating in June, he is expected to begin announcing his policy plans in the next 90 days. High on his list of stated priorities is bringing new life to the Section 3 program as an effective tool for creating jobs in HUD-assisted communities.

For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

Proposed State Bill Would Extend Prevailing Wage Requirement for New Housing Development

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House ContructionProposed new legislation, Assembly Bill 199, authored by Assemblyman Kansen Chu (D-San Jose) and the California Building and Construction Trades Council, a labor group, would require workers to be paid the prevailing wage rate on new, privately constructed homes built with any sort of public money or government agreement. The bill requires workers to be paid prevailing wage on residential projects that have any agreement with “the state or a political subdivision,” a provision that extends the requirement beyond the redevelopment agencies, public agencies and low income housing projects covered under existing state law. If passed, the legislation would represent a state-mandated local requirement.

The bill’s author argues that, with the dissolution of redevelopment agencies, there are now other types of public agencies that may enter into disposition and development agreements to subsidize private developments. Failing to change the language of the existing law creates a gap in the coverage of the prevailing wage law. Further, this update to the Labor Code would not “make private, market-rate residential development a public work project for which prevailing wage must be paid” unless these projects are paid for in whole or part by public funds.”

A case illustrating the “gap” in coverage of the prevailing wage law is the tentative ruling relating to South Gate Senior Villas in Los Angeles County. In this example, the LA County Superior Court found that, despite the public subsidy for the project from the City of South Gage, the South Gate Senior Villas project was not a public work and therefore not subject to prevailing wage requirements, because the city was not a “state agency, redevelopment agency or local public housing authority.”

Opponents of AB 199 claim that, if the bill passes, it would increase the cost of a house by 40% or $35,000 to $60,000. The California Building Industry Association (CBIA) and the California Apartment Association have joined the Coalition for Affordable, Reliable and Equitable Housing (CARE), a newly formed group of organizations that oppose the bill.

The CBIA argues that “If enacted, this measure would have dramatic negative cost implications for newly constructed and privately financed housing in California…. Countless newspaper articles and recent reports have highlighted the dire condition of housing in California. California’s Department of Housing and Community Development estimates that we must build at least 180,000 units to keep pace with demand, not accounting for the backlog of 2 million units that has accrued over the past several decades. Homeownership rates are at abysmal levels – the lowest level since the 1940s – currently 49th nationally.” CBIA asserts that California’s average housing costs are two and a half times the national average and that with the current crisis of undersupply, highest-in-the-nation housing costs, and exploding unaffordability ranking at the top of the state’s most pressing political, social and economic concerns, “it would seem that a proposal to add additional cost to a newly built home is ill-advised and at odds with the California’s need to provide affordable housing.”

For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

How Could Trump Budget Cuts to HUD Affect California’s Largest Cities?

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San Fracisco City HallIn Los Angeles, the President’s budget proposal to cut off all Community Development Block Grants would affect the resources that the city uses for emergency shelters and short-term rent support for homeless families. In November 2016, L.A. voters approved $1.2 billion in bonds under Proposition HHH (“Los Angeles County Plan to Prevent and Combat Homelessness”) to build up to 10,000 homeless and low-income housing units, with long-term financial support projected to come from rent vouchers. The program that voters approved to fight homelessness would be seriously undermined by Trump’s plans to eliminate thousands of federal Section 8 housing vouchers. Limitations built into the spending plan for HUD would force the loss of 200,000 vouchers from the Section 8 program, with an estimated 4,000 to 5,000 of them in the city of Los Angeles.

Proposition HHH will provide 10,000 units in a city whose estimated homeless population is 28,000. But there are nearly 47,000 homeless people in Los Angeles County. L.A. County voters on March 7th approved Measure H, authorizing a local quarter-cent sales tax increase to generate $355 million a year for homeless supportive services.

San Francisco also remains in suspense over the impacts of President Trump’s budget. San Francisco’s current budget relies on $1.2 billion in federal funds — 13 percent of its overall budget — and an additional $800 million in federal grants. Most of the funding is for federal entitlement programs administered by the City, including food stamps, CalWORKs and Medicaid. The Department of Public Health receives the most at $800 million, followed by the Human Services Agency with $286 million and homeless services at $36 million.

Trump’s budget would eliminate $16.5 million for the Mayor’s Office of Housing Community Development Block Grant Program, which funds construction of affordable housing and other services like tenant eviction defense. The full impact of these cuts would most likely be felt in the subsequent fiscal year, beginning July 2018.

The City of San Diego Mayor’s FY 2018 Proposed Budget is scheduled to be released on Friday, April 14th. In his State of the City address in January, Mayor Kevin Faulconer expressed a strong commitment to addressing homelessness and supporting more affordable housing development in San Diego; however, the impact of eliminating HUD’s CDBG program and other federal funding cuts could be substantial. The Mayor said he will also present the City Council with a proposed ballot measure that would raise the hotel room tax rate by an unspecified amount, with a portion of those revenues directed to addressing homelessness. The mayor’s plan comes as the city faces a $47 million budget shortfall in the next fiscal year.

The “skinny budget” is only a blueprint of Trump’s budget proposal to come and a more detailed budget is expected this May. Then it will take months for Congress to debate it, a process that could last past October 2017. The federal budget timing also poses a challenge since the federal fiscal year starts Oct. 1st and the fiscal year for most California cities starts July 1st.

For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

Federal Budget Cuts Add Uncertainty to State and Local Agencies

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Speaker Ryan with Pence and TrumpPresident Donald Trump unveiled a budget proposal, or so-called “skinny budget,” on March 16th that calls for heavy cuts in many areas of government, including the U.S. Department of Housing and Urban Development, Environmental Protection Agency, the National Institutes of Health, and the U.S. Department of Transportation, while boosting military spending by 10 percent ($54 billion) and allocating more than $4 billion for a U.S.-Mexico border wall. As noted by the Los Angeles Times, “The president’s blueprint would disrupt almost everything California does, in some cases quite brutally.”

In releasing his state spending plan for the 2017-2018 fiscal year in January, Governor Brown projected a $1.6 billion deficit by mid-summer. The state budget anticipates facing a multi-billion gap in federal funding with deep cuts across numerous agencies. A revised budget will be released by the Governor in May.

In California, about 12 percent of CalEPA’s budget comes from the federal government. The State Water Resources Control Board gets the largest share – about $300 million. Those funds are used to clean up polluted streams, make sure toxic substances aren’t leaking into groundwater, and ensure drinking water is safe. If EPA funding is reduced or eliminated, the state will have to make up the deficit. The pending cuts to the U.S. EPA’s funding for brownfields reuse and revitalization will also reduce a key source of leveraging for assessment and cleanup of older sites that could be used for housing, commercial/retail and mixed use development throughout the state.

Trump’s budget cuts $9.2 billion (13.5%) from the U.S. Department of Education. Betsy DeVos, Trump’s Secretary of Education, has long been a staunch proponent for voucher programs and private schools. The budget boosts charter school funding by $168 million and adds $250 million for a new private school choice program. It also adds $1 billion for Title I, a federal program that distributes funding to schools with a high percentage of students from low-income families, but eliminates $1.2 billion for before- and after-school programs as well as summer programs. These cuts to education come as many school districts face funding challenges. The San Diego Unified School District, for example, has to slash $124.4 million from next year’s budget, due in part to long-term “structural defects.” Teacher lay-offs are more likely to hurt schools in lower-income neighborhoods which have a higher percentage of more recently hired staff.

In addition, the budget cuts $2.5 billion from the Department of Labor. It decreases federal support for employment services programs for unemployed seniors and disadvantaged youth, shifting the responsibility to state and local agencies.

Especially significant for local housing development are proposed cuts of $4.3 billion to the Department of Housing and Urban Development, including:

• Eliminating funding for the Community Development Block Grants (CDBG) program, cutting $3 billion. The League of California Cities is lobbying fiercely to stop the CDBG elimination proposal at HUD, on which its members depend to fund services such as building housing for the homeless and revitalizing decaying neighborhoods.

• In addition to zeroing out funding for community development groups that create affordable housing (Section 4), Trump’s budget would eliminate the HOME Investment Partnerships Program, Choice Neighborhoods, and the Self-help Homeownership Opportunity Program, cutting more than $1.1 billion.

For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

Impacts of Trump Budget Blueprint on California

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On March 16th, President Trump sent his proposed “America First: A Budget Blueprint to Make America Great Again” to Congress with a plan to release further details in the coming months. The Blueprint focuses on discretionary spending levels for Fiscal Year 2018, and makes an additional $54 billion dollar investment in defense programs, paid for through deep cuts to non-defense discretionary (NDD) programs.

Impacts on California

California stands to lose more federal dollars than any other state and the impact on critical populations – seniors, people with disabilities, families with children, veterans, and formerly homeless individuals — will be drastic.

The U.S. House of Representatives Committee on Appropriations – Democrats released a detailed breakdown by agency of the specific amounts states would lose, based on the proposed Blueprint.
The following chart summarizes the proposed targeted reductions in FY 2018 funding for various key programs assisting communities throughout California:

CaliforniaTableb

Impacts on Housing and Community Development Funding

The President’s 2018 Budget requests $40.7 billion in gross discretionary funding for the U.S. Housing and Urban Development (HUD), a $6.2 billion or 13.2 percent decrease from the 2017 annualized CR level. The Trump budget proposes to eliminate these HUD programs:

Community Development Block Grants, which are a flexible source of funds for housing rehabilitation, infrastructure, and programs. In 2016, CA received $356,855,242 in CDBG funding.

• The HOME Investment Partnerships Program, which is the largest Federal block grant to state and local governments designed exclusively to produce affordable housing for low-income families. In 2016, CA received $129,452,836 under this program.

Choice Neighborhoods grants, which support locally driven strategies to address struggling neighborhoods with distressed public or HUD-assisted housing through a comprehensive approach to neighborhood transformation.

NeighborWorks America, which provides resources to more than 250 affordable housing and community development nationwide.

Self-help Homeownership Opportunity Program, which provides grants for land acquisition, housing renovation, infrastructure and other costs supporting self-help housing.

The President’s budget also would eliminate:
• The U.S. Interagency Council on Homelessness, which coordinates the federal response to homelessness across 19 federal agencies.

Community Development Financial Institutions (CDFI) Fund, which provides New Market Tax Credits. In California, the amount of loans/investments originated with CDFI funding in 2016 totaled $472 million.

• Legal aid services that provide the only resource available to help deeply low income people, including seniors and veterans, avoid unwarranted evictions. The Legal Services Corporation in California would lose $43,598,181 which was used in 2016 to serve 218,768 persons.

• The Meals on Wheels Program, the oldest and largest national organization dedicated to addressing senior hunger and isolation and supporting more than 5,000 community-based senior nutrition programs across the country,

• The Low Income Energy Assistance Program (LIHEAP) which provides resources to help low income families heat their homes in winter. In 2016, CA received $176,127,000 in LIHEAP funding, benefitting 219,178 households.

• The Emergency Food and Shelter Board Program (EFSP) which helps meet the needs of hungry and homeless people by awarding funds to local emergency food and shelter boards for the provision of food and shelter. CA would lose $18,291,648 in EFSP funding.

• Economic Development Administration (EDA) program grants, even though EDA is the only Federal agency focused exclusively on economic development. CA applied $19,858,996 in funding from EDA in 2016 to create 3,078 jobs.

Reduced funding to states would severely affect these agencies and programs:
• Direct rental assistance payments — including Section 8 Housing and housing vouchers for homeless veterans — would be cut by at least $300 million nationally, to $19.3 billion. Additionally, housing for the elderly — known as the Section 202 program — would be cut by $42 million, nearly 10 percent. Section 811 housing for people with disabilities would be cut by $29 million, nearly 20 percent.

• Job training and employment service programs at the Department of Labor would be cut by 35 percent, with CA losing $391,631. The Workforce Innovation and Opportunity grants program is serving 1,118,947 California residents this year.

• State grants to the Environmental Protection Agency would be cut by 45% to $597 million. California’s allocation for EPA would be reduced by $30,889,589.

The proposed budget comes in tandem with the White House’s effort to replace the Affordable Care Act with a Republican alternative, American Health Care Act (AHCA), that threatens to leave 5 million more Californians without insurance and cut $15 billion from the state’s $66-billion Medi-Cal budget within the next few years.