Complaint Regarding the City of Chico’s Housing Obligations and Homelessness Policy

To: California Attorney General’s Housing Justice Team
Regarding: City of Chico, California
From: Scotty Franzyshen, Chico, California
Date: October 2, 2026

Request for Review

I am writing to request a review of the City of Chico’s implementation of its affordable-housing obligations, Housing Element commitments, homelessness policies, allocation of public resources, and treatment of alternative community-based solutions.

My concern is not simply that Chico has a homelessness problem. My concern is that, over a period of years, substantial public resources have been devoted to managing homelessness while there appears to have been comparatively little measurable progress toward creating the permanent, deeply affordable housing necessary to reduce and end homelessness.

The City has spent public resources on emergency shelter, temporary shelter facilities, encampment removal, fencing of public property, cleanup operations, enforcement activities, temporary services, administration, and other responses associated with managing homelessness. Many of these activities may serve legitimate immediate purposes.

However, they do not substitute for permanent housing.

The result appears to be a revolving-door system. People experiencing homelessness are moved from encampments into shelters, temporary programs, or other short-term arrangements and then continue waiting for housing that remains unavailable.

Public money continues to circulate through the system while the underlying shortage of deeply affordable housing remains.

I am asking the Attorney General’s Office to examine whether the City of Chico is meeting not merely the procedural requirements of California housing law, but also the implementation requirements contained in its adopted Housing Element and related state housing requirements.

Areas I Am Requesting the State to Review

1. Implementation of Chico’s Housing Element

Has the City completed the specific programs, deadlines, zoning changes, incentives, affordable-housing actions, monitoring requirements, and other commitments contained in its adopted Housing Element?

Chico’s 2022-2030 Housing Element contains specific implementation actions, including incentives for affordable housing, monitoring short-term rentals, and actions intended to remove barriers and increase housing production. I ask the State to compare those commitments with what has actually been completed.

2. Production of Affordable and Lower-Income Housing

What housing has actually been permitted and completed for:

extremely low-income households;
very low-income households;
low-income households; and
moderate-income households

compared with Chico’s stated housing needs, RHNA allocation, and Housing Element commitments?

3. Use of Public Housing and Homelessness Funds

How much local, state, and federal funding received, controlled, or administered by the City has been directed toward permanent housing outcomes compared with emergency shelter, temporary facilities, homelessness management, enforcement, cleanup, fencing, administration, and related activities?

I ask the State to distinguish between money spent on:

Permanent solutions

permanent affordable housing;
deeply affordable housing;
supportive housing;
acquisition and rehabilitation;
housing development; and
permanent exits from homelessness.

Temporary or management-oriented responses

emergency shelter;
temporary shelter facilities;
homelessness services;
encampment removal and cleanup;
fencing and closure of public spaces;
enforcement;
administration; and
other short-term responses.

The public deserves to know how much is being spent managing homelessness compared with actually creating housing.

4. Outcomes From Homelessness Expenditures

Are publicly funded programs being evaluated based upon permanent housing outcomes, or primarily by the number of people contacted, sheltered, served, enrolled, assessed, referred, or temporarily accommodated?

The number of people who pass through a program is not necessarily the same thing as the number of people who successfully leave homelessness.

I ask the State to determine whether the City has adequate outcome reporting showing how many people move from City-funded or City-supported programs into permanent housing, how long those placements last, and what the cost per successful permanent housing outcome is.

5. Removal of Barriers to Affordable Housing

Has the City taken all actions promised in its Housing Element to:

remove governmental constraints;
facilitate affordable development;
identify suitable sites;
provide incentives to affordable-housing developers;
encourage development of lower-income housing; and
make those opportunities realistically feasible?

6. Housing Opportunities for Marginalized and Extremely Low-Income Residents

Are City policies and expenditures providing meaningful access to permanent housing for people with little or no income, people with disabilities, seniors, people leaving homelessness, and others who cannot afford Chico’s prevailing market rents?

7. Employment and Economic Opportunity

Where federal, state, or local programs administered by the City contain requirements or commitments concerning economic opportunity for low-income or marginalized residents, I ask that the State examine whether those commitments are actually being implemented.

This should include whether meaningful employment opportunities, job training, pathways toward self-sufficiency, and economic participation are being created for the populations these programs are intended to serve.

City-Commissioned Homelessness Strategy and Subsequent Shelter Spending

Another concern is the City’s handling of its own homelessness planning efforts.

In 2021, the Chico City Council authorized a professional-services agreement with Hope Street Coalition to develop a homelessness strategic plan. Contemporary reporting identified the contract amount as $49,950. The resulting work included recommendations intended to improve data collection, accountability, coordination, program evaluation, and the City’s understanding of the actual municipal costs associated with homelessness.

The strategic plan itself stated that there was a consensus in Chico that the existing approach was not working. Among other things, the reports recommended that the City collect better data, establish measurable objectives, improve its accounting of homelessness-related costs, and evaluate programs using meaningful outcomes rather than simply counting contacts or services.

I am concerned that many of these recommendations were not fully or meaningfully implemented before the City dramatically expanded its emergency-shelter response.

The City subsequently operated the Genesis Emergency Housing Site, commonly known as the Pallet Shelter, with 177 non-congregate emergency housing units. In a later court filing, the City stated that its total capital expenditures and operating costs for the Pallet Shelter and related alternative sites amounted to approximately $12.99 million from all funding sources through July 31, 2024.

This sequence raises important questions:

Why did the City commission an outside strategic review, pay nearly $50,000 for recommendations intended to improve accountability and outcomes, and then commit millions of dollars to expanded emergency-shelter infrastructure without first fully implementing the accountability systems the report recommended?

I respectfully request that the State examine:

which recommendations from the homelessness strategic plan were formally adopted;
which recommendations were actually implemented;
which recommendations remain incomplete, were rejected, or were abandoned;
whether the City created the recommended systems for tracking homelessness-related expenditures across departments;
whether City-supported service providers were required to report meaningful outcome data;
whether permanent housing outcomes became a primary measure of program effectiveness;
whether the City evaluated the strategic plan’s recommendations before committing substantial resources to expanded emergency-shelter infrastructure; and
whether subsequent shelter spending was consistent with the City’s stated goals and with the accountability framework recommended by its own consultant.

My concern is not that emergency shelter was necessarily inappropriate. The Genesis site may have provided immediate safety and shelter to people who otherwise would have remained outdoors.

My concern is that the City appears to have commissioned a report identifying weaknesses in its homelessness response and recommending greater accountability, yet proceeded to invest heavily in emergency management without fully demonstrating that the recommended accountability and outcome-measurement systems were put in place.

A strategic plan has little public value if its recommendations are commissioned, received, and then not meaningfully implemented while millions of dollars continue to be spent through the same system the plan was intended to improve.

Concentration of Public Resources and Barriers to Alternative Providers

I am also concerned about the concentration of City support, access, contracts, referrals, facilities, and permissions among a relatively small group of established homeless-service providers.

My concern is not that established providers should receive no public support. My concern is whether the City’s processes provide fair and meaningful opportunities for other nonprofit, community-based, faith-based, volunteer, or privately funded organizations that may wish to pursue different approaches.

I ask the State to examine:

What criteria the City uses to determine which organizations may operate shelters, sanctioned campsites, transitional housing, or other facilities serving people experiencing homelessness.
Whether those criteria are written, objective, publicly available, and consistently applied.
Whether City contracts and homelessness-related funding opportunities are awarded through open and competitive processes.
How much City-controlled homelessness funding has gone to each provider during the past five years.
What percentage of those resources has gone to the same organizations year after year.
Whether other organizations have applied for funding, permits, land-use approvals, operating agreements, or permission to provide alternative sheltering arrangements and been denied.
If privately funded organizations have proposed lawful sanctioned camping or other alternatives, what specific laws, zoning requirements, health and safety standards, or City policies prevented those proposals from proceeding.
Whether the same standards are applied equally to programs sponsored, funded, operated, or selected by the City.
Whether the City’s existing system unnecessarily restricts competition, innovation, or alternative approaches to homelessness.
Whether concentrating resources and authority among incumbent providers creates structural incentives to maintain an emergency-service system rather than expand permanent housing alternatives.

Sanctioned Camping and Alternative Community Solutions

This concern is particularly significant regarding sanctioned camping and other low-cost alternatives.

The City has permitted or operated designated sheltering or camping arrangements under particular circumstances. At the same time, community groups seeking to provide privately funded alternatives may face regulatory, permitting, land-use, or administrative barriers that effectively prevent them from offering similar options.

This raises a straightforward question:

If the City can allow one organization or City-approved program to operate a campsite or alternative sheltering arrangement, what prevents another responsible organization from doing the same if it is willing to meet legitimate health, safety, sanitation, zoning, and operational requirements?

If there are legitimate reasons for treating proposals differently, those reasons should be transparent, documented, publicly available, and consistently applied.

If there are not, the State should determine whether the City’s practices are unnecessarily preventing additional organizations from contributing shelter, housing, employment, transitional options, or other innovative solutions.

Availability of Capital for Other Development

I am also concerned by the repeated argument that insufficient financing or economic feasibility prevents meaningful development of deeply affordable housing in Chico.

During the same general period in which affordable-housing development has struggled, substantial public and private capital has been assembled for other forms of development and for infrastructure serving people experiencing homelessness.

A particularly significant example is the Jesus Center/Renewal Center campus. Publicly available New Markets Tax Credit records report a total project cost of approximately $18.38 million and an NMTC amount of $18.5 million for the campus. The financing involved Accion Opportunity Fund, California Statewide Communities Development Corporation, Capital One, Raza Development Fund, and Community Vision Capital and Consulting.

Accion Opportunity Fund separately reported providing $9.6 million in financing to the Jesus Center for the Renewal Center, described as a 47,000-square-foot multi-agency homeless-services campus.

I do not contend that this project is inherently improper or unnecessary. Shelter, treatment, health care, food, and supportive services can all serve legitimate public purposes.

My concern is the imbalance in what the financing system appears able to fund.

At the same time that deeply affordable housing is described as too expensive or financially infeasible, significant capital can be assembled for shelter and service infrastructure. Chico has also approved private hotel development; for example, City planning records describe a proposed 112-room TownePlace Suites hotel and note the transient occupancy tax revenue it would generate for the City’s general fund.

This raises a broader policy question:

If millions of dollars in loans, tax-credit financing, grants, private investment, and public support can be assembled for facilities that manage, shelter, treat, or provide services to people experiencing homelessness, why has comparable financing been so difficult to assemble for permanent deeply affordable housing?

I am not asserting that any organization intentionally prolongs homelessness for profit. I am asking the State to examine whether the structure of funding and incentives itself rewards shelter, services, treatment, temporary accommodation, and other continuing activities more reliably than it finances permanent exits from homelessness.

Specifically, I ask the State to examine whether local policies, funding structures, land-use decisions, tax incentives, grants, contracts, or other governmental actions create stronger financial incentives for:

shelter construction;
homeless-service facilities;
behavioral-health and treatment facilities;
temporary accommodations;
hotels and short-term lodging; and
continuing service delivery

than for the creation of permanent housing affordable to extremely low-income and formerly homeless residents.

The issue is not whether organizations providing legitimate homelessness services should be compensated for their work.

The issue is whether the broader system has become better financed for managing homelessness than for ending it.

I respectfully request that the Attorney General and, where appropriate, the California Department of Housing and Community Development examine this imbalance and determine whether state or local policies are unintentionally reinforcing it.

Why has substantial capital repeatedly been available to build and expand the infrastructure that serves homelessness while the community continues to struggle to finance the housing necessary to end it?

Request for Review of Contracting and Funding Practices

I request that the State examine Chico’s:

contracting procedures;
grant awards;
permitting decisions;
land-use approvals;
memoranda of understanding;
requests for proposals;
provider-selection processes;
homelessness-related expenditures; and
other arrangements involving housing and homelessness-service providers.

The purpose of this review should be to determine whether public resources and opportunities are being distributed through fair, transparent, competitive, and lawful processes, and whether the City’s spending priorities are consistent with its housing obligations and stated goals.

Managing Homelessness Versus Ending Homelessness

I recognize that emergency shelter, outreach, sanitation, health services, treatment, and public-safety expenditures can be necessary.

My concern is the balance of those expenditures and whether temporary interventions have effectively become the City’s long-term response.

A system that repeatedly shelters, relocates, processes, and serves the same population without producing enough permanent housing risks institutionalizing homelessness rather than resolving it.

The question is not whether people experiencing homelessness should receive services. They should.

The question is whether our public system has become better at managing homelessness than ending it.

Request for State Investigation and Assistance

I respectfully request that the California Attorney General’s Housing Justice Team, working with the California Department of Housing and Community Development where appropriate, review:

Chico’s Housing Element implementation;
Annual Progress Reports;
affordable-housing production by income category;
homelessness expenditures and outcomes;
relevant City funding records;
contracting and provider-selection practices;
permitting and land-use decisions affecting alternative providers;
barriers to deeply affordable housing development;
the balance between spending on temporary homelessness management and permanent housing; and
compliance with applicable state housing laws.

I also ask the State to determine whether Chico’s reported compliance accurately reflects what has actually been implemented and accomplished on the ground, and whether investigation, technical assistance, corrective action, enforcement, or referral is warranted.

Supporting Documentation

I can provide supporting documentation, including:

City financial records;
Housing Element documents;
Annual Progress Reports;
Annual Action Plans and CAPER reports;
public contracts and payment records;
homelessness-program information;
grant and financing records;
public meeting records; and
other public documents.

This complaint is not intended to argue that every dollar spent on shelter or homelessness services is improper. It is a request for accountability regarding whether Chico’s housing policies and expenditures are producing the permanent affordable-housing outcomes California’s housing laws and local housing commitments are intended to encourage.

Closing

I believe Chico’s residents deserve a clear accounting of:

What was promised?
What was funded?
What was actually built?
Who received the resources?
What permanent housing outcomes were achieved?
What remains unfinished?
Why are alternative solutions sometimes unable to move forward?
And why is financing repeatedly available for the infrastructure of homelessness while deeply affordable permanent housing remains so difficult to produce?

Thank you for reviewing this matter.

Sincerely,

Scotty Franzyshen
Chico, California

Selected Supporting Sources

California Attorney General - Housing Justice Team: The Attorney General’s Housing Justice Team enforces state housing and development laws and invites Californians to submit housing complaints and tips.
https://oag.ca.gov/housing
California Department of Housing and Community Development - Housing Accountability Unit: HCD states that the Housing Accountability Unit holds jurisdictions accountable for meeting Housing Element commitments and complying with state housing and homelessness laws.
https://www.hcd.ca.gov/hau
City of Chico 2022-2030 Housing Element: Includes implementation actions concerning affordable housing incentives, governmental constraints, short-term-rental monitoring, and housing production.
https://chico.ca.us/documents/Departments/Community-Development/Housing%20Division/HE%20Update%202022/Chico%20Housing%20Element%202022%20Update.pdf
New Markets Tax Credit Coalition - Jesus Center/Renewal Center Campus: Reports an NMTC amount of $18.5 million and total project cost of $18,375,700.
https://nmtccoalition.org/project/jesus-center-renewal-center-campus/
California Statewide Communities Development Corporation: Reports $8.5 million in NMTC allocation for the Renewal Center campus and identifies additional financing participants.
https://cscda.org/wp-content/uploads/2022/03/CSCDC-Renewal-Center-Press-Release-032122.pdf
Accion Opportunity Fund: Reports $9.6 million in financing to the Jesus Center for the Renewal Center.
https://aofund.org/news/investing-in-communities-with-new-55m-allocation/
City of Chico Planning Commission - TownePlace Suites: City records describe a 112-room all-suites hotel and note that the project would generate transient occupancy tax revenue for the City’s general fund.
https://chico.ca.us/documents/Government/Boards--Commissions/Planning-Commission/2022/7-21-2022_staff_report_and_attachments.pdf
City of Chico City Council - August 3, 2021: Council agenda records show consideration and authorization of a Professional Services Agreement with Hope Street Coalition to develop a Homelessness Strategic Plan.
https://chico-ca.granicus.com/GeneratedAgendaViewer.php?clip_id=996&view_id=2
Chico News & Review - August 4, 2021: Contemporary reporting identified the Hope Street Coalition strategic-plan contract amount as $49,950.
https://chico.newsreview.com/2021/08/04/charging-forward/
Hope Street Coalition - Strategic Plan to Address Homelessness: The City-commissioned plan states that Chico’s existing approach was not working and recommends improved data collection, objectives, accountability, and program evaluation.

https://chico.ca.us/documents/City-Services/Sheltering-Provisions/Homelessness-Strategic-Planning-Efforts/hope_street_coalition_homelessness_strategic_plan_fnl_1.pdf

City of Chico Court Filing - Genesis/Pallet Shelter Costs: A City declaration states that capital expenditures and operating costs for the Pallet Shelter and Alternative Sites totaled approximately $12.99 million from all funding sources through July 31, 2024.

https://chico.ca.us/documents/City-of-Chico-Press-Release-TRUE-FINAL-City-of-Chico-s-Motion-Pursuant-to-Rule-60-002.pdf