(a) For purposes of this section, the following definitions shall apply:

1. (1) “Eligible individual” means an individual who meets both of the following criteria:

   1. (A) The individual is experiencing homelessness, as defined in this chapter.
   2. (B) The individual or head of household is eligible to receive qualifying services.
2. (2) “Experiencing homelessness” means the same as “homeless” and “homelessness,” as those terms are each defined in Section 578.3 of Title 24 of the Code of Federal Regulations, as that section read on January 1, 2022, except that people who were homeless upon admission to an institutional setting shall continue to be considered homeless upon discharge, regardless of the length of time residing in the institutional setting. For the purposes of this paragraph, people who have lost their housing as a result of institutionalization, including, but not limited to, institutionalization in skilled nursing facilities, acute care hospitals, psychiatric facilities, jails, and prisons, and have no home to live in upon discharge are considered homeless regardless of the length of time residing in the institutional setting.

3. (3) “Qualifying services” includes all of the following:

   1. (A) Services received under the Assisted Living Waiver pursuant to state law and Section 1915(c) of the federal Social Security Act (42 U.S.C. Sec. 1396n(c)).
   2. (B) Services received under the Home and Community-Based Alternatives Waiver pursuant to state law and Section 1915(c) of the federal Social Security Act (42 U.S.C. Sec. 1396n(c)).
   3. (C) Services received under the Program of All-Inclusive Care for the Elderly (PACE) pursuant to Chapter 8.75 (commencing with Section 14591) of Part 3 of Division 9 of the Welfare and Institutions Code.

(b) By December 31, 2023, the department shall do both of the following:

1. (1) With respect to funds made available under this chapter, award incentives listed in subdivision (c) to project applicants that agree to all of the following:

   1. (A) Set aside at least 20 percent of the project’s units for eligible individuals. If the project includes more than 100 units, the applicant shall agree to set aside no more than 50 percent of the project’s units for eligible individuals.
   2. (B) Demonstrate viability of linking the units to qualifying services.
   3. (C) Accept referrals from local coordinated entry systems.
2. (2) Partner with the State Department of Health Care Services to determine the most effective way to align qualifying services in housing projects funded under this chapter, including, but not limited to, expediting enrollment, prioritizing waiver and PACE programs for eligible individuals, reducing administrative barriers to using qualifying services in publicly subsidized housing, creating partnerships between developers and providers of qualifying services, and developing sample memoranda of understanding or contracts between developers and providers of qualifying services.

(c) The department shall offer project applicants the following incentives:

1. (1) Loan limits for impacted units that are higher than offered to other units for people experiencing homelessness.
2. (2) An exemption for project applicants to submit a services plan for units set aside under this section, so long as the project applicant has completed an executed agreement with a provider of qualifying services to offer services in set aside units. The department shall determine whether the qualifying services are provided in a manner that complies with the applicable requirements of Section 8255 of the Welfare and Institutions Code, and that services provided in each project are meeting applicable department requirements governing staff-to-client ratios.
3. (3) Based on data and a best practice analysis, providers may receive a higher services cap or an exemption from services caps the department imposes.
4. (4) Allowing project applicants to use funds made available under this chapter for creating alternative care sites for projects aligning with PACE or other service space to offer other qualifying services to eligible individuals. Alternative care sites shall be funded to operate in a manner consistent with state law, department regulations, and program guidelines.

(e) No later than 180 days following the first year of operation of a representative sample of projects, with respect to projects receiving incentives under subdivision (b), the department shall assess tenant outcomes and engage with an evaluator to identify both of the following:

1. (1) The number and demographics, including age, race, or ethnicity, and presubsidy housing status, of people being served.
2. (2) Housing retention rates.