California Voters Pass Two Housing Bond Measures

California voters approved two housing bond measures, Propositions 1 and 37, that address the state’s affordable housing crisis in different ways, according to the Associated Press.  

Prop. 1 gives the state permission to borrow a record-breaking $11.25 billion, with the lion’s share going toward the construction of affordable housing for low-income renters and homeless Californians, the AP noted.

Meanwhile, Prop. 37 is a first-of-its-kind revenue bond that would have the state borrow as much as $25 billion from private investors and lend that money to qualifying homebuyers to help cover most of their down payments.

Calmatters noted that some experts have questioned how this untested program would work, but most agree that it would not come at the expense of state taxpayers.

There are still many open questions about how Prop. 37 will be administered and how many Californians will benefit, said David Garcia, Deputy Director of Policy at UC Berkeley’s Terner Center for Housing Innovation.

But the measure’s blow-out margin “speaks to just how much the dream of homeownership matters to so many Californians,” he said.

A Familiar Borrowing Proposal

Calmatters noted that Prop. 1 carries a historically large price tag, but is otherwise a conventional policy approach.

The state regularly puts affordable housing spending on the state credit card, especially after the Legislature and former Gov. Jerry Brown axed the state’s main funding source in the wake of the Great Recession.

Calmatters reported that the most recent major bond in 2018 saw the state borrow $4 billion. Developers and affordable housing advocates have been lobbying the Legislature for a successor since then.

The money from that most recent bond is now all but depleted, Calmatters said. A recent redesign of the state’s carbon emission market, one of California’s signature climate change programs, is also likely to negate one of California’s few other sources of money for affordable housing.

Under Prop. 1, nearly two-thirds of the money will be used to fund apartment buildings dedicated to cash-strapped Californians, including those facing homelessness.

Low-Cost Home Loans

The remaining funds would be split among different programs: Low-cost home loans for low-income and veteran buyers; support for farmworker, student, and tribal housing; technical innovation grants and grants for cities planning new dense housing development.

Supporters say the new spigot of cash could unlock nearly 40,000 affordable units that are ready to break ground but lack state funding.

Though Prop. 1 passed easily, the coming influx of taxpayer dollars may put more pressure on state lawmakers to tamp down the cost of affordable housing development, which can sometimes exceed $1 million per unit in the state’s pricey coastal cities, Calmatters noted.

“I do think this raises the question of whether we can control the cost of building these homes so that our dollars can go further and so that voters will continue to feel like they’re getting a bang for their buck,” said Garcia with the Terner Center.

Something completely different

Prop. 37 is meant to help Californians a bit higher up the income spectrum, but who still can’t quite crack homeownership.

The proposed borrowing program was principally backed by the California Association of Realtors and former Democratic Assembly Speaker Bob Hertzberg.

Critics of the measure have questioned whether privately financed downpayment loans will be affordable for Californians who most need the help. Hertzberg has countered that wealthy philanthropists, foundations, and other charitable spenders could be convinced to provide the funding to the state at below-market interest rates.