California Proposition 1: Authorizes Bonds to Fund Specified Housing Assistance Programs. Legislative Statute.
Proposition 1 would allow the state to issue up to $4 billion in bonds to fund a variety of existing affordable housing programs.
Annual interest on the bonds would cost the state $170 million per year over 35 years for a total of $5.95 billion.
Proponents’ Arguments For
Proponents argue that the bond measure will relieve the state’s housing crisis by helping veterans afford homes, build housing for the homeless and working families, and create supportive housing for disabled individuals and domestic violence victims.
Opponents’ Arguments Against
Opponents argue that debt service on the new bonds would potentially increase taxes. Although the opposition cites the risk of property tax hikes, the state’s general fund is mostly replenished by sales and income taxes, so the risk to taxpayers is more likely to come from these levies.
The Legislative Analyst’s Office estimates that only 55,500 households would be helped by the bond proceeds — putting only a small dent in California’s affordable housing deficit, estimated at 1.5 million units.
The state programs to be funded by the bond measure range from redundant to inefficient. The veteran’s mortgage assistance provided under the CalVets program serves a constituency already eligible for federally-backed VA mortgages. A University of California—Berkeley study found that due to the many policies and requirements on the building of affordable housing in California, the average cost per unit is $425,000. That is not affordable, so units must be sold or rented at a significant loss.
The Multifamily Housing Program, which will receive the largest share of bond proceeds, often funds apartment buildings in urban areas near transit. These lots are attractive to developers who could build market-rate apartments on these parcels. When state programs put subsidized units there instead, those market-rate units have to be built somewhere else to meet demand, and that is often farther out from downtowns. At the same time, this kind of displacement puts burdens on local governments as affordable housing has lower assessed values and may be exempt from property tax if it is owned by a non-profit.
California voters have approved affordable housing bonds before, such as Proposition 1C in 2006, and received very little value for their money. Indeed, California taxpayers are still paying for past affordable housing bonds and housing is not more affordable. Proponents of Proposition 1 say it would build affordable housing without raising taxes, but of course, the bond must be repaid along with interest, by the taxpayers.
Rather than borrow money to a small number of very expensive to build units, California governments could better relieve the housing crisis by allowing housing supply to keep up with demand and reducing its costs. That means allowing housing to be built where people want to live, in quantities that keep up with population growth, and without zoning, height and unit size restrictions and hundreds of mandates that drive up housing costs.
Voters’ Guide to the 2018 California Ballot Initiatives
The Voters’ Guide offers analysis of each of the 11 ballot propositions certified for the election being held on November 6, 2018.