What’s Proposition 1?
Proposition 1 would authorize the state to borrow up to $4 billion for affordable housing and housing subsidies for veterans.
The state would borrow the money in the form of bonds, which it would repay with interest from the state’s general fund.
As the Los Angeles Times editorial board has pointed out, the name of the measure—the Veterans and Affordable Housing Bond Act of 2018—is a bit misleading because only one-quarter of the money would go to help veterans.
The vast majority of the bonds, about $3 billion, would be set aside for various types of housing programs.
The biggest share, or $1.5 billion, would go toward the construction and rehabilitation of permanent and transitional rental housing and apartments for California households who earn of up to 60 percent of the area median income (about $41,000 in the Los Angeles metro area).
The second biggest portion of the $3 billion, about $150 million, would be earmarked for cities, counties, transit agencies, and developers to build higher density housing near transit stations.
The remaining $1 billion would be earmarked for veterans participating in a home loan program. According to the nonpartisan California Legislative Analyst’s Office, veterans would “make monthly payments to the state, allowing the state to repay the bonds.”
Who’s behind it?
State Sen. from San Jose Jim Beall introduced SB 3 in the legislature nearly two years ago in December 2016. Gov. Jerry Brown signed the final bill in September 2017, after it passed 56-21 in the assembly and 30-8 in a final senate vote. SB 3 later became Prop 1 to try for final approval from voters.
Why does a bill that was signed into law need approval from voters? The California Constitution demands that general bonds greater than $300K get voter approval first. California voters very rarely vote down a bond.
The back story
You’ve probably heard there’s a housing crisis in California. The original text for SB 3 cites the statistic that California has “2.2 million extremely low income and very low income renter households competing for only 664,000 affordable rental homes” across the state.
What impact it will have on San Francisco
In San Francisco, the Mayor’s Office of Housing held lotteries to parcel out some 1,210 subsidized below-market-rate (BMR) homes in 2017, resulting in roughly 85,000 applications. That’s a ratio of only one available home per 70 qualifying SF households, with demand concentrated on the homes priced for the lowest income brackets.
The same mayor’s office report that divulged those figures also noted the high cost of creating new affordable housing: $323,071 per unit in 2017 in SF—cheaper than most market-rate housing, but still a heavy lift.
Meanwhile, California’s population continues to grow—approaching 40 million in early 2018, after adding more than 300,000 new residents the previous year.
Almost all Californians agree that the state needs more housing to address the current shortage, and BMR housing specifically caters to those people least likely to be able to maneuver the current market.
Original bill author Beall also points out that many of the state’s previous housing development efforts have finished out their funding and that additional monies are needed if we expect the work to continue.
The state voter guide argument against Proposition 1 suggests that it’s not ambitious enough, arguing “the housing shortage stemming from the influx of millions to California requires far bigger solutions.”
Meanwhile, critics like the Howard Jarvis Taxpayers Association argue that the high cost of building in California makes Proposition 1 an untenable solution and complain that it adds more debt to the state’s balance sheet.
- San Francisco Chronicle
- Los Angeles Times
- Sacramento Bee
- California Association of Realtors
- Chan/Zuckerberg Advocacy
- SB 3 received unanimous support from Democratic state lawmakers
- Howard Jarvis Taxpayers Association
- Between the senate and the assembly, only five of the state’s Republican lawmakers voted in favor of SB 3
- November 2018 Voter Guide [Curbed SF]
- Proposition 1 [California Voters Guide]
- Proposition 1 [Elections Department]
- SB-3 Veterans and Affordable Housing Bond Act of 2018 [California Legislature]
- California desperately needs affordable housing. Prop 1 will help build it. Vote yes. [LA Times]
- Chronicle recommends: Yes on California Prop. 1 [SF Chronicle]
- Proposition 1 is not the way to address affordable housing problem [San Diego Tribune]
- SF not even close to building enough affordable housing [Curbed SF]