California voters this fall are being asked to weigh in on two ambitious — and strikingly different — proposals aimed at easing the state’s long-running housing affordability crisis.
Proposition 1 and Proposition 37 both call for the state to borrow substantial sums of money to address housing costs, but they target different groups of Californians and rely on very different financial mechanisms to get there.
Prop. 1 would authorize the state to issue $11.25 billion in bonds, the largest housing bond in California history. Most of that money would go toward building affordable apartments for low-income renters and people experiencing homelessness.
Prop. 37 takes a more experimental route. It would allow the state to borrow up to $25 billion from private investors, then turn around and lend that money to eligible homebuyers to help cover down payments. The concept has drawn skepticism from housing policy experts who question whether the untested program will function as intended, though most agree it’s structured in a way that wouldn’t put California taxpayers on the hook.
Despite the uncertainty surrounding Prop. 37’s mechanics, both measures appear headed for approval. Polling from the Public Policy Institute of California shows 60% of likely voters backing Prop. 1 and 65% supporting Prop. 37. Neither measure has attracted any organized opposition spending so far. That bodes well historically — California voters have approved 23 of the 26 bond measures put before them since 2000.
A tried-and-true approach, at record scale
Prop. 1 follows a familiar playbook for California, which has repeatedly turned to bond financing to fund affordable housing since the state eliminated redevelopment agencies — once a major funding source — in the aftermath of the Great Recession.
The last major housing bond, approved by voters in 2018, authorized $4 billion in borrowing. Developers and housing advocates have pushed for a follow-up ever since, and that funding has now largely run dry.
Adding to the urgency, a recent overhaul of California’s cap-and-trade style carbon market — one of the state’s signature climate initiatives — is expected to eliminate another funding stream that has historically supported affordable housing projects.
If voters approve Prop. 1, nearly two-thirds of the bond proceeds would go toward constructing apartments for low-income residents and those experiencing homelessness. The rest would be divided among several programs, including low-interest home loans for low-income buyers and veterans, support for housing aimed at farmworkers, students and tribal communities, as well as grants for technological innovation and for cities working to plan denser housing development.
Backers argue the funding could jumpstart roughly 40,000 affordable housing units that are shovel-ready but stalled due to lack of state funding. That number falls well short of the 312,500 units state housing officials say California needs to build annually to meet its long-term goals, but advocates say it would still represent meaningful progress in a state that has struggled mightily to build housing for its lowest-income residents.
A different approach for a different group
Prop. 37 is designed with a different kind of Californian in mind — those who earn too much to qualify for traditional affordable housing programs but still can’t afford a down payment in one of the nation’s priciest housing markets.
The measure is championed primarily by the California Association of Realtors, along with former Democratic Assembly Speaker Bob Hertzberg, who has helped shape the proposal.
Some critics worry that loans financed through private investment may not end up being affordable for the Californians who need help most. Hertzberg has pushed back on that concern, arguing that wealthy donors, philanthropic foundations and other charitable organizations could be persuaded to lend the state money at below-market interest rates, which would in turn make the homebuyer loans more affordable.
Taken together, the two measures represent California’s latest attempt to confront a housing affordability crisis that has proven resistant to past fixes — one aimed at renters and the homeless, the other at aspiring homeowners stuck on the sidelines of the market.
Original source: CalMatters
