Prop. 1 would give $4B for low-income, vet housingBy: Randi Swisley
Oct. 22 is the last day to register to vote in the General Election on Nov. 6.
This is first in a series of articles outlining unbiased facts about each ballot proposition. The arguments for and against the measure listed at the end of the article are opinions of the proponents and opponents and have not been checked for accuracy.
Placed on the November ballot by the state legislature, Proposition 1 proposes borrowing money to fund housing assistance programs.
Should the state issue $4 billion in general obligation bonds for housing programs for low-income residents and veterans?
An average house in California costs 2.5 times the national average and average rent is about 50 percent higher than the national average. Each year in California about 100,000 houses and apartments are constructed, most by private interests. In some cases, the state provides grants and low-cost loans for construction of housing to be sold or rented to low income individuals. California receives about $2 billion each year from the federal government to support housing projects.
General obligation bonds are sold to investors and repaid from the state’s General Fund. The State repays the principal and interest for these bonds over a period of approximately 35 years. The General Fund receives about 70 percent of its revenue from personal income tax, about 20 percent from sales tax and 10 percent from corporate tax. Bonds used to fund home loans for veterans are not repaid from the General Fund. Mortgage payments from veterans are used to repay bonds used for home loans to veterans.
In the last 15 years, California approved 31 of 39 bond issues placed before voters. General Obligation Bond debt in California is currently $74.2 billion. An additional $29.6 billion bonds have been approved but not yet issued.
Proposition 1 proposes that the state issue $4 billion in new general obligation bonds for the following housing programs:
- $1.8 billion for building or renovating affordable multifamily housing
- $1 billion for home loans to eligible veterans (CalVet Home Loan Program)
- $450 million for parks, water, sewage and transportation to support housing construction
- $450 million for down payment assistance for low and moderate-income home ownership
- $300 million for farm worker housing (rental and owner-occupied)
This proposal would provide assistance to 30,000 families and 7,500 farm worker households and home loans to about 3,000 veterans.
The $1 billion set aside for veterans’ assistance is repaid as the veterans pay off their loans at no cost to taxpayers. The principal and interest on the remaining $3 billion of the bonds totals $5.9 billion to be made in payments of about $171 million per year for 30 years.
A yes vote means:
You support allowing the state to sell $4 billion in general obligation bonds to fund loans to veterans and for affordable housing.
A no vote means:
You do not support changes proposed by Prop 1.
California is home to 21 of the 30 most expensive rental housing markets in the country, which requires the third highest wage in the country to afford housing, behind Hawaii and Washington, D.C.
California has the largest population of homeless veterans in the nation, and homelessness is expected to increase over the next decade among veterans who served in Iraq and Afghanistan. Veterans suffering from medical and mental health conditions sustained from their service are at high risk for long-term homelessness. Prop. 1 directly addresses the shortage of housing without raising taxes.
California is in debt enough already. This bond will result in a one-time boost in housing construction, a blip in housing supply that will not combat the long-term and persistent housing shortage that the state faces.
All Californians are being asked to borrow more money through these bonds which will help a limited number of people.
It is still very early in the campaigns and contributions can increase significantly before Election Day.
As of July the following contributions were made to Proposition 1:
Support: $2.1 million
$250,000 was contributed by Chan Zuckerburg Advocacy. Remaining contributions are about $100,000 each from Voice of the State Building & Construction Trades Council of California, Caleb J. Roope, California Homeless & Housing Coalition Action Fund, Mercy Housing and other housing organizations.