This November, the decisions voters make about two ballot measures—the Housing Assistance Bond and No Place Like Home—the Proposition 1 Housing Assistance Bond and Proposition 2 No Place Like Home—have significant implications for California communities as they address housing affordability.
Proposition 1: Housing Assistance Bond, would allow the state to issue $4 billion in general obligation bonds to investors to fund existing affordable housing programs. Specifically, the bond would provide:
- $1.8 million to build or renovate affordable multifamily housing;
- $450 million for transit-oriented infrastructure development;
- $450 million for down payment assistance or other funding to assist low- and moderate-income homebuyers;
- $300 million for rental and owner-occupied housing for farmworkers; and
- $1 billion for home loan assistance for veterans.
The measure, which qualified for the ballot based on a two-thirds vote from the Legislature and approval by Governor Jerry Brown as part of the 2017 Housing Package, would support an estimated 30,000 multifamily units, 7,500 farmworker households, 15,000 homebuyers, and 3,000 veterans. If passed, the measure would enable the state to provide grants or low-cost loans to local governments, nonprofits, and developers through a competitive process to fund a portion of construction costs. Interest on the bond would be repaid using the state’s General Fund at approximately $170 million annually for 35 years. While opponents chafe at the cost burden to taxpayers, supporters such as United Way, the League of Women Voters, the League of California Cities, and the California State Sheriffs’ and Firefighters’ Associations view Proposition 1 as a much-needed measure to address the affordable housing crisis and argue that a portion of the funds will be recouped as payments on home loans.
Proposition 2: No Place Like Home, if passed, would allow the state to redirect $140 million per year in Mental Health Services Act funding to repay up to $2 billion in bonds to fund permanent supportive housing for people experiencing or at-risk of homelessness who need mental health services. Counties would be able to use these funds to acquire, design, construct, rehabilitate, or preserve permanent supportive housing. Only those supportive housing developments that use low-barrier tenant selection practices and provide voluntary, individualized supportive services would be eligible for funding. Counties would also need to commit to providing mental health services and coordinating other supportive services as a condition of funding.
Currently, the state needs court or voter approval to use Mental Health Services Act funds for permanent supportive housing through No Place Like Home (NPLH). Counties will be able to apply to the California Department of Housing and Community Development for NPLH funds, which are categorized as loans repayable to the state, on either a non-competitive or competitive basis contingent on voter approval.
Research has shown that housing paired with treatment, commonly referred to as permanent supportive housing, helps people with severe mental illness live healthy, stable lives and reduces public health costs. Supporters of the measure include the California affiliate of the National Alliance on Mental Illness. Opponents argue that the measure, if passed, would shift funding away from treatment for people with severe mental illness to pay for housing and does not address restrictive zoning laws that make it difficult to build housing.
Together, Propositions 1 and 2 provide significant revenue streams to address California’s growing housing affordability and homelessness crisis and aim to produce housing types California’s private market has failed to adequately produce in California. The propositions have received widespread support from organizations and elected leaders statewide, including Assm. David Chiu (D-San Francisco) and Senate President pro tempore Toni Atkins (D-San Diego).
Diana Elrod, Principal, brings more than 30 years of consulting and public sector experience to her work co-leading LDC’s housing policy and real estate finance team. Before joining LDC, she provided strategic counsel and conducted research on Housing and Community Development for the Cities of Lafayette, Belmont, Palo Alto, San Jose, San Mateo, and the County of Santa Clara. She also has completed Housing Elements and Consolidated Plans for jurisdictions throughout California. She can be reached at email@example.com.