Affordable Housing Developers Say They Need Steady Cash. Will California Provide It?

Updated 11:39 a.m. Friday

After years’ worth of California housing legislation aimed at streamlining and shortening the process to start building, affordable housing developers say they still face one major obstacle: money.

This week, a constitutional amendment aimed at solving that problem cleared its first set of legislative hurdles when it was passed by two Assembly committees.

The amendment, known as ACA 4, would require at least 5% of the state’s general fund revenues to be pulled into an account to be used for affordable housing and services for people experiencing homelessness. It now heads to the key Assembly Appropriations Committee, which considers a bill’s fiscal impact before sending it to the Assembly floor.

“We know that homelessness and housing availability and affordability [are] one of the most pressing issues facing Californians today,” Assemblymember Corey Jackson (D–Moreno Valley), who wrote the bill, said during the first hearing Wednesday before the Committee on Housing and Community Development. “This ACA would increase and stabilize funding for affordable housing in California.”

A California constitutional amendment must pass both houses of the Legislature by a two-thirds vote to be placed on the ballot, where voters decide whether to adopt it. If ACA 4 is adopted, its dedicated funding stream would begin in 2027.

Using projected revenues from this year’s budget, estimated at a little more than $200 billion, about $10 billion could be earmarked for affordable housing and services.

The bill comes less than a year after two major housing bonds failed to make it to the November ballot.

This year, lawmakers are taking big swings as they try to solve the state’s housing crisis. Assemblymember Buffy Wicks, D-Oakland, reintroduced a $10 billion housing bond, while other proposed bills take stabs at the remaining red tape that can hold up construction.

Jackson framed ACA 4 as a way for affordable housing developers to have access to funds other than what is allocated within the state’s budget.

According to the nonpartisan research nonprofit California Budget Center, state investments in homelessness services have declined since 2023. The state’s most recent budget set aside $2.5 billion for homelessness-related spending, less than half of what it spent in its 2022–23 budget.

If ACA 4 takes effect, it would sunset in 2036 and would require an annual progress report on the fund’s effects on homelessness and affordable housing construction goals to be set by the state.

Still, some housing committee members on Wednesday were concerned about dedicating a portion of the state’s revenues to a single item.

“I do have, unfortunately, serious concerns about putting it on a ballot and requiring 5% of the general fund to be spent on that,” committee Vice President Joe Patterson, R-Rocklin, said. “I can’t support this today.”

Local governments have passed housing bonds in previous years, but affordable housing developers and advocates have said these efforts provide only one-time funding and don’t allow them to plan for future developments.

“There hasn’t been a permanent solution to the affordable housing financing conundrum,” said Welton Jordan, chief real estate development officer for affordable housing developer EAH Housing. “There have been years where there’s been little to no money at the state.”

Jordan said housing developments can often take five years or more to complete, and in that time, costs can change dramatically, driving up risk and borrowing costs.

Without a funding source to bridge gaps in the project’s budget, a developer may decide to back out of the project because it is no longer financially viable, but Jordan said ACA 4 could provide a kind of “runway.”

“You want to know if I’m starting to look at something today that, hey, there’s somewhere for me to go to get that gap in financing,” he said.

A similar constitutional amendment has been introduced before but failed to make it out of committee. In 2022, Wicks introduced ACA 14, which would have also pulled at least 5% of the state’s general fund revenues into affordable housing funding.

Jordan said that he is feeling better about ACA 4’s chances this year. While he believes the constitutional amendment can work in tandem with bond funding to boost affordable housing development, he said ACA 4 could be a better sell to voters, who will eventually have to decide its fate if it makes it out of the Legislature.

“Do you want a bond, which needs to be repaid by taxes, or do you want to split the existing pie, no matter what size it is?” he said. “It’s paid for by whatever the state is able to generate in revenue. To me, it just feels more appealing.”