Proposition 1: Authorizes California to Issue a $11.25 Billion Bond to Fund Affordable Housing

Ericka Cruz Guevarra: When asked in a recent statewide survey, what’s the most important issue facing Californians today? The top responses were affordability, cost of living, housing costs, and availability.

Olivia Allen-Price: In other words, nothing new to see here. These are issues that California has struggled with for a long time. On the November ballot this year are a few initiatives that legislators or interest groups think could help. Among them is Proposition 1, which would allow the state to borrow $11.25 billion for housing programs.

Ericka Cruz Guevarra: Here’s how it reads on your ballot.

Voice Over: Prop 1, authorizes bonds for housing affordability programs.

Ericka Cruz Guevarra: I’m Erika Cruz Guevara, host of The Bay.

Olivia Allen-Price: And I’m Olivia Allen-Price, host of Bay Curious. Welcome to PropFest. For the next few weeks, our teams at The Bay and Bay Curious are bringing you breakdowns of each statewide proposition on the California ballot so you can vote with confidence in the November election.

Ericka Cruz Guevarra: There are 14 propositions on the ballot this year, and we’ll be taking you through all of them between now and October 9th. We’ll be looking at how they got on the ballet, the arguments for and against each one, talk about how things could play out if they pass, and the money fueling it all.

Olivia Allen-Price: Are you ready for this, Ericka?

Ericka Cruz Guevarra: Let’s do this.

Olivia Allen-Price: Today in our first installment, we’re going through Proposition 1, a housing bond with KQED’s housing reporter, Adhiti Bandlamudi. Welcome, Aditi. Hey, thanks for having me. Let’s start at the top level. What does Proposition one do?

Adhiti Bandlamudi: So Prop 1 issues an $11.25 billion bond, mostly for the construction and preservation of affordable housing. Included in that $11,25 billion, there’s a $1.25 million portion that goes towards the CalVet home loan program, which helps veterans become homeowners. The legislative analyst’s office did a report on Prop 1, and it says the money from this bond could build up to 40,000 rental units. And it could help 40,000 households buy a home. So in total, it could help more than 80,000 families stay housed.

Olivia Allen-Price: All right, so we’re at the beginning of PropFest. We’re kind of getting our brains in the right place for all this stuff. Can you remind us how bonds work?

Adhiti Bandlamudi: Yeah, so most of this bond, about $10 billion, is a general obligation bond, also called a GO bond. A state-issued GO bond means that the government will borrow money from investors or anyone who buys the bonds and will then pay it back with interest over the next 25 years out of California’s general fund. It’s kind of like a mortgage. And then The $1.25 billion for the Veterans Home Buying Assistance Program. That is also a go-bond, but it’s self-supporting, meaning that it’ll be repaid through home loans that veterans take out through the program.

Olivia Allen-Price: Do we have any idea how that $11.25 billion will be spent if this passes?

Adhiti Bandlamudi: It is going to be split into a bunch of different programs. So let me break it down. So a very large chunk, about 5.1 billion, goes towards the multifamily housing program, which is this really big state program for affordable housing development. Some of the units that are built under this program have to be available for extremely low income households who are at risk of becoming homeless. And that money can be used towards the construction, rehabilitation, or preservation of affordable housing. About a billion dollars goes towards supportive housing through the multifamily housing program. Supportive housing basically, it’s housing that comes with wraparound services, stuff like drug abuse support, counseling, help finding a job, and that’s specifically for people who were chronically homeless or who are at risk of becoming chronically harmless. The bond also goes towards a bunch of other programs like making existing cities more dense, housing for farm workers, students, tribes, and other groups. And then, as we talked about before, there’s 1.25 billion which goes towards the CalVet program, and then another 1.1 billion that goes towards programs which promote home ownership for other groups

Olivia Allen-Price: Wow, so really funding a pretty big number of programs there. Very much so. This proposition was placed on the ballot by the California legislature. So we know it’s something that at least the majority of our elected officials want to see passed. How does Prop 1 play into larger goals that the state has for housing?

Adhiti Bandlamudi: This proposition has been many years in the making and affordable housing advocates say, it’s a long time coming. So there was a bond voters passed in 2018 that was called the Veterans and Affordable Housing Bond Act. It was also called Prop 1. There’s no deja vu, like that is very similar to this year’s bond. But the 2018 bond was for $4 billion. Similar to this year’s bond that was split into funding for affordable housing and the CalVet program. That funding very quickly ran out in 2023 due to overwhelming demand. Housing advocates say we need more money for these programs and so this year, bond money would basically replace those exhausted funds. I talked with assembly member Buffy Wicks. She represents Berkeley and she’s been working on getting this bond on the ballot for the past four years. She says that every election cycle, lawmakers will fight for a bond for one cause or another, whether it’s housing, climate, schools, transportation.

Buffy Wicks: But there’s really only so much bond debt we can take on as a state So we want to be mindful because every dollar we’ve put into a bond is we’re sort of borrowing from our future self

Adhiti Bandlamudi: And last election cycle, the housing bond lost out to the climate bond and won about school facilities. From then until now, WIC says that money for affordable housing got really tight, partially because the state has allocated less and less for these programs in the state budget in recent years.

Buffy Wicks: This year, the housing bond really became the priority because we’re running out of these resources. And so it was very clear from the assembly, the Senate and the governor that this was the top priority this year is to get it on the ballot.

Adhiti Bandlamudi: Wicks says there are about 40,000 shovel-ready affordable housing projects ready to break ground, but they need just a little bit more money to close their financing and actually put the shovels in the ground. She said that this bond could bridge that funding gap for those projects.

Olivia Allen-Price: We’re going to take a quick break, but when we return, we’ll learn who is supporting the measure and hear from the opposition. Stay with us.

Sponsor messages

Olivia Allen-Price: And we’re back with more on Proposition 1, a bond for housing affordability programs. Adhiti, who is supporting Prop 1.

Adhiti Bandlamudi: There are a lot of Democratic lawmakers who supported this bond when it was working its way through the legislature, but there are also a bunch of organizations that support it, including the California Association of Veterans, ACLU California Action, United Brotherhood of Carpenters and Joiners of America, the California Apartment Association, and so many others. Governor Gavin Newsom also supports this bill. And what about the opposition? So, there isn’t a formal opposition campaign. But there are a handful of Republican lawmakers who voted against the bill while it was in the legislature. Their main concern is that number one, it’s called the Veterans and Affordable Housing Bond Act of 2026, but only 1.25 billion out of the 11 billion goes towards veterans. Here’s state assembly member Carl DeMaio. He represents San Diego. He was speaking on the assembly floor back in June.

Carl DeMaio: Let’s get the vets and let’s put them front and center and say it’s all about the vats. Everyone loves veterans, shameful. The window dressing on an absolutely awful package.

Olivia Allen-Price: Mm, I see, so arguing it’s not right to have the word veterans in there when only about 11% of this bond measure is actually for veterans.

Adhiti Bandlamudi: Yeah, that’s their argument. Their other concern is that the state would be borrowing money if this bond passes, and that could be bad news for future taxpayers. Assemblymember David Tangipa, he represents Fresno. He also spoke about that on that same assembly floor session.

David Tangipa: Why do we need to borrow money? If we wanted to appropriate money right now to take care of our veterans, to make affordable housing, you would do so.

Adhiti Bandlamudi: There are some Californians who are worried about taking on debt. Yes, these programs will be funded, but the legislative analyst office predicts that it would cost about 500 to 600 million annually to repay this bond for the next 25 years. That’s about a quarter of a percent of the state’s total general fund budget. And since the state has to pay interest, the total cost of this bond would be 15% more than if the state just paid upfront with the money that it already has.

Olivia Allen-Price: Interesting. We should also mention that this isn’t the only housing bond on the ballot and not the only one you’re covering.

Adhiti Bandlamudi: That’s right, there’s another bond I’m covering, Prop 37, and it focuses specifically on middle-class homeownership. I think that says something really interesting about how people are feeling about housing affordability right now. It’s clear that this is a top issue for lawmakers, but it’s also a reflection of what they’re hearing from their constituents. It’s clearly a concern for people. And in my conversation with Assemblymember Wix, she mentioned that, you know, if Prop 37… Passes, it could work in tandem with Prop 1 if voters approve both of them. Because it would basically mean that both groups, both low-income residents and middle-class residents, could get the much needed help to afford housing. And it also feels like it’s building off of this national momentum. Congress recently passed the 21st Century Road to Housing Act, which is a huge package of bills, which is also trying to stimulate homeownership, but also home building. And so Wicks is saying that if everything kind of happens and voters approve all of this, it could have a really nice compounding effect, potentially.

Olivia Allen-Price: Who is spending to support or oppose Prop 1?

Adhiti Bandlamudi: Given the most recent data, the spending is pretty lopsided. So $2.65 million have been spent to support the proposition. That mostly comes from affordable housing groups. Only $7,500 have been spent to oppose this prop, and that mostly come from Reform California, an organization led by Republican assembly member Carl DeMaio, who we heard from earlier.

Olivia Allen-Price: Adhiti Bandlamudi is a housing reporter at KQED. Thanks, Adhiti.

Adhiti Bandlamudi: Thanks for having me, Olivia.

Olivia Allen-Price: In a nutshell, a vote yes on Prop 1 means you want California to issue $11.25 billion in bonds for all those housing projects we talked about, targeting primarily low-income families and veterans. And a vote no means you don’t.

Ericka Cruz Guevarra: That’s it for Proposition 1, coming tomorrow is Propositions 2 and 3, so make sure you’re subscribed to The Bay and Bay Curious so you don’t miss a beat. And stay tuned over the next few weeks as we make our way through all 14 statewide propositions.

Olivia Allen-Price: Whew, we got a ways to go, Erica.

Ericka Cruz Guevarra: Laughs

Olivia Allen-Price: Prop Fest is a collaboration between The Bay and Bay Curious podcasts. It is produced by: Alan Montecillo, Ericka Cruz Guevarra, Gabriella Glueck, Pauline Bartolone, Katrina Schwartz, Christopher Beale, Anna Casalme, and me, Olivia Allen-Price

Ericka Cruz Guevarra: We get extra support from, Katie Sprenger, Jen Chien, Maha Sanad, Ethan Toven-Lindsey and the whole KQED family.

Olivia Allen-Price: You can find audio and transcripts for this series at KQED.org/PropFest.

Ericka Cruz Guevarra: Our show is made in San Francisco at member-supported KQED. If you appreciate Prop Fest, please consider becoming a sustaining member of KQED. We cant do this work without you! Become a member at donate.kqed.org/podcasts.

Olivia Allen-Price: I’m Olivia Allen-Price

Ericka Cruz Guevarra: And I’m Ericka Cruz Guevarra. Have a good one.