Deal reached to ask Californians to pass a $4 billion housing bond

LOS ANGELES — California lawmakers reached an agreement Monday to ask voters to approve $4 billion of bonds for affordable housing.

Senate Bill 3, authored by Sen. Beall, D-San Jose, chairman of the Senate Transportation and Housing Committee, would authorize $3 billion in general obligation bonds for affordable housing, subject to voter approval in the November 2018 election, plus a $1 billion authorization to extend the CalVet Home Loan Program for veterans, which was slated to expire in 2018.

The bill still needs two-thirds supermajority approval in both houses of the Legislature. The deadline for all bills to pass this year is Sept. 15. Legislators are also discussing Senate Bill 2, a companion bill that also includes a jobs component.

“Given how California’s housing shortage has metastasized from a problem to a crisis to, now, a full-scale catastrophe, it should surprise no one that the vast majority of Californians have a strong appetite for a multi-billion dollar housing bond to jump start a big and bold solution,” State Treasurer John Chiang said in statement.

David Paul Morris/Bloomberg

Chiang, who is running for governor and campaigned for treasurer on a platform that emphasized the need for affordable housing, said he looks forward to working with lawmakers “on next steps toward reducing our 1.5 million-unit affordable housing shortage and providing a roof and four walls to more Californians.”

The treasurer and housing advocates pressed legislators to go "big and bold," on the housing bond, urging lawmakers to increase the SB3 proposal to between $6 billion and $9 billion -- as supported by voters in a recent poll -- to kick-start a long-term commitment to eliminate California's shortage of more than 1.5 million homes, he said.

Whether California voters will actually support the bill remains to be seen. S&P Global Ratings analysts have mentioned in reports on the California economy that in a recession the state does not have a lot of wiggle room given all the tax measures passed while the state has been doing well economically. The bonds issued under the measure would become a state spending commitment, though no new tax would be levied.

Voters have historically been supportive of state GO bond measures, most recently approving $9 billion for schools in November.

"In our view, the state is using up a significant amount of its taxing flexibility," Petek told the Bond Buyer in July. "The ability to raise it further is limited when the top rate is 13.3%."

Los Angeles city and Los Angeles County voters both approved bond measures in November to provide affordable housing and housing for the homeless.

A statewide housing bond has not gone before voters since 2006, when the $2.9 billion Proposition 1C passed.

Chiang cited a JMM Research poll commissioned by affordable housing boosters claiming strong support for a housing bond of up to $9 billion. The poll also reported that 40% of voters have a family member or close friend who is or has experienced homelessness, and 51% say that at today's prices they could not afford a home in their own neighborhood.

The legislation outlined what California's "housing crisis," citing reports from the Legislative Analyst's Office and the McKinsey Global Institute.

An average California home costs $440,000, almost two-and-a-half times the national average, and the state’s average rent is 50% higher than the rest of the country, according to the LAO.

The October 2016 McKinsey analysis said California’s housing shortage costs California’s economy hundreds of billions of dollars in economic activity every year with high housing costs crowding out other consumption, lost opportunities in the construction industry, and increasing homelessness.

State funding for housing has also declined significantly in recent years, according to a Senate report on the bill.

“The bond agreement we have reached provides badly needed funding to help Californians, including our veterans, find safe, affordable housing,” said Assembly Speaker Anthony Rendon, D-Lakewood. “We have said before: it shouldn’t cost an arm and a leg to put a roof over your head – and this agreement will make housing more affordable for many Californians.”