Unlike market-rate homes, affordable housing takes a village to finance and build. The federal government chips in with tax credits, and depending on the budget that year, the state might subsidize projects it deems worthy.
Neither are enough on their own, so it’s up to local governments to fill in the rest.
But in California, cities need approval from more than two-thirds of voters to raise property taxes in order to borrow money for projects. In 2000, voters were OK with lowering that threshold to a simple majority to pass bonds for public school improvements. This week, they rejected a similar measure, Proposition 5, which would have set the same threshold for affordable housing construction and public infrastructure bonds.
Even though cost of housing remains a top priority for voters and policymakers, the race was called by the end of the week with a preliminary count showing that nearly 56% rejected the proposal.
The result coincides with a conservative swing across the ballot, which saw voters reject rent control expansion in Prop. 33 while overwhelmingly passing harsher criminal sentencing through Prop. 36.
A coalition of Bay Area developers, housing and transit activists, and policy experts crafted Prop. 5 in hopes of concurrently passing a $20 billion affordable housing package for the region. In 2026, the group planned to turn its attention to funding BART and other transit agencies in serious financial trouble.
Now, they’ll have to ask voters to fund both in the next election, since an embarrassing gaffe tanked the housing bond just a few months before Election Day.
Laura Foote, executive director at YIMBY Action, said the stakes are more dramatic than a “non-sexy” constitutional amendment getting turned down. Without Prop. 5, most California cities will struggle to raise enough money to meet state-mandated quotas for new housing construction.
“We are at the point now where the frog is swimming in boiling water,” Foote said. “If it doesn’t hop out, it’s going to die.”
To pay for the affordable construction needed to close the affordability gap and significantly reduce homelessness, the state would need at least $18 billion a year through the end of the decade, according to a 2021 study co-authored by nonprofit research firm California Housing Partnership.
“Local dollars are the most important, because they come in at the beginning of the development,” California Housing Partnership CEO Matt Schwartz said. “They allow for land to be purchased and pay for architecture plans to get submitted. They get the ball rolling.”
Subsequently, affordable housing developments where that front-end capital is secured are more likely to win subsidies from the state, which are competitive since they are so limited, Schwartz added.
Housing experts say bonds need to be replenished at least every four to five years for builders to produce enough supply to meet the demand. In reality, that sort of pace has not been met in the Bay Area.
San Franciscans, for their part, approved three housing bonds during the last decade and passed a $300 million spending package in March with a supermajority.
Housing advocates have fared better recently in permitting and upzoning battles, Foote said, but forming a coalition that could fight for Prop. 5 proved more difficult.
“From my perspective, it felt like this was sort of everyones’ priority No. 3,” she said. “Next time, we need politicians in Sacramento, probably up to the governor, to really make this their cause and take a heavier hand.”
Alfred Twu, a California Democratic Party delegate and candidate for the Berkeley Rent Stabilization Board, agreed. “The next attempt to reform [property tax] may need a sweetener to pass,” Twu said.
For example, in 2019, voters narrowly passed Prop. 19, which lowered taxes for some and raised them for others, mainly those inheriting property.
According to an analysis by the California Local Government Finance Almanac — headed by Michael Coleman, a former city fiscal officer — there were 18 non-school general obligation bonds, totaling $2.4 billion, across all ballots in the state in this election.
Had Prop. 5 succeeded, all but one would be passed.