San Francisco Bay Area will decide California’s biggest housing bond ever – Daily Journal of Commerce

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By Ben Christopher

CalMatters

The largest affordable housing bond in California history is officially headed to the November ballot — just not for all Californians.

On Wednesday, commissioners of the Bay Area Housing Finance Authority — a first-of-its-kind regional agency with the ability to borrow and spend taxpayer dollars — agreed to ask voters across the nine Bay Area counties to approve an IOU of up to $20 billion. The bulk of the money would go toward the construction of new subsidized housing projects, with the rest to be spent buying up existing units (to make or keep them affordable) and on housing-related infrastructure.

The historically huge bond is being sent to the ballot at a time when the future of a long-sought statewide housing bond looks uncertain at best.

A lot will ride on the outcome of this bond vote — both economically and politically.

Affordable housing developers lined up in support at Wednesday’s hearing, noting that ground could be broken promptly on projects with thousands of housing units reserved for working-class residents but lack sufficient funding.

“We have entitled projects now that cannot get financed through the system,” said Nevada Merriman, vice president of MidPen Housing, a nonprofit developer. “There’s a pipeline here. It’s ready to go.”

The Bay Area authority says the funds could be used to build and acquire up to 72,000 units. That housing would range from units reserved for people on the brink of homelessness to those for households with “moderate” incomes. In San Francisco, San Mateo and Santa Clara counties, that includes incomes exceeding $150,000.

California housing regulators have tasked local governments across the Bay Area to plan for the arrival of roughly 250,000 affordable units by the end of the decade.

The bond is also a test case of a new approach to funding affordable housing in California. State lawmakers gave regional planners across the Bay Area the green light to set up the finance authority in 2019. If this first bond passes, most of the proceeds will go out in the form of low-cost loans.

“We’re very intent on setting up a successful public interest mortgage lending system so that we are self-sustaining,” said Kate Hartley, the authority’s director. “Our goal is to get good quality housing out as quickly as possible and to meet that need — and to the people who fear that we won’t do a good job, to really prove them wrong.”

But big borrowing comes with a big cost. The authority estimates that paying off principal and interest will add up to nearly $50 billion, to be paid via higher property taxes — a couple hundred dollars per year for the average Bay Area homeowner.

Even for one of California’s most reliably progressive regions, that’s no sure thing. In March, a mental health housing and treatment bond was backed by Gov. Gavin Newsom and supporters spent nearly 15,000 times more than the opponents. Still, Prop. 1 passed by less than half of a percentage point.

Recent polling commissioned by the Bay Area Housing Finance Authority, the results of which were detailed at the hearing, found that 54 percent of likely voters support the bond. That may be more than a majority, but in California, where most local bonds require the backing of two-thirds of voters, that isn’t enough to pass.

That could change this November. Legislators are crafting a constitutional amendment that would slash the threshold needed to approve local housing and infrastructure borrowing to 55 percent. That change is headed for the November ballot — and if it were to pass, it would apply to any bond concurrently on the ballot. That includes the Bay Area affordable housing bond.

That means the fate of California’s largest-ever housing bond may hinge on the outcome of not one ballot measure, but two.

Editor’s note: This story was originally published by CalMatters and later distributed through a partnership with The Associated Press.

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