California bond could raise $10 billion for housing. Can it survive a state borrowing grab?

New homes rise in the Delta Shores development near the shopping center in south Sacramento on Dec. 12, 2023.
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Will voters accept more ballot measures that would authorize billions of dollars in new bond funding?

They weren’t enthusiastic last month, when they barely approved Proposition 1, which will provide $6.4 billion for mental health treatment and housing.

But a California lawmaker has high hopes for legislation that would put a $10 billion bond to pay for affordable rental housing and homeownership programs on the November ballot.

Even before going to voters, though, the bill would need to advance through the Capitol amid a scramble for state bond dollars as legislators continue to seek alternative funding streams during a tough budget year. And Assembly Speaker Robert Rivas, D-Hollister, is reluctant to push a broad bond agenda.

Assemblywoman Buffy Wicks, D-Oakland, on Monday made her case for Assembly Bill 1657, which would raise money for a handful of state housing programs, including those funding rental and supportive developments, home loans and farmworker and tribal housing. The measure is currently in the Senate Appropriations Committee.

“We need more money for affordable housing now,” Wicks told a group rallying in support of her bill near the Capitol. “So we are going to fight like hell to make sure we get this bond on the ballot. And we are talking to the speaker and the pro tem and the governor and all the legislators.”

Her bill is one of many bonds lawmakers have proposed since last year. California is facing a projected deficit of up to $73 billion, making it challenging to secure state dollars through the budget process.

Bonds allow the state to borrow from investors and repay them with interest during a 10- to 30-year period.

In September, the Senate and Assembly Rules committees effectively cleared the March 5 ballot for the bond measure that would become Gov. Gavin Newsom’s Proposition 1. The Legislature made all other bond measures — aside from the mental health treatment initiative — two-year bills, meaning they could be considered this year.

It is unclear whether this was an effective strategy for Newsom. He secured the funding in Proposition 1, but by a very slim margin in a race that remained too close to call for more than a week after the election.

Lawmakers jockey for bond money

Now, lawmakers are looking to get their delayed requests on the ballot in November. Wicks is competing against bills that would ask for billions in bond money to combat fentanyl addiction, address climate change and modernize school campuses.

Rivas last week signaled it is unlikely all of the legislative bond measures will make it to the ballot. He said during a Thursday press conference the Legislature needs to be “very strategic in what we put before voters,” suggesting the March and November elections are “different ball games” in regard to voter turnout.

“My philosophy around bonds is making meaningful, lasting impacts to our infrastructure,” Rivas said. “Long-term investments are really important, especially if we’re going to ask taxpayers to foot the bill. And so we’ve got to be very thoughtful in what it is we are going to pursue.”

Sen. María Elena Durazo, D-Los Angeles, referenced this dynamic at the Capitol rally.

“This is not about competing — ‘Our issue is better than that one, our issue is more important than that one,’” Durazo said. “No. We need it all. And if we mobilize, we will win it all.”

AB 1657 co-author Sen. Nancy Skinner, D-Berkeley, insisted the housing bond measure is not the result of the budget situation, saying, “That’s what bonds are designed to do — fund capital.”

Wicks also said a $4 billion housing bond voters passed in 2018 is running out this year, making it time to “re-up this bond.”

The two said getting the bond out of the Capitol remains a “work in progress.” They expect there will be a cap on the dollar amount of bonds that end up on the ballot.

“In the conversations I’ve had with folks, I think there’s a strong support in the Assembly amongst my colleagues,” Wicks said. “I know it’s a big priority with the Progressive Caucus, and other caucuses who have concerns about this.”