Olivia Allen-Price: Let’s take a quick trip through some recent election results for local bond measures around California, shall we…?
Ericka Cruz Guevarra: 2020. Measure A. San Diego. A $900 million bond for low-income, substance abuse, and mental health service housing.
Olivia Allen-Price: Failed with 57% of voters in favor.
Ericka Cruz Guevarra: 2022. Measure L. City of Berkeley. A $650 million bond to fund housing and infrastructure.
Olivia Allen-Price: Failed with 59% of voters in favor.
Ericka Cruz Guevarra: 2022. Proposition A. San Francisco. A $400 million bond for transit improvements and repairs.
Olivia Allen-Price: Failed with 65% of voters in favor.
Ericka Cruz Guevarra: I’m noticing a trend…
Olivia Allen-Price: Indeed! California makes it difficult for local governments to borrow money. They have to ask voters for permission – and then get a SUPERMAJORITY of votes – that’s two-thirds of the vote or 66.67%. That’s meant a lot of local bond measures fail, even when they have a lot of public support.
Ericka Cruz Guevarra: But Proposition 5 could change that.
Olivia Allen-Price: I’m Olivia Allen-Price, host of Bay Curious.
Ericka Cruz Guevarra: And I’m Ericka Cruz Guevarra, host of The Bay. This is Prop Fest – our podcast series that goes deep on explaining the props on California’s ballot.
Olivia Allen-Price: We’re covering ten props in ten days, all so you can vote with confidence this November.
Olivia Allen-Price: Prop 5 is looking to lower the threshold of voter support needed to pass local bond measures for housing and public infrastructure projects.
Ericka Cruz Guevarra: I know it sounds pretty wonky – but this one could have a big impact for local budgets … and for homeowners.
Olivia Allen-Price: Because if more bonds start passing someone has to pay for them. And it’s probably you … or your landlord … who then passes that cost on to you.
Ericka Cruz Guevarra: We’ll get into the details on Proposition 5 just ahead on Prop Fest.
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Olivia Allen-Price: Let’s get into it on Proposition 5. Here’s how it will appear on your ballot…
Voiceover: Proposition 5 ALLOWS LOCAL BONDS FOR AFFORDABLE HOUSING AND PUBLIC INFRASTRUCTURE WITH 55% VOTER APPROVAL. It’s a constitutional amendment that was placed on the ballot by the state legislature.
Olivia Allen-Price: To help explain what’s at stake with Prop 5. I’m joined by reporter Adhiti Bandlamudi Hey, Adhiti.
Adhiti Bandlamudi: Hey, Olivia.
Olivia Allen-Price: So Prop 5 impacts how we pass local bonds in this state. So I want to start with a quick refresher for people. What exactly is a bond?
Adhiti Bandlamudi: Okay, so bonds are a way for state and local governments to raise money for big projects that they want to do now, but pay over time. You might think of it as sort of like a 30-year mortgage you might have on a house, right? The bank gives you a bunch of money upfront to buy the house, and then you pay it back in small installments with interest over time. Government bonds work kind of the same way, except instead of being used to buy a house, the government uses the money for all sorts of things like renovating schools, fixing potholes, funding public transportation, things like that.
Olivia Allen-Price: And right now, if a local government in California wants to borrow money, they always have to get voter approval. And not just the majority of the vote, but actually two thirds of the vote. The state, on the other hand, only needs 55% of voters’ support for their bonds. So it’s essentially harder for a city or county to pass a bond than it is for the state. What could Prop 5 change about that?
Adhiti Bandlamudi: So Prop 5 wants to lower that threshold of votes that local governments would need to get from two thirds to 55%, but only for two types of bonds, affordable housing and for public infrastructure projects. Affordable housing bonds would mean money to build new affordable housing funding, down payment assistance programs, or a low income housing support, for example. Public infrastructure bonds could mean money for road repairs, water management, parks, hospitals, stuff like that. This prop also includes a rule that local governments have to put accountability measures in place so if they issue a bond. Taxpayers know where their money is going. And the interesting thing to note here is that back in 2000, voters passed a proposition that lowered the voter threshold to 55% for school bonds. So this is already something that has come up before the voters and they approved it.
Olivia Allen-Price: Can you walk through why there’s this focus specifically on housing affordability and public infrastructure bonds?
Adhiti Bandlamudi: Yeah. I mean, California’s housing affordability crisis impacts everyone. And it’s growing worse and worse every year. So much so that more people are losing their homes or moving out of the state entirely. Public infrastructure is also hard to fund. There are some hospitals that are falling into disrepair, and it’s been hard for them to get funding. Even just getting a bike lane installed on a road can be really expensive. And, you know, bond measures have some results. For example, in 2019, San Francisco passed Prop eight, which approved $600 million in bonds for affordable housing. And some of that money went to fund Shirley Chisholm Village, a development for educators in the San Francisco Unified School District. So, teacher housing. And it’s set to open this fall.
Olivia Allen-Price: And why lower the voter threshold?
Adhiti Bandlamudi: In short, they want more of these local bonds to have a better chance of passing. A lot of local bond measures have failed recently, despite having incredibly strong voter support. Here’s Edie Irons, who works for All Homes, an affordable housing advocacy group.
Edie Irons: I was just looking at a list of like ten measures for housing across the state in the last just handful of years that failed. Because they got 55%, 59%, 60%, 66%. It’s too high of a bar. You know, a two thirds threshold is not actually a functional way to govern.
Olivia Allen-Price: Now, if Prop 5 passes, do we have a sense of how many more of these local bond measures would pass?
Adhiti Bandlamudi: The Legislative Analyst’s Office has done an analysis on recent local election results, and they say an additional 20% to 50% of local bond measures would have passed under Proposition Five’s lower voter approval requirement.
Olivia Allen-Price: Okay. Yeah, that’s quite a bit. Now, this two thirds threshold that currently exists was set back in 1978 with the passage of Proposition 13. Folks will remember that Prop 13 was all about limiting property tax increases for homeowners. Can you walk us through why that two thirds threshold was part of Prop 13?
Adhiti Bandlamudi: Totally. So when Prop 13 was introduced to the voters in the late 70s, it came at a time when property taxes were fluctuating a lot, partially because there was a huge population boom leading to an increase in demand for housing and a lot of inflation.
Here’s anti-tax activist Howard Jarvis, one of the big proponents of Prop 13, in a 1978 debate…
Howard Jarvis (Archival Tape): The second objective of the amendment is to enable elderly people unlimited incomes, which there are 3 or 4 million in this state, to be able to retain the homes that they have bought and paid for. And who are in serious danger today, because of rapidly escalating property taxes, of losing their homes.
Adhiti Bandlamudi: The property taxes rose so much that some people living on their retirements, who were on a fixed income, couldn’t keep up and some even lost their homes. Prop 13 came in and said, we’re going to make sure property taxes are tied to the home’s value when you bought the home, not the current market value, which could fluctuate. And what it also said is that it would make it harder for local governments to raise those property taxes through bond measures.
In California, our state government is primarily funded by income taxes. So the money you probably see taken out of your paycheck every few weeks. Our local governments are funded primarily through property taxes. So language in Prop 13 set the threshold to pass a local bond to two thirds to make it harder to pass bonds and thus less likely, homeowners would see property tax increases.
So if Prop 5 this year passes, local governments will have an easier time approving bond measures, and it’s more likely that homeowners will see property tax increases.
And that’s the thing. Opponents of Prop 5 are worried about that. It chips away at some of those protections Prop 13 has held in place for decades.
Olivia Allen-Price: There are many critiques of Prop 13, and the implications it’s had on everything from the cost of housing to income inequality … but for the purposes of this episode, know Prop 13 had a drastic and immediate impact on the amount of money going to local governments. And that’s taken a toll on everything that’s traditionally funded by local government – like schools and local infrastructure.
Olivia Allen-Price: Adhiti, Prop 13 has long been called, you know, a political third rail, something that just cannot be touched because it’s so popular with many homeowners in California. Is that still the case if we’re seeing, you know, things like Prop 5 on our ballot?
Adhiti Bandlamudi: Yeah, I wanted to figure that out. And so I talked to Mark Baldassare from the Public Policy Institute of California for this. Back in 2018, he had done a survey on how people felt about Prop 13 at that time.
Mark Baldassare: Pretty consistently. More than 6 in 10 people in California in our polling say that they feel overall Proposition 13 has been mostly a good thing. So convincing people that something that the voters passed even a long time ago needs to be changed is a hurdle. And it might impact their own taxes and ultimately their cost of living at a time when people are very sensitive about rising costs of living in California.
Adhiti Bandlamudi: Now, to be fair, I don’t know how many people will read Prop 5 text and think about Prop 13. I also don’t know how many people will read about Prop 5 and think about their property taxes increasing because not everyone realizes that local bond measures are funded through property tax hikes. But if Prop 5 passes, it could be a bellwether for Prop 13 future as we see more of its protections chipped away year after year.
Olivia Allen-Price: Now, I know there’s been some controversy about the language of the measure or basically what voters will read on the ballot. What are opponents saying about that?
Adhiti Bandlamudi: Yeah, there has been a lot of concern about the language of this prop. It doesn’t specify that the 55% threshold is a decrease from the existing two thirds threshold. And many, like former San Jose Councilmember Johnny Khamis, are concerned that voters won’t fully understand what they’re voting on.
Johnny Khamis: I think it’s misleading. The best I can say is it’s a proposition that is going to be reducing the threshold to passing a new tax when in fact the language on the ballot makes you feel like you’re increasing the voting threshold. So I think it’s misleading and dishonest.
Adhiti Bandlamudi: There was even a court case over the language on the ballot, but ultimately, the language on the ballot was permitted to remain as is.
Olivia Allen-Price: This prop has a lot of ramifications for property taxes, as we’ve been talking about already. But how does California stack up against other states currently on that front?
Adhiti Bandlamudi: Yeah, California’s property tax rates aren’t that high when you compare us to other states. In fact, our property tax rates are actually kind of low. But because our property values here are really high, the amount people end up paying can feel like a lot. And because property taxes can only increase by a little bit every year, it can be really hard for local governments to keep up with maintaining their cities, especially if they have huge population booms.
Olivia Allen-Price: Which probably accounts for a lot of Bay Area regions.
Adhiti Bandlamudi: Very much so.
Olivia Allen-Price: Now, how did Prop 5 end up on the ballot?
Adhiti Bandlamudi: The legislature voted to put Prop 5 on the ballot last year. It’s part of a series of attempts to solve the state’s increasingly dire housing crisis. This is just one way local governments could raise money to approach housing affordability at the local level. It’s a change that has to be voted on by Californians because it would mean a change to the state’s constitution.
Olivia Allen-Price: Take us through who is in support of this one and why.
Adhiti Bandlamudi: Lots of organizations support this proposition, including the California Democratic Party. California YIMBY also known as Yes in My Backyard, California Housing Partnership and the California Apartment Association, among many, many, many others. Affordable housing activists are really excited about this bond, particularly because we’re coming out of a kind of lackluster year when it comes to funding for housing at the state level. We had two multibillion dollar bond measures that were going to go before the voters but died along the way.
Some argue that Prop 13 has made it hard for local governments to spend money locally, and they have to rely on the state to pass these big bond measures. And then that money trickles its way down to the cities that need it. I spoke with Amie Fishman from the nonprofit Housing Association of Northern California about this.
Amie Fishman: Our focus is on how do we empower local communities to directly address their own affordable housing and infrastructure needs. And Prop 5 allows communities to take control of their futures, really, and make the necessary investments without waiting for state intervention.
Olivia Allen-Price: And who’s lining up in opposition.
Adhiti Bandlamudi: Generally, groups that are anti-tax. The Howard Jarvis Taxpayers Association has been against this initiative since it was just a proposal. The California Chamber of Commerce is against it and the very powerful California Association of Realtors. Here’s former San Jose Councilmember Johnny Khamis again.
Johnny Khamis: It actually reverses a lot of the protections that we had under Prop 13. It actually makes it much easier to pass new bonds, new, you know, which I think that we do need a good infrastructure. We do need things. But I also am very cognizant of the fact that my mom received her property tax bill in November that she has to pay. And there’s currently, you know, my mom, who’s retired and is on a limited income has 17– already 17 taxes that are not her property tax. So these are 17 parcel measures from anything from the water district to the county to the school boards to the you name it. There’s 17 currently. You know, I think that this could open the floodgates to new propositions and taxes and make and make it much harder for seniors like my mother to live in the area.
Adhiti Bandlamudi: Now, this proposition does have some accountability measures there, but people worry about whether the rules will actually be followed. Bond money is sometimes misappropriated, even with accountability measures in place.
Olivia Allen-Price: And how is the campaign spending shaking out here?
Adhiti Bandlamudi: As of mid-September, when we’re recording this conversation, the opponents of Prop 5 have raised almost $30 million to fight this. Meanwhile, the ‘yes’ camp has raised about 5 million. But I should add, a lot of that $30 million from the ‘no’ camp came from realty groups, but their opposition has cooled slightly because the legislature made some concessions before this was placed on the ballot. There is now language in Prop 5 that bans local governments from using the bond money to buy up existing single family homes and converting them into affordable units, something the realty groups didn’t want to happen. And just to make it clear, this proposition lowers the voter threshold, but people still have to vote in order for a bond measure to pass. So it’s not like cities can just pass bond measures without say so from the taxpayers.
Olivia Allen-Price: All right. Well, thank you for walking us through this one. It was way more complicated than I anticipated when I first read it. Housing reporter Adhiti Bandlamudi, thanks again.
Adhiti Bandlamudi: Thanks for having me. This was really complicated.
Olivia Allen-Price: We made it through.
In summary, a vote yes on Prop 5 means you want the threshold of voter support needed for local affordable housing and public infrastructure bonds to be lowered from two thirds to 55%. This means it’s more likely that bonds will pass and more funding will be available for those types of projects. A vote no on Prop 5 means you want to keep that two thirds threshold in place and you want to maintain Prop 13 protections against property tax increases.
Ericka Cruz Guevarra: That’s a wrap on Prop 5. Thanks for tuning in to Prop Fest – a collaboration between The Bay and Bay Curious podcasts.
Olivia Allen-Price: If you’re finding these episodes valuable, please share them with a friend, tell your neighbors, post about them on social media… We put a ton of work into these episodes and we really want people to find them before Election Day.
Ericka Cruz Guevarra: Prop Fest is produced by Amanda Font, Christopher Beale, Ana De Almeda Amaral, Olivia Allen-Price, Alan Montecillo, Jessica Kariisa, And me Ericka Cruz Guevarra
Olivia Allen-Price: Extra support from Katie Sprenger, Jen Chien, Maha Sanad, Holly Kernan, And the whole KQED family
Ericka Cruz Guevarra: You can find audio and transcripts for this series at KQED.org/PropFest …
Olivia Allen-Price: Our show is made in San Francisco at member-supported KQED. Join your friends and neighbors and support our work today. Give at KQED.org/donate.
Olivia Allen-Price: I’m Olivia Allen-Price
