California Proposition 5: Making it easier to pass housing, infrastructure bonds

Currently, two-thirds voter approval is required to pass local bond measures that fund affordable housing and infrastructure projects in California. Prop. 5 would lower that threshold to 55%.

Official title on the ballot: Proposition 5 — Allows Local Bonds for Affordable Housing and Public Infrastructure with 55% Voter Approval. Legislative Constitutional Amendment.

Understanding Prop. 5

California has a lot of things: beaches, mountains, Silicon Valley, Hollywood. One thing it lacks? Affordable housing.

According to the California Legislative Analyst’s Office, the typical renter pays a 50% premium to live here compared with what renters pay in the rest of the country. Homebuyers can expect to spend double what they would in other states.

Addressing the shortage of reasonably priced housing has been near top of mind for L.A. voters. Prop. 5 is yet another measure aiming to address that problem. But will homeowners support the measure if it could mean higher property tax bills?

The history behind it

Prop. 5 is on the ballot because the state legislature voted to put it there.

Lawmakers say the goal is to make it easier for local governments to ask voters for permission to raise money for plans to construct affordable housing and offer assistance to first-time homebuyers — as well as for projects that build infrastructure, such as hospitals, roads and broadband internet networks.

How it would work

If the voter approval threshold is reduced from two-thirds to 55%, the obvious outcome is that local housing and infrastructure initiatives would have a better chance of passing. That may incentivize local governments to put more of those proposals on the ballot.

If these measures pass, projects would be funded through bonds issued by local governments. That essentially means borrowing money that will need to be paid back, with interest, by future property tax revenue.

What people who support it say

Nurses, firefighters and housing advocates say more local action is needed to address a housing crisis that is pushing middle-class families out of California. They say Prop. 5 would make such action possible, and would come with increased accountability measures, such as citizens oversight committees and annual audits.

What people who oppose it say

Taxpayer and homeowner groups say Prop. 5 would make it easier to pile new costs on taxpayers across the state. They say the current two-thirds threshold was enshrined in the 1879 California Constitution, and lowering it now would mean higher property taxes for homeowners in exchange for affordable housing projects that — in some parts of the state — cost more than $1 million per unit to build.

Potential financial impact

The exact financial impact of Prop. 5 is unclear because increased costs would only come when and if voters approve other, separate, bond measures. The Legislative Analyst’s Office says if the 55% threshold had been in effect during recent elections, between 20% and 50% more local bond measures likely would have passed. 

State analysts say that change could lead to a couple billion more dollars over many years for housing and infrastructure projects, to be recouped through higher property taxes. But, they conclude, revenue would vary across regions, and voters would have the final say on what local government bonds pass.

Follow the money

The Chan Zuckerberg Initiative has contributed $2.5 million to support Prop. 5.

The California Association of Realtors, the California Business Roundtable and the Howard Jarvis Taxpayers Association are among the opponents who have contributed more than $27 million to defeat Prop. 5.

Stayed tuned for more campaign finance figures as we get closer to the election.

Further reading

At this point, you might be wondering, “If local government leaders think funding these projects is such a good idea, why don’t they just raise property taxes themselves?”

One reason they don’t is because of Prop. 13, a landmark measure approved by California voters in 1978 to limit property taxes across the state. You can read more about that pivotal proposition — and how it continues to shape California neighborhoods — by checking out this reporting collaboration LAist had a hand in creating:

In the November 2000 election, California voters passed Prop. 39, a similar initiative to lower the threshold for approving education bonds from two-thirds to 55%. You can read more about that here:

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