Should California sell $600 million in new general obligation bonds to fund affordable multifamily housing for low-income veterans?
California’s veterans housing programs (“Cal-Vet”) have existed since 1921, and been extended 27 times; more than 420,000 veterans have participated. California general obligation bonds are sold to investors and the proceeds used to buy homes for eligible veterans, who make monthly payments to the state. These monies are used to repay the bondholders, so there has been no cost to California taxpayers. In 2008, voters approved an additional $900 million in bonds to replenish funding for the Cal-Vet program.
Since 2000, the number of veterans using the Cal-Vet program has declined significantly for various reasons, including changes in veterans’ housing needs.
$600 million worth of bonds would be redirected from the amount approved in 2008, and sold to fund affordable multifamily housing, such as apartment complexes, for low-income veterans. These new bonds would be repaid by taxpayers rather than by the veterans involved.
California would provide local governments and nonprofit and private developers with partial financing assistance, such as low-interest loans. Housing built with these funds would be rented to low-income veterans—that is, those earning less than 80 percent of the local average family income (on average across the state, this means a single veteran earning less than $38,000). These units would be “affordable,” meaning veterans’ rent payments cannot exceed 30% of the income limit for the program.
An accompanying state law would mandate priority for projects (including supportive housing) for veterans homeless or at risk of becoming homeless. In particular, at least one-half of the funds would be used for housing for extremely low-income veterans, defined as those earning less than 30% of the local average family income (on average across the state, this means a veteran earning less than $14,000 per year)
The Legislature could make future changes to improve the program, and the state would publish an annual program evaluation.
The $600 million of general obligation bonds would be repaid using general tax revenues. The cost of these bonds would depend on their interest rates and the repayment period. Assuming that (i) the interest rate averages 5%, and (ii) the bonds would be repaid over a ten-year period, the bond repayment cost would average about $50 million annually for 15 years, or a total of $750 million. Up to $30 million of the bond funds could be used to cover the costs of administering the program.
A YES Vote Means
You want California to sell $600 million in general obligation bonds to fund affordable multifamily housing for low-income veterans.
A NO Vote Means
You do not want California to sell $600 million in general obligations bonds to fund affordable multifamily housing for low-income veterans.
- This is a fiscally responsible proposition that will help thousands of homeless California veterans get a roof over their heads.
- By using previously approved but unsold bond funds, Proposition 41 doesn’t create new taxes or add new debt to California.
- This program will be paid for by the taxpayers instead of by the veterans who paid for it under the original Cal-Vet program.
- If the funding does not go directly to the intended beneficiaries, there is risk of possible mismanagement and waste.