$10B+ housing bond nears ballot

San Mateo County would receive about $1 billion to $2 billion, depending on the final bond amount, with a minimum of 52% allocated for affordable housing production and 15% for preservation, per the Regional Housing Finance Act. However, BAHFA and ABAG can update those percentages with a two-third majority vote no earlier than five years after its passage.

The measure would effectively create a regional public lending institution bolstered by Bay Area property owners, who would pay roughly $19 per $100,000 of assessed property toward the fund, per most recent estimates. The money allocated to the county could then be used to construct or preserve housing for those earning up to 120% of the area’s median income, which, as of 2023, was about $210,000 for a four-person household in San Mateo County.

Many experts say the additional funds are necessary to close the financing gap that plagues many affordable housing developers, which may obtain all the necessary permits and city approvals but can’t secure substantial lending sources. But some county residents, including former San Mateo Planning Commissioner Maxine Terner, said she is concerned that elected officials have the ability to alter how the funds are used, provided there is majority approval.

“These rules in place can be changed by them. That’s one of my biggest concerns. They have the full authority. The boards of BAHFA and the [Association of Bay Area Governments] can change the funding allocations,” Terner said.

She added that with the cost of constructing one affordable housing unit surpassing $700,000 in the county, local leaders owe it to taxpayers to ensure costs are kept to a minimum.

“There’s no amount of taxpayer subsidy that can cover that,” Terner said.

BAHFA Director Kate Hartley has said permitting elected officials to shift funds is only meant to respond to long-term regional needs, and lowering the 52% production threshold requirement is unlikely, as that would mean elected leaders would have to make the case that less affordable housing should be built.

While stronger investment in affordable housing production has been a longtime effort, establishing a public agency as a de facto housing lender is a unique endeavor in California. The approach is modeled off New York City’s Housing Development Corporation, and Montgomery County, Maryland has experimented with the approach in recent years, although nothing of this caliber has been attempted in the state.

Geeta Rao, senior director at Enterprise Community Partners, said the public lending approach is pivotal to unlocking much-needed subsidies for low-income housing.

“There’s been a lot of streamlining at the state level to approve more housing, but you’re always going to need a subsidy. It takes six to eight funding sources to develop affordable homes, and that’s just not true for market-rate homes,” she said. “When you look at the [Regional Housing Needs Allocation] numbers, it’s always the low-income housing we need.”

The measure’s likelihood of success would also increase, provided another parallel measure passes in the fall. Assembly Constitutional Amendment 1 would lower the current two-thirds voter majority requirement to 55% for certain general obligation bonds, making it easier for some initiatives to pass, such as the BAHFA bond.

San Mateo County Supervisor Noelia Corzo, also a member of the ABAG Executive Board, added in a statement she believed the housing bond was a pivotal step forward in addressing the area’s affordability crisis.

“Last week, I cast one of the proudest votes of my life to move the Bay Area Housing Bond forward so that it can be placed on the November ballot. My colleagues and I voted unanimously to advance this transformational measure so we can give voters the opportunity to fund real solutions to housing unaffordability across the region,” she said.

The BAHFA Board of Directors will vote on whether to add the measure to the ballot in June.