What the Measure Would Do

Proposition 5 would lower the voting requirement needed to approve local bonds and increase local property taxes to pay off bond debt that funds affordable housing or public infrastructure projects such as fire and flood protection, libraries, and public transit. Specifically, it would lower the voter approval requirement from two-thirds to 55%.

In exchange for the lower voter approval threshold, Prop. 5 would require local governments to form citizens’ oversight committees to monitor the use of bond proceeds and to conduct annual independent financial and performance audits to ensure that expenditures align with the voters’ intent.

In 2000, California voters approved a similar measure, Prop. 39, to lower the threshold for bonds for school facilities construction and modernization to a 55% majority. School bonds also require an oversight committee to monitor expenditures and confirm compliance with projects promised to voters.

The Backstory

Since the 1970s, California’s constitution has required a two-thirds majority vote to pass most local bonds for housing, infrastructure, and parks. This threshold has made it difficult to fund critical priorities that disproportionately affect lower-income communities, including affordable housing. For example, the City of San José’s 2018 Measure V, a $450 million affordable housing bond measure, received 64.01% yes votes, and Santa Cruz County’s 2018 Measure H, a $140 million affordable housing bond measure, received 55.39% yes votes, but both failed to reach the 66.67% required to pass.

2000’s Prop. 39 set a precedent for reform by lowering the threshold for school construction bonds to a 55% majority.

The Non-Profit Housing Association of Northern California (NPH) has advocated for lowering the voter threshold since the idea was first introduced in the state legislature in 2019. If approved by voters, Prop. 5 would allow regional and local affordable housing bonds such as a Bay Area housing bond to be approved by 55% of voters in future elections.

In 2023, legislators authorized Prop. 5 to go on the ballot. The legislation originally proposed lowering the voter approval threshold for sales taxes and parcel taxes as well as for property-tax general obligation bonds. Subsequently, the legislature made changes that limited Prop. 5 only to general obligation bonds paid for with local property taxes. Prop. 5 would prohibit local governments from using the funds from these bonds to acquire existing single-family homes and convert them into affordable units.¹

Prop. 5 was placed on the ballot with a super-majority vote of the state legislature. It requires a simple majority (50% plus one vote) to pass.

Equity Impacts

There is a tremendous need for below-market-rate and deed-restricted affordable housing. According to the Terner Center for Housing Innovation at the University of California, Berkeley, “nearly half of Bay Area renters are cost-burdened — spending over 30 percent of their incomes on rent and utilities — and the majority of existing rental units cost over $2,000 per month.”²

The Terner Center also notes that “people of color are more likely to be renters and have lower incomes that make them more vulnerable to rent increases: more than half of Black renters — 55 percent — have very low incomes compared to 30 percent of Non-Hispanic White renters.”

In addition, the Bay Area Equity Atlas reports that “Black, Latinx, Native American, Pacific Islander, and People of color renters are more likely to be rent-burdened, particularly among female-headed renter households.”³

Pros

• More local bond measures for affordable housing and public infrastructure would likely pass, thereby increasing community investments in these needs.
• Local funding often creates the opportunity for jurisdictions to become eligible for and leverage additional state, federal, and private sector resources to finance public works projects.
• The 55% voter approval threshold is more democratic than the two-thirds threshold and aligns with the existing threshold for local school facilities bonds. Under the current rules, a one-third minority of voters can block community investments and improvements.
• Given the financial benefits homeowners receive under Prop. 13, Prop. 5 is a reasonable measure to allow local voters to choose to slightly increase the property tax in order to invest in improvements to the community.

Cons

• SPUR could not identify any downsides to this measure.