Understanding California’s Proposition 5: What it Means for Affordable Housing and Infrastructure in Construction

Author: SanCo Developments

Published: 12:40 PM PDT November 6, 2024

Updated: 12:40 PM PDT November 6, 2024

On California’s November ballot, one of the standout propositions this year was Proposition 5, which could have a lasting impact on the future of housing and infrastructure projects across the state. While it may seem like an intricate legislative change, Proposition 5 directly addresses a critical issue: lowering the voter threshold for local bond measures that fund affordable housing and infrastructure from a two-thirds majority to a 55% approval rate, the same as required for school improvements.

Why the Proposition Matters

For years, California has faced a housing crisis, with the demand for affordable housing outpacing supply. Local governments often rely on bonds to raise funds for large projects, including housing initiatives and infrastructure improvements like transit repairs, public parks, and utilities. However, current law requires a supermajority (66.67%) to pass these bonds — a standard that has blocked several key measures that could have brought critical funding to communities in need.

For example, in 2022, San Francisco's $400 million bond proposal for transit improvements narrowly missed approval with 65% of the vote. A simple majority supported the measure, but it failed due to the two-thirds requirement. Proposition 5’s proposed reduction to a 55% threshold could unlock new funding for housing and public works projects that align with SanCo Developments' mission of building stronger communities through high-quality construction.

Supporters vs. Opponents: The Debate

Supporters of Proposition 5 argue that the two-thirds requirement is a “democratic barrier,” giving a minority of voters the power to stop these essential projects. They believe lowering the threshold will make it easier for local governments to fund necessary housing and infrastructure, allowing voters more direct influence in their communities. The proposition has garnered financial support from organizations like the Non-Profit Housing Association of Northern California and backing from influential figures, including the Zuckerberg family foundation, which sees Proposition 5 as key to unlocking much-needed development resources.

Opponents, however, raise concerns about the financial impact on property owners who ultimately bear the cost of these bonds through property taxes. Increased borrowing by local governments could lead to higher property taxes, raising rents and potentially impacting goods and services. The opposition argues this shift could place an additional financial strain on property owners, including homeowners, renters, and local businesses who could see trickle-down effects in the form of increased costs.

Where Proposition 5 Stands

Initial returns indicate Proposition 5 may not pass, though the final result will be determined in the coming weeks. If it fails, the two-thirds rule will remain intact, maintaining the current level of difficulty for approving local bond measures. However, if Proposition 5 is passed, it could ease the way for communities to fund critical affordable housing and infrastructure initiatives. The California Secretary of State has until December 13 to certify the final results, providing a definitive answer.

What This Means for SanCo Developments and Our Community

For companies like SanCo Developments, which is dedicated to building quality housing and infrastructure, Proposition 5 could present new opportunities to work with local governments on meaningful projects that benefit communities directly. The increased funding available through bonds may lead to more opportunities for construction projects aligned with affordable housing and local infrastructure upgrades, creating a stronger foundation for California’s future.

No matter the outcome, Proposition 5 has opened an important conversation about the accessibility of public funding for vital community projects. SanCo Developments will continue monitoring the evolving landscape to ensure that we are ready to support initiatives that improve our neighborhoods and add value for California’s residents.