Proposition 5 on California’s November 2024 statewide ballot would set the voter threshold to approve local general obligation (GO) bonds for public infrastructure and affordable housing investments at 55%, provided those bonds include strong accountability and transparency requirements. The same was done for school bonds when voters approved Proposition 39 in 2000. The California Housing Partnership cares about this measure because local government GO bonds typically provide an early, catalyzing portion of the funding that is essential to advancing the construction and preservation of affordable housing, a documented need throughout California. We also care about Proposition 5’s ability to make it easier for localities to repair and improve outdated and inadequate infrastructure that is essential to the development and maintenance of healthy California communities, and we wanted an expert in this area to tell us more precisely how it would help, as well as to quantify the economic benefits.
That is why we commissioned a study by the respected land economics consulting firm Economic & Planning Systems (EPS) to assess the net economic benefits that Proposition 5 could bring to California communities if voters approve it on November 5th. The EPS report found substantial economic benefits would accrue to California communities in two broad areas: (1) savings in housing costs for renters and homebuyers and (2) job creation and economic growth.
The EPS report presents these economic benefits in terms of ranges, with low-end estimates assuming that communities focus on assisting low-income renters (for whom assistance costs are greater), and high-end estimates assuming that communities focus on assisting moderate income households (for whom assistance costs are less). In an effort to present the more conservative view, the summary of the EPS report findings below shows the low end of the EPS estimated benefits. In other words, what follows are the minimum levels of economic benefits communities would likely experience per $100 million of bonds issued using the authority granted via Proposition 5:
(1) SAVINGS IN HOUSING COSTS FOR RENTERS AND HOMEBUYERS
For each $100 million of GO bonds issued by local communities, Proposition 5 would generate major savings in both annual household costs and housing production costs for both affordable and market rate housing units due to 1) the creation of new affordable housing and 2) the development of essential public infrastructure necessary to support housing production, such as broadband expansion, water management, and public transit. Here are the detailed benefits from these bonds:
- At least 1,500 new affordable and moderately priced housing units. A local GO bond could also stimulate emerging public-private affordable housing delivery and financing models.
- A reduction of $14,000 in annual housing costs per household from lower rents, freeing up discretionary spending for those residents on other economic activities. This increased spending will increase labor income by at least $6.3 million annually and create at least 90 permanent jobs.
- A reduction in the average cost per housing unit produced by roughly $40,000 if bond proceeds are used by communities to defray the costs of public infrastructure necessary to develop new housing (e.g., transportation facilities, electric utilities, water service, and impact fees for schools, parks, and libraries).
(2) JOB CREATION, ECONOMIC GROWTH AND CLIMATE BENEFITS
For each $100 million of GO bonds issued by local communities, Proposition 5 would reduce greenhouse gas emissions and help stabilize and rebuild California’s construction sector, which has not fully recovered from the 2008 financial crisis, by:
- The creation of at least 11,300 one-time jobs in residential construction, and from economic ripple effects across a wide range of other sectors. More widespread use of GO bonds for affordable housing could also help rebuild California’s construction sector, where employment remains about 18 percent below levels that prevailed prior to the market downturn precipitated by the mortgaged-back security crisis of 2008.
- A net benefit from reduced greenhouse gas emissions and vehicle miles travelled of at least $2.5 million per year. Over a 55-year period (a typical covenant for affordable housing), these annual benefits accumulate to a total net present value of at least $114.6 million, equivalent to at least $76,400 for a typical multi-family housing unit.
- The creation of additional housing opportunities in job rich, labor constrained locations, which will enable ongoing economic growth in these communities that has until now been hampered by local workforce shortages, including at least:
- 2,140 permanent jobs
- $241 million in economic output
- $138 million in value added (i.e., gross domestic product)
- $91 million in labor income
While the total amount of GO bond revenue California communities might approve over time is impossible to know, the results described above represent only a fraction of the total economic and housing benefits California can expect to achieve from Proposition 5. The measure will make it easier for all California communities to fund affordable housing and infrastructure that meets their unique needs, bringing more local control to these important decisions.
(3) STRICTER OVERSIGHT AND ACCOUNTABILITY
As with the oversight structure established under Proposition 39 for school bonds, Proposition 5 mandates strict, new accountability mechanisms to ensure the responsible use of bond funds. Local governments will be required to establish citizen oversight committees and conduct independent performance audits on an annual basis to ensure funds are allocated in alignment with voter-approved projects. The completed audits then will be posted in a manner accessible to the public and submitted to the State Auditor for review. These audits and oversight committees will provide transparency and help maintain public trust by ensuring the bond revenues are used solely for intended purposes.
CONCLUSION
By addressing both housing affordability and broader public infrastructure needs, Proposition 5 would empower local communities to enhance public safety, increase environmental resilience, and improve the quality of life, while also providing a significant boost to the economy. Proposition 5 would provide local governments the flexibility to fund the capital costs for a wide range of essential projects, including first-time homebuyer programs, down payment assistance, emergency services, fire and flood protection, water management, public transportation, hospitals, police stations, broadband networks, and parks. Furthermore, Proposition 5 includes strict oversight measures, requiring local governments to establish citizen oversight committees and conduct independent performance audits to ensure transparency and accountability in using bond funds.
Proposition 5 represents a significant opportunity for California to address its housing affordability crisis and infrastructure challenges by setting the voter threshold for bond approval at a level that will allow local communities to make needed investments. The accompanying EPS report demonstrates how Proposition 5 could unlock billions in funding, create tens of thousands of jobs, and foster long-term economic growth across California.
ABOUT THE AUTHORS
Emma Jordan supports the Partnership’s affordable housing data visualization and preservation projects through data analysis, spatial analysis and automation. She previously worked as an analyst providing data analytic and technical support for Housing and Urban Development grantees and a researcher for the Terner Center for Housing Innovation.
Dan Rinzler leads the Partnership’s policy and research initiatives around affordable housing preservation, development and their social impact. He previously worked in housing program development and impact assessment with the Low Income Investment Fund (LIIF) and as an urban planning consultant in the San Francisco Bay Area. 
Matt Schwartz leads the Partnership’s work to shape state and federal legislation and regulations to expand the resources for affordable housing. He has worked in the sector for more than 30 years in various capacities with partners such as MidPen Housing and San Francisco Redevelopment Agency, Housing California and Non-Profit Housing (NPH) Association of Northern California. Matt has served as CEO of the Partnership since 2002. 
Dr. Anthony Vega leads the Partnership’s research, policy analysis, and program evaluation efforts. He previously worked in research and program evaluation focusing on housing stability, access and crime prevention through environmental design at The Community Builders in Boston and the John Jay Research and Evaluation Center in New York. He has taught 15 courses in Criminology and Sociology at Washington State University and John Jay College.