Proposition 1: California’s Veterans and Affordable Housing Bond

How Has California Expanded Affordable Housing & What Gaps Remain?

Over the past six years, California has nearly tripled the number of new affordable homes it funds. Yet the state continues to face a severe shortage of affordable housing, particularly for Californians with the lowest incomes. California needs more than 2.5 million new homes, including at least 1 million homes that are affordable to lower-income households. Housing cost pressures fall hardest on California renters as nearly half pay unaffordable rents — a hardship that disproportionately impacts Black and Latinx renters with low incomes, older adults, mixed-status families, and people with disabilities.

Unlike market-rate or luxury housing, affordable housing projects typically cannot be built without subsidies because affordable rents do not generate enough revenue to cover development or operating costs. As a result, affordable housing projects rely on multiple funding streams to close financing gaps. Currently, more than 46,000 affordable homes across California (491 developments) are waiting for the last bit of state funding needed to break ground. Prop. 1 would provide funding for various programs that help bridge the financial gap to keep affordable housing construction moving.

Why Is Affordable Housing Funding Running Out & How Would Prop. 1 Help?

Despite the ongoing housing affordability challenges Californians are facing, state funding for affordable housing has largely disappeared. Over the past several years, affordable housing programs have relied on one-time General Fund investments to supplement voter-approved housing bonds, but those investments have drastically declined. The 2026 Budget Act only includes one-time investments in two significant affordable housing programs: $500 million for state Low Income Housing Tax Credits and $200 million for the Multifamily Housing Program, effectively leaving multiple programs without additional funds. Beyond these investments, there is no meaningful ongoing or one-time investment from the state General Fund for affordable housing development.

The state’s remaining modest affordable housing funding sources, including the Affordable Housing and Sustainable Communities Program (AHSC), funded through Cap-and-Invest; state and federal Low-Income Housing Tax Credits; and SB 2 planning funds are insufficient to meet the demand and often require additional funding to be fully leveraged. The AHSC program was expected to receive nearly $800 million per year for affordable housing, but recent changes by the California Air Resources Board put that funding  at risk.

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The funding approved by voters through the 2018 Veterans and Affordable Housing Bond Act has been fully committed — exhausted within five years, by the end of 2023, due to overwhelming demand. The state’s flagship Multifamily Housing Program, which relied on funding from the bond and one-time General Fund investments, is routinely oversubscribed by roughly 9 to 1. Together these signal that the barrier to building more affordable housing in California isn’t a lack of will or projects — it’s a lack of sustainable funding.

Without new state investments, affordable housing production will stall just as California is making meaningful progress and as federal cuts threaten to make it even more difficult for Californians to make ends meet, which is why state lawmakers placed Prop. 1 on the ballot.

What Affordable Housing and Homeownership Programs Would Prop. 1 Fund?

Prop. 1 asks voters to authorize $11.25 billion in general obligation (GO) bonds that would support the construction and preservation of affordable rental homes, expand homeownership assistance for low- and moderate-income homebuyers, including veterans, and provide permanent housing for people at risk of or experiencing homelessness. Within these categories, it would provide some funding for programs that serve distinct populations, such as California tribes, farmworkers, unhoused youth, and college students. The bond funds would be allocated as follows:

Affordable Housing Development and Preservation

• $5.1 billion for the Multifamily Housing Program (MHP), which supports the construction, rehabilitation, or preservation of affordable rental housing. At least 10% of units in a MHP development must be available for extremely low-income households who are at the highest risk of facing homelessness. This is one of California’s model affordable housing development programs.
• $1.15 billion for supportive housing through the MHP program. Supportive housing provides stable homes with wrap-around services for people who were chronically homeless or at risk of becoming so. These funds can be used for operating subsidy reserves, which are critical to the longevity and sustainability of permanent supportive housing.
  • Up to 15% — $150 million — would be allocated as grants to acquire or build permanent supportive housing among other specified uses.
  • Another $150 million is carved out for the capital development or acquisition of youth housing through MHP. This would serve current or former foster youth, homeless minors or youth, or youth at risk of homelessness.
• $750 million for the Portfolio Reinvestment Program, which provides funding to rehabilitate and extend the long-term affordability of state-funded rental multifamily housing projects that are at risk of conversion to market-rate housing.
• $500 million for the Infill Infrastructure Grant Program. This would provide incentive grants to assist with new construction and rehabilitation of infrastructure that supports high-density affordable and mixed-income housing in locations designated as infill. 
• $450 million for the Joe Serna, Jr. Farmworker Housing Program to fund grants or loans for the construction or rehabilitation of housing for agricultural employees and their families.
• $350 million for affordable student housing projects to be split evenly between the University of California and the California State University. 
• $200 million for a new Community Anti-Displacement and Preservation Program, which helps protect unsubsidized housing that may naturally be affordable and requires long-term affordability regulations.
• $200 million for the Tribal Housing Grant Program which finances housing and housing-related activities to enable tribes to rebuild and reconstitute their communities. 
• $200 million to the Affordable Housing Innovation Fund for the Local Housing Trust Fund Matching Grant Program. This would fund competitive grants or loans to local housing trust funds that develop, own, lend, or invest in affordable housing and would be used to create pilot programs to demonstrate innovative approaches to creating or preserving affordable housing.

Homeownership

• $1.25 billion for the CalVet Home Loan Program to help veterans and their families purchase homes. This portion of the bond would be repaid through  mortgage (principal and interest) payments. 
• $600 million for the CalHome program. CalHome provides forgivable loans for lower-income households in self-help homeownership projects, including subdivisions and manufactured homes. 
• $500 million for the My Home downpayment assistance program to fund low-to-moderate income home purchase assistance programs.

What Benefits Would Prop. 1 Create for California’s Economy & Communities?

Prop. 1 would help expand and preserve California’s affordable housing supply while generating economic benefits and advancing the state’s housing goals. The bond would help close the financing gap for affordable rental homes, which serve lower-income California families and include seniors, people with disabilities, farmworkers, college students, and unhoused youth. According to legislative analyses, the bond is expected to:

• Produce more than 40,000 new affordable homes for lower-income families and individuals.
• Preserve more than 5,500 existing affordable homes, ensuring they remain affordable for future generations. 
• Create more than 53,000 construction jobs through building new housing across the state.
• Generate $1.3 billion in state and local tax revenue that supports local communities and public services.

Every $1 invested in state affordable housing leverages roughly $4 in federal, local, and private investment, maximizing the impact of public dollars. Affordable housing also delivers economic, health, and environmental benefits. For example:

• Children who grow up in affordable housing earn a median of $51,000 more over their lifetimes,
• Permanent supportive housing saves an estimated $1.80 in public costs for every $1 invested, and
• Building homes near jobs and transit lowers transportation costs while reducing greenhouse gas emissions.

Together, these investments would expand housing opportunities, reduce housing instability, strengthen local economies, and help California meet its long-term housing needs.

How Would Prop. 1 Be Repaid?

Prop. 1 asks voters to authorize a total of $11.25 billion in GO bonds, divided as follows:

• A $10 billion GO bond for affordable housing and homeownership programs that would be repaid from the state’s General Fund, and
• A $1.25 billion veterans’ bond, a type of tax-exempt GO bond, for the CalVet Home Loan program that would be repaid through mortgage payments, with the General Fund as a backstop.

California voters often pass GO bonds to fund infrastructure projects that are designed to serve the public over many generations, as has been the case with affordable housing. Voters have also historically passed veterans’ bonds for CalVet to support homeownership opportunities for veterans.

GO bonds are repaid from the state’s General Fund. Repaying the $10 billion bond would cost $580 million per year for the next 30 years, for a total estimated cost of $17.4 billion ($10 billion in principal and $7.39 billion in interest). As of the governor’s proposed 2026-27 budget, California had $6.3 billion in General Fund debt service for GO bonds, or roughly 2.6% of General Fund expenditures.

In contrast, veterans bonds are generally self-supporting because they are repaid through principal and interest payments made by CalVet Home Loan Program borrowers. However, they are still GO bonds and are ultimately backed by the state’s General Fund. If program revenues were insufficient to cover the debt service, the General Fund would be responsible for the difference. It is unclear how often, if ever, the General Fund has had to backfill debt payments for previous veterans bonds.

Prop. 1 bond dollars would replenish depleted affordable housing programs. But bond dollars alone will not solve the housing shortage, nor would they replace the need for ongoing investments to meet the state’s substantial housing needs.

Prop. 1 and Prop. 38 Draw From Same Bonding Capacity, Face Important Trade Offs

Voters face two GO bond measures on the November 2026 ballot: Prop. 1 and Proposition 38. Prop. 38 would authorize $8.4 billion in GO bonds to support research and development in immunology and immunotherapy. Voters should weigh how each proposal addresses the state’s most pressing needs, fits within California’s limited borrowing capacity, and affects the state’s ability to invest in services that help families today and in the future.

Like all GO bonds, Prop. 38 would require long-term General Fund debt-service payments — estimated at $500 million annually for 25 years — reducing budget and bonding capacity for other state priorities. If both Prop. 1 and Prop. 38 are approved, it would reduce General Fund dollars by roughly $1.1 billion annually.

Public sector investment in scientific research is needed, particularly given federal cuts, but Prop. 38 raises important fiscal and policy considerations. GO bonds are conventionally used to finance infrastructure projects — like roads, bridges, or housing — that can be used over decades, roughly matching the time it takes to repay the bond itself.

Funding research through GO bonds does not work the same way. Bond-funded research gets most of the dollars upfront for grants, salaries, and operating costs, but are not guaranteed to be built into a lasting asset. Research findings do compound overtime, but the bond dollars themselves are depleted after a few years. The state then spends years or decades paying interest on bonds that stopped directly funding work long ago. So while scientific research needs funding, a GO bond is not the appropriate funding mechanism. Plus, half of Prop. 38’s funding would be concentrated on a limited set of health conditions, even though California already has multiple public and private research institutions conducting work in these areas.

Prop. 1 doesn’t confront these same challenges. While previous affordable housing bond dollars were also used up quickly, they left behind affordable homes that will continue to serve numerous families for decades. Affordable housing developments that use state dollars must have affordability requirements for at least 55 years — way beyond the repayment of the bonds with which they’re financed. The community benefits and capital assets outlast the debt, which is the intended purpose of GO bonds.

Prop. 1 Supporters and Opponents

Prop. 1 is supported by a broad coalition of organizations representing housing, business, labor, local government, older adults, tenants, homelessness, urban planning, construction, environmental, and civil rights interests, among others.

Official opposition has been limited. The primary opponents on record include a few Republican state legislators who voted against placing the measure on the ballot.