How Prop. 41 Changes Things

The existing CalVet Home Loans program was created in the 1920s to help veterans buy a home, mobile home or farm. While it has been effective for those who used it, many veterans today are not financially able to purchase a home, and the program now holds hundreds of millions of dollars worth of unsold bonds.

This measure aims to redirect some—not all—of the unused bonds to help vets who face dire housing challenges. Under the measure, local governments, nonprofits and private developers can get loans to build, renovate or buy multifamily housing, to be rented to vets.

Prop. 41 funding can also be used to create more transitional or supportive housing, where veterans can get services like mental health care and job training.

Who Would Qualify for the Housing?

The program gives priority to projects that would house veterans who are homeless or at risk of becoming homeless.

• Extremely Low-Income Veterans—At least half of the money would be used to finance housing for extremely low-income veterans and their families. On average in the nine Bay Area counties, a single person earning about $20,600 a year is considered extremely low-income. For a Bay Area family of four, the average income limit is about $29,400.
• Low-Income Veterans—The rest of the bond money would be used to finance housing for low-income veterans and their families. On average in the nine Bay Area counties, a single person earning about $53,400 is considered low income, but again, this varies by county. For a family of four, the income limit is about $76,300.

Statewide the income limits are much lower. Find out the income limits in your county.

Where the Money Comes From

In 2008, California voters passed Proposition 12, authorizing the state to issue $900 million in bonds to help veterans buy homes through the CalVet Home Loans program. That was the 23rd time voters had approved bonds for the 1920s-era program.

None of those Prop. 12 bonds were ever sold, however, and a portion of bond funding previously given to the CalVet program also went unspent. Legislators say historically low interest rates, federal home loan assistance and the housing crisis all contributed to declining demand for the program.

So lawmakers deauthorized $600 million of bonds from the CalVet program, and proposed $600 million in new bond funding through Prop. 41. Since voters approved the original bonds, legislators cannot change their use without voter approval. Technically, the public is voting on a new bond measure, though the legislation calls it a reallocation.

If voters do not pass Prop. 41, the $600 million that was deauthorized would not be restored without a new ballot measure.

About $500 million would still be available to fund the CalVet Home Loans program.

How the Program Works

The state would offer low-interest loans to local governments, nonprofit organizations and private developers. These groups would use the loans to buy, construct or refurbish properties to be rented to veterans.

People who buy the bonds would be repaid from the state’s general fund.

Cost to Taxpayers

Prop. 41 would cost taxpayers about $50 million per year for 15 years ($750 million total) to repay principle plus an estimated 5 percent interest. For a point of reference, that amount is less than one-tenth of 1 percent of the general fund.

This is a new cost to the state, because the CalVet Home Loans program bonds have not cost taxpayers anything. Those bonds are self-liquidating, meaning the people who get the home loans repay the bonds. The general fund is used only to repay the bonds if the loan payments made by veterans fall short. In the history of the program, this has not happened.

The new bonds in Prop. 41 will be repaid through the state’s general fund.

State and local governments are expected to save an unknown sum in social and medical services as low-income or homeless vets transition into the new housing. A 2009 study by the Economic Roundtable, a nonprofit public policy organization based in Los Angeles, found the public cost of a homeless person is about five times greater than the cost of someone in supportive housing. No analysis has been done to predict an approximate savings for the state.

ARGUMENTS FOR AND AGAINST:

Supporters say…

this measure will help low-income and homeless veterans find stable housing without raising taxes or adding to California’s bonded debt. They say the CalVet Home Loans program is not meeting the housing needs of low-income and homeless vets, and the state will save money by helping these vets into affordable housing.

This measure got on the ballot with a unanimous vote in the state Legislature. The PAC known as 'Coalition for Veterans Housing-Yes on Prop. 41' has contributed $10,000 for the measure.

Opponents say…

not much, really. There are no people or groups who’ve publicly opposed the measure, or registered with the state to campaign against it. The opposition statements in the secretary of state’s voter guide were written by a lawyer who doesn’t actually argue against the measure, but discusses bond policy.

We talked with the Legislative Analyst’s Office about issues voters may want to consider. The program comes with a cost to taxpayers and will draw money from the general fund, while the current CalVet Home Loans program does not. Some people may also argue the state should not take on additional bond spending.

How Prop. 42 Changes Things

The California Public Records Act was enacted in 1968, giving the public access to government documents and information. In 1975, California amended the state constitution to require the state to reimburse local governments for any costs associated with new state mandates.

Since the Public Records Act was enacted before the mandate law, local governments have always paid for the core provisions of the bill. That means they’ve paid for the staff time to copy and distribute public records.

Starting in the late 1990s, state legislators passed a series of changes to the Act to increase the responsibilities of local governments—things like releasing documents in electronic formats and requiring a response within 10 days. The state must reimburse costs associated with these new mandates.

Prop. 42 would require local governments to take over all costs related to local public records requests. Requests for state public records would still be paid for by the state.

The measure also makes it a constitutional requirement for local governments to comply with the California Public Records Act and the Brown Act. Currently they are state laws.

What Prompted This Measure?

In 2013, the state Legislature passed a budget bill that suspended certain mandates of the California Public Records Act to save money.

The bill said local governments would no longer be required to:

• respond to a public records request within 10 days, and
• provide a reason for denying a request.

Public concern about this plan prompted state leaders to amend their budget proposal within a week, and the suspension never went through.

Prop. 42 would ensure that Public Records Act mandates cannot be suspended for budgetary reasons.

Who Pays, and Who Saves?

The Legislative Analyst’s Office says this measure could save the state tens of millions of dollars annually. And the LAO says it will increase costs for thousands of cities and counties in California that can no longer count on state reimbursement for staff time to comply with public records laws.

But here’s the thing: The state has never once reimbursed local governments for any of these costs.

To get reimbursed, local governments filed a claim with the Commission on State Mandates arguing that things like releasing documents in electronic formats and providing a reason for denying a request were new state mandates. It wasn’t until May 2011 that the commission ruled these local public record costs are eligible for state reimbursement.

About 185 local agencies have now filed for reimbursement, and many more are expected to file in coming months. Reimbursement requests range from $1,126 from the City of Saratoga to more than $630,000 from the City of Fresno. In total, local governments have requested $9.1 million so far in reimbursements. This is a fraction of the anticipated total because many local governments have not yet filed.

If the measure passes, the state would still be required to pay these past claims. But since many local governments haven’t filed claims yet, it’s difficult to estimate how much money the state would save annually in the future.

Prop. 42 has no known direct costs to taxpayers, but local governments may choose to raise taxes in the future to cover these higher costs.

ARGUMENTS FOR AND AGAINST:

Supporters say…

this measure eliminates the possibility that local agencies can deny a request for public information or decide not to post notice of a meeting based on cost. When local governments incur costs for providing the public with records, they will have a financial incentive to make their systems more efficient.

This measure got on the ballot with a unanimous vote in the state Legislature. Sponsored by firefighters and building trades organizations, the PAC known as 'Yes On 42, The Public’s Right To Know Act' is listed in support of the measure, but has not yet reported any campaign donations.

Opponents say…

actually, it’s difficult to find people or groups who oppose this law. None has stepped forward publicly or filed notice with the state.

We explored possible objections to this measure with the Legislative Analyst’s Office; one potential problem is that we don’t know what local governments would do if they don’t have the funds to fulfill these legal obligations. Some may also believe the state should not be permitted to pass laws that create expenses for local governments.