# Prop 1: $11.25 billion bond for affordable and veterans housing

URL: https://www.californiapeople.org/props/prop-1

- number: 1
- title: $11.25 billion bond for affordable and veterans housing
- type: Legislative bond act (SB 417, Limón)
- sponsor: Legislature; campaign funded by affordable-housing developers and their allies

**Our read: Lean yes, but demand accountability.** $11.25B for housing at about $630K a unit, run by an agency flagged in five state audits. Here’s how to watch the money.

## Key findings
- A subsidized apartment built with California tax credits cost about **$630,000 per unit** in 2023, up nearly 20% since 2019 after inflation. [^1]
- The state's share in this bond works out to roughly **$180,000 per rental unit** ($7.2B for up to 40,000 units, our math). The rest has to come from tax credits and local money. [^2]
- RAND estimates that at Colorado's cost levels, about $1.25B of recent spending by California's four biggest housing programs would have built **more than 4 times as many units**. [^3]
- The State Auditor has flagged the agency that runs these bonds (HCD) in **five audits (2007–2018)**: weak monitoring, unexplained high per-unit costs, and a data system that never worked fully. [^4][^5][^6]
- The campaign is funded mostly by the groups that would apply for the money: **$13.9M of $15.3M** came from a committee sponsored by affordable-housing organizations. [^7]

## Track record
| Bond | State $ | What it produced (as reported) | Notes |
|---|---|---|---|
| Prop 46 (2002) | $2.1B | ~91,000 "units assisted" for $1.91B awarded | Count includes 10,000+ shelter and dorm spaces, so it isn't a count of new apartments. [^8] |
| Prop 1C (2006) | $2.85B | ~114,000 "units assisted" for ~$2.3B | Includes ~3,000 shelter spaces. HCD's own report gives two different dollar totals. [^8] |
| Prop 1 (2018) | $4B ($3B housing + $1B veteran loans) | LAO estimated subsidies for up to 30,000 multifamily and 7,500 farmworker households. We found no HCD count of completed units | Money ran out quickly amid heavy demand; HCD expected to use it all by end of 2024. [^9][^10][^11] |
| Prop 1 (Mar 2024) | $6.38B ($2B housing) | Estimated up to 4,350 units | Behavioral-health bond. Passed with 50.2%. [^12][^7] |
| **Prop 1 (2026)** | **$11.25B** | LAO: up to 40,000 rentals + ~40,000 homebuyer households | Nearly 3 times the size of the 2018 bond. [^13] |

**Audit pattern:** In 2014 the State Auditor found that 7 of 10 sampled projects cost well above local averages with no documented justification. One project (East Leland Family Apartments) cost ~$412,000 per unit when comparable projects averaged ~$264,000. The auditor also found a $1.35M grant for an outdoor "green living room" that built no housing, $486M still waiting to be awarded, and HCD's cost benchmarks hadn't been updated since 2008. [^4]

## What it does
- $10B of the general-obligation bonds, repaid from the General Fund: $7.2B affordable rentals, $1.1B homeownership, $500M infrastructure, $450M farmworker housing, $350M UC/CSU student housing, $200M tribal housing, $200M local pilots. [^2]
- $1.25B CalVet home loans, repaid by veterans' loan payments (the program "has always operated at no direct cost to the state"). [^2]
- Cost: $500–600M a year for about 25 years. [^2]

## Money and conflicts
- **Yes $15.3M, No $0** in committees (through Oct 22). [^7] Reform California has spent about $7,500 against. [^11] Top Yes donors include Airbnb, two carpenters' union councils, and Building a Better California (funded by Sergey Brin and John Doerr), at $1M each. [^13]
- Recipients are mostly nonprofit and for-profit affordable-housing developers, who apply to HCD and CalHFA. For example, MidPen Housing alone has 1,198 units waiting on state money. [^14]
- Supporters cite **461 "shovel-ready" projects (39,880 units)** stalled for lack of gap funding. That count comes from Enterprise Community Partners, an affordable-housing finance group. [^14]

## Does it solve a lasting problem?
- It adds units, but it doesn't touch the cost per unit, which is the main reason each dollar builds so little. Every extra funding source a project needs adds about 4 months and ~$20,460 per unit. [^1][^14]
- The state needs about 1 million lower-income units by 2030 under its own targets. This bond covers roughly 4% of that. [^14][^2]

## If you vote yes: accountability
**Bottom line:** Most of the $10B goes out as competitive awards from one department (HCD) with no cost-per-unit limit in the law. The bill only requires an annual report (§ 54088), and it lets agencies write the program rules without the usual public rulemaking (§ 54077). [^15] Watching how the money is spent is up to voters, reporters and the Legislature.

### Who spends it, and who answers for it
| Money | Run by | Who's accountable |
|---|---|---|
| $7.2B rentals, $600M CalHome, $500M infill infrastructure, $450M farmworker, $200M tribal, $200M local pilots | HCD | HCD Director Gustavo Velasquez (since 2020) [^16]; Secretary Tomiquia Moss of the new California Housing and Homelessness Agency (since June 2026) [^17]; the Governor, who appoints both |
| $500M down-payment help | CalHFA | Executive Director Tony Sertich [^18] |
| $350M student housing | UC and CSU | UC Regents and CSU Trustees |
| $1.25B veterans' home loans | CalVet | An independent accountant must review the loan program every year while the bonds are outstanding. [^15] |
| The tax credits most rentals also need | Tax Credit Allocation Committee (CTCAC) | Chaired by the State Treasurer. Other voting members: the Controller, the Finance Director, and the heads of HCD and CalHFA. [^18] **The Treasurer and Controller races are both on this ballot.** |

### Who gets the money
- Applicants are nonprofit and for-profit developers, cities, counties and tribes. From 2019 to 2025, HCD funded **66,511 rental units**. Of those, **only 26,904 (40%) are listed as completed**, and 14,660 hadn't started construction. [^19]
- No single public database lists each HCD award with its developer, cost per unit and status. HCD's summary gives counts only. The best project-level records are CTCAC's staff reports, which list each tax-credit project's developer, units and total cost. [^20]

### Red flags already on record
- **Fraud charges:** Shangri-La Industries won about $115M in state Homekey contracts for about 500 homes. Its $27M Thousand Oaks project sits abandoned. Its former CFO was federally charged with mail fraud in Oct 2025 and has pleaded not guilty. [^21][^22] The state, through Attorney General Bonta, sued the company in Jan 2024, alleging breach of contract and fraud. [^23]
- **Close to home:** San Bernardino's All Star Lodge, a Homekey motel conversion, was foreclosed after two years. No affordability restriction had been recorded, so the new owner could threaten big rent increases. [^22][^24]
- **Homekey's record:** $3.8B awarded since 2020. About 1 in 5 promised homes were unfinished at the end of 2024, and at least 10 awards (about 500 units) were canceled or clawed back. No state agency has publicly analyzed the program in detail. [^22] This matters here because Prop 1's $1.15B supportive-housing share can fund the same kind of interim-to-permanent conversions. [^15]
- **Audit advice ignored:** In 2018 the State Auditor told the Legislature to require HCD to report every year on how it monitors bond programs, and to have its parent agency track HCD's progress. As of Jan 2026, the status of both is "No action taken." The audit's recommendations on HCD's administrative-cost overspending are still listed as only partially implemented or pending. [^6]
- **Money lost, units unclear:** A state committee let about $2.7B in housing bond authority expire in 2015–2017 without saying so publicly. The housing agencies don't share a project ID, so their unit counts may overlap. [^25]
- **Evaluation blocked:** AB 505 would have had the LAO evaluate Homekey. It died in the Assembly Housing Committee in Jan 2026 without a hearing. [^26]
- **Not on the high-risk list:** The State Auditor's Dec 2025 high-risk list doesn't include housing or homelessness spending. [^27]

### Who to press, and what to ask for
1. **Your Assemblymember and state Senator** (look them up at findyourrep.legislature.ca.gov). Ask them to:
   - Pass the 2018 audit recommendation into law: public, project-by-project reporting for every Prop 1 award (developer, units, cost per unit, start and completion dates).
   - Ask the Joint Legislative Audit Committee to have the State Auditor audit the first round of Prop 1 awards. Any legislator can request an audit.
   - Bring back the Homekey evaluation that AB 505 proposed.
   - **Lower the cost per unit:** fund each project from fewer sources, since each extra source adds about 4 months and $20,460 per unit [^1][^14], and adopt RAND's recommendations: a 30-day approval deadline, synchronized inspections, lower impact fees ($29,000 per unit in California vs. $12,000 in Colorado), and fewer design rules that don't affect safety. [^3]
2. **Treasurer and Controller candidates:** they'll sit on CTCAC. Ask whether they'll score tax-credit applications on cost per unit and publish final costs for every finished project.
3. **CTCAC and HCD meetings** take public comment. Agendas are posted on the Treasurer's and HCD's websites.
4. **Report waste or fraud** to the State Auditor's whistleblower hotline: auditor.ca.gov/hotline or 800-952-5665. You can file anonymously. [^28]

### Public records to request (CPRA)
The California Public Records Act is the state's version of FOIA. Anyone can file a request, and you don't need to give a reason. The agency must respond within 10 days, or within 24 days in unusual cases. [^29] Send HCD requests through its online portal or to PRARequest@hcd.ca.gov. [^30]

> **To HCD:** Under the California Public Records Act (Gov. Code § 7920.000 et seq.), I request records sufficient to show, for every award made from Proposition 1 (2018) and Proposition 1 (2024) bond funds: project name, sponsor and developer, city, award amount and date, number of units, total development cost, and current status (not started, under construction, or completed, with the completion date). I also request any notices of default, recapture or cancellation for these awards. I prefer electronic records in their original format, such as a spreadsheet. Please state the estimated date the records will be available, as Gov. Code § 7922.535 requires.

> **To HCD:** All monitoring reports, notices of default, and recapture or settlement records for Homekey projects sponsored by Shangri-La Industries, and for the All Star Lodge in San Bernardino.

> **To CTCAC (State Treasurer's Office):** For every tax-credit project in San Bernardino County awarded from 2019 to 2025, the final cost certification showing the total development cost at completion, alongside the cost in the application.

## Both sides
- **For:** a real backlog of ready projects; rents are crushing low-income households; the bond funds farmworker, tribal and student housing that the market won't build.
- **Against:** No official ballot argument against was filed. [^31] Republican lawmakers, including Asm. Carl DeMaio, say only ~11% goes to veterans despite the name [^11], and that it borrows without addressing why building here costs so much [^22][^32]; RAND finds that at Colorado's costs, the same money would build 4x+ as many units. [^3]

## Official voter guide (condensed) with annotations
- Official title: Authorizes Bonds for Housing Affordability Programs. Legislative Statute.
- Summary: Authorizes $11.25 billion in state general obligation bonds for rental housing, veterans' mortgages, supportive housing, preservation of existing affordable housing, and down payment help.
- Fiscal impact: "Increased state cost of $500 million to $600 million annually for about 25 years" to repay the bond.
- A YES vote means: The state could borrow $11.25 billion to support veterans and affordable housing.
- A NO vote means: The state could not borrow $11.25 billion to support veterans and affordable housing.
- Argument for: Builds affordable homes for veterans, seniors and people with disabilities; expands homeownership; speeds up shovel-ready housing; helps people at risk of homelessness. "Requires strict fiscal accountability and public oversight with no new taxes."
- Argument against: No argument against was submitted.
- Supporters: US Vets, CA Federation of Teachers, Habitat for Humanity CA, and others
- Opponents: None submitted

Annotations (what the booklet leaves out):
- (pro) "No new taxes" is true, but the bond is repaid from the General Fund: roughly $500–600M a year for 25 years, about 15% more than paying cash after inflation. [^2]
- (summary) Of the $11.25B, $1.25B is the veterans home-loan program, which veterans' loan payments have historically repaid. The other $10B is a general obligation bond. [^2]
- (general) The campaign is funded almost entirely by affordable-housing developers and nonprofits ($13.9M of $15.3M), the same groups that would compete for the grants. [^7]
- (general) Scale check: up to 40,000 subsidized rentals over several years, against roughly 100,000 homes California builds in a typical year. It doesn't change the cost of building. [^2]

## Sources
[^1]: Terner Center, LIHTC costs and impact fees (Jan 2026). https://ternercenter.berkeley.edu/wp-content/uploads/2026/01/LIHTCImpactFees2026.pdf
[^2]: LAO 2026. https://lao.ca.gov/ballot/2026/prop1-110326.pdf
[^3]: RAND, High Cost of Multifamily Housing in California (Apr 2025). https://www.rand.org/pubs/research_reports/RRA3743-1.html
[^4]: State Auditor 2014-037. https://information.auditor.ca.gov/pdfs/reports/2014-037.pdf
[^5]: State Auditor 2018-037. https://information.auditor.ca.gov/reports/2018-037/introduction.html
[^6]: State Auditor 2018-037 status of recommendations. https://information.auditor.ca.gov/reports/responses/2018-037/all
[^7]: SoS, March 2024 results (statement of vote). https://elections.cdn.sos.ca.gov/sov/2024-primary/sov/115-state-ballot-measures-formatted.pdf
[^8]: HCD 2016-17 annual report (Prop 46/1C outcomes). https://www.hcd.ca.gov/policy-research/plans-reports/docs/HCD_2016-17_Annual-Report_Final.pdf
[^9]: LAO 2018, Prop 1 analysis. https://lao.ca.gov/BallotAnalysis/Proposition?number=1&year=2018
[^10]: LAO, state housing spending (Feb 2023). https://shou.senate.ca.gov/sites/shou.senate.ca.gov/files/LAO%20-%20Recent%20State%20Housing%20Funding.pdf
[^11]: KQED (Sept 28, 2026). https://www.kqed.org/news/12100622/proposition-1-authorizes-california-to-issue-a-11-25-billion-bond-to-fund-affordable-housing
[^12]: LAO 2024, March 2024 Prop 1 analysis. https://www.lao.ca.gov/ballot/2024/proposition-1.pdf
[^13]: California Today prop guide (donors). https://californiatoday.com/guides/elections/2026-california-proposition-1-guide/
[^14]: CalMatters, 40,000 stalled units (Mar 9, 2026). https://www.sanjoseinside.com/news/ca-is-ready-to-build-40000-affordable-housing-units-but-money-has-run-out/
[^15]: SB 417 text (Ch. 16, Stats. 2026), via Digital Democracy. https://calmatters.digitaldemocracy.org/bills/ca_202520260sb417
[^16]: HCD director page. https://www.hcd.ca.gov/about/executive-team/director
[^17]: HCD, Moss sworn in as Housing and Homelessness Agency secretary (Jun 30, 2026). https://www.hcd.ca.gov/about-hcd/newsroom/governor-newsom-swears-tomiquia-moss-secretary-of-new-california-housing-and-homelessness-agency
[^18]: CTCAC agenda, Sept 1, 2026 (committee members). https://treasurer.ca.gov/sites/default/files/ctcac/CTCAC_Meeting_Notice_and_Agenda_9-1-2026.pdf
[^19]: HCD funded multifamily projects 2019–2025. https://www.hcd.ca.gov/sites/default/files/docs/grants-and-funding/hcd-funded-multifamily-projects-2025.pdf
[^20]: CTCAC staff reports (project-level developer, units, costs). https://www.treasurer.ca.gov/ctcac/meeting/staff
[^21]: LAist, Homekey fraud charges (Oct 16, 2025). https://laist.com/news/housing-homelessness/bill-essayli-federal-charges-homelessness-homekey
[^22]: CalMatters Homekey, 100 records requests (May 7, 2026). https://calmatters.org/housing/2026/05/newsom-homekey-records/
[^23]: The Real Deal, state sues Shangri-La (Jan 8, 2024). https://therealdeal.com/la/2024/01/08/california-state-sues-shangri-la-industries-after-project-homekey-defaults
[^24]: ABC7, All Star Lodge foreclosure (Mar 2, 2024). https://abc7.com/post/san-bernardino-all-star-lodge-motel-project-homekey-foreclosure/14476936/
[^25]: State Auditor 2020-108, California's housing agencies (Nov 2020). https://www.auditor.ca.gov/wp-content/uploads/2024/03/2020-108.pdf
[^26]: Digital Democracy, AB 505 (Castillo). https://calmatters.digitaldemocracy.org/bills/ca_202520260ab505
[^27]: State Auditor 2025-601, high-risk list (Dec 2025). https://www.auditor.ca.gov/wp-content/uploads/2025/12/2025-601_Report-WordPress.pdf
[^28]: State Auditor whistleblower brochure. https://www.ucop.edu/uc-whistleblower/_files/csa-brochure.pdf
[^29]: First Amendment Coalition, CPRA deadlines. https://firstamendmentcoalition.org/resources/explainers/explainer-cpra-delays
[^30]: HCD records requests. https://hcd.ca.gov/contact-us/public-records-requests
[^31]: Official Voter Guide, Prop 1 arguments (SoS). https://vig.cdn.sos.ca.gov/2026/general/pdf/prop1-arg-rebuttals.pdf
[^32]: CalMatters via KPBS (Oct 2, 2026). https://www.kpbs.org/news/politics/2026/10/02/proposition-1-borrow-11-25-billion-for-housing
[^33]: CA SoS contributions. https://www.sos.ca.gov/campaign-lobbying/helpful-resources/measure-contributions/2026-ballot-measure-contribution-totals/proposition-1-sb-417-limon-veterans-and-affordable-housing-bond-act-2026-ch-16-2026