California voters approve new state funding for real estate, San Francisco voters support affordable housing financing and new taxes

Proposition 1 authorizes $10 billion in state bonds for affordable housing, including $5.1 billion for the Multifamily Housing Program, where at least 10% of assisted units in each funded project must serve extremely low-income households. Money is also set aside for supportive housing ($1.15 billion), infill infrastructure grants ($500 million), buying existing units and placing affordability restrictions on them ($200 million), and home ownership programs. Funds can be paid out during construction, and the state may streamline programs to disburse funds faster. The measure also authorizes $1.25 billion in bonds for home and farm loans to veterans.

A report estimates that Proposition 1 and leveraged dollars and tax credits will create more than 57,000 new units of affordable housing.

Proposition 37 directs the California Housing Finance Agency to create a program offering middle-class buyers low-cost loans for newly built homes. Buyers may earn up to 200% of the area median income, must put at least 3% down, and may use the state loan or a second mortgage to cover up to 17% of the price. Eligible homes, which the buyer must be the first to purchase, include new single-family homes, townhomes, condos, and manufactured homes, plus condos in commercial buildings converted to residential use. Home prices are capped at 125% of the county's conforming loan limit. Builders who opt in as “qualified builders” take on liability for certain labor law violations by their contractors but get more favorable construction defect procedures, which they lose for any home sold more than 25% above the price cap. Lender origination fees are capped at the greater of 0.5% or $290.

Proposition B authorizes a Municipal Finance Corporation and, later, a public bank, each organized as a nonprofit corporation. Formation is contingent on the treasurer-tax collector determining that adequate funding and resources exist; the measure itself does not secure capitalization. Proposition B prohibits financing fossil fuels, firearms, tobacco, prisons, and predatory lending and institutes a mandate to partner with community lending institutions and credit unions. The mission of the Municipal Finance Corporation is to finance affordable housing, climate infrastructure, and small businesses.

Proposition C would increase the city's required annual General Fund appropriation to the Housing Trust Fund until it reaches $125 million. The Housing Trust Fund will be used to finance affordable housing and can be used for down payment assistance and affordable housing infrastructure.

Proposition H will impose a new parcel tax on each parcel in San Francisco to support Muni. The parcel tax ranges based on property type and square footage, with caps on liability of $50,000 for multifamily parcels and $400,000 for nonresidential and mixed-use parcels. Residential landlords are allowed to pass 50% of the parcel tax to tenants. Commercial landlords have no restrictions on pass-throughs to tenants.

Proposition J will eliminate the real property transfer tax exemption for foreclosures and deeds in lieu of foreclosure for all properties other than smaller residential and mixed-use properties. The transfer tax ordinance previously exempted the assessment of transfer taxes on all foreclosures and deeds in lieu of foreclosure. Proposition J eliminates the exemption for foreclosures and deeds in lieu of foreclosure except for small residential properties, small mixed-use properties, and hotels. Lenders may change foreclosure strategies and change liability for imposition of transfer taxes on foreclosures or deeds in lieu of foreclosure on office, commercial, and large residential properties.