3 bonds are on the California ballot. Here’s a last-minute voter guide to make sense of them

In summary

Californians will decide on $44 billion in bonds when the vote on Propositions 1, 37 and 38. They’d take out debt to pay for housing and medical research.

 Your November ballot is welcoming you to make it rain … in bonds.

You’ll see an El Nino-sized set of propositions that could flood the housing construction and science research components of the California economy with $44 billion of bond spending if the measures pass.

Two of those bond proposals — Proposition 1 for housing and Proposition 38 for immunology research — are the traditional borrow-now, pay-back-later arrangements that add a few billion dollars to the overall cost of the propositions. A third, Proposition 37, is an atypical measure that amounts to a low-risk radical experiment that taxpayers likely won’t be on the hook for, at least not directly.

Historically, bond propositions win the approval of voters at higher rates than other measures. Since 2000, voters passed 23 of the 26 statewide bonds before them, an 88% yay rate. In recent years voters approved billions in bond debt for school construction, combatting the effects of climate change and housing for veterans.

Bonds are a form of debt that the state must pay off over time, and that means annual payments with interest. The state spends $6 billion annually to repay about $80 billion of bonds. Voters and lawmakers have also approved $40 billion in bonds that have yet to be sold. 

Fortunately for your ballot studying, the following cheat sheet is a primer on just the three bonds before you.

Prop. 1: Affordable housing

If voters say yes, Prop. 1 would permit California’s treasurer to sell $11.25 billion in general obligation bonds. That money would provide various types of housing, including to veterans, homeless Californians, renters, homeowners, farmworkers, students and tribes. 

The measure dedicates $7 billion to constructing, refurbishing, or acquiring apartment complexes, primarily through loans to developers of affordable housing. These developments must serve low-income residents, reserving at least 10% of units for extremely low-income households. Over $1 billion of this total supports permanent and interim housing for the homeless.

The bond, if passed, would result in some 40,000 new rental units, wrote the Legislative Analyst’s Office, which is the nonpartisan think-tank of the Legislature.

This is the only bond measure on the ballot put forward by lawmakers. The other two secured enough signatures from voters to secure a spot for the November election.

Opposition to this bond is minimal. The state Republican Party’s officially neutral on the measure. Several Republican lawmakers in June voted no on the bill that metamorphosed into this bond. They argued that the bill’s title — The Veterans and Affordable Housing Bond Act — misled the public on just how much of the bond revenue would support veterans.

The answer? $1.25 billion for veterans to secure home loans.

Another $350 million would head to the state’s two public university systems to help finance the development of student dorms. But with costs per bed often exceeding $250,000, all those tens of millions of dollars would secure dorms for around 1,300 students. 

Support for Prop. 1 is vast, including Gov. Gavin Newsom, the state Democratic party, home-sharing company AirBnB, major unions and more. 

Want more? Read CalMatters’ Marisa Kendall’s guide to Prop. 1. 

Prop. 37: Help for down payments

This bond measure is strange, novel and introduces a bevy of unknowns.

Confused? So is everyone else, which is why CalMatters’ housing reporter Ben Christopher described this unorthodox proposition as “plainly weird.”

Prop. 37 should be viewed as a way to help buyers of new homes secure down payments. The language permits individuals to apply for as much as 17% of the purchase price of a new house, condo or townhome. That covers much of the typical 20% down payment.

Who’s eligible? Roughly 90% of all California renters. The income caps vary by county, so around $115,000 in Imperial and north of $400,000 in San Mateo for a family of three. 

Eligible homes must satisfy several conditions: They’re new or newly converted and don’t cost more than roughly $1.5 million in the Bay Area or $1 million in Riverside — again, it’s based on a weedy formula by county.

What won’t it do? Add to the state’s debt repayment log. This is not a bond that taxpayers will pay back; instead private lenders who provide this bond money will be repaid by homebuyers in the form of interest payments.

How many homes this could buy is impossible to predict. That number depends on how much the new homes cost, the incomes of the homebuyers and whether developers build new homes. 

Most renters today couldn’t afford even the cheapest new homes, said Eric McGhee, an analyst for the nonprofit Public Policy Institute of California who’s written about Prop. 37.

He estimated that anywhere from 60,000 to more than 1.8 million buyers could take advantage of the down payment assistance through this bond measure. The lower end assumes a 20% down payment on the most expensive homes. The higher end assumes 5% down payments on the least expensive homes. 

Prop. 38: Immunology research

This bond proposal would commit $4.2 billion to a single, unnamed nonprofit institute that focuses on immunology research and cures for major diseases such as Alzheimer’s, cancer and heart disease. 

The same amount would be distributed to a committee that’d identify a limited number of researchers at public universities and nonprofits who study immunology and immunotherapies.

Previous reporting by CalMatters found only one institute in California currently meets Prop. 38’s criteria for half of the money: the California Institute for Immunology and Immunotherapy. The institute’s primary funder is billionaire Gary K. Michelson, who wrote Prop. 38 and is by far the largest donor to its political campaign. 

Additional CalMatters reporting raises the question of how ready is the institute to implement the bond’s vast dollars. The institute had only three employees as of last month, far fewer than the 51 it planned to have on staff last year.

The Yes on 38 campaign says the bond revenue is needed to hedge against the Trump administration’s ongoing efforts to cut federal science research or limit what’s studied. They argue that any curtailment of drug trials and other therapies can lead to avoidable pain and death for patients of debilitating maladies.

Opponents of the measure fault it for concentrating half the money in a single institute and limiting which other researchers can receive the funding. They say science research is best performed in a competitive environment that’s open to all of California’s nonprofit and public university scientists.