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Addressing California's Affordable Housing Shortage: Alternatives to Proposition 1C

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Publication Date: September 2006

Publisher(s): Reason Foundation

Author(s): Leonard C. Gilroy; Adam B. Summers; Samuel R. Staley

Topic: Social conditions (Housing)

Type: Report

Coverage: California

Abstract:

The severe shortage of affordable housing in California threatens the state's economic health and has placed the American Dream of homeownership out of reach for hundreds of thousands of families. Declining federal support for housing programs over the last several decades has prompted calls for increased state funding for affordable housing in California. Rather than establishing a fiscally responsible ongoing revenue stream to fund the state's affordable housing programs, California policymakers have repeatedly asked voters to approve one-time influxes of bond funding, violating a basic principle of public finance: long-term debt should be used to fund long-term investments, not the operating expenditures of state programs.

Like the numerous affordable housing bonds and programs before it, Proposition 1C would do little to address the problem of low-income homeownership and would likely worsen the situation. California's affordable housing problem is largely a creature of government's own making. Increasing the costs of housing, and then throwing an additional $2.85 billion of taxpayers' money at the problems government has exacerbated in the first place, simply does not make any sense.