In 2008, California voters authorized a $900-million bond issue to shore up a state program that financed low-interest mortgages for veterans. The bonds have never been sold, however, because demand for the loans has all but evaporated. Now, a new ballot measure — Proposition 41 — would redirect much of that money into affordable rental housing for low-income and homeless veterans. The proposal would put the dollars to more sensible use on behalf of a needier group of vets. The Times urges a yes vote on Proposition 41.
The state established a mortgage pool for veterans in 1921, using bonds to finance below-market-rate loans for veterans to buy homes and farms, and voters have renewed its funding multiple times. But the recession and the availability of low-cost mortgages from private lenders have vastly diminished both the demand and the need for the CalVet Home Loan program. Meanwhile, the state continues to hold the dubious distinction of having the country's largest population of homeless veterans: about 19,000. And the state's funds for affordable housing generally are all but tapped out.
Proposition 41 would allow state officials to use $600 million of the bonding authority approved in 2008 to fund the construction or rehabilitation of low-cost housing for veterans with incomes at least 20% lower than the county average. Half of the money would be reserved for housing for extremely low-income vets, those whose earnings are 70% below the county average. And at least 60% of that money would have to be spent on supportive housing that provides services aimed at keeping once-homeless vets off the streets. This approach to homelessness can save governments money over the long run; a 2009 study found that a homeless person cost the public almost five times as much per month in safety net expenses as someone in supportive housing.
Supporters of Proposition 41 argue that it wouldn't add to California's debt, but that's misleading. The bonds authorized in 2008 haven't been sold, and if they eventually were, they would be repaid by the vets who take out home loans. The bonds authorized by Proposition 41 presumably would be sold soon, and they would be repaid by taxpayers at a rate of about $50 million a year for 15 years. Even with the new bonds, however, the increase in the state's interest costs would amount to less than 0.1% of the general fund, and the state would still be spending less than 6% of its general fund on interest.