California’s efforts to tackle the affordable housing crisis were dealt another blow this week when voters rejected Proposition 5, a measure designed to make it easier to fund affordable housing and public infrastructure projects. Unlike market-rate homes, affordable housing projects rely on a complex mix of federal tax credits, state subsidies, and local funding to get off the ground.

The failure of Prop. 5 is a setback for California’s affordable housing goals, especially given the difficulty in raising funds for such projects. In California, local governments require approval from more than two-thirds of voters to raise property taxes in order to finance development. While voters approved a similar threshold change in 2000 for public school bonds, they rejected Prop. 5, which would have lowered the threshold to a simple majority for affordable housing construction and public infrastructure bonds.

The measure’s defeat is notable given the growing concern about housing costs among voters and policymakers alike. Preliminary election results showed that nearly 56% of voters opposed the proposal.

"We are at the point now where the frog is swimming in boiling water,” said Laura Foote, executive director of YIMBY Action. “If it doesn’t hop out, it’s going to die.”

Prop. 5 had been designed by a coalition of Bay Area developers, housing advocates, and policy experts who hoped to pass a $20 billion affordable housing package for the region. The group had also planned to turn its attention to funding BART and other transit agencies in serious financial trouble in 2026.

Now, with the defeat of Prop. 5, they’ll need to go back to voters to fund both affordable housing and transit needs in the next election. An embarrassing misstep months before the election was blamed for the measure’s failure.

"Local dollars are the most important, because they come in at the beginning of the development,” said Matt Schwartz, CEO of the California Housing Partnership. “They allow for land to be purchased and pay for architecture plans to get submitted. They get the ball rolling.”

Despite the rejection of Prop. 5, housing advocates have been making strides in permitting and zoning battles, with San Francisco voters approving three housing bonds over the last decade. However, coalition-building efforts for Prop. 5 faced greater challenges.

“From my perspective, it felt like this was sort of everyone’s priority No. 3,” said Foote. “Next time, we need politicians in Sacramento, probably up to the governor, to really make this their cause and take a heavier hand.”

As affordable housing developers struggle to meet the state’s housing goals, experts agree that a consistent flow of funding is needed to meet the growing demand. Bonds must be replenished at least every four to five years to keep up with construction needs.

"The next attempt to reform [property tax] may need a sweetener to pass,” said Alfred Twu, a California Democratic Party delegate and candidate for the Berkeley Rent Stabilization Board.

With an eye toward future efforts, the housing industry will likely need more strategic alliances and stronger political support to address the affordability gap and the escalating homelessness crisis.