By Michele Allyn
2024 President
Santa Barbara Association of Realtors
As President of the Santa Barbara Association of REALTORS®, it is crucial that I highlight why we must vote NO on Proposition 5, a measure that could have serious implications for both our housing market and property tax system.
What Proposition 5 Does
Proposition 5, on the 2024 California ballot, seeks to lower the voter approval threshold from two-thirds to 55% for local bonds that fund affordable housing and public infrastructure. Bonds are a way for the government to borrow money that is then paid back with interest. On the surface, this seems like a way to streamline the funding of essential housing projects and community services, but it comes with significant risks.
Increased Property Tax Burden
By making it easier for local governments to issue bonds, Proposition 5 puts Californians at risk of increased property taxes. These bonds are repaid through property taxes, meaning that if more bond measures pass, property taxes will rise as the cost to pay off these bonds tends to range from $1.70 to $2.00 per each $1.00 borrowed over the life of the bond. For homeowners, especially those already struggling to afford California’s high cost of living, this could make homeownership even more difficult to obtain and sustain. For renters, it is possible that these expenses could be passed on to tenants making affordability that much worse. Additionally, commercial property taxes would be impacted causing increased prices for all consumers. While addressing housing needs is important, Proposition 5’s approach threatens to place too much financial pressure on Californians for too little gain.
Vague Language and Unclear Oversight
Another issue with Proposition 5 is the vague language surrounding what qualifies as “affordable housing” and “infrastructure projects.” Without clear definitions, bond funds could be used for a variety of projects that may not directly benefit affordable housing or the community at large. Additionally, while Prop 5 includes some oversight measures like audits and citizens’ committees, lowering the approval threshold diminishes the rigorous voter scrutiny currently required for these significant financial commitments and the expenses of these audits can come from the funds raised by the bond measure, thereby limiting any positive impact it may have on the community.
Erosion of Proposition 13 Protections
One of the most significant concerns with Proposition 5 is how it weakens the protections provided by Proposition 13, the 1978 law that limits property tax increases to no more than 2% annually, based on the home’s purchase price. Prop 13 was designed to provide predictability and stability for homeowners.
Prop 5 circumvents these protections by lowering the approval threshold that has been in place since California was made a state. The result would be a wave of new tax increases, undermining the affordability and financial predictability that Prop 13 was meant to secure.
Prop 13 is crucial for keeping homeownership within reach for millions of Californians. For long-term homeowners, it prevents them from being priced out of their homes due to rising property values. For new homeowners, it provides predictability, ensuring they aren’t hit with unforeseen tax hikes as the value of their homes increases. These protections are essential for creating a stable and fair housing market, which would be threatened by the lowered threshold proposed by Prop 5.
Conclusion: Why Vote No
Everyone understands the importance of creating more affordable housing, but Proposition 5 is not the right path forward. It risks destabilizing our property tax system, increasing the tax burden on Californians, and weakening the vital protections of Proposition 13. Californians, particularly homeowners, depend on the stability and affordability that Prop 13 provides. Voting NO on Proposition 5 will protect our community from unnecessary tax hikes and maintain the safeguards that help make homeownership still a possibility.
Let’s focus on finding solutions without jeopardizing the dream of homeownership across California. Vote NO on Proposition 5.
Michele Allyn is the owner and manager of Allyn & Associates Real Estate and Lending, a real estate brokerage and mortgage company, serving Santa Barbara, California’s Central Coast, Ventura, Riverside, San Diego and Greater Los Angeles County. Michele has been a member of the Santa Barbara Association of Realtors since 1973, and currently serves as the President of the Board of Directors. Reach Michele at 805-895-5101 or micheleallyn@yahoo.com.