Bay Bungles Bond Boondoggle

Affordable Housing Bond Pulled from November Ballot

This originally appeared as two stories in the California Globe - the change described happened that quickly.

It seems even Californians are getting tired of incompetence and over-spending.

The Bay Area Housing Finance Authority (BAHFA) last week dropped its campaign to pass a $20 billion so-called affordable housing bond.

Facing its almost certain loss at the polls, the BAHFA board met in closed session and unanimously decided that – on the last day possible – it would not place the bond on November’s ballot.

But just a few days before they pulled the plug, the board – facing a lawsuit – had to significantly modify the ballot language of the bond. known as Regional Measure 4.

Initially, the ballot said the “payback” on $20 billion dollars of bonds intended to create and/or retain affordable housing stock in the Bay Area would be about $670,000,000 million per year (for the next 50 years.)

But a group of experts – and opponents of the measure -  looked into the claim and discovered (and immediately sued BAHFA) that the annual bill property owners will have to shoulder in the nine county region is actually $910,976,423 (about $300 a year for the median house which is valued at now at about $1.5 million.  No, really – the median value is $1.5 million.)

The mistake (maybe) created a publicly-stated difference of $240 million dollars a year or about $12 billion over the life of the bonds.  BAHFA got the number wrong by more than one-third.

Oops.

In response to the “No on RM4” group’s lawsuit regarding the entire ballot description, the board made the change, even without a court order.  The board’s lawyer called it a “mathematical error.”

A $12 billion dollar “mathematical error.”

Again, oops.

One of the plaintiffs in the suit that forced the change is Marc Joffe, a public finance expert who is part of the opposition group.

"How can the public trust an agency that can't do basic arithmetic with nearly $50 billion of its taxes?” Joffe asked.  “Ridiculous."

The bond proceeds would have been used to create or “preserve” 90,000 housing units in the nine counties that make up the Bay Area centered on San Francisco.

Interestingly, it does not appear the board made the decision to pull the measure from the November ballot because of the egregious error but because it was likely to fail, even with a bit of  Sacramento sleaze at play.

According to current law, bonds such as RM4 have to be passed with two thirds of the vote, not just a simple majority.  Standing at about 54% approval in the polls it was not even close, especially considering that bonds and propositions – this would be largest housing bond in state history, by the way – tend to see support sag as election day approaches.

But also on the November ballot is a proposition – Prop 5, in fact - put there by the legislature that would lower that two-thirds requirement to only 55% of the vote to pass.   That bond question is still on the ballot.

And the kicker is that if Prop 5 passes, then any other “local bond measure” anywhere in the state – and that would have included RM 4 - on the ballot would also only need 55% of the vote to pass.

In other words, bond proponents will not have to wait until he next election cycle to take advantage of the lower threshold.  The legislature is asking voters to literally change the rules in the middle of the game.

How would that work in football?  At the end of the game the refs could change the score – touchdowns are worth 4 points, safeties worth 11 points, etc. – to change the winner.

Even with the potential Prop 5 help, ;local word is that BAHFA has only about $8 million to spend to pass bonds, not enough the pollsters told them to overcome the current deficit.

Spend it on something that has a chance, is the common wisdom.

While it is legal for public agencies to spend taxpayer money polling and focus grouping and such for bond measure that will  cost the taxpayer money, from an ethical standpoint it fails the smell test,

At least this time the smell was so bad it was dropped