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Senate Sends $2.1-Billion Housing Bond Issue to Davis

Legislation: The bill asks voters to fund aid to poor people, collegians, the disabled, seniors and farm workers.


SACRAMENTO — A $2.1-billion bond issue intended to ease California's worsening housing shortage was passed by the Senate on Monday and sent to Gov. Gray Davis, whose expected signature would put it before the voters Nov. 5.

The bill would provide financial help for the construction of housing for not only low-income people, but also for university students, farm workers, the disabled and needy seniors.

It would also help buyers who qualified for aid in making a down payment on their first home.

At $2.1 billion, the legislation dwarfed the $600 million that voters approved in bond sales for housing in the late 1980s and 1990, the last time a housing bond issue was put on the ballot.

The vote was 27-11 and was almost entirely along party lines.

Only Republican Sen. Bruce McPherson of Santa Cruz, a candidate for lieutenant governor, voted with all 26 Democrats to pass the bill.


Cost of Paying for Bonds Falls to State Taxpayers

The no votes were cast by Republicans, who complained about the cost of financing the housing programs and subsidies.

The cost of paying for the bonds would fall to California taxpayers. If they were sold at an average interest rate of 5%, the bonds would end up costing $3.5 billion in interest and principal over their 25-year life.

The action marked the second time in five days that a proposed bond issue of historic cost had been delivered to the governor.

On Thursday, a $25.6-billion plan for construction of public schools and higher education facilities was approved.

Davis has promised to sign the school building bill, but has not announced a position on the housing program (SB 1227) by Senate leader John Burton (D-San Francisco). Administration officials have said, however, that Davis intends to sign it.

California for years has suffered an acute housing shortage, which has worsened as the supply of affordable homes has shrunk.


Struggling Workers to Benefit, Burton Says

With the real estate market in many parts of California strong even as the economy remains mixed, the gap has widened between high housing prices and the financial ability of buyers to purchase.

One consequence is that people must commute greater and greater distances to their jobs because they are living in homes farther from their workplaces.

Burton argued that his bill, if approved by voters, would help provide shelter for not only homeless and low-income Californians, but also struggling workers with "modest" incomes.

But at an Appropriations Committee hearing on the bill shortly before it was debated by the full Senate, Sen. Kevin Murray (D-Culver City) asserted that such legislation resulted in the "ghettoizing and barrioizing" of minority communities.

"When we build housing for 'low-income' people, we end up building new ghettoes," Murray told Burton. Burton replied that the bill would benefit others as well as low-income people, but added, "Your point is well taken."


GOP Claims Democrats Caused Housing Crisis

Murray voted for the housing bill, but Republicans attacked it as an enterprise that the government should not engage in, and claimed that Democrats had brought about the crisis by imposing burdensome regulations, fees and taxes on the housing industry.


$910 Million Set for Multi-Family Housing

Under the bill, almost half the funds, $910 million, would be spent for multiple family housing.

Other programs that would receive multimillions include housing for low-income students at the University of California and California State University systems; housing for the disabled, and for migrants and other farm workers; and emergency programs.

Other expenditures would be on health services related to housing, the CalHome program and down payment assistance.

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