With the passage of California Senate Bill 79, housing lobbyists and State legislators have set their sights on the passage of a $10 billion housing bond anticipated to be voted on by the public in the June 2026 state primary election.
California Senate Bill 79 (SB 79), the Abundant and Affordable Homes Near Transit Act, is a 2025 California law that legalizes the construction of multi-story, multi-family housing within one-half mile of public transit stations. The law preempts local government control of land zoning in the intervening areas of proposed projects.
While passage of this bill is promising, the high cost and red tape associated with creating affordable housing in the state still plagues developers and nonprofits. Many projects sit for years in planning and approvals, only to languish further because market changes have impacted funding sources.
The new funding bill, if and when approved by voters, is crafted to address the multifaceted funding needs associated with affordable housing. The Affordable Housing Bond Act of 2026 will authorize the issuance of $10 billion in bonds under the State General Obligation Bond Law. Bond sales will be used to finance programs that fund affordable rental housing and home ownership programs. For example, programs such as the Multifamily Housing Program, the CalHome Program, and the Joe Serna, Jr. Farmworker Housing Grant Program, among others, will receive much-needed allocations to fund their initiatives.
Where Will the Affordable Housing Funding Go?
According to California Assembly Bill AB 736, amended in April 2025, the $10 billion will be carved out to fund eight different funding initiatives, including:
- $5 billion to the Housing Rehabilitation Loan Fund to be used for the Multifamily Housing Program. At least 10 percent of assisted units in each development receiving these funds will be affordable to extremely low-income households.
- $1.7 billion allocated to the Housing Rehabilitation Loan Fund to be used for supportive housing. These funds will be used to offer capitalized operating subsidy reserves for supportive housing units in developments receiving funding.
- $800 million appropriated by the Legislature to the Portfolio Reinvestment Program
- $500 million appropriated by the Legislature and administered by the Department of Housing and Community Development to fund the acquisition and rehabilitation of unrestricted housing units and attach long-term affordability restrictions on the housing units, while safeguarding against the displacement of current residents.
- $1 billion appropriated to provide home ownership opportunities through the following programs:
- The CalHome Program Â
- The Home Purchase Assistance ProgramÂ
- $350 million appropriated to the Joe Serna, Jr. Farmworker Housing Grant Program
- $250 million appropriated to a dedicated, flexible, and comprehensive state program to finance housing and housing-related activities that will enable tribes to rebuild and reconstitute their communities
- $400 million allocated to fund the Infill Infrastructure Grant Program of 2019.
The Affordable Housing Bond Act will appear on the California primary election ballot on June 2, 2026.
The success of the bonding issue will bring renewed hope to communities and nonprofits diligently working to find creative solutions to the growing need for affordable housing. Since California is a high-cost state for construction, the pressure is on to find ways to fund multi-unit housing that is truly affordable.
Real Construction Costs
According to a recent article in CalMatters, the cost of construction per square foot for rental space in 2025 in California averaged $415 (with the Bay Area as high as $531 per square foot), while in Texas, the comparative cost of construction was only $157 per square foot.
A study by Rand Research noted that the average apartment in Texas costs roughly $150,000 to produce; whereas, in California, building the same apartment costs around $430,000, or 2.8 times more.
The Rand study also found that California’s high costs can be attributed to delays that extend the timeline of completion, and the cost of fees associated with projects.
According to Rand, longer production timelines are strongly associated with higher costs. In particular, they cite that the time to bring a project to completion in California is more than 22 months longer than the average time required in Texas.
Rand also suggests that municipal impact and development fees vary substantially across states; they are $1,000 per unit on average in Texas, $12,000 per unit in Colorado, and $29,000 per unit in California.
Other key drivers that inflate the costs of building in California include substantially above-market wages and unusually large architectural and engineering fees housing developers must pay related to highly prescriptive design requirements.
The Rand report had recommendations to help California reduce the cost of affordable housing construction, including passing legislation requiring municipalities to review and approve new projects within 30 days (a factor addressed somewhat with the passage of SB 79) and revamping inspections so that they are synchronized rather than sequential, a move that could reduce completion times by months.
As auditors and advisors, and affordable housing consultants to many not-for-profit organizations, we are always keeping a close eye on the trends, challenges, and good-faith efforts underway to address affordability and homelessness in California.
Talk to the team at LvHJ about ways to manage your fiscal and operational responsibilities as developers or as nonprofits with related housing services.
Related Reading:
CA SB 79 – What’s Next for High-Density Zoning Near Transit?
References:
CalMatters
Rand Research: The High Cost of Producing Multifamily Housing in California
California Assembly Bill AB 736
