California’s $11.25 billion housing bond: What London planners can learn from Proposition 1

California voters will decide next month whether to approve Proposition 1, an $11.25 billion general obligation bond that would be the largest single housing bond in the state’s history. The measure, which appears on the November ballot, aims to unlock stalled affordable housing projects and create tens of thousands of new rental units across the state. For housing professionals and planners in London, where affordable housing delivery has also slowed sharply in recent years, the California experiment offers a useful comparison on how large-scale public borrowing works, what it costs, and where it falls short.

The scale of the housing shortfall in California is comparable in severity to London’s, though the mechanisms for addressing it differ. A recent report cited in the bond’s coverage states that nearly 40,000 affordable housing units are stalled across California because developers cannot secure enough funding to complete the projects. Proposition 1 would allow the state to sell $11.25 billion in general obligation bonds, with proceeds directed to housing for veterans, renters, and students.

Por que importa

Repayment costs and timeline
The bond would be repaid from California’s general fund over approximately 25 years. According to the state’s legislative analyst, annual repayments would range between $500 million and $600 million, including interest. That means the total cost to taxpayers over the life of the bond would be significantly higher than the $11.25 billion principal, potentially reaching $12.5 billion to $15 billion depending on interest rates.

For comparison, London’s Affordable Homes Programme 2021–2026 was backed by £4 billion in grant funding from central government, with the GLA adding further contributions. That programme aimed to deliver 35,000 affordable homes but has faced delivery shortfalls, with many schemes delayed by rising construction costs, labour shortages, and planning bottlenecks. California’s bond mechanism differs fundamentally from the UK’s grant-based model, but the underlying challenge is the same: large sums of upfront capital are needed, and repayment terms define how much housing can be delivered per pound or dollar spent.

Contexto

Key facts

What the bond would fund
If passed, Proposition 1 would support the creation of over 40,000 new rental units when combined with other funding sources. The bond proceeds would be allocated through existing state housing programmes, with specific set-asides for veterans, low-income renters, and student housing. Vivian Wan, chief executive of affordable housing provider Abode, described the bond as “huge” but cautioned that California needs a permanent source of funding for new housing rather than relying on one-off bond measures.

This echoes a persistent theme in London housing policy: the reliance on short-term funding rounds and programme cycles creates uncertainty for housing associations and developers. The GLA’s current Affordable Homes Programme expires in 2026, and negotiations for the next funding settlement are already underway. Housing providers on both sides of the Atlantic argue that predictable, long-term capital is essential for building the pipeline of sites and schemes that can deliver at scale.

The limitations of bond finance
General obligation bonds are a common tool in US state and local government finance, used for infrastructure ranging from schools to transport. They allow governments to raise large sums quickly without raising taxes, but they add to long-term debt obligations. For housing, the risk is that bond repayments compete with other spending priorities, and that the bond proceeds, while substantial, still fall short of what is needed.

In California, the $11.25 billion bond is part of a broader package of housing measures, but advocates say it is not enough. The 40,000 stalled units represent only a fraction of the state’s overall housing deficit, which is estimated at over 1 million homes. Similarly, London’s housing need is estimated at over 60,000 new homes per year, with affordable housing delivery consistently falling short of that target.

The bond also does not address the underlying causes of stalled development: rising construction costs, labour shortages, planning delays, and the gap between the cost of building affordable housing and the rents or sale prices that can be charged. In London, the GLA has introduced measures such as accelerated planning, direct commissioning, and land release, but the fundamental viability gap remains a barrier.

What London can take from this
For London housing professionals, the California bond debate highlights several points worth watching. First, the scale of public borrowing required to make a real dent in affordable housing supply is enormous, and the repayment costs are substantial. Second, bond-financed housing creates a long-term fiscal commitment that must be managed alongside other public spending. Third, even a large bond cannot substitute for permanent, recurring funding streams.

The GLA and UK government have largely avoided general obligation bonds for housing, relying instead on grant funding, borrowing by housing associations, and developer contributions through Section 106 agreements. However, as central government grants become tighter and developer contributions fall in a slow market, alternative financing models are being explored. The California example shows that bond finance is possible but comes with trade-offs in cost and duration.

The vote on Proposition 1 will be closely watched by housing researchers and policymakers internationally. If it passes, the implementation phase will provide real-world data on how bond-funded housing programmes perform: how quickly units are delivered, at what cost, and whether the repayment burden constrains future housing investment. If it fails, the 40,000 stalled units will remain stalled, and California will face the same funding gap that London knows well.

Source: Planetizen News, “California voters weigh $11.25 billion housing bond,” October 18, 2026. https://www.planetizen.com/news/2026/10/138676-california-voters-weigh-1125-billion-housing-bond