housing bond issues: overview

What are housing bond issues?

Housing bond issues are general obligation bonds dedicated to affordable housing. General obligation bonds are bonds that state or local governments issue to raise funds for an activity the jurisdiction wishes to support. The bonds are repaid through tax levies or appropriations by the legislature. In many jurisdictions, a special vote of the electorate is needed to authorize the issuance of such bonds. In some cases, a ballot measure for the issuance of general obligation bonds also will authorize a specific tax to pay for the bonds. While challenging to secure, general obligation bonds (and other types of publicly issued bonds) can provide an indispensable form of flexible funding for the development of affordable homes.

What problems does this policy solve?

General obligation bonds are an important financing source for public works projects, including the development of affordable housing, that do not generate sufficient revenue to pay for themselves. Because the bonds are repaid out of general revenue or a dedicated tax, the funds raised by the bonds function as equity, reducing the gap between project costs and the public and private sources of financing available for a project. General obligation bonds can be particularly effective when used as gap funds to leverage federal funding streams, such as 4 percent tax credits. General obligation funds also can be used to support state or local housing programs that do not qualify for federal funds.

Where is this policy most applicable?
Solutions in Action
Villa Madera
Photo courtesy of California Department of Housing and Community Development

Villa Madera Family Housing in Oxnard, California consists of 72 units of affordable multifamily homes, along with a 3,655 square foot community room and an outdoor play area. The development was funded in part by California's Multifamily Housing Program, which was supported by funds raised through the Proposition 46 housing bond issue.

Visit the Gallery to learn more about Villa Madera.

Any state or locality can issue general obligation bonds to fund affordable
housing projects. Since the need for voter approval is the key obstacle to issuing general obligation bonds, the ability to do so will vary according to public opinion, the jurisdiction's legal and political environment, and its fiscal condition.

Villas on SixthLearn more about using general obligation bonds to finance affordable homes

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The Center for Housing Policy gratefully acknowledges the input and feedback provided for this policy section by Jeff Loustau, California Housing Consortium. Please note, however, that the views and opinions expressed on HousingPolicy.org are those of the Center for Housing Policy alone.