BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT:
Title
Adopt Recommended Positions on State and Local Ballot Measures: Proposition 1, The Veterans and Affordable Housing Bond Act of 2026; Proposition 43, Limits Voters' Ability to Raise Revenues for Local Government Services; Measure RTM, Connect Bay Area Transit Initiative; and Other Measures Which May Require Urgent Consideration for a Position by the Board.
End
RECOMMENDATION:
Recommendation
A. Adopt a position of “Support” on: Proposition 1, The Veterans and Affordable Housing Bond Act of 2026;
B. Adopt a position of “Oppose” on: Proposition 43, Limits Voters' Ability to Raise Revenues for Local Government Services; and
C. Adopt a position of “Support” on: Measure RTM, Connect Bay Area Transit Initiative.
Body
SUMMARY:
A. Proposition 1, The Veterans and Affordable Housing Bond Act of 2026.
Position Recommendation: Support
Proposition 1 would authorize the state to issue $11.25 billion in general obligation bonds for housing purposes. Of that amount, $10 billion would support a variety of state housing programs and would be repaid by the state General Fund. An additional $1.25 billion would support the state’s veterans home loan program and be repaid through payments from participating veterans.
Proposition 1 would allocate bond funding as follows:
|
Category of Programs |
Funding |
|
Affordable Multifamily Housing Programs |
$7.2 billion |
|
Veterans Housing Program |
$1.25 billion |
|
Homeownership Programs |
$1.1 billion |
|
Infrastructure Programs |
$500 million |
|
Farmworker Housing Program |
$450 million |
|
Higher Education Student Housing Programs |
$350 million |
|
Tribal Housing Program |
$200 million |
|
Local Pilot Programs |
$200 million |
|
Total |
$11.25 billion |
The $7.2 billion for affordable multifamily housing programs would support the acquisition, construction, and rehabilitation of rental housing for low-income households. These programs generally provide local governments and private developers with low-interest loans to fund a portion of project costs in exchange for reserving units for low-income households for a specified period. Some of this funding would support permanent supportive housing that combines housing with on-site services for certain residents.
The measure would provide $1.1 billion for homeownership programs for low- and moderate-income households, including first-time homebuyer assistance and funding for land acquisition and repairs to existing homes. Proposition 1 would provide an additional $450 million for farmworker housing, $350 million for affordable student housing at the University of California and California State University, $200 million for tribal housing, and $200 million for local pilot programs intended to develop housing at reduced costs.
Proposition 1 would provide $500 million for infrastructure projects that support affordable housing developments, including water, sewer, parks, and transportation improvements.
The measure would also provide $1.25 billion for veterans' home loan assistance, to be repaid through loan payments on home purchases.
The $10 billion in bonds supported by the General Fund is estimated to require approximately $500 million to $600 million in annual debt service payments over 25 years. As the veterans' housing funding would be repaid through payments made by participating veterans, it is not expected to result in a direct state cost.
Importance to Valley Water
Proposition 1 would provide significant state funding for affordable housing and related infrastructure, including water and wastewater improvements for housing developments. Valley Water interest is in supporting the development of housing that can reduce homelessness and housing affordability challenges affecting communities in Santa Clara County.
Increasing the supply of affordable housing can help reduce homelessness by expanding housing opportunities for low-income individuals and families who may otherwise be at risk of becoming or remaining unhoused. Proposition 1 would provide funding to develop and preserve affordable multifamily housing, supportive housing, farmworker housing, and other housing opportunities. Increasing the availability of affordable, supportive housing may also provide additional options for unhoused individuals currently living along waterways within Valley Water’s jurisdiction.
Valley Water has identified homelessness as an issue affecting its watershed stewardship responsibilities. Encampments along waterways can affect water quality, environmental resources, flood protection facilities, and Valley Water operations. Valley Water continues to address encampments through outreach, partnerships with cities and the County, and other programs. However, homelessness is a complex regional issue that requires coordinated efforts among local governments, housing and service providers, nonprofit organizations, and other partners.
Staff recommends that the Board adopt a position of “Support” on Proposition 1.
Pros
• Provides significant state funding to increase the supply of affordable housing.
• Increasing the availability of affordable and supportive housing may help reduce homelessness by providing additional housing opportunities for the unhoused.
• Provides $500 million for infrastructure supporting affordable housing developments, including water and wastewater improvements.
• Compliments regional efforts to reduce encampments along waterways and address the impacts of homelessness.
Cons
• Would increase state General Fund costs by approximately $500 million to $600 million annually for about 25 years.
B. Proposition 43, Limits Voters' Ability to Raise Revenues for Local Government Services.
Position Recommendation: Oppose
Proposition 43 limits voters' ability to pass voter-proposed local special taxes by increasing the percentage of votes needed to approve such ballot measures from a majority (over 50%) to two-thirds (66.6%), beginning January 1, 2027.
Currently, local governments, including special districts, must obtain two-thirds voter approval to impose, extend, or increase special taxes (taxes dedicated to a specific purpose) that they place on the ballot. However, this two-thirds vote requirement does not currently apply to special taxes placed on the ballot through voter-initiated signature gathering. Recent court decisions have allowed voter-initiated local special taxes to pass by a simple majority instead of the two-thirds threshold.
Specifically, beginning January 1, 2027, Proposition 43 would prohibit a local government, including the electorate of a local government exercising the initiative power, from:
• Imposing, extending, or increasing any special tax, except as provided in specific provisions of the California Constitution, unless and until that tax is submitted to the electorate and approved by a two-thirds vote.
• Imposing ad valorem taxes on real property, except where authorized under existing constitutional provisions in Article XIII D Section (3)(a)(1).
Importance to Valley Water
Because the measure includes existing requirements for special taxes and exemptions, Proposition 43 does not have a direct fiscal impact on special districts such as Valley Water. Valley Water will still be able to collect revenue based on assessed valuation due to the reference of Article XIII D Section (3)(a)(1) that incorporates existing exemptions, as well as to collect fees, as those charges are generally excluded from the definition of “tax” under Article XIII C.
Valley Water’s 2026 Legislative Guiding Principles IV.A.6. expresses support for reducing the vote threshold for ballot measures to fund infrastructure projects. Valley Water has historically supported efforts to lower the vote threshold for local revenue measures, including the failed Proposition 5 in 2004, which sought to reduce the threshold from two-thirds to 55% for local bond measures for housing and infrastructure projects.
Valley Water has also opposed efforts to restrict local governments’ ability to raise revenue, such as the 2024 “Taxpayer Protection and Government Accountability Act," which would have imposed stricter rules for local taxes, fees, and assessments. The California Supreme Court blocked the measure from the ballot for exceeding the scope of the power to amend the Constitution via citizen initiative.
If Proposition 43 passes, citizens' initiatives would be expressly forbidden from imposing ad valorem property taxes or imposing, extending, or increasing
special taxes without being subject to the relevant super-majority voter approval threshold provisions of Proposition 13 or Proposition 218. As a result, a minority of voters within Santa Clara County could block a majority of voters from approving revenues necessary to fund essential services and programs.
Staff recommends that the Board adopt a position of “Oppose” on Proposition 43.
Pros
• Closes what proponents have identified as a loophole to the two-thirds vote requirement for local special taxes.
Cons
• Restricts local control.
• Allows a minority of voters to block funding determined to be essential by a majority of local voters.
• Reduces an avenue for raising revenue currently available to communities.
C. Measure RTM, Connect Bay Area Transit Initiative.
Position Recommendation: Support
Measure RTM is a five-county regional sales tax proposal on the November 3, 2026, ballot, covering Alameda, Contra Costa, San Francisco, San Mateo, and Santa Clara counties. If approved, the measure would impose a 0.5% sales tax in Alameda, Contra Costa, San Mateo, and Santa Clara counties and a 1% sales tax in San Francisco for 14 years and is estimated to generate approximately $980 million to $1 billion annually.
The measure aims to prevent severe service cuts and support regional transit service, including the Santa Clara Valley Transportation Authority (VTA) and Caltrain. In addition to maintaining transit operations, the measure would provide funding for improvements intended to increase transit safety, cleanliness, reliability, affordability, accessibility, and coordination among San Francisco Bay Area transit systems, as well as certain transportation capital and roadway projects. This measure is also intended to support regional connectivity and preserve access to public transportation for workers, students, seniors, people with disabilities, and other riders who rely on public transit.
Importance to Valley Water
Measure RTM has a nexus to Valley Water Board Governance Policy No. E-5 (“Climate Change Mitigation and Adaptation”), which establishes the Board’s policy direction for Valley Water to achieve carbon neutrality and provide equitable, climate-resilient water supply, flood protection, and water resource stewardship.
Specifically, Ends Policy E-5.1.3 establishes the objective of incentivizing low-carbon practices, projects, and efforts by employees, contractors, and partners. By helping maintain reliable and accessible regional public transit, Measure RTM would preserve lower-carbon commuting options for Valley Water employees who use public transit and provide an alternative to single-occupancy vehicle travel. This is consistent with Valley Water’s goal of minimizing greenhouse gas emissions from its operations and its related objective of incentivizing low-carbon practices, projects, and employee efforts.
Staff recommends that the Board adopt a position of “Support” on the Connect Bay Area Transit Initiative.
Pros
• Supports regional greenhouse gas reduction efforts by maintaining public transit that can reduce automobile trips and associated transportation-related emissions.
• Supports regional coordination through a multi-county approach to maintaining and improving an interconnected Bay Area public transit network.
• Preserves lower-carbon transportation options for residents and workers, including Valley Water employees who rely on public transit for commuting.
• Benefits Santa Clara County by directing locally generated revenue to transit services, including VTA and Caltrain.
Cons
• Increases the local tax burden by imposing a 0.5% sales tax in Santa Clara County for 14 years.
• May contribute to taxpayer fatigue, as voters may grow weary of future measures that fund public services.
ENVIRONMENTAL JUSTICE AND EQUITY IMPACT:
There are no Environmental Justice impacts associated with this item. The Board’s position does not enact the ballot measures discussed above. If the enactment of such ballot measures necessitates an action by the Board, any associated Environmental Justice impacts will be assessed when the Board considers the action.
FINANCIAL IMPACT:
There is no financial impact associated with this item.
CEQA:
The recommended action does not constitute a project under CEQA because it does not have the potential to result in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
None.
UNCLASSIFIED MANAGER:
Manager
Marta Lugo, 408-630-2237