SF Housing Finance Authority Bungles Boondoggle Bond: $12 Billion Dollar ‘Mathematical Error’

Sometimes, government agencies and the concept of math are not the best of friends.

The state’s high speed rail program budget to complete the entire project has ballooned to upwards of $180 billion dollars. It was supposed to cost $33 billion – at least that’s what the ballot measure voters approved said – and it was supposed to be pretty much done by, well, now.

Similarly, the Bay Area Housing Finance Authority (BAHFA) recently released its ballot measure question saying the “payback” on $20 billion dollars of bonds intended to create and/or retain affordable housing stock in the Bay Area would be about $670,000,000 million per year (for the next 50 years.)

But – unlike with the rail project – a group of experts looked into the claim and discovered the annual bill property owners will have to shoulder in the nine county region is actually $910,976,423.

That’s a difference of $240 million dollars a year or about $12 billion over the life of the bonds. BAHFA got the number wrong by more than one-third.

Oops.

Also unlike the rail project, the ballot question for Regional Measure 4 – that’s the name of the bond effort – will be corrected before the ballots are sent out, thanks to that group of residents who have formed a group fighting the measure.

Thursday, in response to the “No on RM4” group’s lawsuit regarding the entire ballot description, the BAHFA board made the change, even without a court order.  The board’s lawyer called it a “mathematical error.”

A $12 billion dollar “mathematical error.”

Again, oops.

One of the plaintiffs in the suit that forced the change is Marc Joffe, a public finance expert who is part of the opposition group.

“How can the public trust an agency that can’t do basic arithmetic with nearly $50 billion of its taxes?” Joffe asked. “Ridiculous.”

While that issue has been settled, the group’s lawsuit is demanding eight other changes to the ballot language, language it says is misleading and slanted to “prejudice voters to vote in favor of the measure.”

In California, the election code is quite clear in stating that ballot measure titles and such “must be an accurate synopsis” of the issue at hand and cannot use words and phrases that are not actually in the full text of the bond proposal.

Anyone familiar with California politics is aware that that is a custom more honored in the breach, most notably with then-Attorney General Kamala Harris’ absurd declaration that the evil Proposition 47 be called the “Safe Neighborhoods and Schools Act” on the ballot.

In fact, opponents of the measure say BAHFA held focus groups and conducted significant public polling to decide which words and phrases it would use in the ballot measure to convince voters to approve it.

Citing the on-going litigation, BAHFA had no further comment on the matter. You can see $12 billion dollar change being made can be seen here (at about the 33 minute mark.)  

So what will Bay Area residents actually be voting on in November?

Regional Measure 4 will raise $20 billion dollars to add new affordable housing and preserve existing affordable housing. It is estimated that 90,000 such units shall be built/retained.

The measure is being proposed by BAHFA, a new local agency essentially jointed operated by the Association of Bay Area Governments (ASSBAG) and the Metropolitan Transportation Commission (MTC), two extant regional agencies that coordinate a number of different type of projects.

BAHFA was created in 2019 after state law allowed such new spending districts be created and it appears it was created by the MTC and ASSBAG specifically to make this bond measure possible.

While the bond will generate $20 billion, it will cost – with interest and such – between now and 2077 about $48.3 billion to pay back. A median priced home in the Bay Area is worth about $1.5 million – the bond for thar property would add about $300 per year to the tax bill (note – the number varies drastically between type of property and also on the year – the rate increases in the early years before decreasing later on).

Passage itself also carries a bit of the odor of Sacramento sleaze. As of now, the bond would have to be approved by two-thirds of voters – it stands at about 54% “yes” in the polls.  Not even close, especially considering that bonds and propositions – this would be largest housing bond in state history, by the way – tend to see support sag as election day approaches.

But also on the November ballot is a proposition – Prop. 5, in fact – put there by the legislature that would lower that two-thirds requirement to only 55% of the vote to pass.

And the kicker is that if Prop. 5 passes, then any other “local bond measure” anywhere in the state – and that includes RM 4 – on the ballot would also only need 55% of the vote to pass.

In other words, bond proponents will not have to wait until the next election cycle to take advantage of the lower threshold. The California Legislature is asking voters to literally change the rules in the middle of the game.

How would that work in football?  At the end of the game the refs could change the score – touchdowns are worth 4 points, safeties worth 11 points, etc. – to change the winner.

Sounds fair.  

Note – ASSBAG does not like to be called ASSBAG – the acronym they use is ABAG…a bit better, I suppose, but it’s still involves a bag of …well, whatever.