A complex first-time home buyer program California lawmakers are working on in conjunction with the State Treasurer’s Office may be funded by an up to $25 billion general obligation bond initiative — if voters approve it.

The “Dream for All” program aims to make home ownership more affordable by reducing the cost of ownership for lower and middle-income Californians, and encourages home builders to sell homes at prices that are attainable to a broader range of purchasers.

The overall goal is to build wealth among Californians for whom homeownership is out of reach and add to the state’s housing supply by building as many as 500,000 new homes, said Sen. Robert Hertzberg, D-Van Nuys.

Hertzberg is crafting legislation for the bond initiative he plans to introduce next year that would provide “silent second” mortgages that are not repaid by first-time home buyers until the home is sold. If lawmakers approve the initiative it would go before voters in November 2022.

“I want to get people out of renter-ship,” Hertzberg said. “Where they are stuck in a cycle of paying rent higher than the cost of paying a mortgage and school loans, so that they are never able to save for a down payment on a house.”

The program would not only be a mortgage program for home buyers under a certain income level, but also help pay to construct new homes.

The mortgage program only applies to new construction and can’t be used for existing construction, he said.

“I want to make sure that the people who buy the homes get brand new homes that aren’t old and decrepit and that don’t have problems,” Hertzberg said. “We also want the program to stimulate the economy and create new supply.

“The idea is to do soft second mortgage with investors,” Hertzberg said. “You don’t technically need the full faith and credit of the state to do that, but we want to get approval from the public for the program.”

Creating the fund to support the program using GOs means that “you get a better price and reduce the carry for the down payment program for folks,” Hertzberg said.

“We will also provide mezzanine financing for developers to pay for street lights, sidewalks and other infrastructure,” he said.

The bond measure is part of a larger first-time homebuyer program called Dream for All that was created through Assembly Bill 140 and approved by lawmakers in July as part of the 2021-22 budget.

AB 140 provided funding for a study by the California State Treasurer’s office, in collaboration with the California Housing Finance Agency and the California Department of Housing and Community Development, and other relevant parties, to develop a framework for the program by April.

The treasurer’s office put out a request for proposal seeking specific, detailed proposals, including a written work plan and list of deliverable work products, from qualified consultants or vendors experienced in the design and implementation of housing finance or mortgage banking programs. The deadline for the RFPs is November 16.

A spokesman in the treasurer’s office said their legal counsel informed him that they cannot comment on how many applications they have received or anything about the RFP until it has closed and a vendor has been selected.

The language of the RFP cautioned potential responders to respond directly to the questions in the document and to “not present general sales or marketing approaches unique to the responder’s firm or organization.”

While the state may ultimately choose to contract with a private sector entity to administer the program, the RFP seeks a plan that is adaptable to either a public, private, or hybrid ownership or management structure, according to the RFP.

The program would not only create a program that could turn middle-class Californians into homeowners, but also aims to help lessen the state’s housing supply problem, provide jobs for construction workers and stimulate the economy, Hertzberg said.

“When you try to work on problem solving in government, you have to work at multi-dimensional levels,” Hertzberg said. “It you are trying to solve the problem — it’s not just housing, it’s about closing the rich-poor divide.”

Most programs aimed at creating affordable housing end up getting people in “renter-ship,” Hertzberg said adding that the aim with this program is to get people into homes.

“It’s just a more sophisticated approach to governing,” he said. “In government, there are so many unintended consequences and we don’t think through these things in a holistic manner. This is a much more elegant way to do governance. It’s not just housing people, but 15 other things at the same time.”