County Affordable Housing Policy Discussion – Update

On Tuesday, August 19th, the Santa Cruz County Board of Supervisors publicly considered amending the County’s affordable housing guidelines in conjunction with a nexus analysis and recommendations performed by Keyser Marston Associates. While the impetus for a re-examining of the affordable housing policy is related to two recent court rulings, the County is also exploring ways to make up for the funding lost after the dissolution of Redevelopment in 2011.

Among the recommendations issued by the consultant and County staff, the most pertinent to SCCBC members were:

1. the consideration of a $15.00 per square foot impact fee, as an alternative to the existing 15% inclusionary requirements (which would also apply to single family homes and accessory dwelling units as proposed);
2. a reduction in the inclusionary requirements from 40% to 15% for parcels rezoned from commercial to residential (also applies to R combining overlay zoned areas);
3. a $2.00 per square foot impact fee on both new rental units and new commercial properties;
4. an increase to the allowed Area Median Income level (AMI) to be considered in on-site inclusionary units.

This was the first public meeting of the Board of Supervisors concerning this topic, following two separate meetings of the Housing Advisory Commission, which also considered the changes recommended by the consultant. After a presentation by the consultant, counsel and County planning staff, it appeared that the Board was going to delay further consideration of the recommendations, as opposed to providing staff with direction to move forward. There was noticeable uncertainty amongst multiple board members as well as acknowledgement of the importance of the decision before them. Supervisor Caput, as seconded by Supervisor McPherson, motioned to delay to proceeding to allow for greater review and the development of more alternatives to the proposed fee schedule. However, upon receiving commentary from Supervisor Friend this motion failed 2-3. At this time Supervisor Leopold, with input from Supervisors Coonerty and Friend, put forth a motion directing staff to pursue the following recommendations:

• Exclude single family homes, accessory dwelling units and remodels from the proposed impact fees/inclusionary mandate
• For ownership units, existing provisions are retained, such that participation starts with 3 unit projects.  3- and 4-unit projects pay a fee (which is still to be determined), and on-site 15% requirement for 5+ unit projects. Also, there is the option for developers to request paying impact fees instead, at $15.00/SF. Again, this does not apply to projects with less than 3 units.
• Increase the affordability threshold of the inclusionary requirements from 100% to 110% of Area Media Income (AMI). (meaning unit pricing is set higher)
• Reduce the inclusionary requirements from 40% to 15% for rezoned commercial to residential properties, and for the R combining districts, while directing staff to establish clear rules governing potential rezoning.
• Pursue a tiered fee structure for rental properties that would promote higher density and units considered “affordable by design”.
• Draft language to include accessory dwelling units (ADUs) as affordable stock…(meaning that it counts toward the 15% provision of Measure J)
• Impact fee for non-res/commercial development could be $2.00/SF – still under consideration
• In accordance with recent court rulings, the County can no longer require on-site inclusionary requirements for rental properties, and must adhere to state law in regards to density bonuses.

It is important to note that these are all simply recommendations at this time. No formal changes have been made. After staff and the consultants conduct revisions, the revisions will then go back to the Housing Advisory Committee in early November, to be followed by Planning Commission discussion in mid-November. From there, potential changes will go back to the Board of Supervisors in December.

SCCBC will continue to monitor the issue, and make recommendations to the Board and staff as we move into the fall.