County Board to consider affordable housing recommendations in January

The final public hearing to approve changes to the County’s affordable housing guidelines has been moved to mid-January to give staff more time to prepare. For those of you who haven’t been following this issue, the County has been considering some of the most substantial changes to housing policy within the past decade in the wake of having to respond to multiple recent court rulings. SCCBC staff has attended every public hearing, including the Housing Advisory Commission and Planning Commission; met with multiple supervisors; and members of County staff.

Affordable housing in Santa Cruz County is regulated under Measure J, which compels developers to set aside anywhere between 15-40% of the units being developed on a given project, both ownership and rental, to be available for those earning a “low income”. However, this income level is determined by Area Median Income, or AMI. Under Measure J, these inclusionary units could legally be made affordable to those earning up to 100% AMI, meaning that few genuinely affordable units were developed, rather just sub-market rate housing.

However, a series of recent court cases has called into question multiple aspects of the County’s affordable housing program, which in conjunction within having to respond to the loss of local Redevelopment funds, has prompted a larger review of the current policies. Chief among these changes is allowing for the developer to decide whether they want to build the on-site units, or choose to pay a fee that varies based upon project size. We believe that this is by far a preferable change to the status quo because it would give project developers more flexibility than currently allowed, while also generating fee revenue that could be leveraged by the County to build affordable housing projects that could be available to those earning 50% AMI and below, a role traditionally reserved for Redevelopment funds. The on-site inclusionary mandate for rental housing has been completely redacted, as tied specifically to a court ruling, meaning that the same fee structure would apply to these units.

As far as how these new fees would be administered, originally County staff proposed a single level of $15 per square foot for ownership units and $2.00 per square foot for rental. And while we would have liked to see reductions in those fees across the board, we are happy to report that a tiered fee structure has been adopted for ownership projects under 5 units. The breakdown of this fee structure is as follows:

Unit Size (Square Feet)Fee Level
5000<$20.00Note: This fee structure is applied gradually to all units for projects of 5 units or less, meaning that if the size of a unit is 3000 square feet, the first 1000 feet get charged a $2.00 a square foot, the next 1500 get charged at $5.00 a square foot, and so on.

As proposed, this fee structure would not overly burden individual homeowners and smaller developers, and would also prioritize the development of smaller units. The developer option, as well as this tiered fee structure were also adopted unanimously by both the Housing Advisory Commission and the Planning Commission. Given the level of cooperation and receptiveness we have had while working on this issue thus far, we feel confident that the Board will move forward in approving these much needed changes at their meeting in January.