In early March, the city of Santa Cruz got word that it had scored $5 million from the competitive federal Local Housing Trust Fund (LHTF), which is administered by the State Housing and Community Development department. It was part of $57 million in competitive grants doled out statewide.
The money, which will be allocated over five years, will help provide matching funds for several projects in Santa Cruz that are bringing much-needed affordable housing units for low-income families.
Santa Cruz was one of 33 applicants vying for the funds, says Economic Development Director Bonnie Lipscomb, who called the grant “key money” for at least three current projects. The city has about $3 million in its Affordable Housing Trust Fund, she says, which is funded by developer fees and used to close the financing gap for affordable housing projects in the city.
“Having that money means we can leverage that many more projects,” Lipscomb says. “We typically come in as the last financing on projects, particularly ones that may be stalled in their projects.”
Lipscomb says that the city currently has around 1,000 housing units in various stages of development, many of which are considered affordable. Affordable housing projects could also get a boost from the ongoing work of a volunteer group looking at potential revenue streams.
In November 2018, a bond that would have funded affordable housing in the county failed after falling just short of the two-thirds it needed. But the numbers by jurisdiction told a different story. The city of Santa Cruz overwhelmingly approved it, and it nearly passed in Watsonville, says retired county treasurer and former state lawmaker Fred Keeley, who is a member of Housing Santa Cruz County. That group—formed about one year ago in the wake of those efforts—took the near success as a cue that voters might give a nod to a similar measure in the future.
The group tackles the affordable housing crisis with a multi-faceted approach. This includes advocating for affordable housing projects countywide, supporting efforts by local jurisdictions to increase affordable housing stock and connecting with and supporting elected officials who list housing as one of their top priorities.
“So many people wanted to continue to move forward,” Keeley says.
And so as part of those efforts, he says the group is in the early stages of a possible affordable housing measure for the November 2022 ballot. Group member Don Lane, a former Santa Cruz mayor and community organizer, says that the work will mean looking into the specific needs for each jurisdiction in the county.
“There is just a good amount of discussion going on in a lot of different places around the need for some new local funding sources for affordable housing,” Lane says. “That will be a major point of discussion for us going forward.”
The quickly-growing nonprofit group is made up of 25 organizations and about 100 members, Lane says.
“We are trying to build a very big tent for this organization,” he says, “and we’re off to a very good start.”
Statewide, the numbers are grim. According to the U.S. Census bureau, 1.4 million Californians—nearly 8% of the population of people 18 and older—are experiencing housing insecurity. Housing Authority of Santa Cruz County Executive Director Jenny Panetta estimates that about 30,000 households—roughly one-third of all households in the county—are income eligible for federal rental assistance, defined as earning less than 50% of median household income.
“We are among the least-affordable rental markets in the nation,” she says.
Panetta says the organization is assisting roughly 5,000 households, and another 12,000 are on the waiting list for the Housing Choice (previously known as Section 8) voucher program, a process that can take about 10 years.
Mayor Donna Meyers says that the state next year will adjust its Regional Housing Needs Allocation (RHNA) numbers—which lays out the amount of local housing programs that jurisdictions must include when developing their housing elements, a long-range plan of how a city plans to develop its housing stock. The Association of Monterey Bay Area Governments oversees those allocations.
The city adopted its plan in 2016 and is set to do so again in 2023. She also says that the state will likely begin holding jurisdictions responsible for failing to meet their goals by withholding funding for housing projects, putting more pressure on cities.
“I have a feeling that the state is going to put out a bigger number for us to achieve,” Meyers says.
Meyers says she hopes to see a mix of housing for all income levels—from market-rate to affordable—as the city looks to ease its housing crisis and considers new projects. That can be a tough sell in any jurisdiction, with many residents ready to fight changes to their neighborhoods.
“Housing is a hard, moving target to really develop comprehensive public policy for, because people react to development in different ways,” Meyers says.
While the ongoing work in Santa Cruz was helping the city reach its RHNA goals of 180 very-low income units, 118 low-income units and 136 moderate units, next year’s goals will essentially start the clock over again with the city’s housing needs obligations, Meyers says.
Reach for the sky
Lipscomb says various downtown projects making their way through the design phase will allow vertical, high-density development in the corridor, bringing residents’ homes closer to where they work, shop and eat.
“That whole local context will help our downtown really thrive into the future,” she says. “This is a really good situation for our community right now.”
These projects run the gamut from 100% affordable to a mix of market-rate and low-income. What’s clear is that there is no solution that will satisfy everyone, particularly when considering projects that potentially alter the look and feel of neighborhoods.
Political consultant Bruce Van Allen, who served as Santa Cruz mayor and led several housing projects in the city, called the affordable housing problem “a big, intractable mess.”
“Many people feel that higher density is the way to expand the inventory, but that’s a volatile subject,” he says.
That is especially true in neighborhoods made up of single-family homes, Van Allen says.
“A lot of those neighborhoods like it the way it is,” he says.
Van Allen says the problem won’t simply be solved by building more units. Raising wages, lowering the cost of housing and regulating the market all factor into solving the issue. It’s also important, he adds, to subsidize both potential homebuyers and developers to make including affordable options more attractive. But those subsidies can also be a touchy subject, Van Allen says.
“Regulating the market is a tough ask in our country, and subsidizing people is tough, too, because of the impression that you’re encouraging laziness,” he says. “There is really no other way to do it, which is why there is so much homelessness now because of the disparity between what people can earn and the cost.”
Van Allen says he managed several affordable housing projects for the nonprofit Community Housing Corporation in the aftermath of the Loma Prieta Earthquake. Getting through the red tape, he says, brought another hassle.
“It would take sometimes two or three years to line up the funding and get everything in place,” he says.
Housing activist Charlie Vaske says he came to Santa Cruz to attend UCSC in 2003, and started delving into the issue when he began to look for his own apartment.
“I was wondering why all my friends were leaving town and why the rents kept going up,” he says. “And why there isn’t enough housing, why when I went to apply for an apartment to rent, why there were 80 people looking for one apartment. It seemed like that was all wrong.”
He says he found a “systematic manipulation” of housing by property owners over the past 50 years who have opposed numerous apartment projects, thus making them scarce and driving up prices. The average rent currently for a one-bedroom apartment is now $2,200, he says.
This skepticism includes the 831 Water Street project, which would bring 77 affordable and 47 very-low-income units. It would also include about 9,000 square feet of retail businesses on the ground floor, about 80 underground parking spaces and a 2,000-square-foot community space on the top floor of one of the two buildings. Despite the high number of affordable units that it will provide, it has garnered opposition even by people who support affordable housing. One such person is Simon Ghorbani, who lives behind the strip mall where the project would be located. He says the large development would be jarring when juxtaposed near his neighborhood of single-family homes.
“A lot of people would say, ‘not in my backyard, not in my backyard,’ and I never imagined I would be saying this, but, literally, this would be impossible to have in my backyard,” he said during a public comment period on Jan. 27 as the public information phase of the project kicked off.
Vaske says the city needs more duplexes, triplexes and quadplexes, which are discouraged or even prohibited in many communities. Berkeley, Oakland and South San Francisco recently changed their zoning rules to allow them, Vaske says, adding that no such change is slated for Santa Cruz.
“But I’d like to create some movement,” he says.
Senate Bill 9, introduced in December by a half-dozen senators, would allow those developments in neighborhoods zoned for single families. The bill is currently making its way through the normally circuitous approval process.
Rafa Sonnenfeld of Santa Cruz YIMBY (Yes In My Back Yard) cites numbers from the California Housing Partnership showing that 1.3 million low-income renter households statewide—10,000 locally—don’t have access to affordable homes.
“We’re way behind the curve in what the need is and what the supply is,” he says.
In Santa Cruz County, Sonnenfeld says, 75% of people earning less than 35% of median household income are paying more than half of their paychecks on housing costs, which he says is an “incredible cost burden.” Inclusionary ordinances—such as Santa Cruz’s requirement that any project with five or more units must be 20% affordable—often shifts the onus of adding affordable housing onto private for-profit developers, he says.
“So it doesn’t always pencil out for developers or the community,” Sonnenfeld says.
“There is really a need for more affordable housing, especially at the deepest levels of affordability, and right now we really don’t have any great way to produce that kind of housing,” he adds.
Keeley says that any discussion of creating affordable housing should be based on taking action.
“We are long, long, long past the time when the case needs to be made in the need for affordable housing,” he says. “This is now part of the fabric of California, especially on the coast. It is part of the reality of our community as well, which is that there continues to be a growing divide between those that can’t afford housing and work in the community.”
The city is in the midst of several projects that include affordable housing, and while officials tout them as a step in the right direction, housing advocates say they do not do enough to meet the need.
Where: Just south of Maple Alley where Tampico restaurant used to be
Developer: For The Future Housing
Details: Offers 80 units of very-low income affordable housing. Will include a new home for Santa Cruz Community Health Center and Dientes Community Dental Care, offering low-cost dental and medical care.
Stage: City has approved the application and is seeking final funding and applying for tax credits.
Pacific Station North
Where: Downtown corridor
Developer: First Community Housing
Details: About 100 units of affordable housing. This ambitious project includes a plan to relocate the Metro center to Front Street and develop Pacific Street frontage with commercial retail on the ground floor, with affordable housing on top. “The idea is that we’re realigning the metro, making a very active streetscape and pedestrian-enhanced area and providing much-needed housing by going vertical, so we’re going denser,” Lipscomb says.
Stage: The project is in the design phase.
Where: At the site of the downtown farmer’s market
Developer: Design firms Project for Public Space and Group 4 Architecture have been chosen to lead the development process.
Details: Approved by the City Council on June 23, 2020, this project will include a new library, with housing on the upper floors with a minimum of 50 affordable units. It will also include a parking structure with 400 spaces.
Stage: This project recently kicked off, and is a few months behind Pacific Station North, Lipscomb said. A request for proposal will be sent out soon.
Calvary Church project
Where: Adjacent to the church at 532 Center St.
Developer: By Calvary Church
Details: This 100% affordable housing project adjacent to Calvary Church is slated for 60 units. Assembly Bill 1763, signed into law on Oct. 9, 2019, provides density bonuses for projects that offer 100% affordable units.
Stage: In the design phase.
Where: 831 Water St.
Developer: Novin Development
Details: The project would be a mixture of 151 market rate, workforce and affordable housing units. Of these, 77 would be affordable, 47 very-low-income and the remainder being market-rate. It would also include about 9,000 square feet of retail businesses on the ground floor, about 80 underground parking spaces and a 2,000-square-foot community space on the top floor of one of the two buildings.
Stage: Still working through the pre-application and design processes.
Where: From 508 Front St. to 418 Front St.
Developer: Owen Lawlor
Details: A seven-story, mixed-use building with 175 residential condos, 15 of which will be affordable to incomes at 50% of the Area Median Income (AMI) and 5 at 80% AMI. In addition, it will have 11,498 square feet of ground floor and levee front commercial space.
Stage: The city approved the project on Jan. 12.
Santa Cruz School District is looking to build a workforce housing program, Lipscomb says, and the Santa Cruz City Council is looking at changes to the city’s inclusionary ordinance to allow employer- and school-sponsored housing. This project would be located where Natural Bridges School now stands on Swift Street.