A report raises questions about whether the City of Santa Cruz is properly tracking who lives in โinclusionary unitsโโthose set aside as affordable housingโwithin the city to make sure preference is given to Santa Cruz residents.
The timing is uncomfortable for the city as thousands of market-rate units have been approved and the supply of inclusionary units is set to expand. The City of Santa Cruz mandates that private developers set aside 20% of a projectโs homes at โaffordable rents.โ
But nobody knows who is living in these units, according to the report done by the Santa Cruz County Civil Grand Jury, a non-subpoenaing group of citizens tasked with investigating local government.
This is a problem because there is an official, on-the-books locals preference for these homes. Under Santa Cruz municipal code, the priority for inclusionary housing is given to Santa Cruz residents and workers living here for more than one year.
โThe city keeps no records, does no tracking, gathers no data, and has no evidence to determine if preference is being given to local residents and local workers when renting Inclusionary Housing units,โ according to the report.
Meanwhile, Santa Cruz is the most expensive rental market in the nation for a two-bedroom apartment when adjusted to average income, according to the 2024 Out of Reach report.
There are currently 240 below-market rate inclusionary units in the city: 147 rentals and 93 owned-apartments. This is set to expand tremendously in the years to come if funding doesnโt dry up, according to the report. More than 600 inclusionary/affordable units are proposed in future development projects.
โAffordableโ is a nebulous and general term. The amount one pays to rent or buy these homes is set by the โaverage median incomeโ and the degree to which one makes more or less than that. The categories are โextremely-low,””very-low,โ โlowโ (all below average) or โmoderateโ income.
Moderate income is defined by the state of California as 80%-120% of the average median income of the area. In recent years, the median income in Santa Cruz County has risen to around $92,950. This means someone making up to $111,550 could be eligible for affordable housing, according to the report.
Does โModerate Incomeโ Count as Affordable?
There is also confusion about whether the cityโs ordinance covers โmoderate incomesโ for inclusionary housing. At stake is whether the city is obeying its own laws.
โThe city has conflicting and contradictory policies on whether Inclusionary Housing applies to low, very low and extremely low income earners only, or whether moderate income earners are also eligible. The city cannot state what percentage of the cityโs affordable housing is occupied by income-verified UCSC students,โ the report says.
The report cites a line from the 2018 update to Measure O, the local ordinance enshrining inclusionary units, which reads, โAll affordable units shall be rented or sold to extremely-low, very-low, or low income households.โ However, on the cityโs website it says that inclusionary units are available to โmoderate income households.โ
In practice the city seems to count โmoderate incomeโ as affordable, the report says. A 120-apartment building proposed at 831 Almar Ave. has nine โmoderate incomeโ units as part of its affordability requirement.
This might have more to do with the new pro-housing state regime than the city.
It should come as no surprise to readers of Good Times that all roads lead back to density bonus law, AB 1287. This is the 100% density bonus law which in this case also allows โmoderate income housingโ to be used as part of the base density before the building is supersized, according to a longtime local planner.
The answer to whether โmoderate incomeโ is affordable is more confusing because the cityโs code defines โaffordable housing unitsโ and โinclusionary housing unitsโ as two separate things.
โAffordable housingโ is a more general term that the cityโs inclusionary ordinance falls under. While โinclusionary housingโ is strictly the cityโs 20%, โaffordable housingโ applies to projects with state money or 100% affordable projects such as Pacific Station and Cedar Street Housing.
Since at least 2007, โaffordable housingโ has been an umbrella term that includes โmoderate income housingโ as defined in the cityโs code but is not limited to it, according to Director of Planning Lee Butler.
So while inclusionary housing does not include โmoderate income housingโ definitionally, it is a type of โaffordable housingโ which does.
Recommendations
The report had three recommendations. First, the City of Santa Cruz should create โan ongoing-system to trackโ who is living in inclusionary units; second, the city should explain if โmoderate incomeโ counts for the inclusionary requirement. Also the jury recommends that the city keep track of the number of UCSC students living in inclusionary units for use in negotiations.
In response, the city said that the Economic Development and Housing Departments are preparing responses to the grand jury report for September.





















