Grand Jury Board of Supervisors' Response to 2022-2023 Grand Jury Report--"Housing Our Workers"

While all city and county planning departments have demonstrated a good understanding of the new State housing laws and the need to facilitate more housing, the failure to do so in a timely manner has served to further decrease the availability of housing and further increase the need and cost of more housing. __ AGREE _x_ PARTIALLY DISAGREE __ DISAGREE Response explanation (required for a response other than Agree): The pace of State law changes related to housing typically does not give the California Department of Housing and Community Development (HCD) adequate time to develop guidance before laws go into effect. It is up to jurisdictions to analyze laws, without the benefit of State guidance, and determine how to incorporate into and balance new laws with other existing local and State code requirements. The County has worked diligently to update policies and codes related to new laws, where necessary, and to issue guidance and application materials for use by the public. Further, implementation of laws is often “clarified” by case law after the fact, requiring further adjustment of materials. The County’s role is to ensure the availability of appropriately zoned land to ensure capacity for units, and to ensure that policies, regulations, permitting and related procedures do not thwart development, while also complying with the General Plan, local codes, and State laws that regulate housing and protect the environment. Therefore, jurisdictions including the County are dependent upon private-sector, non- profit and for-profit housing developers to build new housing of all types. There are many other forces that influence housing development volumes and locations, including national and State economic trends, real estate-related market forces, interest rates, costs of construction labor and materials, land costs, disasters, and their resulting impacts on availability of labor and materials, in some cases neighborhood opposition and/or the input of other local regulatory agencies, and the demand for luxury and/or second homes in coastal areas. All of these forces affect the pace and volume of housing development, and therefore the supply and cost of local housing over the decades. Required Response from the Santa Cruz County Board of Supervisors Housing Our Workers Due by August 31, 2023 The County has been very proactive in the areas of both Accessory Dwelling Units (ADUs) and Density Bonus law. For ADUs, the County has developed online tools, guidebooks, fee reductions, and a new ADU Technical Assistance program, to encourage the development of ADUs. The County’s 2018 density bonus code updates exceeded the State’s density bonus law minimum requirements in place at the time and has been implemented with multiple projects since its adoption. In 2019, the County also updated its codes for farmworker housing on agriculturally zoned parcels and updated its codes to allow affordable rental and school employee housing in public facility zone districts to make “workforce housing” more feasible and possible on more acreage within the unincorporated area. However, many factors impact a property owner’s ability to develop, including economic conditions, neighborhood opposition, legal challenges to CEQA determinations, etc. Required Response from the Santa Cruz County Board of Supervisors Housing Our Workers Due by August 31, 2023

The County of Santa Cruz has identified several sites for higher density housing, identified sites along transportation corridors for housing and changed zoning laws to allow more mixed-use developments, however in the past several years, few low income homes have been built or approved. __ AGREE _x_ PARTIALLY DISAGREE __ DISAGREE Response explanation (required for a response other than Agree): The Grand Jury’s report does not include the latest 5th Cycle Regional Housing Needs Allocation (RHNA) status submitted to the State in April 2023. The updated status, which added the units permitted in calendar year 2022 to the prior years of this cycle, shows a total of 1,043 units were permitted, or 79% of the County’s RHNA assignment. Of those units permitted, 381 were in the low and very low categories, for approximately 72% of the required lower-income units. In addition, the County has approved additional housing projects that include lower- income units, which either have not yet applied for building permits due to changing economic conditions or are still in the process of preparing their building plans, and/or pulled permits during calendar year 2023, and therefore are not yet included in the prior year's annual reports. Many local housing projects have been delayed and/or been negatively impacted by economic factors related to the multiple disasters affecting the County during the 5th cycle, including the three-year COVID-19 pandemic, 2020 CZU fires, and 2023 atmospheric river storms. The most recent permitting data for all jurisdictions is available through the online State dashboard at: https://www.hcd.ca.gov/planning-and-community-development/housing-open-data- tools/housing-element-implementation-and-apr-dashboard. As shown below, on the chart provided on of that dashboard (filtered to Santa Cruz County jurisdictions), the County permitted more Very Low-Income Units in the 5th cycle (through December 2022) than any of the local cities, and more Low- and Moderate-Income units than any city except the City of Santa Cruz. Required Response from the Santa Cruz County Board of Supervisors Housing Our Workers Due by August 31, 2023 To make infill housing development more feasible and more environmentally sustainable, the Board of Supervisors adopted the Sustainability Policy and Regulatory Update (Sustainability Update) in December 2022. This project, comprised of comprehensive General Plan and County Code amendments and rezonings, incorporates many policy and regulatory improvements to encourage the development of more housing on urban infill parcels within the County’s established Urban Services Line, where infrastructure is available or can be made available more efficiently than in rural areas. Changes include establishment of a new high-density zoning district called Residential Flex (22-24 units/acre) and County Code adjustments to urban residential standards, including increased height and story allowances that could make projects more economically feasible, reduced setbacks, and increased allowances for residential square footage in mixed-use development. The rezoning of parcels along Portola Drive, which were included in the project, allow for Urban High Residential development at an increased density range of 11 to 30 dwelling units per acre. The effect of these policy and mapping changes have yet to be fully realized, as the amendments are currently under consideration at the California Coastal Commission. However, the changes are anticipated to greatly improve the potential for housing units to be built along transportation corridors. The County is optimistic that the Coastal Commission will approve these updates so that much-needed housing can be built for local essential workers and others in need. Required Response from the Santa Cruz County Board of Supervisors Housing Our Workers Due by August 31, 2023

Capitola and the County of Santa Cruz need to work together to facilitate significant housing in the mid-county area where a large percentage of jobs are located. __ AGREE _x_ PARTIALLY DISAGREE __ DISAGREE Response explanation (required for a response other than Agree): The Board of Supervisors agrees that housing located near job centers and transportation corridors is key to future sustainable urban development. Coordination among the various local jurisdictions and regional agencies within the county is important to making progress on the housing crisis. The planning directors meet quarterly, and further informal communications frequently occur. Coordination also occurs in the regular bi-monthly meetings of the Planning Directors Forum hosted by the Association of Monterey Bay Area Governments (AMBAG), as well as in the local Continuum of Care, known as the Housing for Health Partnership, which includes representatives from all local jurisdictions. In addition to coordination among directors, other planning, and public works staff in various divisions (including housing and development review) are familiar with, and frequently reach out to their colleagues in neighboring jurisdictions when needed to coordinate on developments and other projects that require such cross-jurisdictional coordination, such as those located close to city limits, and regional infrastructure and planning efforts. Several recent examples of this include the Pippin I (built in 2018) and Pippin II (currently under construction) affordable housing development projects. Each of these projects included one parcel on unincorporated County land and one parcel in the City of Watsonville. Extensive coordination occurred between City and County staff at various stages of their development in order to get these projects funded and completed. Required Response from the Santa Cruz County Board of Supervisors Housing Our Workers Due by August 31, 2023

While all local municipalities have voiced support for prioritizing housing for local workers, only some of them have clear local preference guidelines that give some priority to local workers. Without clear guidelines and incentives, new housing is more likely to be purchased by those who do not live and work here. __ AGREE _x_ PARTIALLY DISAGREE __ DISAGREE Response explanation (required for a response other than Agree): Many California jurisdictions including the County that fund affordable housing projects or administer affordable housing programs, such as inclusionary or “below market-rate” programs, provide general preferences to prospective applicants who live and/or work in their locality. State and federal fair housing laws, as well as conditions attached to State and federal subsidies, limit the extent to which these preferences can be very narrowly tailored to provide priority preferences to local workers only, as opposed to those who may live locally but work elsewhere, and/or to those who work versus those who may be retired, unemployed, or unable to work due to disabilities or other reasons. The reasons are that such preferences could create a “disparate impact” on certain protected groups who may be less likely to be in the group receiving the preference, and thus the preference limits their access to fair housing, which would violate the law. Most local jurisdictions including the County generally provide legally allowable preferences in their local affordable housing projects and programs for those who live or work in the County. This sometimes include priorities for additional special needs groups, such as for those displaced by recent disasters, or for those who are homeless, households with a disability, seniors, homeless families, or other special needs group. Furthermore, if a project is being built by an employer specifically for its employees, then it does not violate fair housing law to limit those units to the specified group of employees. Examples include housing for farmworkers, or local school districts building housing for their employees. The County’s inclusionary housing program (also known as a below-market rate housing program), established through the 1978 voter initiative called “Measure J”, does generally limit the eligibility to access these affordable housing units entirely to applicants who live or work within the county. The County owns many parcels throughout the unincorporated area and is actively studying the potential for public-sector employee housing on several of its properties. Employers of various types may also develop housing for their employees on any other types of property they own that allows housing development, which includes residential zones and commercial mixed-use zones (C1, C2, PA, and/or RF). Required Response from the Santa Cruz County Board of Supervisors Housing Our Workers Due by August 31, 2023

All municipalities are trying to identify and facilitate the building of housing projects, but most of that is done independently of the other municipalities or with outside partners. Since workforce housing and transportation gridlock is a county-wide problem, all county municipalities need to work more closely together and with property owners to develop housing solutions. __ AGREE _x_ PARTIALLY DISAGREE __ DISAGREE Response explanation (required for a response other than Agree): Please see response to F6. In addition, the County has forged strong partnerships with various non-profit affordable housing developers and other public agencies, including local cities in some cases, and/or the countywide Housing Authority, resulting in the construction of many affordable housing developments over the past 40 or more years. Some of the more recently built projects include Pippin Orchards Phases I and II in the Watsonville area, Aptos Blue and Canterbury Park in Aptos, and St. Stephens, 1520 Capitola Road (Bienestar Plaza), and Rodeo Creek Court in Live Oak. Where possible, the County has pursued partnerships including with local cities. However, housing is inherently a local land use issue and thus makes cross- jurisdictional coordination unfeasible in many cases. There are several regional agencies, such as the Regional Transportation Commission, that handle regional planning issues including transportation and groundwater. These agencies include representatives from each of the local jurisdictions, and staff of each of the local jurisdictions closely follow and participate in planning efforts of those regional agencies. Other regional entities that many local staff participate in, which help staff keep informed and share information on regional issues affecting housing development and housing needs, include AMBAG, the Monterey Bay Economic Partnership, the Housing for Health Partnership, and Housing Santa Cruz County. Required Response from the Santa Cruz County Board of Supervisors Housing Our Workers Due by August 31, 2023