2023-2024 Consolidated Final Report with Responses 343 Grand Jury Civil Grand Jury Required Responses: (1) Housing for

The contradictory entries on the City’s website and in the City’s legal documents on whether Inclusionary Housing is restricted to Low, Very Low and Extremely Low-income levels or whether it includes the Moderate- income level is a major discrepancy with consequences about who is eligible for and who obtains Inclusionary Housing. __ AGREE __ PARTIALLY DISAGREE _X_ DISAGREE Response explanation (required for a response other than Agree): The process for determining income eligibility depends on the governing resolution that was approved by the City Council at the specific point in time that the affordable housing agreement between the City and the Developer was executed. This does not change over time for units in a specific project, so a project approved in 2007 would have different requirements and governing resolutions than a project approved in 2024. On the City’s Measure O Resolutions and Ordinances web page, eight resolutions are posted that govern the calculation of income eligibility for Inclusionary Housing /Measure O units in the City of Santa Cruz. Measure O is a voter-approved initiative originally adopted in 1979 that requires developers of residential projects to provide a certain percentage of the total number of units as affordable to income eligible households. The City’s Inclusionary Ordinance (Municipal Code Chapter 24.16, Part One) codifies the requirements of Measure O. Each resolution was approved by Santa Cruz City Council at different times to establish the income, monthly housing cost guidelines, and asset limits for the inclusionary units throughout the City of Santa Cruz. Additionally, each project has specific requirements related to the affordability threshold depending on the project type. The applicable resolution for an available Inclusionary Unit is noted when a unit is available either under the “AVAILABLE MEASURE O UNITS FOR PURCHASE” or “AVAILABLE MEASURE O UNITS FOR RENT” lists respectively. Required Response from the Santa Cruz City Council Housing For Whom? Due by September 19, 2024 2023-2024 Consolidated Final Report with Responses 347

The City has no data on whether Inclusionary Housing is occupied by income-verified local residents and local workers. Both groups are given preference for housing as required by Ordinance. Without data, neither the City nor the community can be assured that such housing is meeting its intended purpose. __ AGREE __ PARTIALLY DISAGREE _X_ DISAGREE Response explanation (required for a response other than Agree): Generally, the intended purpose for inclusionary housing is to serve low-income households (with exceptions allowing moderate-income housing for some projects). Local preferences are not required by Measure O; they were initially adopted in October 2006, and some projects are not subject to the preferences. Our annual compliance monitoring verifies income eligibility of occupants of rental inclusionary housing. We also confirm eligibility of homebuyers when a for-sale unit is purchased. The Santa Cruz Housing Authority reviews the actual applications and confirms income eligibility for Measure O units, and the City reviews the Housing Authority’s determination and associated documentation. However, in 100 percent affordable projects, the City’s agreements generally allow the property manager to review and certify tenant applications, because those projects are subject to the requirements of multiple funding sources and then the property manager sends this reporting to the City for annual review and verification. In some cases, conditions placed on federal, or state funds may not be consistent with the City’s preferences. However, at initial lease-up, where permitted, typically the developer establishes a lottery system with rankings based on the required preferences. Staff has recently initiated a new compliance form for developers/property managers to sign prior to Temporary Certificate of Occupancy, when the units are getting ready to be leased up or sold, verifying that the developer or property manager is complying with the City’s local preference policy. In addition, the affordable housing agreements entered into between the City and the Developer at the time of building permit issuance require the Developer to comply with the City’s local preferences, and these agreements are recorded on title. The City believes that the mechanisms in place effectively enforce the City’s preferences to the extent possible given existing agreements and state and federal laws, while avoiding excessive administrative burdens on property managers. Required Response from the Santa Cruz City Council Housing For Whom? Due by September 19, 2024 348 Santa Cruz County Civil Grand Jury

The City has no data on the percentage of units in Inclusionary and 100% Affordable Housing projects that are rented to UCSC students. This leaves the City and the public unable to assess the impact of UCSC on the local affordable housing supply. Such data is important for the City’s ongoing negotiations with UCSC to build more on-campus housing. __ AGREE _x_ PARTIALLY DISAGREE __ DISAGREE Response explanation (required for a response other than Agree): The City does not currently track the percentage of UCSC students occupying Inclusionary Units or 100% affordable housing projects. The City does recommend that UCSC track where their students live. The impact of UCSC students on the availability of inclusionary units is likely fairly limited as the income eligibility requirements would disqualify UCSC students who are claimed as dependents by their parents. At this time, the City is unaware of UCSC students renting inclusionary units. Most undergraduate students (nearly 90% of USCS students) are likely to be claimed as dependents. If the students are dependents, then the entire household’s income must be shown on the Measure O application and all household members must reside in the unit as their principal place of residence. This likely excludes most students from being deemed eligible for inclusionary housing. The City recommends that UCSC track where their students live, which would allow the City to determine if they are residing in inclusionary unit Required Response from the Santa Cruz City Council Housing For Whom? Due by September 19, 2024 2023-2024 Consolidated Final Report with Responses 349

By not sending candidates for difficult to fill positions directly to hiring managers the chances of hiring well qualified candidates are reduced.

Most county departments lack dedicated hiring managers leading to overloaded administrators.

The Personnel Department has not changed policies and procedures in the face of fewer candidates applying for County positions resulting in additional vacancies and slower recruitment and hiring processes.

The Personnel Department’s website advertising continuous open positions without regular updates makes it very difficult for candidates to find opportunities on search engines because the information is stale and not up to date.

Continuous improvement for promoting existing employees in departments with difficult to fill positions can help to maintain effective staffing levels.

Promoting employees within departments with many difficult to fill positions can limit the damage caused by attrition, especially at more senior levels.

The months-long hiring process is frustrating to candidates and jeopardizes the County’s chances of hiring good candidates.

The time required for complex paper processes steals time from creative recruitment and ongoing contact with candidates.

Despite the finding in F9, having leadership in Personnel Department positions filled by long-time employees that have spent most of their career in the department has led to limited acceptance of ideas that have worked elsewhere in hiring for difficult to fill positions.

The 8-county salary comparison in place since 2002 is no longer a useful benchmark for wages and salaries given the high cost of living in Santa Cruz County resulting in many vacancies.

To attract a wider pool of candidates for difficult to fill positions, pay needs to be at least 90% of what Santa Clara County offers.

The County Personnel Department was consistently unable to provide comprehensive hiring statistics. Without accurate data, Personnel and other departments cannot make sound judgements on how to measure improvements in the hiring process for difficult to fill positions.

The Personnel Department expects the department units themselves to track hiring and recruitment metrics and keep important data such as turnover statistics and vacancy rates. This leaves the Personnel Department and oversight bodies without a clear picture of the situation and depth of the problem.

By not filling essential positions for months at a time, services for residents suffer harm when vacancies persist.