Investigation of the Lack of Affordable Housing in Santa Cruz County

A Housing Element is an integral part of the General Plan of a city or county or a city and county including the County of Santa Cruz.

California law requires that the Housing Element (plan) of each county be certified by the California Department of Housing and Community Development (HCD) as meeting legal requirements. Failure to comply results in Santa Cruz County being ineligible to apply for millions of dollars per year in State funding. 5 The U.S. Department of Housing and Urban Development (HUD) divides households into four income groups: high, moderate, low and very low. The State of California also divides households into four groups, using slightly different terminology: high, low/moderate, very low and extremely low. Both use the same numerical income ranges. 6 A self-sufficiency wage is the amount needed to maintain bare functional necessities: shelter, food, essential transportation, essential medical care, and non-discretionary incidental expenses. Page 3-16 Investigation of the Lack of Affordable Housing in Santa Cruz County 2001–2002 Santa Cruz County Grand Jury Final Report

The Santa Cruz County Board of Supervisors, as the responsible executives of the County, with full knowledge and understanding are, and for a number of years, have been out of compliance with California and Santa Cruz County housing laws.7,8 Even in the face of repeated memos from high level County officials advising the Supervisors of same and recommending corrective actions, they failed to vote as a majority to bring the County into compliance.

Many employed individuals and families in the very low-income category live in condemned structures, abandoned vehicles, sheds, storage bins and camps for the homeless. They endure living with unacceptable health and safety violations: without plumbing, without sanitary facilities, without electricity, without heat and with infestations of vermin. A quoted response from the 2001 Farmworker Housing and Health Survey: “...some people were living in a hotel room with one bedroom, a small bathroom, kitchen...there were eight people there...they were in wretched conditions, dead cockroaches, rats, and the roof in bad condition.”

The crisis is not limited just to those with very low incomes. The drastic rise in the cost of housing, and the lack of remedial action, has forced an exodus of people in the public and private sectors with essential skills and an inability to attract replacements. Included are medical providers, educators, law enforcement and firefighting personnel, other professionals and service workers, all of whom are vital to a healthy community. Also, many of the professional and highly skilled individuals have accepted higher salaries in nearby counties, but continue to occupy their Santa Cruz County residences, thus increasing the problem.

One Supervisor produced an affordable housing proposal to help public employees only. Although not adopted, the proposed remedy was to provide public employees with (a), preferential treatment in affordable housing opportunities and (b), financial assistance using County funds. Santa Cruz County Code 17.10.100 describes this practice as an illegal Conflict of Interest.

The ongoing failure of the County Supervisors to take actions that would result in meeting affordable housing laws has resulted in Santa Cruz County being ineligible to apply for millions of dollars per year in State funding for:9 A. Acquisition, development, rehabilitation and financing of rental or ownership housing for low-income families. B. Assistance for first time homebuyers. C. Infrastructure improvements, community facilities and some community services. 7 California Government Code 65580 et seq., and Santa Cruz County Codes, Chapter 17.10, et seq. 8 Housing Element Compliance Report, State of California Dept of Housing and Community Development, dated February 1, 2002, page 8, Santa Cruz County. www.hcd.ca.gov/hpd/hrc/plan/he/status.htm 9 Board of Supervisors Meeting, agenda item 65, October 19, 1999. Letter from the Director, Santa Cruz County Planning Department and the County Administrative Officer to the Santa Cruz County Board of Supervisors, dated October 19, 1999. Investigation of the Lack of Affordable Housing Page 3-17 in Santa Cruz County 2001–2002 Santa Cruz County Grand Jury Final Report D. Business attraction, retention and revitalization activities. E. Capitalization of a loan fund for local businesses for working capital, revolving lines of credit, equipment renovation and other. F. Economic development and related infrastructure improvements.

When questioned in public debates about the loss of these funds, high-level County officials have asserted that no loss of funds has occurred because such funds can, and have been obtained by non-profit organizations and that grants of such funds could not be received by both non-profits and the County. A closer examination of the facts revealed these assertions to be misleading.

The number of primary and 2nd or vacation homes created for moderate income (fewer than 15% of County households) and high income has been disproportionate to the economic ratio of those in need. In parallel, according to County documents and the testimony of County housing officials, the number of affordable dwelling units has actually been declining. Among the reasons for the decline: A. Builders are permitted to demolish affordable dwelling units and replace them with larger, market rate homes. B. Construction of expensive single-family dwellings is being permitted in areas zoned for affordable multifamily dwellings C. The number of dwelling units carrying time limited affordable deed restrictions by agreement with landlords is shrinking.10 The agreements are expiring at a higher rate than they are being replaced. D. Funding mandated for affordable housing is being excessively used on rehabilitation of existing dwelling units, instead of being used to increase the overall number of dwelling units.

Affordable housing has not been attractive to developers and realtors. Given the ample opportunities to build and sell very expensive homes, there have been no economic incentives to consider affordable housing.

There is a widely communicated misconception – touted by those who advocate it – that encourages the false belief that meeting legal requirements for affordable housing mandates high rise developments and/or unacceptable growth.11 The law requires neither. It merely says if a county or city plans to increase (or decrease) the number of dwelling units, the housing element must address the needs of all income segments of the community and cannot unfairly favor certain income groups at the expense of others.

According to the findings of experts with detailed knowledge of the County and all the constraints therein, there are numerous options for relieving the affordable housing situation and substantially bringing the Plan into compliance) These can be achieved 10 Landlords are subsidized for the difference between the affordable rate and the prevailing market rate. 11 The Mid County Post, May 7- 20, 2002, “New Housing Policies Could Bring Crowding," and “Your Neighborhood Might Be Next,” by Jan Beautz, Santa Cruz County Supervisor. Page 3-18 Investigation of the Lack of Affordable Housing in Santa Cruz County 2001–2002 Santa Cruz County Grand Jury Final Report without compromising essential health and safety requirements, environmental or coastal protections, agricultural lands or services important to the quality of life. These options, sometimes individually, sometimes collectively, have been proposed to the Supervisors on many occasions but no action has been taken. Instead, the Supervisors, while publicly voicing support for affordable housing, have instead, directed further studies, directed additional analysis, requested additional reports, directed economic modeling, directed exploration of possibilities and routinely deferred considerations to future dates – often repeatedly – until they eventually failed to appear on subsequent agendas. In contrast, a number of housing officials within the County commended the City of Watsonville for conscientiously addressing their affordable housing needs and obligations.

Housing projects, which violated affordable housing laws, have been approved by the County Supervisors. County law (“Measure J”) requires 15% of new residential developments to be affordable or, satisfy one of several alternative options such as ‘in- lieu’ fees, or transfer credits based on the value of property or dwellings in the development (County Code Section 17.10.034) These fees or other options accrue for the creation of affordable housing. The minimum in-lieu fee, as shown in the Code, is $160,000. Examples of violations found by the Grand Jury are Tan Heights at 13% and Calabria Heights at 10%.

According to the testimony of more than three local housing officials within Santa Cruz County, urban services boundaries12 in the County have historically been determined by anti-growth actions directed by elected officials rather than based on suitability of location for housing development.

The root of many County problems can be traced to the lack of affordable housing: A. Many workers are forced to commute long distances, often two hours or more. Typically those who must make the longest commutes to more affordable places are those who can least afford to those with lowest incomes. This puts additional traffic on already badly deteriorated roads, but Community Development Block Grant funding from the State that would help the situation has been denied, due to the Supervisors’ decision not to comply with affordable housing laws. B. A shortage of employees is hurting businesses and public agencies. Both have experienced an outflow of people and fruitless recruiting programs because the ratio of income to housing affordability is better elsewhere. C. Strained sanitary facilities of public buildings and local businesses, because unemployed and working homeless people living in vehicles or moving from one temporary shelter to another are forced to use them. D. Health and Safety Code violations. According to testimony by a County employee, inspectors are overloaded with work in this area and illegally built living quarters of various kinds.

The lack of affordable housing for low-income individuals is having a particularly serious impact on low-income individuals receiving treatment for mental illness, 12 Municipal water, sewers, transportation and other services are typically available only within urban service areas. Investigation of the Lack of Affordable Housing Page 3-19 in Santa Cruz County 2001–2002 Santa Cruz County Grand Jury Final Report substance abuse and other problems and on their caregivers as well. Because these patients have no fixed address or telephone, it is a serious concern to physicians and other caregivers who cannot locate and maintain necessary contact with their patients to monitor efficacy of treatment and progress.

As stated in this Grand Jury report on County schools, nearly all of the schools in the County have experienced a decline in enrollment, and a resultant loss of State funds. County educators interviewed by the Grand Jury have pointed directly to the lack of affordable housing as the reason.

A number of County officials have testified that the University of California, Santa Cruz has not provided its ‘fair share’ of on-campus housing.

The director of housing for the University of California, Santa Cruz, reports UCSC provides the largest percentage of on-campus housing within the University of California system. Conclusions