Santa Cruz County relaxes affordable housing rules

By Jason Hoppin – Santa Cruz Sentinel
08/14/2012SANTA CRUZ – In a nod to what remains a tight housing market, the county Board of Supervisors on Tuesday relaxed the county’s affordable housing rules, handing developers the flexibility to rent out units that would otherwise be sold to low- and moderate-income residents.County staff said they hoped the deal encouraged banks to lend to builders who are still having a difficult time securing financing on large projects. The deal sunsets after two years, and likely impacts a high-profile plan that’s been three decades in the making – the Aptos Village Project.

“It’s going to provide an incentive for large-scale housing developments in the county, which we have not seen over the years,” Wanda Williams, the county’s assistant planning director, told the board.

But the shift touched off a debate among supervisors about how best to fund affordable housing after the statewide loss of redevelopment agencies, once the primary force behind new affordable housing.

The move was championed by Supervisor Ellen Pirie, who represents Aptos and is retiring from politics in a few months. She has said one of her goals is to push the Aptos Village plan through.

“The last thing we want is an affordable housing ordinance that actually inhibits affordable housing,” Pirie said.

Under the county’s voter-approved 1978 Measure J affordable housing program, roughly 15 percent of new units are set aside of low- and moderate-income homeowners, providing one path to homeownership in a county where housing prices remain sky high.

Rather than sell the units, the changes approved Tuesday allow the developer to rent them out for up to seven-and-a-half years, at which point they would be sold as affordable housing or at market rates, if the developer pays a substantial fee.

That last provision caused much of the debate, with the board eventually voting that it would have final say over any developer’s decision to pay the “in lieu” fee.

“I’m concerned that if we allow that, we’re going to have more units that fall outside the affordable housing stock,” Supervisor Mark Stone said.

That option is available to developers, who pay a sliding scale fee based on the value of a home. For example, a home valued at $500,000 would trigger a 40 percent fee, or $200,000.

Those funds go toward building affordable housing. For example, they were recently plowed into Santa Cruz’ Nuevo Sol Apartments, which serves the chronically homeless.

But they have also been used to helped fund programs aimed at vulnerable populations, and county staff praised their value. Because they are flexible, they can be used as matching funds to help secure state and federal grants, for example.

“I think in terms of the overall program it’s a real benefit to have those resources,” county administrator Susan Mauriello said.

The Aptos Village Project is targeted for an undeveloped swath behind the Bayview Hotel. It includes a mixed-use village, more than 60 housing units, new roads and the relocation of the old apple barn.

The project is being developed by Barry Swenson Builder. A representative could not be reached to comment.