Slow-Growth County Takes On Housing Officials : Santa Cruz Supervisors Reject Negotiated Housing Element
Despite five years of negotiation with state housing officials, the Santa Cruz County Board of Supervisors has rejected a proposed housing element that would permit the county to reach its affordable housing goals largely through the unprecedented use of "granny flat" policies.
At its core, the dispute between the notoriously slow-growth county and the state is a stark example of two competing philosophies about affordable housing. Within the context of longstanding growth restrictions, county supervisors seek to use regulations to require that a certain percentage of housing units be affordable. By contrast, the "supply-siders" at the state Department of Housing and Community Development favor increasing housing production by removing the growth restrictions, which they see as barriers to affordable-housing construction.
The supervisors voted 3-2 in late October against a staff proposal to approve a new housing element — thus extending the longstanding stalemate between the county and HCD. In recommending approval, the county's staff report proudly stated that the county had "reached a tentative agreement with HCD" and would now be eligible for some $4 million in "much-needed housing and community development funds." But board Chairwoman Mardi Warmout claimed the staff negotiated with the state without sufficient direction from the board and, therefore, brought forward a deal that was unacceptable.
In particular, Warmout ridiculed HCD's supply-side strategy, especially in a housing market adjacent to the booming Silicon Valley area. "Nobody who has visited the Central Coast of California in the last 20 years could with a straight face suggest that if you build more housing you're going to get housing affordability," she said. "We have an insatiable demand for housing."
She criticized HCD staff members — many of whom are holdovers from the administration of Gov. Pete Wilson — as being too closely connected to the development industry and expressed hope that Democratic Gov. Gray Davis would appoint new top brass at HCD more sympathetic to the county's point of view. She also said that Democratic Assemblyman Fred Keeley, a former member of the Board of Supervisors, had agreed to help with the HCD negotiations.
The board majority rejected the housing element over the objections of many housing advocates and elected officials from the southern part of Santa Cruz County, including Supervisor Tony Campos. These officials argued that the county's tough stance on growth is forcing the farming town of Watsonville to accept a disproportionate share of affordable housing in the county. Watsonville is said to be contemplating litigation against the county. The city is already locked in a long-standing dispute with county officials and environmentalists over the proposed annexation of sensitive coastal property near Watsonville.
The key to the tentative agreement was HCD's willingness to accept Santa Cruz County's proposed reliance on so-called second units in existing single-family neighborhoods to meet affordable housing goals in unincorporated areas. The draft housing element called for half of the county's goal of 30,000 units to be "second" units — including some 9,000 units in areas designated as rural. HCD approved the second-unit strategy "in spite of the fact that we really don't think the strategy has any chance of being successful," said Cathy Creswell, HCD's policy chief.
But this concession was not good enough for the majority of the Board of Supervisors, which objected to HCD's insistence that regulations designed to ensure the affordability of second units be removed. "The board members raised the question of whether these units are really going to be affordable" in the absence of such regulations, said Alvin James, the county's planning director.
For its part, HCD questioned whether, in the face of such regulations, second units would actually be built. For example, the county's proposed regulations would have required homeowners seeking to build accessory units to select their tenants from a list provided by the county housing authority. As part of the negotiation over the housing element, HCD demanded that this requirement be removed. "Our position was, who's going to do that?" Creswell said.
In fact, one homeowner has already sued the county over the second-unit regulations, claiming the rules are too onerous. Stanley and Sonya Sokolow of Santa Cruz claim that the county's second-unit rules constitute a taking of property and violate the state's second-unit and rent control laws.
The Santa Cruz County Board of Supervisors approved a housing element in 1994, but HCD never certified it for compliance with the state housing element law. The 1994 housing element called for the construction of almost 31,000 units in unincorporated areas, including 12,000 on vacant land, 15,600 as second units, and the rest a combination of mixed-use projects and density-bonus units. Approximately 5,000 of those units would be for low- and moderate-income residents.
Creswell said HCD at first resisted accepting the second-unit strategy, but "we decided to let them try it. … They don't have much land zoned for multi-family." However, the state agency first demanded changes in the second-unit regulations. In a 1997 letter to the county, HCD asked the county to, among other things, streamline the screening of prospective tenants (in addition to removing the county housing authority requirement) and eliminate a requirement for deed restrictions requiring that rents be kept at specified levels in perpetuity. HCD suggested cutting the deed restrictions to no more than 10 years.
In the deal brought to the Board of Supervisors in October, the county staff lowered the overall housing target from 31,000 to 28,600 units. The proposal also shifted some housing production from the second-unit program into areas available for mixed-use development, creating a target of 2,200 mixed-use units. However, the overall production based on second units remained at approximately 13,000 units, or close to half of the county's overall housing obligation.
In addition, the staff asked the board to agree to a series of changes to placate HCD, including:
o Exempting main units from the county's housing permit allocation process when a second unit is proposed.
o Permitting the use of mobile homes as second units.
o Providing priority processing for residential projects that are mixed-use or have second units. Priority processing for larger projects is already available.
o Providing incentives for mixed-use development and second units.
The deal also included a proposed pilot program for second-unit development in unincorporated territory around Watsonville.
Warmout minced no words in criticizing both HCD and her own staff. "This has been a real debacle," she said. She added that she believes the state should be able to set housing targets but that local governments should be given more flexibility in how to achieve them. "This is an issue here about people having control over their own planning destiny," she said.
Mardi Warmout, Santa Cruz County Board of Supervisors chairwoman, (831) 454-2200.
Alvin James, Santa Cruz County planning director, (831) 454-2180.
Cathy Creswell, deputy director for policy development, Department of Housing and Community Development, (916) 323-3183.