Santa Cruz Municipal Code Part 5 Local Preference Policy

The purpose and intent of this part is to establish local tenant preference requirements for certain deed-restricted affordable housing units regulated by the city and set forth by resolution in the city’s local preference policy to:

a. Reduce displacement of lower-income households;

b. Prioritize housing opportunities for households who live or work in the city and county;

c. Ensure consistency with state and federal fair housing law; and

d. Provide a clear and uniform framework for tenant selection where permitted by law.

(Ord. 2026-11 § 1, 2026).

1. For purposes of this part, “affordable unit” means a dwelling unit subject to a deed restriction, regulatory agreement, or other binding agreement requiring occupancy by an income-eligible household at a restricted rent or price. The local tenant preference requirements of this part and the local preference policy are intended to be applied to the extent they are consistent with project funding source requirements, state, and federal law.

2. As used in this part, “affordable unit” includes, without limitation:

a. Inclusionary units required pursuant to Part 1 of this chapter (Section 24.16.010 et seq.);

b. Affordable units provided to qualify a project for a density bonus pursuant to Part 3 of this chapter (Section 24.16.200 et seq.) or any other state or local density bonus;

c. Units within a one hundred percent affordable housing development; and

d. Units within housing developments receiving city financial assistance, city land, or other city-controlled resources for new construction, substantial rehabilitation, or acquisition.

3. The community development director may from time to time adopt or amend guidelines for qualifying applicants for the local preference policy, monitoring, relevant administrative provisions, and means of compliance with the requirements of this part (the “local preference guidelines”). The local preference guidelines shall be available publicly and published online.

(Ord. 2026-11 § 1, 2026).

Pursuant to Government Code Section 7061.1, the city shall, no more than ninety calendar days after the date the ordinance codified in this chapter becomes operational, create a webpage on its internet website containing the ordinance codified in this chapter, the local preference policy, and any other supporting material, and include a current link to said webpage in its annual housing element report.

(Ord. 2026-11 § 1, 2026).

1. When selecting tenants or homebuyers for affordable unit(s) subject to the requirements of this chapter, owners of the affordable unit(s) shall implement the local preference policy adopted via resolution and published online pursuant to Government Code Section 7061.1, as may be amended by the city council by resolution from time to time.

2. The local preference policy shall be included as a term in the regulatory agreement or other agreement between the city and the owner of the affordable unit(s). Prior to offering the affordable unit for sale or for rent, the owner must provide the city with a tenant selection plan which describes the project’s procedures for implementing the required preferences and for determining whether potential renters and homebuyers are entitled to the preferences required by the local preference policy.

(Ord. 2026-11 § 1, 2026).

The local preference policy shall apply during the full term of affordability required by this chapter or by any regulatory agreement, financing document, or other city approval applicable to the affordable unit. The local preference policy shall be applied at both initial occupancy and subsequent rental or sale of affordable units, to the extent consistent with project funding source requirements, state, and federal law.

(Ord. 2026-11 § 1, 2026).

1. The provisions of this chapter shall apply to all owners and their agents, successors, and assigns of affordable units governed by this chapter.

2. Upon the city’s request, owners of affordable units shall provide documentation of compliance with this chapter, consistent with the local preference guidelines referenced in Section 24.16.410(3).

3. Notice of Noncompliance. Except as otherwise provided herein, if the city determines that a violation of this chapter has occurred, then the community development director, or designee, shall provide notification of the noncompliant issues to the offending party. Within thirty calendar days of the notice, the developer, owner, or tenant (as applicable) shall either cure the violation or submit a written cure plan to the community development director, or designee, for approval. The community development director, or designee, may approve a cure plan establishing a reasonable timeline and conditions for achieving compliance. Any cure plan shall be implemented in a manner consistent with applicable state and local law, including any requirements governing tenant noticing, relocation assistance, eviction, or fair housing obligations.

4. The city may institute any appropriate legal actions or proceedings necessary to ensure compliance with this chapter. In the event the city is the prevailing party in a legal action to enforce the provisions of this chapter, the city shall be entitled to recover its administrative costs, including reasonable attorneys’ fees, in addition to any other remedy provided by the court.

5. The city council by resolution may establish fees for the ongoing administration and monitoring of the local preference policy, which fees may be updated periodically, as required.

(Ord. 2026-11 § 1, 2026).