Santa Cruz Municipal Code Part 1 Expenditures

(a) “Act” shall mean the city of Santa Cruz Workforce Housing Affordability Act of 2025.

(b) “Affordable and workforce housing” shall mean housing that is affordable for extremely low-, very low-, low- and moderate-income households as defined by Section 24.16.015.

(c) “Affordable housing fund” shall mean the fund established by Section 3.34.030.

(d) “Affordable housing trust fund” or “AHTF” shall mean the city of Santa Cruz affordable housing trust fund established by city council Resolution No. NS-26410, as may have been or thereafter may be amended by city council resolution.

(e) “AHTF guidelines” shall mean the city of Santa Cruz affordable housing trust fund administrative guidelines, department of economic development, housing division, adopted by the city council on October 28, 2003, by Resolution No. NS-26410; as revised by the city council on April 25, 2006 (adding Section 5.4.i) by Resolution No. NS-27214; as revised on May 2, 2014, updating organization change to economic development; as revised July 28, 2020, as directed by the city council on June 23, 2020, and for consistency with state Local Housing Trust Fund (“LHTF”) Program application, and as may thereafter be amended by city council resolution.

(f) “Area median income” shall mean the area median income for Santa Cruz County as published and periodically updated by the state of California pursuant to California Code of Regulations, Title 25, Section 6932, or successor provision.

(g) “Housing to reduce/prevent homelessness fund” shall mean the fund established by Section 3.34.040.

(h) “Oversight, accountability, and administration fund” shall mean the fund established by Section 3.34.050.

(i) “Proceeds of the tax revenue measure” shall mean all revenue derived from the taxes imposed by this chapter net of the cost of collection.

(Ord. 2025-29 § 4, 2025).

(a) Pursuant to Sections 50075.1 and 50075.3 of the California Government Code, the specific purposes of the tax and the requirement that the tax proceeds be applied to such purposes and the establishment of a special fund for the tax proceeds are as set forth in Sections 3.34.030 through 3.34.050. So long as the tax is collected hereunder, commencing no later than July 1, 2026, and annually thereafter, the director of finance is hereby authorized and directed to cause to be prepared and filed with the council an annual report that shows the amount of tax collected and expended and the status of any projects funded with the tax proceeds. For the purposes of this section, the director of finance is authorized to retain such consultants, accountants or agents as may be necessary or convenient to accomplish the foregoing.

(b) A three-member financial oversight committee shall be established, composed of the director of finance, the chief executive officer of a local bank, credit union or other local financial institution to be appointed by the city council, and a public member to be appointed by the city council to ensure that expenditures of the tax proceeds of this chapter are in accordance with the terms of this chapter.

(Ord. 2025-29 § 4, 2025).

(a) The Fund. There is hereby established the affordable and workforce housing fund.

(b) Revenue. For each fiscal year eighty-seven percent of the proceeds of the revenue tax measure shall be appropriated, together with interest that accrues thereon, for the purposes specified in subsection (c).

(c) Eligible Uses. Moneys in the affordable and workforce housing fund shall be deposited into and shall be expended in accordance with the city’s affordable housing trust fund including the following:

1. Construction of new affordable units, including tiny homes and social housing;

2. Preservation of existing affordable housing;

3. Affordable housing project planning, project development and support;

4. Assistance with multifamily rehabilitation programs;

5. Conversion of market rate units to affordable housing;

6. Construction, conversion or rehabilitation of income-restricted accessory dwelling units;

7. Gap financing for acquisition and rehabilitation of potential limited equity cooperatives;

8. First-time homebuyer down payment assistance loans;

9. Predevelopment loans/grants to assist nonprofit and for-profit developers with project feasibility studies, site acquisition and design studies for potential affordable housing projects;

10. Payment of debt service or ground-lease payments for projects authorized by this section;

11. Santa Cruz city residents, workers, and veterans shall have priority for obtaining housing units, to the extent allowed by law;

12. Funds from the measure may be allocated to developments that provide housing units to households at a variety of low- and moderate-income levels;

13. Funds from the measure may be allocated to either rental or for-sale housing developments.

(d) Restrictions on Uses.

1. Eminent domain actions are prohibited.

2. All affordable housing shall be deed restricted for a minimum of fifty-five years for rental units and forty-five years for for-sale housing.

3. To the extent feasible, the funds from the measure shall be allocated only for developments where other funding sources provide the majority of the construction financing.

4. Funds from the measure shall not be used to replace existing deed-restricted affordable housing unless they are replaced on a two-to-one basis and existing residents receive relocation assistance and have a right of first refusal.

5. Santa Cruz city residents, workers and veterans shall have priority for obtaining housing units, to the extent allowable by law.

(Ord. 2025-29 § 4, 2025).

(a) The Fund. There is hereby established the housing to prevent/reduce homelessness fund.

(b) Revenue. For each fiscal year ten percent of the proceeds of the revenue measure shall be appropriated, together with interest that accrues thereon, for the purposes specified in subsection (c).

(c) Eligible Uses. Moneys in the housing to prevent/reduce homelessness fund shall be used for the purpose of assisting persons who became homeless while living in the city of Santa Cruz without housing, or those at immediate risk of losing housing, including adults, children, and youth, and persons with mental health issues, to secure permanent supportive housing. To that end, uses under this section shall be limited to:

1. Construction, acquisition, rehabilitation, lease and preservation of permanent supportive housing. For purposes of this section, “permanent supportive housing” means housing that provides a rental subsidy and on-site supportive services for adults, families, and youth living in the city of Santa Cruz without any housing;

2. Construction, acquisition, rehabilitation, lease, or preservation of buildings and facilities that provide supportive housing for adults, families and youth living in the city of Santa Cruz without any housing, including short-term residential shelter, navigation centers and shelters;

3. Programs providing for (A) payments of up two months of rent arrearages paid directly to property owners for purposes of assisting lower-income tenants who are at risk of losing their housing, and/or (B) payments for security deposits and/or last month’s rent paid directly to property owners to support immediate rehousing of displaced qualifying lower-income tenants;

4. Payment of debt service or lease payments for projects authorized by this section; and

5. Provision of emergency shelter.

(d) Restrictions on Uses.

1. Eminent domain actions are prohibited.

2. Santa Cruz city residents, workers and veterans shall have priority for obtaining housing units, to the extent allowable by law.

(Ord. 2025-29 § 4, 2025).

(a) The Fund. There is hereby established the oversight, accountability, and administration fund.

(b) Revenue. For each fiscal year three percent of the proceeds of the revenue tax measure shall be appropriated, together with interest that accrues thereon, for the purposes specified in subsection (c).

(c) Eligible Uses. Moneys in the oversight, accountability and administration fund shall be used for the following purposes:

1. Payment of the administrative expenses of implementing this chapter;

2. Payment for city oversight of the expenditures described in this chapter;

3. Payment for city expenses providing support financial oversight committee; and

4. Payment for professional services rendered in support of implementing this chapter.

(d) Transfer to Program Funds. To the extent that at the end of each two-year budget period any unspent and unencumbered or undesignated funds remain in the oversight, accountability, and administration fund, the remaining funds shall be transferred to the affordable and workforce housing fund and the housing to prevent/reduce homelessness fund in the same proportion as those funds are allocated pursuant to Sections 3.34.030 and 3.34.040.

(Ord. 2025-29 § 4, 2025).