The Makings of a Crisis
Though known for its beaches, alternative culture, and laidback lifestyle, Santa Cruz County is now the country's least-affordable metro area for renters (Out of Reach Report 2017). This means the disparity between average rents and income—the measure of affordability—is greater here than in any other city region of the US.
How did this happen? No single issue is to blame: there are many causes of rising housing costs and stagnating or declining incomes. Nor is Santa Cruz alone: the US, and California in particular, are in the midst of their own affordability crises. Yet, the impacts are experienced most acutely at the local scale, so their roots need to be understood and studied with that in mind.
This project explores the multidimensional, multi-scalar makings of the affordability crisis through the lens of Santa Cruz. We focus on four aspects: changing demand; inadequate supply; lack of tenant protections or support despite overheated market conditions; and political roadblocks. Across these issues, Santa Cruz both reflects national and state trends and has its own unique dynamics that localize and exacerbate them.
Since the mass evictions brought on by the foreclosure crisis of 2008, the number of renters has grown nationwide. Six million were added when they were pushed out of home ownership by the banks and millions more began to rent as young workers entered the labor market during a decade of recession alongside skyrocketing home prices. Renters are now more than 50% of the population in the top 100 US cities. Yet high rents coupled with stagnant or declining real wages mean that over 50% of these renter households now pay unaffordable rents. In Santa Cruz, the percentage of renters has grown from 53% in 2000 to 60% in 2017, making it, indisputably, a majority renter town.
Like cities across the US, the region has seen an increase in families and professionals renting homes rather than buying. Particular to Santa Cruz are certain renter sub-groups that play a major role in this growth: agricultural workers moving to cities for higher-paid service sector work (documented by the Working for Dignity project), UCSC’s growing student population, Silicon Valley tech workers moving here for the lifestyle and relatively cheaper rents, and increasing numbers of short-term vacation rentals.
Growing demand for affordable housing parallels a lack of production and supply, from the local to the national scale. Over the past 50 years, the Federal Government has shifted towards privatising and financializing housing markets, prioritizing single-family homeownership over multifamily rental housing, and drastically reducing allocations for building and maintaining affordable housing. The assumption has been that demand would incentivize the private market to fill the funding gap, but the current crisis demonstrates that this has not occurred. Without the public sector, history shows, adequate affordable housing simply does not get built.
Until 2011, California was able to partially make up for the loss of federal support through Redevelopment Agencies (RAs), which spent at least 15% of their funds on building and maintaining affordable housing; the Santa Cruz RA helped fund and monitor hundreds of units. But in 2011, Governor Jerry Brown signed legislation to eliminate RAs. In the past six years, private developers have met only a fraction of the state and local affordable housing need, while federal aid, such as HOME and Section 8 subsidies, has decreased.
Municipalities can use inclusionary zoning to require that private developers make a certain percentage of new units—usually 15-20%—affordable for local residents. They can also use land use regulations, like an "urban services line," to encourage dense development that would be subject to inclusionary zoning. Santa Cruz City and County were actually ahead of their time in this regard, passing Measures J and O in the early 1980s, which created an urban services line, and stipulated that 15% of newly constructed units county-wide be affordable to average-income households. Yet in the 1990s, voters elected a County Supervisor who moved to “downzone” the urbanized unincorporated area, designating this area for single-family homes on large lots. This resulted in a significant reduction in the production and the availability of affordable, multi-family housing across the County.
Not only has new affordable housing not been built, that which exists has not been preserved, and those inhabiting it lack legal protection. Beginning in the 1970s, when federal government halted funding for new public housing projects, and cut funds for maintaining existing ones, the US public housing stock decreased precipitously. In the same period, HUD funding decreased from 8% to 1% of the federal budget, slashing rental subsidy programs such as Section 8.
With few options outside the private market, tenants increasingly organized in the 1970s and ‘80s, and a number of municipalities enacted or strengthened rent-control and eviction-protection measures. Santa Cruz County, however, failed to pass rent control three times in the late 1970s and early '80s. In California, tenants lost additional legal ground with a series of pro-landlord laws and legal rulings.
The 1995 Costa-Hawkins Act, permits landlords to use “vacancy decontrol” to increase rent whenever tenants move out, and severely limits the number and type of units that can be protected by rent control. And a 2009 Court of Appeal decision, Palmer vs. City of Los Angeles, shielded California rentals from inclusionary zoning requirements.
By 2015, against the background of the national housing/financial crisis and regional market pressure, Santa Cruz had around 5,000 renters on the local Section 8 waitlist. This, in addition to skyrocketing rents and evictions, has led to renewed calls for rent control and tenant protections. Nonetheless, tenant protections in the City and County have continued to erode, including in 2017 with the elimination of city and county funds for tenants legal protections.
Since the post-World War II period, and increasing in the 1980s, national policies have incentivized home and property-ownership and supported the deregulation of rental housing markets, undermining the rights and power of tenants. This has resulted in an increasingly pitched political struggle between landlords, homeowners, pro-business groups, and tenants. In California, organized landlords, through lobbying bodies such as the California Apartment Association, have sought to block tenant protections statewide, as well as any attempts to amend or overturn pro-owner legislation such as Costa Hawkins.