Agenda packet — Santa Cruz City Council, January 23, 2024 (part 5 of 5)

The increasing use of police drone surveillance in the U.S. raises significant concerns about potential threats to civil liberties. While the deployment of drones can enhance law enforcement capabilities in certain situations, it also poses risks to privacy and individual freedoms.

One major concern is the potential for mass surveillance without proper oversight.

Drones equipped with advanced cameras and sensors can collect vast amounts of data, including footage of individuals in public and private spaces. Without adequate regulations and safeguards, this extensive surveillance can infringe upon the right to privacy protected by the Fourth Amendment.
“The government has deployed helicopters, airplanes, and border dronesover American cities to systematically monitor peaceful protests . An investigative report by the New York Times found that the Department of Homeland Security alone had logged at least 270 hours of surveillance footage on these racial justice protests this spring and summer. The collected footage was ultimately channeled into a digital network — accessible by federal and local law enforcement agencies for use in future investigations — with the ominous name “the Big Pipe.” Other law enforcement and military agencies, including the FBI, National Guard, and local police departments also requested deployment of private or government-owned aircraft for the purpose of surveilling protests. This widespread surveillance has been carried out across the country — from the big-city protests in NYC, Portland, Chicago and LA, to 20-person protests in small towns across the country.” - ACLU
Moreover, there is the risk of abuse of power by law enforcement agencies. The use of drones for surveillance must be subject to strict guidelines to prevent unwarranted intrusions into people's lives. Transparency, accountability, and clear legal frameworks are essential to ensure that these technologies are used responsibly and in accordance with constitutional rights.

Civil liberties advocates argue that without proper safeguards, police drone surveillance can disproportionately impact marginalized communities. There are concerns about the potential for discriminatory targeting, leading to further disparities in the enforcement of laws.

Addressing these concerns requires a balanced approach that considers both the legitimate needs of law enforcement and the protection of civil liberties. Policymakers must work to establish clear regulations, oversight mechanisms, and accountability measures to safeguard individual privacy and prevent abuses of power in the context of police drone surveillance. Public discourse and engagement are crucial to shaping policies that strike the right balance between security and civil liberties in an evolving technological landscape.

30.60 In the regrettable event that you decide to approve the SCPD’s request we recommend the following safeguards:
·
·
·Usage Limits:
·A drone should be deployed by law enforcement only with a warrant, in an emergency, or when there are specific and articulable grounds to believe that the drone will collect evidence relating to a specific criminal act.
·
·
·
·Data Retention:
·Images should be retained only when there is reasonable suspicion that they contain evidence of a crime or are relevant to an ongoing investigation or trial.
·
·
·
·Policy:
·Usage policy on drones should be decided by the public’s representatives, not by police departments, and the policies should be clear, written, and open to the public.
·
·
·
·Abuse Prevention and Accountability:
·Use of domestic drones should be subject to open audits and proper oversight to prevent misuse.
·
·
·
·Weapons:
·Domestic drones should not be equipped with lethal or non-lethal weapons.

30.61 ·
Sincerely,

SANTA CRUZ COP WATCH

30.62 SANTA CRUZ COP WATCH
January 22, 2024

VIA ELECTRONIC MAIL
Matt Huffaker
City Manager
City of Santa Cruz
809 Center Street
Santa Cruz, CA 95060
Re: Item #30 Military Equipment Purchase Request and Policy Update per Assembly Bill 481 (PD)
Dear City Manager Matt Huffaker, et al.

The Santa Cruz Cop Watch, a coalition against police terror and surveillance, write to strongly encourage you to reject the Santa Cruz Police Department’s (SCPD) request for approval to purchase five (5) Skydio X10 drones.

One major concern is the potential for mass surveillance without proper oversight. Drones equipped with advanced cameras and sensors can collect vast amounts of data, including footage of individuals in public and private spaces. Without adequate regulations and safeguards, this extensive surveillance can infringe upon the right to privacy protected by the Fourth Amendment.
“The government has deployed helicopters, airplanes, and border drones 1over American cities to
systematically monitor peaceful protests . An investigative report by the New York Times found2that the Department of Homeland Security alone had logged at least 270 hours of surveillance footage on these racial justice protests this spring and summer. The collected footage was ultimately channeled into a digital network — accessible by federal and local law enforcement agencies for use in future investigations — with the ominous name “the Big Pipe.” Other law enforcement and military agencies, including the FBI, National Guard, and local police departments also requested deployment of private or government-owned 2 https://www.nytimes.com/2020/06/19/us/politics/george-floyd-protests-surveillance.html 1 https://www.vice.com/en/article/5dzbe3/customs-and-border-protection-predator-drone-minneapolis-george-floyd

30.63 aircraft for the purpose of surveilling protests. This widespread surveillance has been carried out 3 across
the country — from the big-city protests in NYC, Portland, Chicago and LA, to 20-person protests in small towns across the country.” - ACLU
Moreover, there is the risk of abuse of power by law enforcement agencies. The use of drones for surveillance must be subject to strict guidelines to prevent unwarranted intrusions into people's lives. Transparency, accountability, and clear legal frameworks are essential to ensure that these technologies are used responsibly and in accordance with constitutional rights.

Public discourse and engagement are crucial to shaping policies that strike the right balance between security and civil liberties in an evolving technological landscape.

In the regrettable event that you decide to approve the SCPD’s request we recommend the following safeguards4:
● Usage Limits: A drone should be deployed by law enforcement only with a warrant, in an emergency, or when there are specific and articulable grounds to believe that the drone will collect evidence relating to a specific criminal act. ● Data Retention: Images should be retained only when there is reasonable suspicion that they contain evidence of a crime or are relevant to an ongoing investigation or trial.
● Policy: Usage policy on drones should be decided by the public’s representatives, not by police departments, and the policies should be clear, written, and open to the public.
● Abuse Prevention and Accountability: Use of domestic drones should be subject to open audits and proper oversight to prevent misuse.
● Weapons: Domestic drones should not be equipped with lethal or non-lethal weapons.

Sincerely,

SANTA CRUZ COP WATCH
4 https://www.aclu.org/issues/privacy-technology/surveillance-technologies/domestic-drones 3 https://www.buzzfeednews.com/article/peteraldhous/george-floyd-protests-police-military-planes

30.64 cc: Mayor Fred Keeley
Vice Mayor Renee Golder
Councilmember Sandy Brown
Councilmember Sonja Brunner
Councilmember Shebreh Kalantari-Johnson
Councilmember Scott Newsome
Councilmember Martine Watkins
Communications Manager and Public Information Officer Erika Smart City Attorney Anthony P. Condotti

30.65 From: Reggie Meisler
To: City Council
Cc: Martine Watkins; Sonja Brunner; Renee Golder; Shebreh Kalantari-Johnson; Scott Newsome; Fred Keeley Subject: Item #30 Military Equipment Purchase Request and Policy Update Date: Monday, January 22, 2024 5:00:00 PM
I know you don’t care what I have to say about this issue, but you should know that brazenly supporting this expansion of police surveillance so quickly after an unprecedented expansion of automated license plate readers and also rejecting a ceasefire, only helps me and my allies in our goals of building support for a local abolitionist movement locally.

You are doing yourselves no favors by doubling down and legitimizing my narratives about your support for police state policies that serve the interests of the local capitalist class and beyond. You are in fact helping produce the conditions of mass action targeting the city and empowering abolitionist and socialist organizing (which we are already seeing in the form of UCSC-lead state-wide strike waves against the UC). If you think continuing down this path is worth the trade off, as you seemed to believe during your ceasefire vote, please continue. This works to accelerate our power.

Reggie

30.66 EQUIPMENT

MILITARY

SANTA CRUZ POLICE DEPARTMENT
AB 481
Unmanned Aerial System (UAS) Program Proposal

30.67 AB 481

REQUIREMENTS
01 02
Background
• Effective January 1, 2022• Establishes requirements for purchasing, raising funds for, acquiring, and use of items deemed “military equipment” ؙ Obtain approval of governing bodyؙ Establish a policy and posting requirements • Cease use of items not approved
Re com m e n d at ion s

SANTA CRUZ POLICE DEPARTMENT
03 Introduce for publication an ordinance amending City of Santa Cruz Municipal Code Chapter 9.90 “AB 481 Military Equipment Use.” If the City Council approves Recommendation #1:

Adopt a resolution amending the FY 2024 budget in the amount of $170,942 from the Police Asset Seizure 214 Fund Approve a five-year purchase contract with Axon Inc.

30.68 SANTA CRUZ MILITARY
EQUIPMENT POLICY 705
Definition of military equipment Military equipment coordinator and his/her responsibilities
Coordination with other jurisdictions Approval, Annual Report, and community engagement requirements

SANTA CRUZ POLI CE DEPARTMENT
Policy Includes:
Public complaint process Current military equipment inventory:

DescriptionQuantityCapabilitiesPurchase CostPurpose
Authorized UseExpected LifespanFiscal ImpactTrainingLegal & Procedural Rules*

30.69 SKYDIO X10 UAS (CATEGORY 1)
COST
$227,224 over five (5) years
$27,708 to outfit two patrol vehicles
Five (5) UAS + software + training + subscriptions
Asset forfeiture funds and patrol General Funds

SANTA CRUZ POLI CE DEPARTMENT

SP EED & RANGE
Max speed 45 mph
40-minute runtime

7.5-mile connection from controller

DAY & NIGHT OP ERATION
360-degree visibility
Kinematic GPS sensor
Visible/infrared light sensor
Detachable spotlight = 2800 lumens
Flight assistance and object avoidance software

SP ECIALIZED EQUIP MENT
Mapping software
Telephoto + wide + thermal cameras
Spotlight & speaker/microphone

30.70 INTENDED USES
Natural disaster or public safety emergency
Search and rescue/water rescue Lost or missing person(s) Crime scene & traffic collision documentation Mutual aid (SC Fire & outside agencies) De-escalation Search and/or arrest warrant Crime in progress Locating a fleeing suspect

SANTA CRUZ POLI CE DEPARTMENT

PROHIBITED USES
Weaponize Facial recognitionRandom surveillance activitiesTarget, harass, intimidate or discriminate against any individual, group or protected classPersonal businessRoutine monitoring of a mass gathering, protests or demonstrations where security concerns or criminal activity does not exist

30.71 SANTA CRUZ POLI CE DEPARTMENT
Transparency & Reporting

1. Santa Cruz Police Department Policy Unmanned
Aerial System Policy (607)

2. Santa Cruz Police Department Military Equipment
Policy (705)

3. AB 481 Annual Report
Cost Use Inventory

4. Federal Aviation Administration (FAA), Certificate
of Authorization (COA)

5. Transparency Portal6. Axon Air powered by DroneSense Tools allowing easy management of pilots, flight
logs, data and hardware

30.72 Skydio X10
Unmanned Aerial System

SANTA CRUZ POLI CE DEPARTMENT

30.73 CRIME SCENES
& TRAFFIC ACCIDENTS

SANTA CRUZ POLI CE DEPARTMENT
Enhance and
expedite evidence
collection with 3D
modeling and scene
reconstruction

30.74 LOCATING A

FLEEING SUSPECT

SANTA CRUZ POLI CE DEPARTMENT
Assess situations from
above and provide
responders with intel
on access points, a
suspect’s location, and
movements

30.75 NATURAL

DISASTERS &PUBLIC SAFETY EMERGENCIES

SANTA CRUZ POLI CE DEPARTMENT
1989 Loma Prieta Earthquake
Downtown Santa Cruz
Optimize response
and recovery with
distanced, real-time
environmental
assessment

30.76 SEARCH &
RESCUE

SANTA CRUZ POLI CE DEPARTMENT
Find individuals faster and provide bird’s eye
view intel to responders
in the field using highresolution digital and
thermal cameras

30.77 DE-ESCALATION

SANTA CRUZ POLI CE DEPARTMENT
Assess situations
from a safer distance
and reduce risk to
police and hostile
parties, limiting the
need for conflict

30.78 VEHICLE UAS

STORAGE &DEPLOYMENT

SANTA CRUZ POLI CE DEPARTMENT

30.79 Ha rd w a re Se c u rit y - U.S. Designed, Assembled & Supported • National Defense Authorization Act (NDAA) - Compliant• AES-encrypted wireless links• AES-256 bit encryption • Security updates Clo u d - Secure infrastructure in the U.S.
• TLS 1.2/1.3 data encryption• Hosted on Amazon Web Services Infrastructure Co m p lia n c e - Highest Security Standards
• SOC2 Type II certified• ISO 27001:2022 Certification• Penetration Testing• Vulnerability Management Axon - Current Contracts
• Evidence Storage, Tasers, Interview Room, Auto-Tagging, Body-Worn Cameras, In-Car Cameras

SANTA CRUZ POLI CE DEPARTMENT

VENDORS
+

30.80 SANTA CRUZ POLI CE DEPARTMENT
COST - $ 254,932

ARTMENT
Hardware(5) Skydio X10 DronesSpotlights + Speaker/MicrophonesBatteriesSpare Parts PlanSoftw a reNight Vision (annual)Drone License (annual) 3D Modeling (annual) Object Avoidance (annual)

30.81 SANTA CRUZ POLI CE DEPARTMENT ICE DEPARTMENT
Tra in in gDroneSenseFAA Part 107Axon Air-Skydio X10Su b sc rip t io n sPilot License (annual)Frame WarrantiesSensor WarrantiesCOST - $ 254,932

30.82 QUESTIONS?

SANTA CRUZ POLI CE DEPARTMENT

THANK YOU

30.83 City Council

AGENDA REPORT
DATE: 01/08/2024
AGENDA OF: 01/23/2024
DEPARTMENT: City Clerk
SUBJECT: Arts Commission (CC)
RECOMMENDATION: Appoint two at-large Arts Commissioners with terms ending January 31, 2025.

BACKGROUND: At its meeting on January 24, 2023, Council transitioned a number of City commissions to directly appointed members, which includes the Arts Commission. In order to maintain a quorum, there was a need to transition in phases.

These current openings are at-large with terms ending January 31, 2025, at which time Councilmembers in the newly elected Districts of 1, 2, and 3 (in that order) will directly appoint members.

DISCUSSION: The following people are seeking appointment to the Arts Commission:

Martel Braymer
Linda Cover*
Rebecca Escobedo Guzman
Hector Marin
Joy Schendledecker
*Currently serving on this Commission and seeking reappointment.

FISCAL IMPACT: None.

Prepared By:

Bonnie Bush
City Clerk
Submitted By:

Laura Schmidt
Assistant City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. APPLICATIONS.PDF

31.1 31.2

31.3 31.4

31.5 1. tŚǇ ĂƌĞ ǇŽƵ ŝŶƚĞƌĞƐƚĞĚ ŝŶ ƚŚŝƐ ƉŽƐŝƟŽŶ͍ tŚĂƚ ƉĂƌƟĐƵůĂƌ ƐŬŝůůƐ ǁŽƵůĚ ǇŽƵ ďƌŝŶŐ ƚŽ ƚŚĞ ŽŵŵŝƐƐŝŽŶͬŽŵŵŝƩĞĞͬ ŽĂƌĚ͍
/ ůŝǀĞ Ăƚ ƚŚĞ dĂŶŶĞƌǇ ƌƚƐ ĞŶƚĞƌ͘ / Ăŵ ŝŶƚĞƌĞƐƚĞĚ ŝŶ ĐŽŶŶĞĐƟŶŐ ƚŚĞ dĂŶŶĞƌǇ ǁŝƚŚ ^ ŝƚǇ ƌƚƐ͕ WĂƌŬƐ ΘZĞĐ͕ ĂŶĚ tĂƚĞƌ ŽŵŵŝƐƐŝŽŶƐ ďĞĐĂƵƐĞ ƚŚĞ dĂŶŶĞƌǇ ŝƐ Ă ǀŝďƌĂŶƚ ĐƵůƚƵƌĂů Ăƌƚ ĐĞŶƚĞƌ͕ ůŽĐĂƚĞĚ ŽŶ ƚŚĞ ^ĂŶ >ŽƌĞŶǌŽ ZŝǀĞƌ ŝŶ Ă ŇŽŽĚƉůĂŝŶ͕ Ăƚ ƚŚĞ ĞŶĚ ŽĨ ƚŚĞ ZŝǀĞƌ tĂůŬǁĂǇ͕ ƚŚĞ ůŽŶŐĞƐƚ ƉĂƌŬ ŝŶ ^͘͘ Ɛ ĂŶ ŽƌŝŐŝŶĂů dĂŶŶĞƌǇ ƌĞƐŝĚĞŶƚ ĨƌŽŵ ϮϬϬϵ͕ / ŬŶŽǁ ŵǇ ĂƌƟƐƚ ĐŽŵŵƵŶŝƚǇ͕ / ŚĞůƉĞĚ ďƵŝůĚ ŝƚ͘ / ŬŶŽǁ ƚŚĞ ƌŝǀĞƌ ĂŶĚ ŝƚƐ ŇŽŽĚƐ͘ / ŬŶŽǁ ƚŚĞ ZŝǀĞƌ tĂůŬǁĂǇ ĂŶĚ ƉĂƌŬƐ ƚŚƌŽƵŐŚŽƵƚ ƚŚĞ ĐŝƚǇ͘ DǇ Ăƌƚ ŝƐ ŝŶƐƉŝƌĞĚ ďǇ ƚŚĞ ƌŝǀĞƌ͕ WŽŐŽŶŝƉ͕ ďĞĂĐŚĞƐ ĂŶĚ ƉĂƌŬƐ ĂĐĐĞƐƐŝďůĞ ďǇ ďŝŬĞ ĨƌŽŵ ƚŚĞ dĂŶŶĞƌǇ͘ / ďĞůŝĞǀĞ ƚŚĞ dĂŶŶĞƌǇ ƐŚŽƵůĚ ďĞ ƌĞƉƌĞƐĞŶƚĞĚ ŝŶ ƚŚĞ ĚĞĐŝƐŝŽŶ-ŵĂŬŝŶŐ ƉƌŽĐĞƐƐ ŽĨ ^ ŝƚǇ ƌƚƐ͕ WĂƌŬƐ ĂŶĚ ZĞĐƌĞĂƟŽŶ ĂŶĚ tĂƚĞƌ ŽŵŵŝƐƐŝŽŶƐ ďĞĐĂƵƐĞ Ăƌƚ͕ ǁĂƚĞƌ ĂŶĚ ƉĂƌŬƐ ĚĞĮŶĞ ǁŚŽ ǁĞ ĂƌĞ͘ /Ŷ ĂĚĚŝƟŽŶ ƚŽ ƐĞƌǀŝŶŐ ƚŚĞ ůĂƐƚ ϰ ǇĞĂƌƐ ĂƐ Ă ^ ƌƚƐ ŽŵŵŝƐƐŝŽŶĞƌ͕ / Ăŵ Ă ďŽĂƌĚ ŵĞŵďĞƌ ŽĨ ƚŚĞ ŽĂƐƚĂů tĂƚĞƌƐŚĞĚ ŽƵŶĐŝů ĂŶĚ ďĞůŝĞǀĞ ŝƚ ŝƐ ŝŶ ƚŚĞ ĐŝƚǇΖƐ ďĞƐƚ ŝŶƚĞƌĞƐƚ ƚŽ ĞůĞǀĂƚĞ ƚŚĞ ƐƚĂƚƵƐ ŽĨ ƚŚĞ ^ĂŶ >ŽƌĞŶǌŽ ZŝǀĞƌ ƚŚƌŽƵŐŚ Ăƌƚ͕ ĞǀĞŶƚƐ ĂŶĚ ĂĐƟǀŝƟĞƐ ƚŽ ŝŶǀŝŐŽƌĂƚĞ ƚŚĞ ĞĐŽŶŽŵŝĐ ĂŶĚ ĐƵůƚƵƌĂů ĂƐƉĞĐƚƐ ŽĨ ^ĂŶƚĂ ƌƵǌ͘ dŚĞ ƌƚ ĂŶĚ WĂƌŬƐ ĂŶĚ ZĞĐ ŽŵŵŝƐƐŝŽŶƐ ĂƌĞ ŝŶ Ă ƵŶŝƋƵĞ ƉŽƐŝƟŽŶ ƚŽ ŚĞůƉ ŵĂŶŝĨĞƐƚ ƚŚŝƐ ΗĞŵĞƌŐŝŶŐ ĂƐƐĞƚͬƌĞƐŽƵƌĐĞ ĨŽƌ ƚŚĞ ŝƚǇ ŽĨ ^ĂŶƚĂ ƌƵǌ͘ dŚĞ ZŝǀĞƌ tĂůŬǁĂǇ ĐĂŶ ďĞ ƚŚĞ ůŝƚĞƌĂů ƌƚ WĂƚŚ ƚŽ ƚŚĞ dĂŶŶĞƌǇ ĨŽƌ ƚŽƵƌŝƐƚƐ ŝŶ ƚŚĞ ŶĞǁ ƌŝǀĞƌ ĨĂĐŝŶŐ ŚŽƚĞůƐ ĂŶĚ ĚŽǁŶƚŽǁŶ ǀŝƐŝƚŽƌƐ͘ KƵƌ ĐŝƚǇ ƉĂƌŬƐ ĐĂŶ ƌĞŇĞĐƚ ƚŚĞ ĐŽŵŵƵŶŝƚǇ ƚŚƌŽƵŐŚ Ăƌƚ ƚŚĂƚ ǁŝůů ĂƩƌĂĐƚ ƌĞƐŝĚĞŶƚƐ ĂŶĚ ƚŽƵƌŝƐƚƐ ĂůŝŬĞ͘ ŽƚŚ ŽĨ ƚŚĞƐĞ ĐŽŶŶĞĐƟŽŶƐ ;ƚŚĞ ƌŝǀĞƌ Θ ƚŚĞ dĂŶŶĞƌǇͿ ĂƌĞ ĂŶŽƚŚĞƌ ƐƚĞƉ ŝŶ ƚŚĞ ĚŝƌĞĐƟŽŶ ŽĨ ŵĂŬŝŶŐ ^ĂŶƚĂ ƌƵǌ a tourist ĚĞƐƟŶĂƟŽŶ͘
^ŬŝůůƐ͗

1. Educator - / ŚĂǀĞ ďĞĞŶ ƚĞĂĐŚŝŶŐ ĞŶǀŝƌŽŶŵĞŶƚĂů Ăƌƚ ƚŽ ĐŚŝůĚƌĞŶ ƚŚƌŽƵŐŚŽƵƚ ^ĂŶƚĂ ƌƵǌ ĐŽƵŶƚǇ ĂƐ Ă ^W dZ ƚĞĂĐŚŝŶŐ
ĂƌƟƐƚ ĨŽƌ ϮϬ н ǇĞĂƌƐ͘ / ƐĞĞ ŚŽǁ ƉŽǁĞƌĨƵů ĞĚƵĐĂƟŽŶ ŝƐ ĨŽƌ ĐŚŝůĚƌĞŶ͕ ƚŚĞŝƌ ĨĂŵŝůŝĞƐ ĂŶĚ ĐŽŵŵƵŶŝƟĞƐ͘ Ϯ͘ WƌŽĨĞƐƐŝŽŶĂů ĂƌƟƐƚ - KƉĞŶ ^ƚƵĚŝŽƐ ĂƌƟƐƚ ĂŶĚ ĞǆŚŝďŝƚ ĞǆƉĞƌŝĞŶĐĞ Ăƚ Ăůů ƚŚĞ ŵĂũŽƌ ĞǆŚŝďŝƚ ǀĞŶƵĞƐ ŝŶ ^͘ ϯ͘
ĐŽŶŽŵŝĐ ĞƋƵŝƚǇ - ůŝǀŝŶŐ ŝŶ ĂīŽƌĚĂďůĞ ŚŽƵƐŝŶŐ͕ / ďƌŝŶŐ ĞĐŽŶŽŵŝĐ ĚŝǀĞƌƐŝƚǇ ƚŽ ƚŚĞ ĐŽŵŵŝƐƐŝŽŶ͘ ϰ͘ ĐƟǀĞ
ŶǀŝƌŽŶŵĞŶƚĂůŝƐƚ - / Ăŵ ŝŶƟŵĂƚĞůǇ ŝŶǀŽůǀĞĚ ŝŶ ŽƵƌ ĞŶǀŝƌŽŶŵĞŶƚ͕ ĞƐƉĞĐŝĂůůǇ ŽƵƌ ŐƌĞĞŶ ǌŽŶĞƐ͕ ĨŽƌĞƐƚƐ ĂŶĚ ƚŚĞ ^ĂŶ >ŽƌĞŶǌŽ ZŝǀĞƌ͘ / ƐĞƌǀĞ ŽŶ ƚŚĞ ďŽĂƌĚ ŽĨ ŽĂƐƚĂů tĂƚĞƌƐŚĞĚ ŽƵŶĐŝů͘ DǇ ĐůĂƐƐ ĐƵƌƌŝĐƵůƵŵ ŝƐ ΗtĂƚĞƌƐŚĞĚ ƌƚΗ͕ ĐƌĞĂƚĞĚ ƚŽ ƐŚŽǁ ƐƚƵĚĞŶƚƐ ƚŚĞ ŝŵƉŽƌƚĂŶĐĞ ĂŶĚ ĐŽŶŶĞĐƟŽŶƐ ďĞƚǁĞĞŶ ĂŶŝŵĂůƐ͕ ƉůĂŶƚƐ ĂŶĚ ŽƵƌ ǁĂƚĞƌƐŚĞĚ͘ DǇ Ăƌƚ ŝƐ ŶĂƚƵƌĞ ĂŶĚ community based.
ϱ͘ ŽŵŵƵŶŝƚǇ ĂĐƟǀŝƐƚ- ƐĞƌǀŝŶŐ ŽŶ ŵƵůƟƉůĞ ďŽĂƌĚƐ Ăƚ ƚŚĞ dĂŶŶĞƌǇ͕ ŽīĞƌŝŶŐ ĨƌĞĞ Ăƌƚ ĐůĂƐƐĞƐ ĨŽƌ ĐŽŵŵƵŶŝƚǇ ĐŚŝůĚƌĞŶ͕ ĂŶĚ ŽƌŐĂŶŝǌŝŶŐ ĐůĞĂŶ ƵƉƐ ϰy Ă ǇĞĂƌ ƐŝŶĐĞ ǁĞ ŽƉĞŶĞĚ ŝŶ ϮϬϬϵ͘ / ďĞůŝĞǀĞ ƚŚƌŽƵŐŚ Ăƌƚ͕ ĞĚƵĐĂƟŽŶ͕ ĂŶĚ ĐŽŵŵƵŶŝƚǇ ŝŶǀŽůǀĞŵĞŶƚ͕ ŽƵƌ ^ ĐŽŵŵƵŶŝƚǇ ĐĂŶ ďƵŝůĚ ƌĞƐŝůŝĞŶĐĞ͕ ĂƐ ǁĞůů ĂƐ ĞĐŽŶŽŵŝĐ ĂŶĚ ĐŽŵŵƵŶŝƚǇ ƐƚƌĞŶŐƚŚ͘ Ϯ͘ tŚĂƚ ƚǇƉĞƐ ŽĨ ĚŝǀĞƌƐĞ ŝŶƚĞƌĞƐƚƐͬĞǆƉĞƌŝĞŶĐĞƐ ǁŽƵůĚ ǇŽƵ ďƌŝŶŐ ƚŽ ƚŚĞ ŽŵŵŝƐƐŝŽŶͬŽŵŵŝƩĞĞͬŽĂƌĚ͍ ŽŵŵƵŶŝƚǇ ĂĐƟǀŝƐƚ Ăƚ dĂŶŶĞƌǇ ƌƚƐ ĞŶƚĞƌ ϭϯнǇƌƐ͕ ^ƚĂī Ăƚ ^ ƌƚ >ĞĂŐƵĞ ϯн ǇƌƐ͘ / ^ƚƌĞĞƚ ǀĞŶĚŽƌ ĚŽǁŶƚŽǁŶ ^ĂŶƚĂ ƌƵǌ- Ϯн yrs.
t- ŽĂƐƚĂů tĂƚĞƌƐŚĞĚ ŽƵŶĐŝů- ďŽĂƌĚ ŵĞŵďĞƌ ;Ϯн ǇƌƐͿ ĂŶĚ Ăƌƚ ĐŽŶƐƵůƚĂŶƚ ĨŽƌ ƐƚĂī Θ ĞĚƵĐĂƟŽŶĂů ĐůĂƐƐĞƐ ĨŽƌ tĂƚĞƌƐŚĞĚ ZĂŶŐĞƌƐ ;-ϭ ǇƌͿ͘
^ƵŵŵĞƌ ĐĂŵƉƐ- &ŽƵŶĚĞƌͬĚŝƌĞĐƚŽƌͬ ƚĞĂĐŚŝŶŐ ĂƌƟƐƚ- ĂŵƉ dĂŶŶĞƌǇ ƌƚƐ ;ϭϬнǇƌƐͿ Θ ƌƚ KƵƚƐŝĚĞ ĂŵƉƐ ;ϯнǇƌƐͿ

ǀĞŶƚͬ ĞǆŚŝďŝƚ ĐŽŽƌĚŝŶĂƚŽƌ- &ŝƌƐƚ &ƌŝĚĂǇ Ăƌƚ ǁŽƌŬƐŚŽƉƐ ĨŽƌ tĂƚĞƌƐŚĞĚ ƌƚƐ ^ƚƵĚŝŽ ;ϴн ǇƌƐͿ͕ DĂŬĞƌƐ &Ăŝƌ ĨŽƌ <ŝĚƐ ZŝǀĞƌ ^ƚƵĚŝŽϭϭϲ- ^ŚŽƉ Θ 'ĂůůĞƌǇ- ŽǁŶĞƌ͕ ĨŽƵŶĚĞƌ ĂŶĚ ĐŽůůĞĐƟǀĞ ŵĞŵďĞƌ ;-ϭ Ǉƌ͘Ϳ ͘ ŶĞǁ ϲ ĂƌƟƐƚ ĐŽůůĞĐƟǀĞ ƐŚŽƉ ĂŶĚ ŐĂůůĞƌǇ ƚŚĂƚ ŚŽŶŽƌƐ ƚŚĞ ƌŝǀĞƌ͕ ĨĞĂƚƵƌŝŶŐ ǁŽƌŬƐŚŽƉƐ ĂŶĚ ĞǀĞŶƚƐ ĞǀĞƌǇ ŵŽŶƚŚ͘ KƉĞŶ ^ƚƵĚŝŽƐ ĂƌƟƐƚ ϱ ǇƌƐ͘
ůĞĂŶ ƵƉ ŽƌŐĂŶŝǌĞƌ ͬǀŽůƵŶƚĞĞƌ ĨŽƌ ^ĂǀĞ KƵƌ ^ŚŽƌĞƐ͕ ĚŽƉƚ >ĞǀĞĞ͕ dŚĞ >ĞǀĞůŝĞƐ ϭϬн ǇƌƐ͘ DǇ ŝŶƚĞƌĞƐƚƐ Ăƚ ƚŚŝƐ ƟŵĞ ĂƌĞ ďŝŬŝŶŐ͕ ƉŚŽƚŽŐƌĂƉŚǇ͕ ĐƌĞĂƟŶŐ Ă ƐƵƐƚĂŝŶĂďůĞ ƐŚŽƉ ĂŶĚ ĂƌƟƐƚ ĐŽůůĞĐƟǀĞ Ăƚ ƚŚĞ dĂŶŶĞƌǇ͕ ĐĂƌŝŶŐ ĨŽƌ ƚŚĞ ƌŝǀĞƌ͘ ĨĂŵŝůǇ͕ ĂŶĚ ĐŽŵŵƵŶŝƚǇ͘
ϯ͘ >ŝƐƚ ĐŽŵŵƵŶŝƚǇͬǀŽůƵŶƚĞĞƌ ĂĐƟǀŝƟĞƐ ǁŝƚŚ ǁŚŝĐŚ ǇŽƵ ŚĂǀĞ ďĞĞŶ ŝŶǀŽůǀĞĚ ŝŶ ƚŚĞ ůĂƐƚ ĮǀĞ ;ϱͿ ǇĞĂƌƐ͘ ŽĂƐƚĂů tĂƚĞƌƐŚĞĚ ŽƵŶĐŝů ϮнǇƌƐ ŽĂƌĚ ŽĨ ŝƌĞĐƚŽƌƐ

31.6 dĂŶŶĞƌǇ dĞŶĂŶƚƐ hŶŝŽŶ ;ZdhͿ ϱн ǇƌƐ ŽĂƌĚ ŵĞŵďĞƌ
dĂŶŶĞƌǇ ƌƟƐƚ /ŶƚĞƌǀŝĞǁ ŽŵŵŝƩĞĞ ϰн ǇƌƐ͘ ŚĂŝƌͬĐŽŵŵŝƩĞĞ ŵĞŵďĞƌ dĂŶŶĞƌǇ ZĞƐŝĚĞŶƚƐ ZĞƐŽƵƌĐĞ 'ƌŽƵƉ – ďŽĂƌĚ ϭнǇƌ
&ƌĞĞ ŌĞƌ-ƐĐŚŽŽů ƌƚ ĐůĂƐƐĞƐ ϭϬн ǇĞƐ͘ dĞĂĐŚĞƌ
dĂŶŶĞƌǇ WĂŶƚƌǇ- ϯн ǇƌƐ͘ ŽƌŐĂŶŝǌĞƌͬ ĨŽƵŶĚĞƌ
^ ƌƚ ŽŵŵŝƐƐŝŽŶĞƌ- ϰǇƌƐ͘ ŽĂƌĚ ŵĞŵďĞƌ
^ĂǀĞ KƵƌ ^ŚŽƌĞƐ- ƐŝƚĞ ĐĂƉƚĂŝŶ ϲнǇƌƐ
Tannery clean-ƵƉƐ- ŽƌŐĂŶŝǌĞƌ ϭϯнǇƌƐ
ZŝǀĞƌ ^ƚ ^ŚĞůƚĞƌͬ tĂƌŵŝŶŐ ĞŶƚĞƌ- volunteer
/ ďĞůŝĞǀĞ ŵǇ ůŽŶŐ ŚŝƐƚŽƌǇ ŽĨ ŝŶǀŽůǀĞŵĞŶƚ ŝŶ ƚŚĞ ĂƌƚƐ͕ ĞŶǀŝƌŽŶŵĞŶƚ ĂŶĚ ĐŽŵŵƵŶŝƚǇ ĂĐƟǀŝƐŵ ŐŝǀĞƐ ŵĞ ĂŶ ŝŶƚĞƌĚŝƐĐŝƉůŝŶĂƌǇ ƉĞƌƐƉĞĐƟǀĞ ƚŚĂƚ ĐĂŶ ƉƌŽďůĞŵ ƐŽůǀĞ ĂŶĚ ĞŶŚĂŶĐĞ ǀŝƐŝŽŶ ĨŽƌ ŽƵƌ ^ĂŶƚĂ ƌƵǌ ĐŽŵŵƵŶŝƚǇ WůĞĂƐĞ ĨĞĞů ĨƌĞĞ ƚŽ ĐŚĞĐŬ ŵǇ ǁĞďƐŝƚĞ͗ ůŝŶĚĂĐŽǀĞƌ͘ŽƌŐ dŚĂŶŬ ǇŽƵ͘

31.7 31.8

31.9 31.10

31.11 31.12

31.13 City Council

AGENDA REPORT
DATE: 01/08/2024
AGENDA OF: 01/23/2024
DEPARTMENT: City Clerk
SUBJECT: County Library Advisory Commission (CC)
RECOMMENDATION: Appoint two at-large County Library Advisory Commissioners with terms ending January 31, 2028.

BACKGROUND: In 2015, the City Council approved an amendment to the Joint Powers Agreement between the City of Santa Cruz and the County of Santa Cruz and the Cities of Capitola and Scotts Valley related to Library services. The amendment included establishing a Library Joint Powers Governing Board. The amendment also established a Library Advisory Commission that will advise the Governing Board.

DISCUSSION: There are two openings for residents of the City of Santa Cruz. The following people are seeking appointment to the Library Advisory Commission:

Dubin, Rena*
Rogers, Vivian
*Currently serving on this Commission and seeking reappointment.

FISCAL IMPACT: None.

Prepared By:

Bonnie Bush
City Clerk
Submitted By:

Laura Schmidt
Assistant City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. APPLICATIONS.PDF

32.1 32.2

32.3 32.4

32.5 City Council

AGENDA REPORT
DATE: 01/08/2024
AGENDA OF: 01/23/2024
DEPARTMENT: City Clerk
SUBJECT: Downtown Commission (CC)
RECOMMENDATION: Approve Mayor Keeley’s nomination for one Downtown Commissioner with a term ending January 31, 2027, and appoint one Downtown Commissioner, at-large, with a term ending January 31, 2025.

BACKGROUND: At its meeting on January 24, 2023, Council transitioned a number of City commissions to directly-appointed members, which includes the Downtown Commission. In order to maintain a quorum, there was a need to transition in phases.

Mayor Keeley’s direct appointment will have a term that ends January 31, 2027, while the atlarge appointment’s term will end January 31, 2025, at which time the newly elected Councilmembers for Districts of 2, 3, and 5 (in that order) will directly appoint members.

DISCUSSION: The following people are seeking appointment to the Downtown Commission:

Rebecca Acosta
Enda Brennan*
Lisa Colombo
Joe Ferrara*
Chad Mitcham
Joy Schendledecker
Boden Shargel
Rafa Sonnenfeld
Zennon Ulyate-Crow*
*Currently serving on this Commission and seeking reappointment.

FISCAL IMPACT: None.

Prepared By:

Bonnie Bush
City Clerk
Submitted By:

Laura Schmidt
Assistant City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. APPLICATIONS.PDF

33.1 33.2

33.3 33.4

33.5 33.6

33.7 33.8

33.9 33.10

33.11 33.12

33.13 33.14

33.15 33.16

33.17 33.18

33.19 Zennon Ulyate-Crow
March 8, 2022
Transportation and Public Works Commission Application
As a UCSC student and well versed transit/mobility activist, I apply to the Transportation and Public Works Commission with a unique set of skills and qualifications.

I've always been passionate about the issue of transportation. It started with drawing bird's-eye maps of cities in Elementary School and commenting at Los Angeles Metro community scoping meetings throughout Middle School.

But quickly it grew from a hobby to a passion. By 9th grade I was working on securing grant funding for a safe walking route from my local elementary school to the library. In 10th, I attempted to save my school's busing system by redesigning my school's entire 16 route school bus network in a night, but when that didn't work I conceived and successfully advocated for the creation of a new public bus route. This route directly served my high school and saved a collective 3 hours and 20 minutes of travel time each week for over 160 students. In 11th, I joined the Los Angeles Metro as an intern and wrote a report on all-door bus boarding mechanisms for the CEO (attached below).

Throughout all of this I educated myself further and further on the topic. I co-led a talk on Congestion Pricing at a UCLA transportation conference, took a UCLA class in Urban Planning, read countless reports on global best street designs, signal timings, transportation networks, bus intervals, and more.

I fought for safe streets in my neighborhood while serving on my local community council for over 2 years as a Youth Advisor. Additionally, I worked as a projects advocacy lead where I followed public works and housing projects throughout the government process, writing letter head advocacy in technical terms to support their safe passage. It was through serving on my community council and working within the bureaucracy I learned about the local public works process in and out.

Bringing us to Santa Cruz, I've already begun talking to Santa Cruz METRO transportation planners to institute all-door boarding on campus and crafted a parking policy uniquely suited to tackle our transportation crisis (attached below). I've also brought my intersection redesign series to the Eastside's spaghetti intersection of Morrissey/Soquel/Water, creating a conceptual reallocation of space that incorporates protected bike lanes and safe pedestrian infrastructure (attached below). Statewide, I've crafted a bill white paper for value-capture around transit infrastructure that would effectively allow transportation agencies and cities to finance their own mass-transit projects (attached below).

33.20 But more importantly, I want to introduce a new perspective to the commission not yet heard in its history.

I want to bring my role as a student to the table.

Our city is around 30% students and 55% of METRO riders are UCSC students, yet our voice has never had a seat on the commission. As a bus rider, biker, and car owner, I can bring both a lived and learned perspective of transportation expertise to the issues our city faces today. When I don't feel safe biking up High or Bay Streets towards campus, when I go into town on a Saturday with friends and miss the last bus at 12:30, when anything east of Ocean Street is Terra Incognita because it takes over an hour with transfers to travel the same distance as a 12 minute drive, it's from the unique perspective of a student. 69% of our city's emissions come from transportation. We know the transition away from vehicles is necessary and students will be an extremely large part of that equation. We need representation, and I hope to fill that voice.

Thank you for considering my application for the Transportation and Public Works Commission.

All the Best,
Zennon Ulyate-Crow

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33.25 Zennon Ulyate-Crow -
Bodie Shargel -
January 2022
Citywide In-Lieu Parking Fee to Fund Active Mobility
and Transit
Context
Parking policy is one of the most interconnected issues municipalities face, affecting housing affordability, access to mobility, transit use, climate change, and neighborhood livability.

Research has demonstrated Santa Cruz and other cities’ current minimum parking requirements damage the climate, housing affordability, and walkable neighborhoods. We must transition away from our current overwhelmingly auto-dependent infrastructure, but the question of parking reform is always a chicken or egg situation.

Do cities begin by implementing parking maximums to create walkable communities while suffering the short-term consequences of insufficient transit and packed street parking? Or do they look for the current non-existent funds to invest in transit first while still promoting development that disincentives its usage?
Policy
Currently, Santa Cruz’s Downtown Parking District allows businesses and developers to pay an in-lieu fee for each parking spot they cannot provide. The city uses the money to build shared parking and downtown street improvements.

We want to pursue a citywide in-lieu parking fee that exclusively funds active mobility and transit infrastructure. The fee would be priced lower than the cost of constructing parking and could replace up to 100% of parking requirements.

Implications
Making the in-lieu fee cheaper than parking construction reduces building costs and provides a strong incentive for usage. Each additional parking space per unit raises rents by 20% on average, and reductions in parking have been shown to result in lower rents, making homes and storefronts more affordable. Furthermore, the fee could be reduced for deed-restricted affordable units, extending the value of our tax dollars and incentivizing more affordable housing overall.

This policy will right-size parking requirements to each unique development. Our current minimums paint a broad brush and often result in more parking than would otherwise be constructed. For example, city law mandated that a recent project with 233 student-oriented homes build 214 parking stalls. Students use cars at significantly lower rates, but providing a free parking spot induces them to own a vehicle. If priced similarly to the Downtown In-Lieu fee of $20,000 per space, the project’s 209 parking spots would convert to over $4 million in funds, and that’s just from this one project!
1 33.26
Zennon Ulyate-Crow -
Bodie Shargel -
January 2022
In practice, this policy would hardly ever eliminate all parking spots but instead right-size requirements to anticipated usage. There are still strong incentives for parking construction, from construction financing to customer desires. Furthermore, our current infrastructure is far too car-dependent to facilitate an immediate transition to neighborhoods not reliant on vehicles.

But by using this money to build car-free infrastructure while also gradually reducing parking and creating dense communities, we can achieve the chicken and the egg simultaneously.

The climate change implications are obvious: significant new funding for transit to help combat the 69% of city carbon emissions coming from transportation, fewer cars on the road from right-sized parking, and dense communities that ensure fewer per-capita carbon emissions from each resident. It’s important to note our climate plans rely on a 15% reduction in Vehicle Miles Traveled, in addition to widespread electric car adoption. Hence, conversion to other transportation modes is paramount.

From an equity standpoint, most METRO riders cannot afford a car, with 75.3% earning less than $35,000 annually. People of color and disabled individuals use transit at higher rates, so funding mobility improvements will directly result in better outcomes for society’s most vulnerable populations–especially considering access to transportation is the number one determinant in an individual’s ability to escape poverty.

Comparable Examples
Parking districts that create shared parking structures and street improvements within a defined geographic area are highly prevalent nationally. Santa Cruz, Redwood City, and Santa Monica are all local examples. These fees can fund transit and streetscape projects; however, their primary purpose is to create shared parking garages that district businesses and residents can utilize.

Our proposal for Santa Cruz is innovative and unique. Many cities have recognized the need for parking reform and transit improvements in recent years. San Francisco, Berkeley, and Minneapolis all eliminated parking minimums. Others imposed transit impact fees on new developments, but this policy raises housing costs and still mandates the parking that induces driving and creates unwalkable communities. No other city has attempted to convert parking construction costs directly into transit and active mobility funds.

Additionally, our proposal is the first to propose a citywide parking in-lieu fee. Movement happens on an inter and intra city scale, so implementing this policy at a city level ensures effective, comprehensive plans to reduce overall congestion.

Conclusions
While without precedent, this policy will incentivize the necessary transition to a more balanced transportation system while also recognizing our city’s current need for parking. We can lead the nation with this policy, cementing Santa Cruz’s place as an innovative hub for governance and ideas that can tackle the pressing issues of our time. 2 33.27
Sunset Blvd/Hollywood Blvd/Virgil Ave/Hillhurst Ave in Los Angeles, CA

33.28 Huntington Drive/Garfield Ave/Atlantic Blvd/Los Robles Ave in Alhambra, CA

33.29 Water/Soquel/Morrissey in Santa Cruz, CA
Twitter thread explaining each intersection design choices and compliance:
https://twitter.com/zennonuc/status/1378103324335960064?s=20&t=9fi84QQy625j-f1rf8j- g

33.30 33.31
Ulyate-Crow, 2
Context
In California, our transportation infrastructure is failing us. Crippled by congestion, Californians lose $29.1 billion in lost time and fuel annually due to traffic. In Los Angeles alone, commuters spend an extra 5 full days in their cars every year. In the past, we’ve looked to more highway construction and expansion to try and alleviate these issues. However, decades of research have shown highway expansion is counterproductive and futile due to a concept called induced demand. Just look at the $1.1 billion 405 Sepulveda Pass widening project, where travel times through the pass increased by a minute only a year after construction.

Additionally, today we are reckoning with institutional racism at every level and facing the unprecedented challenge of climate change. Correcting the policies that purposely put poorer communities of color in the paths of highways, exposing residents to harmful PM 2.5 toxins that cause cancer and asthma, and led to 42.9% of our carbon emissions coming from road vehicles, should be of paramount priority.

Reflecting on all of this, California lawmakers have already recognized that we need to invest in public transportation, the greener, denser, and cheaper option for Californians.

However, it has been an endless struggle to fund the day-to-day operations of transit agencies throughout the state, let alone the billions in costs (and rising) required to build alternatives to our current auto-based infrastructure. In a country with limited federal transit funding and a state where Proposition 13 and other voter initiatives have made it challenging to pass and create new funding sources for transit, agencies have been unsure how to provide capital for these massive investments.

For the solution to fund and sustain transit, we can look back at our recent past.

History
Looking back to the heyday of public transportation in the US in the early 1900s, transit systems were primarily financed not by the fares they generated but by the land they improved.

For example, Henry Huntington built Los Angeles’s Pacific Electric Railways, previously the world’s largest public transportation network, by buying empty land in places like Redondo or Huntington Beach then selling it at a premium once he connected it to the interurban railway. He then used those funds to buy more land and expand the rail network. Beloved streetcar suburbs around the state, such as Berkeley and Pasadena, were built upon this land-development model: wholesale developers buying land then selling to prospective homeowners, in-tandem developing profitable commercial uses for the new residents and stations.

However, by the 1940s, the era of rail transportation dominance came to an end.

Increasing competition from the government-subsidized automobile and a series of poor decisions that did not consider long-term financial sustainability led to transit providers going bankrupt throughout the country. Similar to the growth Ponzi scheme documented in suburban

33.32 Ulyate-Crow, 3
sprawl, initially transit agencies turned a year-over-year profit. However, when 40 years had passed, and the rail infrastructure needed a wholesale replacement, no funds were left to finance it. But out of the ashes many countries and companies internationally, especially in Asia, learned from the mistakes of American transit and adopted similar but reformed methods of real-estate development and transit expansion.

Asian transit agencies operate with two key distinctions to ensure financial sustainability.

First and foremost, their stations’ development is considerably higher density than the traditional American model. A minimum density threshold is required to sustain rail ridership, and most US streetcar suburbs did not meet this threshold. There were too few people living near stations, and therefore there wasn’t enough ridership to justify service. Second, US operators primarily outright sold the land they owned, which created large short-term profits but no long-term financial model accounting for the costs associated with maintenance of track, rolling stock, and other liabilities. Today, Asian counterparts predominantly use rents rather than lump sales, enabling a model of operation that doesn’t depend on constant expansion.

For example, the profitable Hong Kong Mass Transit Railway (MTR) finances its transit development by owning land near stations then developing parcels in partnership with private developers. MTR collects either ongoing lump-sum payments, a percentage of the total building profits, or a number of the building’s businesses to fund operations. We also see this phenomenon as a critical driver of railway development in Japan and its fringes.

In California, we’ve begun to partially experiment with this model through AB 2923, passed and signed into law by Governor Brown in 2018. AB 2923 mandated Bay-Area cities to upzone to the same level as BART’s TOD standards on BART-owned land, essentially allowing the transit agency to control zoning on parcels they owned. BART was then empowered to enter agreements with private partners to develop these lots. This bill is expected to result in up to 20,000 units in the Bay Area alone. However, it only applied to BART, excluding every other transportation agency in the state. While we haven’t yet seen any projects directly resulting from this bill due to its relatively recent passage, developments such as Mandela Station in West Oakland are a prime example of the buildings that should occur near transit.

Transforming Transit Real-estate Authority Near Stations to Invest in Transportation (TTRANSIT) Act
In short, the Transforming Transit Real-estate Authority Near Stations to Invest in Transportation (TTRANSIT) Act would empower every transit provider statewide to have full discretionary development authority on the land they own within ¾ mile of a train or bus-rapid-transit station. However, for the bill to work effectively, detailed below are provisions necessary to facilitate its usage.

33.33 Ulyate-Crow, 4
Land-Use Authority & Development
Provision Reasoning
Within ¾ mile of rail transit or
bus-rapid-transit stations, transit agencies
would have full discretionary development
authority over properties they own, essentially
exempting them from any local zoning
restrictions.

This development right given to agencies
would automatically raise the value of the
land they buy. Being allowed to build more
than was initially permitted means you can
extract more value than previously possible.

Additionally, this will enable the construction
of the densities and uses needed to sustain
transit.

So long as the uses are non-polluting and
conducive to transit, agencies will be allowed
to construct any use on these properties,
whether that be housing, commercial, leisure,
or office, to maximize cross-subsidization.

All communities and transit agencies have
different needs, so mandating a type of use
could lead to no construction when there isn’t
a need for the required use. Allowing for local
choice ensures practical application in our
diverse state. Additionally, considering the
purpose of the development is to subsidize
public transit, we shouldn’t be precluding
uses that could create more revenue.

When soliciting developers, agencies will use
a weighted scoring rubric to determine which
project to select for any given site. This rubric
will be out of 100 points, with 75 points
allocated to state priorities and 25 to local
priorities. The state and local municipality will
submit their priorities to the transit agency.

Then the agency will conduct an independent
analysis to determine, based on the rubrics
the state and local municipality submitted,
which project scored the highest.

A joint committee of CA HUD and Caltrans
representatives will create the state priorities,
which will require the governor’s approval. On
the local side, the local municipality’s
electoral body will determine priorities. For
the state, the rubric will ideally include priority
aspects such as the number of affordable
housing units, projected profitability, and
contractor reliability while also considering
secondary elements such as integration with
This weighted rubric will be how the state can
implement regional priorities, such as
affordable housing construction, through
weighing specific criteria more than others.

The rubric process for selecting a builder will
also encourage good development and
solicitation practices while reflecting local
municipalities’ concerns. By giving
municipalities the power to submit their
preferences, developments can incorporate
local circumstances, however not to the
extent it entirely limits a transit agency’s
ability to construct on their property.

Additionally, contracting out construction and
development allows smaller agencies without
the expertise to reap the benefits of projects
but outsource the technical skills required.

A mix of transit and urban development
professionals determining the state rubric
ensures good policy, while approval from the
governor allows political preferences to be
incorporated. Giving the transit agency the
ability to issue the grading system allows for
an independent review of proposals and a fair
evaluation of which development to select.

33.34 Ulyate-Crow, 5
transit, green buildings, and neighborhood
compatibility. This rubric will incorporate
elements from the state to advance regional
priorities; however, it will also include a
portion of weight for local preferences, so
long as these priorities don’t make it
impossible for site development.

In no way is this an exhaustive list, but
hypothetically a weighted rubric would work
on a points system like this:

State
20 points - Projected profitability
10 points - Number of affordable units
10 points - Contractor reliability
10 points - Projected transit users
10 points - Environmentally sustainable
construction
10 points - VMT reduction
5 points - Integration with Transit
Local
20 - Neighborhood compatibility
5 - Number of affordable units
If transit agencies would like to develop their
land using an in-house team, they must gain
approval from the joint committee of Caltrans
and CA HUD representatives. The committee
will consider the development proposal using
the same rubric process as when soliciting
private development, and if the proposed
project scores more than 70 points, it will be
permitted.

While unlikely to be utilized as the expertise
required to engage in this type of in-house
development is not in the wheelhouse of any
current transit agencies, in the future, this
option gives a pathway for an eventual
consolidation of construction. This would
allow for greater efficiencies and profits as not
relying on developers can lead to more
money for the agency. If it ever happened,
only large-scale transit agencies or a
statewide intercity rail operator would likely
use it.

Property Acquisition & Transit Construction
Provision Reasoning
Agencies will be allowed to finance the
upfront capital required to buy land and build
transit by issuing revenue bonds. Revenue
bonds do not require voter approval because
the future user fees and revenues used to
cover the upfront costs are not new taxes. In
this case, farebox revenues, development
profits, and other currently existing taxes will
be the user fees and revenues the Treasurer
can issue bonds against.

By allowing the issuance of revenue bonds
against development profits, agencies can
quickly acquire large sums of cash to
purchase land and construct transit projects.

Transit agencies can access a more
dependent form of funding and expand at an
expedited rate by not requiring voter
approval.

33.35 Ulyate-Crow, 6
Transit agencies will have preemptive
purchasing rights to all property within ¾ of a
mile of stations for a period of 15 days after
being on the market.

Giving transit agencies the exclusive right to
place an offer on land before it goes to the
general marketplace shields them from a
bidding war and gives them a better chance
to own more property.

Agencies will be allowed to purchase land
before they announce a project and only have
to disclose these acquisitions every 6
months, giving them time to amass a portfolio
before speculation.

Transportation infrastructure announcements
often lead to a land speculation boom that
rapidly increases land value. This is
problematic because increases often result in
prices far above the real value of the land,
and those trying to purchase property spend
far more than before a project’s
announcement. For example, when
speculators discovered Henry Huntington
bought the local land-holding company in
Redondo Beach, overnight prices
skyrocketed. Investors realized this purchase
was a signal of future rail investment in the
community. Considering the slow-moving
nature of public entities, any additional
property secured after this boom would likely
be over-evaluated.

Only in the most extreme circumstances will a
total land sale be allowed. The default form of
property transaction will be long-term ground
leases, recurring lump sums, a portion of
business profits, ownership of several
businesses, or other revenue sharing
agreements.

Only when a transit agency owns the land
can they utilize their development authority,
and continuing to own the land allows for
more options when agencies need to expand
or modify transit infrastructure. Additionally,
guaranteeing revenue through long-term
leases means a sustainable funding source
for continued operation.

Agencies will be encouraged to engage in
unique property acquisition methods that
don’t necessarily involve traditional
purchasing.

This kind of creativity in governance could
allow for unique property transfers, such as
Japan’s “land readjustment” acquisition
method. Used primarily in rural areas with
large parcels, property owners keep half of
their property and give half away to the
agencies. The railway company provides full
infrastructure support (water, power, roads,
etc...) for the private land and uses their half
to install roads and transit infrastructure. Land
readjustment can also refer to the practice of
pooling inefficient property shapes and
dividing the land into more efficient plots.

Transit agencies could facilitate this type of

33.36 Ulyate-Crow, 7
adjustment among property owners to
guarantee contiguous and viable pieces of
land.

Agencies are encouraged to “land bank” by
consolidating smaller parcels into larger plots.

Especially when building large-scale projects
near transit hubs, land banking allows for the
property acquisition required to consolidate
smaller parcels into the larger pieces of land
necessary for construction. By encouraging
land banking, we can incentivize large-scale
developments that can better meld with the
community and result in more profit.

Conclusion
Access to transportation is the number one determinant in a person’s ability to escape poverty. As a state, we know that we need to invest in public transit to combat many significant issues we face. Whether it be climate change, access to opportunity, or congestion, all problems point to a need for wholesale change in transportation policy. This bill will allow agencies to take this mandate and run with it. The inflated values of California land, especially in urban areas where regional transportation exists, means the funds transit agencies can acquire through their development authority will transform agencies’ budgets. This bill requires no new taxes and creates environmentally friendly communities supporting transit. Good policy begins synergistic cycles that far outlive the original bills, and the stimulation of transit and community growth will do just that.

33.37 City Council

AGENDA REPORT
DATE: 01/08/2024
AGENDA OF: 01/23/2024
DEPARTMENT: City Clerk
SUBJECT: Historic Preservation Commission (CC)
RECOMMENDATION: Approve Vice Mayor Golder’s and Mayor Keeley’s nominations for two Historic Preservation Commissioners, with terms ending January 31, 2027.

BACKGROUND: At its meeting on January 24, 2023, Council transitioned a number of City commissions to directly-appointed members, which includes the Historic Preservation Commission. In order to maintain a quorum, there was a need to transition in phases.

DISCUSSION: The following people are seeking appointment to the Historic Preservation Commission:

Donna Ramos
William Schultz
Sean Wilson
FISCAL IMPACT: None.

Prepared By:

Bonnie Bush
City Clerk
Submitted By:

Laura Schmidt
Assistant City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. APPLICATIONS.PDF

34.1 34.2

34.3 34.4

34.5 34.6

34.7 City Council

AGENDA REPORT
DATE: 01/08/2024
AGENDA OF: 01/23/2024
DEPARTMENT: City Clerk
SUBJECT: Parks and Recreation Commission (CC)
RECOMMENDATION: Approve Vice Mayor Golder’s nomination of one Parks and Recreation Commissioner, with a term ending January 31, 2027.

BACKGROUND: At its meeting on January 24, 2023, Council transitioned a number of City commissions to directly-appointed members, which includes the Parks and Recreation Commission. In order to maintain a quorum, there was a need to transition in phases.

DISCUSSION: The following people are seeking appointment to the Parks and Recreation Commission:

Melissa Begin
Lisa Colombo
Linda Cover
Jorge Leonardo Cruz*
Walter “Joe” Griffin
Joy Schendledecker
Boden Shargel
Emma Ussat
Leslie Wooding
*Currently serving on this Commission and seeking reappointment.

FISCAL IMPACT: None.

Prepared By:

Bonnie Bush
City Clerk
Submitted By:

Laura Schmidt
Assistant City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. APPLICATIONS.PDF

35.1 35.2

35.3 35.4

35.5 35.6

35.7 1. tŚǇ ĂƌĞ ǇŽƵ ŝŶƚĞƌĞƐƚĞĚ ŝŶ ƚŚŝƐ ƉŽƐŝƟŽŶ͍ tŚĂƚ ƉĂƌƟĐƵůĂƌ ƐŬŝůůƐ ǁŽƵůĚ ǇŽƵ ďƌŝŶŐ ƚŽ ƚŚĞ ŽŵŵŝƐƐŝŽŶͬŽŵŵŝƩĞĞͬ ŽĂƌĚ͍
/ ůŝǀĞ Ăƚ ƚŚĞ dĂŶŶĞƌǇ ƌƚƐ ĞŶƚĞƌ͘ / Ăŵ ŝŶƚĞƌĞƐƚĞĚ ŝŶ ĐŽŶŶĞĐƟŶŐ ƚŚĞ dĂŶŶĞƌǇ ǁŝƚŚ ^ ŝƚǇ ƌƚƐ͕ WĂƌŬƐ ΘZĞĐ͕ ĂŶĚ tĂƚĞƌ ŽŵŵŝƐƐŝŽŶƐ ďĞĐĂƵƐĞ ƚŚĞ dĂŶŶĞƌǇ ŝƐ Ă ǀŝďƌĂŶƚ ĐƵůƚƵƌĂů Ăƌƚ ĐĞŶƚĞƌ͕ ůŽĐĂƚĞĚ ŽŶ ƚŚĞ ^ĂŶ >ŽƌĞŶǌŽ ZŝǀĞƌ ŝŶ Ă ŇŽŽĚƉůĂŝŶ͕ Ăƚ ƚŚĞ ĞŶĚ ŽĨ ƚŚĞ ZŝǀĞƌ tĂůŬǁĂǇ͕ ƚŚĞ ůŽŶŐĞƐƚ ƉĂƌŬ ŝŶ ^͘͘ Ɛ ĂŶ ŽƌŝŐŝŶĂů dĂŶŶĞƌǇ ƌĞƐŝĚĞŶƚ ĨƌŽŵ ϮϬϬϵ͕ / ŬŶŽǁ ŵǇ ĂƌƟƐƚ ĐŽŵŵƵŶŝƚǇ͕ / ŚĞůƉĞĚ ďƵŝůĚ ŝƚ͘ / ŬŶŽǁ ƚŚĞ ƌŝǀĞƌ ĂŶĚ ŝƚƐ ŇŽŽĚƐ͘ / ŬŶŽǁ ƚŚĞ ZŝǀĞƌ tĂůŬǁĂǇ ĂŶĚ ƉĂƌŬƐ ƚŚƌŽƵŐŚŽƵƚ ƚŚĞ ĐŝƚǇ͘ DǇ Ăƌƚ ŝƐ ŝŶƐƉŝƌĞĚ ďǇ ƚŚĞ ƌŝǀĞƌ͕ WŽŐŽŶŝƉ͕ ďĞĂĐŚĞƐ ĂŶĚ ƉĂƌŬƐ ĂĐĐĞƐƐŝďůĞ ďǇ ďŝŬĞ ĨƌŽŵ ƚŚĞ dĂŶŶĞƌǇ͘ / ďĞůŝĞǀĞ ƚŚĞ dĂŶŶĞƌǇ ƐŚŽƵůĚ ďĞ ƌĞƉƌĞƐĞŶƚĞĚ ŝŶ ƚŚĞ ĚĞĐŝƐŝŽŶ-ŵĂŬŝŶŐ ƉƌŽĐĞƐƐ ŽĨ ^ ŝƚǇ ƌƚƐ͕ WĂƌŬƐ ĂŶĚ ZĞĐƌĞĂƟŽŶ ĂŶĚ tĂƚĞƌ ŽŵŵŝƐƐŝŽŶƐ ďĞĐĂƵƐĞ Ăƌƚ͕ ǁĂƚĞƌ ĂŶĚ ƉĂƌŬƐ ĚĞĮŶĞ ǁŚŽ ǁĞ ĂƌĞ͘ /Ŷ ĂĚĚŝƟŽŶ ƚŽ ƐĞƌǀŝŶŐ ƚŚĞ ůĂƐƚ ϰ ǇĞĂƌƐ ĂƐ Ă ^ ƌƚƐ ŽŵŵŝƐƐŝŽŶĞƌ͕ / Ăŵ Ă ďŽĂƌĚ ŵĞŵďĞƌ ŽĨ ƚŚĞ ŽĂƐƚĂů tĂƚĞƌƐŚĞĚ ŽƵŶĐŝů ĂŶĚ ďĞůŝĞǀĞ ŝƚ ŝƐ ŝŶ ƚŚĞ ĐŝƚǇΖƐ ďĞƐƚ ŝŶƚĞƌĞƐƚ ƚŽ ĞůĞǀĂƚĞ ƚŚĞ ƐƚĂƚƵƐ ŽĨ ƚŚĞ ^ĂŶ >ŽƌĞŶǌŽ ZŝǀĞƌ ƚŚƌŽƵŐŚ Ăƌƚ͕ ĞǀĞŶƚƐ ĂŶĚ ĂĐƟǀŝƟĞƐ ƚŽ ŝŶǀŝŐŽƌĂƚĞ ƚŚĞ ĞĐŽŶŽŵŝĐ ĂŶĚ ĐƵůƚƵƌĂů ĂƐƉĞĐƚƐ ŽĨ ^ĂŶƚĂ ƌƵǌ͘ dŚĞ ƌƚ ĂŶĚ WĂƌŬƐ ĂŶĚ ZĞĐ ŽŵŵŝƐƐŝŽŶƐ ĂƌĞ ŝŶ Ă ƵŶŝƋƵĞ ƉŽƐŝƟŽŶ ƚŽ ŚĞůƉ ŵĂŶŝĨĞƐƚ ƚŚŝƐ ΗĞŵĞƌŐŝŶŐ ĂƐƐĞƚͬƌĞƐŽƵƌĐĞ ĨŽƌ ƚŚĞ ŝƚǇ ŽĨ ^ĂŶƚĂ ƌƵǌ͘ dŚĞ ZŝǀĞƌ tĂůŬǁĂǇ ĐĂŶ ďĞ ƚŚĞ ůŝƚĞƌĂů ƌƚ WĂƚŚ ƚŽ ƚŚĞ dĂŶŶĞƌǇ ĨŽƌ ƚŽƵƌŝƐƚƐ ŝŶ ƚŚĞ ŶĞǁ ƌŝǀĞƌ ĨĂĐŝŶŐ ŚŽƚĞůƐ ĂŶĚ ĚŽǁŶƚŽǁŶ ǀŝƐŝƚŽƌƐ͘ KƵƌ ĐŝƚǇ ƉĂƌŬƐ ĐĂŶ ƌĞŇĞĐƚ ƚŚĞ ĐŽŵŵƵŶŝƚǇ ƚŚƌŽƵŐŚ Ăƌƚ ƚŚĂƚ ǁŝůů ĂƩƌĂĐƚ ƌĞƐŝĚĞŶƚƐ ĂŶĚ ƚŽƵƌŝƐƚƐ ĂůŝŬĞ͘ ŽƚŚ ŽĨ ƚŚĞƐĞ ĐŽŶŶĞĐƟŽŶƐ ;ƚŚĞ ƌŝǀĞƌ Θ ƚŚĞ dĂŶŶĞƌǇͿ ĂƌĞ ĂŶŽƚŚĞƌ ƐƚĞƉ ŝŶ ƚŚĞ ĚŝƌĞĐƟŽŶ ŽĨ ŵĂŬŝŶŐ ^ĂŶƚĂ ƌƵǌ a tourist ĚĞƐƟŶĂƟŽŶ͘
^ŬŝůůƐ͗

35.8 dĂŶŶĞƌǇ dĞŶĂŶƚƐ hŶŝŽŶ ;ZdhͿ ϱн ǇƌƐ ŽĂƌĚ ŵĞŵďĞƌ
dĂŶŶĞƌǇ ƌƟƐƚ /ŶƚĞƌǀŝĞǁ ŽŵŵŝƩĞĞ ϰн ǇƌƐ͘ ŚĂŝƌͬĐŽŵŵŝƩĞĞ ŵĞŵďĞƌ dĂŶŶĞƌǇ ZĞƐŝĚĞŶƚƐ ZĞƐŽƵƌĐĞ 'ƌŽƵƉ – ďŽĂƌĚ ϭнǇƌ
&ƌĞĞ ŌĞƌ-ƐĐŚŽŽů ƌƚ ĐůĂƐƐĞƐ ϭϬн ǇĞƐ͘ dĞĂĐŚĞƌ
dĂŶŶĞƌǇ WĂŶƚƌǇ- ϯн ǇƌƐ͘ ŽƌŐĂŶŝǌĞƌͬ ĨŽƵŶĚĞƌ
^ ƌƚ ŽŵŵŝƐƐŝŽŶĞƌ- ϰǇƌƐ͘ ŽĂƌĚ ŵĞŵďĞƌ
^ĂǀĞ KƵƌ ^ŚŽƌĞƐ- ƐŝƚĞ ĐĂƉƚĂŝŶ ϲнǇƌƐ
Tannery clean-ƵƉƐ- ŽƌŐĂŶŝǌĞƌ ϭϯнǇƌƐ
ZŝǀĞƌ ^ƚ ^ŚĞůƚĞƌͬ tĂƌŵŝŶŐ ĞŶƚĞƌ- volunteer
/ ďĞůŝĞǀĞ ŵǇ ůŽŶŐ ŚŝƐƚŽƌǇ ŽĨ ŝŶǀŽůǀĞŵĞŶƚ ŝŶ ƚŚĞ ĂƌƚƐ͕ ĞŶǀŝƌŽŶŵĞŶƚ ĂŶĚ ĐŽŵŵƵŶŝƚǇ ĂĐƟǀŝƐŵ ŐŝǀĞƐ ŵĞ ĂŶ ŝŶƚĞƌĚŝƐĐŝƉůŝŶĂƌǇ ƉĞƌƐƉĞĐƟǀĞ ƚŚĂƚ ĐĂŶ ƉƌŽďůĞŵ ƐŽůǀĞ ĂŶĚ ĞŶŚĂŶĐĞ ǀŝƐŝŽŶ ĨŽƌ ŽƵƌ ^ĂŶƚĂ ƌƵǌ ĐŽŵŵƵŶŝƚǇ WůĞĂƐĞ ĨĞĞů ĨƌĞĞ ƚŽ ĐŚĞĐŬ ŵǇ ǁĞďƐŝƚĞ͗ ůŝŶĚĂĐŽǀĞƌ͘ŽƌŐ dŚĂŶŬ ǇŽƵ͘

35.9 35.10

35.11 35.12

35.13 35.14

35.15 35.16

35.17 35.18

1. Why are you interested in this position? What particular skills would you bring to the Commission/Committee/Board?
I am thrilled at the prospect of contributing to the Santa Cruz City Parks and Recreation Commission, drawing from my substantial experience overseeing public programs, including trail stewardship and maintenance, at Santa Cruz Mountains Trail Stewardship (SCMTS). In this role I have developed an intimate familiarity with city parks, the Parks and Recreation Department's staff, mission, goals, and available resources. Collaborating closely with department contacts, I've developed a profound understanding of the intricacies involved in maintaining and enhancing public spaces. My expertise in event planning, community engagement, and budget management, combined with firsthand knowledge of various city parks gained through weekly activities, uniquely positions me to contribute effectively to the commission's objectives.

Furthermore, my eagerness to contribute stems from a deep passion for building healthy communities and fostering environmental stewardship, closely aligning with the department's mission and vision. As a Senior Community Engagement Manager at Santa Cruz Mountains Trail Stewardship, I bring extensive experience in event planning, community outreach, budget management, and program development. My proficiency in fostering transparent and honest communication, in line with the department's values, and strategic communication skills contribute to achieving the department's vision. Additionally, my proven track record of securing diversified funding sources, managing teams, and cultivating relationships with local businesses aligns seamlessly with the responsibilities of the commission.

2. What types of diverse interests/experiences would you bring to the Commission/Committee/Board? In addition to my professional experiences, my direct involvement with city parks through overseeing public programs with SCMTS adds a specific dimension to my perspective. My hands-on experience in trail stewardship and maintenance aligns seamlessly with the commission's responsibilities. Having worked at various city parks on a weekly basis during SCMTS events, I have gained an in-depth understanding of the unique features, challenges, and opportunities associated with each park. This firsthand knowledge allows me to bring practical insights into the commission's decision-making processes.

Furthermore, my commitment to diversity, equity, and inclusion (DEI) is not only theoretical but has been translated into tangible actions. I took a leadership role in developing and implementing a DEI committee at SCMTS, fostering an inclusive environment within the organization. This initiative involved creating onboarding policies and programs designed to ensure that diversity and inclusivity were integral parts of the organizational culture.

Beyond organizational initiatives, I have personally developed and implemented multiple DEI programs aimed at serving underserved communities. These programs were designed to break down barriers and provide access to outdoor and recreational activities for individuals who may face systemic challenges. My hands-on experience in executing DEI programs, coupled with my understanding of the diverse needs within the community, uniquely positions me to contribute to the Santa Cruz City Parks and Recreation Commission's commitment to fostering equity, inclusion, and accessibility in recreational opportunities for all residents.

3. List community/volunteer activities with which you have been involved in the last five (5) years.

Over the past ten years, my primary focus has been on my role as Senior Community Engagement Manager at Santa Cruz Mountains Trail Stewardship (SCMTS). In this capacity, I have actively contributed to the community through various initiatives. I have created and implemented over a dozen public programs, community engagement initiatives, organized events, and developed partnerships with local businesses, all aimed at enhancing the quality of life within the Santa Cruz community.

One noteworthy community engagement effort includes my involvement in trail crew leader training at SCMTS and the California Naturalist Program. Through these initiatives, I have not only contributed to environmental stewardship but also actively participated in educating and engaging community members in sustainable practices and a deeper understanding of the natural surroundings.

35.19 My commitment to community service extends to my active participation in SCMTS events, where we work closely with the Parks and Recreation Department at various city parks on a weekly basis. This hands-on engagement has provided me with a unique perspective on the needs and challenges of these public spaces, reinforcing my dedication to improving recreational opportunities and overall community wellbeing.

In summary, my community and volunteer activities over the past five years have been centered around enhancing community engagement, promoting environmental stewardship, and actively contributing to the well-being of residents within the Santa Cruz area.

35.20 35.21

35.22 City Council

AGENDA REPORT
DATE: 01/08/2024
AGENDA OF: 01/23/2024
DEPARTMENT: City Clerk
SUBJECT: Planning Commission (CC)
RECOMMENDATION: Approve Councilmember Newsome’s nomination for one Planning Commissioner with a term ending January 31, 2027, and appoint one Planning Commissioner, at-large, with a term ending January 31, 2025.

BACKGROUND: At its meeting on January 24, 2023, Council transitioned a number of City commissions to directly-appointed members, which includes the Planning Commission. In order to maintain a quorum, there was a need to transition in phases.

Councilmember Newsome’s direct appointment will have a term that ends January 31, 2027, while the at-large appointment’s term will end January 31, 2025, at which time the newly elected Districts of 1 and 2 (in that order) will directly appoint members.

DISCUSSION: The following people are seeking appointment to the Planning Commission:

Detlef Adam
Ayo Banjo
Lisa Colombo
Rachel Dann
Michael Funari
Scott Harriman
Hector Marin
Kenneth Matlin
Chad Mitcham
Daniel Nelson
Charles Prograce
Joy Schendledecker
William Schultz
Boden Shargel
Rafa Sonnenfeld
Joe Thompson
Matthew Thompson
FISCAL IMPACT: None.

36.1 Prepared By:

Bonnie Bush
City Clerk
Submitted By:

Laura Schmidt
Assistant City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. APPLICATIONS.PDF

36.2 36.3

36.4 Please note: This application is considered a public document, and will be available for release upon request.

CITY OF SANTA CRUZ APPLICATION FOR APPOINTMENT TO ADVISORY BODIES Applications will be considered active for two years from date of submission.

NAME* DATE
RESIDENCE ADDRESS* CITY ZIP
EMAIL* HOME # CELL #

EMPLOYER OCCUPATION
REGISTERED CITY VOTER? Yes No YEARS LIVED IN CITY LIMITS OF SANTA CRUZ EMPLOYED BY CITY OF SANTA CRUZ? Yes No PRESENTLY SERVING ON ADVISORY BODY?** Yes No PERSONAL REFERENCE or ENDORSING
COUNCILMEMBER (optional) PHONE
*required fields.

ADVISORY BODIES
If you are applying for more than one advisory body, please rank your preferences numerically with #1 as your first choice.

Arts Commission* Historic Preservation Commission*
Board of Building Appeals* Parks and Recreation Commission* Children’s Fund Oversight Committee Planning Commission*

Commission for the Prevention of Violence
Against Women* Sister Cities Committee
Downtown Commission* Transportation and Public Works Commission* Equal Employment Opportunity Committee Water Commission* Other Advisory Body, or if you are applying for a specialized category, please indicate:

Advisory Body Category
* A Statement of Economic Interest must be filed after appointment by those appointed to the advisory bodies marked with an asterisk (*). The statement includes, but is not limited to, disclosure of financial, business and real property interests held by the appointee (and spouse) in the City of Santa Cruz or within 2 miles of the jurisdiction of the City of Santa Cruz. ** Council Policy 5.1 states that members shall not serve simultaneously on more than one advisory body. If you are presently serving on (or are appointed to) an advisory body, your application to serve on a second advisory body will be forwarded to the Council for consideration only if you indicate that you are willing to resign from the first advisory body. If you are appointed to serve on an advisory body, you may also be eligible to serve on another advisory body or task force if it is scheduled to sunset within 13 months.

SIGN AND RETURN TO CITY CLERK’S DEPARTMENT
By Email [email protected]
By Mail/In Person: 809 Center Street, Room 9
Santa Cruz, CA 95060
Signature of Applicant Fax: 831-420-5031
● PLEASE USE THE REVERSE SIDE FOR ADDITIONAL INFORMATION ● 6 Sonja Brunner
1 X X
01/10/2023
X
Santa Cruz Black
Santa Cruz
Ayo Banjo
95060
Director of Programs

36.5 36.6

36.7 36.8

36.9 36.10

36.11 36.12

36.13 36.14

36.15 36.16

36.17 36.18

36.19 36.20

36.21 36.22

36.23 36.24

36.25 36.26

36.27 36.28

36.29 36.30

36.31 36.32

36.33 36.34
I was driven to (re)apply for these commissions based on the impacts I have seen throughout our community due to the recent storms and the storms we faced last December and January. It is clear to me that these adverse impacts are a direct result of our climate change due to fossil fuels. I am honored to have State Senator John Laird as my personal reference. I will bring that same passion for our community and our environment.

We need a variety of input throughout this process. I'm a student at UC Santa Cruz studying politics and environmental policy. Throughout my coursework, I have learned and taken courses that challenge the current way of thinking when it comes to our current status quo. I bring a unique perspective to each of these commissions, and if I am selected to serve on these commissions, I will continue to build the knowledge and expertise I currently have.

I have been a student at the UCSC for roughly three years now, and I believe that our community thrives the most when all voices and people are heard. Students and student voices need to be brought into the circle to continually build up our community and build partnerships with those who work, study, and live on campus.

I want to use my personal and professional network developed through my work in our local community to make sure my fellow Commissioners and I have access to the latest information on new, insightful, and creative solutions to growth and development. Santa Cruz, alongside the UC, is struggling to balance growth, quality of life, and affordability. I will bring a new voice to advocate for sustainable, equitable, and common-sense solutions to the problems and issues we face.

I will work to ensure we are tracking the newest implementation of laws across the state and looking for ways to ensure we are compiling with the statutes while tailoring our decisions and requirements to push low-income housing creation to the maximum extent possible while learning from other jurisdictions how they are resolving some of the problems we face. Given new laws passed by the legislature and the need for low-income housing, I believe it is necessary to address this issue head-on with all the means at our disposal.

I want to maintain and build a community that is economically diverse. While door knocking in the city, I noticed a common pattern of people moving or being forced out due to the rising cost of homes in Santa Cruz. This causes both community and climate impacts. I want to ensure that in addition to all the legal requirements that guide our decision-making, we are looking at every project through the lens of climate change and the impacts that are happening to our environment.

The increase in traffic over recent years from the former city of Santa Cruz residents being pushed out to more affordable surrounding communities is causing an increase in emissions and increase in traffic. We need to look at our growth as part of a holistic ecosystem of affordability, quality of life, transportation, and economics. I look forward to bringing a focus on holistically informed decisionmaking to the Planning Commission, Transportation, or Water Commission.

36.35 Joe Thompson
Experienced project manager in union, non-profit, and campaign environments with strong relationship-building skills. Thrives when working on a team and promotes positive and productive work environments, while striving to achieve hard deadlines and goals. Remains calm and focused in challenging and high-stress roles.

EXPERIENCE
Service Employees International Union Local 1021 |Union Organizer| Santa Cruz, CA August 2023 - Present ● Actively represented union Starbucks employees at 5 locations across Northern California ● Successfully organized non-union employees to join the union and become active members and leaders ● Developed communications and organizing skills while attending trainings & teaching skills to workers California State Senate, Senator Aisha Wahab |District Intern| Fremont, CA March 2023 - June 2023 ● Researched, drafted, and presented policy and event ideas to the Senator to meet constituents where they are ● Connected constituents with city, county, state, and federal resources to address their concerns ● Developed communications and connections in the community to advocate and prepare the Senator Gail Pellerin For Assembly |Field Director| Santa Cruz & Santa Clara County June 2022 - Dec 2022 ● Organized teams of up to 45 volunteers for canvases, phone banks, and actions to build name recognition and support across multiple counties.
● Led outreach to important stakeholders and elected officials in both counties. Experience and connections with Environmental Justice groups, Labor, and Democratic Clubs. ● Led virtual and in-person events with hundreds of attendees, P2P text campaigns, and canvassing Starbucks |Lead Union Organizer and Shift Supervisor| Santa Cruz, CA Nov 2019 - Aug 2022 ● Successfully unionized the first Starbucks in California, working with my workers to make our workplace more democratic and better for the workers
● Organized my coworkers through team building, trust exercises, hangouts, one on ones, group meetings, phone calls, and building up leaders to help organize each other and other stores NWF Strategies |Sr. Campaign Advisor| Primarily Remote Jan 2021 - August 2021 ● Actively represented union Starbucks employees at 5 locations across Northern California ● Successfully organized non-union employees to join the union and become active members and leaders ● Developed communications and organizing skills while attending trainings & teaching skills to workers

ADDITIONAL EXPERIENCE
Santa Cruz County Substance Use Disorder Services, Commissioner April 2023 - Present California Democratic Party, Assembly District Delegate Jan 2023 - Present Sierra Club, Executive Committee Member Dec 2022-Present BAYMEC, Board Member Nov 2022 - Present
Water Insecurity Correction Coalition, Social Media Manager and Policy Advocate April 2021 - Sep 2021 The Borgen Project, Political Affairs Intern Sep 2020 - Jan 2021

EDUCATION
University of California, Santa Cruz, Politics Major Sep 2021 - Present SKILLS
Votebuilder/VAN, MiniVAN, Reach, Mobilize, ThruText & Spoke, Thru Talk, MailChimp, Action Network Communication, Leadership, Time Management, Problem Solving, Attention To Detail, Policy Research

36.36 36.37

36.38 City Council

AGENDA REPORT
DATE: 01/08/2024
AGENDA OF: 01/23/2024
DEPARTMENT: City Clerk
SUBJECT: Sister Cities Committee (CC)
RECOMMENDATION: Appoint two Sister Cities Committee Members with terms ending January 31, 2028.

BACKGROUND: At its January 9, 2024 meeting, the Council approved the reduction of eleven members to seven. Given the new number, there are two openings.

DISCUSSION: The following people are seeking appointment to the Sister Cities Committee:

Carola Barton
Danielle Brown
Emily Burton
Lisa Colombo
Andrea Riordan
FISCAL IMPACT: None.

Prepared By:

Bonnie Bush
City Clerk
Submitted By:

Laura Schmidt
Assistant City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. APPLICATIONS.PDF

37.1 37.2

37.3 37.4

37.5 37.6

37.7 37.8

37.9 37.10

37.11 City Council

AGENDA REPORT
DATE: 01/08/2024
AGENDA OF: 01/23/2024
DEPARTMENT: City Clerk
SUBJECT: Transportation and Public Works Commission (CC) RECOMMENDATION: Approve Vice Mayor Golder’s nomination of one Transportation and Public Works Commissioner with a term ending January 31, 2027, Councilmember Newsome’s nomination of one Transportation and Public Works Commissioner with a term ending January 31, 2027, and appoint two Transportation and Public Works Commissioners, at-large, both with terms ending January 31, 2025.

BACKGROUND: At its meeting on January 24, 2023, Council transitioned a number of City commissions to directly appointed members, which includes the Transportation and Public Works Commission. In order to maintain a quorum, there was a need to transition in phases, with varying term limits.

Vice Mayor Golder’s and Councilmember Newsome’s direct appointments will both have terms ending January 31, 2027, while the two at-large appointments will have terms ending January 31, 2025, at which time the newly elected Councilmembers for Districts 2, 3, 5, and 1 (in that order) will directly appoint members.

DISCUSSION: The following people are seeking appointment to the Transportation and Public Works Commission:

Detlef Adam
Candace Brown*
Lisa Colombo
Ron Goodman*
Scott Harriman
Ryan Meckel*
Chad Mitcham
Alex Ponik
Lola Quiroga
Joy Schendledecker
Boden Shargel
Joe Thompson
Zennon Ulyate-Crow*
*Currently serving on this Commission and seeking reappointment.

38.1 FISCAL IMPACT: None.

Prepared By:

Bonnie Bush
City Clerk
Submitted By:

Laura Schmidt
Assistant City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. APPLICATIONS.PDF

38.2 38.3

38.4 38.5

38.6 Addendum to Candace Brown 2024 Application to the Transportation and Public Works Commission.

I have served for 4 years now on the Transportation and Public Works Commission. I was encouraged to get more involved by David Terrazas when I negotiated with David Terrazas, Claire Gallogly and Rick Longonitti regarding final revisions to the 2017 Active Transportation Plan (ATP). I also advocated successfully with the then TPWC to have two final Community Meetings on the Westside and Eastside to ensure that there was maximum Community input to the important Active Transportation Plan..

While I was originally interested in the Planning Commission, I now realize that I have had more impact on the TPWC then I would have ever had on the other Commission. While the political make-up of the Commission has evolved, the Transportation and Public Works Commission is a highly functioning body that carefully considers, questions and debates many details presented to my six colleagues and myself. I often challenge my colleagues and staff with my prepared questions in my head without notes and find others challenge me to consider positions from another angle.

TPWC deals with the essential services of the City (other than Water).

Recycling, Food Waste Management and Water Safety are examples of items all brought before the Commission. These are very diverse subject matters requiring careful study sometimes. I thoroughly enjoy the broad base of subjects and the complexity of the materials.

When COVID first hit, my home town of Pasadena put up 500 signs turning most of the streets into “Slow Streets”. Ron Goodman and myself proposed the Slow Street Program after Phil Boutelle showed there was an additional $200K in one of the funds that could be allocated for such a program. While there was resistance from Staff, the City is learning that Rapid Response to major and unanticipated events requires creative and flexible solutions. Ron Goodman and I crafted a post-mortem report to that effect.

The reality of a policy change is brought loud and clear from the neighborhoods as is the case with Save WestCliff. It was music to my ears when one of the key staff said they wanted to have more Community meetings because they have

38.7 learned so much in the process. That has been my experience in the last decade and now hundreds of public hearings and Community meetings that I have attended.

When the lighting was to be changed on the Bike path along the levee, the Staff and Bike advocacy community was in favor of the proposed change. However, the International Dark Sky Association Santa Cruz Chapter made a strong case that the lighting was too impactful to the night sky and I also saw that the lighting would light up the nocturnal river ecosystem far beyond the bike lanes. When it came to a vote, I advocated very strongly for a design change. However the vote was 6-1 (I was the lone vote). I received surprisingly many texts from key Bike Advocates that said it was not politically possible to speak up on the design issue and yet they were so glad I was on the Commission to make the case. Well, amazingly the Staff did take into account the testimony and my comments and I was quietly notified several months later that the lighting had been redesigned.

When the levee vegetation had to be removed to meet the key metrics for the FEMA certification, I again advocated that a natural-based solution was a better solution for flood control. Manzanita's roots stabilize the levee slope. There were very strong advocates for this approach. I was not the only vote I believe on this one but in the minority. However the plea to work more closely with very knowledgeable Community members was taken back by the Staff and key modifications were made and the implementation. Compromise while not perfect offered a better solution for the stabilization of the levee and also the rich San Lorenzo River ecosystem.

I made the motion for the Laurel Street restriping which was unanimous but the appeal, Robert Orizzi and myself voted in favor of as we both felt that the design could better fit the model of Vision Zero (that Robert Orrizzi and Phil Boutelle championed with the City Council in 2019). The Laurel Street residents, many of 20-40 years, could not be left with a more unsafe parking option many blocks away on uneven sidewalks and unlighted streets. There were not even loading zone areas offered for an 87-year long-term resident. Again, while the discussion felt contentious at the time, the Staff did come back with a better design with new tandem parking on the side streets that was then presented to the Council.

38.8 In all cases, I am considering the worst case scenario and safety becomes a paramount measure of whether a project meets the standard. For almost 30-years I was in the high-tech industry working on very complex infrastructure solutions to ensure business continuity (not just disaster recovery). My last position at Oracle was in the Healthcare industry for a 150-hospital network in 20-states.

I am now an Accountant and so numbers are also something that I do not take for granted. I will get into the weeds on the budget and the 5-year Capital Improvement Plan. It was I that first brought the Bay Street Project forward to the CIP process. While it was in the top 10 worst Corridors for active transportation safety, it was not on the CIP until I insisted that we add it.

Unfortunately the bids were too high and the project had to be postponed recently. I know that City Council members are now advocating for it too and so it will eventually happen. It was one of the first hills I rode when I came to Santa Cruz as a transfer student in 1974.

My advocacy has centered around safety concerns for neighborhood families, seniors, the disabled, bicyclists and pedestrians. I came to Santa Cruz via UC Davis and before that the San Gabriel mountains where I was a “bike fanatic” in my youth. My partner however asked me not to continue riding my bike because of several potentially serious incidents I had with cars and pedestrians.

Tragically my partner of 37-years died unexpectedly during COVID. It then dawned on me that now I can ride again but now I know too much about the safety issues, the road hazards and the statistics that rank Santa Cruz one of the highest in serious bike and pedestrian accidents compared to other municipalities of similar size. Vision Zero is an important approach that the City still has not fully adopted. I attend the Community Traffic Safety Coalition zoom calls and also the Watsonville Vision Zero Task Force meetings and hope to continue the discussion about its importance.

It is with the motivation of safety for all of our Community including myself that I am re-apply to the TPWC for a 3-year term. I humbly resubmit my application to the City of Santa Cruz Mayor and City Council.

I am a 49 year resident of the Santa Cruz area. I was a renter for many years living on campus for over 2 years, then off Western, off Mission, off Seabright and

38.9 off Hwy 1 until I purchased a house finally after 18 years in Santa Cruz. I live in East Morrissey–a walking Community with alleys and flat streets in a grid with no continuous sidewalks along one of the busiest Traffic Corridors.

Sincere regards, Candace Brown

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38.24 38.25

38.26 Lola Quiroga
January 5, 2024
Transportation and Public Works Commission Application

1. Why are you interested in this position? What particular skills would you bring to the Commission/Committee/Board?
In Summer 2022, I made the best decision of my life: to sell my car in place of an e-bike.

Through riding my bike and taking public transportation, I have fallen in love with Santa Cruz in a way I never thought I could. I know firsthand the experiences of being car-free and a car owner in this city and I know the limitations of our public and private transportation. I believe that nobody should have to own a private vehicle to survive and live in this city, or any city. Having viable alternatives to car travel is crucial not only for mitigating transportation emissions in Santa Cruz County but also for enhancing the mental health and well-being of Santa Cruz residents.

I want to use my voice and experience to advocate for those who do not have the choice of being car-free – they should be able to get around our city without a private vehicle and without fear that our infrastructure could put them in unsafe situations. I am passionate about making Santa Cruz a more bikeable and walkable place, for not just those who experience these benefits recreationally but also for those who do not have a choice, such as individuals with disabilities, children, etc. I also look forward to hearing what community members have to say and drafting solutions to our community’s issues.

As a computer science student, I take an analytical approach to understanding the limitations of our transportation and urban infrastructure. I am eager to use my problem solving skills to work with my colleagues and the community to find strategic solutions to the changing circumstances that the Transportation and Public Works Commission may face in response to climate change effects, such as erosion. While I am firm with what I believe in, I feel there is no issue that my colleagues and I cannot find a middle ground on. I want to use my problem-solving skills to find ways to make cars and buses coexist with pedestrians and cyclists more seamlessly and safely, such as by drafting plans with my colleagues for road diets and other urban projects to help with these transitions.

I have great pride in giving service to others and advocating for the needs of the community. As a car-free student and renter, I bring a unique perspective to the table and can advocate for students and individuals who do not have the privilege of being car-free by choice as I am. As a young Latina woman and LGBTQ member, I am committed to representing underrepresented voices, ensuring diverse needs are considered in our city's transportation initiatives. My dedication to finding middle-ground solutions and drafting plans for safer coexistence between different modes of transportation make me an ideal candidate for this commission.

38.27 2. What types of diverse interests/experiences would you bring to the Commission/Committee/Board?
As a student deeply engaged in UCSC politics, a non-car owner, and a passionate cyclist with both e-bike and road bike experience, I bring a multifaceted perspective to the Commission.

As a proud Latina residing on the Westside (particularly enjoying West Cliff), I've lived in various parts of Santa Cruz, gaining insight into the city's diverse conditions and transportation needs. Having used every form of transportation across different areas, from Natural Bridges to Live Oak, I've cultivated a comprehensive understanding of our city's transportation dynamics that other community-members may not have experienced.

As a student-organizer at UCSC, I’ve gained a deep understanding of UCSC politics and the perspective of students that aids me in accurately representing students’ needs. In addition to my student experience, my experience working on Santa Cruz city council campaigns and being a member of Santa Cruz YIMBY has provided me with an understanding of the needs and diverse opinions of Santa Cruz residents, especially in regard to the city’s transportation needs.

In joining the Transportation and Public Works Commission, I am eager to find middle ground solutions that accommodate the diverse range of residents and opinions in our city, ensuring our transportation initiatives benefit all stakeholders. This, coupled with my pragmatic thinking and passion for making Santa Cruz safer and more accessible, positions me as a dedicated advocate for all residents.

Thank you for considering my application for the Transportation and Public Works Commission.

38.28 38.29

38.30 38.31

38.32 38.33

38.34 I was driven to (re)apply for these commissions based on the impacts I have seen throughout our community due to the recent storms and the storms we faced last December and January. It is clear to me that these adverse impacts are a direct result of our climate change due to fossil fuels. I am honored to have State Senator John Laird as my personal reference. I will bring that same passion for our community and our environment.

38.35 Joe Thompson
Experienced project manager in union, non-profit, and campaign environments with strong relationship-building skills. Thrives when working on a team and promotes positive and productive work environments, while striving to achieve hard deadlines and goals. Remains calm and focused in challenging and high-stress roles.

38.36 38.37

38.38 Zennon Ulyate-Crow
March 8, 2022
Transportation and Public Works Commission Application
As a UCSC student and well versed transit/mobility activist, I apply to the Transportation and Public Works Commission with a unique set of skills and qualifications.

38.39 But more importantly, I want to introduce a new perspective to the commission not yet heard in its history.

I want to bring my role as a student to the table.

Thank you for considering my application for the Transportation and Public Works Commission.

All the Best,
Zennon Ulyate-Crow

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38.44 Zennon Ulyate-Crow -
Bodie Shargel -
January 2022
Citywide In-Lieu Parking Fee to Fund Active Mobility
and Transit
Context
Parking policy is one of the most interconnected issues municipalities face, affecting housing affordability, access to mobility, transit use, climate change, and neighborhood livability.

This policy will right-size parking requirements to each unique development. Our current minimums paint a broad brush and often result in more parking than would otherwise be constructed. For example, city law mandated that a recent project with 233 student-oriented homes build 214 parking stalls. Students use cars at significantly lower rates, but providing a free parking spot induces them to own a vehicle. If priced similarly to the Downtown In-Lieu fee of $20,000 per space, the project’s 209 parking spots would convert to over $4 million in funds, and that’s just from this one project!
1 38.45
Zennon Ulyate-Crow -
Bodie Shargel -
January 2022
In practice, this policy would hardly ever eliminate all parking spots but instead right-size requirements to anticipated usage. There are still strong incentives for parking construction, from construction financing to customer desires. Furthermore, our current infrastructure is far too car-dependent to facilitate an immediate transition to neighborhoods not reliant on vehicles.

But by using this money to build car-free infrastructure while also gradually reducing parking and creating dense communities, we can achieve the chicken and the egg simultaneously.

Conclusions
While without precedent, this policy will incentivize the necessary transition to a more balanced transportation system while also recognizing our city’s current need for parking. We can lead the nation with this policy, cementing Santa Cruz’s place as an innovative hub for governance and ideas that can tackle the pressing issues of our time. 2 38.46
Sunset Blvd/Hollywood Blvd/Virgil Ave/Hillhurst Ave in Los Angeles, CA

38.47 Huntington Drive/Garfield Ave/Atlantic Blvd/Los Robles Ave in Alhambra, CA

38.48 Water/Soquel/Morrissey in Santa Cruz, CA
Twitter thread explaining each intersection design choices and compliance:
https://twitter.com/zennonuc/status/1378103324335960064?s=20&t=9fi84QQy625j-f1rf8j- g

38.49 38.50
Ulyate-Crow, 2
Context
In California, our transportation infrastructure is failing us. Crippled by congestion, Californians lose $29.1 billion in lost time and fuel annually due to traffic. In Los Angeles alone, commuters spend an extra 5 full days in their cars every year. In the past, we’ve looked to more highway construction and expansion to try and alleviate these issues. However, decades of research have shown highway expansion is counterproductive and futile due to a concept called induced demand. Just look at the $1.1 billion 405 Sepulveda Pass widening project, where travel times through the pass increased by a minute only a year after construction.

Reflecting on all of this, California lawmakers have already recognized that we need to invest in public transportation, the greener, denser, and cheaper option for Californians.

For the solution to fund and sustain transit, we can look back at our recent past.

History
Looking back to the heyday of public transportation in the US in the early 1900s, transit systems were primarily financed not by the fares they generated but by the land they improved.

However, by the 1940s, the era of rail transportation dominance came to an end.

38.51 Ulyate-Crow, 3
sprawl, initially transit agencies turned a year-over-year profit. However, when 40 years had passed, and the rail infrastructure needed a wholesale replacement, no funds were left to finance it. But out of the ashes many countries and companies internationally, especially in Asia, learned from the mistakes of American transit and adopted similar but reformed methods of real-estate development and transit expansion.

Asian transit agencies operate with two key distinctions to ensure financial sustainability.

38.52 Ulyate-Crow, 4
Land-Use Authority & Development
Provision Reasoning
Within ¾ mile of rail transit or
bus-rapid-transit stations, transit agencies
would have full discretionary development
authority over properties they own, essentially
exempting them from any local zoning
restrictions.

Additionally, this will enable the construction
of the densities and uses needed to sustain
transit.

Then the agency will conduct an independent
analysis to determine, based on the rubrics
the state and local municipality submitted,
which project scored the highest.

Additionally, contracting out construction and
development allows smaller agencies without
the expertise to reap the benefits of projects
but outsource the technical skills required.

38.53 Ulyate-Crow, 5
transit, green buildings, and neighborhood
compatibility. This rubric will incorporate
elements from the state to advance regional
priorities; however, it will also include a
portion of weight for local preferences, so
long as these priorities don’t make it
impossible for site development.

In no way is this an exhaustive list, but
hypothetically a weighted rubric would work
on a points system like this:

By allowing the issuance of revenue bonds
against development profits, agencies can
quickly acquire large sums of cash to
purchase land and construct transit projects.

Transit agencies can access a more
dependent form of funding and expand at an
expedited rate by not requiring voter
approval.

38.54 Ulyate-Crow, 6
Transit agencies will have preemptive
purchasing rights to all property within ¾ of a
mile of stations for a period of 15 days after
being on the market.

Giving transit agencies the exclusive right to
place an offer on land before it goes to the
general marketplace shields them from a
bidding war and gives them a better chance
to own more property.

Agencies will be allowed to purchase land
before they announce a project and only have
to disclose these acquisitions every 6
months, giving them time to amass a portfolio
before speculation.

Agencies will be encouraged to engage in
unique property acquisition methods that
don’t necessarily involve traditional
purchasing.

Transit agencies could facilitate this type of

38.55 Ulyate-Crow, 7
adjustment among property owners to
guarantee contiguous and viable pieces of
land.

Agencies are encouraged to “land bank” by
consolidating smaller parcels into larger plots.

38.56 City Council

AGENDA REPORT
DATE: 01/08/2024
AGENDA OF: 01/23/2024
DEPARTMENT: City Clerk
SUBJECT: Water Commission (CC)
RECOMMENDATION: Approve Vice Mayor Golder’s nomination of one Water Commissioner with a term ending January 31, 2027, and appoint one Water Commissioner, atlarge, with a term ending January 31, 2025.

BACKGROUND: At its meeting on January 24, 2023, Council transitioned a number of City commissions to directly appointed members, which includes the Water Commission. In order to maintain a quorum, there was a need to transition in phases, with potentially varying term limits.

DISCUSSION: Vice Mayor Golder’s direct appointment has a term ending January 31, 2027, while the at-large appointment will have a term ending January 31, 2025, at which time the newly elected Councilmembers for Districts 3, 5, and 1 (in that order) will directly appoint members.

The Water Commission allows for one County member, so long as they are a qualified elector who resides outside the City but within the City’s water service area, however that position is not vacant for this application period, and only City residents are eligible to be appointed. The following people are seeking appointment to the Water Commission:

David Green Baskin
Lisa Colombo
Linda Cover
Kent Dannehl
James Mekis
Julianne Rhodes
Joy Schendledecker
William Schultz
Patrice Tanti
Joe Thompson
FISCAL IMPACT: None.

Prepared By:

Bonnie Bush
City Clerk
Submitted By:

Laura Schmidt
Assistant City Manager
Approved By:

Matt Huffaker
City Manager

39.1 ATTACHMENTS:

1. APPLICATIONS.PDF

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39.4 39.5

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39.10 39.11

39.12 Vita - Kent Dannehl
Kent Dannehl
Education
Ph.D. Political Science, University of California, Los
Angeles,June 1991 (expected)
Major Fields: Political Theory, Public Law
Minor Fields: American Political Thought, Approaches
to the Analysis of
Political Consciousness.

M.A.University of California, Los Angeles, 1987;
Political Science
B.A.Merrill College, University of California, Santa Cruz, 1978;
College Honors, Honors in Politics, Honors on the
Comprehensive Exam.

New College, Oxford, Admitted to study for B.Phil but
withdrew for personal
reasons after one term, 1979-80.

Major field: Politics
Dissertation
Title "Property and the Resilience of Modernity".

SupervisorE. Victor Wolfenstein
Professional Experience
Teaching Assistant, University of California, Santa Cruz Upper division courses:

Politics 104 A, American Political Thought (Fall 1988 & 90) Politics 104 B, American Political Thought (Winter 1989) Politics 105 A, Classical Political Theory (Fall 1989)
Politics 105 C, Modern Political Theory (Spring 1990)
Lower division courses:

Politics 33 - Theories of Political Freedom (Spring 1989) Legal Studies 80 - Introduction to Legal Studies (Winter 1990) Teaching Assistant, University of California, Los Angeles Upper division courses:

Political Science 170 - Anglo-American Legal Systems (Winter 1987) Lower division courses:

Political Science 6 - Statistics (Fall 1985 & Spring 1987)

39.13 Political Science 10 - Introduction to Political Theory (Winter 1986 & 88Spring 1986, Fall 1987
Political Science 70 - History of the Supreme Court (Fall 1986, Spring 88)
Research Assistant, University of California, Santa Cruz Richard Wasserstrom 1989-90:

Worked to find and identify theories of mitigation in use in state and federal death penalty cases
and in the academic literature surrounding such cases.

University Related Experience
Member, Graduate Student Association, Space Allocation Committee, 1986-87
Graduate Student Member, Department of Political Science, Graduate Studies Advisory
Committee 1987-88.

Work Experience
Assistant Director, London Nelson Community Center, City of Santa Cruz, 1982-84.

Grant Writer and Administrator, Legal Aid Society of Santa Cruz County, Inc. 1980-82
Academic and Teaching Honors
University of California, University Fellow 1984-85
University of California, Los Angeles. Teaching Assistant Trainer 1988-89.

As trainer I was responsible for training all first year TA's in our department [13]. This position
is awarded annually by the department on a competitive basis based on performance as a Teaching
Assistant.

References
E. Victor Wolfenstein, University of California, Los Angeles, Department of Political Science, 405 Hilgard Avenue, Los Angeles, California 90024-1472,
Office .

Dept. office .

Leonard Binder, University of California, Los Angeles, Department of Political Science, 405 Hilgard Avenue, Los Angeles, California, 90024-1472,
Office .

Dept. office .

John Schaar, Politics, Kresge College, University of California, Santa Cruz; Santa Cruz, California, 95064.

39.14 Office .

Faculty Message Center
Abstract
Political theory and social thinking as a whole seem tired of being modern. From as many directions as social theorists can develop there have been attempts to end modernity as well as the institutions that make it up. We are post-industrial, post-ideological, posthistorical, post-liberal, post structural and of course post-modern.

In the face of this, however, some of the basic institutions and relationships associated with modernity not only survive but seem to grow stronger. I believe that central to this strength is the conception of freedom usually associated with the modern state.

I argue that some help in developing an understanding of the strength of the `modern' understanding of freedom as well as why various alternatives have seemed fruitless can be found in a theoretical conversation between Hegel, Marx and Arendt. The terrain for such a conversation is charted by Aristotle's assertion that for political freedom to exist and develop the oikos necessarily must be subservient to, regulated by, and kept separate from, the realm of political action and freedom.

Modernity, Hegel argues, has overcome that necessary separation not by regulating necessity to a realm outside of politics, but by recognizing and integrating necessity within a rational whole. The first step toward such an integration Hegel thought was accomplished when the socially recognized relationships defined by property could be rationally actualized within an ethical life. `Property' for Hegel functions in two ways. While one side of this formulation has been familiar to us in one form or another since Marx, I believe that it is the other side which is more important to an understanding of the strength of modernity. The more familiar side of the formulation points out that we somehow `actualize' ourselves in our property and the social relations defined by that property, but equally important Hegel believed--and more so in understanding the resilience of modernity--is the fact that in our property we both discover and define ourselves. Thus we not only actualize our aims, we also create and discover ourselves. For Hegel in things we first begin to find ourselves. In modern property we begin to see ourselves as individuals who should be `free'.

While Hegel believed that this most basic mode of self discovery would be "raised up" or "abolished" [aufheben] by later `higher' methods of spiritual expression, I claim, along with Marx, that in modern bourgeois capitalism this is not always--or even usually--the case.

For Marx, as for Aristotle, political life cannot be reconciled with private interest.Unlike Aristotle and like Hegel, Marx believed that although modernity had not yet resolved Aristotle's dilemma, it had certainly created the conditions for its solution. Rather than recognizing and integrating such `private property' relations into Hegel's rational whole, modern productive forces make it possible to abolish them. Thus, Marx believes modernity has made it possible to remove the influence of the contemporary oikos by making it possible to abolish the necessity on which it is based. This is done by abolishing the property relations on which it and its politics are based and then politicizing or re-politicizing its management.

I assert, along with Arendt, that this too, is not likely to

39.15 achieve its goal. Even if Marx's intuitions [along with Hegel's] were correct that such relations can be [and indeed are] enslaving, they cannot be abolished or made political. That attempt is much more likely to result in some variation of bureaucratic managerial privatism more interested in its own survival than in political freedom. Thus Arendt is correct to argue that Hegel is wrong to politically recognize and legitimate `private' property relations, and that Marx is wrong if he intends only to try either to abolish such relations, or to manage them publicly.

Still, by asserting laboring and working men and women are necessity bound and hence `anti-political', Arendt fails to clearly address the ways in which all human relationships, including those dictated by necessity, are constitutive and self-revelatory.I conclude this section by arguing that Hegel offers a compelling understanding of how `free individuality' is created together with how such individuals necessarily create and recreate the political institutions associated with modernity. We `discover' or `find' ourselves in fundamental ways in our property and thus, when given a chance, recreate the institutions which were an important part of that discovery.

Nevertheless, for reasons best articulated by Marx and Arendt, the `ourselves' we find there often fail to achieve the rational freedom Hegel so desired. However, neither Marx, with his attempt to abolish the property relations which characterize modernity, nor Arendt, by linking them to our `animal' or `private' selves and thus somehow dislodging them from the discourse concerning `political freedom', are able to formulate a better solution to what I have characterized as the Aristotelian dilemma. They do nonetheless suggest what a truly "post-modern" or "post-Hegelian" theory must try to do.

Returning to the question of `post-modernity' the last section of the dissertation argues that many of the `post-modern' political theories are somewhat mis-designated. The post modern claim cannot be supported so long as it is grounded in the same self-actualizing `free subjectivity' created by modern institutions.

Course Work[1984-90]
Courses Completed
F 84 Political Science as a Discipline John Petrocik
F 84 Quantitative MethodsThad Brown
W 85 Hegel's Phenomenology E. Victor Wolfenstein
W 85 Probability TheoryThad Brown
W 85 Habermas and Critical TheoryRichard Ashcraft
S 85 Hegel's Phenomenology (con't) E. Victor Wolfenstein S 85 I.S. Locke & Hume Richard Ashcraft
F 85 Theories of Participation Duane Smith & Blair
Campbell
F 85 Topics in Constitutional LawRobert Welch
W 86 Contemporary Constitutional TheoryRobert Welch
W 86 Topics in Constitutional LawRichard Funston
S 86 Consciousness and Political Knowledge Leonard Binder F 86 Liberalism and the Individual Duane Smith
W 87 Hegel's Philosophy of Right E. Victor Wolfenstein
W 88 Politics and the LawBruce Cain & Dan
Lowenstein
W 90 Aristotle and Political EqualityPeter Euben
Courses Audited

39.16 S 87 Conceptual Approaches to Social Science Leonard Binder W 88 Politics and Textual Interpretation Sheldon Wolin
F 88 The Nature of Political ThinkingJohn Schaar
W 89 Kant's Political Theory Robert Meister

39.17 Kent Dannehl
, Santa Cruz, California 95060

PROFILE
Over twenty-five years’ experience in the software industry as a software, tools, servlet and web service developer, writer, instructor, and instructional developer. Also, have 6 years experience as a University and Community College political science teacher and statistical researcher. I am an exceptional team member well skilled at moving between development, writing, and instructional tasks.

EDUCATION
Doctoral Candidate
University of California, Los Angeles
June 1991
Dissertation topic: Property and the Resilience of Modernity Major Fields: Political Theory, Public Law
Minor Fields: American Political History, American Political Thought Advanced to candidacy, but left graduate school to take a position in a software development group as a writer.

Master of Arts
University of California, Los Angeles
June 1987
Major Field: Computer Applications in Social Science, Statistical Methodology Bachelor of Arts
University of California, Santa Cruz
College Honors, Merrill College UCSC
Honors in Politics
Honors on the Politics Comprehensive Exam.
1978

PUBLICATIONS
UNIX Commands by Example: a desktop command reference for UnixWare, Solaris, and SCO UNIX; New York; PTR Prentice Hall, 1994
Co-authored with David Elboth and P.C. Larsen. This book is a command reference to networking, X and administration commands for SCO UNIX, Solaris and UnixWare. This book is still available on Amazon.com.

Conference Papers
“Hegel, Property and Modernity"
Delivered at the 1992 Annual Meeting of the American Political Science Association. "The Supreme Court's Theory of Constitutional Representation: Bandemer and Partisan Gerrymandering"
Delivered at the 1993 Annual Meeting of the Western Political Science Association.

39.18 EXPERIENCE
I have over 35 years combined experience teaching political science and working in the software industry as a writer, editor, information architect, instructor, and software developer. Below is a partial list of positions I have held
Senior Technical Writer February 2004-2009
Microsoft, Mountain View, California
Current writing responsibilities include designing, developing, writing, and maintaining Application Interface (API) and Troubleshooting references for Microsoft TV’s IPTV and Foundation Edition Television products. I am responsible for both stand-alone hard-copy documentation and .chm-based online documentation used by third-party developers.

Publications Project Lead October 1996 to January 2003
Starfish Software, Scotts Valley, California
Throughout most of my tenure at Starfish, I managed one or two contract technical writers and delivered all server application interface (API) documentation. I created and wrote most of the TrueSync server API documentation, the majority of the user portal documentation, and Java servlets that would return sample XML data for developers using the Starfish API.

I was also responsible for creating and teaching online training courses for developers. Customers for the courses included developers at IBM, Motorola, and Excite.

While at Starfish I also designed, developed, and implemented a multi-platform HTML-based help system for the Java/AWT Personal In-formation Manager (PIM) and the “Internet Sidekick” servletbased PIM. I wrote tools in awk and sed to generate navigational documents “on the fly” from HTML source.

Political Science Instructor Spring 1995
Cabrillo College, Aptos, California
Political Science 1, Introduction to US Government
Teaching Fellow Summer quarter 1992
University of California, Santa Cruz
Politics 33, Political Freedom
University Fellow September 1984 to June 1986
University of California, Los Angeles
Teaching Fellow Fall 1988 to June 1989
Political Science 355, Practical Teaching. Responsible for training all first-year teaching assistants in UCLA’s Department of Political Science.

39.19 Kent Dannehl
Santa Cruz, California
(W)
email:

Summary
Java and web applications developer, and project manager with over six years’ experience in the design, implementation and documentation of Starfish Software’s TrueSync middleware servers. This experience includes J2EE compliant java servlet design and development, JSP development, XML/XSLT development and HTML/JavaScript design and development.

As a development team member I have:
 designed, coded and implemented a java-based, J2EE compliant synchronization server used by Excite, General Magic, H3G, IBM (part of WebSphere), Motorola, and others
 designed, coded and implemented a java J2EE compliant servlet-based Personal Information Manager used by thousands of users at Excite, General Magic, H3G, IBM (part of WebSphere), Motorola, and others .  designed and coded an XML/XSLT interface for the Starfish Personal Information Manger.  designed and coded and XML/XSLT, java servlet based, web SyncML Device Manager.  designed and coded a java servlet based help system for the Starfish Personal Information Manager.  structured and wrote the server/servlet API documentation for developers at IBM, H3G, Excite and others.  created online training courses in covering the TrueSync server and online PIM for OEM developers I can use, and am very familiar with Linux, SCO and Sun’s UNIX implementations, Motif and CDE desktops, and the different flavors of Windows. I thrive on challenging opportunities that necessitate integrating my talents as an engineer with my talents as a senior writer.

Technical Summary
Programming Languages C#, Java
Scripting Languages WordBasic, PERL, JavaScript, XSLT, Shell, Awk, Flash.

Web programming
technologies
J2EE, JSP, XML, HTTP, HTML, DHTML, SYNCML, WML
Database Technologies JDBC, SQL, ORACLE 7, SAS, SPSS
Text Processing Technologies HomeSite, TROFF, NROFF, SED , AWK Adobe FrameMaker, Acrobat, and Photoshop , Word (many
versions)
Operating Systems Solaris, SCO UNIX, Linux (several flavors), Windows (all flavors), IBM MVS, IBM CMS,

39.20 Professional Experience
September 2013 to October 2020
Ericsson MediaKind
Santa Clara, California
Microsoft sold their TV software to Ericsson in June 2013. My work there continued as listed below.

February 2004 to September 2013
Microsoft (Microsoft TV products)
Mountain View, California
Microsoft TV offers digital TV software to enhance the viewing experience of consumers and the business of broadband network operators including Comcast, Verizon and others. Microsoft TV solutions support the features that operators need to deliver competitive services today and they continue to develop new solutions to enable the digital TV networks, content, services and connected experiences of tomorrow.

Recent Responsibilities
Builder
Assisted in all aspects of document production. Developed, operated and maintained a complex, automated, C#/Excel/Word/Perl-based documentation build process. Shared in a broad range of production-related activities, including managing, configuring, debugging, and fixing document builds; reworking Word documents to comply with formatting guidelines; debugging and repairing corrupted Word documents; developing training programs and providing training and support to a team of twelve writers in the use of customized, Word-based authoring tools as well as writing and maintaining an internal Help system documenting the build process as well as the authoring tools and processes.

August 2003 to October 2003
SUN iForce Partner Products
San Jose, California
Sun iForce Partner Products manages the Developer Contact Centers and the Sun Partner Products Catalog using a web based user portal. The user portal is a set of business processes and a Web site, which allows Sun Microsystems Inc. to collect data from companies developing products on Sun platforms when they join the iForce[sm] Partner Program.

The Web site allows representatives of Sun, including Developer Contact Centers (DCCs) and Membership Administrators to view, validate, and modify the data. Each of these groups has distinct and separate interfaces (portals), which will provide information and functionality tailored to their needs.

Recent Responsibilities
Senior Writer
Before the project was severely cut back in October, I worked closely with engineers to write functional and technical specifications for this project. I also participated in the redesign of the existing DCC portals. I was also responsible for writing Developer Coding Guidelines, and a Data Dictionary.

Starfish Software (October 1996 to January 03)
Scotts Valley, California
Starfish Software made TrueSync -- one of the most widely used data synchronization solutions in the world. The TrueSync infrastructure is designed to provide end-to-end synchronization for wireless data services, enterprise application servers (such as iPlanet, Microsoft Outlook, or Lotus Notes), Mobile Devices (such as Personal Digital Assistants and phones), and corporate infrastructures. The TrueSync technology platform is a comprehensive set of wireless and wireline synchronization products and solutions.

TrueSync Server Products and Solutions are written almost entirely in Java and provide multi-tier over-the-air and wireline synchronization between a heterogeneous mix of devices, applications and services.

39.21 Most Recent Responsibilities
Engineer I & II, Internet Sidekick/TrueSync.com (August 1998 to January 2003) Responsible for developing and maintaining major parts of the “Internet Sidekick” servlet and its XML, JSP and HTML client interface. The Internet Sidekick is a java-servlet-based personal information manager application for accessing and manipulating personal information data stored in the TrueSync data store. The Internet Sidekick servlet is written in java and runs on any J2EE compliant HTTP server (e.g. Tomcat or Apache). It accesses data directly from an Oracle database (reads) or through the TrueSync middleware server (writes and reads). The Internet Sidekick client templates utilize XML, XSLT, JSP, JavaScript and forms to solicit, present and manipulate data maintained by the TrueSync server.

I was responsible for maintaining all the Java-based servlet modules and developing new XML based Personal Information Manager (PIM) modules utilizing JSP, XML and XSLT. When last I checked, the “Internet Sidekick” could be seen online at www.starfish.com.

Engineer II, Simplify Device Manager (September 2002 to January 20003) As a member of the development team, I was responsible for developing a java servlet based interface for Starfish’s “Simplify” device manager. Device management encompasses technologies utilized by wireless operators and corporate IT departments to perform complex remote configuration of mobile devices on behalf of end users. Responsible for servlet development as well as the XML/XSLT based client interface. As the interface developer on this project, I worked with the Human Factors team to create a web-based interface for the TrueSync device manager and then (with others) created the servlet and supporting XML to implement it.

Publications Project Lead (October 1996 to August 1998) As needed, I managed 2 contract technical writers and delivered all server application interface (API) documentation.

Created the TrueSync server API documentation set and wrote a large part of the documentation. Customers for the documentation include developers at IBM, Motorola, and Excite.

Technical Trainer (September 1999 to November 2002)
As needed, I created server API courses for Starfish server customers. Created the course framework as well as a series of on-line labs. These courses taught developers how to install, configure and start programming against the TrueSync server API.

Project Manager TrueSync Sync Adaptor for Exchange (November 2001 to August 2002) Took over management of this project mid way through the product development cycle. Managed and coordinated a development project creating new product for TrueSync customers. TS SyncAdaptor for exchange enabled the TS middleware server to Synchronize PIM data between Microsoft’s Exchange server and all the supported TrueSync clients.

I project-managed the development, documentation, integration and QA efforts for this product. Delivered product to customer on budget and on time.

SunSoft Developer Products (August 1995 to October 1996) Menlo Park, California
Sun WorkShop
Documentation Lead
As a senior documentation lead, I was Responsible for delivering RAD ScreenPlay (a multi-media authoring tool) online videos for the WorkShop – a suite of tools for professional developers. Also responsible for resolving all issues involving ScreenPlay, documenting WorkShop Projects, and building and testing for integration the online documentation.

Santa Cruz Operation - SCO (June 1991- 1995)
Joint Application Design Team (JAD)
As an engineering member of the JAD team, I helped architect the design and change control process for SCO Open Server Release 5.0. The JAD process assembles all the principals involved in software application design and then creates a design process that can deal with the inevitable changes to software design and functionality that occur during a long software development cycle.

Advanced Hardware Developers Kit (AHDK)
Worked closely with X and network engineers to write the X Link Kit Guide and parts of the Networking and TTY Drivers Guide. These guides provide assistance to developers writing device drivers for existing and future SCO operating systems

39.22 On-line Help
As one of the technical leads, I helped design the new NCSA Mosaic-based, on-line help system for SCO Open Server Release 5.0. I coordinated part of the effort to architect, document and implement a new on-line documentation system based on Mosaic Release 2.4 (help browser) and HTTP Release 1.4 (HTTP server). I worked closely with information architects, X and usability engineers to guarantee that the new documentation system was state of the art.

Publications and Papers
UNIX Commands by Example: A desktop command reference for UnixWare, Solaris, and SCO UNIX Written in conjunction with David Elboth and P.C. Larsen. This book is a command reference to networking, X and administration commands for SCO UNIX, Solaris and UnixWare. Published by Prentice-Hall in August 1994.

Education
University of California, Los Angeles
Los Angeles, California
Ph.C., M.A. Political Science
Major Fields: Political Theory, Public Law
Minor Fields: Statistical Applications and Methodology
The Candidate in Philosophy (Ph. C) is awarded to graduate students upon completion of all Ph.D requirements prior to the dissertation
While enrolled at the University, I taught classes in American Political Thought, Political Theory, Constitutional Law, Statistics and Practical Teaching.

New College,
Oxford, England
Admitted to study for D.Phil but withdrew for personal reasons after one term, 1979-80.

Major field: Politics
University of California, Santa Cruz
Santa Cruz, California
BA. Politics
College Honors
Honors in the major
References
Available on request
Kent Dannehl
Santa Cruz, CA 95060

Email:

39.23 Summary
 Over 35 years of experience as a software developer, project lead, technical writer, editor, information architect and instructor
 SQL language experience (SQL) and the ability to create and customize software C# tools using SQL on the backend
 Skilled developer of C#, Perl, Shell, PowerShell and msbuild build tools  Scripting language experience (Windows and Linux) from the perspective of the user and the installer/administrator
 Ability to develop new technology, modify the structure of existing products and provide technical guidance to complex projects
 Extenssive experience with development tools such as TFS. Artifactory, Git, Jenkins, Jira, and Confluenc  Experience in project management and the ability to lead and provide guidance to a tools development team.

Job Objective
Obtain a challenging position as a tools software developer on a team connected to creating and maintaining tools that make use of my creative abilities, analytical skills and strong knowledge of advanced tools technologies.

Experience
Software Developer IV
Ericsson Inc 2795 Augustine Drive, Santa Clara, CA
Create and customize software SQL build and development tools Develop C#, Perl, Shell, PowerShell and msbuild build tools Use scripting languages (Windows and Linux) from the perspective of the software developer and the installer/administrator
Develop new tools technology, modify the structure of existing products and provide technical guidance to complex projects
Install update and manage development tools including Artifactory, TFS, Gitlab, Jenkins, Jira, and Confluence.

Lead and manage miscellaneous development projects as well as mentor tools development team.

Software Developers, Systems Software
Microsoft Corp 1065 La Avenida St # Sv1, Mountain View, CA  Create and customize software SQL build and development tools  Develop C#, Perl, Shell, PowerShell and msbuild build tools  Use scripting languages (Windows and Linux) from the perspective of the software developer and the installer/administrator
 Develop new tools technology, modify the structure of existing products and provide technical guidance to complex projects
 Install update and manage development tools including Artifactory, TFS, Gitlab, Jenkins, Jira, and Confluence.  Lead and manage miscellaneous development projects as well as mentor tools development team.

Education
Issuing Institution Location Degree Received Course of Study University of California, Los Angeles Los Angeles, CA Master's Degree Political Science

39.24 Skills
Publications and Papers
Published Publicly
UNIX Commands by Example: A desktop command reference for UnixWare, Solaris, and SCO UNIX Co-authored with David Elboth and P.C. Larsen. This book is a command reference to networking, X and administration commands for SCO UNIX, Solaris and UnixWare. Published by Prentice-Hall in August 1994. This book is still available on Amazon.com.

Partial List of Books written (either individually or part of a team) while at SCO, SUN, and Starfish (listed chronologically by employer)

1. SCO: “Building X Display Drivers with the X Server Link Kit’’.

2. SCO: “ Configuring Network Connections”.

3. SCO: “Kernel Driver Interface Guide’’ (team member).

4. SCO: “SCO UNIX Development System Encyclopedia’’ (team member – wrote over 60 articles).

5. SCO: “Using SCOHelp’’.

6. SCO: “Adding information to SCOHelp”.

7. SUN: Sun WorkShop: Beyond the Basics (team member—wrote 3 chapters).

8. SUN: Sun WorkShop: Getting Started (team member – wrote 3 chapters).

9. Starfish: Using the TrueSync Event API to Fetch, Store and Synchronize Events.

10. Starfish: Using the TrueSync Contacts API to Fetch, Store and Synchronize Contacts.

11. Starfish: Using the TrueSync Tasks API to Fetch, Store and Synchronize Tasks.

12. Starfish: Using the TrueSync Notes API to Fetch, Store and Synchronize Notes.

13. Starfish: Using the TrueSyn
Additional Comments
References Available on Request

39.25 39.26

39.27 James Mekis
, Santa Cruz, CA 95060 • •
Product and Management Leader
Technology • Production
Successful problem solver with more than twenty years of management results.

Production & Business Workflow / Technology Assessment & Integration / eCommerce Development / Cross-functional Leadership / Project Management / Innovation

PROFESSIONAL EXPERIENCE
Semi-Retired, Santa Cruz, CA 2014 to-date
Community & Industry
Continuing contributions: Santa Cruz Water Commission 2016-2019, Cal Poly advisory board, and further development of automation interoperability standards for the printing industry.

Mekis Associates, Sunnyvale & Santa Cruz, CA 2001 – 2014 Principal
Last primary client was Caslon & Company, the management company of PODi, a digital printing trade and standards organization. Responsibilities included:
• PODi Director of Technology, driving development of PPML, the XML variable data publishing language. Three releases completed, also developed testing tools and a certification program now used by HP, Canon, Xerox, and more. • Develop unique tools, training materials & website for service providers, assisting them to better position their products and successfully grow sales. • Speaking to groups internationally on the power of relevant marketing campaigns.

Independent consultant. Projects for manufacturers included:
• Extended contract as Product Manager and Industry Expert for the creation of a webbased print procurement and JDF creation product developed by Heidelberg, the world's largest manufacturer of printing equipment.
• Developed new distance-learning products and partnerships for I.O. Technologies • Consultant for Hewlett-Packard to assist commercial printers in developing digital color workflow and business plan.
• Consultant for EFI on product positioning of Fiery embedded servers Also consulted for commercial printers on digital printing/variable data feasibility, and was speaker for events on industry trend topics.

EFI (Electronics for Imaging), Fremont, CA 2004 – 2005
Sr. Manager, Product Strategy & Marketing
Created vision and direction, re-focusing a $40M+ Fiery embedded color market segment:
• Developed new market requirements and guidance.
• Drove development of user-friendly tools and workflow functionality to address this Multi-Function Printer (MFP) segment for power-user customers. • Segment market requirements included a new drivers, web-browser interface, authentication and security features that were completed in less than half the anticipated time with a highly focused hands-on small-team approach.

Impresse Corp., Sunnyvale, CA 1999 – 2001
Director, Commercial Print Solutions

39.28 James Mekis, continued

Page 2 of 2 ends

Guided Impresse’s integration and standards functionality in this technical marketing role, creating partnerships and education efforts around the benefits which collaboration tools and workflow automation bring to the broader printing industry. This included:
• Subject matter expert; providing industry specific knowledge and user requirements to guide product development.
• Requested speaker at printing industry events on the topics of print eProcurement, workflow automation, and emerging automation standards, such as JDF. • Originated the Impresse/Cisco business development partnership. • PrintTalk creation. While employed by Impresse, Co-founded and managed development of PrintTalk, an XML messaging standard to automate communication between the business systems used by print buyers and those used by their printers. PrintTalk is now tightly integrated within the widely supported JDF (Job Definition Format) industry standard.

GEORGE Lithograph, Brisbane, CA 1987 – 1999
Director, Technology Development (and co-owner)
In 1989, George Lithograph had no digital production capabilities. By 1999, George was widely considered an innovative technology leader. The company grew sales from $11 million in 1988 to $60+ million in 1999, placing it within the printing industry's top 1% in annual sales. My technology restructuring efforts contributed to the outstanding valuation received when we sold the company in 1998.

Created and operated George’s strategic workflow and integration program. This multimillion dollar program identified & developed technology "edges" that enabled George to expand in its high-tech marketplace. I created technology strategy, implementation and infrastructure; negotiated capital equipment purchases, managed integration and training.

Registered the Internet domain name George.com in 1992 and fired-up servers for email, FTP and Web to accelerate business relationships, years before competitors.

Speaker on workflow innovation for Viewpoint, Digital Smart Factory, Seybold & Xplor conferences.

PROFESSIONAL & EDUCATION
Advisory Board, Graphic Communications Department, California Polytechnic State University, San Luis Obispo, CA 2003 to-date. http://www.grc.calpoly.edu/industry/graphiccommunication-department-advisory-board Advisory Board, CIP4 (The International Cooperation for the Integration of Processes in Prepress, Press and Postpress), based in Zurich, Switzerland 2002-2004, 2006-2008, and 2010-2012. www.cip4.org/
Co-Chair, JDF Product Description workgroup, within CIP4, 2001 to-date.

Cal Poly, California Polytechnic State University at San Luis Obispo BSc Bachelor of Science degree in Graphic Communications Technology and Management, 1972

39.29 39.30

39.31 39.32

39.33 39.34

39.35 39.36

39.37 39.38

39.39 I was driven to (re)apply for these commissions based on the impacts I have seen throughout our community due to the recent storms and the storms we faced last December and January. It is clear to me that these adverse impacts are a direct result of our climate change due to fossil fuels. I am honored to have State Senator John Laird as my personal reference. I will bring that same passion for our community and our environment.

39.40 Joe Thompson
Experienced project manager in union, non-profit, and campaign environments with strong relationship-building skills. Thrives when working on a team and promotes positive and productive work environments, while striving to achieve hard deadlines and goals. Remains calm and focused in challenging and high-stress roles.

39.41 CITY COUNCIL

AGENDA REPORT
DATE: January 5, 2024
AGENDA OF:

DEPARTMENT:

January 23, 2024
Planning & Community Development and Economic Development & Housing
SUBJECT: Impact Report on the Effect of the Proposed Housing for People Initiative (Measure M) (PL/ED)
RECOMMENDATION: Accept the impact report on the effect of the proposed Housing for People initiative (Measure M) and, should the Council choose to do so, vote to take a formal position on the measure.

BACKGROUND: On October 24, 2023, the City Council provided direction to prepare a report on the Housing for People initiative (Measure M), including an analysis of relevant information in California Elections Code Section 9212 and as described in the October 24, 2023 agenda report attached hereto. Council directed that the impact report be presented to Council no later than the February 13, 2024 hearing to allow for timely distribution and discussion prior to the March 5, 2024 election day. Council also directed that staff may seek assistance from a qualified consultant in preparing the impact report.

In response to Council direction, staff issued a Request for Proposals and selected Keyser Marston Associates (KMA) to prepare the report. The impartial analysis prepared by Keyser Marston is attached.

DISCUSSION: Measure M would amend the City’s Municipal Code to prohibit the City Council from amending the City’s General Plan or Zoning Ordinance in a way that increases allowable height limits or floor area ratios (FARs)1 for development projects in any zoning district without a prior vote of the people. The measure would also increase the City’s inclusionary housing requirements to at least 25% for developments with 30 or more units. The following conclusions are explicitly made or derived from KMA’s analyses. KMA’s full analysis contains the detailed explanations and evaluation leading to the conclusions below, and in some instances, additional information is also provided later in this staff report. 1 FAR is a measure of how much square footage is constructed or allowed on a site as compared to the square footage of the site itself.

40.1 Summary of Conclusions from KMA’s Analysis of Measure M

1. Measure M has Broad Applicability
a. Measure M applies citywide in all Zoning Districts and to all General Plan Designations.
b. The measure would necessitate voter approval for a broad range of changes to the Zoning Ordinance, Zoning Map, General Plan, or General Plan Land Use Map, when said changes result in increased FAR or height allowances but not limited to direct changes to FAR and height, because changes to regulations such as setbacks, building separations, lot coverage, or number of stories could require voter approval.
c. The voter approval noted above would potentially impact a broad range of projects, including but not limited to 100% affordable projects, single-family homes, accessory dwelling units (ADUs), fences, commercial buildings, industrial buildings, mixed-use projects, and public buildings.

2. Measure M will Constrain Housing Supply
a. The inclusionary requirements in Measure M will reduce affordable housing production and market rate housing production.
b. KMA evaluated rental and ownership housing projects, and neither development type was feasible at a 25% inclusionary rate, including when considering the State Density Bonus Law.
c. Measure M increases developer risk when a vote is required. A vote results in additional time, additional costs, and increased uncertainty, each of which will discourage development.
d. Measure M would make it more challenging to meet the City’s Regional Housing Needs Allocation (RHNA) targets from the State, which, if not achieved, has a range of implications, including a loss of local land use control through California Government Code 65913.4 housing development application streamlining requirements (Senate Bill (SB) 35 legislation).

3. Measure M would Constrain the City’s Ability to Comply with State Law Requirements a. Measure M’s inclusionary housing requirements are confiscatory, deprive property owners of a fair and reasonable return on their investment, and act as a constraint to housing, all of which conflict with State law and associated case law. b. When the City is not meeting its RHNA targets, the City’s State-certified Housing Element calls for the City to take additional actions to promote housing production, and Measure M would make it more challenging to enact those changes, as some of those actions would require voter approval under Measure M. c. The Housing Element also calls for a range of additional actions that would or could trigger voter approval, meaning that it will be more time consuming, more costly, and more uncertain as to the outcome.
d. If the City is not enacting policy changes required by its Housing Element, the State can decertify the City’s Housing Element, which has a range of implications, such as reduced funding for affordable housing and housing development projects being able to ignore local land use laws. e. Measure M would make it more challenging to change City rules to comply with State legislation, as State legislation would routinely require a vote of the people.

40.2 4. Measure M has a Significantly Negative Fiscal Impact a. Each ballot measure currently costs the City and taxpayers between $115,000 and $185,000.
b. Measure M is expected to result in at least one and likely more than one ballot measure per year.

As outlined above and as further detailed in KMA’s impartial analysis, Measure M would create barriers to the City achieving its housing goals, increase developer risks and costs, create significant additional cost to taxpayers, and require an infeasible inclusionary housing percentage that will reduce the amount of affordable housing and market rate housing that will be built.

The following two sections provide additional detail regarding recent State legislation that could trigger a vote of the people under Measure M and provide some of the potential impacts the measure would create in regard to the City achieving its recently-adopted Housing Element objectives.

State Legislation Triggers Votes of the People
While Measure M seems to focus on specific changes to the General Plan or Zoning Ordinance being proposed in City-led planning processes or by developers of homes, numerous State law changes would also trigger the need for a vote of the people under the measure. The State has allowed for increased height or FAR beyond the City’s General Plan or Zoning Ordinance many times recently. While the City must follow State law from the date the law goes into effect, fully complying with these laws and providing transparency with respect to applicable development allowances would still require a formal amendment (typically to the Zoning Ordinance), thus triggering a vote of the people under the measure. Each vote would be expensive, and the outcome of the vote would not affect what a developer could do, only whether City codes could be updated to reflect State mandates, because the City would have to comply with State law regardless, or face legal jeopardy.

Below is a sample list of recent legislation that would, under the measure, trigger the need for a vote of the people in order to fully comply with State law through changes to the City’s Zoning Ordinance or General Plan to match State law requirements. A vote would be triggered because the bills allow for additional FAR or height beyond what is allowed in the Zoning Ordinance or General Plan, and changing the Zoning Ordinance or General Plan to match State law would trigger a vote of the people under the measure.
2019 Legislation
 AB 68, AB 881, and SB 13 are a package of accessory dwelling unit (ADU) bills that removed parking requirements, parking replacement requirements, removed lot coverage requirement, decreased setback requirements, and increased maximum square footage allowances. They allowed for more square feet of housing than would have been allowed previously under the existing ADU development standards in the Zoning Ordinance.  AB 1763 created an 80% Density Bonus and a 33-foot height increase for 100% affordable housing. This was an increase beyond the 35% Density Bonus for all projects prior to the bill and provided for more FAR and height than the Zoning Ordinance allowed at the time.

40.3 2020 Legislation
 AB 2345 created a 50% Density Bonus for all projects, an increase beyond the 35% Density Bonus for market-rate projects at the time. This bill provided for more FAR than the Zoning Ordinance allowed at the time.
 AB 3162 expanded Accessory Dwelling Unit (ADU) and Junior ADU (JADU) allowances to increase allowable square footage (FAR) in residential zones beyond existing standards in the Zoning Ordinance.
2021 Legislation
 SB 9 increased density and square footage (FAR) in single-family residential zones by allowing property owners to build two primary homes on one lot (exclusive of ADUs/JADUs) or split the lot one time to allow for primary homes on two separate lots.  SB 478 increased the minimum FAR for projects in areas that allow between two and ten units. The bill required that lot size minimums and lot coverage requirements cannot physically preclude development at these minimum FARs. This law meant that existing height or density standards could be superseded in certain scenarios. 2022 Legislation
 AB 916 increased height allowances, reduced setbacks, and removed front yard lot coverage and lot size requirements.
 AB 2295 allowed multifamily housing projects to be proposed on school property by local educational agencies. Schools are typically located in Public Facility zoning that did not allow multifamily residential previously and this law could result in increased height to meet the allowed development FAR.
 AB 2011 allowed for qualifying residential development to be located in zones that previously only allowed for commercial or mixed-use development at heights potentially greater than the existing Zoning Ordinance.
2023 Legislation
 AB 1287 created a 100% Density Bonus for projects that meet the initial 50% Density Bonus and then provide another 15% of the units at the Moderate Income affordability level. This bill provides for more FAR and height than the Zoning Ordinance currently allows.
 SB 4 is the “Yes in God’s Backyard” bill that allows for qualifying multifamily projects on land owned by faith institutions. Churches are typically in single-family zoning, so this would allow for additional FAR beyond existing standards.  SB 684 allows for ministerial approval of up to 10-unit housing projects in multi-family zoning. It provides that subdivided lots under this law must allow at least 20 units to the acre in density despite any standards in place that would otherwise not allow that density.

This would increase allowable FAR and/or heights in certain circumstances.

40.4 Potential Impact on the City’s Housing Element
The 6th Cycle Housing Element Update was just found, in December 2023, to be in substantial compliance by the State of California, capping off 18 months of work with the community, stakeholders, housing advocates, the Planning Commission, the Council Subcommittee, and the City Council to create policies and actions that help the City achieve its housing goals and meet the diverse housing needs of the community, including but not limited to housing and housing support services for individuals and households at all income levels. The Housing Element policies and action items received substantial support during this process. However, at least thirteen of these action items could or would require a vote of the people under Measure M and, if not approved, could jeopardize the State’s certification of the City’s Housing Element. This would result in the “builder’s remedy” taking effect in Santa Cruz (so housing developers meeting certain standards would not have to follow any local land use regulations), would eliminate the City’s ability to apply for certain grant funds, and would remove the City’s ProHousing Designation, which provides the City a competitive advantage in securing grant funds.

The sections below contain additional information related to this.

A selection of action items from the Housing Element that could or would require a vote of the people under Measure M are detailed below. The Housing Element objectives are shown in italics, with brief analysis following the objective that describes the impactions from Measure M on the City’s ability to achieve those objectives. “HCD” refers to the State Department of Housing and Community Development.

1.2a. Adopt a program level EIR and approve the Downtown Plan Expansion Project to facilitate housing development in the expansion area.

The Downtown Plan Expansion project’s current draft calls for a maximum height of 85 feet for a limited number of specified sites in the expansion area. This is consistent with the maximum height in the current Downtown Plan. That would constitute a height increase over what is currently in the Zoning Ordinance, thus triggering a vote of the people under Measure M.

The Downtown Plan Expansion also proposes to increase the FAR for certain sites in the expansion area. Increasing the FAR would require changes to the General Plan. FAR is not proposed to be increased above what is already allowed in the current Downtown Plan, but any increase in FAR would require a vote of the people under Measure M.

Requiring a vote of the people to approve the Downtown Plan Expansion Project could also delay, or put into jeopardy, the development of the Santa Cruz Warriors’ new arena, because the new arena is depending on residential development as a key funding source. Continued development uncertainty or a reduction in the amount of housing allowed in the expansion area would be costly both for funding the arena and for providing new homes.

1.2d. Adopt rezonings in the Ocean Street Area Plan so that they align with the General Plan development standards.

40.5 Rezoning is required to align the Zoning Ordinance development standards with the General Plan development standards to be consistent with State law. This work is to be completed by December 2024, but would be delayed should the rezoning require a vote of the people under Measure M. Should this rezoning not be supported by a vote of the people, the City would further not meet this Housing Element Objective.

While not specifically related to the Housing Element objective noted here, the Council has also provided direction to change the General Plan Land Use Designation of two parcels at the northwest corner of Leonard Street and May Avenue. This would reduce the planned residential capacity of those parcels.

Due to the State’s “no net loss” of residential capacity, a reduction in residential capacity can only be accomplished while simultaneously increasing the residential capacity of other sites by an equivalent or greater amount. Thus, to accomplish the Council’s direction of reducing the residential density/intensity on the May Avenue and Leonard Street properties, Measure M would likely require a vote of the people due to the accompanying required increase in residential capacity elsewhere in the City. The same required voter approval under Measure M would be expected if residential capacity reduction were contemplated anywhere in the City.

1.2e. Support a balance of jobs and housing land uses by only considering residential use in industrial land if it is ancillary to industrial land’s full employment capacity being achieved in an economically viable manner and if it does not negatively impact existing or future industrial uses in the area, except in the vicinity of Coral Street on properties where homeless services or affordable housing are identified in the properties’ respective General Plan Land Use Designations as an allowable use. Adopt a Coral Street Overlay that builds off existing services and resources to provide homeless services and related residential use standards for that specific, immediate area.

Requiring a vote of the people in order to rezone properties for affordable housing, supportive housing, and homeless services such as a navigation center (homeless shelter with wraparound services, like housing navigation, health services, job training, etc.) would likely delay these much-needed homes and services, possibly resulting in missing the target adoption date of June 2025 set in the Housing Element. Should this rezoning not be supported by a vote of the people under Measure M, the City would further not meet this Housing Element Objective.

1.3e. Adopt code changes that utilize SB 10 allowances to increase residential density in transit rich areas, including evaluation of how deed-restricted affordable housing can be added.

Code changes to allow for increased density in high quality transit areas are set to be completed by March 2026 per the Housing Element. Achieving this action would require increased FARs or heights and would therefore trigger a vote of the people under Measure M.

40.6 1.3g. Adopt zoning changes by January 2027 to align development standards and use allowances with the maximum intensity already allowed under state law, following a comprehensive review. Zoning changes will include heights and lot coverages among other development standards. State law requires that properties be allowed to achieve their maximum intensity using either General Plan or Zoning Ordinance standards. The City follows this law currently by waiving standards that preclude maximum densities; however, this creates uncertainty for developers and community members, and code amendments would remedy that uncertainty.

This would require rezonings or changes to Zoning Ordinance development standards to match certain standards allowed in the General Plan, including increases in allowable FARs or heights. Should the changes not be supported through a vote of the people required under the measure, the City would not meet this Housing Element Objective.

1.3i. As part of the HCD Annual Progress Report, the City will monitor the progress of pending projects in the entitlement process, and if projects are not sufficiently progressing toward building permits or if the City is not meeting the pro-rated share of the RHNA at all income levels, including ADU production and affordability, as of midway through the Housing Element Cycle, the City will evaluate its sites inventory and capacity to maintain adequate sites throughout the planning period and, if necessary, identify strategies to streamline and/or assist projects through entitlement, adopt amendments to the ADU development regulations, or implement other strategies, such as general plan and zoning changes to allow for greater residential densities.

Not only would Measure M reduce housing production to the extent that meeting RHNA housing production targets at all income levels would be very unlikely (due to the chilling effects of both the required votes for regulatory changes needed to facilitate projects and due to the high inclusionary requirement making projects infeasible), Measure M would also limit the City’s ability to enact policies that could help increase affordable and market rate housing production, as a costly and time consuming vote of the people would be required for modifications to the inclusionary requirements or increases to FARs or heights.

1.4a. Create and/or revise development standards for co-housing, housing cooperatives, live/work and other alternative housing types.

This work could potentially increase the maximum FARs or heights allowed in certain circumstances, and achieving the action would then require a vote of the people under Measure M.

1.5a. Maintain an inventory of ADU applications, location, affordability, etc. to ensure adequate ADU development is occurring to meet the 6th cycle RHNA. Annually review ADU development progress as part of the HCD Annual Progress Report and if necessary, adopt amendments to the ADU development regulations within 18 months of the annual review to further facilitate ADU production.

Should support for additional ADU development be needed, adopting amendments to development standards like height, setbacks, or lot coverage

40.7 would be a likely focus, and since those changes would affect allowable heights or FARs, a vote of people would be needed under Measure M.

2.1a. Maintain and implement the City’s Inclusionary Ordinance. Review the Inclusionary Ordinance to determine if amendments are needed to ensure that the inclusionary requirements provide the maximum number of affordable units or deeper levels of affordability without being a barrier to housing development, while considering implications for how developers will use density bonus and how the City’s Inclusionary Ordinance interfaces with density bonus proposals. Analysis will evaluate affordability levels to incentivize deeper levels of affordable housing, such as extremely low income units, or more moderate income units depending on needs.

One of the greatest concerns with the measure is that increasing the inclusionary requirement could create a barrier to housing, and that is the exact finding in the attached report from KMA. Because the increased inclusionary requirement is not financially feasible as evidenced in the proforma analyses in the KMA report, Measure M would result is less production of market rate and less production of affordable housing than under the current inclusionary requirement. Additionally, the City intends to study different levels of affordability as well. Further study may result in ways to retool the Inclusionary Ordinance to be more flexible and allow for different affordability levels like Moderate Income “workforce” housing and Very Low-Income housing to count towards the inclusionary requirement.

2.1b. Develop a program and/or incentives that increase rental and homeownership opportunities for moderate income / workforce housing units.

If alternative approaches of inclusionary requirements were contemplated, as is called for in Objectives 2.1a and 2.1b, such as a lower percentage of units at deeper levels of affordability (such as households making 50% of Area Median Income) or even an inclusionary requirement that is higher than 25% but which caters to Moderate Income households (making up to 120% of Area Median Income), such changes could trigger a vote of the people, since they deviate from the direction that is given in the measure. Not only would the measure result in fewer affordable units and fewer market rate units, it would make it harder (by potentially requiring a costly and time consuming vote of the people) for the City to adjust the inclusionary percentage to meet diverse needs or to reflect market conditions that fluctuate over time.

3.7b. Support and facilitate the efforts of the Santa Cruz City School District to provide workforce housing for its employees and update local codes to match or exceed allowances found in state law. Authorize development of 50 workforce housing units throughout the planning period.

Building off of recent State law changes (2022’s AB 2295 noted above), the City could further support workforce housing for school teachers and staff by exceeding the development allowances governed by State law. In certain circumstances, AB 2295 could allow for greater height than the currently allowed

40.8 in the Zoning Ordinance so formally adopting this law into the Zoning Ordinance would trigger a vote of the people under Measure M.

If the City chooses to exceed State law to support teacher housing, that scenario would require height and/or FAR increases beyond the existing standards in the Zoning Ordinance and trigger a vote of the people under Measure M.

6.2e. Expand the use of Flexible Density Units into more zoning districts in conjunction with an SB 10 overlay district to provide opportunities for more small units in the City, particularly in higher resource areas.

This action would amend the Zoning Ordinance and, for certain locations, would likely increase either allowable heights or FARs above those that currently exist, so achieving this action would require a vote of the people under Measure M.

6.2f. Develop a local ordinance to implement SB 9 consistent with State law.

As noted under the 2021 Legislation section above, formally adopting SB 9 Zoning Ordinance Amendments to comply State law would trigger a vote of the people under Measure M due to increased FAR allowances on some properties.

In October 2023, HCD’s Housing Accountability Unit published a 44-page report detailing San Francisco’s lack of housing production and inability to achieve its Housing Element objectives.

While Santa Cruz has not had the same level of housing production issues as San Francisco, the report speaks to the seriousness of needing to follow the Housing Element. The full report is available at https://www.hcd.ca.gov/sites/default/files/docs/policy-and-research/plan-report/sfhousing-policy-and-practice-review.pdf, and below are direct quotes from the report:

A housing element is not a paper exercise – it is an enforceable commitment to the state that a city or county will take specific actions on specific timeframes over an eight-year period. Once HCD finds an adopted housing element compliant with Housing Element Law, the jurisdiction must work towards implementing the housing element.

If HCD finds that a jurisdiction failed to implement a program included in the housing element, HCD may, after informing the local jurisdiction and providing a reasonable time to respond, revoke its finding of compliance with Housing Element Law until it determines that the jurisdiction has come into compliance.

The City’s failure to implement the Required Actions will result in HCD initiating the process to revoke housing element compliance. Various consequences may apply if the City does not have a housing element in compliance with Housing Element Law, including ineligibility or delay in receiving certain state funds, referral to the California Office of the Attorney General, court-imposed financial penalties, the loss of local land use authority to a court-appointed agent, and the application of the “builder’s remedy.”
As noted with the City’s recent Housing Element certification, the “builder’s remedy” allows for residential or mixed-use projects meeting certain affordability thresholds to ignore local land use

40.9 law and construct those residential or mixed-use projects as whatever standards they like, with no regard to local heights, setbacks, densities, or other development standards.

This report speaks to the State’s increasing reach in enforcing housing law, and the City should do everything it can to follow the adopted policies and actions in the Housing Element. It is unlikely Santa Cruz would face the same level of ire from HCD as San Francisco based on the City’s recent, positive track record on housing. However, if the City is unable to achieve a number of the objectives identified in the Housing Element, especially if that were coupled with the City not meeting its RHNA targets for housing production, that would capture the attention of HCD, and HCD does have the ability to decertify the City’s Housing Element for not carrying out the objectives called for in the plan. In fact, in its December 21, 2023 letter to the City, HCD writes:

Government Code section 65585, subdivision (i) grants HCD authority to review any action or failure to act by a local government that it determines is inconsistent with an adopted housing element or housing element law. This includes failure to implement program actions included in the housing element.

HCD may revoke housing element compliance if the local government’s actions do not comply with State law.

While cities like San Francisco receive much of HCD’s attention for their challenging approach to housing, HCD’s recent letter to the City reiterates that Santa Cruz must continue to follow through on its commitments. As detailed above, Measure M would impede the City’s ability to achieve many of the Housing Element objectives.

Additional Potential Implications of the Measure
Because Measure M would establish inclusionary standards that would slow the production of housing at all income levels, including for affordable housing, the City would be unlikely to achieve the housing production targets set forth in its RHNA. This would have several consequences.

First, more development would qualify for streamlining under Senate Bill (SB) 35, which requires ministerial approval and no California Environmental Quality Act (CEQA) review for qualifying projects, which is a way the State seeks to incentivize development in jurisdictions where housing production is lagging. However, the benefits of the SB 35 streamlining incentive would be unlikely to overcome the cost burden associated with the City’s high inclusionary requirement established by Measure M, so housing production would still lag.

Second, if the City is not on track to meet its RHNA housing production targets at all income levels, pursuant to Objective 1.3i in the newly adopted Housing Element, “the City will evaluate its sites inventory and capacity to maintain adequate sites throughout the planning period and, if necessary, identify strategies to streamline and/or assist projects through entitlement, adopt amendments to the ADU development regulations, or implement other strategies, such as general plan and zoning changes to allow for greater residential densities.” As noted above, Measure M would simultaneously reduce the production of affordable and market rate housing and make it more challenging to enact policies that would stimulate production of affordable and market rate housing.

A lack of housing production would certainly catch the attention of HCD. If the City were also unable to achieve many of the Housing Element objectives due to the costs, time, and voting outcomes of elections required under Measure M, then HCD could decertify the City’s Housing

40.10 Element. Decertification of the HE would have a range of implications. First, “builder’s remedy,” as detailed above, would take effect in Santa Cruz. Second, the City would lose eligibility for State grants and other State funding sources (a primary source of affordable housing funding leveraged currently by the City) and would result in the loss of the City’s ProHousing Designation, which provides a competitive advantage to securing State grants.

Health in all Policies (HiAP)
HiAP is a collaborative approach to improving the health of all people by incorporating health considerations into decision-making across sectors and policy areas. HiAP is based on 3 pillars:
equity, public health, and sustainability. The goal of HiAP is to ensure that all decision-makers are informed about the health, equity, and sustainability impacts of various policy options during the policy development process. Measure M’s creates barriers to the production of affordable and market rate homes, impacts the City’s ability to comply with State housing requirements, impacts the City’s ability to meet its Housing Element objectives, and results in significant negative fiscal impacts on the City, thereby frustrating all three HiAP pillars of equity, public health, and sustainability, so Measure M is inconsistent with HiAP.

FISCAL IMPACT: As indicated in the attached analysis and that contained in this report, Measure M itself would have long-term negative fiscal impacts to the City. Based on historical and recent trends, including complying with State law, it is anticipated, on average, the measure would result in at least one election/vote of the people per year, and that does not account for any additional, proactive work that the City is doing that would trigger additional votes of the people, including the objectives committed to in the Housing Element. Thus, the estimate that the measure would result in at least one vote of the people per year is conservative, and it would likely result in a higher number of annual votes required. The current cost of an election is estimated to be in the range of $115,000 to $185,000 based on figures from the Santa Cruz County Elections Department. This amount may fluctuate, based on the number of registered voters at the time of the election, the number of items the City places on the ballot, and if the election is a special one called solely by the City. The direct fiscal impact to the City would, of course, accumulate over time with each needed election.

The cost of reviewing the measure and preparing this impact report was $42,000 in consultant fees, plus many hours of staff time that are not included in the $42,000 in direct costs.

Prepared by:

Matt VanHua, AICP
Principal Planner – Advance
Planning
Submitted by:

Lee Butler, AICP, LEED AP
Director of Planning and
Community Development
Bonnie Lipscomb
Director of Economic
Development and Housing
Approved by:

Matt Huffaker
City Manager
ATTACHMENTS:

1. KEYSER MARSTON REPORT ON EFFECTS OF MEASURE M

3. OCTOBER 24, 2023 COUNCIL AGENDA REPORT

4. MINUTES FROM OCTOBER 24, 2023 COUNCIL MEETING

40.11 REPORT TO CITY COUNCIL

ON A BALLOT INITIATIVE TITLED

MEASURE M

REQUIRING PRIOR VOTER APPROVAL FOR ANY

AMENDMENT TO GENERAL PLAN OR ZONING

REGULATIONS TO INCREASE HEIGHT LIMIT OR FLOOR
AREA RATIOS; AND INCREASING INCLUSIONARY HOUSING
REQUIREMENTS FROM 20% TO AT LEAST 25% FOR
DEVELOPMENTS WITH 30 OR MORE HOUSING UNITS
PREPARED FOR:

CITY OF SANTA CRUZ
PREPARED BY:

KEYSER MARSTON ASSOCIATES, INC.

JANUARY 18, 2024

40.12 Report to City Council: Measure M Impact Analysis Page i Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024

TABLE OF CONTENTS
INTRODUCTION..................................................................................................................... 1 I. REQUEST FOR AN IMPACT REPORT RELATED TO MEASURE M ............................................................ 1 II. REPORT ORGANIZATION ............................................................................................................ 1 EXECUTIVE SUMMARY........................................................................................................... 3 I. RESTRICTIONS ON GENERAL PLAN & ZONING ORDINANCE AMENDMENTS ........................................... 3 II. INCLUSIONARY HOUSING REQUIREMENTS ..................................................................................... 5 RESTRICTIONS ON GENERAL PLAN & ZONING ORDINANCE AMENDMENTS............................. 9 I. CITY ACTIONS THAT WOULD TRIGGER MEASURE M REQUIREMENTS.................................................. 9 II. SECTION 65915 DENSITY BONUS ISSUES.................................................................................... 13 III. INCREASED DEVELOPER RISK..................................................................................................... 14 IV. MEASURE M IMPACT ON THE CITY’S RHNA TARGETS AND HOUSING ELEMENT ................................ 15 V. FISCAL IMPACTS ..................................................................................................................... 17 INCLUSIONARY HOUSING REQUIREMENTS........................................................................... 19 I. INCLUSIONARY HOUSING PROGRAM STRUCTURING ISSUES ............................................................. 19 II. FINANCIAL EVALUATION METHODOLOGY .................................................................................... 21 III. APARTMENT DEVELOPMENT ANALYSIS ....................................................................................... 27 IV. OWNERSHIP HOUSING DEVELOPMENT ANALYSES.......................................................................... 34 V. FINANCIAL EVALUATION CONCLUSIONS ...................................................................................... 40

40.13 Report to City Council: Measure M Impact Analysis Page ii Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024

ATTACHMENTS
Attachment 1: Resolution No. NS-30,240
Attachment 2: Affordable Housing Cost Calculation Methodologies Appendix A: Affordable Rent Calculation Methodology
Appendix B: Affordable Sales Price Calculation Methodology Attachment 3: Apartment Development
Appendix A: Rent Survey: 4+ Star Properties
Appendix B: Affordable Rent Calculations
Appendix C: Pro Forma Analyses: High Density – Traditional Apartment Prototype Appendix D: Pro Forma Analyses: Medium Density – Traditional Apartment Prototype Appendix E: Pro Forma Analyses: SRO Apartment Prototype Attachment 4: Ownership Housing Development
Appendix A: Home Sales Survey
Appendix B: Affordable Sales Price Calculations
Appendix C: Pro Forma Analyses: High Density Condominium Prototype Appendix D: Pro Forma Analyses: Low Density Condominium Prototype Appendix E: Pro Forma Analyses: Townhome Prototype

40.14 Report to City Council: Measure M Impact Analysis Page 1 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024

INTRODUCTION
I. REQUEST FOR AN IMPACT REPORT RELATED TO MEASURE M
At a meeting held on October 24, 2023, the Santa Cruz City Council (City Council) directed City of Santa Cruz (City) staff to prepare an impact report on an initiative that has been placed on the March 5, 2024 primary election ballot. For reference purposes, the initiative has been given the following title:

Measure M
Requiring Prior Voter Approval for any Amendment to General Plan or Zoning Regulations to Increase Height Limits of Floor Area Ratio ; and Increasing Inclusionary Housing Requirements from 20% to at least 25% for Developments with 30 or more Housing Units Throughout this report the initiative will be referred to as Measure M.

II. REPORT ORGANIZATION
Keyser Marston Associates, Inc. (KMA) was engaged by the City to prepare the impact report that was requested by the City Council. The following report is divided into the following two components:

A. Restrictions on General Plan & Zoning Ordinance Amendments The following issues that could potentially be impacted by the Measure M limitations are evaluated on a qualitative basis:

1. City actions that would trigger the Measure M requirements.

2. Issues related to projects applying to use the California Government Code Section 65915 et seq. (Section 65915) density bonus statute.

3. The increased risk borne by developers considering projects that would be subject to a vote of the people.

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4. The impact on achieving compliance with existing and future Regional Housing Needs Allocation (RHNA) targets.

5. The potential fiscal impact to the City.

B. Inclusionary Housing Requirements
The City’s original Inclusionary Housing Ordinance was adopted following the passage of Measure O in 1980, which imposed a 15% affordable housing requirement on new residential development within Santa Cruz. The Inclusionary Housing Ordinance has been amended multiple times over time, with the most recent being Ordinance 2019-25, which went into effect in February 2020, and which imposed a 20% affordable housing requirement on new residential development. 1 Measure M proposes to increase the Inclusionary Housing requirement to at least 25% for new residential developments that include 30 or more units.

KMA prepared an Inclusionary Housing: Financial Evaluation (Financial Evaluation) to analyze the impacts created by increasing the affordable housing requirement to 25% for new residential developments that include 30 or more units. The analysis is organized as follows:

1. The influences that court cases and legislation have on the Inclusionary Housing requirements that can be imposed by the City are discussed.

2. Financial testing was performed to evaluate the feasibility of increasing the percentage of affordable housing units that are required to be developed in new residential developments in Santa Cruz.
1 The City’s Inclusionary Housing requirements are codified in Chapter 24.16 of the Santa Cruz Municipal Code.

40.16 Report to City Council: Measure M Impact Analysis Page 3 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024

EXECUTIVE SUMMARY
I. RESTRICTIONS ON GENERAL PLAN & ZONING ORDINANCE AMENDMENTS The City received a Sixth Cycle RHNA target of 3,736 units. In part to assist in fulfilling the current and future obligations, the City commenced work on the Downtown Expansion Plan (DTEP) in 2020, which is anticipated to include amendments to the General Plan and Zoning Ordinance that will increase the allowable building heights and floor area ratios (FARs) for residential development.

A. City Actions that would Trigger the Measure M Requirements One of the authors’ stated purposes for putting Measure M forward is to subject any proposed increases in building heights and/or FARs in downtown development to a vote of the people. While it does that, as written, the Measure M voting requirements impose the following broader constraints:

1. They apply on a citywide basis in all zoning districts.

2. They apply to regulations pertaining to a wide array of developments including accessory dwelling units (ADUs) in certain Coastal Zone locations, single family homes, commercial/industrial buildings, and 100% affordable housing projects.

3. They constrain the City’s ability to comply with State law requirements to align development standards and use allowances by 2027. This alignment is called for in the City’s Sixth Cycle Housing Element (Housing Element), which has been certified by the California Department of Housing and Community Development (HCD).

4. They potentially impede the City’s ability to adhere to the California Government Code Sections 65863 and 66300 “no net loss” requirements.

5. They will trigger a Measure M vote of the people requirement to bring the City’s Zoning Ordinance and/or General plan into compliance with new State legislation that results in mandated increases to allowable residential building heights and/or FARs.

40.17 Report to City Council: Measure M Impact Analysis Page 4 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 B. Section 65915 Density Bonus Issues
The Section 65915 density bonus provides developers with the opportunity to significantly modify development standards without requiring amendments to the General Plan or Zoning Ordinance. For example, the City will be required to approve the increases in building heights and FARs that are commonly requested as the statutorily provided incentives/concessions or development standards waivers. These modifications, in and of themselves, do not constitute changes to the General Plan or Zoning Ordinance. As such, they would not trigger a Measure M vote of the people.

C. Increased Developer Risk
The imposition of a voter approval requirement on a proposed development negatively impacts the desirability of the investment. This impact is related to the combination of the increased uncertainty in the entitlement process, the additional costs incurred during the process, and by the risk that the voters will not approve the General Plan and/or Zoning Ordinance changes needed to allow the project to proceed. This may act to reduce the number of residential projects that are proposed by experienced and well capitalized developers.

D. Measure M Impacts on the City’s RHNA Targets and Housing Element HCD has imposed strict timelines for jurisdictions to adopt General Plan designations and zoning standards that comply with their RHNA targets. If the housing production targets and objectives identified in the Housing Element are not achieved within the timelines specified, the developers of eligible housing projects would be allowed to use the housing development application streamlining provisions set for in California Government Code Section 65913.4.2 This removes some local decisionmaking control, and exempts proposed projects from California Environmental Quality Act review.

Complying with the HCD requirements is made more challenging by Measure M. In addition to the risk that developers will be reluctant to take the risk of voter approval, there is the significant potential that certain sites may not be approved by the voters for additional height and/or FAR. Measure M 2 These provisions were created by Senate Bill 35, which went into effect on January 1, 2018.

40.18 Report to City Council: Measure M Impact Analysis Page 5 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 could also make achieving Housing Element objectives more difficult as it would trigger a vote of the people in order to implement Objectives 1.2a, 1.2d, 1.2e, 1.3e, 6.2f, and others.

The ultimate penalty is that HCD could potentially decertify the City’s Housing Element. This would trigger a variety of penalties including limiting the City’s ability to enforce General Plan and Zoning Ordinance standards, disqualification for the award of affordable housing assistance funds provided by the State, and monetary penalties that may be devised by the State Legislation in the future.

E. Fiscal Impacts
It is anticipated that if Measure M goes into effect at least one election/vote of the people per year would be required. Based on estimates provided by the Santa Cruz County Elections department, the current cost of an election falls within the range of $115,000 to $185,000.

There continues to be significantly more demand for housing than the supply of housing in Santa Cruz.

As a result, housing is becoming increasingly unaffordable each year. It can reasonably be assumed that the requirements imposed by Measure M will negatively impact the potential for the development of both market rate and affordable housing. To mitigate this problem the City will likely need to create and fund additional programs that reduce displacement of existing residents and that assist in the development of dedicated affordable housing projects beyond those that the City already supports.

II. INCLUSIONARY HOUSING REQUIREMENTS
The KMA Los Angeles office has assisted 37 jurisdictions in the Inclusionary Housing program adoption and updating processes over the past 25 years. KMA’s analyses reflect a real world perspective based on the firm’s core experience in real estate development economics, real estate transactions, and developer negotiations services.

The imposition of income and affordability restrictions on units in a market rate residential development creates an impact on the project economics. The fundamental purpose of the Financial Evaluation is to determine whether the Inclusionary Housing requirements included in Measure M comport with the requirements that have been imposed on Inclusionary Housing programs by the

40.19 Report to City Council: Measure M Impact Analysis Page 6 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 courts and the State Legislature. Based on these requirements, the fundamental standards that must be imposed are:3

1. Inclusionary Housing requirements cannot be confiscatory;

2. Inclusionary Housing requirements cannot deprive a property owner of a fair and reasonable return on investment; and

3. Inclusionary Housing requirements cannot act as a constraint to housing development.

A. Financial Analysis Components
The Financial Evaluation tested three apartment development prototypes and three ownership housing development prototypes. The prototypes were created using the City’s “Active Planning Applications” webpage and the Housing Element. These prototypes can be described as follows:

Market Rate Residential Development Prototypes
Inclusionary Housing : Financial Evaluation
Apartment Prototypes
Ownership Housing Development
Prototypes
High Density – Traditional Apartment High Density Condominium Base Density: 150 Units Per Acre Base Density: 125 Units Per Acre Density Bonus: 225 Units Per Acre Density Bonus: 169 Units Per Acre Medium Density – Traditional Apartment Low Density Condominium Base Density: 60 Units Per Acre Base Density: 30 Units Per Acre Density Bonus: 90 Units Per Acre Density Bonus: 45 Units Per Acre SRO Apartment Townhome
Base Density: 125 Units Per Acre Base Density: 15 Units Per Acre Density Bonus: 188 Units Per Acre Density Bonus: Not Applicable 3 The first two requirements were imposed by the California Supreme Court in California Building Industry Association v.

City of San Jose. The third requirement is imposed by California Government Code Section 65583 (A).

40.20 Report to City Council: Measure M Impact Analysis Page 7 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 The Financial Evaluation estimates the “Affordability Gaps” associated with the defined income and affordability restrictions. An Affordability Gap is defined as the difference between the achievable market rate rents or sales prices and the allowable rents or sales prices for each “Inclusionary Unit”.

This Financial Evaluation uses pro forma analyses to estimate the Affordability Gaps generated by the existing Inclusionary Housing requirements and the requirements proposed by Measure M.

B. Financial Evaluation Findings
There is very little vacant developable land left in Santa Cruz. As a result, the majority of recent new residential development has been occurring on properties that are developed with existing improvements. The Housing Element makes the fundamental assumption that this will continue to be the case. For this to occur, the property value supported by residential development must be competitive with the other opportunities available to property owners.

Based on the results of the pro forma analyses, KMA reached the following conclusions:

1. Apartment Development:
a. Under current conditions, the existing 20% Inclusionary Housing requirement can only be supported if the project can make use of the Section 65915 density bonus on a cost efficient basis.
b. A 25% Inclusionary Housing requirement could not be supported by any of the apartment prototypes even it was assumed that the maximum Section 65915 density bonus was applied.

40.21 Report to City Council: Measure M Impact Analysis Page 8 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 imposition of the current 20% Inclusionary Housing obligation. This constraint will be exacerbated if the Inclusionary Housing requirement is increased to 25%.

As discussed previously, the courts and the State legislature have imposed the following requirements on Inclusionary Housing programs:

1. Inclusionary Housing requirements cannot be confiscatory;

2. Inclusionary Housing requirements cannot deprive a property owner of a fair and reasonable return on investment; and

3. Inclusionary Housing requirements cannot act as a constraint to housing development.

Based on the results of the Financial Evaluation KMA reached the following conclusions:

1. The Measure M requirement to increase the Inclusionary Housing obligation to 25% for projects with 30 or more units does not comport with any of the requirements imposed by the courts and the State Legislature.

2. Given the financial impacts created by the proposed increase in the Inclusionary Housing obligations, residential development will not be competitive with the other disposition or holding opportunities available to property owners.

3. If Measure M passes, significant potential exists for legal challenges from residential developers and/or an HCD constraint to housing investigation. This could possibly result in the decertification of the City’s Housing Element.

40.22 Report to City Council: Measure M Impact Analysis Page 9 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024

RESTRICTIONS ON GENERAL PLAN & ZONING ORDINANCE AMENDMENTS The City received a Sixth Cycle RHNA target of 3,736 units. To assist in fulfilling this and future obligations, the City commenced work on the DTEP in 2020 with one of the fundamental purposes being to increase the potential for residential development to be attracted to the downtown area. To achieve this, the proposed DTEP is anticipated to include amendments to the General Plan and Zoning Ordinance that will increase the allowable building heights and floor area ratios (FARs) for residential development.

One of the authors’ stated purposes for putting Measure M forward is to subject any proposed increases in building heights and/or FARs in the downtown to a vote of the people. However, as written, Measure M requirements actually would apply on a citywide basis. In addition, the Measure M requirements would be retroactive to June 1, 2023.

The following sections of this report describe the impacts that could potentially be generated by the Measure M requirements.

I. CITY ACTIONS THAT WOULD TRIGGER MEASURE M REQUIREMENTS A. Development Types that are Subject to the Measure M Requirements The term “Development Project” is defined in Municipal Code Chapter 24.22.265 as:

Any project undertaken for the purpose of development. Includes a project involving the issuance of a permit for construction or reconstruction, but not a permit to operate. Does not include ministerial projects proposed to be carried out or approved by the City.

The use of the term development project in Measure M means that any change to the Zoning Ordinance, Zoning Ordinance Map, General Plan, or General Plan Land Use Map, which increases the building height and/or FAR for any project that requires a discretionary permit (other than just a use permit), would trigger a vote of the people. The following development types provide a sample of projects that can potentially require a discretionary permit:

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1. Single family homes;

2. ADUs in certain Coastal Zone locations;

3. Multifamily residential projects, including residential projects in which 100% of the units are subject to income and affordability covenants;

4. Mixed-use projects;

5. Commercial projects;

6. Industrial projects;

7. Public building construction projects carried out by the City;

8. Some fences, including fences on single family home properties; and

9. Properties on the City’s Historic Survey.

B. Examples of Potential Measure M Triggers

CHANGES TO GENERAL PLAN TEXT, ZONING ORDINANCE TEXT, GENERAL PLAN LAND USE DESIGNATIONS, AND/OR

ZONING DESIGNATIONS
Measure M would require voter approval for any modifications to the Zoning Ordinance and/or General Plan when the changes result in increased height and/or FAR allowances for any project that requires a discretionary permit from the Planning Department.4 The Measure M voter approval requirement applies to residential, commercial, industrial, mixed use, and public spaces development located anywhere within the Santa Cruz city limits.

The Measure M requirements apply to a broad range of changes, including but not limited to the following actions:
4 Projects that only require a use permit would not trigger a Measure M vote of the people.

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1. Changing the General Plan land use designation (General Plan Land Use Map) in a manner that increases height and/or FAR allowances.

2. Changing the Zoning Designation (Zoning Map) in a manner that increases height and/or FAR allowances.

3. Changing the text of the General Plan or Zoning Ordinance in a manner that increases height and/or FAR allowances. The following actions could impact height and/or FAR, which would in turn trigger a Measure M vote of the people:
a. Changes to certain setbacks;
b. Changes to certain lot coverage requirements;
c. Changes to certain building separation requirements; d. Changes to certain limitations on the number of stories allowed; and/or e. Other standards that effect height or FAR for “development projects”, which includes a broad array of potential projects, as noted above.

DEVELOPMENT STANDARDS ALIGNMENT
State law requires the City to adopt zoning changes by 2027 to align development standards and use allowances with the maximum intensity already allowed by State law. Specifically, properties must be allowed to achieve the maximum intensity permitted under the General Plan or Zoning Ordinance standards. This includes height and lot coverage standards. Pertinent examples are:

1. The zoning standards in place in the Ocean Street Area Plan, which need to be amended to be consistent with the General Plan development standards.

2. It would be useful to adopt Code amendments to provide clarity to the development standards that would be applicable in the following cases:

40.25 Report to City Council: Measure M Impact Analysis Page 12 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 a. The minimum lot size requirement for properties subject to R-L zoning. b. The property located at 125 Coral Street, which is anticipated to be developed with a five-story physical health, mental health, navigation center with permanent supportive housing and/or an expanded homeless shelter.
c. The affordable housing project proposed to be developed on the northeast corner of Highways 1 and 9, which could trigger the Measure M requirements depending on the modifications that are ultimately requested.
d. The prospective development of the properties located on the north side of Mission Street at Center Street.
e. The DTEP, particularly as it pertains to the development of the four corners of Front Street and Spruce Street to 140 Center Street.

NO NET LOSS REQUIREMENTS
California Government Code Sections 65863 and 66300 impose a “no net loss” standard on jurisdictions that requires any reduction in residential capacity to be concurrently accompanied by an equivalent increase in residential capacity elsewhere. This standard is measured against the unit count projections the City included in the “Housing Element Sites Inventory”. Examples of activities that could invoke a requirement to increase capacity elsewhere in Santa Cruz are:

1. Any project that is developed on a listed site and that provides fewer than the identified target number of units.

2. City actions that reduce the residential capacity on a listed site by reducing height, FAR, dwelling units per acre, and/or increasing setback requirements.

This explicit requirement to increase the allowable unit count on other sites would likely necessitate increasing the allowable FAR and likely height on those sites. This would trigger a Measure M vote of the people.

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STATE LEGISLATIVE ACTIONS
State legislation can result in mandated increases to allowable residential building heights and/or FARs.

As written, this will trigger a Measure M vote of the people to make the City’s Zoning Ordinance and/or General Plan consistent with State standards. This is the case despite the fact that the City has no authority to override the State requirements. Some examples are:

1. Authority to construct residential projects on commercially zoned sites;

2. Authority to construct residential units on school and religious properties;

3. Prohibition on coupling minimum lot sizes and lot coverage ratios with minimum FAR standards, which act to preclude development of residential projects of up to 10 units;

4. Increasing the maximum height limits for ADU’s; and

5. Lot splits allowed in single family zones.

II. SECTION 65915 DENSITY BONUS ISSUES
Height and FAR increases are two of the most commonly requested incentives/concessions and development standards waivers by applicants using the Section 65915 density bonus. Key requirements imposed by Section 65915 are:

1. The City must grant the applicant’s request for an incentive/concession unless the City makes a written finding, based on substantial evidence, that the requested FAR incentive/concession does not comport with the very limited criteria defined in Section 65915 (d) (1).

2. Section 65915 (e) states that the City cannot apply any development standard that physically precludes the construction of a project at the density allowed by Section 65915 along with the permitted incentives/concessions:
a. Development standards waivers do not reduce the number of incentives or concessions to which the project is entitled.

40.27 Report to City Council: Measure M Impact Analysis Page 14 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 b. There is no stated limit to the number of development standards waivers that can be requested.

3. Section 65915 (d) (3) provides the Applicant with the right to pursue legal action if the City denies a requested incentive/concession or waiver. If the court finds against the City, the City would be required to pay the applicant’s reasonable attorney’s fees and the costs associated with the lawsuit.

As discussed in detail in the Inclusionary Housing Requirements section of this report, it is likely that the vast majority of residential developers will make use of the Section 65915 density bonus benefits.

This provides developers with the opportunity to significantly modify development standards without amendment to the General Plan or Zoning Ordinance. As such, the use of the Section 65915 density bonus should not trigger a Measure M vote of the people even though it will likely result in increased building heights and FARs in many cases.

III. INCREASED DEVELOPER RISK
The development process is fraught with several levels of risk, but in general developers seek out development opportunities in which the entitlement process is well defined, and uncertainty is minimized. The imposition of a voter-approval requirement creates the following key impacts:

1. It increases the inherent risk that a development will not be approved;

2. It requires developers to make a substantial investment of capital prior to placing the proposed development in front of the voters; and

3. It prolongs the development process, which increases the carrying costs incurred by the proposed development.

A review of the available scholarly literature provides consistent evidence that imposing voter-approval requirements on proposed development creates a negative impact on development opportunities.

This impact is caused by the combination of the increased uncertainty involved in the development

40.28 Report to City Council: Measure M Impact Analysis Page 15 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 approval process, the additional costs incurred during the process, and the risk that the voters will not approve projects that are put forward for a vote. It is reasonable to conclude that the voter approval requirements imposed by Measure M will discourage some developers from pursuing projects that require height and/or FAR increases.

IV. MEASURE M IMPACT ON THE CITY’S RHNA TARGETS AND HOUSING ELEMENT HCD has imposed strict timelines for jurisdictions to adopt General Plan designations and zoning standards that comply with their RHNA targets. Requiring a vote of the people to ratify the necessary modifications will potentially create the following impacts:

1. The voter approval requirement may discourage both the developers of market rate housing and affordable housing from pursuing residential development in Santa Cruz.

2. The entitlement period for impacted residential developments will be extended by the election timing.

3. Proposed projects that require height and/or FAR increases may be voted down in Measure M elections.

The combination of these factors could decrease the number of residential units that are actually produced to below the targets included in the Housing Element. This would create the following impacts:

1. Developers of eligible projects would be allowed to use the housing development application streamlining provisions provided by California Government Code Section 65913.4. However, the use of this provision would likely be limited due to the various costs associated with Measure M compliance, most notably the increased Inclusionary Housing requirement.

2. For the current Housing Element, limited housing production would result in the requirement for the City to implement additional measures to increase housing production, as is called for in Objective 1.3i of the Housing Element:

40.29 Report to City Council: Measure M Impact Analysis Page 16 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 a. These changes would likely include actions that require Measure M voter approval; and b. If housing production numbers are lagging, and the City does not adopt policy changes to further promote housing production, HCD could potentially de-certify the City’s Housing Element.

3. For future Housing Elements, limited housing production and the smaller development project pipeline will reduce the number of sites that HCD finds acceptable for the future Housing Elements Sites Inventory:
a. This will make it more likely that General Plan and/or Zoning Code amendments will be necessary to establish an sites inventory with sufficient residential capacity. b. These amendments would likely trigger the Measure M voter approval requirement, which could potentially create the following impacts:
i. The process could delay the process beyond the State mandated deadlines; and/or
ii. The voters could reject the proposed amendments.
c. As a result, HCD could potentially decertify the City’s Housing Element.

Lack of a certified Housing Element would result in the following impacts:

1. California Government Code Section 655589.5, also known as Builder’s Remedy, could be invoked. This allows developers to build residential projects that do not comply with either the General Plan or the Zoning Ordinance.

2. Leveraged affordable housing projects being pursued by the City and/or developers would be ineligible to receive assistance funding offered by the State.

3. The City’s Pro-Housing Designation would be revoked. This designation provides the City with a competitive advantage in securing grants offered by the State.

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4. The State Legislature Penalties may continue their recent practice of enacting monetary penalties for noncompliance with Housing Element requirements.

V. FISCAL IMPACTS
A. Election Costs
Based on historical and recent trends, including complying with State law, it is anticipated that on average the passage of Measure M would result in at least one election/vote of the people per year.

Based on estimates provided by the Santa Cruz County Elections department, the current cost of an election falls within the range of $115,000 to $185,000. This amount will fluctuate based on the following factors:

1. The number of registered voters at the time of the election;

2. The number of items the City places on the ballot; and

3. Whether the item is placed on a regularly scheduled election or if a special election is called by the City.

B. Housing Supply
Due in large part to the existence of significantly more demand for housing than the supply of housing in Santa Cruz, housing costs continue to outpace inflation. Passage of Measure M will clearly create a constraint to the future development of both market rate and affordable housing. The resulting reduction in housing production will necessitate the creation and funding of additional programs to reduce displacement of existing residents and to assist in the development of dedicated affordable housing projects.

Since the State’s elimination of redevelopment agencies in 2012 no new ongoing source of dedicated affordable housing funding has been identified or made available to local governments for affordable housing production. The need to develop and fund new affordable housing programs will place a further strain on the City’s General Fund unless or until a new funding source is created.

40.31 Report to City Council: Measure M Impact Analysis Page 18 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 The potential for a community led initiative to create a new funding source is being contemplated locally. However, currently no such funding stream exists at the local, regional or state level to offset the increased constraint to the future development of affordable housing that would be created under Measure M.

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INCLUSIONARY HOUSING REQUIREMENTS
I. INCLUSIONARY HOUSING PROGRAM STRUCTURING ISSUES
In the process of evaluating the increase in the Inclusionary Housing obligations proposed by Measure M it is important to understand that the courts and the State Legislature have placed the following key limitations on the requirements that can be imposed Inclusionary Housing Programs:

A. San Jose Case
In 2015, the California Supreme Court ruled in the California Building Industry Association v. City of San Jose, 61 Cal 4th 435 (San Jose) that Inclusionary Housing Ordinances should be viewed as use restrictions that are a valid exercise of a jurisdiction’s zoning powers. The limitations imposed by the Court can be summarized as follows:

1. The requirements cannot be “Confiscatory”; and

2. The requirements cannot deprive a property owner of a fair and reasonable return on their investment.

Since the Court did not provide criteria under which jurisdictions can evaluate these limitations, each jurisdiction is left to create an evaluation methodology. The objective is to balance the interests of property owners, developers and the jurisdiction’s need for affordable housing.

B. Assembly Bill 1505
Assembly Bill (AB) 1505 amended Section 65850 of the California Government Code and added Section 65850.01. This legislation provides jurisdictions with the ability to adopt programs that impose Inclusionary Housing requirements on apartment developments.

40.33 Report to City Council: Measure M Impact Analysis Page 20 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 Section 65850.01 does not place a cap on the percentage of units that can be subject to income and affordability restrictions. However, Section 65850.01 (a) gives HCD the authority to review the restrictions imposed by an Inclusionary Housing Program on apartment developments if it requires that more than 15% of the units to be restricted to households earning less than 80% of the area median income (AMI), and if one of the following conditions applies:

1. The jurisdiction has failed to meet at least 75% of its share of its above moderate income Regional Housing Needs Allocation over at least a five year period, based on the jurisdiction’s Annual Housing Element Report; or

2. HCD finds that the jurisdiction has not submitted their Housing Element report for at least two consecutive years.

At this time, the City has fulfilled the requirements imposed by both of the standards identified above.

As such, HCD does not have authority under Section 65850.01 (a) to review the Inclusionary Housing requirements Measure M proposes to impose. However, in a technical guidance memorandum dated October 21, 2019, HCD reaffirmed its authority to review Inclusionary Housing ordinances as part of its review of a jurisdiction’s Housing Element.

As discussed previously, the current 6th Cycle RHNA targets for housing creation will pose a significantly greater challenge for the City to achieve. It is possible that the City may find itself subject to these provisions within a five-year timeframe if substantial progress on the current RHNA targets is not achieved.

C. California Government Code Section 65583 (A)
California Government Code Section 65583 (a) requires the City to analyze potential and actual constraints being placed on the development of housing. HCD has the discretion to require the City to demonstrate that the Inclusionary Housing requirements do not create a constraint to housing development.

40.34 Report to City Council: Measure M Impact Analysis Page 21 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 The imposition of the 25% Inclusionary Housing requirement proposed by Measure M could potentially instigate an HCD review. If such an evaluation concludes that a 25% Inclusionary Housing requirement creates a constraint to housing development it is possible that the City’s Housing Element could be decertified. The implications of not having a certified Housing Element are described in the previous chapter of this report.

II. FINANCIAL EVALUATION METHODOLOGY
A. Financial Evaluation Structure
The analysis structure applied by KMA can be described as follows:

1. KMA prepared financial analyses to assist in identifying the impacts associated with imposing income and affordability requirements on new market rate residential developments.

2. In general terms, the financial impact associated with fulfilling Inclusionary Housing requirements within market rate projects is equal to the Affordability Gap between the achievable market rate rents or sales prices and the allowable rents or sales prices for the Inclusionary Units.

3. The KMA financial analyses test the impacts associated with the existing and proposed Inclusionary Housing production requirements.

The KMA financial analyses components are described in the following sections of this report.

B. Residential Development Prototypes
To assist in creating development prototypes for use in the evaluation, KMA reviewed the City’s “Active Planning Applications” webpage and the Housing Element. It is important to understand that the prototypes used in the Financial Evaluation do not represent actual projects. Instead, the prototypes represent composites of projects that have recently been developed or proposed for development and the results of KMA market surveys.

40.35 Report to City Council: Measure M Impact Analysis Page 22 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 C. Pro Forma Analyses
Apartment Development Prototypes
KMA prepared pro forma analyses for the following apartment development prototypes:

1. A high density traditional apartment development;

2. A medium density traditional apartment development; and

3. A single room occupancy (SRO) development.

The following development scope and affordability standards were tested for the apartment development alternatives:

Development Scope and Affordability Standards
Apartment Development Prototypes
Inclusionary Housing Section 65915 Total
Low Income Very Low Income Affordable Housing
80% of AMI 50% of AMI Requirement
Base Zoning Scenario 20% NA 20%
Section 65915: 50% Density Bonus Scenarios
Option 1 5% 15% 20%
Option 2 10% 15% 25%
Ownership Housing Development Prototypes
KMA prepared pro forma analyses for the following ownership housing development prototypes:

1. A high density condominium development;

2. A low density condominium development; and

3. A townhome development.

40.36 Report to City Council: Measure M Impact Analysis Page 23 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 The following development scope and affordability standards were tested for the ownership housing development alternatives:

Development Scope and Affordability Standards
High Density Condominium Alternative
Ownership Housing Development Prototypes
35% Density Bonus
Base Zoning Option 1 Option 2
Inclusionary Units: Moderate Income Units
@ 110% of AMI 20% 9% 14%
Section 65915 Very Low Income Units @
50% of AMI NA 11% 11%
Total Affordable Housing Requirement 20% 20% 25%
Development Scope and Affordability Standards
Low Density Condominium Alternative
Ownership Housing Development Prototypes
50% Density Bonus
Base Zoning Option 1 Option 2
Inclusionary Units: Moderate Income Units
@ 110% of AMI 20% 5% 10%
Section 65915 Very Low Income Units @
50% of AMI NA 15% 15%
Total Affordable Housing Requirement 20% 20% 25%
Development Scope and Affordability Standards
Townhome Alternative
No Density Bonus Scenarios
Ownership Housing Development Prototypes
Existing Inclusionary Housing Requirements 20% Moderate @ 110% of AMI Measure M Inclusionary Housing Requirements 25% Moderate @ 110% of AMI

40.37 Report to City Council: Measure M Impact Analysis Page 24 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 Caveats
The following caveats apply to the pro forma analyses:

1. A fundamental premise of the pro forma analyses is that Measure M is not proposing to modify the affordable housing cost calculation methodologies that are imposed by the existing Inclusionary Housing program.

2. In each apartment and ownership housing prototype analysis, the affordable housing requirements are measured against the number of units allowed by the base zoning standards imposed on the development site.

3. Based on the Affordable Rent and Affordable Sales Price calculation methodologies imposed by Section 65915 (c) (1) (B), and the sliding scale density bonuses provided by Section 65915 (f), it is mathematically most advantageous from a financial standpoint to fulfill the Section 65915 affordability requirements with very low income units.

4. The City’s Inclusionary Housing program, as detailed in Municipal Code Chapter 24.16, requires ownership housing developments with five or more units to allocate 20% of the units to low and moderate income households. KMA prepared this Financial Evaluation based on the assumption that the entire obligation can be fulfilled with moderate income units.

5. The Townhome Prototype analysis does not include any Section 65915 density bonus alternatives. This is because townhome projects do not typically require the density bonus, incentives/concessions and development standards waivers to maximize the development’s value.

D. Financial Evaluation Tests
It has been KMA’s experience that the following series of events occurs following the increase in the requirements imposed by an Inclusionary Housing program:

1. Profits are reduced for developers that have already purchased land.

40.38 Report to City Council: Measure M Impact Analysis Page 25 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024

2. Developers that have not purchased land attempt to bargain for a lower land price.

3. Some property owners are reluctant to accept the fact that their land value has decreased, and they defer selling the property until prices increase.

Each of these three factors is relevant in the assessment of the impact created by an increase in Inclusionary Housing obligations:

1. City staff have received questions from developers regarding a number of properties, which may indicate property acquisitions since June 1, 2023. If Measure M passes, it is likely that developers that acquired property after June 1, 2023, but had not yet entered the formal approval process, will challenge the legality of imposing the requirements retroactively.

2. Developers that had complete applications or formal SB 330 preliminary applications prior to June 1, 2023 would not be subject to the Measure M requirements, assuming the project proceeds and retains its grandfathering under the prior regulations.

In recognition of this assumption, KMA has placed the most weight on the following impacts:

1. The reduction in property acquisition cost that would need to be achieved to offset the impact created by the proposed 25% Inclusionary Housing requirement; and

2. The increase in market rate rents and sales prices that would be needed to offset the proposed requirements.

The preceding tests are the evaluation methodology used to balance the impacts that increasing the Inclusionary Housing requirements has on developers and property owners. Specifically, the factors to be considered are:

1. The need for residential development to support land values that are competitive with other potential uses, and that exceed the value the property owner is currently receiving from the existing use of the property; and

40.39 Report to City Council: Measure M Impact Analysis Page 26 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024

2. To gain an understanding of the near-term increases in achievable market rate rents and sales prices that would need to be achieved to offset the impacts created by the increased Inclusionary Housing requirement.

It is important to understand that every proposed residential development embodies unique characteristics. As such, the benchmarks presented in the following table were used collaboratively to identify the Inclusionary Housing requirements that can be supported:

Benchmark Evaluation Standards
Inclusionary Housing Evaluation
Reduction in property acquisition cost needed to offset the impact created by the Inclusionary Housing requirements. 30% The increase in market rate rents and sales prices that would be needed to offset the proposed requirements. 4%
Ideally, both benchmark standards would be met. However, to give the 25% Inclusionary Housing requirement the best chance of being deemed to be supportable, KMA only required one of the benchmarks to be achieved in each alternative being evaluated.

E. Financial Analysis Organization
The following sections of the Financial Evaluation describe the assumptions, analysis and findings related to apartment and ownership housing developments. The analyses are supported by the following Attachments:

Financial Analysis Organization
Attachment 2: Affordable Housing Cost Calculation Methodology Attachment 3: Apartment Development
Attachment 4: Ownership Housing Development

40.40 Report to City Council: Measure M Impact Analysis Page 27 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 III. APARTMENT DEVELOPMENT ANALYSIS
KMA created three prototype apartment development scenarios that were used to evaluate the impacts created by variations in site sizes and densities of the project types anticipated to be developed in Santa Cruz. The characteristics of the apartment development prototypes are described in the following table:

A. Pro Forma Organization and Assumptions

MARKET RATE SCENARIOS
The 100% market rate unit apartment development prototypes provide baselines against which to measure the impacts created by affordable housing requirements. The pro forma analyses for the 100% market rate unit scenarios are organized as follows:

Pro Forma Analysis - 100% Market Rate Scenario
Apartment Development Prototypes
Table 1: Estimated Development Costs
Table 2: Estimated Stabilized Net Operating Income
Table 3: Stabilized Return on Total Investment
Alternative
Site Area
(Acres)
Density
(Units / Acre)
Total Number
of Units
Density
(Units / Acre)
Total Number
of Units
High Density 1.0 150 150 225 225
Medium Density 0.5 60 30 90 45
SRO 0.75 125 94 188 141
Base Zoning Section 65915 Density Bonus
Project Descriptions
Apartment Development Prototypes

40.41 Report to City Council: Measure M Impact Analysis Page 28 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 The stabilized returns on investment generated by the 100% market rate scenarios are used as the benchmark returns for the purpose of estimating the impacts created by the imposition of Inclusionary Housing obligations. KMA measured the financial impacts created by the imposition of Inclusionary Housing requirements using the tools described previously in this Financial Evaluation.

AFFORDABLE HOUSING SCENARIOS
The pro forma analyses for the affordable housing scenarios are organized as follows:

Pro Forma Analysis – Affordable Housing Alternatives
Apartment Development Prototypes
Table 1: Estimated Development Costs
Table 2: Estimated Stabilized Net Operating Income
Table 3: Financial Impacts: Inclusionary Housing Requirements The “Affordable Rent” calculation methodology is described in Attachment 2: Appendix A and the Affordable Rent calculations are detailed in Attachment 3: Appendix B. The results are presented in the following table:

Affordable Rents
Apartment Development Prototypes
Inclusionary Housing Section 65915
Number of Low Income Very Low Income
Bedrooms 80% of AMI 50% of AMI
Studio $1,974 $1,005
1 $2,252 $1,144
2 $2,503 $1,258

40.42 Report to City Council: Measure M Impact Analysis Page 29 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 B. Alternatives Testing
HIGH DENSITY – TRADITIONAL APARTMENT PROTOTYPE
The analysis of the High Density - Traditional Apartment Prototype is presented in Attachment 3 – Appendix C. The results are summarized in the following table:

MARKET RATE

ALTERNATIVE
20% LOW INCOME

INCLUSIONARY

ALTERNATIVE
BASE ZONING UNITS:
15% AT VERY LOW
INCOME + 5% AT LOW
INCOME
BASE ZONING UNITS:
15% AT VERY LOW
INCOME + 10% AT

LOW INCOME
Project Description
Site Area (Sf) 43,560 43,560 43,560 43,560
Density (Units/Acre) 150 150 225 225
Unit Mix
Studio/SRO Units 60 60 90 90
One Bedroom Units 75 75 112 112
Two Bedroom Units 15 15 23 23
Total Units 150 150 225 225
Parking Spaces Per Unit 1.10 1.10 0.50 0.50
Development Costs
Property Acquisition Costs $4,356,000 $4,356,000 $4,356,000 $4,356,000 Construction Costs 94,827,000 94,727,000 133,537,000 133,506,000 Total Development Cost $99,183,000 $99,083,000 $137,893,000 $137,862,000 Per Unit $661,200 $660,600 $612,900 $612,700
Stabilized Net Operating Income $4,760,700 $4,286,800 $6,452,100 $6,322,700 Total Financial Impact
Required Prop Acq Cost Reduction ($) $9,773,000 $3,472,000 $6,137,000 Required Prop Acq Cost Reduction (%) 224% 80% 141%
% Rent Increase to Offset Impact 10.7% 2.3% 4.3%
50% §65915 DENSITY BONUS ALTERNATIVE
Apartment Development Prototypes
High Density - Traditional Apartment Prototype
Base Case Density: 150 Units/Acre

40.43 Report to City Council: Measure M Impact Analysis Page 30 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 MEDIUM DENSITY – TRADITIONAL APARTMENT PROTOTYPE
The analysis of the Medium Density - Traditional Apartment Prototype is presented in Attachment 3 – Appendix D. The results are summarized in the following table:

MARKET RATE

ALTERNATIVE
20% LOW INCOME

INCLUSIONARY

ALTERNATIVE
BASE ZONING UNITS:
15% AT VERY LOW
INCOME + 5% AT LOW
INCOME
BASE ZONING UNITS:
15% AT VERY LOW
INCOME + 10% AT

LOW INCOME
Project Description
Site Area (Sf) 21,780 21,780 21,780 21,780
Density (Units/Acre) 60 60 90 90
Unit Mix
Studio/SRO Units 15 15 22 22
One Bedroom Units 12 12 18 18
Two Bedroom Units 3 3 5 5
Total Units 30 30 45 45
Parking Spaces Per Unit 1.10 1.10 0.51 0.51
Development Costs
Property Acquisition Costs $2,178,000 $2,178,000 $2,178,000 $2,178,000 Construction Costs 14,679,000 14,667,000 21,508,000 21,505,000 Total Development Cost $16,857,000 $16,845,000 $23,686,000 $23,683,000 Per Square Foot of Land Area $561,900 $561,500 $526,400 $526,300 Stabilized Net Operating Income $793,000 $728,600 $1,086,400 $1,064,900 Total Financial Impact
Required Prop Acq Cost Reduction ($) $1,357,000 $592,000 $1,046,000 Required Prop Acq Cost Reduction (%) 62% 27% 48%
% Rent Increase to Offset Impact 8.7% 2.3% 4.3%
Base Case Density: 60 Units/Acre
Medium Density - Traditional Apartment Prototype
Apartment Development Prototypes
50% §65915 DENSITY BONUS ALTERNATIVE

40.44 Report to City Council: Measure M Impact Analysis Page 31 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024

SRO APARTMENT PROTOTYPE
The analysis of the SRO Apartment Prototype is presented in Attachment 3 – Appendix D. The results are summarized in the following table:

MARKET RATE

ALTERNATIVE
20% LOW INCOME

INCLUSIONARY

ALTERNATIVE
BASE ZONING UNITS:
15% AT VERY LOW
INCOME + 5% AT LOW
INCOME
BASE ZONING UNITS:
15% AT VERY LOW
INCOME + 10% AT

LOW INCOME
Project Description
Site Area (Sf) 32,670 32,670 32,670 32,670
Density (Units/Acre) 125 125 188 188
Unit Mix
Studio/SRO Units 94 94 141 141
One Bedroom Units 0 0 0 0
Two Bedroom Units 0 0 0 0
Total Units 94 94 141 141
Parking Spaces Per Unit 1.00 1.00 0.50 0.50
Development Costs
Property Acquisition Costs $3,267,000 $3,267,000 $3,267,000 $3,267,000 Construction Costs 36,597,000 36,572,000 53,283,000 53,276,000 Total Development Cost $39,864,000 $39,839,000 $56,550,000 $56,543,000 Per Unit $424,100 $423,800 $401,100 $401,000
Stabilized Net Operating Income $1,822,100 $1,724,100 $2,505,200 $2,479,400 Total Financial Impact
Required Prop Acq Cost Reduction ($) $2,119,000 $1,741,000 $2,299,000 Required Prop Acq Cost Reduction (%) 65% 53% 70%
% Rent Increase to Offset Impact 5.6% 2.8% 3.9%
Base Case Density: 125 Units/Acre
SRO Apartment Prototype
Apartment Development Prototypes
50% §65915 DENSITY BONUS ALTERNATIVE

40.45 Report to City Council: Measure M Impact Analysis Page 32 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 C. Findings: Apartment Development Analysis
The financial impacts created by the Inclusionary Housing alternatives tested in this analysis are presented in the following table:

The following conclusions can be derived from the apartment development analyses:

1. 20% Low Income Inclusionary Housing Requirement:
a. At the base zoning standard, it is currently not financially viable to develop an apartment project that includes a 20% Inclusionary Housing component. b. The use of the Section 65915 density bonus materially enhanced the viability of the three apartment development prototypes that fulfilled a 20% Inclusionary Housing requirement. Each prototype met the established rent offset benchmark, and one prototype also met the property acquisition cost reduction benchmark.

2. None of the three apartment development prototypes achieved viability if the Inclusionary Housing requirement is increased to 25%.

High Density -
Traditional Apartment
Prototype
Medium Density -
Traditional Apartment
Prototype
SRO Apartment
Prototype
20% Inclusionary Requirement - Base Zoning Alternative
Required Prop Acq Cost Reduction 224% 62% 65%
% Rent Increase to Offset Impact 10.7% 8.7% 5.6%
20% Inclusionary Requirement - Density Bonus Alternative Required Prop Acq Cost Reduction 80% 27% 53%
% Rent Increase to Offset Impact 2.3% 2.3% 2.8%
25% Inclusionary Requirement - Density Bonus Alternative Required Prop Acq Cost Reduction 141% 48% 70%
% Rent Increase to Offset Impact 4.3% 4.3% 3.9%
Estimated Financial Impacts
Apartment Development Prototypes

40.46 Report to City Council: Measure M Impact Analysis Page 33 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 It is important to consider that the Inclusionary Housing requirement was increased from 15% to 20% effective in February 2020. Since then, the market rate apartment projects that have entered into the approval process can be described as follows:

1. Only one market rate apartment development has commenced construction under the 20% requirement, and that was a small project with a two unit Inclusionary Housing obligation. The developer also included three ADUs to the mix to make the project more financially viable.

2. Building permits are being pursued for apartment developments at 530 Front Street and 719 Darwin Street. Construction has not commenced on either of these developments.

3. The Front/Riverfront project located at 418, 440, 504, and 508 Front Street is currently under development:
a. The project is subject to the former 15% Inclusionary Housing requirement; b. The developer obtained a subdivision map that allows the units to be sold; and c. The developer plans to rent the units upon completion.

By definition, 100% affordable housing projects are not impacted by changes in the Inclusionary Housing requirements. These developments achieve financial feasibility through using a range of local, state and federal grants and assistance sources.

40.47 Report to City Council: Measure M Impact Analysis Page 34 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 IV. OWNERSHIP HOUSING DEVELOPMENT ANALYSES
Residential development in Santa Cruz has been dominated by the construction of apartments through several real estate cycles. A number of the proposed apartment developments have obtained subdivision tract maps that will allow the units to be sold as condominiums. However, to date developers have opted to rent the units upon completion.

KMA created two condominium prototypes based on the characteristics of recently proposed mapped apartment projects. KMA also created a townhome prototype based on recently proposed and developed projects. The characteristics of the ownership housing prototypes are described in the following table:

A. Pro Forma Organization and Assumptions

MARKET RATE SCENARIOS
The 100% market rate unit ownership housing development scenarios provide baselines against which to measure the impacts created by affordable housing requirements. The pro forma analyses for the 100% market rate unit scenarios are organized as follows:

Alternative
Site Area
(Acres)
Density
(Units / Acre)
Total Number
of Units
Density
(Units / Acre)
Total Number
of Units
High Density 1.0 125 125 169 169
Low Density 2.0 30 60 45 90
Townhome 2.3 15 35 NA NA
Project Descriptions
Ownership Housing Development Prototypes
Base Zoning Section 65915 Density Bonus

40.48 Report to City Council: Measure M Impact Analysis Page 35 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 Pro Forma Analysis – 100% Market Rate Scenario
Ownership Housing Development Prototypes
Table 1: Estimated Development Costs
Table 2: Projected Net Sales Revenue
Table 3: Projected Developer Profit
The estimated developer profit for each of the 100% market rate scenarios is used as the benchmark profit percentage for the purpose of estimating the impacts created by the imposition of Inclusionary Housing obligations. The resulting financial gaps represent the impact created by the requirements being tested.

AFFORDABLE HOUSING SCENARIOS
The pro forma analyses for the affordable housing scenarios are organized as follows:

Pro Forma Analyses - Affordable Housing Alternatives
Ownership Housing Development Prototypes
Table 1: Estimated Development Costs
Table 2: Projected Net Sales Revenue
Table 3: Financial Impacts: Inclusionary Housing Requirements KMA measured the financial impacts created by the imposition of Inclusionary Housing requirements using the tools described previously in this Financial Evaluation. These tools were used to identify the moderate income and very low income requirements that can be feasibly imposed on ownership housing developments.

The “Affordable Sales Price” calculation methodology is described in Attachment 2: Appendix B and the Affordable Sales Price calculations are detailed in Attachment 4: Appendix B. The results are presented in the following table:

40.49 Report to City Council: Measure M Impact Analysis Page 36 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 Affordable Sales Prices
Ownership Housing Development Prototypes
Inclusionary Housing Section 65915
Number of Moderate Income Very Low Income
Bedrooms 110% of AMI 50% of AMI
Studio $296,600 $62,400
1 $341,200 $73,400
2 $367,400 $67,900
3 $407,100 $63,000
B. Alternatives Testing

HIGH DENSITY CONDOMINIUM PROTOTYPE
The analysis of the High Density Condominium Prototype is presented in Attachment 4 – Appendix C.

The results are summarized in the table on the following page:

40.50 Report to City Council: Measure M Impact Analysis Page 37 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024

LOW DENSITY CONDOMINIUM PROTOTYPE
The analysis of the Low Density Condominium Prototype is presented in Attachment 4 – Appendix D.

The results are summarized in the following table:

MARKET RATE

ALTERNATIVE
20% MODERATE
INCOME

INCLUSIONARY

ALTERNATIVE
20% MODERATE
INCOME

INCLUSIONARY

ALTERNATIVE
25% MODERATE
INCOME

INCLUSIONARY

ALTERNATIVE
BASE ZONING UNITS:
11% @ VERY LOW
INCOME + 9% @

MODERATE INCOME
BASE ZONING UNITS:
11% @ VERY LOW
INCOME + 14% @

MODERATE INCOME
Project Description
Site Area (Sf) 43,560 43,560 43,560 43,560
Density (Units/Acre) 125 125 169 169
Unit Mix
Studio Units 31 31 42 42
One-Bedroom Units 63 63 85 85
Two-Bedroom Units 31 31 42 42
Three-Bedroom Units 0 0 0 0
Total Units 125 125 169 169
Parking Spaces Per Unit 1.25 1.25 0.63 0.63
Development Costs
Property Acquisition Costs $4,356,000 $4,356,000 $4,356,000 $4,356,000 Construction Costs 80,728,000 80,462,000 107,385,000 107,287,000 Total Development Cost $85,084,000 $84,818,000 $111,741,000 $111,643,000 Per Unit $680,700 $678,500 $661,200 $660,600
Net Revenue $90,104,000 $80,054,000 $108,270,000 $106,031,000 Developer Profit / (Loss) 5.9% -5.6% -3.1% -5.0%
Total Financial Impact
Required Prop Acq Cost Reduction ($) $9,768,000 $10,064,000 $12,199,000 Required Prop Acq Cost Reduction (%) 224% 231% 280%
% Market Price Increase to Offset Impact 13% 9% 12%
High Density Condominium Prototype
Ownership Housing Development Prototypes
35% §65915 Density Bonus Alternative
Base Case Density: 125 Units/Acre

40.51 Report to City Council: Measure M Impact Analysis Page 38 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024

TOWNHOME PROTOTYPE
The analysis of the Townhome Prototype is presented in Attachment 4 – Appendix E. The results of the analysis are summarized in the following table:

MARKET RATE

ALTERNATIVE
20% MODERATE
INCOME

INCLUSIONARY

ALTERNATIVE
20% MODERATE
INCOME

INCLUSIONARY

ALTERNATIVE
25% MODERATE
INCOME

INCLUSIONARY

ALTERNATIVE
BASE ZONING UNITS:
15% @ VERY LOW
INCOME + 5% @

MODERATE INCOME
BASE ZONING UNITS:
15% @ VERY LOW
INCOME + 10% @

MODERATE INCOME
Project Description
Site Area (Sf) 87,120 87,120 87,120 87,120
Density (Units/Acre) 30 30 45 45
Unit Mix
Studio Units 0 0 0 0
One-Bedroom Units 18 18 27 27
Two-Bedroom Units 30 30 45 45
Three-Bedroom Units 12 12 18 18
Total Units 60 60 90 90
Parking Spaces Per Unit 1.30 1.30 0.66 0.66
Development Costs
Property Acquisition Costs $8,712,000 $8,712,000 $8,712,000 $8,712,000 Construction Costs 52,319,000 52,138,000 91,653,000 91,653,000 Total Development Cost $61,031,000 $60,850,000 $100,365,000 $100,365,000 Per Unit $1,017,200 $1,014,200 $1,115,200 $1,115,200
Net Revenue $68,295,000 $58,955,000 $90,538,000 $88,215,000 Developer Profit 11.9% -3.1% -9.8% -12.1%
Total Financial Impact
Required Prop Acq Cost Reduction ($) $9,137,000 $21,773,000 $24,096,000 Required Prop Acq Cost Reduction (%) 105% 250% 277%
% Market Price Increase to Offset Impact 15.8% 23.1% 26.6% Ownership Housing Development Prototypes
50% §65915 Density Bonus Alternative
Low Density Condominium Prototype
Base Case Density: 30 Units/Acre

40.52 Report to City Council: Measure M Impact Analysis Page 39 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 C. Findings: Ownership Housing Development Analysis
The City’s Inclusionary Housing program, as detailed in Municipal Code Chapter 24.16, requires that ownership housing developments with five or more units must allocate 20% of the units to low and moderate income households. However, the Chapter does not identify a required allocation between

MARKET RATE

ALTERNATIVE
20% MODERATE
INCOME

INCLUSIONARY

ALTERNATIVE
25% MODERATE
INCOME

INCLUSIONARY

ALTERNATIVE
Project Description
Site Area (Sf) 100,000 100,000 100,000
Density (Units/Acre) 15 15 15
Unit Mix
Studio Units 0 0 0
One-Bedroom Units 9 9 9
Two-Bedroom Units 26 26 26
Three-Bedroom Units 0 0 0
Total Units 35 35 35
Parking Spaces Per Unit 1.74 1.74 1.74
Development Costs
Property Acquisition Costs $10,000,000 $10,000,000 $10,000,000 Construction Costs 24,708,000 24,716,000 24,776,000
Total Development Cost $34,708,000 $34,716,000 $34,776,000 Per Unit $991,700 $991,900 $993,600
Net Revenue $37,504,000 $32,443,000 $30,842,000
Developer Profit 8.1% -6.5% -11.3%
Total Financial Impact
Required Prop Acq Cost Reduction ($) $5,070,000 $6,735,000 Required Prop Acq Cost Reduction (%) 51% 67%
% Market Price Increase to Offset Impact 15.9% 22.9%
Townhome Prototype
Ownership Housing Development Prototypes
Base Case Density: 15 Units/Acre

40.53 Report to City Council: Measure M Impact Analysis Page 40 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 low and moderate income units. For the purposes of this analysis, KMA assumed that the entire obligation can be fulfilled with moderate income units.

The key finding of the analysis is that condominium and townhome development is not currently financially viable if any affordable housing requirements are imposed. The analyses indicate that 100% market rate projects could potentially be supported, but even the imposition of a moderate income requirement generated negative profit in all the ownership housing prototypes that were tested. The loss would be even larger if a low income requirement is applied.

Based on the analyses, it is KMA’s conclusion that the existing 20% Inclusionary Housing cannot be supported under current economic conditions. This conclusion is supported by the fact that no market rate ownership developments that are subject to 20% Inclusionary Housing requirement have commenced construction. If the obligation is increased to 25% the constraint would be even greater.

As discussed previously, a number of proposed apartment developments have obtained subdivision tract maps that will allow the units to be sold as condominiums at some point in the future. One likely reason that developers have opted to rent the units upon completion is that under current conditions apartment development is more profitable than condominium and townhome development.

V. FINANCIAL EVALUATION CONCLUSIONS
There is very little vacant developable land left in Santa Cruz. As a result, the majority of recent new residential development has been occurring on properties that are developed with existing improvements. The Housing Element makes the fundamental assumption that this will continue to be the case. For this to occur, the property value supported by residential development must be competitive with the other opportunities available to property owners.

Based on the results of the pro forma analyses, KMA reached the following conclusions:

1. Apartment Development:

40.54 Report to City Council: Measure M Impact Analysis Page 41 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024 a. Under current conditions, the existing 20% Inclusionary Housing requirement can only be supported if the project can make use of the Section 65915 density bonus on a cost efficient basis.
b. A 25% Inclusionary Housing requirement could not be supported by any of the apartment prototypes even it was assumed that the maximum Section 65915 density bonus was applied.

2. Ownership Housing Development:
a. Under current conditions ownership housing development cannot support an affordable housing requirement of any kind.
b. It is possible that developers of some mapped apartment projects may ultimately sell the units. However, the opportunities for this to occur will be constrained by the imposition of the current 20% Inclusionary Housing obligation. This constraint will be exacerbated if the Inclusionary Housing requirement is increased to 25%.

It is important to remember that the courts and the State legislature have imposed the following requirements on Inclusionary Housing programs:

1. Inclusionary Housing requirements cannot be confiscatory;

2. Inclusionary Housing requirements cannot deprive a property owner of a fair and reasonable return on investment; and

3. Inclusionary Housing requirements cannot act as a constraint to housing development.

Base on the assumptions and analysis presented in the Financial Evaluation, KMA reached the following conclusions:

40.55 Report to City Council: Measure M Impact Analysis Page 42 Keyser Marston Associates, Inc. 2401001.SC / 19175.008.016 January 18, 2024

40.56 ATTACHMENT 1
RESOLUTION NO. NS-30,240

REPORT TO CITY COUNCIL

SANTA CRUZ, CALIFORNIA

40.57 40.58

40.59 40.60

40.61 40.62

40.63 ATTACHMENT 2

AFFORDABLE HOUSING COST CALCULATION METHODOLOGIES
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

40.64 Affordable Housing Cost Calculation Methodologies Page 1 Inclusionary Housing: Financial Evaluation January 18, 2024

APPENDIX A

AFFORDABLE RENT CALCULATION METHODOLOGY

ASSUMPTIONS
The Affordable Rent calculations are presented in Attachment 3 – Appendix B. The calculations are based on the following assumptions:

1. The household income information used in the calculations is based on 2023 income statistics for Santa Cruz County as a whole. This information is published annually by the United States Department of Housing and Urban Development (HUD) and distributed by the California Department of Housing and Community Development (HCD).

2. The household size appropriate for the unit is based on the California Health and Safety Code (H&SC) Section 50052.5 standard of the number of bedrooms in the home plus one.1 H&SC Section 50052.5 refers to this as “the family size appropriate for the unit.” This is a benchmark that is used for calculation purposes only. It is neither an occupancy minimum nor a maximum.

3. The benchmark household incomes used in the Affordable Rent analyses are based on the following standards:
a. The low income rents imposed by the City’s Inclusionary Housing Ordinance are based on 80% of area median income (AMI).
b. The affordable rents used in the California Government Code Section 65915 et seq. (Section 69515) density bonus analyses are based on the very low income standard.2 The very low income rents are based on 50% of AMI, which is the standard imposed by H&SC Section 50053.

4. The percentages of defined household income that are allocated to housing related expenses are set as follows:
a. The City’s Inclusionary Housing Ordinance allocates 35% of household income to housing related expenses.
1 For example, the imputed household size for a two-bedroom unit is three persons. 2 Based on the sliding scale density bonuses provided by Section 65915 (f) it is mathematically most advantageous from a financial standpoint to fulfill the Section 65915 affordability requirements with very low income units.

40.65 Affordable Housing Cost Calculation Methodologies Page 2 Inclusionary Housing: Financial Evaluation January 18, 2024 b. H&SC Section 50053 allocates 30% of household income to housing-related expenses.

5. The following monthly utilities allowances were applied in this analysis.3 Utility Allowances
Apartment Development Prototypes
Number of
Bedrooms
Monthly Utilities
Allowances
Studio $113
1 $134
2 $180

AFFORDABLE RENTS
The resulting affordable rents are presented in the following table:

Affordable Rents
Apartment Development Prototypes
Number of Inclusionary Housing: Section 65915:

Bedrooms Low Income Very Low Income
Studio $1,974 $1,005
1 $2,252 $1,144
2 $2,503 $1,258
3 Utilities allowances are based on utilities costs comprised of electric heating, cooking and water heating; and basic electric. The allowances are based on the Santa Cruz County Housing Authority schedule effective as of January 1, 2024.

40.66 Affordable Housing Cost Calculation Methodologies Page 3 Inclusionary Housing: Financial Evaluation January 18, 2024

APPENDIX B

AFFORDABLE SALES PRICE CALCULATION METHODOLOGY

ASSUMPTIONS
The Affordable Sales Price calculations are presented in Attachment 4 – Appendix B. The calculations are based on the following assumptions:

1. The household income information used in the calculations is based on 2023 income statistics for Santa Cruz County as a whole:
a. The household incomes for very low income households are produced by HUD and distributed by HCD.
b. The household incomes for moderate income households are produced and distributed annually by HCD.

2. The Affordable Sales Price estimates are based on the calculation methodology imposed by H&SC Section 50052.5.

The elements included in the Affordable Sales Price calculations are described in the following sections of this Attachment.

Household Size
For the sole purposes of calculating Affordable Sales Prices, H&SC Section 50052.5 sets household sizes based on the number of bedrooms in the home plus one. As discussed previously, this is not an occupancy minimum or maximum. Rather, it is a benchmark that creates a consistent Affordable Sales Price calculation methodology.

Household Income
For calculation purposes only, H&SC Section 50052.5 applies benchmark household incomes as the standard for determining the Affordable Sales Prices. These benchmarks are based on the following percentages of the Santa Cruz County AMI:

40.67 Affordable Housing Cost Calculation Methodologies Page 4 Inclusionary Housing: Financial Evaluation January 18, 2024 Income Category % of AMI
Moderate 110%
Very Low 50%
Income Allocated to Housing-Related Expenses
H&SC Section 50052.5 allocates the following percentages of the benchmark household incomes to the payment of housing-related expenses:

Income Category
% of Benchmark
Income
Moderate 35%
Very Low 30%
Housing-Related Expenses
Based on research undertaken by KMA, the variable housing related expense assumptions used in this analysis are presented in the following table:

Variable Housing Related Expenses
Ownership Housing Development Prototypes
Number of
Bedrooms
Monthly Utilities
Allowances 4
Monthly HOA,
Insurance &
Maintenance
Studio $301 $350
1 $329 $400
2 $407 $525
3 $493 $700
4 Utilities allowances are based on utilities costs comprised of electric heating, cooking and water heating; basic electric; and water, sewer and garbage services. The allowances are based on the Santa Cruz County Housing Authority schedule effective as of January 1, 2024.

40.68 Affordable Housing Cost Calculation Methodologies Page 5 Inclusionary Housing: Financial Evaluation January 18, 2024 The property tax expense estimates are based on 1.15% of the defined Affordable Sales Prices. This assumes that the City will require the homes to be resold at an Affordable Sales Price throughout one cumulative 45-year covenant period.

Supportable Mortgage Amount
The mortgage amounts used in the Affordable Sales Price calculations are estimated using the income available after the other housing-related expenses are paid. The mortgage terms used in this Financial Evaluation were based on a 30-year fully amortizing loan at a 7.32% interest rate. 5 Benchmark Down Payment
KMA set the benchmark down payment at 5% of the estimated Affordable Sales Price. A down payment of this magnitude is commonly allowed by affordable housing programs.

AFFORDABLE SALES PRICES
The resulting Affordable Sales Prices are estimated as follows:

Affordable Sales Prices
Ownership Housing Development Prototypes
Number of Inclusionary Housing: Section 65915:

Bedrooms Moderate Income Very Low Income
Studio $296,600 $62,400
1 $341,200 $73,400
2 $367,400 $67,900
3 $407,100 $63,000
5 Based on a 50 basis points premium applied to the Freddie Mac monthly average, between January 2023 and December 2023, for a fixed-interest rate loan with a 30-year amortization period.

40.69 ATTACHMENT 3

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; ATT 3 TITLE Page 1 of 57

40.70 APPENDIX A

MARKET SURVEY
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

APARTMENT DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; App A Titles Page 2 of 57

40.71 APPENDIX A
MARKET SURVEY - 4 STAR PROPERTIES

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Name Address # of Units
Unit Size
(SF) Total Per SF Year Built
I.

Clay Street Residences 132 Clay St Santa Cruz 95060 2 379 $2,411 $6.36 2008 Nanda on Pacific 1547 Pacific Ave Santa Cruz 95060 16 421 $2,316 $5.50 2020 Five55 555 Pacific Ave Santa Cruz 95060 36 440 $2,993 $6.80 2018 Pacific Shores Apartments 1240 Shaffer Rd Santa Cruz 95060 103 623 $2,027 $3.25 2003 Minimum 379 $2,027 $3.25
Maximum 623 $2,993 $6.80
Weighted Average 557 $2,283 $4.34
II.

Five55 555 Pacific Ave Santa Cruz 95060 58 630 $3,719 $5.90 Nanda on Pacific 1547 Pacific Ave Santa Cruz 95060 43 673 $3,161 $4.70 Clay Street Residences 132 Clay St Santa Cruz 95060 11 815 $2,714 $3.33 Pacific Shores Apartments 1240 Shaffer Rd Santa Cruz 95060 103 1,017 $3,809 $3.75 Minimum 630 $2,714 $3.33
Maximum 1,017 $3,809 $5.90
Weighted Average 833 $3,599 $4.50
Average Effective Rent
Studio Units
One-Bedroom Units
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; Rent Survey Page 3 of 57

40.72 APPENDIX A
MARKET SURVEY - 4 STAR PROPERTIES

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Name Address # of Units
Unit Size
(SF) Total Per SF Year Built
Average Effective Rent
III.

Nanda on Pacific 1547 Pacific Ave Santa Cruz 95060 20 1,045 $4,741 $4.54 Clay Street Residences 132 Clay St Santa Cruz 95060 3 1,154 $3,282 $2.84 Minimum 1,045 $3,282 $2.84
Maximum 1,154 $4,741 $4.54
Weighted Average 1,059 $4,551 $4.32
Source: CoStar, December 2023
Two-Bedroom Units
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; Rent Survey Page 4 of 57

40.73 APPENDIX B

APARTMENT DEVELOPMENT

AFFORDABLE RENT CALCULATIONS
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; App B Titles Page 5 of 57

40.74 APPENDIX B

AFFORDABLE RENT CALCULATIONS
2023 INCOME STANDARDS

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Studio/SRO
Units
One Bedroom
Units
Two Bedroom
Units
I. General Assumptions
Area Median Income (AMI) 1 $89,450 $102,250 $115,000
Monthly Utilities Allowance 2 $113 $134 $180
II. Affordable Rent Calculations
A. Very Low Income - Rent Based on 50% AMI 3
Benchmark Annual Household Income $44,725 $51,125 $57,500 Percentage of Income Allotted to Housing Expenses 30% 30% 30% Monthly Income Available for Housing Expenses $1,118 $1,278 $1,438 (Less) Monthly Utilities Allowance (113) (134) (180)
Maximum Allowable Rent $1,005 $1,144 $1,258
B. Low Income - Rent Based on 80% AMI 4
Benchmark Annual Household Income $71,560 $81,800 $92,000 Percentage of Income Allotted to Housing Expenses 35% 35% 35% Monthly Income Available for Housing Expenses $2,087 $2,386 $2,683 (Less) Monthly Utilities Allowance (113) (134) (180)
Maximum Allowable Rent $1,974 $2,252 $2,503
1 2
3 4 Based on the requirements imposed by the City's Inclusionary Housing Ordinance. The rents are calculated based on 80% of the median income published by HCD.

Based on the 2023 Santa Cruz County household incomes published by the California Housing & Community Development Department (HCD). The benchmark household size is set at the number of bedrooms in the unit plus one.

Based on the Santa Cruz County Housing Authority utility allowance schedule for apartments effective as of 1/1/24. Assumes: Electric Heating, Electric Cooking, and Electric Water Heater; and Basic Electric.

Based on the requirements imposed by Government Code Section 65915 et seq. The rents are required to be set using the California Health & Safety Code Section 50053 calculation methodology.

Prepared by: Keyser Marston Associates
File name: 1 18 24 SC Rent; Aff Rent Page 6 of 57

40.75 SANTA CRUZ, CALIFORNIA

APPENDIX C

PRO FORMA ANALYSES

HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; App C Title Page 7 of 57

40.76 INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

APPENDIX C - EXHIBIT I

PRO FORMA ANALYSIS

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 150 UNITS/ACRE

HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; PF HD Mkt Page 8 of 57

40.77 APPENDIX C - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 150 UNITS/ACRE: HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 43,560 Sf of Land $100 /Sf of Land $4,356,000 II. Direct Costs 2
On-Site Improvements/Landscaping 43,560 Sf of Land $45 /Sf of Land $1,960,000 Parking 3
Above-Ground Spaces 139 Spaces $30,000 /Space 4,170,000 1st Level Subterranean Spaces 26 Spaces $50,000 /Space 1,300,000 Building Costs 131,000 Sf of GBA $400 /Sf of GBA 52,400,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 11,966,000 Total Direct Costs 131,000 Sf of GBA $548 /Sf of GBA $71,796,000 III. Indirect Costs
Architecture, Engineering & Consulting 6% Direct Costs $4,308,000 Public Permits & Fees 5 150 Units $35,000 /Unit 5,250,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 1,436,000 Marketing 150 Units $2,500 /Unit 375,000
Developer Fee 5% Direct Costs 3,590,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 748,000 Total Indirect Costs $15,707,000
IV. Financing Costs
Interest During Construction
Land 6 $4,356,000 Cost 7.0% Avg Rate $457,000
Construction 7 $94,827,000 Cost 7.0% Avg Rate 5,974,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 893,000 Total Financing Costs $7,324,000
V. Total Construction Cost 150 Units $632,000 /Unit $94,827,000 Total Development Cost 150 Units $661,000 /Unit $99,183,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 The base requirement is 1.0 space for Studio/SRO Units; 1.0 space for One Bedroom Units; and 2.0 spaces for Two Bedroom Units. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 Based on a 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on a 18 month construction period following receipt of entitlements, and a 60% average outstanding loan balance.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; PF HD Mkt Page 9 of 57

40.78 APPENDIX C - EXHIBIT I - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 150 UNITS/ACRE: HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio/SRO Units 60 Units @ $3,061 /Unit/Month $2,203,900 One Bedroom Units 75 Units @ $4,368 /Unit/Month 3,931,500 Two Bedroom Units 15 Units @ $5,240 /Unit/Month 943,200 B. Laundry & Miscellaneous Income 150 Units @ $25 /Unit/Month 45,000 Total Gross Income $7,123,600
Vacancy & Collection Allowance 5% Gross Income (356,200) II. Effective Gross Income $6,767,400
III. Operating Expenses
General Operating Expenses 150 Units @ $4,500 /Unit $675,000 Property Taxes 150 Units @ $8,700 /Unit 1,309,200
Replacement Reserve Deposits 150 Units @ $150 /Unit 22,500 Total Operating Expenses ($2,006,700)
IV. Stabilized Net Operating Income $4,760,700
1 Based in part on the rent survey presented in APPENDIX A. The weighted average monthly rent equates to $6.00 per square foot of leasable area.

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File name: 1 18 24 SC Rent; PF HD Mkt Page 10 of 57

40.79 APPENDIX C - EXHIBIT I - TABLE 3

STABILIZED RETURN ON TOTAL INVESTMENT

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 150 UNITS/ACRE: HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Stabilized Net Operating Income See APPENDIX C - EXHIBIT I - TABLE 2 $4,760,700 II. Total Development Cost See APPENDIX C - EXHIBIT I - TABLE 1 $99,183,000 III. Return on Total Investment 4.8%
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; PF HD Mkt Page 11 of 57

40.80 INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

APPENDIX C - EXHIBIT II

PRO FORMA ANALYSIS
20% LOW INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 150 UNITS/ACRE

HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; PF HD 20% Low Page 12 of 57

40.81 APPENDIX C - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS
20% LOW INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 150 UNITS/ACRE: HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 43,560 Sf of Land $100 /Sf of Land $4,356,000 II. Direct Costs 2
On-Site Improvements/Landscaping 43,560 Sf of Land $45 /Sf of Land $1,960,000 Parking 3
Above-Ground Spaces 139 Spaces $30,000 /Space 4,170,000 1st Level Subterranean Spaces 26 Spaces $50,000 /Space 1,300,000 Building Costs 131,000 Sf of GBA $400 /Sf of GBA 52,400,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 11,966,000 Total Direct Costs 131,000 Sf of GBA $548 /Sf of GBA $71,796,000 III. Indirect Costs
Architecture, Engineering & Consulting 6% Direct Costs $4,308,000 Public Permits & Fees 5 150 Units $35,000 /Unit 5,250,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 1,436,000 Marketing 150 Units $2,500 /Unit 375,000
Developer Fee 5% Direct Costs 3,590,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 748,000 Total Indirect Costs $15,707,000
IV. Financing Costs
Interest During Construction
Land 6 $3,329,800 Cost 7.0% Avg Rate $350,000
Construction 7 $94,927,000 Cost 7.0% Avg Rate 5,980,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 894,000 Total Financing Costs $7,224,000
V. Total Construction Cost 150 Units $632,000 /Unit $94,727,000 Total Development Cost 150 Units $661,000 /Unit $99,083,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 The base requirement is 1.0 space for Studio/SRO Units; 1.0 space for One Bedroom Units; and 2.0 spaces for Two Bedroom Units. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 7 Based on a 18 month construction period following receipt of entitlements, and a 60% average outstanding loan balance.

Based on a 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. Includes a $1,026,200 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; PF HD 20% Low Page 13 of 57

40.82 APPENDIX C - EXHIBIT II - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
20% LOW INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 150 UNITS/ACRE: HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio/SRO Units 48 Units @ $3,061 /Unit/Month $1,763,100 One Bedroom Units 60 Units @ $4,368 /Unit/Month 3,145,200 Two Bedroom Units 12 Units @ $5,240 /Unit/Month 754,600 B. Low Income Units 2
Studio/SRO Units 12 Units @ $1,974 /Unit/Month 284,300
One Bedroom Units 15 Units @ $2,252 /Unit/Month 405,300 Two Bedroom Units 3 Units @ $2,503 /Unit/Month 90,100
C. Laundry & Miscellaneous Income 150 Units @ $25 /Unit/Month 45,000 Total Gross Income $6,487,600
Vacancy & Collection Allowance 5% Gross Income (324,400) II. Effective Gross Income $6,163,200
III. Operating Expenses
General Operating Expenses 150 Units @ $4,500 /Unit $675,000 Property Taxes 150 Units @ $7,900 /Unit 1,178,900
Replacement Reserve Deposits 150 Units @ $150 /Unit 22,500 Total Operating Expenses 150 Units @ $12,509 /Unit ($1,876,400) IV. Stabilized Net Operating Income $4,286,800
1 Based in part on the rent survey presented in APPENDIX A. The weighted average monthly rent equates to $6.00 per square foot of leasable area. 2 The low income rent calculations are based on household income at 80% of AMI, with 35% of income allotted to housing related expenses. See APPENDIX B.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; PF HD 20% Low Page 14 of 57

40.83 APPENDIX C - EXHIBIT II - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
20% LOW INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 150 UNITS/ACRE: HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX C - EXHIBIT II - TABLE 2 $4,286,800 Threshold Return on Total Investment 1 4.8%
Total Supportable Investment $89,310,000
II. Total Development Cost See APPENDIX C - EXHIBIT II - TABLE 1 $99,083,000 III. Total Financial Impact ($9,773,000)
Required Prop Acq Cost Reduction 224% of Estimated Current Acquisition Prices Return on Total Investment 4.3% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 10.7% Market Rate Units 1 Based on the Supportable Investment estimated to be generated by the BASE CASE DENSITY: 150 UNITS/ACRE: MARKET RATE ALTERNATIVE.

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File name: 1 18 24 SC Rent; PF HD 20% Low Page 15 of 57

40.84 INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

APPENDIX C - EXHIBIT III

PRO FORMA ANALYSIS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 5% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE

HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; PF HD 20% VL_L DB Page 16 of 57

40.85 APPENDIX C - EXHIBIT III - TABLE 1

ESTIMATED DEVELOPMENT COSTS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 5% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 43,560 Sf of Land $100 /Sf of Land $4,356,000 II. Direct Costs 2
On-Site Improvements/Landscaping 43,560 Sf of Land $45 /Sf of Land $1,960,000 Parking 3
At-Grade Spaces 0 Spaces $5,000 /Space 0
Above-Ground Spaces 113 Spaces $30,000 /Space 3,390,000 Building Costs 196,707 Sf of GBA $400 /Sf of GBA 78,683,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 16,807,000 Total Direct Costs 196,707 Sf of GBA $513 /Sf of GBA $100,840,000 III. Indirect Costs
Architecture, Engineering & Consulting 6% Direct Costs $6,050,000 Public Permits & Fees 5 225 Units $35,000 /Unit 7,875,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 2,017,000 Marketing 225 Units $2,500 /Unit 563,000
Developer Fee 5% Direct Costs 5,042,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 1,077,000 Total Indirect Costs $22,624,000
IV. Financing Costs
Interest During Construction
Land 6 $3,991,440 Cost 7.0% Avg Rate $419,000
Construction 7 $133,537,000 Cost 7.0% Avg Rate 8,413,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 1,241,000 Total Financing Costs $10,073,000
V. Total Construction Cost 225 Units $593,000 /Unit $133,537,000 Total Development Cost 225 Units $613,000 /Unit $137,893,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 Based on .5 spaces per unit.
4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 7 Based on a 18 month construction period following receipt of entitlements, and a 60% average outstanding loan balance.

Based on a 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. Includes a $364,560 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; PF HD 20% VL_L DB Page 17 of 57

40.86 APPENDIX C - EXHIBIT III - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 5% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio/SRO Units 78 Units @ $3,061 /Unit/Month $2,865,100 One Bedroom Units 97 Units @ $4,368 /Unit/Month 5,084,800 Two Bedroom Units 20 Units @ $5,240 /Unit/Month 1,257,600 B. Inclusionary Units
Very Low Income Density Bonus Units 2
Studio/SRO Units 9 Units @ $1,005 /Unit/Month 108,600
One Bedroom Units 12 Units @ $1,144 /Unit/Month 164,800 Two Bedroom Units 2 Units @ $1,258 /Unit/Month 30,200
Low Income Inclusionary Units 3
Studio/SRO Units 3 Units $1,974 /Unit/Month 71,100
One Bedroom Units 3 Units $2,252 /Unit/Month 81,100
Two Bedroom Units 1 Unit $2,503 /Unit/Month 30,000
C. Laundry & Miscellaneous Income 225 Units @ $25 /Unit/Month 67,500 Total Gross Income $9,760,800
Vacancy & Collection Allowance 5% Gross Income (488,000) II. Effective Gross Income $9,272,800
III. Operating Expenses
General Operating Expenses 225 Units @ $4,500 /Unit $1,012,500 Property Taxes 225 Units @ $7,900 /Unit 1,774,400
Replacement Reserve Deposits 225 Units @ $150 /Unit 33,800 Total Operating Expenses 225 Units @ $12,536 /Unit ($2,820,700) IV. Stabilized Net Operating Income $6,452,100
1 Based in part on the rent survey presented in APPENDIX A. The weighted average monthly rent equates to $6.00 per square foot of leasable area. 2 Under Section 65915 (f) (2), 15% of the Base Units are set aside for very-low income households. 3 The balance of the affordable units are set aside for low income households. The low income rent calculations are based on household income at 80% of AMI, with 35% of income allotted to housing related expenses. See APPENDIX B.

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File name: 1 18 24 SC Rent; PF HD 20% VL_L DB Page 18 of 57

40.87 APPENDIX C - EXHIBIT III - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 5% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX C - EXHIBIT III - TABLE 2 $6,452,100 Threshold Return on Total Investment 1 4.8%
Total Supportable Investment $134,421,000
II. Total Development Cost See APPENDIX C - EXHIBIT III - TABLE 1 $137,893,000 III. Total Financial Impact ($3,472,000)
Required Prop Acq Cost Reduction 80% of Estimated Current Acquisition Prices Return on Total Investment 4.7% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 2.3% Market Rate Units 1 Based on the Supportable Investment estimated to be generated by the BASE CASE DENSITY: 150 UNITS/ACRE: MARKET RATE ALTERNATIVE.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; PF HD 20% VL_L DB Page 19 of 57

40.88 INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

APPENDIX C - EXHIBIT IV

PRO FORMA ANALYSIS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 10% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE

HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
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File name: 1 18 24 SC Rent; PF HD 25% VL_L DB Page 20 of 57

40.89 APPENDIX C - EXHIBIT IV - TABLE 1

ESTIMATED DEVELOPMENT COSTS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 10% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 43,560 Sf of Land $100 /Sf of Land $4,356,000 II. Direct Costs 2
On-Site Improvements/Landscaping 43,560 Sf of Land $45 /Sf of Land $1,960,000 Parking 3
Above-Ground Spaces 113 Spaces $30,000 /Space 3,390,000 1st Level Subterranean Spaces 0 Spaces $50,000 /Space 0 Building Costs 196,707 Sf of GBA $400 /Sf of GBA 78,683,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 16,807,000 Total Direct Costs 196,707 Sf of GBA $513 /Sf of GBA $100,840,000 III. Indirect Costs
Architecture, Engineering & Consulting 6% Direct Costs $6,050,000 Public Permits & Fees 5 225 Units $35,000 /Unit 7,875,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 2,017,000 Marketing 225 Units $2,500 /Unit 563,000
Developer Fee 5% Direct Costs 5,042,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 1,077,000 Total Indirect Costs $22,624,000
IV. Financing Costs
Interest During Construction
Land 6 $3,711,615 Cost 7.0% Avg Rate $390,000
Construction 7 $133,506,000 Cost 7.0% Avg Rate 8,411,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 1,241,000 Total Financing Costs $10,042,000
V. Total Construction Cost 225 Units $593,000 /Unit $133,506,000 Total Development Cost 225 Units $613,000 /Unit $137,862,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 Based on .5 spaces per unit.
4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 7 Based on a 18 month construction period following receipt of entitlements, and a 60% average outstanding loan balance.

Based on a 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. Includes a $644,385 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

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File name: 1 18 24 SC Rent; PF HD 25% VL_L DB Page 21 of 57

40.90 APPENDIX C - EXHIBIT IV - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 10% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio/SRO Units 75 Units @ $3,061 /Unit/Month $2,754,900 One Bedroom Units 93 Units @ $4,368 /Unit/Month 4,875,100 Two Bedroom Units 19 Units @ $5,240 /Unit/Month 1,194,700 B. Inclusionary Units
Very Low Income Density Bonus Units 2
Studio/SRO Units 9 Units @ $1,005 /Unit/Month 108,600
One Bedroom Units 12 Units @ $1,144 /Unit/Month 164,800 Two Bedroom Units 2 Units @ $1,258 /Unit/Month 30,200
Low Income Inclusionary Units 3
Studio/SRO Units 6 Units $1,974 /Unit/Month 142,100
One Bedroom Units 7 Units $2,252 /Unit/Month 189,200
Two Bedroom Units 2 Units $2,503 /Unit/Month 60,100
C. Laundry & Miscellaneous Income 225 Units @ $25 /Unit/Month 67,500 Total Gross Income $9,587,200
Vacancy & Collection Allowance 5% Gross Income (479,400) II. Effective Gross Income $9,107,800
III. Operating Expenses
General Operating Expenses 225 Units @ $4,500 /Unit $1,012,500 Property Taxes 225 Units @ $7,700 /Unit 1,738,800
Replacement Reserve Deposits 225 Units @ $150 /Unit 33,800 Total Operating Expenses 225 Units @ $12,378 /Unit ($2,785,100) IV. Stabilized Net Operating Income $6,322,700
1 Based in part on the rent survey presented in APPENDIX A. The weighted average monthly rent equates to $6.00 per square foot of leasable area. 2 Under Section 65915 (f) (2), 15% of the Base Units are set aside for very-low income households. 3 The balance of the affordable units are set aside for low income households. The low income rent calculations are based on household income at 80% of AMI, with 35% of income allotted to housing related expenses. See APPENDIX B.

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40.91 APPENDIX C - EXHIBIT IV - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 10% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: HIGH DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX C - EXHIBIT IV - TABLE 2 $6,322,700 Threshold Return on Total Investment 1 4.8%
Total Supportable Investment $131,725,000
II. Total Development Cost See APPENDIX C - EXHIBIT IV - TABLE 1 $137,862,000 III. Total Financial Impact ($6,137,000)
Required Prop Acq Cost Reduction 141% of Estimated Current Acquisition Prices Return on Total Investment 4.6% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 4.3% Market Rate Units 1 Based on the Supportable Investment estimated to be generated by the BASE CASE DENSITY: 150 UNITS/ACRE: MARKET RATE ALTERNATIVE.

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40.92 APPENDIX D

PRO FORMA ANALYSES
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

APARTMENT DEVELOPMENT

MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; App D Title Page 24 of 57

40.93 SANTA CRUZ, CALIFORNIA

PRO FORMA ANALYSIS

MARKET RATE ALTERNATIVE

APPENDIX D - EXHIBIT I

APARTMENT DEVELOPMENT
BASE CASE DENSITY: 60 UNITS/ACRE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE
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File name: 1 18 24 SC Rent; PF MD Mkt Page 25 of 57

40.94 APPENDIX D - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 60 UNITS/ACRE MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 21,780 Sf of Land $100 /Sf of Land $2,178,000 II. Direct Costs 2
On-Site Improvements/Landscaping 21,780 Sf of Land $45 /Sf of Land $980,000 Parking 3
Above-Ground Spaces 33 Spaces $30,000 /Space 990,000
1st Level Subterranean Spaces 0 Spaces $50,000 /Space 0 Building Costs 23,700 Sf of GBA $300 /Sf of GBA 7,110,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 1,816,000 Total Direct Costs 23,700 Sf of GBA $460 /Sf of GBA $10,896,000 III. Indirect Costs
Architecture, Engineering & Consulting 6% Direct Costs $654,000 Public Permits & Fees 5 30 Units $35,000 /Unit 1,050,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 218,000 Marketing 30 Units $2,500 /Unit 75,000
Developer Fee 5% Direct Costs 545,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 127,000 Total Indirect Costs $2,669,000
IV. Financing Costs
Interest During Construction
Land 6 $2,178,000 Cost 7.0% Avg Rate $191,000
Construction 7 $14,679,000 Cost 7.0% Avg Rate 771,000
Loan Origination Fees 60% Loan to Cost 1.5 Points 152,000 Total Financing Costs $1,114,000
V. Total Construction Cost 30 Units $489,000 /Unit $14,679,000 Total Development Cost 30 Units $562,000 /Unit $16,857,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 The base requirement is 1.0 space for Studio/SRO Units; 1.0 space for One Bedroom Units; and 2.0 spaces for Two Bedroom Units. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 Based on a 15 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on a 15 month construction period following receipt of entitlements, and a 60% average outstanding loan balance.

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File name: 1 18 24 SC Rent; PF MD Mkt Page 26 of 57

40.95 APPENDIX D - EXHIBIT I - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 60 UNITS/ACRE MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio/SRO Units 15 Units @ $2,381 /Unit/Month $428,500 One Bedroom Units 12 Units @ $4,250 /Unit/Month 612,000 Two Bedroom Units 3 Units @ $4,491 /Unit/Month 161,700
B. Laundry & Miscellaneous Income 30 Units @ $25 /Unit/Month 9,000 Total Gross Income $1,211,200
Vacancy & Collection Allowance 5% Gross Income (60,600) II. Effective Gross Income $1,150,600
III. Operating Expenses
General Operating Expenses 30 Units @ $4,500 /Unit $135,000 Property Taxes 30 Units @ $7,300 /Unit 218,100
Replacement Reserve Deposits 30 Units @ $150 /Unit 4,500 Total Operating Expenses ($357,600)
IV. Stabilized Net Operating Income $793,000
1 Based in part on the rent survey presented in APPENDIX A. The weighted average monthly rent equates to $6.04 per square foot of leasable area.

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File name: 1 18 24 SC Rent; PF MD Mkt Page 27 of 57

40.96 APPENDIX D - EXHIBIT I - TABLE 3

STABILIZED RETURN ON TOTAL INVESTMENT

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 60 UNITS/ACRE MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Stabilized Net Operating Income See APPENDIX D - EXHIBIT I - TABLE 2 $793,000 II. Total Development Cost See APPENDIX D - EXHIBIT I - TABLE 1 $16,857,000 III. Return on Total Investment 4.7%
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File name: 1 18 24 SC Rent; PF MD Mkt Page 28 of 57

40.97 SANTA CRUZ, CALIFORNIA

APPENDIX D - EXHIBIT II

PRO FORMA ANALYSIS
20% LOW INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 60 UNITS/ACRE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

APARTMENT DEVELOPMENT

MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; PF MD 20% Low Page 29 of 57

40.98 APPENDIX D - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS
20% LOW INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 60 UNITS/ACRE: MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 21,780 Sf of Land $100 /Sf of Land $2,178,000 II. Direct Costs 2
On-Site Improvements/Landscaping 21,780 Sf of Land $45 /Sf of Land $980,000 Parking 3
Above-Ground Spaces 33 Spaces $30,000 /Space 990,000
1st Level Subterranean Spaces 0 Spaces $50,000 /Space 0 Building Costs 23,700 Sf of GBA $300 /Sf of GBA 7,110,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 1,816,000 Total Direct Costs 23,700 Sf of GBA $460 /Sf of GBA $10,896,000 III. Indirect Costs
Architecture, Engineering & Consulting 6% Direct Costs $654,000 Public Permits & Fees 5 30 Units $35,000 /Unit 1,050,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 218,000 Marketing 30 Units $2,500 /Unit 75,000
Developer Fee 5% Direct Costs 545,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 127,000 Total Indirect Costs $2,669,000
IV. Financing Costs
Interest During Construction
Land 6 $2,059,300 Cost 7.0% Avg Rate $180,000
Construction 7 $14,667,000 Cost 7.0% Avg Rate 770,000
Loan Origination Fees 60% Loan to Cost 1.5 Points 152,000 Total Financing Costs $1,102,000
V. Total Construction Cost 30 Units $489,000 /Unit $14,667,000 Total Development Cost 30 Units $562,000 /Unit $16,845,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 The base requirement is 1.0 space for Studio/SRO Units; 1.0 space for One Bedroom Units; and 2.0 spaces for Two Bedroom Units. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 7 Based on a 15 month construction period following receipt of entitlements, and a 60% average outstanding loan balance.

Based on a 15 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. Includes a $118,700 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

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40.99 APPENDIX D - EXHIBIT II - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
20% LOW INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 60 UNITS/ACRE: MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio/SRO Units 12 Units @ $2,381 /Unit/Month $342,800 One Bedroom Units 10 Units @ $4,250 /Unit/Month 510,000 Two Bedroom Units 2 Units @ $4,491 /Unit/Month 107,800
B. Low Income Units 2
Studio/SRO Units 3 Units @ $1,974 /Unit/Month 71,100
One Bedroom Units 2 Units @ $2,252 /Unit/Month 54,000
Two Bedroom Units 1 Unit @ $2,503 /Unit/Month 30,000
C. Laundry & Miscellaneous Income 30 Units @ $25 /Unit/Month 9,000 Total Gross Income $1,124,700
Vacancy & Collection Allowance 5% Gross Income (56,200) II. Effective Gross Income $1,068,500
III. Operating Expenses
General Operating Expenses 30 Units @ $4,500 /Unit $135,000 Property Taxes 30 Units @ $6,700 /Unit 200,400
Replacement Reserve Deposits 30 Units @ $150 /Unit 4,500 Total Operating Expenses 30 Units @ $11,330 /Unit ($339,900) IV. Stabilized Net Operating Income $728,600
1 Based in part on the rent survey presented in APPENDIX A. The weighted average monthly rent equates to $6.06 per square foot of leasable area. 2 The low income rent calculations are based on household income at 80% of AMI, with 35% of income allotted to housing related expenses. See APPENDIX B.

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File name: 1 18 24 SC Rent; PF MD 20% Low Page 31 of 57

40.100
APPENDIX D - EXHIBIT II - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
20% LOW INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 60 UNITS/ACRE: MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX D - EXHIBIT II - TABLE 2 $728,600 Threshold Return on Total Investment 1 4.7%
Total Supportable Investment $15,488,000
II. Total Development Cost See APPENDIX D - EXHIBIT II - TABLE 1 $16,845,000 III. Total Financial Impact ($1,357,000)
Required Prop Acq Cost Reduction 62% of Estimated Current Acquisition Prices Return on Total Investment 4.3% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 8.7% Market Rate Units 1 Based on the Developer Return estimated to be generated by the BASE CASE DENSITY: 60 UNITS/ACRE: MARKET RATE ALTERNATIVE.

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40.101
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

APPENDIX D - EXHIBIT III

PRO FORMA ANALYSIS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 5% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE

MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
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40.102
APPENDIX D - EXHIBIT III - TABLE 1

ESTIMATED DEVELOPMENT COSTS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 5% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 21,780 Sf of Land $100 /Sf of Land $2,178,000 II. Direct Costs 2
On-Site Improvements/Landscaping 21,780 Sf of Land $45 /Sf of Land $980,000 Parking 3
Above-Ground Spaces 23 Spaces $30,000 /Space 690,000
1st Level Subterranean Spaces 0 Spaces $50,000 /Space 0 Building Costs 35,943 Sf of GBA $325 /Sf of GBA 11,681,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 2,670,000 Total Direct Costs 35,943 Sf of GBA $446 /Sf of GBA $16,021,000 III. Indirect Costs
Architecture, Engineering & Consulting 6% Direct Costs $961,000 Public Permits & Fees 5 45 Units $35,000 /Unit 1,575,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 320,000 Marketing 45 Units $2,500 /Unit 113,000
Developer Fee 5% Direct Costs 801,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 189,000 Total Indirect Costs $3,959,000
IV. Financing Costs
Interest During Construction
Land 6 $2,126,200 Cost 7.0% Avg Rate $186,000
Construction 7 $21,508,000 Cost 7.0% Avg Rate 1,129,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 213,000 Total Financing Costs $1,528,000
V. Total Construction Cost 45 Units $478,000 /Unit $21,508,000 Total Development Cost 45 Units $526,000 /Unit $23,686,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 Based on .5 spaces per unit.
4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 7 Based on a 15 month construction period following receipt of entitlements, and a 60% average outstanding loan balance.

Based on a 15 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. Includes a $51,800 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Rent; PF MD 20% VL_L DB Page 34 of 57

40.103
APPENDIX D - EXHIBIT III - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 5% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio/SRO Units 19 Units @ $2,381 /Unit/Month $542,800 One Bedroom Units 16 Units @ $4,250 /Unit/Month 816,100 Two Bedroom Units 4 Units @ $4,491 /Unit/Month 215,600
B. Inclusionary Units
Very Low Income Density Bonus Units 2
Studio/SRO Units 2 Units @ $1,005 /Unit/Month 24,100
One Bedroom Units 2 Units @ $1,144 /Unit/Month 27,500
Two Bedroom Units 1 Unit @ $1,258 /Unit/Month 15,100
Low Income Inclusionary Units 3
Studio/SRO Units 1 Unit $1,974 /Unit/Month 23,700
One Bedroom Units 0 Units $2,252 /Unit/Month 0
Two Bedroom Units 0 Units $2,503 /Unit/Month 0
C. Laundry & Miscellaneous Income 45 Units @ $25 /Unit/Month 13,500 Total Gross Income $1,678,400
Vacancy & Collection Allowance 5% Gross Income (83,900) II. Effective Gross Income $1,594,500
III. Operating Expenses
General Operating Expenses 45 Units @ $4,500 /Unit $202,500 Property Taxes 45 Units @ $6,600 /Unit 298,800
Replacement Reserve Deposits 45 Units @ $150 /Unit 6,800 Total Operating Expenses 45 Units @ $11,291 /Unit ($508,100) IV. Stabilized Net Operating Income $1,086,400
1 Based in part on the rent survey presented in APPENDIX A. The weighted average monthly rent equates to $6.03 per square foot of leasable area. 2 Under Section 65915 (f) (2), 15% of the Base Units are set aside for very-low income households. 3 The balance of the affordable units are set aside for low income households. The low income rent calculations are based on household income at 80% of AMI, with 35% of income allotted to housing related expenses. See APPENDIX B.

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40.104
APPENDIX D - EXHIBIT III - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 5% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX D - EXHIBIT III - TABLE 2 $1,086,400 Threshold Return on Total Investment 1 4.7%
Total Supportable Investment $23,094,000
II. Total Development Cost See APPENDIX D - EXHIBIT III - TABLE 1 $23,686,000 III. Total Financial Impact ($592,000)
Required Prop Acq Cost Reduction 27% of Estimated Current Acquisition Prices Return on Total Investment 4.6% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 2.3% Market Rate Units 1 Based on the Developer Return estimated to be generated by the BASE CASE DENSITY: 60 UNITS/ACRE: MARKET RATE ALTERNATIVE.

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40.105
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

APPENDIX D - EXHIBIT IV

PRO FORMA ANALYSIS
50% §65915 DENSITY BONUS ALTERNATIVE
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 10% AT LOW INCOME

MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
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File name: 1 18 24 SC Rent; PF MD 25% VL_L DB Page 37 of 57

40.106
APPENDIX D - EXHIBIT IV - TABLE 1

ESTIMATED DEVELOPMENT COSTS
50% §65915 DENSITY BONUS ALTERNATIVE: BASE ZONING UNITS: 15% AT VERY LOW INCOME + 10% AT LOW INCOME

MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 21,780 Sf of Land $100 /Sf of Land $2,178,000 II. Direct Costs 2
On-Site Improvements/Landscaping 21,780 Sf of Land $45 /Sf of Land $980,000 Parking 3
Above-Ground Spaces 23 Spaces $30,000 /Space 690,000
1st Level Subterranean Spaces 0 Spaces $50,000 /Space 0 Building Costs 35,943 Sf of GBA $325 /Sf of GBA 11,681,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 2,670,000 Total Direct Costs 35,943 Sf of GBA $446 /Sf of GBA $16,021,000 III. Indirect Costs
Architecture, Engineering & Consulting 6% Direct Costs $961,000 Public Permits & Fees 5 45 Units $35,000 /Unit 1,575,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 320,000 Marketing 45 Units $2,500 /Unit 113,000
Developer Fee 5% Direct Costs 801,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 189,000 Total Indirect Costs $3,959,000
IV. Financing Costs
Interest During Construction
Land 6 $2,086,475 Cost 7.0% Avg Rate $183,000
Construction 7 $21,505,000 Cost 7.0% Avg Rate 1,129,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 213,000 Total Financing Costs $1,525,000
V. Total Construction Cost 45 Units $478,000 /Unit $21,505,000 Total Development Cost 45 Units $526,000 /Unit $23,683,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 Based on .5 spaces per unit.
4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 7 Based on a 15 month construction period following receipt of entitlements, and a 60% average outstanding loan balance.

Based on a 15 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. Includes a $91,525 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

Prepared by: Keyser Marston Associates, Inc.

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40.107
APPENDIX D - EXHIBIT IV - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
50% §65915 DENSITY BONUS ALTERNATIVE: BASE ZONING UNITS: 15% AT VERY LOW INCOME + 10% AT LOW INCOME

MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio/SRO Units 18 Units @ $2,381 /Unit/Month $514,300 One Bedroom Units 15 Units @ $4,250 /Unit/Month 765,100 Two Bedroom Units 4 Units @ $4,491 /Unit/Month 215,600
B. Inclusionary Units
Very Low Income Density Bonus Units 2
Studio/SRO Units 2 Units @ $1,005 /Unit/Month 24,100
One Bedroom Units 2 Units @ $1,144 /Unit/Month 27,500
Two Bedroom Units 1 Unit @ $1,258 /Unit/Month 15,100
Low Income Inclusionary Units 3
Studio/SRO Units 2 Units $1,974 /Unit/Month 47,400
One Bedroom Units 1 Unit $2,252 /Unit/Month 27,000
Two Bedroom Units 0 Units $2,503 /Unit/Month 0
C. Laundry & Miscellaneous Income 45 Units @ $25 /Unit/Month 13,500 Total Gross Income $1,649,600
Vacancy & Collection Allowance 5% Gross Income (82,500) II. Effective Gross Income $1,567,100
III. Operating Expenses
General Operating Expenses 45 Units @ $4,500 /Unit $202,500 Property Taxes 45 Units @ $6,500 /Unit 292,900
Replacement Reserve Deposits 45 Units @ $150 /Unit 6,800 Total Operating Expenses 45 Units @ $11,160 /Unit ($502,200) IV. Stabilized Net Operating Income $1,064,900
1 Based in part on the rent survey presented in APPENDIX A. The weighted average monthly rent equates to $6.02 per square foot of leasable area. 2 Under Section 65915 (f) (2), 15% of the Base Units are set aside for very-low income households. 3 The balance of the affordable units are set aside for low income households. The low income rent calculations are based on household income at 80% of AMI, with 35% of income allotted to housing related expenses. See APPENDIX B.

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40.108
APPENDIX D - EXHIBIT IV - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
50% §65915 DENSITY BONUS ALTERNATIVE: BASE ZONING UNITS: 15% AT VERY LOW INCOME + 10% AT LOW INCOME

MEDIUM DENSITY - TRADITIONAL APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX D - EXHIBIT IV - TABLE 2 $1,064,900 Threshold Return on Total Investment 1 4.7%
Total Supportable Investment $22,637,000
II. Total Development Cost See APPENDIX D - EXHIBIT IV - TABLE 1 $23,683,000 III. Total Financial Impact ($1,046,000)
Required Prop Acq Cost Reduction 48% of Estimated Current Acquisition Prices Return on Total Investment 4.5% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 4.3% Market Rate Units 1 Based on the Developer Return estimated to be generated by the BASE CASE DENSITY: 60 UNITS/ACRE: MARKET RATE ALTERNATIVE.

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40.109

SANTA CRUZ, CALIFORNIA

APPENDIX E

PRO FORMA ANALYSES

SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
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40.110
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

APPENDIX E - EXHIBIT I

PRO FORMA ANALYSIS

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE

SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
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40.111
APPENDIX E - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE: SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 32,670 Sf of Land $100 /Sf of Land $3,267,000 II. Direct Costs 2
On-Site Improvements/Landscaping 32,670 Sf of Land $45 /Sf of Land $1,470,000 Parking 3
Above-Ground Spaces 94 Spaces $30,000 /Space 2,820,000
1st Level Subterranean Spaces 0 Spaces $50,000 /Space 0 Building Costs 50,357 Sf of GBA $350 /Sf of GBA 17,625,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 4,383,000 Total Direct Costs 50,357 Sf of GBA $522 /Sf of GBA $26,298,000 III. Indirect Costs
Architecture, Engineering & Consulting 6% Direct Costs $1,578,000 Public Permits & Fees 5 94 Units $35,000 /Unit 3,290,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 526,000 Marketing 94 Units $2,500 /Unit 235,000
Developer Fee 5% Direct Costs 1,315,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 347,000 Total Indirect Costs $7,291,000
IV. Financing Costs
Interest During Construction
Land 6 $3,267,000 Cost 7.0% Avg Rate $343,000
Construction 7 $36,597,000 Cost 7.0% Avg Rate 2,306,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 359,000 Total Financing Costs $3,008,000
V. Total Construction Cost 94 Units $389,000 /Unit $36,597,000 Total Development Cost 94 Units $424,000 /Unit $39,864,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 The base requirement is 1.0 space for Studio/SRO Units; 1.0 space for One Bedroom Units; and 2.0 spaces for Two Bedroom Units. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 Based on a 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. 7 Based on a 18 month construction period following receipt of entitlements, and a 60% average outstanding loan balance.

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40.112
APPENDIX E - EXHIBIT I - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE: SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio/SRO Units 94 Units @ $2,551 /Unit/Month $2,877,400 One Bedroom Units 0 Units @ $0 /Unit/Month 0
Two Bedroom Units 0 Units @ $0 /Unit/Month 0
B. Laundry & Miscellaneous Income 94 Units @ $25 /Unit/Month 28,200 Total Gross Income $2,905,600
Vacancy & Collection Allowance 5% Gross Income (145,300) II. Effective Gross Income $2,760,300
III. Operating Expenses
General Operating Expenses 94 Units @ $4,500 /Unit $423,000 Property Taxes 94 Units @ $5,300 /Unit 501,100
Replacement Reserve Deposits 94 Units @ $150 /Unit 14,100 Total Operating Expenses ($938,200)
IV. Stabilized Net Operating Income $1,822,100
1 Based in part on the rent survey presented in APPENDIX A. The weighted average monthly rent equates to $6.80 per square foot of leasable area.

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40.113
APPENDIX E - EXHIBIT I - TABLE 3

STABILIZED RETURN ON TOTAL INVESTMENT

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE: SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Stabilized Net Operating Income See APPENDIX E - EXHIBIT I - TABLE 2 $1,822,100 II. Total Development Cost See APPENDIX E - EXHIBIT I - TABLE 1 $39,864,000 III. Return on Total Investment 4.6%
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40.114
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

APPENDIX E - EXHIBIT II

PRO FORMA ANALYSIS
20% LOW INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE

SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
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40.115
APPENDIX E - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS
20% LOW INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE: SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 32,670 Sf of Land $100 /Sf of Land $3,267,000 II. Direct Costs 2
On-Site Improvements/Landscaping 32,670 Sf of Land $45 /Sf of Land $1,470,000 Parking 3
Above-Ground Spaces 94 Spaces $30,000 /Space 2,820,000
1st Level Subterranean Spaces 0 Spaces $50,000 /Space 0 Building Costs 50,357 Sf of GBA $350 /Sf of GBA 17,625,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 4,383,000 Total Direct Costs 50,357 Sf of GBA $522 /Sf of GBA $26,298,000 III. Indirect Costs
Architecture, Engineering & Consulting 6% Direct Costs $1,578,000 Public Permits & Fees 5 94 Units $35,000 /Unit 3,290,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 526,000 Marketing 94 Units $2,500 /Unit 235,000
Developer Fee 5% Direct Costs 1,315,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 347,000 Total Indirect Costs $7,291,000
IV. Financing Costs
Interest During Construction
Land 6 $3,044,500 Cost 7.0% Avg Rate $320,000
Construction 7 $36,572,000 Cost 7.0% Avg Rate 2,304,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 359,000 Total Financing Costs $2,983,000
V. Total Construction Cost 94 Units $389,000 /Unit $36,572,000 Total Development Cost 94 Units $424,000 /Unit $39,839,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 The base requirement is 1.0 space for Studio/SRO Units; 1.0 space for One Bedroom Units; and 2.0 spaces for Two Bedroom Units. 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 7 Based on a 18 month construction period following receipt of entitlements, and a 60% average outstanding loan balance.

Based on a 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. Includes a $222,500 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

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40.116
APPENDIX E - EXHIBIT II - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
20% LOW INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE: SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio/SRO Units 75 Units @ $2,551 /Unit/Month $2,295,800 One Bedroom Units 0 Units @ $0 /Unit/Month 0
Two Bedroom Units 0 Units @ $0 /Unit/Month 0
B. Low Income Units 2
Studio/SRO Units 19 Units @ $1,974 /Unit/Month 450,100
One Bedroom Units 0 Units @ $2,252 /Unit/Month 0
Two Bedroom Units 0 Units @ $2,503 /Unit/Month 0
C. Laundry & Miscellaneous Income 94 Units @ $25 /Unit/Month 28,200 Total Gross Income $2,774,100
Vacancy & Collection Allowance 5% Gross Income (138,700) II. Effective Gross Income $2,635,400
III. Operating Expenses
General Operating Expenses 94 Units @ $4,500 /Unit $423,000 Property Taxes 94 Units @ $5,000 /Unit 474,200
Replacement Reserve Deposits 94 Units @ $150 /Unit 14,100 Total Operating Expenses 94 Units @ $9,695 /Unit ($911,300) IV. Stabilized Net Operating Income $1,724,100
1 Based in part on the rent survey presented in APPENDIX A. The weighted average monthly rent equates to $6.80 per square foot of leasable area. 2 The low income rent calculations are based on household income at 80% of AMI, with 35% of income allotted to housing related expenses. See APPENDIX B.

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40.117
APPENDIX E - EXHIBIT II - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
20% LOW INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE: SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX E - EXHIBIT II - TABLE 2 $1,724,100 Threshold Return on Total Investment 1 4.6%
Total Supportable Investment $37,720,000
II. Total Development Cost See APPENDIX E - EXHIBIT II - TABLE 1 $39,839,000 III. Total Financial Impact ($2,119,000)
Required Prop Acq Cost Reduction 65% of Estimated Current Acquisition Prices Return on Total Investment 4.3% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 5.6% Market Rate Units 1 Based on the estimated to be generated by the BASE CASE DENSITY: 125 UNITS/ACRE: MARKET RATE ALTERNATIVE.

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40.118
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

APPENDIX E - EXHIBIT III

PRO FORMA ANALYSIS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 5% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE

SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
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40.119
APPENDIX E - EXHIBIT III - TABLE 1

ESTIMATED DEVELOPMENT COSTS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 5% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 32,670 Sf of Land $100 /Sf of Land $3,267,000 II. Direct Costs 2
On-Site Improvements/Landscaping 32,670 Sf of Land $45 /Sf of Land $1,470,000 Parking 3
At-Grade Spaces 0 Spaces $5,000 /Space 0
Above-Ground Spaces 71 Spaces $30,000 /Space 2,130,000
Building Costs 75,536 Sf of GBA $375 /Sf of GBA 28,326,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 6,385,000 Total Direct Costs 75,536 Sf of GBA $507 /Sf of GBA $38,311,000 III. Indirect Costs
Architecture, Engineering & Consulting 6% Direct Costs $2,299,000 Public Permits & Fees 5 141 Units $35,000 /Unit 4,935,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 766,000 Marketing 141 Units $2,500 /Unit 353,000
Developer Fee 5% Direct Costs 1,916,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 513,000 Total Indirect Costs $10,782,000
IV. Financing Costs
Interest During Construction
Land 6 $3,084,090 Cost 7.0% Avg Rate $324,000
Construction 7 $53,283,000 Cost 7.0% Avg Rate 3,357,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 509,000 Total Financing Costs $4,190,000
V. Total Construction Cost 141 Units $378,000 /Unit $53,283,000 Total Development Cost 141 Units $401,000 /Unit $56,550,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 Based on .5 spaces per unit.
4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 7 Based on a 18 month construction period following receipt of entitlements, and a 60% average outstanding loan balance.

Based on a 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. Includes a $182,910 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

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40.120
APPENDIX E - EXHIBIT III - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 5% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio/SRO Units 122 Units @ $2,551 /Unit/Month $3,734,400 One Bedroom Units 0 Units @ $0 /Unit/Month 0
Two Bedroom Units 0 Units @ $0 /Unit/Month 0
B. Inclusionary Units
Very Low Income Density Bonus Units 2
Studio/SRO Units 15 Units @ $1,005 /Unit/Month 180,900
One Bedroom Units 0 Units @ $1,144 /Unit/Month 0
Two Bedroom Units 0 Units @ $1,258 /Unit/Month 0
Low Income Inclusionary Units 3
Studio/SRO Units 4 Units $1,974 /Unit/Month 94,800
One Bedroom Units 0 Units $2,252 /Unit/Month 0
Two Bedroom Units 0 Units $2,503 /Unit/Month 0
C. Laundry & Miscellaneous Income 141 Units @ $25 /Unit/Month 42,300 Total Gross Income $4,052,400
Vacancy & Collection Allowance 5% Gross Income (202,600) II. Effective Gross Income $3,849,800
III. Operating Expenses
General Operating Expenses 141 Units @ $4,500 /Unit $634,500 Property Taxes 141 Units @ $4,900 /Unit 688,900
Replacement Reserve Deposits 141 Units @ $150 /Unit 21,200 Total Operating Expenses 141 Units @ $9,536 /Unit ($1,344,600) IV. Stabilized Net Operating Income $2,505,200
1 Based in part on the rent survey presented in APPENDIX A. The weighted average monthly rent equates to $6.80 per square foot of leasable area. 2 Under Section 65915 (f) (2), 15% of the Base Units are set aside for very-low income households. 3 The balance of the affordable units are set aside for low income households. The low income rent calculations are based on household income at 80% of AMI, with 35% of income allotted to housing related expenses. See APPENDIX B.

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40.121
APPENDIX E - EXHIBIT III - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 5% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX E - EXHIBIT III - TABLE 2 $2,505,200 Threshold Return on Total Investment 1 4.6%
Total Supportable Investment $54,809,000
II. Total Development Cost See APPENDIX E - EXHIBIT III - TABLE 1 $56,550,000 III. Total Financial Impact ($1,741,000)
Required Prop Acq Cost Reduction 53% of Estimated Current Acquisition Prices Return on Total Investment 4.4% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 2.8% Market Rate Units 1 Based on the estimated to be generated by the BASE CASE DENSITY: 125 UNITS/ACRE: MARKET RATE ALTERNATIVE.

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40.122
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

APPENDIX E - EXHIBIT IV

PRO FORMA ANALYSIS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 10% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE

SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
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40.123
APPENDIX E - EXHIBIT IV - TABLE 1

ESTIMATED DEVELOPMENT COSTS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 10% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 32,670 Sf of Land $100 /Sf of Land $3,267,000 II. Direct Costs 2
On-Site Improvements/Landscaping 32,670 Sf of Land $45 /Sf of Land $1,470,000 Parking 3
Above-Ground Spaces 71 Spaces $30,000 /Space 2,130,000
1st Level Subterranean Spaces 0 Spaces $50,000 /Space 0 Building Costs 75,536 Sf of GBA $375 /Sf of GBA 28,326,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 6,385,000 Total Direct Costs 75,536 Sf of GBA $507 /Sf of GBA $38,311,000 III. Indirect Costs
Architecture, Engineering & Consulting 6% Direct Costs $2,299,000 Public Permits & Fees 5 141 Units $35,000 /Unit 4,935,000 Taxes, Insurance, Legal & Accounting 2% Direct Costs 766,000 Marketing 141 Units $2,500 /Unit 353,000
Developer Fee 5% Direct Costs 1,916,000
Soft Cost Contingency Allowance 5% Other Indirect Costs 513,000 Total Indirect Costs $10,782,000
IV. Financing Costs
Interest During Construction
Land 6 $3,025,605 Cost 7.0% Avg Rate $318,000
Construction 7 $53,276,000 Cost 7.0% Avg Rate 3,356,000 Loan Origination Fees 60% Loan to Cost 1.5 Points 509,000 Total Financing Costs $4,183,000
V. Total Construction Cost 141 Units $378,000 /Unit $53,276,000 Total Development Cost 141 Units $401,000 /Unit $56,543,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 Based on .5 spaces per unit.
4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 7 Based on a 18 month construction period following receipt of entitlements, and a 60% average outstanding loan balance.

Based on a 18 month construction period following receipt of entitlements, and a 100% average outstanding loan balance. Includes a $241,395 offset to reflect the carrying cost savings associated with the estimated property acquisition cost reduction.

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40.124
APPENDIX E - EXHIBIT IV - TABLE 2

ESTIMATED STABILIZED NET OPERATING INCOME
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 10% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Income
A. Market Rate Units 1
Studio/SRO Units 117 Units @ $2,551 /Unit/Month $3,581,400 One Bedroom Units 0 Units @ $0 /Unit/Month 0
Two Bedroom Units 0 Units @ $0 /Unit/Month 0
B. Inclusionary Units
Very Low Income Density Bonus Units 2
Studio/SRO Units 15 Units @ $1,005 /Unit/Month 180,900
One Bedroom Units 0 Units @ $1,144 /Unit/Month 0
Two Bedroom Units 0 Units @ $1,258 /Unit/Month 0
Low Income Inclusionary Units 3
Studio/SRO Units 9 Units $1,974 /Unit/Month 213,200
One Bedroom Units 0 Units $2,252 /Unit/Month 0
Two Bedroom Units 0 Units $2,503 /Unit/Month 0
C. Laundry & Miscellaneous Income 141 Units @ $25 /Unit/Month 42,300 Total Gross Income $4,017,800
Vacancy & Collection Allowance 5% Gross Income (200,900) II. Effective Gross Income $3,816,900
III. Operating Expenses
General Operating Expenses 141 Units @ $4,500 /Unit $634,500 Property Taxes 141 Units @ $4,800 /Unit 681,800
Replacement Reserve Deposits 141 Units @ $150 /Unit 21,200 Total Operating Expenses 141 Units @ $9,486 /Unit ($1,337,500) IV. Stabilized Net Operating Income $2,479,400
1 Based in part on the rent survey presented in APPENDIX A. The weighted average monthly rent equates to $6.80 per square foot of leasable area. 2 Under Section 65915 (f) (2), 15% of the Base Units are set aside for very-low income households. 3 The balance of the affordable units are set aside for low income households. The low income rent calculations are based on household income at 80% of AMI, with 35% of income allotted to housing related expenses. See APPENDIX B.

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40.125
APPENDIX E - EXHIBIT IV - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
BASE ZONING UNITS: 15% AT VERY LOW INCOME + 10% AT LOW INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: SRO APARTMENT PROTOTYPE

APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Supportable Investment
Stabilized Net Operating Income See APPENDIX E - EXHIBIT IV - TABLE 2 $2,479,400 Threshold Return on Total Investment 1 4.6%
Total Supportable Investment $54,244,000
II. Total Development Cost See APPENDIX E - EXHIBIT IV - TABLE 1 $56,543,000 III. Total Financial Impact ($2,299,000)
Required Prop Acq Cost Reduction 70% of Estimated Current Acquisition Prices Return on Total Investment 4.4% Based on Estimated Current Property Acquisition Costs % Rent Increase to Offset Impact 3.9% Market Rate Units 1 Based on the estimated to be generated by the BASE CASE DENSITY: 125 UNITS/ACRE: MARKET RATE ALTERNATIVE.

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ATTACHMENT 4

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Att 4 Title Page 1 of 54

40.127

APPENDIX A

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA

HOME SALES SURVEYS
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APPENDIX A - EXHIBIT I
RESALE HOME SALES SURVEY 1

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Unit Size (SF) Total Per SF Year Built
I. Townhomes
200 Castillion Ter Santa Cruz 95060 987 $725,000 $735 1976 1090 Whitewater Cv Santa Cruz 95062 987 $760,000 $770 1983 1648 Ocean St Santa Cruz 95060 1,017 $825,000 $811 1989 220 Castillion Ter Santa Cruz 95060 1,046 $875,000 $837 1976 146 Castillion Ter Santa Cruz 95060 1,046 $692,500 $662 1976 162 Castillion Ter Santa Cruz 95060 1,046 $725,000 $693 1976 134 Blaine St Unit A Santa Cruz 95060 1,050 $740,000 $705 1981 137 Torrey Pine Ter Santa Cruz 95060 1,088 $805,000 $740 1980 137 Torrey Pine Ter #137 Santa Cruz 95060 1,088 $805,000 $740 1980 1519 Hidden Terrace Ct Santa Cruz 95062 1,109 $815,000 $735 1983 825 35th Ave Santa Cruz 95062 1,114 $989,000 $888 1984
566 Spinnaker Ct Santa Cruz 95062 1,120 $940,000 $839 1982 705 Hanover St Santa Cruz 95062 1,136 $838,000 $738 1987 1552 Merrill St #2 Santa Cruz 95062 1,148 $860,000 $749 1981 1780 Esperanza Ct Santa Cruz 95062 1,155 $875,000 $758 1988 1143 30th Ave Santa Cruz 95062 1,165 $825,000 $708 1980 125 Kennan St Unit B Santa Cruz 95060 1,198 $775,000 $647 2009 139 Kennan St Unit B Santa Cruz 95060 1,198 $775,000 $647 2009 131 Kennan St Unit B Santa Cruz 95060 1,198 $777,500 $649 2009 3216 Stockbridge Ln Santa Cruz 95065 1,212 $865,000 $714 1984 118 Library Ln Santa Cruz 95062 1,215 $895,000 $737 1996 128 Harbor Oaks Cir Santa Cruz 95062 1,218 $805,000 $661 1978 784 Heath Cv Santa Cruz 95062 1,231 $850,000 $690 1981
133 Kennan St Unit B Santa Cruz 95060 1,233 $777,500 $631 2009 3026 Buckingham Ln #13 Santa Cruz 95062 1,236 $1,015,000 $821 1986 730 Cable Ct Santa Cruz 95062 1,268 $990,000 $781 1984
102 Shelter Lagoon Dr Santa Cruz 95060 1,286 $903,000 $702 1974 691 Harbor Cv Santa Cruz 95062 1,367 $1,040,000 $761 1983 125 Southampton Ln Unit A Santa Cruz 95062 1,375 $1,285,000 $935 1984 135 Southampton Ln Unit A Santa Cruz 95062 1,375 $1,240,000 $902 1984 183 Frederick St Santa Cruz 95062 1,431 $1,070,000 $748 1984 1700 Escalona Dr Unit B Santa Cruz 95060 1,439 $990,000 $688 1981 749 Chestnut St Santa Cruz 95060 1,472 $1,149,000 $781 1990 739 Chestnut St Santa Cruz 95060 1,472 $920,000 $625 1990 704 Chestnut St Santa Cruz 95060 1,578 $1,050,000 $665 1981 Minimum 987 $692,500 $625 1974
Maximum 1,578 $1,285,000 $935 2009
Average 1,209 $893,300 $739 1986
Sales Price
Address
Two-Bedroom Units
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APPENDIX A - EXHIBIT I
RESALE HOME SALES SURVEY 1

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Unit Size (SF) Total Per SF Year Built
Sales Price
Address
2514 Charlene Ln Santa Cruz 95062 1,153 $899,000 $780 1985 2500 Charlene Ln Santa Cruz 95062 1,153 $787,500 $683 1986 1200 Capitola Rd #9 Santa Cruz 95062 1,180 $725,000 $614 1981 174 Harbor Oaks Cir Santa Cruz 95062 1,218 $750,000 $616 1977 124 Torrey Pine Ter Santa Cruz 95060 1,220 $880,000 $721 1979 3213 Stockbridge Ln Santa Cruz 95065 1,459 $885,000 $607 1984 2573 Valerie Ct Santa Cruz 95062 1,504 $991,000 $659 1989 108 Shelter Lagoon Dr Santa Cruz 95060 1,515 $950,000 $627 1974 584 Spinnaker Ct Santa Cruz 95062 1,522 $1,175,000 $772 1982 3407 Gross Rd Santa Cruz 95062 1,703 $1,000,000 $587 1984 122 Walti St Santa Cruz 95060 1,852 $1,260,000 $680 2006 120 Walti St Santa Cruz 95060 1,852 $1,260,000 $680 2006 Minimum 1,153 $725,000 $587 1974
Maximum 1,852 $1,260,000 $780 2006
Average 1,444 $963,500 $667 1986
II. Condominiums / Co-Ops
2262 7th Santa Cruz 95062 588 $280,000 $476 1984
112 Vista Prieta Ct Santa Cruz 95062 600 $275,000 $458 1986 106 Vista Prieta Ct #106 Santa Cruz 95062 600 $290,000 $483 1985 114 Vista Prieta Ct Santa Cruz 95062 600 $285,000 $475 1984 204 Vista Prieta Ct Santa Cruz 95062 600 $290,000 $483 1985 1863 Halterman Ave Unit D1 Santa Cruz 95062 648 $575,000 $887 1969 755 14th Ave #404 Santa Cruz 95062 656 $565,000 $861 1973 755 14th Ave #703 Santa Cruz 95062 656 $341,498 $521 1973 41 Grandview St #801 Santa Cruz 95060 692 $431,506 $624 1989 1111 Ocean St #201 Santa Cruz 95060 704 $464,831 $660 2014 216 Everson Dr Santa Cruz 95060 733 $620,000 $846 1998
260 High St #101 Santa Cruz 95060 972 $635,000 $653 1912 202 Panetta Ave #9 Santa Cruz 95060 1,310 $999,000 $763 2021 Minimum 588 $275,000 $458 1912
Maximum 1,310 $999,000 $887 2021
Average 720 $465,500 $647 1983
One-Bedroom Units
Three-Bedroom Units
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APPENDIX A - EXHIBIT I
RESALE HOME SALES SURVEY 1

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Unit Size (SF) Total Per SF Year Built
Sales Price
Address
3112 Erin Ln Santa Cruz 95065 1,228 $835,000 $680 1984
3119 Erin Ln Santa Cruz 95065 1,492 $835,000 $560 1984
41 Grandview St #1505 Santa Cruz 95060 913 $750,000 $821 1989 2746 Hampton Ln Santa Cruz 95065 1,253 $825,000 $658 1986 2606 Mallory Ln Santa Cruz 95065 1,241 $835,000 $673 1987 2602 Warwick Ln Santa Cruz 95065 1,172 $835,000 $712 1985 134 Jewell St Santa Cruz 95060 1,371 $795,000 $580 1979 627 Seabright Ave Unit A Santa Cruz 95062 1,517 $1,200,000 $791 2012 180 Dakota Ave #55 Santa Cruz 95060 824 $520,000 $631 1973 321 Broadway Unit D1 Santa Cruz 95060 1,180 $725,000 $614 1980 41 grandview St #602 Santa Cruz 95060 915 $788,000 $861 1989 134 Grant St Santa Cruz 95060 1,152 $660,000 $573 1979
200 Everson Dr Santa Cruz 95060 931 $800,000 $859 1996
250 River St #421 Santa Cruz 95060 748 $600,000 $802 1986 323 Broadway Unit A2 Santa Cruz 95060 1,165 $612,500 $526 1980 308 River St Unit B17 Santa Cruz 95060 757 $660,000 $872 1993 126 Tree Frog Ln Santa Cruz 95060 1,288 $1,000,000 $776 1978 41 Grandview St #1110 Santa Cruz 95060 915 $679,000 $742 1989 701 Freeman Ct Santa Cruz 95062 1,104 $830,000 $752 1985 308 River St Unit A1 Santa Cruz 95060 784 $639,000 $815 1993 2601 Mallory Ln Santa Cruz 95065 1,410 $925,000 $656 1986 3220 Stockbridge Ln Santa Cruz 95065 1,253 $800,000 $638 1984 755 14th Ave #106 Santa Cruz 95062 799 $750,000 $939 1973 318 Soquel Ave Unit D2 Santa Cruz 95062 1,180 $675,000 $572 1980 323 Broadway Unit B3 Santa Cruz 95060 1,180 $725,000 $614 1980 41 Grandview St #804 Santa Cruz 95060 1,073 $774,000 $721 1989 180 Dakota Ave #36 Santa Cruz 95060 720 $480,000 $667 1973 755 14th Ave #212 Santa Cruz 95062 799 $715,000 $895 1973 Minimum 720 $480,000 $526 1973
Maximum 1,517 $1,200,000 $939 2012
Average 1,084 $759,600 $700 1984
918 3rd St Unit E Santa Cruz 95060 1,911 $1,015,000 $531 1984 145 Tree Frog Ln Santa Cruz 95060 1,515 $1,100,000 $726 1980 180 Dakota Ave Unit B Santa Cruz 95060 1,045 $680,000 $651 1963 2030 N Pacific Ave #311 Santa Cruz 95060 1,472 $1,030,000 $700 2008 2030 N Pacific #236 Santa Cruz 95060 1,904 $1,050,000 $551 2008 185 Palo Verde Ter Santa Cruz 95060 1,237 $810,000 $655 1973 918 3rd St Unit E Santa Cruz 95060 1,911 $1,015,000 $531 1984 Minimum 1,045 $680,000 $531 1963
Maximum 1,911 $1,100,000 $726 2008
Average 1,571 $957,100 $609 1986
1 Based on a search of the Redfin data base for sales occurring between December 2022 and December 2023.

Three-Bedroom Units
Two-Bedroom Units
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APPENDIX B

AFFORDABLE SALES PRICE CALCULATIONS

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; App B ASP Page 6 of 54

40.132

APPENDIX B
AFFORDABLE SALES PRICE CALCULATIONS 1
2023 INCOME STANDARDS

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Studio Units
One-Bedroom
Units
Two-Bedroom
Units
Three-Bedroom
Units
General Assumptions
Area Median Income 2 $89,450 $102,250 $115,000 $132,800 Annual Utilities Allowance 3 $3,612 $3,948 $4,884 $5,916 HOA, Maintenance & Insurance 4 $4,200 $4,800 $6,300 $8,400 I.

A. Income Allotted to Housing Based on 110% AMI
Benchmark Annual Household Income $98,395 $112,475 $126,500 $146,080 Income Allotted to Housing @ 35% of Income $34,440 $39,370 $44,280 $51,130 B. Property Taxes @ 1.15% of Affordable Sales Price $3,410 $3,920 $4,230 $4,680 C. Income Available for Mortgage Debt Service 5 $23,218 $26,702 $28,866 $32,134 D. Affordable Sales Price
Supportable Mtg @ 7.32% Interest 6 $281,800 $324,100 $350,300 $390,000 Home Buyer Down Payment @ 5% of ASP 14,800 17,100 17,100 17,100 Affordable Sales Price $296,600 $341,200 $367,400 $407,100 II.

A. Income Allotted to Housing Based on 50% AMI
Benchmark Annual Household Income $44,725 $51,125 $57,500 $66,400 Income Allotted to Housing @ 30% of Income $13,420 $15,340 $17,250 $19,920 B. Property Taxes @ 1.15% of Affordable Sales Price $720 $850 $780 $720 C. Income Available for Mortgage Debt Service 5 $4,888 $5,742 $5,286 $4,884 D. Affordable Sales Price
Supportable Mtg @ 7.32% Interest 6 $59,300 $69,700 $64,200 $59,300 Home Buyer Down Payment @ 5% of ASP 3,100 3,700 3,700 3,700 Affordable Sales Price $62,400 $73,400 $67,900 $63,000
1 2
3 4 Based in part on the HOA dues identified in the home sales survey. 5 6
Moderate Income Units
Based on 2023 Santa Cruz County household incomes published by the California Department of Housing & Community Development (HCD).

The Affordable Sales Price calculations are based on the California Health and Safety Code Section 50052.5 methodology.

Under the California Health & Safety Code Section 50052.5 calculation methodology, the benchmark household size is set at the number of bedrooms in the unit plus one. This benchmark is used solely for the purposes of calculating the Affordable Sales Price. It is neither an occupancy cap nor a floor.

Utilities allowances are based on the Santa Cruz County Housing Authority utility allowance schedule for duplexes, row houses, townhouses effective as of 1/1/24. Assumes: Electric Heating, Electric Cooking, Electric Water Heater, Basic Electric, Water, Sewer, and Garbage.

Based on the Income Allotted to Housing minus the following: Annual Utilities Allowance; HOA, Maintenance & Insurance; and Property Taxes @

1.15% of Affordable Sales Price.

Based on a 50 basis points premium applied to the Freddie Mac monthly average, between January 2023 and December 2023, for a fixedinterest rate loan with a 30-year amortization period.

Very Low Income Units
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SANTA CRUZ, CALIFORNIA

APPENDIX C

PRO FORMA ANALYSES

HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
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SANTA CRUZ, CALIFORNIA

APPENDIX C - EXHIBIT I

PRO FORMA ANALYSIS

MARKET RATE ALTERNATIVE

HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
BASE CASE DENSITY: 125 UNITS/ACRE
Prepared by: Keyser Marston Associates, Inc.

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40.135
APPENDIX C - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE: HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 43,560 Sf of Land $100 /Sf of Land $4,356,000 II. Direct Costs 2
On-Site Improvements/Landscaping 43,560 Sf of Land $45 /Sf of Land $1,960,000 Parking 3
Attached Garage 0 Spaces $0 /Space 0
Covered Carports 0 Spaces $7,500 /Space 0
Above-Ground Spaces 39 Spaces $30,000 /Space 1,170,000
1st Level Subterranean Spaces 117 Spaces $50,000 /Space 5,850,000 Building Costs 120,800 Sf of GBA $350 /Sf of GBA 42,280,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 10,252,000 Total Direct Costs $61,512,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $3,691,000 Public Permits & Fees 5 125 Units $37,000 /Unit 4,625,000 Taxes, Insurance, Legal & Accounting 2.0% Direct Costs 1,230,000 Marketing 125 Units $5,000 /Unit 625,000
Developer Fee 3.0% Gross Sales Revenue 2,860,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 652,000 Total Indirect Costs $13,683,000
IV. Financing Costs
Interest During Construction 6 $4,817,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 716,000 Total Financing Costs $5,533,000
V. Total Construction Cost 125 Units $646,000 /Unit $80,728,000 Total Development Cost 125 Units $681,000 /Unit $85,084,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 Assumes a 7.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 19 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

The base requirement is 1.0 space for Studio Units; 1.0 space for One-Bedroom Units; 2.0 spaces for Two-Bedroom Units; and 2.0 spaces for ThreeBedroom Units.

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40.136
APPENDIX C - EXHIBIT I - TABLE 2

PROJECTED NET SALES REVENUE

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE: HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Sales Revenue 1
Studio Units 31 Units @ $427,500 /Unit $13,253,000
One-Bedroom Units 63 Units @ $745,400 /Unit 46,960,000
Two-Bedroom Units 31 Units @ $1,133,400 /Unit 35,135,000 Three-Bedroom Units 0 Units @ $0 /Unit 0
Total Gross Sales Revenue $95,348,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $2,860,000
Closing 2.0% Gross Sales Revenue 1,907,000
Warranty 0.5% Gross Sales Revenue 477,000
Total Cost of Sales ($5,244,000)
III. Net Revenue $90,104,000
1 Based in part on a survey of home resales in Santa Cruz. The sales survey was undertaken by KMA in December 2023. See APPENDIX A. The weighted average sales price equates to $1,052 per square foot of saleable area.

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40.137
APPENDIX C - EXHIBIT I - TABLE 3

PROJECTED DEVELOPER PROFIT

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE: HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Net Revenue See APPENDIX C - EXHIBIT I - TABLE 2 $90,104,000 II. Total Development Cost See APPENDIX C - EXHIBIT I - TABLE 1 $85,084,000 III. Developer Profit 5.9% Total Development Cost $5,020,000 Prepared by: Keyser Marston Associates, Inc.

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40.138

APPENDIX C - EXHIBIT II

PRO FORMA ANALYSIS
20% MODERATE INCOME INCLUSIONARY ALTERNATIVE

HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT

SANTA CRUZ, CALIFORNIA
BASE CASE DENSITY: 125 UNITS/ACRE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
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40.139
APPENDIX C - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS
20% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE: HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 43,560 Sf of Land $100 /Sf of Land $4,356,000 II. Direct Costs 2
On-Site Improvements/Landscaping 43,560 Sf of Land $45 /Sf of Land $1,960,000 Parking 3
Attached Garage 0 Spaces $0 /Space 0
Covered Carports 0 Spaces $7,500 /Space 0
Above-Ground Spaces 39 Spaces $30,000 /Space 1,170,000
1st Level Subterranean Spaces 117 Spaces $50,000 /Space 5,850,000 Building Costs 120,800 Sf of GBA $350 /Sf of GBA 42,280,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 10,252,000 Total Direct Costs $61,512,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $3,691,000 Public Permits & Fees 5 125 Units $37,000 /Unit 4,625,000 Taxes, Insurance, Legal & Accounting 2.0% Direct Costs 1,230,000 Marketing 125 Units $5,000 /Unit 625,000
Developer Fee 3.0% Gross Sales Revenue 2,541,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 636,000 Total Indirect Costs $13,348,000
IV. Financing Costs
Interest During Construction 6 $4,889,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 713,000 Total Financing Costs $5,602,000
V. Total Construction Cost 125 Units $644,000 /Unit $80,462,000 Total Development Cost 125 Units $679,000 /Unit $84,818,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 The base requirement is 1.0 space for Studio Units; 1.0 space for One-Bedroom Units; 2.0 spaces for Two-Bedroom Units; and 2.0 spaces for ThreeBedroom Units.

Assumes a 7.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 15 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

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40.140
APPENDIX C - EXHIBIT II - TABLE 2

PROJECTED NET SALES REVENUE
20% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE: HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Sales Revenue 1
A. Market Rate Units
Studio Units 25 Units @ $427,500 /Unit $10,688,000
One-Bedroom Units 50 Units @ $745,400 /Unit 37,270,000
Two-Bedroom Units 25 Units @ $1,133,400 /Unit 28,335,000 Three-Bedroom Units 0 Units @ $0 /Unit 0
B. Inclusionary Units 2
Very Low Income - Density Bonus Units
Studio Units 0 Units @ $62,400 /Unit 0
One-Bedroom Units 0 Units @ $73,400 /Unit 0
Two-Bedroom Units 0 Units @ $67,900 /Unit 0
Three-Bedroom Units 0 Units @ $63,000 /Unit 0
Moderate Income - Inclusionary Units
Studio Units 6 Units @ $296,600 /Unit 1,780,000
One-Bedroom Units 13 Units @ $341,200 /Unit 4,436,000
Two-Bedroom Units 6 Units @ $367,400 /Unit 2,204,000
Three-Bedroom Units 0 Units @ $407,100 /Unit 0
Total Gross Sales Revenue $84,713,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $2,541,000
Closing 2.0% Gross Sales Revenue 1,694,000
Warranty 0.5% Gross Sales Revenue 424,000
Total Cost of Sales ($4,659,000)
III. Net Revenue $80,054,000
1 2 See APPENDIX B.

Based in part on a survey of home resales in Santa Cruz. The sales survey was undertaken by KMA in December 2023. See APPENDIX A. The weighted average sales price equates to $1,052 per square foot of saleable area.

Prepared by: Keyser Marston Associates, Inc.

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40.141
APPENDIX C - EXHIBIT II - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
20% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 125 UNITS/ACRE: HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Funds Available for Development Costs
Net Revenue See APPENDIX C - EXHIBIT II - TABLE 2 $80,054,000 (Less) Threshold Developer Profit 1 5.9% Total Development Cost ($5,004,000) Total Funds Available for Development Costs $75,050,000 II. Total Development Cost See APPENDIX C - EXHIBIT II - TABLE 1 $84,818,000 III. Total Financial Impact ($9,768,000)
Developer Profit -5.6% Total Development Cost
Required Prop Acq Cost Reduction 224% of Estimated Current Acquisition Prices % Price Increase to Offset Impact 12.8% Market Rate Units 1 Based on the profit as a percentage of Total Development Cost estimated to be generated by the MARKET RATE ALTERNATIVE.

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OWNERSHIP HOUSING DEVELOPMENT

APPENDIX C - EXHIBIT III

PRO FORMA ANALYSIS
BASE ZONING UNITS: 11% @ VERY LOW INCOME + 9% @ MODERATE INCOME 35% §65915 DENSITY BONUS ALTERNATIVE

HIGH DENSITY CONDOMINIUM PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

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40.143
APPENDIX C - EXHIBIT III - TABLE 1

ESTIMATED DEVELOPMENT COSTS
BASE ZONING UNITS: 11% @ VERY LOW INCOME + 9% @ MODERATE INCOME 35% §65915 DENSITY BONUS ALTERNATIVE: HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 43,560 Sf of Land $100 /Sf of Land $4,356,000 II. Direct Costs 2
On-Site Improvements/Landscaping 43,560 Sf of Land $45 /Sf of Land $1,960,000 Parking 3
Attached Garage 0 Spaces $0 /Space 0
Covered Carports 0 Spaces $7,500 /Space 0
Above-Ground Spaces 27 Spaces $30,000 /Space 810,000
1st Level Subterranean Spaces 79 Spaces $50,000 /Space 3,950,000 Building Costs 163,333 Sf of GBA $375 /Sf of GBA 61,250,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 13,594,000 Total Direct Costs $81,564,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $4,894,000 Public Permits & Fees 5 169 Units $37,000 /Unit 6,253,000 Taxes, Insurance, Legal & Accounting 2.0% Direct Costs 1,631,000 Marketing 169 Units $5,000 /Unit 845,000
Developer Fee 3.0% Gross Sales Revenue 3,437,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 853,000 Total Indirect Costs $17,913,000
IV. Financing Costs
Interest During Construction 6 $6,974,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 934,000 Total Financing Costs $7,908,000
V. Total Construction Cost 169 Units $635,000 /Unit $107,385,000 Total Development Cost 169 Units $661,000 /Unit $111,741,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 The base requirement is 1.0 space for Studio Units; 1.0 space for One-Bedroom Units; 2.0 spaces for Two-Bedroom Units; and 2.0 spaces for ThreeBedroom Units.

Assumes a 7.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 22 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

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40.144
APPENDIX C - EXHIBIT III - TABLE 2

PROJECTED NET SALES REVENUE
BASE ZONING UNITS: 11% @ VERY LOW INCOME + 9% @ MODERATE INCOME 35% §65915 DENSITY BONUS ALTERNATIVE: HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Sales Revenue 1
A. Market Rate Units
Studio Units 36 Units @ $427,500 /Unit $15,390,000
One-Bedroom Units 72 Units @ $745,400 /Unit 53,669,000
Two-Bedroom Units 36 Units @ $1,133,400 /Unit 40,802,000 Three-Bedroom Units 0 Units @ $0 /Unit 0
B. Inclusionary Units 2
Very Low Income - Density Bonus Units
Studio Units 4 Units @ $62,400 /Unit 250,000
One-Bedroom Units 7 Units @ $73,400 /Unit 514,000
Two-Bedroom Units 3 Units @ $67,900 /Unit 204,000
Three-Bedroom Units 0 Units @ $63,000 /Unit 0
Moderate Income - Inclusionary Units
Studio Units 2 Units @ $296,600 /Unit 593,000
One-Bedroom Units 6 Units @ $341,200 /Unit 2,047,000
Two-Bedroom Units 3 Units @ $367,400 /Unit 1,102,000
Three-Bedroom Units 0 Units @ $407,100 /Unit 0
Total Gross Sales Revenue $114,571,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $3,437,000
Closing 2.0% Gross Sales Revenue 2,291,000
Warranty 0.5% Gross Sales Revenue 573,000
Total Cost of Sales ($6,301,000)
III. Net Revenue $108,270,000
1 2 See APPENDIX B.

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40.145
APPENDIX C - EXHIBIT III - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
BASE ZONING UNITS: 11% @ VERY LOW INCOME + 9% @ MODERATE INCOME 35% §65915 DENSITY BONUS ALTERNATIVE: HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Funds Available for Development Costs
Net Revenue See APPENDIX C - EXHIBIT III - TABLE 2 $108,270,000 (Less) Threshold Developer Profit 1 5.9% Total Development Cost ($6,593,000) Total Funds Available for Development Costs $101,677,000 II. Total Development Cost See APPENDIX C - EXHIBIT III - TABLE 1 $111,741,000 III. Total Financial Impact ($10,064,000)
Developer Profit -3.1% Total Development Cost
Required Prop Acq Cost Reduction 231% of Estimated Current Acquisition Prices % Price Increase to Offset Impact 9.2% Market Rate Units 1 Based on the profit as a percentage of Total Development Cost estimated to be generated by the MARKET RATE ALTERNATIVE.

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OWNERSHIP HOUSING DEVELOPMENT

APPENDIX C - EXHIBIT IV

PRO FORMA ANALYSIS
BASE ZONING UNITS: 11% @ VERY LOW INCOME + 14% @ MODERATE INCOME 35% §65915 DENSITY BONUS ALTERNATIVE

HIGH DENSITY CONDOMINIUM PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
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40.147
APPENDIX C - EXHIBIT IV - TABLE 1

ESTIMATED DEVELOPMENT COSTS
BASE ZONING UNITS: 11% @ VERY LOW INCOME + 14% @ MODERATE INCOME 35% §65915 DENSITY BONUS ALTERNATIVE: HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 43,560 Sf of Land $100 /Sf of Land $4,356,000 II. Direct Costs 2
On-Site Improvements/Landscaping 43,560 Sf of Land $45 /Sf of Land $1,960,000 Parking 3
Attached Garage 0 Spaces $0 /Space 0
Covered Carports 0 Spaces $7,500 /Space 0
Above-Ground Spaces 27 Spaces $30,000 /Space 810,000
1st Level Subterranean Spaces 79 Spaces $50,000 /Space 3,950,000 Building Costs 163,333 Sf of GBA $375 /Sf of GBA 61,250,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 13,594,000 Total Direct Costs $81,564,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $4,894,000 Public Permits & Fees 5 169 Units $37,000 /Unit 6,253,000 Taxes, Insurance, Legal & Accounting 2.0% Direct Costs 1,631,000 Marketing 169 Units $5,000 /Unit 845,000
Developer Fee 3.0% Gross Sales Revenue 3,366,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 849,000 Total Indirect Costs $17,838,000
IV. Financing Costs
Interest During Construction 6 $6,951,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 934,000 Total Financing Costs $7,885,000
V. Total Construction Cost 169 Units $635,000 /Unit $107,287,000 Total Development Cost 169 Units $661,000 /Unit $111,643,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 The base requirement is 1.0 space for Studio Units; 1.0 space for One-Bedroom Units; 2.0 spaces for Two-Bedroom Units; and 2.0 spaces for ThreeBedroom Units.

Assumes a 7.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 21 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

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40.148
APPENDIX C - EXHIBIT IV - TABLE 2

PROJECTED NET SALES REVENUE
BASE ZONING UNITS: 11% @ VERY LOW INCOME + 14% @ MODERATE INCOME 35% §65915 DENSITY BONUS ALTERNATIVE: HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Sales Revenue 1
A. Market Rate Units
Studio Units 33 Units @ $427,500 /Unit $14,108,000
One-Bedroom Units 69 Units @ $745,400 /Unit 51,433,000
Two-Bedroom Units 35 Units @ $1,133,400 /Unit 39,669,000 Three-Bedroom Units 0 Units @ $0 /Unit 0
B. Inclusionary Units 2
Very Low Income - Density Bonus Units
Studio Units 4 Units @ $62,400 /Unit 250,000
One-Bedroom Units 7 Units @ $73,400 /Unit 514,000
Two-Bedroom Units 3 Units @ $67,900 /Unit 204,000
Three-Bedroom Units 0 Units @ $63,000 /Unit 0
Moderate Income - Inclusionary Units
Studio Units 5 Units @ $296,600 /Unit 1,483,000
One-Bedroom Units 9 Units @ $341,200 /Unit 3,071,000
Two-Bedroom Units 4 Units @ $367,400 /Unit 1,470,000
Three-Bedroom Units 0 Units @ $407,100 /Unit 0
Total Gross Sales Revenue $112,202,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $3,366,000
Closing 2.0% Gross Sales Revenue 2,244,000
Warranty 0.5% Gross Sales Revenue 561,000
Total Cost of Sales ($6,171,000)
III. Net Revenue $106,031,000
1 2 See APPENDIX B.

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40.149
APPENDIX C - EXHIBIT IV - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
BASE ZONING UNITS: 11% @ VERY LOW INCOME + 14% @ MODERATE INCOME 35% §65915 DENSITY BONUS ALTERNATIVE: HIGH DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Funds Available for Development Costs
Net Revenue See APPENDIX C - EXHIBIT IV - TABLE 2 $106,031,000 (Less) Threshold Developer Profit 1 5.9% Total Development Cost ($6,587,000) Total Funds Available for Development Costs $99,444,000 II. Total Development Cost See APPENDIX C - EXHIBIT IV - TABLE 1 $111,643,000 III. Total Financial Impact ($12,199,000)
Developer Profit -5.0% Total Development Cost
Required Prop Acq Cost Reduction 280% of Estimated Current Acquisition Prices % Price Increase to Offset Impact 11.6% Market Rate Units 1 Based on the profit as a percentage of Total Development Cost estimated to be generated by the MARKET RATE ALTERNATIVE.

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SANTA CRUZ, CALIFORNIA

APPENDIX D

PRO FORMA ANALYSES

LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
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OWNERSHIP HOUSING DEVELOPMENT

APPENDIX D - EXHIBIT I

PRO FORMA ANALYSIS

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 30 UNITS/ACRE

LOW DENSITY CONDOMINIUM PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
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40.152
APPENDIX D - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 30 UNITS/ACRE: LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 87,120 Sf of Land $100 /Sf of Land $8,712,000 II. Direct Costs 2
On-Site Improvements/Landscaping 87,120 Sf of Land $45 /Sf of Land $3,920,000 Parking 3
Attached Garage 0 Spaces $0 /Space 0
Covered Carports 0 Spaces $7,500 /Space 0
Above-Ground Spaces 0 Spaces $30,000 /Space 0
1st Level Subterranean Spaces 78 Spaces $50,000 /Space 3,900,000 Building Costs 94,235 Sf of GBA $275 /Sf of GBA 25,915,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 6,747,000 Total Direct Costs $40,482,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $2,429,000 Public Permits & Fees 5 60 Units $37,000 /Unit 2,220,000 Taxes, Insurance, Legal & Accounting 2.0% Direct Costs 810,000 Marketing 60 Units $5,000 /Unit 300,000
Developer Fee 3.0% Gross Sales Revenue 2,168,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 396,000 Total Indirect Costs $8,323,000
IV. Financing Costs
Interest During Construction 6 $2,996,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 518,000 Total Financing Costs $3,514,000
V. Total Construction Cost 60 Units $872,000 /Unit $52,319,000 Total Development Cost 60 Units $1,017,000 /Unit $61,031,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 The base requirement is 1.0 space for Studio Units; 1.0 space for One-Bedroom Units; 2.0 spaces for Two-Bedroom Units; and 2.0 spaces for ThreeBedroom Units.

Assumes a 7.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 8 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

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40.153
APPENDIX D - EXHIBIT I - TABLE 2

PROJECTED NET SALES REVENUE

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 30 UNITS/ACRE: LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Sales Revenue 1
Studio Units 0 Units @ $0 /Unit $0
One-Bedroom Units 18 Units @ $905,100 /Unit 16,292,000
Two-Bedroom Units 30 Units @ $1,314,100 /Unit 39,423,000 Three-Bedroom Units 12 Units @ $1,379,500 /Unit 16,554,000 Total Gross Sales Revenue $72,269,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $2,168,000
Closing 2.0% Gross Sales Revenue 1,445,000
Warranty 0.5% Gross Sales Revenue 361,000
Total Cost of Sales ($3,974,000)
III. Net Revenue $68,295,000
1 Based in part on a survey of home resales in Santa Cruz. The sales survey was undertaken by KMA in December 2023. See APPENDIX A. The weighted average sales price equates to $902 per square foot of saleable area.

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40.154
APPENDIX D - EXHIBIT I - TABLE 3

PROJECTED DEVELOPER PROFIT

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 30 UNITS/ACRE: LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Net Revenue See APPENDIX D - EXHIBIT I - TABLE 2 $68,295,000 II. Total Development Cost See APPENDIX D - EXHIBIT I - TABLE 1 $61,031,000 III. Developer Profit 11.9% Total Development Cost $7,264,000 Prepared by: Keyser Marston Associates, Inc.

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OWNERSHIP HOUSING DEVELOPMENT

APPENDIX D - EXHIBIT II

PRO FORMA ANALYSIS
20% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 30 UNITS/ACRE

LOW DENSITY CONDOMINIUM PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
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40.156
APPENDIX D - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS
20% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 30 UNITS/ACRE: LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 87,120 Sf of Land $100 /Sf of Land $8,712,000 II. Direct Costs 2
On-Site Improvements/Landscaping 87,120 Sf of Land $45 /Sf of Land $3,920,000 Parking 3
Attached Garage 0 Spaces $0 /Space 0
Covered Carports 0 Spaces $7,500 /Space 0
Above-Ground Spaces 0 Spaces $30,000 /Space 0
1st Level Subterranean Spaces 78 Spaces $50,000 /Space 3,900,000 Building Costs 94,235 Sf of GBA $275 /Sf of GBA 25,915,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 6,747,000 Total Direct Costs $40,482,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $2,429,000 Public Permits & Fees 5 60 Units $37,000 /Unit 2,220,000 Taxes, Insurance, Legal & Accounting 2.0% Direct Costs 810,000 Marketing 60 Units $5,000 /Unit 300,000
Developer Fee 3.0% Gross Sales Revenue 1,872,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 382,000 Total Indirect Costs $8,013,000
IV. Financing Costs
Interest During Construction 6 $3,128,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 515,000 Total Financing Costs $3,643,000
V. Total Construction Cost 60 Units $869,000 /Unit $52,138,000 Total Development Cost 60 Units $1,014,000 /Unit $60,850,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 The base requirement is 1.0 space for Studio Units; 1.0 space for One-Bedroom Units; 2.0 spaces for Two-Bedroom Units; and 2.0 spaces for ThreeBedroom Units.

Assumes a 7.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 7 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

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40.157
APPENDIX D - EXHIBIT II - TABLE 2

PROJECTED NET SALES REVENUE
20% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 30 UNITS/ACRE: LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Sales Revenue 1
A. Market Rate Units
Studio Units 0 Units @ $0 /Unit $0
One-Bedroom Units 14 Units @ $905,100 /Unit 12,671,000
Two-Bedroom Units 24 Units @ $1,314,100 /Unit 31,538,000 Three-Bedroom Units 10 Units @ $1,379,500 /Unit 13,795,000 B. Inclusionary Units 2
Very Low Income - Density Bonus Units
Studio Units 0 Units @ $62,400 /Unit 0
One-Bedroom Units 0 Units @ $73,400 /Unit 0
Two-Bedroom Units 0 Units @ $67,900 /Unit 0
Three-Bedroom Units 0 Units @ $63,000 /Unit 0
Moderate Income - Inclusionary Units
Studio Units 0 Units @ $296,600 /Unit 0
One-Bedroom Units 4 Units @ $341,200 /Unit 1,365,000
Two-Bedroom Units 6 Units @ $367,400 /Unit 2,204,000
Three-Bedroom Units 2 Units @ $407,100 /Unit 814,000
Total Gross Sales Revenue $62,387,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $1,872,000
Closing 2.0% Gross Sales Revenue 1,248,000
Warranty 0.5% Gross Sales Revenue 312,000
Total Cost of Sales ($3,432,000)
III. Net Revenue $58,955,000
1 2 See APPENDIX B.

Based in part on a survey of home resales in Santa Cruz. The sales survey was undertaken by KMA in December 2023. See APPENDIX A. The weighted average sales price equates to $902 per square foot of saleable area.

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40.158
APPENDIX D - EXHIBIT II - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
20% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 30 UNITS/ACRE: LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Funds Available for Development Costs
Net Revenue See APPENDIX D - EXHIBIT II - TABLE 2 $58,955,000 (Less) Threshold Developer Profit 1 11.9% Total Development Cost ($7,242,000) Total Funds Available for Development Costs $51,713,000 II. Total Development Cost See APPENDIX D - EXHIBIT II - TABLE 1 $60,850,000 III. Total Financial Impact ($9,137,000)
Developer Profit -3.1% Total Development Cost
Required Prop Acq Cost Reduction 105% of Estimated Current Acquisition Prices % Price Increase to Offset Impact 15.8% Market Rate Units 1 Based on the profit as a percentage of Total Development Cost estimated to be generated by the MARKET RATE ALTERNATIVE.

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40.159

OWNERSHIP HOUSING DEVELOPMENT

APPENDIX D - EXHIBIT III

PRO FORMA ANALYSIS
BASE ZONING UNITS: 15% @ VERY LOW INCOME + 5% @ MODERATE INCOME 50% §65915 DENSITY BONUS ALTERNATIVE

LOW DENSITY CONDOMINIUM PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
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40.160
APPENDIX D - EXHIBIT III - TABLE 1

ESTIMATED DEVELOPMENT COSTS
BASE ZONING UNITS: 15% @ VERY LOW INCOME + 5% @ MODERATE INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 87,120 Sf of Land $100 /Sf of Land $8,712,000 II. Direct Costs 2
On-Site Improvements/Landscaping 87,120 Sf of Land $45 /Sf of Land $3,920,000 Parking 3
Attached Garage 0 Spaces $0 /Space 0
Covered Carports 0 Spaces $7,500 /Space 0
Above-Ground Spaces 0 Spaces $30,000 /Space 0
1st Level Subterranean Spaces 59 Spaces $50,000 /Space 2,950,000 Building Costs 141,353 Sf of GBA $375 /Sf of GBA 53,007,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 11,975,000 Total Direct Costs $71,852,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $4,311,000 Public Permits & Fees 5 90 Units $37,000 /Unit 3,330,000 Taxes, Insurance, Legal & Accounting 2.0% Direct Costs 1,437,000 Marketing 90 Units $5,000 /Unit 450,000
Developer Fee 3.0% Gross Sales Revenue 2,874,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 620,000 Total Indirect Costs $13,022,000
IV. Financing Costs
Interest During Construction 6 $5,937,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 842,000 Total Financing Costs $6,779,000
V. Total Construction Cost 90 Units $1,018,000 /Unit $91,653,000 Total Development Cost 90 Units $1,115,000 /Unit $100,365,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 The base requirement is 1.0 space for Studio Units; 1.0 space for One-Bedroom Units; 2.0 spaces for Two-Bedroom Units; and 2.0 spaces for ThreeBedroom Units.

Assumes a 7.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 12 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

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40.161
APPENDIX D - EXHIBIT III - TABLE 2

PROJECTED NET SALES REVENUE
BASE ZONING UNITS: 15% @ VERY LOW INCOME + 5% @ MODERATE INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Sales Revenue 1
A. Market Rate Units
Studio Units 0 Units @ $0 /Unit $0
One-Bedroom Units 23 Units @ $905,100 /Unit 20,817,000
Two-Bedroom Units 40 Units @ $1,314,100 /Unit 52,564,000 Three-Bedroom Units 15 Units @ $1,379,500 /Unit 20,693,000 B. Inclusionary Units 2
Very Low Income - Density Bonus Units
Studio Units 0 Units @ $62,400 /Unit 0
One-Bedroom Units 3 Units @ $73,400 /Unit 220,000
Two-Bedroom Units 4 Units @ $67,900 /Unit 272,000
Three-Bedroom Units 2 Units @ $63,000 /Unit 126,000
Moderate Income - Inclusionary Units
Studio Units 0 Units @ $296,600 /Unit 0
One-Bedroom Units 1 Unit @ $341,200 /Unit 341,000
Two-Bedroom Units 1 Unit @ $367,400 /Unit 367,000
Three-Bedroom Units 1 Unit @ $407,100 /Unit 407,000
Total Gross Sales Revenue $95,807,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $2,874,000
Closing 2.0% Gross Sales Revenue 1,916,000
Warranty 0.5% Gross Sales Revenue 479,000
Total Cost of Sales ($5,269,000)
III. Net Revenue $90,538,000
1 2 See APPENDIX B.

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40.162
APPENDIX D - EXHIBIT III - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
BASE ZONING UNITS: 15% @ VERY LOW INCOME + 5% @ MODERATE INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Funds Available for Development Costs
Net Revenue See APPENDIX D - EXHIBIT III - TABLE 2 $90,538,000 (Less) Threshold Developer Profit 1 11.9% Total Development Cost ($11,946,000) Total Funds Available for Development Costs $78,592,000 II. Total Development Cost See APPENDIX D - EXHIBIT III - TABLE 1 $100,365,000 III. Total Financial Impact ($21,773,000)
Developer Profit -9.8% Total Development Cost
Required Prop Acq Cost Reduction 250% of Estimated Current Acquisition Prices % Price Increase to Offset Impact 23.1% Market Rate Units 1 Based on the profit as a percentage of Total Development Cost estimated to be generated by the MARKET RATE ALTERNATIVE.

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40.163

OWNERSHIP HOUSING DEVELOPMENT

APPENDIX D - EXHIBIT IV

PRO FORMA ANALYSIS
BASE ZONING UNITS: 15% @ VERY LOW INCOME + 10% @ MODERATE INCOME 50% §65915 DENSITY BONUS ALTERNATIVE

LOW DENSITY CONDOMINIUM PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
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40.164
APPENDIX D - EXHIBIT IV - TABLE 1

ESTIMATED DEVELOPMENT COSTS
BASE ZONING UNITS: 15% @ VERY LOW INCOME + 10% @ MODERATE INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 87,120 Sf of Land $100 /Sf of Land $8,712,000 II. Direct Costs 2
On-Site Improvements/Landscaping 87,120 Sf of Land $45 /Sf of Land $3,920,000 Parking 3
Attached Garage 0 Spaces $0 /Space 0
Covered Carports 0 Spaces $7,500 /Space 0
Above-Ground Spaces 0 Spaces $30,000 /Space 0
1st Level Subterranean Spaces 59 Spaces $50,000 /Space 2,950,000 Building Costs 141,353 Sf of GBA $375 /Sf of GBA 53,007,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 11,975,000 Total Direct Costs $71,852,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $4,311,000 Public Permits & Fees 5 90 Units $37,000 /Unit 3,330,000 Taxes, Insurance, Legal & Accounting 2.0% Direct Costs 1,437,000 Marketing 90 Units $5,000 /Unit 450,000
Developer Fee 3.0% Gross Sales Revenue 2,801,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 616,000 Total Indirect Costs $12,945,000
IV. Financing Costs
Interest During Construction 6 $6,014,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 842,000 Total Financing Costs $6,856,000
V. Total Construction Cost 90 Units $1,018,000 /Unit $91,653,000 Total Development Cost 90 Units $1,115,000 /Unit $100,365,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 The base requirement is 1.0 space for Studio Units; 1.0 space for One-Bedroom Units; 2.0 spaces for Two-Bedroom Units; and 2.0 spaces for ThreeBedroom Units.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf LDC 25% VL_M DB Page 39 of 54

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APPENDIX D - EXHIBIT IV - TABLE 2

PROJECTED NET SALES REVENUE
BASE ZONING UNITS: 15% @ VERY LOW INCOME + 10% @ MODERATE INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Sales Revenue 1
A. Market Rate Units
Studio Units 0 Units @ $0 /Unit $0
One-Bedroom Units 22 Units @ $905,100 /Unit 19,912,000
Two-Bedroom Units 38 Units @ $1,314,100 /Unit 49,936,000 Three-Bedroom Units 15 Units @ $1,379,500 /Unit 20,693,000 B. Inclusionary Units 2
Very Low Income - Density Bonus Units
Studio Units 0 Units @ $62,400 /Unit 0
One-Bedroom Units 3 Units @ $73,400 /Unit 220,000
Two-Bedroom Units 4 Units @ $67,900 /Unit 272,000
Three-Bedroom Units 2 Units @ $63,000 /Unit 126,000
Moderate Income - Inclusionary Units
Studio Units 0 Units @ $296,600 /Unit 0
One-Bedroom Units 2 Units @ $341,200 /Unit 682,000
Two-Bedroom Units 3 Units @ $367,400 /Unit 1,102,000
Three-Bedroom Units 1 Unit @ $407,100 /Unit 407,000
Total Gross Sales Revenue $93,350,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $2,801,000
Closing 2.0% Gross Sales Revenue 1,867,000
Warranty 0.5% Gross Sales Revenue 467,000
Total Cost of Sales ($5,135,000)
III. Net Revenue $88,215,000
1 2 See APPENDIX B.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf LDC 25% VL_M DB Page 40 of 54

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APPENDIX D - EXHIBIT IV - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
BASE ZONING UNITS: 15% @ VERY LOW INCOME + 10% @ MODERATE INCOME 50% §65915 DENSITY BONUS ALTERNATIVE: LOW DENSITY CONDOMINIUM PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Funds Available for Development Costs
Net Revenue See APPENDIX D - EXHIBIT IV - TABLE 2 $88,215,000 (Less) Threshold Developer Profit 1 11.9% Total Development Cost ($11,946,000) Total Funds Available for Development Costs $76,269,000 II. Total Development Cost See APPENDIX D - EXHIBIT IV - TABLE 1 $100,365,000 III. Total Financial Impact ($24,096,000)
Developer Profit -12.1% Total Development Cost
Required Prop Acq Cost Reduction 277% of Estimated Current Acquisition Prices % Price Increase to Offset Impact 26.6% Market Rate Units 1 Based on the profit as a percentage of Total Development Cost estimated to be generated by the MARKET RATE ALTERNATIVE.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf LDC 25% VL_M DB Page 41 of 54

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SANTA CRUZ, CALIFORNIA

APPENDIX E

PRO FORMA ANALYSES

TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
Prepared by: Keyser Marston Associates, Inc.

File name: 1 18 24 SC Own; APP E TH Page 42 of 54

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OWNERSHIP HOUSING DEVELOPMENT

APPENDIX E - EXHIBIT I

PRO FORMA ANALYSIS

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 15 UNITS/ACRE

TOWNHOME PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf TH Mkt Page 43 of 54

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APPENDIX E - EXHIBIT I - TABLE 1

ESTIMATED DEVELOPMENT COSTS

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 15 UNITS/ACRE: TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 100,000 Sf of Land $100 /Sf of Land $10,000,000 II. Direct Costs 2
On-Site Improvements/Landscaping 100,000 Sf of Land $45 /Sf of Land $4,500,000 Parking 3
Attached Garage 61 Spaces $0 /Space 0
Covered Carports 0 Spaces $7,500 /Space 0
Above-Ground Spaces 0 Spaces $30,000 /Space 0
1st Level Subterranean Spaces 0 Spaces $50,000 /Space 0 Building Costs 42,800 Sf of GBA $250 /Sf of GBA 10,700,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 3,040,000 Total Direct Costs $18,240,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $1,094,000 Public Permits & Fees 5 35 Units $37,000 /Unit 1,295,000 Taxes, Insurance, Legal & Accounting 2.0% Direct Costs 365,000 Marketing 35 Units $5,000 /Unit 175,000
Developer Fee 3.0% Gross Sales Revenue 1,191,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 206,000 Total Indirect Costs $4,326,000
IV. Financing Costs
Interest During Construction 6 $1,849,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 293,000 Total Financing Costs $2,142,000
V. Total Construction Cost 35 Units $706,000 /Unit $24,708,000 Total Development Cost 35 Units $992,000 /Unit $34,708,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 The base requirement is 1.0 space for Studio Units; 1.0 space for One-Bedroom Units; 2.0 spaces for Two-Bedroom Units; and 2.0 spaces for ThreeBedroom Units.

Assumes a 7.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 5 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf TH Mkt Page 44 of 54

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APPENDIX E - EXHIBIT I - TABLE 2

PROJECTED NET SALES REVENUE

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 15 UNITS/ACRE: TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Sales Revenue 1
Studio Units 0 Units @ $0 /Unit $0
One-Bedroom Units 9 Units @ $900,000 /Unit 8,100,000
Two-Bedroom Units 26 Units @ $1,214,900 /Unit 31,587,000 Three-Bedroom Units 0 Units @ $0 /Unit 0
Total Gross Sales Revenue $39,687,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $1,191,000
Closing 2.0% Gross Sales Revenue 794,000
Warranty 0.5% Gross Sales Revenue 198,000
Total Cost of Sales ($2,183,000)
III. Net Revenue $37,504,000
1 Based in part on a survey of home resales in Santa Cruz. The sales survey was undertaken by KMA in December 2023. See APPENDIX A. The weighted average sales price equates to $927 per square foot of saleable area.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf TH Mkt Page 45 of 54

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APPENDIX E - EXHIBIT I - TABLE 3

PROJECTED DEVELOPER PROFIT

MARKET RATE ALTERNATIVE
BASE CASE DENSITY: 15 UNITS/ACRE: TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Net Revenue See APPENDIX E - EXHIBIT I - TABLE 2 $37,504,000 II. Total Development Cost See APPENDIX E - EXHIBIT I - TABLE 1 $34,708,000 III. Developer Profit 8.1% Total Development Cost $2,796,000 Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf TH Mkt Page 46 of 54

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OWNERSHIP HOUSING DEVELOPMENT

APPENDIX E - EXHIBIT II

PRO FORMA ANALYSIS
20% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 15 UNITS/ACRE

TOWNHOME PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf TH 20% Mod Page 47 of 54

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APPENDIX E - EXHIBIT II - TABLE 1

ESTIMATED DEVELOPMENT COSTS
20% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 15 UNITS/ACRE: TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 100,000 Sf of Land $100 /Sf of Land $10,000,000 II. Direct Costs 2
On-Site Improvements/Landscaping 100,000 Sf of Land $45 /Sf of Land $4,500,000 Parking 3
Attached Garage 61 Spaces $0 /Space 0
Covered Carports 0 Spaces $7,500 /Space 0
Above-Ground Spaces 0 Spaces $30,000 /Space 0
1st Level Subterranean Spaces 0 Spaces $50,000 /Space 0 Building Costs 42,800 Sf of GBA $250 /Sf of GBA 10,700,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 3,040,000 Total Direct Costs $18,240,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $1,094,000 Public Permits & Fees 5 35 Units $37,000 /Unit 1,295,000 Taxes, Insurance, Legal & Accounting 2.0% Direct Costs 365,000 Marketing 35 Units $5,000 /Unit 175,000
Developer Fee 3.0% Gross Sales Revenue 1,030,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 198,000 Total Indirect Costs $4,157,000
IV. Financing Costs
Interest During Construction 6 $2,027,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 292,000 Total Financing Costs $2,319,000
V. Total Construction Cost 35 Units $706,000 /Unit $24,716,000 Total Development Cost 35 Units $992,000 /Unit $34,716,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 The base requirement is 1.0 space for Studio Units; 1.0 space for One-Bedroom Units; 2.0 spaces for Two-Bedroom Units; and 2.0 spaces for ThreeBedroom Units.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf TH 20% Mod Page 48 of 54

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APPENDIX E - EXHIBIT II - TABLE 2

PROJECTED NET SALES REVENUE
20% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 15 UNITS/ACRE: TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Sales Revenue 1
A. Market Rate Units
Studio Units 0 Units @ $0 /Unit $0
One-Bedroom Units 7 Units @ $900,000 /Unit 6,300,000
Two-Bedroom Units 21 Units @ $1,214,900 /Unit 25,513,000 Three-Bedroom Units 0 Units @ $0 /Unit 0
B. Inclusionary Units 2
Very Low Income - Density Bonus Units
Studio Units 0 Units @ $62,400 /Unit 0
One-Bedroom Units 0 Units @ $73,400 /Unit 0
Two-Bedroom Units 0 Units @ $67,900 /Unit 0
Three-Bedroom Units 0 Units @ $63,000 /Unit 0
Moderate Income - Inclusionary Units
Studio Units 0 Units @ $296,600 /Unit 0
One-Bedroom Units 2 Units @ $341,200 /Unit 682,000
Two-Bedroom Units 5 Units @ $367,400 /Unit 1,837,000
Three-Bedroom Units 0 Units @ $407,100 /Unit 0
Total Gross Sales Revenue $34,332,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $1,030,000
Closing 2.0% Gross Sales Revenue 687,000
Warranty 0.5% Gross Sales Revenue 172,000
Total Cost of Sales ($1,889,000)
III. Net Revenue $32,443,000
1 2 See APPENDIX B.

Based in part on a survey of home resales in Santa Cruz. The sales survey was undertaken by KMA in December 2023. See APPENDIX A. The weighted average sales price equates to $927 per square foot of saleable area.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf TH 20% Mod Page 49 of 54

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APPENDIX E - EXHIBIT II - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
20% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 15 UNITS/ACRE: TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Funds Available for Development Costs
Net Revenue See APPENDIX E - EXHIBIT II - TABLE 2 $32,443,000 (Less) Threshold Developer Profit 1 8.1% Total Development Cost ($2,797,000) Total Funds Available for Development Costs $29,646,000 II. Total Development Cost See APPENDIX E - EXHIBIT II - TABLE 1 $34,716,000 III. Total Financial Impact ($5,070,000)
Developer Profit -6.5% Total Development Cost
Required Prop Acq Cost Reduction 51% of Estimated Current Acquisition Prices % Price Increase to Offset Impact 15.9% Market Rate Units 1 Based on the profit as a percentage of Total Development Cost estimated to be generated by the MARKET RATE ALTERNATIVE.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf TH 20% Mod Page 50 of 54

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OWNERSHIP HOUSING DEVELOPMENT

APPENDIX E - EXHIBIT III

PRO FORMA ANALYSIS
25% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 15 UNITS/ACRE

TOWNHOME PROTOTYPE
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf TH 25% Mod Page 51 of 54

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APPENDIX E - EXHIBIT III - TABLE 1

ESTIMATED DEVELOPMENT COSTS
25% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 15 UNITS/ACRE: TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Property Acquisition Costs 1 100,000 Sf of Land $100 /Sf of Land $10,000,000 II. Direct Costs 2
On-Site Improvements/Landscaping 100,000 Sf of Land $45 /Sf of Land $4,500,000 Parking 3
Attached Garage 61 Spaces $0 /Space 0
Covered Carports 0 Spaces $7,500 /Space 0
Above-Ground Spaces 0 Spaces $30,000 /Space 0
1st Level Subterranean Spaces 0 Spaces $50,000 /Space 0 Building Costs 42,800 Sf of GBA $250 /Sf of GBA 10,700,000 Contractor/DC Contingency Allow 4 20% Other Direct Costs 3,040,000 Total Direct Costs $18,240,000
III. Indirect Costs
Architecture, Engineering & Consulting 6.0% Direct Costs $1,094,000 Public Permits & Fees 5 35 Units $37,000 /Unit 1,295,000 Taxes, Insurance, Legal & Accounting 2.0% Direct Costs 365,000 Marketing 35 Units $5,000 /Unit 175,000
Developer Fee 3.0% Gross Sales Revenue 979,000
Soft Cost Contingency Allowance 5.0% Other Indirect Costs 195,000 Total Indirect Costs $4,103,000
IV. Financing Costs
Interest During Construction 6 $2,142,000
Loan Origination Fees 60.0% Loan to Cost 1.5 Points 291,000 Total Financing Costs $2,433,000
V. Total Construction Cost 35 Units $708,000 /Unit $24,776,000 Total Development Cost 35 Units $994,000 /Unit $34,776,000 1 Estimated in part based on a survey of recent land sales in Santa Cruz. 2 Based on the estimated costs for similar uses.
3 4 Includes contractors' fees, general requirements, builder's risk insurance and a direct cost contingency allowance. 5 Based on a review of the City's draft Housing Element. 6 The base requirement is 1.0 space for Studio Units; 1.0 space for One-Bedroom Units; 2.0 spaces for Two-Bedroom Units; and 2.0 spaces for ThreeBedroom Units.

Assumes a 7.0% interest cost for debt; an 18 month construction period after receipt of entitlements; a 4 month absorption period; 30% of the units are presold and close during first month after completion; and 1.5 points for loan origination fees.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf TH 25% Mod Page 52 of 54

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APPENDIX E - EXHIBIT III - TABLE 2

PROJECTED NET SALES REVENUE
25% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 15 UNITS/ACRE: TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Gross Sales Revenue 1
A. Market Rate Units
Studio Units 0 Units @ $0 /Unit $0
One-Bedroom Units 7 Units @ $900,000 /Unit 6,300,000
Two-Bedroom Units 19 Units @ $1,214,900 /Unit 23,083,000 Three-Bedroom Units 0 Units @ $0 /Unit 0
B. Inclusionary Units 2
Very Low Income - Density Bonus Units
Studio Units 0 Units @ $62,400 /Unit 0
One-Bedroom Units 0 Units @ $73,400 /Unit 0
Two-Bedroom Units 0 Units @ $67,900 /Unit 0
Three-Bedroom Units 0 Units @ $63,000 /Unit 0
Moderate Income - Inclusionary Units
Studio Units 0 Units @ $296,600 /Unit 0
One-Bedroom Units 2 Units @ $341,200 /Unit 682,000
Two-Bedroom Units 7 Units @ $367,400 /Unit 2,572,000
Three-Bedroom Units 0 Units @ $407,100 /Unit 0
Total Gross Sales Revenue $32,637,000
II. Cost of Sales
Commissions 3.0% Gross Sales Revenue $979,000
Closing 2.0% Gross Sales Revenue 653,000
Warranty 0.5% Gross Sales Revenue 163,000
Total Cost of Sales ($1,795,000)
III. Net Revenue $30,842,000
1 2 See APPENDIX B.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf TH 25% Mod Page 53 of 54

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APPENDIX E - EXHIBIT III - TABLE 3
FINANCIAL IMPACTS: INCLUSIONARY HOUSING REQUIREMENTS
25% MODERATE INCOME INCLUSIONARY ALTERNATIVE
BASE CASE DENSITY: 15 UNITS/ACRE: TOWNHOME PROTOTYPE

OWNERSHIP HOUSING DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION

SANTA CRUZ, CALIFORNIA
I. Funds Available for Development Costs
Net Revenue See APPENDIX E - EXHIBIT III - TABLE 2 $30,842,000 (Less) Threshold Developer Profit 1 8.1% Total Development Cost ($2,801,000) Total Funds Available for Development Costs $28,041,000 II. Total Development Cost See APPENDIX E - EXHIBIT III - TABLE 1 $34,776,000 III. Total Financial Impact ($6,735,000)
Developer Profit -11.3% Total Development Cost
Required Prop Acq Cost Reduction 67% of Estimated Current Acquisition Prices % Price Increase to Offset Impact 22.9% Market Rate Units 1 Based on the profit as a percentage of Total Development Cost estimated to be generated by the MARKET RATE ALTERNATIVE.

Prepared by: Keyser Marston Associates, Inc.

File Name: 1 18 24 SC Own; Pf TH 25% Mod Page 54 of 54

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City Council

AGENDA REPORT
DATE: 10/17/2023
AGENDA OF: 10/24/2023
DEPARTMENT: City Council
SUBJECT: Impact Report on Effect of Housing for People Ballot Initiative (CN) RECOMMENDATION: Motion to direct the preparation of an impact report on the effect of the proposed Housing for People initiative which would amend the City’s Municipal Code to: (1) prohibit the City Council from amending the City’s General Plan or Zoning Ordinance in a way that increases allowable height limits or floor area ratios without a prior vote of the people; and (2) increases the City’s inclusionary housing requirements to at least 25% for developments with 30 or more units.

BACKGROUND: On May 25, 2023, proponents for an initiative petition entitled “Housing for People,” submitted a Notice of Intent to Circulate a Petition and a Request for Ballot Initiative Title and Summary with the City Clerk. The City Attorney’s Office prepared the ballot title and summary for inclusion in the petition form pursuant to Elections Code Section 9203, and the City Clerk furnished a copy to the proponents on June 8, 2023.

On October 9, 2023, the proponent submitted the petition to the City Clerk for a prima facie count. On that same date, the City Clerk determined that there were more than the required number of actual signatures on the petition and delivered the petition to the County Clerk to verify the validity of the signatures. The County Elections Department is currently working through the petition to determine if the minimum of 3,683 valid signatures has been met. The County has until November 21, 2023, to complete the certification process.

DISCUSSION: The Housing for People ballot initiative would amend the City’s Municipal Code to prohibit the City Council from amending the City’s General Plan or Zoning Ordinance in a way that increases allowable height limits or floor area ratios without a prior vote of the people. It would also increase the City’s inclusionary housing requirements to at least 25% for developments with 30 or more units.

These proposed changes would likely have substantive impacts on the City and its compliance with state housing laws, housing goals, and on City revenue. It is therefore recommended that Council direct staff to prepare a comprehensive report on potential impacts of the Housing for People Initiative.1
1 Note that Elections Code section 9212 allows the Council to direct preparation of a report on proposed initiatives and their effects, but Section 9212 Reports are limited by short timeframes governed by statute. Apart from Section 9212, the Council is also generally authorized to direct the preparation of a general impact report, which is the action recommended here.

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To prepare the report for timely distribution and discussion for the March 2024 election, staff may seek the assistance of a consultant in developing the report. The impact report will be presented to Council no later than February 13, 2024.

FISCAL IMPACT: The exact consultant costs associated with preparation of the report are unknown at this time, but anticipated to be less than $20,000. Costs associated with the preparation of the report will be absorbed within the City’s approved FY 2023 budget.

Submitted By:

Fred Keeley
Mayor
Submitted By:

Shebreh Kalantari-Johnson
Councilmember
Submitted By:

Scott Newsome
Councilmember
ATTACHMENTS:

1. NOTICE OF INTENTION AND MEASURE.PDF

2. BALLOT TITLE AND SUMMARY

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MINUTES ARE UNOFFICIAL UNTIL APPROVED BY COUNCIL
City of Santa Cruz
809 Center Street
Santa Cruz, California 95060

MINUTES OF A CITY COUNCIL MEETING
October 24, 2023
1:40 PM
Mayor Keeley opened the City Council Closed Session at 1:41 p.m. in a public meeting via Zoom and in Council Chambers, for the purpose of announcing the agenda, and receiving public testimony.

Roll Call

Present: Councilmembers Newsome, Brown, Watkins, Brunner, KalantariJohnson; Mayor Keeley.

Absent: Vice Mayor Golder.

Staff: City Manager M. Huffaker, Assistant City Manager L. Schmidt, City Attorney T. Condotti, Finance Director E. Cabell, Director of Information Technology K. Morgan, Director of Parks and Recreation T. Elliot, Chief of Fire R. Oatey, Chief People Officer S. De Leon, Deputy City Clerk Administrator J. Wood, City Clerk Administrator B. Bush.

Public Comment
Mayor Keeley opened the public comment period at 1:42 p.m. The following person spoke:

Kathleen Gould spoke regarding item 1.

Mayor Keeley closed the public comment period at 1:47 p.m., at which time the meeting was closed to the public and Council adjourned to the Courtyard Conference Room.

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October 24, 2023 CITY COUNCIL MINUTES 6599
Closed Session

1. Conference With Legal Counsel – Liability Claims (Government Code §54956.95) Claimant: Kathleen Gould
Claim against the City of Santa Cruz
Council received a status report, took up under agenda item 8, and no reportable action was taken.

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October 24, 2023 CITY COUNCIL MINUTES 6600
City of Santa Cruz
809 Center Street
Santa Cruz, California 95060

MINUTES OF A CITY COUNCIL MEETING
October 24, 2023
1:45 PM
Call to Order – Mayor Keeley called the meeting to order at 1:57 p.m. in Council Chambers.

Roll Call

Present: Councilmembers Newsome, Brown, Watkins, Brunner (left at 2:57 p.m.), Kalantari-Johnson; Vice Mayor Golder (arrived at 2:47 p.m.); Mayor Keeley.

Absent: None.

Staff: City Manager M. Huffaker, Assistant City Manager L. Schmidt, City Attorney T. Condotti, Finance Director E. Cabell, Director of Information Technology K. Morgan, Director of Parks and Recreation T. Elliot, Chief of Fire R. Oatey, Chief People Officer S. De Leon, Deputy City Manager L. Murphy (via Zoom), Director of Public Works N. Nguyen, Director of Planning and Community Development L. Butler, Chief of Police B.

Escalante (via Zoom), Assistant Director of Public Works/City Engineer K. Crossley, Sustainability and Climate Action Manager T. Wise-West (via Zoom), Senior Planner R. Bane, Assistant Director of Planning and Community Development E. Marlatt, Development Manager N. Daly, Transportation Manager M. Starkey, Deputy City Clerk Administrator J.

Wood, City Clerk Administrator B. Bush.

Oral Communications Announcement - The Mayor provided a brief announcement about Oral Communications.

40.185
October 24, 2023 CITY COUNCIL MINUTES 6601
Oral Communications
At 1:58 p.m. Mayor Keeley opened Oral Communications for members of the public who wished to speak regarding items not listed on the City Council agenda.

James Ewing Whitman spoke regarding the Citizen Rule Book.

Rachael Sotos spoke regarding a COVID Truth Commission that she would like the City Council to establish.

Garrett spoke regarding analyzing Council actions against similarities to revolutionaries who actively pursue the destruction of this country.

At 2:04 p.m. Mayor Keeley closed Oral Communications.

Presiding Officer's Announcements
Statements of Disqualification – Councilmember Brunner announced she is recusing herself from items 25 and 26 as these items have an impact on her employer, the Downtown Association.

Additions and Deletions – None.

City Attorney Report on Closed Session – See page 6599 for the report.

Council Meeting Calendar

2. The City Council reviewed and did not revise the meeting calendar attached to the agenda.

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October 24, 2023 CITY COUNCIL MINUTES 6602
Consent Agenda
Councilmember Watkins made a comment on item 5.

Councilmember Brown pulled item 20 for further discussion.

Mayor Keeley made a comment on items 4, 5, and 9.

Mayor Keeley opened the public comment period. The following people spoke:

James Ewing Whitman spoke regarding items 3 and 4.

Unidentified person spoke regarding item 3.

Garrett spoke regarding items 9, 12, and 4.

Michelle Kibrick spoke regarding item 4.

Steve Palmisano spoke regarding item 4.

Robert Kibrick spoke regarding item 4.

Mayor Keeley closed the public comment period.

MOTION: Councilmember Brown moved, seconded by Councilmember Watkins, to approve the remaining Consent Agenda, with the below amendment to the minutes of the October 10, 2023 Council meeting related to item 18, and direct staff to issue a press release regarding the adoption of the resolution urging California Public Employees’ Retirement System (CalPERS) to invest in sustainable energy and divest from fossil fuels.

From:
 Reduce the height from 9 feet to 8 feet to help with perceived massing.

To:
 Reduce the first-floor height from 9 feet to 8 feet to help with perceived massing.

ACTION: The motion carried with the following vote.

AYES: Councilmembers Newsome, Brown, Watkins, Brunner, KalantariJohnson; Mayor Keeley.

NOES: None.

ABSENT: Vice Mayor Golder.

DISQUALIFIED: None.

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October 24, 2023 CITY COUNCIL MINUTES 6603
Consent Agenda (continued)

3. Minutes of the October 10, 2023 City Council Meeting (CC) Motion carried to approve as amended.

4. Resolution Urging California Public Employees’ Retirement System (CalPERS) to Invest in Sustainable Energy and Divest from Fossil Fuels and Support Climate-Safe California Goals (CN)
Motion carried to:
 Adopt Resolution No. NS-30,216 urging CalPERS to invest in sustainable energy and divest from fossil fuels, and
 Encourage State and Federal legislation that supports Climate-Safe California goals.

5. Appointments to Housing for Health Partnership Board (CN) Motion carried to appoint Mayor Keeley and Councilmember Kalantari-Johnson to the Santa Cruz County Housing for Health Partnership (H4HP) Policy Board.

6. Impact Report on Effect of Housing for People Ballot Initiative (CN) Motion carried to direct the preparation of an impact report on the effect of the proposed Housing for People initiative which would amend the City’s Municipal Code to: (1) prohibit the City Council from amending the City’s General Plan or Zoning Ordinance in a way that increases allowable height limits or floor area ratios without a prior vote of the people; and (2) increases the City’s inclusionary housing requirements to at least 25% for developments with 30 or more units.

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October 24, 2023 CITY COUNCIL MINUTES 6604
Consent Agenda (continued)

7. USDA, Forest Service Type 6 Fire Truck (Engine) – Congressionally Designated Project - Grant Acceptance, Authorization and Appropriation (FD) Motion carried to:
 Adopt Resolution No. NS-30,217 authorizing the City Manager to apply for, accept, and appropriate funds from the USDA Forest Service Grant to purchase a Type 6 Fire Engine and additional equipment; and  Adopt Resolution No. NS-30,218 amending the FY 2024 budget to appropriate a $400,000 grant from USDA Forest Service to purchase a Type 6 Fire Engine and additional equipment.

8. Liability Claim Filed Against the City of Santa Cruz (FN) Motion carried to reject the liability claim of Kathleen Gould, based on staff recommendation.

9. Award Contract for Investment Management Services (FN) Motion carried to:
 Award a contract for Investment Management Services to PFM Asset Management LLC, San Francisco, California for fiscal years ending June 30, 2023, 2024, 2025, 2026, and 2027 with five option years; and  Authorize the City Manager to execute an agreement in a form approved by the City Attorney with PFM Asset Management LLC for Investment Management Services.

10. Year-End Budget Adjustment for FY 2023 (FN)
Resolution No. NS-30,219 was adopted amending the FY 2023 budget where annual revenues and expenditures need adjustments in various funds.

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October 24, 2023 CITY COUNCIL MINUTES 6605
Consent Agenda (continued)

11. Resolution Amending the City of Santa Cruz Personnel Complement and Classification and Compensation Plan for the City Manager’s Office, Information Technology, Parks and Recreation, Public Works, and Economic Development and Housing – Budget Adjustment (HR/FN)
Motion carried to:
 Adopt Resolution No. NS-30,220 amending the Classification and Compensation Plans and the Fiscal Year 2024 Budget Personnel Complement for Information Technology, the City Manager’s Office, Parks and Recreation, Public Works, and Economic Development and Housing; and  Adopt Resolution No. NS-30,221 amending the FY 2024 budget in the amount of $636,046 to adjust personnel budgets for Information Technology, City Manager’s Office, Parks and Recreation, Public Works, and Economic Development and Housing.

12. Award Agreement for Fee Study for the Departments of Public Works, Parks and Recreation, Economic Development and Housing, Fire, Finance, City Manager’s Office, and Planning and Community Development (PL) Motion carried to:
 Award agreement for citywide Fee Study to MGT of America Consulting, LLC (MGT) in the amount of $139,874; and
 Authorize the City Manager, or designee, to execute the agreement and any amendments within the approved operating budget and authorized amendments budget, in a form approved by the City Attorney.

13. Recycling Center Storm Water Quality Improvements (c402111) – Award Contract (PW)
Motion carried to accept the bid of Clear Water Services (Rodeo, CA) for providing storm water treatment system rental at the Resource Recovery Facility Recycling Center in the amount of $129,204.00. The City Manager is hereby authorized and directed to execute the contract in a form approved by the City Attorney. The Director of Public Works is authorized to execute change orders within the approved project budget.

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October 24, 2023 CITY COUNCIL MINUTES 6606
Consent Agenda (continued)

14. Encroachment Permit – Installation of Retaining Wall and Stairs (PW) Resolution No. NS-30,222 was adopted granting an encroachment permit to Christen & W.F. Docker to install a retaining wall and stairs in the public rightof-way at 215 4th Avenue.

15. Encroachment Permit – Installation ADA Access Ramp/Sidewalk (PW) Resolution No. NS-30,223 was adopted granting an encroachment permit to Lissner Properties, Inc. to install an ADA access ramp/sidewalk in the public right-of-way at 320 Cedar Street (Birch Alley).

16. Front-Spruce-Pacific 54-Inch Sewer Rehabilitation (c401606) – Approval of Plans and Specifications, Authorization to Advertise and Award Contract, California Environmental Quality Act Exemption, and Budget Adjustment (PW) Motion carried to:
 Approve the plans and specifications for the Front-Spruce-Pacific 54-Inch Sewer Rehabilitation (c401606), authorize staff to advertise for bids, award the contract. The City Manager is hereby authorized and directed to execute the contract, in a form approved by the City Attorney, and as authorized by Resolution No. NS-27,563. The Director of Public Works is authorized to execute change orders within the approved project budget;  Find the project exempt under the California Environmental Quality Act (CEQA); and
 Adopt Resolution No. NS-30,224 amending the FY 2024 budget and appropriating $8,100,000 from supporting project, c402204 (City WWTF Headworks Replacement), to fund c401606 (Front-Spruce-Pacific 54-Inch Sewer Rehabilitation).

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October 24, 2023 CITY COUNCIL MINUTES 6607
Consent Agenda (continued)

17. Front-Spruce-Pacific 54-Inch Sewer Rehabilitation Project and Wastewater Treatment Facility Headworks Rehabilitation Project – Loan Application and Acceptance (c401606 and c402204) (PW)
Resolution No. NS-30,225 was adopted authorizing the Public Works Department to apply for and accept a loan from the California Infrastructure and Economic Development for the Front-Spruce-Pacific 54-Inch Sewer Rehabilitation and Wastewater Treatment Facility Headworks Rehabilitation Projects (c401606 and c402204) in the amount of $33,500,000 and authorizing the City Manager to execute an agreement in a form approved by the City Attorney with California Infrastructure and Economic Development Bank for said loan and its repayment.

18. Route 1/9 Intersection Improvement Project (c400805) - Notice of Completion (PW)
Motion carried to accept the work of Granite Rock, Inc. (Watsonville, CA) as completed per the plans and specifications and authorize the filing of the Notice of Completion for Route 1/9 Intersection Improvement Project (c400805).

19. Branciforte Branch Public Library Renovation (c351801) – Notice of Completion (PW)
Motion carried to accept the work of JPB Designs, Inc. (Orangevale, CA) as completed per plans and specifications and authorizing the filing of a Notice of Completion for the Branciforte Branch Public Library Renovation Project (c351801).

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October 24, 2023 CITY COUNCIL MINUTES 6608
Consent Agenda (continued)

20. Retaining Wall Reconstruction Project -141 Archer Drive (g402402) (PW) Assistant Director of Public Works/City Engineer K. Crossley and Director of Public Works N. Nguyen responded to Council questions.

Mayor Keeley opened the public comment period. There were no speakers.

Mayor Keeley closed the public comment period.

MOTION: Councilmember Brown moved, seconded by Councilmember Watkins, to:
 Adopt Resolution No. NS-30,226 approving the Application for Federal Assistance SF-424 and Advance of Funds/Reimbursement Agreement for Emergency Watershed Protection Program and authorizing the City Manager to execute said agreements and any amendments in a form acceptable to the City Attorney; and
 Adopt Resolution No. NS-30,227 amending the FY 2024 budget and appropriating $414,000 for the Retaining Wall Reconstruction Project - 141 Archer Drive (g402402).

Assistant Director of Public Works/City Engineer K. Crossley informed Council that the deposit intended to be provided by the property owner was going to, in part, recoup the cost of staff time which has not yet been covered on this project. In addressing concerns raised by Council, he proposed that the City could absorb those costs up to now to get the project to this point, and charge for staff time moving forward. After discussion, the staff recommendation was incorporated into the motion.

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October 24, 2023 CITY COUNCIL MINUTES 6609
Consent Agenda (continued)

20. Retaining Wall Reconstruction Project -141 Archer Drive (g402402) (PW) (continued)
ACTION: The motion carried with the following vote.

AYES: Councilmembers Newsome, Brown, Watkins, Brunner,
Kalantari-Johnson; Mayor Keeley.

NOES: None.

ABSENT: Vice Mayor Golder.

DISQUALIFIED: None.

21. Award Agreement for Fisheries Biology Support from Hagar Environmental Science (WT)
Motion carried authorizing the City Manager to execute an agreement in a form to be approved by the City Attorney with Hagar Environmental Science for ongoing fisheries biology support of the City of Santa Cruz's Habitat Conservation Plan development and Incidental Take Permitting, and to authorize the Water Director to execute up to four annual agreement renewals.

End Consent Agenda
Consent Public Hearings
Councilmember Brown pulled item 25 for further discussion and made a comment on item 24.

Sustainability and Climate Action Manager T. Wise-West responded to Council questions on item 24.

Councilmember Newsome made a comment on item 22.

Mayor Keeley opened the public comment period. The following people spoke:

Garrett spoke regarding item 24.

Unidentified person spoke regarding item 24.

Judi Young spoke regarding item 24.

Mayor Keeley closed the public comment period.

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October 24, 2023 CITY COUNCIL MINUTES 6610
Consent Public Hearings (continued)
MOTION: Councilmember Newsome moved, seconded by Vice Mayor Golder, to approve the remaining Consent Public Hearings Agenda.

ACTION: The motion carried unanimously with the following vote.

AYES: Councilmembers Newsome, Brown, Watkins, Brunner, KalantariJohnson; Vice Mayor Golder; Mayor Keeley.

NOES: None.

ABSENT: None.

DISQUALIFIED: None.

22. Tax Equity and Fiscal Responsibility Act (TEFRA) Hearing for Approval of the California Municipal Finance Authority for Issuance of Tax-Exempt Bonds for the Benefit of the Sycamore Street Commons and La Playa Residential Affordable Housing Projects (ED)
Motion carried to:
 Conduct the public hearing under the requirements of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the Internal Revenue Code of 1986, as amended (the “Code”); and
 Adopt Resolution No. NS-30,228 to approve the issuance of Tax-Exempt Revenue Bonds by the California Municipal Finance Authority (“CMFA”) for the benefit of Mercy Housing California 72, L.P., a California limited partnership, or another entity to be established by Mercy Housing California or an affiliate thereof (collectively, the “Borrower”), in an amount not to exceed thirty million dollars ($30,000,000) to provide financing for Sycamore Street Commons and La Playa Residential (the “Project”), such adoption is solely for the purposes of satisfying the requirements of TEFRA, the Code, and the California Government Code Section 6500.

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October 24, 2023 CITY COUNCIL MINUTES 6611
Consent Public Hearings (continued)

23. Mission Gardens Apartments Amendment to HOME Investment Partnership Regulatory Agreement and Assumption Agreements (ED)
Motion carried to adopt Resolution No. NS-30,229 to:
 Authorize the City Manager to execute any and all amendments necessary, in a form to be approved by the City Attorney, to change the Managing Agent from John Stewart Company to Rose Community Management LLC including but not limited to Exhibit D of the HOME Investment Partnership Regulatory Agreement, upon close of escrow should Rose Affordable Housing Preservation Fund V Mission Gardens L.P. take ownership of the property located at 90 Grandview Street; and
 Authorize the City Manager to execute any and all agreements necessary, in a form to be approved by the City Attorney, for Rose Affordable Housing Preservation Fund V Mission Gardens, L.P. to assume all existing affordability requirements currently recorded against 90 Grandview Street and extend the City Redevelopment Agency affordability requirements in perpetuity.

24. Housing and Urban Development (HUD) Pathways to Removing Obstacles to Housing Grant Program: Authorization for Application, Acceptance, and Appropriation of Grant Funds for Preserving and Promoting Housing Affordability and Climate Resilience in Front Line Communities of Santa Cruz,

CA (CM)
Resolution No. NS-30,230 was adopted authorizing the City Manager to apply for, accept, and appropriate funds from the Housing and Urban Development (HUD) Pathways to Removing Obstacles to Housing Grant Program to carry out a project entitled “Preserving and Promoting Housing Affordability and Climate Resilience in Front Line Communities of Santa Cruz, CA.” At this time, Councilmember Brunner recused herself and left the dais.

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October 24, 2023 CITY COUNCIL MINUTES 6612
Consent Public Hearings (continued)

25. A23-0001: Downtown Plan Amendments Related to Removing Public Hearing Requirements for Day Care and Supportive Housing, Consistent with State Law; Expanding Hotel, Residential, and Recreational Use Allowances; Revising Additional Height Criteria; Adding Language to Encourage Activated Roof Top Amenities; and Amending Landscape Requirements to Allow More Flexibility with Landscaping and Tree Selection (PL)
Director of Planning and Community Development L. Butler introduced the item and responded to Council questions.

Senior Planner R. Bane and Assistant Director of Planning and Community Development E. Marlatt gave a presentation and responded to Council questions.

Mayor Keeley opened the public comment period. The following people spoke.

Susan Monheit
Rick Longinotti
James Ewing
Allison Buchter
Candace Brown
Unidentified person
Unidentified person
Mayor Keeley closed the public comment period.

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October 24, 2023 CITY COUNCIL MINUTES 6613
Consent Public Hearings (continued)

25. A23-0001: Downtown Plan Amendments (PL) (continued) MOTION: Vice Mayor Golder moved, seconded by Councilmember Newsome, to:
 Adopt Resolution No. NS-30,231 approving the amendments to the Downtown Plan and the Local Coastal Program to clarify and update various sections, remove obsolete sections and references, streamline application processes, and bring the Downtown Plan into conformity with State law, finding that the public necessity, and the general community welfare, and good zoning practice shall be served and furthered with the adoption of the Downtown Plan amendments; and that the proposed amendments are in general conformance with the principles, policies, and land use designation set forth in the General Plan, Local Coastal Program, and the Downtown Plan. The amendments include but are not limited to removing public hearing requirements for day care and supportive housing, consistent with state law; expanding hotel, residential, and recreational use allowances; revising additional height criteria; adding language to encourage activated roof top amenities; and amending landscape requirements to allow more flexibility with landscaping and tree selection. An Addendum to the 2017 Downtown Plan Amendments Program Environmental Impact Report (EIR) has been prepared pursuant to California Environmental Quality Act (CEQA) Guidelines sections 15162 and 15164.
 Adopt Resolution No. NS-30,232 authorizing and directing the City Manager to submit the above Local Coastal Program Implementation Plan amendments to the Downtown Plan to the California Coastal Commission for final certification.

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October 24, 2023 CITY COUNCIL MINUTES 6614
Consent Public Hearings (continued)

25. A23-0001: Downtown Plan Amendments (PL) (continued) FRIENDLY AMENDMENT: Councilmember Newsome requested to add the following to the Downtown Plan Development Standards and Design Guidelines:

Add to H. Additional Height Zones, Section 1. Additional Height Zone A:
b. vi. Affordable Housing Public Benefit Fee for Non-Residential Projects. An application for additional height is voluntary. Because an applicant requesting additional height is receiving a benefit in the form of increased height and intensity, and to ensure that non-residential projects which are granted additional height reasonably contribute to the City’s need for affordable housing, non-residential projects that are granted additional height shall be required to pay an in-lieu public benefit fee in the amount of $5.00 per square foot of gross floor area occurring above the 55-foot Base Height limit (i.e., the additional gross floor area occurring within the project on levels that exceed the 55- foot Base Height limit). The fee shall be paid prior to occupancy of the project. All fees provided collected under this section shall be deposited in the City of Santa Cruz’s affordable housing trust fund.

Add to H. Additional Height Zones, Section 2. Additional Height Zone B. b. vii. Affordable Housing Public Benefit Fee for Non-Residential Projects. An application for additional height is voluntary. Because an applicant requesting additional height is receiving a benefit in the form of increased height and intensity, and to ensure that non-residential projects which are granted additional height reasonably contribute to the City’s need for affordable housing, non-residential projects that are granted additional height shall be required to pay an in-lieu public benefit fee in the amount of $5.00 per square foot of gross floor area occurring above the 50-foot Base Height limit (i.e., the additional gross floor area occurring within the project on levels that exceed the 50- foot Base Height limit). The fee shall be paid prior to occupancy of the project. All fees provided collected under this section shall be deposited in the City of Santa Cruz’s affordable housing trust fund.

Vice Mayor Golder accepted the friendly amendment.

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October 24, 2023 CITY COUNCIL MINUTES 6615
Consent Public Hearings (continued)

25. A23-0001: Downtown Plan Amendments (PL) (continued) ACTION: The motion as amended carried with the following vote.

AYES: Councilmembers Newsome, Brown, Watkins, KalantariJohnson; Vice Mayor Golder; Mayor Keeley.

NOES: None.

ABSENT: None.

DISQUALIFIED: Councilmember Brunner.

Council took a break at 3:55 p.m. and returned at 4:07 p.m.

General Business

26. METRO Downtown Transit Center Interim Operations Plan - Approval of Plans and Specifications and Related Actions (ED)
Development Manager N. Daly gave a presentation and responded to Council questions.

Mayor Keeley opened the public comment period. The following people spoke.

James Ewing
Ron Goodman
Brandon Freeman
Candace Brown
Daniel Zaragoza
Unidentified person
Zennon Ulyate-Crow
Unidentified person
Mayor Keeley closed the public comment period.

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October 24, 2023 CITY COUNCIL MINUTES 6616
General Business (continued)

26. METRO Downtown Transit Center Interim Operations Plan - Approval of Plans and Specifications and Related Actions (ED) (continued) MOTION: Councilmember Kalantari-Johnson moved, seconded by Councilmember Watkins, to:
1) Adopt Resolution No. NS-30,233 approving plans and specifications for the METRO Downtown Transit Interim Operations Plan (Plan) pursuant to Government Code Section 830.6 (design immunity), and authorizing removal of unlawfully parked vehicles when the Plan is implemented and schedule implementation of the plan such that it will minimize impact on businesses and residents during the upcoming peak holiday season; 2) Direct staff to review the potential impacts of the plan on parking revenue and supply with the Downtown Commission, and also provide regular updates on the overall functioning of the Plan to the Downtown Commission, Downtown Association, and Downtown Management Corporation;
3) Direct staff to return to the Transportation and Public Works Commission with an update on the conditions of the Plan after it has been implemented; 4) Authorize the City Manager, or designee, to negotiate and enter into a commercial lease with the Santa Cruz Metropolitan Transportation District (METRO) for a storefront facility at 603 and 605 Front Street for a METRO ticket sales/call center function, in a form approved by the City Attorney; 5) Adopt Resolution No. NS-30,234 amending the FY 2024 budget to allocate $500,000 of METRO funding to the Pacific Station North Project for the METRO Interim Operations Plan;
6) Authorize the City Manager to enter into a Memorandum of Understanding with METRO and For the Future Housing/EDEN that defines roles and financing commitments for the Plan; and
7) Direct staff to explore and implement increased safety measures along River Street South and the adjacent river levee.

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October 24, 2023 CITY COUNCIL MINUTES 6617
General Business (continued)

26. METRO Downtown Transit Center Interim Operations Plan - Approval of Plans and Specifications and Related Actions (ED) (continued) ACTION: The motion carried with the following vote.

AYES: Councilmembers Newsome, Brown, Watkins, KalantariJohnson; Vice Mayor Golder; Mayor Keeley.

NOES: None.

ABSENT: None.

DISQUALIFIED: Councilmember Brunner.

Adjournment – Vice Mayor Golder moved, seconded by Councilmember Newsome, to adjourn. By consensus City Council adjourned at 4:52 p.m.

Respectfully Submitted:

Julia Wood, Deputy City Clerk Administrator
Attest:

Bonnie Bush, City Clerk Administrator
Approved:

Fred Keeley, Mayor

40.202
From: Ron Pomerantz
To: City Council
Subject: 1-23-24 Agenda Item #40. Impact Report on the Effect of the Proposed Housing for People Initiative (Measure

M) (PL/ED)
Date: Monday, January 22, 2024 3:25:13 PM
Re. Item #40. Impact Report on the Effect of the Proposed Housing for People Initiative (Measure M) (PL/ED)
Good day Mayor Keeley and Council members.

The Keyser Marston and staff reports on the Effect of the Proposed Housing for People Initiative (Measure M) are an embarrassment to objectivity. Sadly the fix was in when the City signed the Marston contract last year to critique Measure M. And the Council wonders why our trust in them is low and a citizen’s initiative was the last resort.

After years of residents' pleas to have some say over major planning decisions has only fallen on deaf ears. The only course remaining was direct democracy asking the voters to place an initiative on the ballot in the form of Measure M to assure our vision and legitimate concerns would be heard. The UNOBJECTIVE report from Keyser Marston reflects only what staff wants. There is no background information why the citizen’s initiative that resulted in Measure M was put forth. There is no information as to what Measure M could constructively accomplish. A major unsupported assertion in the report says that a mere 5% increase in Inclusionary Housing from the current 20% to 25% would reek havoc on developers ability to provide any affordable housing. There is no discussion in the Keyser Marston report how State housing RHNA requirements could be met without 150’ buildings looming over the waterfront and elsewhere.

The staff report is filled with examples of how the planning process will be slowed down by the need to have issues contrary to Staff brought to a public vote. What’s so bad about that? What is so frightening about Measure M to Staff is they will no longer will be able to run roughshod over important residents' vision of the look and feel of Santa Cruz. It’s a shame staff believes they are the ultimate authority in deciding the vision of our future. Real estate and development interests, along with the Santa Cruz Warriors, will be on an equal footing with residents. State mandates can be met and affordable housing built without selling our soul to powerful interests. The history, character, and working people’s interest are at stake.

Hopefully you, the Council, will ask the hard questions of staff. Understand if your planning process was more inclusive and responsive Measure M would not have been necessary. I ask you to reject the Keyser Marston Report as written and direct them to truly be thorough and OBJECTIVE so everyone involved can make thoughtful decisions in everyone’s best interest.

Thank you for your time and thoughtful decision.

Ron Pomerantz

40.203
From: Eva Brunner
To: City Council; Sandy Brown; Fred Keeley; Martine Watkins; Sonja Brunner; Scott Newsome; Shebreh KalantariJohnson; Renee Golder Subject: Re. Item #40. Impact Report on the Effect of the Proposed Housing for People Initiative (Measure M) (PL/ED) Date: Monday, January 22, 2024 4:33:01 PM
Dear Mayor Keeley and Council members.

I wholly concur with the sentiment below written by my cohort. Please carefully consider the points made in this letter.

Sincerely,
Eva Brunner
Santa Cruz
The Keyser Marston and staff reports on the Effect of the Proposed Housing for People (Measure M) are an embarrassment to objectivity. Sadly the fix was in when the City signed the Marston contract last year to critique Measure M.

And the Council wonders why our trust in them is low and a citizen’s initiative was the last resort.

It is outrageous for them to hire a consultant to find fault in Measure M, with our taxpayer money!
After years of residents' pleas to have some say over major planning decisions has only fallen on deaf ears. The only course remaining was direct democracy asking the voters to place an initiative on the ballot in the form of Measure M to assure our vision and legitimate concerns would be heard.

The UNOBJECTIVE report from Keyser Marston reflects only what staff wants. There is no background information why the citizen’s initiative that resulted in Measure M was put forth.

There is no information as to what Measure M could constructively accomplish.

A major unsupported assertion in the report says that a mere 5% increase in Inclusionary Housing from the current 20% to 25% would reek havoc on developers ability to provide any affordable housing. There is no discussion in the Keyser Marston report how State housing RHNA requirements could be met without 150’ buildings looming over the waterfront and elsewhere.

The staff report is filled with examples of how the planning process will be slowed down by the need to have issues contrary to Staff brought to a public vote. What’s so bad about that?!
What is so frightening about Measure M to Staff is they will no longer will be able to run roughshod over important residents' vision of the look and feel of Santa Cruz. It’s a shame staff believes they are the ultimate authority in deciding the vision of our future. Real estate and development interests, along with the Santa Cruz Warriors, will be on an equal footing with residents.

State mandates can be met and affordable housing built without selling our soul to powerful interests. The history, character, and working people’s interest are at stake.

Hopefully you, the Council, will ask the hard questions of staff.

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Understand if your planning process was more inclusive and responsive Measure M would not have been necessary.

I ask you to reject the Keyser Marston Report as written and direct them to truly be thorough and OBJECTIVE so everyone involved can make thoughtful decisions in everyone’s best interest.

Thank you for your time and thoughtful decision.
--
Eva Brunner
Bookkeeping services & consulting
for small business and non-profit organizations
Serving Santa Cruz since 1990

40.205
From: Keresha Durham
To: City Council; Sandy Brown; Fred Keeley; Martine Watkins; Sonja Brunner; Scott Newsome; Shebreh KalantariJohnson; Renee Golder Subject: 1-23-24 Agenda Item #40. Impact Report on the Effect of the Proposed Housing for People Initiative (Measure

M) (PL/ED)
Date: Monday, January 22, 2024 4:54:43 PM
Re. Item #40. Impact Report on the Effect of the Proposed Housing for People, Yes on Measure M Initiative
Dear Mayor Keeley and Council Members,
The Keyser Marston and staff reports on the Effect of the Proposed Housing for People (or Yes on Measure M) is clearly biased and thus a waste of our taxpayer money! Last year, I wish I had been aware that the City signed a contract with Marston to critique our citizen-led initiative (but I was quite busy helping collect 7K signatures in only 3 months).

I urge you to reject the Keyser Marston Report as written and direct them to write a thorough and OBJECTIVE report.

This is yet another act that demonstrates why Yes on Measure M was necessary and citizen-led initiative needed to happen- in order for our concerns to be heard and addressed. Part of the democratic process is having initiatives put on the ballot by citizens so that concerns get serious consideration.

The Keyser Marston is a City Staff echo chamber and is not objective. It is one-sided and does not include any research, information from the Yes on M side, about the history nor background information of Measure M nor the many merits of Measure M.

One example is that there is no evidence to support in the opinion that " 5% increase in Inclusionary/Affordable Housing would make it impossible for developers to build affordable housing".

Another example, the Keyser Marston does not report State housing RHNA requirements can be met without excessively tall buildings.

The staff report is filled with examples that are purposely slanted and this needs to be corrected to offer an objective report for fair consideration.

It needs to include these factual points:

False Claim #1: Opponents claim the City needs 12+ story towers to meet the state requirement of 3,736 new housing units by 2031. The Truth #1: Our City’s “Housing Element” has identified development opportunities that provide thousands more units than needed, under existing height limits. Measure M will not in any way prevent the city from achieving the state required housing goals. Excessive high-rises are not needed, and if

40.206
they ever are in the future, voters should be the ones responsible for approving them, not developer-friendly City officials.

False Claim #2: Measure M opponents also claim that Measure M would require city-wide votes for minor development projects like fences or Accessory Dwelling Units (ADUs) that exceed the normal height limits. The Truth #2: City-wide votes would be required only when a General Plan or Zoning Ordinance amendment is needed to raise building height limits for entire zoning districts (see Addendum Item A below), not for minor projects like small increases in fence or ADU heights. This was confirmed at the 11/30/23 Planning Commission meeting by Asst Planning Director Eric Marlatt who said that these instances would only require a “Conditional Fence Permit” for an overheight fence, or a “Variance” for an overheight ADU (as seen at the end of this video clip HERE), neither of which require a General Plan or Zoning Ordinance amendment (according to the city Zoning Ordinance’s Land Use Permits and Findings section) Thus, it is clear that minor projects such as overheight fences or ADUs would NOT require a vote under Measure M.

False Claim #3: Measure M opponents have claimed that a citywide vote would be required to approve affordable housing developments like the recently approved 5-story Housing Matters homeless services/housing project on Coral St. The Truth #3: Projects like this Housing Matters development — which meet the State Density Bonus affordability requirements — will qualify for a “height waiver or exception” and can go up to 5-stories in a zone district that normally has a two-story height limit. This type of height exception is allowed under current zoning regulations and does not require a General Plan or Zoning Ordinance amendment and, therefore, would not be subject to a vote under Measure M.

False Claim #4: Opponents claim that if Measure M stops the 12-story buildings south of Laurel, larger developments will be forced into residential neighborhoods. The Truth #4:

Measure M protects all neighborhoods city-wide from up-zonings that increase the current height limits in the General Plan or Zoning Ordinance. This is as true for the outlying neighborhoods as it is for downtown.

False Claim #5: Opponents claim our initiative would encourage urban sprawl and more commuter traffic. The Truth #5: Further urban sprawl is already prevented in Santa Cruz by local City, County, and State measures. For example: the city's Greenbelt Initiative (that protected Pogonip, Arana Gulch and the westside ag lands), the county's Measure J (that implemented an urban growth boundary and has kept the rural areas rural), and the state Coastal Act (which established the Coastal Zone and is the reason we don't have subdivisions going up the coast). Measure M simply requires a vote of the people before our General Plan or Zoning Ordinance can be amended to allow increases in existing height limits. Higher density housing is already allowed along transit corridors throughout the city, and particularly in downtown and south of Laurel. Denser housing near where people work can and will result from our current zoning. Measure M doesn't change that. Measure M will not promote sprawl or further traffic congestion.

False Claim #6: In a 12/14/23 Lookout article, Don Lane claimed our campaign was using scare tactics by saying 22 and 17-story skyscrapers were being considered for Santa Cruz.

The Truth #6: At the 6/14/22 City Council meeting, city staff recommended: one 225-foot (22-story) tower, surrounded by three 185-foot (18-story) towers, and one 145-foot (14 story) tower in the south of Laurel area. It was called "Development Scenario 3.1" for the

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Downtown Plan Expansion project, which can be seen HERE and below (Addendum Item B). The City Council subsequently decided to scale back that proposal to instead include one 175-foot (17-story) and three 150-foot (15-story) buildings. Then on 1/10/23 the Council changed the project to include an unspecified number of "12-story" towers (with no objective height limits in feet), and no locations identified. It is clear that Mr. Lane was incorrect in stating that 22 and 17-story towers have not been proposed for Santa Cruz.

Again I urge you to reject the Keyser Marston Report as written and direct them to truly be thorough and OBJECTIVE so everyone involved can make thoughtful decisions in everyone’s best interest.

Thank you for your time and thoughtful consideration!
--
YES on Measure M
More democracy- the right to vote on height
More affordable housing -5% more!
NOT unaffordable high-rises!
WITHOUT A VOTE OF THE PEOPLE!
Donate,
Sign up to help,
Add your name to our list of Supporters:
www.Yes-on-M.org
Keresha Durham~ Yes on M outreach leader
"care-sha".
_≈o
_-\<,_
(_)/ (_)

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From: [email protected]
To: City Council
Subject: Subject: 1-23-24 Agenda Item #40. Impact Report on the Effect of the Proposed Housing for People Initiative (Measure M) (PL/ED)
Date: Monday, January 22, 2024 4:57:40 PM
Dear Mayor Keeley and Council members.

The Keyser Marston and staff reports on the Effect of the Proposed Housing for People (Measure M) are an embarrassment to objectivity. Sadly the fix was in when the City signed the Marston contract last year to critique Measure M.

And the Council wonders why our trust in them is low and a citizen’s initiative was the last resort.

The UNOBJECTIVE report from Keyser Marston reflects only what staff wants. There is no background information why the citizen’s initiative that resulted in Measure M was put forth. There is no information as to what Measure M could constructively accomplish.

The staff report is filled with examples of how the planning process will be slowed down by the need to have issues contrary to Staff brought to a public vote. What’s so bad about that?!
What is so frightening about Measure M to Staff is they will no longer will be able to run roughshod over important residents' vision of the look and feel of Santa Cruz. It’s a shame staff believes they are the ultimate authority in deciding the vision of our future. Real estate and development interests, along with the Santa Cruz Warriors, will be on an equal footing with residents.

State mandates can be met and affordable housing built without selling our soul to powerful interests. The history, character, and working people’s interest are at stake.

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Hopefully you, the Council, will ask the hard questions of staff.

Understand if your planning process was more inclusive and responsive Measure M would not have been necessary.

I ask you to reject the Keyser Marston Report as written and direct them to truly be thorough and OBJECTIVE so everyone involved can make thoughtful decisions in everyone’s best interest.

Thank you for your time and thoughtful decision.

Stephen Bare

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KEYSER MARSTON ASSOCIATES, INC.

JANUARY 23, 2024

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January 23, 2024
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Overview
The City received a Sixth Cycle RHNA target of
3,736 units.

To assist in fulfilling this and future obligations the City commenced work on the Downtown
Expansion Plan (DTEP).

A stated purpose of putting Measure M forward is
to subject any proposed increases in downtown
building heights &/or FAR to voter approval.

In contrast, Measure M requirements would
actually apply citywide, and would be retroactive
to June 1, 2023.

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City Actions
that Trigger
Measure M
Requirements
Measure M applies to “Development Projects”, a
term that means any project that requires a
discretionary permit other than just a use permit.

Measure M applies to any change to the Zoning
Ordinance and/or Map, General Plan, and/or Land
Use Map that increases building height and/or FAR
for any Development Project.

A sample of projects that can potentially require a
discretionary permit:

January 23, 2024 4
Single family homes Industrial projects
ADUs in certain Coastal Zone locations Public building construction projects Multifamily residential projects Some fences on single family home properties Mixed-use projects Properties on the City’s Historic Survey Commercial projects

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Potential Measure
M Triggers:

Changes in
Planning
Documents that
Result in
Increased Height
&/or FAR
Changing the General Plan land use designation
(General Plan Land Use Map).

Changing the Zoning Designation (Zoning Map).

Changes to General Plan or Zoning Ordinance text,
such as:
◦ Changes to certain setbacks
◦ Changes to certain lot coverage requirements
◦ Changes to certain limitation of the number of stories ◦ Other standards that effect height &/or FAR, which
includes a broad array of potential projects
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Development
Standards
Alignment
State law requires the City to align development
standards and use allowances so that projects can
achieve the maximum intensity permitted under
the General Plan or Zoning Ordinance standards.

Pertinent examples are:
◦ Ocean Street Area Plan zoning standards need to be made consistent with the General Plan development standards.
◦ Minimum lot size requirements for R-L zoning properties.

Potential Zoning/General Plan changes needed for:
◦ 125 Coral Street five story health, navigation center, with permanent supportive housing &/or an expanded homeless shelter
◦ Proposed affordable housing project at NEC of Highways 1 & 9 ◦ Development of the north side of Mission and Center Streets ◦ The DTEP, particularly the four corners of Front & Spruce Streets and 140 Center Street
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No Net Loss
Requirements
Government Code Sections 65863 & 66300 require
any reduction in residential capacity to be
accompanied by an equivalent increase elsewhere.

Potential activities that could trigger this are:
◦ Any site on the Housing Element Sites Inventory that is developed with fewer than the target number of units.
◦ City actions that reduce capacity on a listed site – height, FAR, density reductions &/or setback increase.

Replacement requirement would likely necessitate
increasing the allowable FAR and height on other
sites. This would trigger a Measure M vote.

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State Legislative
Actions
The Legislature continues to take actions that
impact the General Plan &/or Zoning Ordinance in
terms of height & FAR standards.

The City has no authority to override these
requirements, but they would trigger Measure M.

Some previous State actions are:
◦ Authority to construct residential on commercial, school & religious sites
◦ No imposition of minimum lot size, coverage & FAR
minimums that preclude projects of up to 10 units
◦ Increasing maximum ADU height limits
◦ Lot splits allowed in single family zones
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Government
Code Section
65915 et seq.

Density Bonus
Height & FAR increases are two of the most
commonly requested incentives/concessions &
waivers for Section 65915 density bonus projects.

Most residential developers will use the Section
65915 density bonus benefits.

This will allow developers to significantly modify
development standards without amendments to
the General Plan or Zoning Ordinance.

Use of the Section 65915 density bonus should not
trigger a Measure M vote even though building
heights & FARs will increase in many cases.

January 23, 2024 9 40.219
Increased
Developer Risk
Developers tend to try to minimize uncertainty. A
voter approval requirement causes the following:
◦ Increases the risk that the project will not be approved. ◦ Requires developers to invest substantial capital prior to placing the project in front of the voters.
◦ Prolongs the development process, which increases costs.

It is reasonable to conclude that Measure M voter
requirements will discourage some developers,
including developers of 100% affordable housing
projects, from pursuing projects that require
height &/or FAR increases.

Scholarly literature backs up this conclusion.

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Measure M
Impacts on:

RHNA Targets &
Housing Element
HCD has imposed strict timelines for modifying
planning documents to comply with RHNA targets.

Measure M Impacts:
◦ Voter approval may discourage market rate & affordable housing development.
◦ Extended entitlement periods.
◦ Projects may be voted down in Measure M elections.

Impacts if Housing Element targets are not met:
◦ Developers can use streamlining provided by Government Code Section 65913.4
◦ Limited housing production would require the City to
implement measures to increase housing production:
◦ Changes would likely require Measure M approval.
◦ If production lags, and policy changes are not adopted, HCD could potentially de-certify the Housing Element.

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Housing Element
Decertification
Impacts associated with the lack of a certified
Housing Element:
◦ Builder’s Remedy (Government Code Section 65589.5)
could be used by developer to build residential project that do not comply with either the General Plan or the
Zoning Ordinance.
◦ Leveraged affordable housing projects would be ineligible to receive assistance from State funding sources.
◦ The City’s Pro-Housing Designation would be revoked. This designation provides a competitive edge in securing
grants offered by the State.
◦ State may continue the recent practice of enacting
monetary penalties for noncompliance.

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Fiscal Impacts
Election Costs are estimated to range between
$115,000 and $185,000 depending on:
◦ Number of registered voters
◦ Number of items the City places on the ballot
◦ Regularly schedule election vs special election
Housing Supply:
◦ More demand than supply of housing is one cause of
housing costs continuing to outpace inflation.
◦ Measure M will clearly create a constraint to future
development of market rate & affordable housing.
◦ Resulting reduction in housing production will necessitate creation & funding of additional affordable housing programs & projects. ◦ Since the elimination of redevelopment agencies in 2012 no new dedicated funding source has been made available.
◦ This combination of factors will place a further strain on the City’s General Fund.

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Structuring Issues:

Limitations
Imposed by the
Courts & State
Legislature
January 23, 2024 15
California Building Industry Association v. City of San Jose (2015) Inclusionary Housing requirements:

Cannot be confiscatory; and
Cannot deprive a property owner of a fair & reasonable return on investment.

Assembly Bill 1505 – Government Code Sections 65850 & 65850.01 Allows Inclusionary Housing obligations for rental projects.

HCD suggested standard – no more than 15% at 80% of AMI.

HCD cannot currently require the City to prepare a feasibility study if more stringent requirements are applied.

Unless substantial RHNA target progress is made, the City may subsequently be required to prepare a feasibility study.

Constraint to Housing Development – Govt Code Section 65583 (A) As part of the Housing Element, the City must analyze potential & actual constraints to housing development.

HCD can demand an analysis at any time.

Imposing the 25% Measure M Inclusionary Housing requirement could potentially instigate an HCD review.

If the requirement is deemed to be a constraint, the current Housing element could be decertified.

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Financial
Evaluation
Structure
KMA prepared financial analyses to identify the
impacts associated with imposing Inclusionary
Housing requirements on market rate housing.

The financial impact is generally equal to the
“Affordability Gap” generated by the requirements
being tested.

The KMA financial analyses tested the impacts
associated with the current 20% requirement &
the proposed 25% requirement for projects with
30 or more units.

January 23, 2024 16 40.226
Development Prototypes
Prototypes were created using the City’s “Active Planning Applications” webpage and the Housing Element. The prototypes are described in the following table:

January 23, 2024 17
Market Rate Residential Development Prototypes
Inclusionary Housing : Financial Evaluation
Apartment Prototypes
Ownership Housing Development
Prototypes
High Density – Traditional Apartment High Density Condominium Base Density: 150 Units Per Acre Base Density: 125 Units Per Acre Density Bonus: 225 Units Per Acre Density Bonus: 169 Units Per Acre Medium Density – Traditional Apartment Low Density Condominium Base Density: 60 Units Per Acre Base Density: 30 Units Per Acre Density Bonus: 90 Units Per Acre Density Bonus: 45 Units Per Acre SRO Apartment Townhome
Base Density: 125 Units Per Acre Base Density: 15 Units Per Acre Density Bonus: 188 Units Per Acre Density Bonus: Not Applicable

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Financial
Evaluation Tests
January 23, 2024 18
Events following increase in Inclusionary Housing requirements:

Profits are reduced for developers that have purchased property.

Developers that have not purchased property try to bargain for a lower price.

Some property owners are reluctant to accept that their property value has decreased and defer selling until prices increase.

Other factors:

If Measure M passes, it is likely that developers that purchased property after June 1, 2023, but have not entered the approval process, will challenge the retroactivity proposed by Measure M.

Developer that had complete applications or formal SB 330 preliminary applications prior to June 1, 2023 would not be subject to the Measure M requirements.

Based on these factors, the most weight was put on the following:

Reduction in the property acquisition cost that would need to be achieved to offset the proposed 25% Inclusionary Housing requirement.

Increase in market rate rents and sales prices that would be needed to offset the proposed requirements.

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Rationale for
Evaluation
Criteria
The tests are used to balance the impacts that
increasing the Inclusionary Housing requirements
have on developers and property owners.

The factors that need to be considered are:
◦ The need for residential development to support property acquisition costs that are competitive with other potential uses, and that exceed the value the property owner is
receiving from the existing use of the property.
◦ To understand the near-term increases in achievable
market rate rents and sales prices that would need to be achieved to offset the impacts created by the increased Inclusionary Housing requirement.

January 23, 2024 19 40.229
Benchmark Standards
Every residential project embodies unique characteristics. The benchmarks presented in the following table were used collaboratively to identify the supportable Inclusionary Housing requirements.

Ideally, both benchmark standards would be met. However, to give the 25% Inclusionary Housing requirement the best chance of being deemed supportable, KMA required only one of the benchmarks to be achieved in each alternative being evaluated.

January 23, 2024 20
Benchmark Evaluation Standards
Inclusionary Housing Evaluation
Reduction in property acquisition cost needed to offset the impact created by the Inclusionary Housing requirements. 30% The increase in market rate rents and sales prices that would be needed to offset the proposed requirements. 4%

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Estimated Financial Impacts:

Apartment Development Prototypes
January 23, 2024 21
High Density -
Traditional Apartment
Prototype
Medium Density -
Traditional Apartment
Prototype
SRO Apartment
Prototype
20% Inclusionary Requirement - Base Zoning Alternative
Required Prop Acq Cost Reduction ($) $9,773,000 $1,357,000 $2,119,000 Required Prop Acq Cost Reduction (%) 224% 62% 65%
% Rent Increase to Offset Impact 10.7% 8.7% 5.6%
20% Inclusionary Requirement - Density Bonus Alternative Required Prop Acq Cost Reduction (%) $3,472,000 $592,000 $1,741,000 Required Prop Acq Cost Reduction (%) 80% 27% 53%
% Rent Increase to Offset Impact 2.3% 2.3% 2.8%
25% Inclusionary Requirement - Density Bonus Alternative Required Prop Acq Cost Reduction (%) $6,137,000 $1,046,000 $2,299,000 Required Prop Acq Cost Reduction (%) 141% 48% 70%
% Rent Increase to Offset Impact 4.3% 4.3% 3.9%

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Conclusions:

Apartment
Development
Analysis
The following conclusions can be derived from the
apartment development analysis:
20% Low Income Requirement:
◦ At base zoning, a 20% requirement cannot be supported. ◦ When the Section 65915 density bonus was applied each prototype met the established rent offset benchmark, and one prototype also met the property acquisition cost
reduction benchmark.

A 25% Inclusionary Housing requirement could not
be supported by any of the apartment prototypes
tested even if it was assumed that the maximum
Section 65915 density bonus was applied.

January 23, 2024 22 40.232
Estimated Financial Impacts
Ownership Housing Development Prototypes
High Density
Condominium
Prototype
Low Density
Condominium
Prototype Townhome Prototype
20% Inclusionary Requirement - Base Zoning Alternative
Developer Profit / (Loss) -5.6% -3.1% -6.5%
Required Prop Acq Cost Reduction ($) $9,768,000 $9,137,000 $5,070,000 Required Prop Acq Cost Reduction (%) 224% 105% 51%
% Market Price Increase to Offset Impact 12.8% 15.8% 15.9% 20% Inclusionary Requirement - Density Bonus Alternative NA Developer Profit / (Loss) -3.1% -9.8%
Required Prop Acq Cost Reduction ($) $10,064,000 $21,773,000 Required Prop Acq Cost Reduction (%) 231% 250%
% Market Price Increase to Offset Impact 9.2% 23.1%
25% Inclusionary Requirement - Density Bonus Alternative NA Developer Profit / (Loss) -5.0% -12.1%
Required Prop Acq Cost Reduction ($) $12,199,000 $24,096,000 Required Prop Acq Cost Reduction (%) 280% 277%
% Market Price Increase to Offset Impact 11.6% 26.6%
January 23, 2024 23 40.233
Conclusions:

Ownership
Housing
Development
Analysis
The following conclusions can be derived from the
ownership housing development analysis:

Under current conditions ownership housing
development cannot support an affordable
housing requirement of any kind.

It is possible that developers of some mapped
apartment projects may ultimately sell the units:
◦ The opportunities for this are constrained by the current 20% Inclusionary Housing requirement.
◦ This constraint will be exacerbated if the Inclusionary Housing requirement is increased to 25%.

January 23, 2024 24 40.234
Inclusionary Housing: Things to Remember
Inclusionary Housing requirements cannot be confiscatory.

Inclusionary Housing requirements cannot deprive a property owner of a fair and reasonable return on investment.

Inclusionary Housing requirements cannot act as a constraint to housing development.

January 23, 2024 25 40.235
Conclusions:

Inclusionary
Housing
Financial
Evaluation
The proposed increase in the Inclusionary Housing
obligation to 25% for projects with 30+ units does
not comport with any of the requirements
imposed by the courts and the State Legislature.

Financial impacts created by the proposed
increase in the Inclusionary Housing obligations:
◦ Property acquisition for residential development would not be competitive with the other disposition or holding opportunities available to property owners.
◦ If Measure M passes, significant potential exists for legal challenges from residential developers and/or an HCD
constraint to housing investigation. This could possibly result in the decertification of the Housing Element.

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Santa Cruz City CouncilJanuary 23, 2024

Santa Cruz City Council
January 23, 2024