Affordable housing is a mainstay of Santa Cruz politics. A new campaign led by local renters and homeowners wants to add a new caveat to local policy to help alleviate the housing crisis and spur affordable housing development.
The Yes on Empty Home Tax Campaign seeks to create a fund dedicated to the development of low-income affordable housing in Santa Cruz County and increase its housing stock. The campaign, if approved, would place a tax on vacant housing in the city. If organizers collect enough signatures, the measure would be on the November 2022 ballot.
“It’s hard to overstate just how profound this crisis is and how deeply it affects everybody,” said Kayla Kumar, a renter and housing advocate who supports the Empty Home Tax.
The proposed tax would impose a flat fee of $6,000 for vacant residential parcels. Vacant condominiums, townhomes, and units on parcels containing seven or more units would be subject to a tax of $3,000. Vacancy would be defined as being occupied for fewer than 120 days in a year.
The tax would also disincentivize empty homes and force property owners to avoid paying the tax by listing vacant units for rent, thereby increasing the area’s housing stock.
The campaign and the tax are a reaction to the nature of the Santa Cruz housing market. Santa Cruz was the least affordable city in the United States in 2018 when measuring income against housing prices.
“There hasn’t been enough support for the housing that’s needed by the bulk of people, which is affordable rental housing,” said Miriam Greenberg, a professor at UC Santa Cruz and one of the researchers behind No Place Like Home, a yearslong study of housing availability in Santa Cruz.
The campaign also notes that almost 2,300 dwelling units, or 9.5 percent, in Santa Cruz are empty. At a low ball estimate with just 500 property owners paying the tax, the campaign suggests the city would raise about $3 million annually, with potentially millions more if the number of owners paying the tax increased.
Despite that, there’s still uncertainty on how much tax revenue it would definitively generate.
Cyndi Dawson, a Santa Cruz Planning Committee member affiliated with the initiative, said there is no public data that can definitively say how much revenue the tax would generate. However, she believes whatever funds it could generate would still be important.
“There are massive amounts of federal and state money, but … [it can] come up a little short. So having a dedicated fund for bringing these projects over the line can make a really big difference in Santa Cruz,” Dawson said. “The administrative costs could also be on the low side as a result of close coordination with county tax services.”
The cost of a recent affordable housing development in Santa Cruz was nearly $18 million for a total of 41 units, or about $440,000 per unit. This was slightly above the California average of $425,000 per unit of constructed affordable housing, according to the UC Berkeley’s Terner Center.
The number of housing units that could be directly funded by the Empty Home Tax would be roughly seven units to 30 per year, depending on tax revenue generated. A 2019 study by the Department of Housing and Urban Development found that the production of rental and sales units in Santa Cruz was about 1,100 units short of what was necessary over a period of three years.
Still, the effects of the campaign’s efforts may go beyond the money raised by the tax.
“This initiative, in addition to being impactful in and of itself, is also going to be impactful in continuing the conversation about what other tools we need,” said Dawson. “This is not going to solve [the issue of] affordable housing in Santa Cruz, but it is going to help significantly.”
City on a Hill Press has added language in this article for clarification that was previously not included.
