SCOTTS VALLEY >> Broader affordable housing rules are expected to be among the priorities for Scotts Valley staff in the next year, the Scotts Valley City Council decided by consensus in Wednesday’s budget hearing. 

The council also discussed funding for a possible ballot measure to increase a city tax, but no vote was taken. A final budget is expected to be adopted at the council’s June 16 meeting.

Inclusionary housing law

Scotts Valley law requires that new housing projects of six or more units must dedicate 15% of those units at affordable prices or rents to qualifying households with lower incomes. The prices and income criteria are based on the county’s area median income. Many California cities have similar rules, called “inclusionary housing” laws. 

Scotts Valley’s inclusionary law only applies to part of the city. A majority of the council has said that they would support an expansion of the law to apply to the entire city. The council recently directed the city staff to look into it. 

Scotts Valley’s inclusionary housing law applies to the areas in blue — generally around Scotts Valley Drive and Mount Hermon Road. (City of Scotts Valley)

“I know I’ve been speaking about this [inclusionary law change] for years as several of us have been on the council. I do think it’s important that we get this done quickly,” Vice Mayor Jim Reed said Wednesday. “Every couple months that we don’t is a couple more months that developers are going to spend money and waste time trying to come to us with proposals that don’t include 15% inclusionary. And it just seems like a wasteful process.”

Wednesday, council members said they would support City Manager Tina Friend’s recommendation to hire a $60,000 consultant to implement the law change.

Despite the hired help, the large workload of the city’s planning and community development department may prevent the completion of the law change in the next fiscal year, Friend said.

Reed said he wanted city staff to defer a $30,000 poll of residents’ opinions on a possible ballot measure that would increase hotel or utility taxes. Reed suggested that city staff instead add that money to the inclusionary law change project to ensure completion next year.

A majority of the council agreed with Reed on deferral of funding for the poll. No one besides Reed supported transferring that money to the inclusionary law change project.

The Scotts Valley City Council on Wednesday discussed the proposed budget for the next fiscal year. (Zoom screenshot)

Potential tax-related ballot measure

Reed said he was confident that a majority of residents would support a potential ballot measure to increase hotel or utility taxes.

Last year, city voters approved Measure Z, a 0.75% sales tax increase. City Manager Friend called Measure Z a “game changer.”

“Yet we still will need more — and diversified revenue as well,” Friend said. She said the pandemic exposed the fragility of hotel and sales taxes as city revenue sources. “When we have about half of our General Fund reliant on hotel and sales tax, which are volatile, and they’re very market sensitive. And so if those revenue sources are compromised, we really suffer.”

Friend said that Scotts Valley was “disadvantaged” since the city collects a 6.5% property tax rate that is less than other cities. For example, for a $5,000 property tax bill, the city receives $325. 

Councilmember Donna Lind and others said they wanted to wait to fund the opinion poll until staff had a clearer idea of a timeline for a potential ballot measure.

Other funding decisions

The council supported the city manager’s recommendation to fund several projects, including:

  • A consultant to study a development impact fee ($75,000)
  • Economic analysis and conceptual drawings for the proposed Town Center ($50,000)
  • Plans, training and equipment for wildfire preparedness ($60,000)

The council also supported the city manager’s recommendation to defer a $500,000 overall review of the city’s planning codes. 

A grant will fund the development of objective design standards that are expected to move forward in the next fiscal year, Friend wrote in an email to Santa Cruz Local on Friday. 

Cities across the state, including Santa Cruz and Capitola, have begun to create objective design standards for multi-family housing projects. These are measurable standards for things like building materials, setbacks, floor ratios and heights. A recent state law, SB 330, limits cities from using subjective standards to evaluate housing proposals. The law encourages cities to create objective design standards because councils have to point to a specific objective design standard to reduce housing units in a project. 

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Kara Meyberg Guzman is the CEO and co-founder of Santa Cruz Local. ​Prior to Santa Cruz Local, she served as the Santa Cruz Sentinel’s managing editor. She has a biology degree from Stanford University and lives in Santa Cruz.