Measure M – Santa Cruz Housing for People initiative

What is Measure M?

Measure M would raise the affordability requirements for larger housing developments in the City of Santa Cruz, and it would require citywide elections for housing and other projects that propose rule changes for taller buildings and greater density. 

Measure M would create two new requirements for developers in the City of Santa Cruz: 

  • For housing proposals of 30 units or more, it would increase the required percentage of affordable homes to 25% from 20%.
  • For a developer to construct a building higher or denser than current limits, city voters would have to approve a change to the city’s zoning code. A height or density change could include a specific parcel or a larger area.

Measure M proponents said that the election requirement would give residents more say over how and where the city grows. They said developers need a push to offer more homes at affordable rents.

Measure M opponents said the changes would deter new development and exacerbate the city’s housing shortage. The city might not meet state housing goals, which would compel the city to accept affordable housing proposals at any scale.

  • Measure M will appear on voters’ ballots in the City of Santa Cruz. 
  • It needs more than 50% of the vote to be adopted. 
  • Supporters called the measure Housing for People not Unaffordable Towers and gathered signatures to qualify it for the ballot.

What would Measure M do?

  • The initiative would require Santa Cruz housing proposals with 30 or more units to have 25% of the homes as deed-restricted affordable.
  • Changes to height or density limits would require a citywide election rather than Santa Cruz City Council approval. An election could stem from height or density exceptions proposed for a housing project, or if a developer, the city council or another group proposed an exception for a larger area.

A building’s density is the ratio between the total floor area of the building and the parcel size. Allowing additional floors, reducing a building’s setback from the street, or reducing the required distance between buildings, would all increase density and trigger an election, according to a Measure M impact report written by city consultants.

If adopted, Measure M would apply retroactively to development applications submitted after June 1, 2023, according to the measure's text.

What does a “yes” vote mean?

A “yes” vote would raise the affordability requirements for larger housing developments and require a citywide election to approve changes to city rules that limit building height and density. For instance, if city rules allow a six-story building and a developer wants to build a seven-story building, that proposal would trigger an election rather than require approval from the Santa Cruz City Council.

Measure M would not affect the additional height from a density bonus that some projects qualify for under state law. Density bonus building proposals could still be taller or denser than city laws allow if they provide affordable housing.

Measure M also would require new buildings with 30 or more homes to dedicate 25% of units to affordable housing based on state-set income limits.

What does a “no” vote mean?

A “no” vote would keep the existing process for changing allowable height and density rules. The process now requires a recommendation from the Santa Cruz Planning Commission and a vote from the Santa Cruz City Council. If the area is in the Coastal Zone, it also requires approval from the California Coastal Commission.

What is the ballot language?

“An initiative measure proposing an ordinance that:

  1. Prohibits the Santa Cruz City Council from amending the city’s General Plan or zoning ordinance in a way that increases allowable height limits or floor area ratios for development projects, 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 housing units.”

Things to consider about Measure M

  • Arguments for and against Measure M.
  • Background of the Downtown Expansion Plan.
  • Measure M election requirement.
  • Measure M and the affordable housing rate.
  • Background on state housing goals.
  • Measure M and market-rate housing.
  • Measure M and in-law units and fences.

Proponents of Measure M argue:

  • The measure could halt city plans to allow 12-story buildings south of Laurel Street that have faced some community pushback.
  • Requiring a public election for zoning changes would be more democratic.
  • Increasing the number of affordable homes required within a housing proposal would increase the supply of affordable housing.
  • The city would still be able to meet existing state housing goals, and could vote to change zoning to meet future goals.

Opponents of Measure M argue: 

  • By increasing the number of affordable homes required in a housing proposal, developers would be discouraged from pursuing housing projects because projects would be less profitable or infeasible.
  • The election requirement would reduce certainty for housing developers, and elections would be frequent and costly for the city.
  • More housing development, including market-rate homes, are needed to help push down housing costs citywide.
  • The measure could prevent the city from meeting state housing goals, which could trigger a state law that removes local control over new housing developments.

The initiative is in part a response to the city’s Downtown Expansion Plan, which was proposed in 2021 and has not been approved by the Santa Cruz City Council. 

The plan essentially would allow taller buildings south of Laurel Street. In June 2022, city staff proposed a version of the plan that included one building up to 17 stories and up to three 14-story buildings. Some residents pushed back against the proposed changes. 

In response to concerns, Santa Cruz Mayor Fred Keeley led an effort to scale back the Downtown Expansion Plan. In January 2023, the city council voted to amend the plan to limit buildings south of Laurel Street to 12 stories. The plan would not limit the number of 12-story buildings or the height of the buildings. 

Measure M proponents said the amendment is not enough to address their concerns. “That’s a lot lower, but it’s still very big,” said Frank Barron, a retired land use planner and a leader of the group promoting the ballot measure. “It’s not a very good compromise.”

The Downtown Expansion Plan is not scheduled to be voted on by city council before the March election, city staff said.

If adopted, Measure M would require an election to loosen height and density restrictions in the city’s General Plan and zoning laws. A ballot measure to change the limits could be added to an election by a vote of the city council, or by a developer or other group collecting signatures, said Santa Cruz City Attorney Tony Condotti. 

“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 [floor area ratio] allowances for any project that requires a discretionary permit from the Planning Department,” according to the city consultant’s report. “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.”

“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 [floor area ratio] allowances for any project that requires a discretionary permit from the Planning Department,” according to the city consultant’s report. “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.”

Measure M proponents said the initiative would give the public the final say in a conversation now led by developers, city staff and the city council. 

Elections would be open to the public, but many lower-income residents may not participate, said Rafa Sonnenfeld, policy director at housing advocacy organization YIMBY Action. Santa Cruz YIMBY, a local housing advocacy organization of which Sonnenfeld is a member, unanimously voted to oppose the ballot measure.  

“The types of people who vote in local elections tend to be older, whiter, wealthier homeowners,” Sonnenfeld said. The existing process includes opportunities for input at outreach events and city council meetings, he said.

Santa Cruz County charges the City of Santa Cruz for each ballot that has a city ballot measure or council race, said County Clerk Tricia Webber. 

  • If a ballot has one or more city questions, the county charges about $91,000 to $183,000. 
  • Adding a question to a ballot that already has a city race does not cost additional money.
  • Holding a city vote without any other county, city or state elections could cost upwards of $250,000.

A lengthy and uncertain election process could dissuade developers from proposals that require height or density increases, Measure M opponents said. Elections also could stymie affordable housing projects that are in the works, said Lee Butler, Santa Cruz director of planning and regional development. 

  • For instance, city leaders have approved preliminary plans for a homeless navigation center and permanent supportive housing complex at 125 Coral St. on the Housing Matters campus. The proposed five-story building would exceed existing height limits, Butler said. (A separate affordable housing development planned at 119 Coral St., Harvey West Studios, has been approved by city officials and is in a zone that allows its proposed height.)
  • City leaders also plan to propose an affordable housing project across River Street, next to Central Home Supply. The city owns part of the land, and is planning to purchase the rest. The area is zoned for industrial use.

Both projects would require changes to the General Plan and a citywide vote if Measure M is approved by voters.

Even if voters approve such projects, the risk of the project being rejected could deter nonprofit developers, Butler said. “They may go build somewhere in the county and choose to invest in an area where there is more certainty,” he said.

Housing proposals that have already submitted a formal development application or pre-application would not require an election, even if they exceed existing height or density limits, said Santa Cruz City Attorney Tony Condotti. 

Under state law, “most residential projects are only subject to the ordinances, policies and standards that are adopted and in effect when an application is submitted,” Condotti wrote in an email.

It’s not clear how Measure M would affect changes to the Downtown Plan approved in October. The changes allow buildings in some parts of downtown, including a proposed hotel at 324 Front St., to be up to 70 feet tall, even if they don’t include housing. The updated plan grants additional height for a rooftop bar or other features.

“The bottom line is that we’re still trying to figure it out,” Condotti wrote in a Jan. 31 email. “The language of Measure M is ambiguous and, if approved by the voters, it is reasonably likely that its meaning will be tested in the courts.”

In housing proposals with 30 or more units, Measure M would raise the city’s affordable housing requirement to 25% of units. The requirement has been 20% since February 2020, when it was raised from 15% of units. It’s also called the inclusionary rate. 

Measure M proponents said the 20% requirement is effectively lowered by extra units afforded developers who seek a “density bonus.” State law allows developers who include a certain amount of affordable housing to build taller or denser than city limits. Inclusionary rates do not apply to these extra units. Most new housing projects in the city have applied for or received a density bonus. 

“When you apply that, it ends up watering down that 20% so that the effective net affordable number of affordable units ends up being closer to 11 to 13%,” said Barron.

One of these projects, at 530 Front St., is slated to set aside 37 of 276 units as affordable — or 13.4% of units.

Opponents of raising the inclusionary rate have argued that it could dissuade developers from building more housing. The 25% rate would make housing development economically infeasible, even with the largest allowable density bonus, according to a financial analysis in a Jan. 5 impact report written by city consultants.

The idea “sounds good on its face, but it’s really a poison pill for housing production,” said Sonnenfeld. Some developers might not propose new housing projects if the affordable housing requirement is too high, he said.

San Francisco recently slashed its inclusionary rate after leaders said it had depressed housing development. The city had an inclusionary rate of 21.5% for apartments for rent and 23.5% for condominiums for sale. In July, the board of supervisors voted to decrease that rate to 12%-16% depending on the project. 

If “a city that has as much potential for housing development as San Francisco recognizes that 24% is too high, it should go without saying that that number is an absurd number for Santa Cruz,” Sonnenfeld said.

Proponents of Measure M said that raising the rate won’t dampen developer interest. “This is one of the top beach towns in the state, if not the nation, and we’re a 45-minute drive away from the No. 1 economic engine in Silicon Valley,” Barron said. “Developers are going to want to build here and they’re still going to make a lot of money.”

Measure M opponents fear the new rules would be an obstacle to meeting state requirements for new homes.

Requirements of the Regional Housing Needs Allocation, or RHNA, are set every eight years for the Monterey Bay region. State authorities set housing production targets for each region to try to address the state’s housing shortage. 

State authorities have approved the City of Santa Cruz’s Housing Element of the General Plan, a plan to allow more housing over the next eight years. But at least 13 planned changes to city rules called for in the Housing Element would require an election, according to the January consultant’s report. If voters reject those changes, the city would not be able to make them, and the Housing Element likely would not satisfy state authorities. 

State officials could decertify the Housing Element if they find that city rules are impeding housing development. If that happens:

  • State law would implement the “builder’s remedy,” which allows developers to build projects with affordable housing anywhere in the city, disregarding zoning rules. City leaders would have extremely limited ability to change or veto the projects.
  • The city would be ineligible for many state grants for affordable housing.

The measure could also leave the city vulnerable to legal challenges from developers, according to the consultant’s report.

City documents have identified enough space for potential new homes to meet housing requirements for the next eight years. But the city may not have enough space for future requirements, said Butler, Santa Cruz’s planning director. 

“When we’re thinking about how to plan for our city, we are thinking about a much, much longer timeframe — many, many, many decades,” Butler said. “To look at the current rate and target and make an assumption that we’re going to have plenty of capacity for future RHNA cycles is not taking a long-term view.”

Once the city runs out of space to build new homes under existing zoning, the public could vote to raise height limits, Barron said. “We would need to go up a certain amount in certain areas, probably downtown,” he said. “I think people would go for that.”

Trouble could also arise if state laws mandate changes to city rules that increase allowable height or density. If voters reject changes called for in future state laws, “the outcome of the vote would not affect what a developer could do, only whether city codes could be updated to reflect state mandates,” the consultant’s report stated. “The city would have to comply with state law regardless, or face legal jeopardy.”

Sonnenfeld and other Measure M opponents said the measure will decrease the production of market-rate housing, which they say is needed to ease the city’s housing shortage. Affordable housing advocates in Santa Cruz and elsewhere have long debated whether more market-rate housing will ease rent increases overall.

Demand for housing in Santa Cruz is “almost insatiable,” and no amount of market-rate housing will meet the appetite for housing, Barron said. “The normal law of supply and demand doesn’t work,” he said.

A 2021 report by the UC Los Angeles Lewis Center for Regional Policy Studies suggested that in many places with high housing demand, building more market-rate homes can make housing in the surrounding neighborhood more affordable. The report looked at six prior studies, one of which had mixed findings about the relationship between new housing and rent trajectories.

Building market-rate housing in some areas also can lead to displacement of lower-income renters. 

Research from the Stanford Changing Cities Research Lab has suggested that new market-rate housing in the San Francisco Bay Area increases the number of low-income residents who move to a different city or neighborhood. Ongoing UC Santa Cruz research has suggested that low-income renters in the Beach Flats and Lower Ocean neighborhoods of Santa Cruz are at high risk of displacement.

Measure M would require an election to change city restrictions on the height and density of in-law units and the height of fences at single-family homes, said Lee Butler, the Santa Cruz planning director. Making an exception for a single property or changing the rules for a wider area would both require a vote, Butler said.

In some cases, homeowners might get permission to exceed height or density restrictions without an election.

Santa Cruz city zoning rules limit most in-law units, or accessory dwelling units, to 16 feet tall. Some units can be up to 23 feet to match the primary house’s roof if the ADU is further from the property line. Fences are limited to six feet.

Barron, the Measure M supporter, said he did not believe that Measure M would touch ADUs or fences because homeowners can seek exceptions and “variances” from the zoning code that do not require changes to the code or the General Plan.

City rules allow homeowners to build a fence higher than existing limits if they receive a conditional fence permit. The permit requires “unusual or special circumstances relating to the property,” according to the city’s zoning code. The city has issued 22 conditional fence permits since 2018, according to the city’s planning department. Applicants who are unlikely to qualify for a permit are discouraged from submitting a formal application, which costs about $2,000, Butler said.

Some Measure M proponents have said that an election to change fence height limits is unlikely because those limits often go unenforced.

The city has enforced fence regulations 79 times since 2018, according to the planning department.

Variances that allow extra ADU height also have particular requirements, according to the zoning code. The property must have a feature that poses a “hardship” for the homeowner. Possible hardships include something that prevents a homeowner from developing a large part of their property, like a rock outcropping, Butler said. 

Homeowners cannot receive a variance solely to provide extra height or density, according to the zoning code. “Variances are fairly rare, because the findings are difficult to make,” Butler wrote in an email. “Most variance requests do not move forward to application,” after city staff tell the applicant that they do not meet the requirements, he said.

In almost all cases, if the property doesn’t meet the requirements to receive a variance, the city must change zoning rules and the General Plan to allow the project, Butler said. Measure M would require an election for each change to zoning rules.