Permitting Process for 100% Affordable Housing

July 9, 2026: Community Meeting

A virtual community meeting was held at 6pm on Thursday, July 9, 2026. For those who were unable to attend, here is the link to the recorded community meeting:

• July 9, 2026, Community Meeting Recording
• Community Meeting Notes Permitting Process for 100% Affordable Housing(PDF, 46KB)
• Responses to the Q&A report are being prepared and will be posted soon

December 18, 2025: Planning Commission 

The Planning Commission reviewed the proposed amendments and recommended that the City Council formally approve them. See the December 18, 2025, Planning Commission meeting page for a recording of the meeting along with the staff report and draft amendments. 

November 19, 2025: Community meeting 

The Community Development Department held a virtual community meeting on Wednesday, November 19, 2025 to gather input on a variety of policy efforts, including streamlining permitting for 100% affordable housing development projects. The meeting included brief presentations from City staff and time for questions and answers. The recording and Q&A report are available here: 

• Community Meeting Recording Affordable Housing Part 1
• Community Meeting Recording Affordable Housing Part 2
• Community Meeting Affordable Housing Q&A Report(PDF, 67KB)

Affordable housing developments are those where 100 percent of the units are offered for reduced rents or sale prices to Moderate- or Lower-income households. These projects provide much needed housing for income-restricted households but often face constraints related to fees and permitting timelines that affect their ability to be constructed.  

These projects, like all housing development projects, must currently go through a two-step permitting process under current City regulations: 

1. A discretionary, subjective permit process that takes several months to complete, costs tens of thousands of dollars in permit fees, and requires approval either at a staff level or at a public hearing with the Zoning Administrator, Planning Commission, or City Council. 
2. A building permit process that takes several months to complete before the permit is issued and construction can begin. 

However, due to changes in state law over the last several years, the City can now only review proposed housing development projects based on objective criteria, making subjective review criteria and the associated discretionary permit process obsolete.

The City’s Housing Element includes an objective to adopt an ordinance that allows 100 percent affordable residential development to be considered a “by-right” use. The Housing Element is a document that is required by state law and was developed in 2022-2023 with a substantial amount of public input. State law requires implementation of all objectives in the document.

To implement this objective, the proposed updates to the local zoning ordinance would streamline the permitting process for 100 percent affordable housing projects by removing the first, discretionary step for qualifying projects but would retain portions of that process that still add value. The streamlined process would include:

1. A preliminary application for City staff to review an early project design concept to provide feedback to promote a design consistent with community values and to identify any substantial changes that may be needed to achieve compliance with development standards,
2. One or more community meetings to give the public the opportunity to provide meaningful input early in the project design phase, when the applicant is most likely to be able to respond to design suggestions, and
3. A building permit, which is a fact-based review process.

The streamlined approval process would be allowed on all sites in the City that are currently zoned to allow multi-family or mixed-use buildings but would exclude certain environmentally sensitive areas, such as sensitive habitats or sites in the FEMA flood zone.

A map of the proposed Affordable Housing Ministerial Approval Overlay district(PDF, 8MB) shows the locations of these eligible sites. The overlay district would not make any changes to the types of uses allowed on those sites or how much housing could be built. It would only show where 100 percent affordable housing projects could qualify for a streamlined approval process when the project meets specified criteria.

Proposed map where the permit streamlining would apply: Click to open detailed map 

For development projects to qualify for streamlined permitting, they must: 

• Offer 100 percent of the units, except for up to three manager’s units, at reduced rent or sale price to Moderate- or Lower-income households 
• Not be located in sensitive environmental areas 
• Not demolish a historic building, structure, or landmark 
• Be consistent with the Objective Design Standards for Multifamily Housing and other objective development standards in the Zoning Ordinance, except as allowed to be modified through the state density bonus law 
• Be consistent with standards to govern the removal and replacement of heritage trees. 

The proposed amendments are anticipated to be heard by the City Council in the latter half of 2026 or early 2027. Because the proposed zoning overlay is also partially in the Coastal Zone, these changes would need subsequent approval by the Coastal Commission prior to going into effect in the Coastal Zone.

MYTH: The proposal would intensify development on the Eastside

FACTS:

1. The proposal does not include any changes that would increase the density of development. The mapping reflects areas where 100% affordable housing is already an allowable use.
2. Larger housing projects currently in the development pipeline are distributed throughout the city, mainly along the corridors of Mission St., Ocean St., Soquel Ave., and Water St., as well as in the Downtown.

MYTH: Changes would remove protections for heritage trees

FACTS:

1. State law has eliminated the City’s ability to apply subjective standards in the review of housing development projects. Our heritage tree ordinance currently has one standard – a subjective standard – to determine when a heritage tree can be removed on a development site.
2. That subjective standard cannot be legally enforced, so the City currently has no enforceable heritage tree review standards related to housing development projects.
3. The proposal would create new, objective standards for 100% affordable housing projects, specifying under what conditions a heritage tree can be removed, protection measures for trees to be retained, and replacement requirements for any tree to be removed.

MYTH: It will eliminate the ability for community members to make their voices heard

FACTS:

1. The proposal requires one or two community meetings at a preliminary application stage to preserve the ability for the community to provide input on an affordable housing project.
2. Developers are far more likely to incorporate community input into a project design early in the design stage when the project is conceptual.
3. Developers are generally unwilling to make project design changes by the time a project is ready for approval since the project has been designed in great detail by that time, making it very expensive to make any changes.

MYTH: It will get rid of all public hearings for 100% affordable housing projects

FACTS:

1. These projects currently only require City Council approval if they involve a subdivision (5 or more new parcels, including condos) or if they are requesting something unusual, such as a Planned Development permit. These kinds of projects would not qualify for the streamlining and would still require City Council approval.
2. In addition, projects involving a Coastal Permit currently require a public hearing with the Zoning Administrator, and that would still be required under the proposed changes since the proposal would not eliminate Coastal Permit requirements.
3. Depending on required entitlements, some projects can already be approved at a staff level, without any hearing, under current regulations.
4. Several state streamlining laws for affordable housing already allow for ministerial approval of certain types of 100% affordable housing projects (AB 2011 – sites zoned for specified commercial uses, AB 2162 – projects including a specified percentage of supportive housing, and SB4 – sites owned by religious or higher education entities).

MYTH: The changes are not required by state law

FACTS:

1. State Housing Element law requires the City to implement all Housing Element policy objectives.  See Government Code Section 65583(c) and 65585(i) and (j).
2. The state is actively tracking local jurisdictions’ annual progress on completing each Housing Element objective, including whether the jurisdiction has met the due date for each objective. Objective 2.2g, which requires this streamlining, was due December 2025.
3. Failure to implement the Housing Element could lead to enforcement by HCD, which could eventually lead to decertification of the Housing Element. Consequences would include:
   • Revocation of the City’s ProHousing designation, which enables the City to be eligible for certain housing grants.
   • Requiring the City to accept Builder’s Remedy projects, which could allow for larger buildings than already allowed and would give developers even more latitude in deciding whether or not to follow development and design standards.
   • HCD has thus far decertified three jurisdictions’ housing elements (Brisbane and Portola Valley for not completing required rezonings on time and Norwalk for banning emergency shelters in violation of state law). HCD has not decertified any jurisdictions at this time for failure to complete policy objectives unrelated to state laws requiring rezoning or allowances for emergency shelters.

MYTH: We are constructing more affordable housing than we need, way ahead of schedule; Santa Cruz’s RHNA (Regional Housing Needs Allocation) numbers are too big, and we should have pushed back on the state when assigned these numbers for the current housing cycle.

FACTS:

1. While the City exceeded RHNA requirements for lower income units in the 2014-2023 RHNA cycle (permits for 669 units issued compared to 298 required) and is currently ahead of schedule in issuing permits for lower income housing in the current, 2023-2031 RHNA cycle (801 units issued permits out of 1,421 required), the true need for affordable housing still greatly outweighs what has been permitted.
2. The Monterey Bay Economic Partnership’s Practical Housing Policy paper (2023) presents American Community Survey data from 2021 showing that 34.6% of all households in Santa Cruz County are rent burdened, meaning they pay more than 35% of their income on rent.
3. Santa Cruz has approximately 11,200 lower income households (3,100 Low-Income, 2,445 Very-Low Income, and 5,640 Extremely-Low Income, per HUD Comprehensive Housing Affordability Strategy (CHAS), 2015-2019) but only approximately 3,000 deed-restricted lower-income units (built and under construction).
4. The California Housing Partnership’s Santa Cruz County 2026 Affordable Housing Needs Report indicates that countywide, significant proportions of lower-income households are cost-burdened for housing, meaning that they spend over 30% of income on housing. Specifically 43% of Low-Income households (50-80% AMI), 58% of Very Low Income households (30%-50% AMI), and 87% of Extremely Low Income households (0%-30% AMI) are cost burdened for housing.
5. Each of the two affordable housing developments completed in the last year, providing 200 new units, had over 1,600 households apply for each development.

MYTH: The changes would allow for six-story buildings deep into neighborhoods; The overlay disproportionately affects the Eastside over the Westside.

FACTS:

1. The proposal does not change the allowable density or size of projects and does not change where affordable multi-family housing is already allowed.
2. Neighborhoods such as Seabright generally have smaller-sized lots that would not support the scale needed for 100% affordable housing developments, so it is unlikely that such projects would be developed in that neighborhood.

MYTH: This proposal has been made with little outreach or public input.

FACTS:

1. The timeline on this effort started a few years ago in 2022-2023 when the City created the current Housing Element that now contains the objective to create this permit streamlining.
2. The Housing Element was an involved process that included community meetings, public review of each draft of the Housing Element document, and multiple hearings at both the Planning Commission and the City Council. The City received a lot of community input throughout this process.
3. The proposal for permit streamlining of 100 percent affordable housing developments was presented at a community meeting in November 2025 and at the Planning Commission in December 2025.
4. The City has since listened to additional public input, including via a neighborhood meeting earlier in 2026 and a second community meeting in July 2026.