Measure C: Workforce Housing Affordability Act of 2025

Santa Cruz City voters approved Measure C, the Workforce Housing Affordability Act of 2025, to create a dedicated local funding source for affordable housing and homelessness prevention.

The measure is expected to generate about $2 million annually for 20 years through a $96 annual parcel tax and a graduated real estate transfer tax on high-value property sales. Funds stay local and are legally restricted to housing-related uses, with public oversight and independent audits to ensure accountability.

Starting in the 2026–2027 fiscal year, most property owners will pay the parcel tax, which remains fixed for 20 years and is collected with regular property taxes. Residential landlords cannot pass this cost on to tenants. Some property owners qualify for exemptions, including eligible low-income homeowners, low-income seniors, affordable housing properties, and tax-exempt organizations. See below in the Parcel Tax Exemption FAQs for details on exemptions, income limits and required documents.

The transfer tax applies only to property sales above $1.8 million, with rates increasing by tier and many common exceptions.

This webpage is the City’s official source for Measure C information, including how it works, timelines, and exemption details.

The application window is now closed for 2026.

Watch the Informational Webinar Recording

Measure C FAQ

Parcel Tax Information

The city of Santa Cruz Workforce Housing Affordability Act includes a $96.00 flat annual tax on property parcels in the city of Santa Cruz to support affordable housing initiatives in the City of Santa Cruz.

This amount is fixed and will not increase during the 20-year life of the Act. The new tax will begin in the 2026–2027 fiscal year on July 1, 2026 and will be collected along with regular property taxes.

An owner of residential rental property shall be prohibited from passing any portion of the tax imposed by this section onto their tenant or tenants. 3.34.070

Parcel Tax Exemptions

Some property owners do not have to pay this tax. To qualify, you must submit an exemption form and mail corresponding documents by July 24, 2026. The mailing address is:

City of Santa Cruz: Workforce Affordability Act Exemption

1200 Pacific Avenue, Suite 290, Santa Cruz, CA 95060

This address is mail only- do not come in person. If you would like to drop off your documents, please call for an appointment: 831.420.5068.

Low- income homeowners requirements and documents:

Low-Income Exemption:	Required Documents:
Must be primary residence	Utility or Financial Statement- please block out sensitive information
Household income is at or below 60% at area median income*	CalFresh Acceptance, PG&E CARE Program, or W2
Proof of ownership	Property Tax bill

Low- Income Senior 65+ homeowners requirements and documents:

Senior 65+ Exemption:	Required Documents:
Must be primary residence	Utility or Financial Statement- please block out sensitive information
Household income is at or below 80% at area median income*	CalFresh Acceptance, PG&E CARE Program, or Tax Documents
Proof of ownership	Property Tax bill
Proof of Age: must be 65+	Driver’s license, birth certificate, Medicare card or passport.

*“Area Median Income” shall mean the area median income for Santa Cruz County as published and periodically updated by the state of California pursuant to California Code of Regulations, Title 25, Section 6932, or successor provision.

Income	1 Person	2 Person	3 Person	4 Person	5 Person	6 Person	7 Person	8 Person
Median Income (AMI)	$92,950	$106,250	$119,500	$132,800	$143,400	$154,050	$164,650	$175,300
Household income is at or below 60% of area median income	$55,770	$63,750	$71,700	$79,680	$86,040	$92,430	$98,790	$105,180
Senior Household income is at or below 80% of area median income	$74,360	$85,000	$95,600	$106,240	$114,720	$123,240	$131,720	$140,240

How to pay the tax?

The parcel tax will be included on the homeowner’s property taxes assessed by the County of Santa Cruz.

The transfer tax is due at the time of the deed transfer with your Title company.

Transfer Tax Information

Real Property Transfer Tax:

This tax helps fund affordable workforce housing in the City of Santa Cruz and is in addition to the existing real property transfer tax.

What does it apply to and when does it go into effect?

The sale or transfer of real estate in Santa Cruz, including certain changes in ownership of legal entities that hold property.

Beginning in the 2026–2027 fiscal year: July 1, 2026

Tax Rates:

The tax is based on the property’s sale price (including any debt on the property) as a progressive marginal tax:

Under $1.8 million: No new tax

$1.8M – $2.5M: 0.5%

$2.5M – $3.5M: 1.0%

$3.5M – $4.5M: 1.5%

Over $4.5M: 2.0%

Maximum tax per transaction: $200,000

Sample Tax Calculation
Sale Price	$2,600,000.00
Tax up to 1.8M	$0.00
Tax on 1.8-2.5M at .5%	$3,500.00
Tax on 2.5-2.6M at 1%	$1,000.00
Total Due	$4,500.00

Exception: Transfers Involving Partnerships

In most cases, transferring ownership of real estate triggers a tax. However, there are important exceptions for properties held by partnerships:

No tax is charged when ownership shares in a partnership change, but the partnership itself continues and still owns the property.

If a partnership ends (terminates) under federal tax rules, it is treated as if all its real estate was sold at market value. In this case, the transfer tax may apply but only once, even if multiple transfers are involved.

No tax is charged when property is transferred between individuals and legal entities (or between entities) if nothing really changes except how the property is titled, meaning the same people own the same shares before and after the transfer.

Additional Transfer Tax Exemptions

Workforce Housing Affordability Act includes several situations where the real estate transfer tax does not apply:

Deed in Lieu of Foreclosure

No tax when a property is transferred to a lender to avoid foreclosure

Exception: Tax may apply if the property’s value exceeds the remaining loan balance

Restricted Affordable Housing Units

No tax on transfers of homes that are legally restricted for low- or moderate-income households

The affordability restriction must last at least 30 years

Transfers Between Spouses

No tax on property transfers between spouses as part of:

Divorce or legal separation

Property division agreements

Applies as long as the transfer is clearly identified as part of this process

Certain Government Transfers

No tax when property is transferred from a government agency with an agreement that it will be immediately transferred back to a tax-exempt public agency

What is the Workforce Housing Affordability Tax Oversight Committee?

A three-member Financial Oversight Committee has been established, composed of the Director of Finance, the Chief Executive Officer of a local bank, credit union or other local financial institution to be appointed by the City Council, and a public member to be appointed by the City Council to ensure that expenditures of the tax proceeds of the Act are in accordance with the terms of the Act.

How can Affordable Housing Funds be used?

Eligible Uses:

Moneys in the Affordable and Workforce Housing Fund shall be deposited into and shall be expended in accordance with the City’s Affordable Housing Trust Fund including the following:

1. Construction of new affordable units, including tiny homes, social housing;

2. Preservation of existing affordable housing;

3. Affordable housing project planning, project development and support;

4. Assistance with multifamily rehabilitation programs;

5. Conversion of market rate units to affordable housing;

6. Construction, conversion or rehabilitation of income-restricted accessory dwelling units;

7. Gap financing for acquisition and rehabilitation of potential limited equity cooperatives;

8. First time homebuyer down payment assistance loans;

9. Predevelopment loans/grants to assist nonprofit and for-profit developers with project feasibility studies, site acquisition and design studies for potential affordable housing projects;

10. Payment of debt service or ground-lease payments for projects authorized by this section;

11. Santa Cruz City residents and workers, and veterans shall have priority for obtaining housing units, to the extent allowed by law;

12. Funds from the measure may be allocated to developments that provide housing units to households at a variety of low and moderate-income levels;

13. Funds from the measure may be allocated to either rental or for-sale housing developments.

Restrictions on Uses

1. Eminent domain actions are prohibited.

2. All affordable housing shall be deed restricted for a minimum of 55 years for rental units and 45 years for for-sale housing.

3. To the extent feasible, the funds from the measure shall be allocated only for developments where other funding sources provide the majority of the construction financing.

4. Funds from the measure shall not be used to replace existing deed-restricted affordable housing unless they are replaced on a two-to-one basis and existing residents receive relocation assistance and have a right of first refusal.

5. Santa Cruz City residents, workers and veterans shall have priority for obtaining housing units, to the extent allowable by law.

How can I apply for funds?

We are currently not accepting applications for funds. This application process and forms will be available soon. Check back for details.

Where can I find the actual tax language?

Learn more at VotesCounty Santa Cruz County.

Who can answer any additional questions I may have?

Call the City of Santa Cruz at 831-420-5068 or email askfinance@santacruzca.gov.

Is this Property Tax being considered for repeal in November?

The Local Taxpayer Protection Act has qualified for the November 2026 election. The City will continue to monitor and assess the impact this measure may have on the recent passage and implementation of Measure C.