Quick Take
A political firestorm is brewing in Santa Cruz as realtors launch a rival housing initiative to one put forward earlier this year by Mayor Fred Keeley and housing groups. Keeley and his allies say they were blindsided by the move.
Earlier this year, Santa Cruz Mayor Fred Keeley and local nonprofit Housing Santa Cruz County launched a petition to put an affordable housing funding stream before voters in November 2025. Work on the proposed ballot measure, a hallmark of the mayor’s 2022 campaign, stretched back 18 months and was shaped by negotiations with stakeholders ranging from landlords and the real estate industry to renters and UC Santa Cruz students.
Now, an opposing petition has entered the fray, piloted by a monied political group that Keeley and housing advocates thought, and hoped, would stay on the sidelines: the Santa Cruz County Association of Realtors. SCCAR’s presence opens a direct line to its national and statewide parent organizations, which have spent hundreds of thousands of dollars to topple previous progressive housing measures in Santa Cruz.
The realtors hope their initiative will appeal to people’s pocketbooks, as it proposes significantly lighter tax burdens on property owners and home sellers. Yet, by doing so, it would constrict the annual revenue potential to less than half of what Keeley and Housing Santa Cruz County’s effort aims to raise. If both petitions secure roughly 4,000 signatures and qualify for the Nov. 4 ballot, the measure with more votes will win.
Supporters of the initial petition say they are taken aback by the move. Keeley accused the group of dirty politics.
“This is the dirtiest local political trick I’ve ever seen in the city of Santa Cruz,” Keeley told Lookout on Tuesday. “It’s a slap in the face. For a narrow special interest to try to blow up over two years of work is pretty insulting to the community.”
Renee Mello, SCCAR’s president, said her organization “couldn’t live with” the real estate transfer tax proposed by Keeley’s measure, which seeks to tack a fee onto home sales greater than $1.8 million and progressively increase it on higher-value sales. About 300 homes sold for at least $1.8 million in the city of Santa Cruz in 2024. Keeley said the realtors played an “enormous” role in setting the threshold at $1.8 million. Mello disagrees.
“We never said we’d stay neutral on a transfer tax, that was never, never, ever said,” Mello told Lookout. “We always told Keeley it was something we’d have an issue with.”
Yet for a while, the realtors were unsure of their strategy. Since the original proposal would need only a simple majority to pass at the ballot box, the realtors were not confident they could kill the measure on the campaign trail. Mello said they felt the “bar for passage was awfully low and we would be fighting a losing battle.” Instead, they saw a clearer path to victory if they went head to head against Keeley’s proposed Workforce Housing Affordability Act with an initiative that, they say, better protects home sellers and seniors.
When the leadership group behind the original initiative gathered for its weekly meeting on March 14, Elaine Johnson, executive director of Housing Santa Cruz County, said they were all surprised.
“We had to take a deep breath,” Johnson said over the phone after a long pause. “We said, OK, we need to keep moving forward, even though we’re still navigating that this is even happening.”
Johnson said she thought that after two years of developing their initiative and working with the realtors, that “we were all in alignment, but I guess that wasn’t the case.”
“My hope was that we could talk this through and come up with something together instead of having two measures that look almost identical and can confuse voters,” Johnson said. “This is what we’ve been talking about for two years. I don’t know why they did this. I can only hope it’s with the same intent as ours, but I don’t know that.”
Mello said the mission of SCCAR’s proposal is to defeat the initial initiative. She said SCCAR is “against real estate transfer taxes, period. That’s the starting assumption.” Yet, in order for the measures to compete head to head on the November ballot, they need to mirror one another. This forced the relators to include a real estate transfer tax, albeit watered down, in their proposed initiative.
“Philosophically, as realtors, we are against anything that is added onto the seller,” Mello said. “But if we’re going to have a competitive measure, then we need to do what the other measure does. If they do a parcel tax, we have to do a parcel tax. If they do a real estate transfer tax, we have to do that. We’re just trying to make it much more bearable.”
Instead of the $96 annual parcel tax Keeley’s proposal seeks to levy on every property in the city, the realtors’ version proposes a $50 parcel tax. Instead of a real estate transfer tax that starts at 0.5% on home sales of at least $1.8 million and steps up to to 2% for sales greater than $4.5 million, the realtors propose a tax that kicks in for sales starting at $4 million (a $5 tax for every $1,000 greater than $4 million). Keeley’s proposal caps the real estate transfer tax at $200,000; the realtors cap theirs at $100,000.
The realtors’ tax would last only 10 years and exempts property owners or sellers over 55 years old. The original proposal would last 20 years and offers only a low-income senior exemption for the parcel tax.
Victor Gomez, SCCAR’s director of government affairs, said the $1.8-$3 million range often represents “unfortunately, in Santa Cruz, first-time homebuyers.” He said real estate transfer taxes are added to the closing costs, and make “reaching the milestone of owning a home much harder.”
Keeley pointed to the initiatives’ titles as evidence of the opposition’s intent to confuse voters. The realtors have called their initiative the Workforce Housing and Climate Change Act of 2025, as it also proposes to use some revenue on climate projects such as repairs to West Cliff Drive. Keeley’s proposal is called the Workforce Housing Affordability Act of 2025.
“Once they’re able to go out and collect signatures, they will be confusing people about which petition they signed,” Keeley said. “It’s not a genuine effort to pass an affordable housing measure. Renee Mello herself said they couldn’t support a real estate transfer tax and yet their initiative includes one. They’re going to come along with no other support and spend $150,000 on signature-gathering to confuse people.”
The climate dimension of the realtors’ initiative has raised some eyebrows. Gomez said if SCCAR’s proposal passes, the city council will ultimately decide how to spend the money, but the realtors wanted to guide the council toward putting some of the funds specifically toward work on two of the city’s tourism gems most susceptible to climate damage: the Santa Cruz Municipal Wharf and West Cliff Drive.
“For us in the real estate community, tourism is important and you have to keep it going,” Gomez said. “That impacts home values.”
However, City Attorney Tony Condotti told Lookout that the initiative might be too broad, thus in violation of state law. Known as the “single-subject rule,” the state constitution mandates that “an initiative measure embracing more than one subject may not be submitted to the electors or have any effect.”
Condotti said the initiative’s attempt to tie its revenue to affordable housing and projects on West Cliff and at the wharf poses “a significant legal question.”
The realtors have a history of spending to kill housing initiatives in the city of Santa Cruz. In 2022, the California Association of Realtors spent $49,000 to help beat back an empty homes tax. In 2018, the same group spent $195,000, and the National Association of Realtors separately spent $200,000, to kill a rent control measure.
Local political action group Santa Cruz Together led both campaigns against the empty homes tax and rent control measures, and the realtors’ support was critical to its success. Whether it will return the favors is a question looming over the next few months.
Santa Cruz Together, which holds sway with thousands of homeowners throughout Santa Cruz, agreed to not take a position on Keeley’s initiative. That agreement had long been seen as a cornerstone to any successful affordable housing tax measure. In a January newsletter, Santa Cruz Together lead Lynn Renshaw told supporters that, while it will “continue to monitor its progress,” the organization “decided not to take a position on this measure and leave it to individuals to weigh its merits.”
“Santa Cruz Together is not taking a position on the transfer tax initiative,” Renshaw wrote via email on Wednesday, and referred back to the January newsletter. Yet, a new petition on the table, from a group that has been key to Santa Cruz Together’s influence, might complicate that commitment. Renshaw did not answer Lookout’s multiple questions about whether Santa Cruz Together would take a position on the realtors’ initiative.
“We will ask for Santa Cruz Together’s support,” Gomez told Lookout. “We understand they took a neutral position on the first petition, but we hope to engage them in the future.”
The realtors are working on a much tighter deadline. They will need to present the roughly 4,000 signatures to the city by the end of May, ahead of the city council’s June vote to finalize the November ballot’s language.
However, Keeley and the housing advocates aren’t too far ahead. As of last Friday, March 14 — after two months circulating of their petition — they had collected about 1,200 signatures, a number that will need to more than triple over the next 2½ months.
Gomez acknowledged the steep task of collecting so many signatures in such a short amount of time. However, he said if the realtors cannot qualify their initiative for the ballot, they will likely go all-in on fighting Keeley’s proposal.
“There’s a strong likelihood that we’re going to oppose it and we’re going to spend money doing it,” Gomez said. “We have plenty of resources. Money is not a problem.”
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