Quick Take:
Although the new 21st Century ROAD to Housing Act simplifies regulations and boosts tax credits, local officials say it won't provide immediate relief to Santa Cruz County's housing shortage. Instead, the bill’s benefits are expected to unfold gradually over the next decade.
Politicians came together in a surprising show of bipartisanship last month to pass the 21st Century ROAD to Housing Act, a federal bill aimed at lowering housing costs through dozens of changes to regulations and funding. It is the biggest federal housing legislation in decades.
But the bill, which became law this month, won’t significantly boost housing supply in Santa Cruz County anytime soon, local officials say. The county is the least-affordable rental market in the nation, largely because of a severe housing shortage.
“Based on our initial review, we do not expect the legislation to significantly change affordable housing production locally in the near term,” said Lee Butler, director of community development for the City of Santa Cruz.
And the bill isn’t expected to “fundamentally change the county’s land-use authority or permitting process,” said Tiffany Martinez, communications officer at the county’s department of Community Development and Infrastructure.
“While some proposed reforms, such as allowing single-stair apartment buildings and expanding manufactured housing opportunities, could have modest impacts, any effects on local development are likely to be gradual and dependent on future regulatory action,” Martinez added.
Jenny Panetta, executive director of the Housing Authority of Santa Cruz County, which administers federally-funded programs like Section 8, said the bill “won’t bring an influx of new funding” and it is “too early to estimate a dollar amount,” but construction could move forward more quickly in the next several years.
“The biggest benefit may ultimately be helping existing housing dollars go further by reducing costs, delays and financing barriers,” Panetta said. “This bill is a meaningful step, but it isn’t a silver bullet.”
Still, affordable-housing developers say the bill should streamline rules that slow housing projects.
The bill largely aims to simplify housing programs and regulations, including making environmental reviews easier, said Louis Liss, a director of real estate development at nonprofit Eden Housing. Regulators are now working on how that will look in practice.
“A lot of it is cleaning up technical issues that have come up through decades of these programs stacking together and not always working together perfectly and creating new problems on top of the ones they are trying to solve,” he said.
Eden Housing is the developer behind the 128-unit Pacific Station North Apartments and the 124-unit mixed-use library project in downtown Santa Cruz. Liss said Eden Housing is “always looking for opportunities” in the county, including in unincorporated areas where around half of people live.
“This is the type of bill that will hopefully have an effect over the next decade, rather than the next year or election cycle or two,” he said.
For affordable-housing developers, one of the biggest benefits of the bill is the increase of the so-called public welfare investment cap from 15% to 20%, which allows banks to invest more in affordable housing tax credits that are a critical source of funding. The new cap follows an expansion of tax credits from the One, Big, Beautiful Bill Act signed into law last year.
“We are most excited to see that come through,” said Nevada Merriman, vice president of policy and advocacy at nonprofit Midpen, which has completed more than a dozen affordable housing projects in the county.
Merriman said the higher cap could raise billions of dollars nationwide and there could be a positive investor response to the housing bill in as little as six months.
“It’s very exciting for all the communities in California,” she said, especially Santa Cruz.
Another helpful part of the bill is the expansion and reform of the so-called Community Development Block Grant program, which allows cities and counties to directly spend federal funds on new housing.
One reform to the program is a three-year authorization of construction funding for natural disasters such as fires and floods. The longer-term authorization, which Congress could renew by 2029, will make it much easier to get funding for areas hit by disasters like Santa Cruz.
Santa Cruz County has received more than $80 million in disaster recovery funding for housing in recent years, Merriman said, which helped developers move projects into construction.
Congress has yet to appropriate funding for much of the bill, but Merriman said she is optimistic that the money will come because there’s political support.
“When you see this many members of Congress voting for something, it disrupts narratives that Washington is broken,” she said. “It’s a reflection that housing affordability is a top issue for people in this country.”
