Quick Take
The Santa Cruz City Council voted against easing restrictions on accessory dwelling units Tuesday, fearing lax ADU rules could invite investors, increase demand and drive up prices. Some councilmembers argued that the changes were needed to provide more flexibility amid a housing affordability crisis, while others demanded more data on the potential impacts before proceeding.
Rental restrictions on the 550 accessory dwelling units (ADUs) built in the city of Santa Cruz before 2020 will continue after the city council rejected a proposal Tuesday that sought to open up more rental and ownership opportunities in the face of the region’s housing affordability crisis.
A city council majority expressed fear the move would invite investors whose speculation could further inflate the market.
In a 4-2 vote, Mayor Fred Keeley and Councilmembers Sandy Brown, Scott Newsome and Martine Watkins rejected a proposal that would have allowed property owners to sell their ADUs as condos and allow property owners who built their ADUs before 2020 to rent out both their ADU and main home without living on the property. The state legislature prohibited local owner-occupancy requirements for new ADUs in 2019. Councilmembers Shebreh Kalantari-Johnson and Sonja Brunner supported the change, each saying they supported exploring options to open up the city’s housing supply. Vice Mayor Renée Golder was absent.
Watkins told staff she was “uncomfortable” moving forward with the condo conversion proposal because the idea is too new and untested. The council directed city staff to come back in two years with data on how ADU condo conversions have worked in other communities.
Newsome said lifting the requirement that landlords of ADUs built before 2020 live on the property “could increase competition for those 550 ADUs, which increases demand,” which increases the price.
“The separate sale of an ADU [as a condo] is a brand-new idea and I don’t know how it would work,” Newsome said. Newsome said the whole proposal could result in more expensive rentals and “a lot of negative consequences.”
Kalantari-Johnson and Brunner said the proposal aligned with the city’s commitment to diversify its housing stock and create more flexibility in a tight local market.
“I don’t know how we can say we want to be an inclusive community and not explore these bold initiatives,” Kalantari-Johnson said.
She questioned why the city would continue “punishing” property owners who built their ADUs before 2020 by requiring them to live on site in order to rent the unit out. “We say as a council that we want more pathways to home ownership,” she said. “This ordinance was attempting to do [that].”
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