Quick Take
Santa Cruz civic leaders unveiled an ambitious dual-tax proposal to fund affordable housing, blending a $99 annual parcel tax with a progressive real estate transfer tax. Aiming for the November 2025 ballot, the plan hopes to generate $5 million annually for the city.
For the group of civics scenesters tasked with fulfilling Santa Cruz Mayor Fred Keeley’s promise of an affordable housing tax measure, the past 18 months have been filled with fits, starts and extended lulls. The urgency around the effort and hopes to place it on a March 2024 ballot slowly slipped into a vague push for November 2024, before Keeley marked “the end of 2026” as the deadline.
Over the past few months, however, that group – led by the likes of Housing Santa Cruz County’s Elaine Johnson and Don Lane, and chair of the local Democratic committee Andrew Goldenkranz – has been developing a vision. On Thursday, they introduced the community to its first firm proposal for a local tax to fund affordable housing construction.
Gathered inside the community room at the Santa Cruz Police Department — the seedbed for the measure’s conversations last year — Johnson, Lane and Goldenkranz, among others, unveiled their plan: a dual parcel tax/real estate transfer tax they hope to put on the November 2025 ballot.
They expect the dual tax structure to initially bring in at least $5 million per year to the city’s affordable housing trust fund: $1.7 million from a flat $99 annual parcel tax applied to each property owner, regardless of their lot’s value; the rest coming from a progressive real estate transfer tax that would kick in only for sales worth more than $1.8 million. The city would collect 0.5% on sales of homes worth between $1.8 and $2.5 million, a rate that incrementally increases before landing at a 2% tax for homes worth more than $4.5 million. Both taxes would expire after 20 years.
With the parcel tax, the city will raise steady, dependable money from all property owners each year, while the transfer tax focuses on raising money from wealthier residents, a progressive feature that Goldenkranz said was essential in developing the proposal.
As it stands, the proposal does include some compromises. Although Keeley initially pushed a bond measure that would fund affordable housing construction and homelessness services, the plan introduced Thursday focuses primarily on the former. Goldenkranz said some money would be placed into eviction protection programs, but no money would be earmarked for direct homelessness services. Goldenkranz said he found that many people would be unlikely to support a tax directed at homeless services, as it’s viewed as an “endless drain” on city resources.
The 20-year time limit on the taxes also indicated a compromise with local real estate interests. The group working on the measure has long said they don’t think they need groups like Santa Cruz Together to necessarily endorse the measure, but they do need them to not oppose it. In the past, Santa Cruz Together has successfully leveraged the power and money of the California Association of Realtors to defeat ballot measures on rent control and an empty homes tax.
“It’s not perfect. This is not Christmas where it’s everything we wanted it to be; this is the best that we think we can sell successfully to a really wide portion of the community,” Goldenkranz told the group of about 30 filtering in and out Thursday evening.
James Weller, who attended the early community meetings last year when Keeley and the city attempted to shape the measure through a series of messy town halls, said he was surprised to see the proposal as a two-headed tax, but that he was pleased with the product and creativity.
“I had always been thinking this whole time that we were comparing the parcel tax versus the transfer tax,” Weller said. “But I think this is a pretty smart approach.”
Peter Klotz-Chamberlin, who stood with Weller at the center of the room, said he was “enthusiastic” about the direction.
“My son and daughter have housing challenges and the value of housing has just been rising at incredible rates,” Klotz-Chamberlin said. “To leverage the wealth that is already here, this seems great to me.”
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