The Makings of a Crisis

Changing Demand

Since the mass evictions brought on by the foreclosure crisis of 2008, the number of renters has grown nationwide. Six million were added when they were pushed out of home ownership by the banks and millions more began to rent as young workers entered the labor market during a decade of recession alongside skyrocketing home prices. Renters are now more than 50% of the population in the top 100 US cities. Yet high rents coupled with stagnant or declining real wages mean that over 50% of these renter households now pay unaffordable rents. In Santa Cruz, the percentage of renters has grown from 53% in 2000 to 60% in 2017, making it, indisputably, a majority renter town.

Like cities across the US, the region has seen an increase in families and professionals renting homes rather than buying. Particular to Santa Cruz are certain renter sub-groups that play a major role in this growth: agricultural workers moving to cities for higher-paid service sector work (documented by the Working for Dignity project), UCSC’s growing student population, Silicon Valley tech workers moving here for the lifestyle and relatively cheaper rents, and increasing numbers of short-term vacation rentals.

 

 

 

UC Santa Cruz provides on-campus housing for 53% of its over 16,000 undergrads, the highest for any of the ten University of California campuses. Nonetheless, this pushes the remainder into the local rental market. The UC’s Campus Expansion initiative calls for an increased student enrollment and in 2016, UCSC admitted 300 additional students, though the university has not built new housing since 2002. The Long Range Development Plan (LRDP) outlines UCSC’s plan for more university housing, including Student Housing West, which will be completed in 2020, via partnerships with private developers. In the meantime, the university has converted on-campus double rooms to triples, and lounges to dorm rooms, for which board and a required meal plan costs students over $1,400 per month. This increases the numbers seeking housing off-campus.

The influx of students into town in the midst of a housing crisis affects both students and residents. On the one hand, it increases competition for affordable units for all renters.  On the other, it creates added stresses for students. Financial aid packages decrease if students live off campus, limiting income that can go towards rent; residents often complain about students as neighbors, so many landlords to refuse to rent to them; and those landlords that do often charge well above market rate. As a result, students often live two or three to a single bedroom in the few units available to them. It also leads to informal, precarious, and unsafe housing situations—including in garages, sheds, and vehicles.

Student Renters

Santa Cruz has been a popular tourist destination since the 19th century. In the last decade, this tourism has increasingly shifted from the hotels lining the beaches to formal and informal short-term vacation rentals [STVRs]. Due to high home and mortgage costs, the lure of high rental profits, and the ease of new platforms like Airbnb, STVRs have become popular among Santa Cruz property owners. With the potential to net some of the $700 million revenue from local tourism, many have replaced long-term tenants with short-term visitors. Some local officials and hotel-industry professionals argue that STVR hosts are not paying adequate Transient Occupancy Taxes (TOTs), depriving the city of funds that could be used to stabilize the rental market, among other things.

Renters argue that short-term rentals decrease available spaces for long-term tenants—and drive up rents for what remains. Moreover many of these rentals are not “short-term,” and extend beyond individual rooms to entire units. According to Inside Airbnb, 65% of available Santa Cruz rentals in 2017 are entire homes or apartments, which are occupied by visitors 34% of the year. STVR hotspots worldwide have approached regulating these rentals in a variety of ways. San Francisco’s Office of Short-Term Rentals was created by a city ordinance in 2015 for this purpose. Regulations govern the number and size of units that can be rented by a single owner, the length of “short-term” stays and the amount of tax paid, and require landlords to abide by local rent-control laws. Santa Cruz has been unsuccessful in passing similar legislation.

Short-term Vacation Rentals

Production/Supply

Growing demand for affordable housing parallels a lack of production and supply, from the local to the national scale. Over the past 50 years, the Federal Government has shifted towards privatising and financializing housing markets, prioritizing single-family homeownership over multifamily rental housing, and drastically reducing allocations for building and maintaining affordable housing. The assumption has been that demand would incentivize the private market to fill the funding gap, but the current crisis demonstrates that this has not occurred. Without the public sector, history shows, adequate affordable housing simply does not get built.

Until 2011, California was able to partially make up for the loss of federal support through Redevelopment Agencies (RAs), which spent at least 15% of their funds on building and maintaining affordable housing; the Santa Cruz RA helped fund and monitor hundreds of units. But in 2011, Governor Jerry Brown signed legislation to eliminate RAs. In the past six years, private developers have met only a fraction of the state and local affordable housing need, while federal aid, such as HOME and Section 8 subsidies, has decreased.

 

 

Municipalities can use inclusionary zoning to require that private developers make a certain percentage of new units—usually 15-20%—affordable for local residents. They can also use land use regulations, like an "urban services line," to encourage dense development that would be subject to inclusionary zoning. Santa Cruz City and County were actually ahead of their time in this regard, passing Measures J and O in the early 1980s, which created an urban services line, and stipulated that 15% of newly constructed units county-wide be affordable to average-income households. Yet in the 1990s, voters elected a County Supervisor who moved to “downzone” the urbanized unincorporated area, designating this area for single-family homes on large lots. This resulted in a significant reduction in the production and the availability of affordable, multi-family housing across the County.

Preservation/Protection

Not only has new affordable housing not been built, that which exists has not been preserved, and those inhabiting it lack legal protection. Beginning in the 1970s, when federal government halted funding for new public housing projects, and cut funds for maintaining existing ones, the US public housing stock decreased precipitously. In the same period, HUD funding decreased from 8% to 1% of the federal budget, slashing rental subsidy programs such as Section 8.

With few options outside the private market, tenants increasingly organized in the 1970s and ‘80s, and a number of municipalities enacted or strengthened rent-control and eviction-protection measures. Santa Cruz County, however, failed to pass rent control three times in the late 1970s and early '80s. In California, tenants lost additional legal ground with a series of pro-landlord laws and legal rulings.

 

 

The 1995 Costa-Hawkins Act, permits landlords to use “vacancy decontrol” to increase rent whenever  tenants move out, and severely limits the number and type of units that can be protected by rent control. And a 2009 Court of Appeal decision, Palmer vs. City of Los Angeles, shielded California rentals from inclusionary zoning requirements.

By 2015, against the background of the national housing/financial crisis and regional market pressure, Santa Cruz had around 5,000 renters on the local Section 8 waitlist. This, in addition to skyrocketing rents and evictions, has led to renewed calls for rent control and tenant protections. Nonetheless, tenant protections in the City and County have continued to erode, including in 2017 with the elimination of city and county funds for tenants legal protections.

Politics

Since the post-World War II period, and increasing in the 1980s, national policies have incentivized home and property-ownership and supported the deregulation of rental housing markets, undermining the rights and power of tenants. This has resulted in an increasingly pitched political struggle between landlords, homeowners, pro-business groups, and tenants. In California, organized landlords, through lobbying bodies such as the California Apartment Association, have sought to block tenant protections statewide, as well as any attempts to amend or overturn pro-owner legislation such as Costa Hawkins.

 

 

Efforts at building new housing has met resistance by “NIMBY” (Not in my Backyard) organizations, largely comprised of homeowners and the local governments they elect. These organizations have enacted zoning regulations and land use policies that block new housing development in general, and the building of multifamily, affordable rental housing in particular.

On the other hand, there are YIMBYs (Yes in My Backyard). YIMBYs support all types of development, but often favor high-end development that will attract business investment. YIMBYs generally believe that market forces will meet local demand without regulation, a position that critics argue helps create highest-bidder rental markets that disadvantage lower-income tenants. In California YIMBYs have become a powerful force, fueled by tech workers lack of access to housing near their jobs. In Santa Cruz, the Economic Development Department is encouraging an influx of young, moneyed professionals, advertising Santa Cruz as a bedroom community for Silicon Valley and launch-pad for entrepreneurship.

NIMBYs and YIMBYs

Tenant organizing movements focused on affordable housing have also gained ground nationally. In the Bay Area, these organizations have had significant victories on renter protections, affordable housing bonds, zoning changes, and other pro-tenant initiatives. Local and statewide tenants organizations, like Tenants Together, also successfully advocated for the “California Housing Package” passed by Governor Brown “to address the affordability crisis” in September 2017. Yet tenant organizations expressed mixed feelings about this: Its provisions focused on increasing state subsidies for new housing by replacing lost RA funds and opposing NIMBY regulations—something on which developers, YIMBYs, and renters could all agree. It did not, however, include tenant protections to stop displacement, preserve existing affordable housing, and keep tenants in their homes. In addition, a bill that was part of the package, SB 35, forces local government to fast-track approval for market rate (often luxury) housing, which fuels gentrification and displacement. This bill was led by Governor Brown, in exchange for his signature on funding for affordable homes.

In Santa Cruz, tenant organizing efforts have struggled for affordable housing solutions since the 1970s. The Santa Cruz Tenant Organizing Committee (SCTOC)  is at the forefront of this effort today. STOC operates a tenant support hotline, works to organize tenants and educate them about their rights as renters, and operates on a platform that supports rent control and just-cause eviction protections for tenants. UCSC student organizations such as Students United With Renters (SUR) are educating both students and community members about the housing crisis by collaborating with existing community organizations in Santa Cruz. Both organizations push for tenant protections and the decommodification of housing, advocating that housing is a right for all and not a privilege for the few.

Tenant Organizing