Journalist Julia Sinn explores the impact of Silicon Valley on Santa Cruz. In this installment, she explores the history of Santa Cruz’s housing problems. Part 1: Is Silicon Valley Invading Santa Cruz

Laying The Groundwork 

“It's the end product of a unique — and chronically shortsighted — political culture 50 years in the making that is now part of the city's genetic structure.”

-From a piece in The SF Chronicle in 1999 on San Francisco’s “drum-tight” housing market.

Thank you! 

We got so many responses to the announcement of this series—thank you! The presence of thoughtful, engaged citizens is really where solutions start (and we can trust you all to read past the headline...right?). We hope that, by zooming out, we can all gain an unbiased perspective and regard Santa Cruz’s particular issues in a more pragmatic way, uniting around solutions.

Please continue to send us your input and ideas. What do you want to know? What data do you want to see? We’re digging into more nitty-gritty data next week, so stay tuned! 

This week, we want to talk about the baseline: the complexes and history that got us here. This might be a refresher for some of you who are versed in development history and law, but for most of us, it‘ll be a much-needed look at the history that led us to today.

How did this happen?

Even though the making of the housing crisis is a topic seemingly exhausted by journalists, economists, lecturers, and book authors, it seems that opinion and speculation still fuel much of the conversation.

No single issue holds all the blame for the tragic crisis that’s overwhelmed our state and county, but it is broadly understood by experts that the linchpin has been underproduction. And that didn’t start anytime recently.

“People are not focused on the source of the problem when it comes to our housing shortage — if they’re blaming tech companies and developers, then they’re not showing up at our city council meetings,” says Ethan Elkind, director of UC Berkeley law school’s climate program and an expert in land use and infrastructure policy. “That’s where their attention should be focused.” From Marisa Kendall’s April 8, 2018 piece in Mercury News

The seedlings of California's housing crisis

It’s key to remember that Santa Cruz isn’t alone in experiencing a housing crisis. While some aspects of our local emergency are unique, the entire United States is decades into the making of this quagmire that has displaced millions of people. California, particularly and notoriously, has been an epicenter.

Between 2000 and 2015, the U.S. produced 7.3 million fewer homes than it needed to in order to keep up with demand. Of the 23 states that failed to meet housing growth demanded by population, California’s dearth of development was the most drastic: 3.4 million homes short of sufficient. The entire United States unproduced by 7.3 million homes.

• 7.3 million too few housing units in the U.S. 

• 3.4 million of those in California.

What about Prop 13?

Ah, yes, Proposition 13. Passed in the summer of 1978, it established property tax “assessment” based on “base year value” for a property when it was purchased and limited annual tax increases for both residential and commercial property.

That’s why two homeowners living on the same block with similar houses may be paying drastically different property tax bills, even though the value of both their houses is now identical—but one was purchased 10 years ago. Attempt after attempt has been made to amend, override, and strike down, Prop. 13, to varying degrees of success.

It’s an essential tidbit as we try to clearly understand what made the Bay Area in particular such a challenging place to buy a home or build new (non-luxury) housing. 

Add mountains on one side, the ocean on the other, and an attitude of protectiveness around a precious local culture, and things get even more complicated.

As Prop. 13 shifted tax burdens to newer homebuyers (and thus, younger homebuyers), some of its biggest beneficiaries were large corporations. Despite the measure being marketed as a way to help older Californian’s maintain housing, businesses could keep assessed property values below market rates (much easier to do than residential) and skirt increased tax rates.

“By 1991, two-thirds of the 25 least affordable cities in the nation were in California,” writes Margaret O’Mara, author of The Code: Silicon Valley and the Remaking of America. “But Proposition 13 has meant that city governments have few fiscal incentives to encourage private companies to build more housing… This is a Catch-22 for a city desperate for both tax revenue and new, more affordable housing.”

Layers of Crisis

Many experts have begun to think of this housing crisis as multiple crises. In Santa Cruz, the layers of damage are clear.

As low-income families and individuals get displaced and find themselves unable to attain new housing, new families trying to buy homes (despite their higher incomes) are outbid within massive cash offers. As older adults are pushed out of their longtime homes for new high-end developments, young adults and students struggle to find safe, affordable rentals.

Benjamin Schneider has exquisitely covered this topic for Bloomberg, and writes, “It’s the difference between low-income residents who’ve never been adequately served by the housing market and the young professionals who have only recently become frustrated by their inability to find homes they can afford. The movement’s success could depend on its ability to transcend these divides and build a broader coalition.”

(Just as thorough and insightful is Schneider’s study of homelessness in U.S. cities, which is well worth a read—and a bookmark and share). 

So we’ll touch on perhaps the most controversial layer that makes Santa Cruz’s cris unique: the unwillingness to build. Perhaps sparked by the establishment and subsequent massive growth of UCSC, anti-growth sentiment wasn’t always the Santa Cruz way. The early sentiment of Santa Cruz, with its railroads, lumber, and beaches ready for money-flinging tourists, embraced the boom. But in the decades after UCSC’s founding, development has stalled at almost every turn. Until recently.

Though controversial (and now somewhat outdated) the 2009 book The Leftmost City by Richard Gendron and Bill Domhoff offers an eye-opening look at the at time confounding political and social sentiments of liberal Santa Cruz.

For many decades, Santa Cruz has been trying to protect neighborhoods, once-pristine shorelines, and its precious culture. But how can we do that and ensure that everyone is safely housed? How does a County with physical limits make more space? And what fuels the resistance to development—is it truly a desire to protect this special place, or is it tinged with an exclusionary fear of cultural infiltration?

We’ll look more closely next week at Santa Cruz-specific aspects of this crisis—commute trends, wages and employer statistics, displacement, and the University’s impact.