Code changes on inclusionary housing, farmworker and supportive housing, and lot consolidation

In plain English

The city wants to make a batch of changes to its zoning and subdivision rules plus the General Plan. The main pieces: waive the roughly $2,000 boundary adjustment (lot-line) fee for projects that combine two or more lots and add at least two new homes; remove the rule that planned development permits (which allow a project to vary from zoning standards in exchange for public benefit) can only be used on sites of 20,000 square feet or more; change zoning so transitional and supportive housing is treated the same as other homes of the same type in the same zone; allow farm employee housing as state law requires (six or fewer employees treated like a single-family home, up to 12 units or 36 beds treated like any agricultural use); clarify wording in the inclusionary (below-market housing) rules; and update General Plan language to match the 2022 Climate Action Plan and the 2025 Local Hazard Mitigation Plan – Climate Adaptation Plan. A yes vote approves the first reading of the ordinance and adopts resolutions changing the General Plan and the fee schedule.

The changes affect small-lot property owners and builders combining parcels, people who need supportive or transitional housing (the 2026 Point-In-Time Count found 1,024 unhoused individuals in the city), and farm employees, and they keep the city's state-certified Housing Element on schedule, which protects eligibility for housing grants and avoids state penalties such as Builder's Remedy.

Key facts

Eliminating the Community Development Department boundary adjustment fee saves an applicant "just under $2,000, based on today's fees," for projects that consolidate two or more lots and create two or more dwelling units.
Housing Element Objectives 1.1e (lot consolidation incentives), 1.6b (planned development permits on infill lots under 20,000 square feet), 3.4b (transitional and supportive housing) and 3.7a (agricultural housing) are all due by December 2026.
The Planning Commission recommended approval on October 1, 2026 by a vote of 4-0, with Commissioners Kelley, Kennedy and Thompson absent; no members of the public commented.
A virtual community meeting on August 10th, 2026 drew 11 members of the public; none expressed opposition, and a few asked for more homeownership opportunities.
A second reading of the ordinance is anticipated for November 17, 2026; non-coastal changes take effect 30 days after final Council action, while Local Coastal Program changes go to the Coastal Commission, with action anticipated in 2027.

Reasons to support

Meeting the four Housing Element deadlines in 2026 helps keep state certification, which keeps the city eligible for housing grant funding and avoids state penalties like Builder's Remedy that would sharply limit the city's ability to regulate housing development.
State Government Code Section 65583(c)(3) already requires transitional and supportive housing to be treated as a residential use subject only to the rules applying to similar dwellings in the same zone, and state Health and Safety Code sections 17021.5 and 17021.6 set the farm employee housing rules; the amendments bring city code into line with those laws.
Waiving the lot-line fee could help small projects that combine two or three lots to build roughly two to four units, and larger consolidated parcels make it easier for projects to meet setback, open space and neighborhood transition standards instead of seeking exceptions.

Reasons to oppose or change it

Staff acknowledge the roughly $2,000 fee waiver "would not be of sufficient magnitude to incentivize consolidation of lots" for a multimillion-dollar project, while the city still spends the same staff resources to process the entitlement — a minor negative hit to the General Fund.
Removing the 20,000-square-foot minimum opens planned development permits, which allow approved departures from zoning use and development standards, to small infill lots anywhere in the city; Planning Commissioners specifically asked how much discretion decision makers would retain.
Broader lot consolidation incentives (such as allowing extra units along corridors or downtown) and the review of the inclusionary housing ordinance to promote workforce housing are deferred to analysis starting in 2027, so this round delivers only the fee waiver and wording cleanups; community meeting attendees who asked for more homeownership opportunities get nothing here.

Official wording

Minor Amendments to the Municipal Code Related to Maps, Planned Development Permits, Land Use Districts, Inclusionary Housing, Lot Consolidation, Agricultural Employee Housing, Supportive and Transitional Housing to Implement State Law and General Plan Housing Element Requirements and to Clarify Regulations; Amendment to the General Plan to Align Language with the Climate and Hazard Plans; and Amendment to the Fee Schedule for Boundary Adjustments (CD) LOCATION: Citywide Motion to: 1) Introduce for publication an ordinance amending Chapter 23.12, Chapter 24.08 Part 8, Chapter 24.10, Chapter 24.16 Part 1, and Chapter 24.22 of the Santa Cruz Municipal Code (SCMC) to make various amendments related to lot consolidation, planned development permits, agricultural employee housing, supportive and transitional housing, and inclusionary housing; 2) Adopt a resolution amending the General Plan to align with the Climate Action Plan and Local Hazard Mitigation Plan – Climate Adaptation Plan; 3) Acknowledge the determination that the proposed municipal code and general plan amendments are exempt from environmental review under California Environmental Quality Act (CEQA) Guidelines Sections 15061(b)(3) (Common Sense Exemption) and as consistent with the findings of the negative declaration prepared for the Climate Action Plan; and 4) Adopt resolution amending the boundary adjustment fee on the fee schedule.

Official agenda

Summary written by claude-opus-5 from the agenda and the Staff report (agenda packet, pages 202-231). It can contain mistakes. The official documents govern.