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Measure O

Overview:

Measure O is a voter-approved initiative that requires developers of residential projects to provide a certain percentage of the total number of units as affordable to moderate, low or very-low income households. This requirement may be met by various options, one of which is for the developer to build the units and designate them as either for-sale units or as rental units. All Measure O units remain affordable through a long-term or permanent deed restriction recorded against the property.

New developments are required to meet the requirements of Part 1 of Chapter 24.16 of the Santa Cruz Municipal Code as revised by Ordinance 2006-16 effective January 15, 2007.

Existing inclusionary units remain regulated under previous ordinances and implementing resolutions.

For-Sale Units:


The sales price of a Measure O for-sale unit and maximum incomes of potential buyers are determined through a formula designated in a City resolution governing the unit’s affordability. Owners must occupy the unit as their principal place of residence. The City maintains a list of Measure O for-sale units and income limits for buyers.

Notice of Measure O Unit Available for Sale:

The owner of a Measure O unit must submit to the City a Notice of Measure O Unit Available For Sale. The City establishes a maximum allowable sales price according to the governing resolution, and authorizes the owner to sell the property to an eligible buyer. The City then posts the unit on the Measure O webpage.

How To Buy A Measure O Unit:

Potential buyers of Measure O units may have incomes no greater than those allowable under the governing Resolution for the unit. Buyers of Measure O units should access the list of Measure O for-sale units and income limits for buyers and after determining that their incomes are below the maximum allowed, directly contact the seller of the units they are interested in.

The prospective buyer must then convince the seller that 1) the buyer’s income will be below the maximum allowed when verified, and 2) that the buyer will be able to obtain purchase financing.

If the seller agrees to consider a potential buyer, the buyer must submit a Measure O Eligibility Application to the Housing Authority of the County of Santa Cruz in order to verify that their income does not exceed the maximum allowable under the Resolution governing the unit. This may only be done with the concurrence of the seller. No pre-qualifying for Measure O is permitted.

The application includes a letter of referral from the seller to the Housing Authority requesting that the buyer be verified as income eligible. The seller must also pay an application processing fee to the Housing Authority which must be included with the application.

The seller (as well as the City and the buyer) will receive a letter of eligibility from the Housing Authority confirming the buyer is eligible to purchase the unit.

Once approved by the Housing Authority, a Measure O eligible buyer is free to make an offer (may not exceed the established maximum sales price). If accepted by the seller, both parties enter into a purchase agreement, and establish an escrow with a title company.

The buyer arranges for mortgage financing through a bank or a mortgage broker. Many local lenders and mortgage brokers are familiar with the City’s program.

If a buyer cannot get a first mortgage large enough to purchase the unit, the City has a First Time Homebuyer Program that can provide a silent second mortgage (no payments on principal or interest until one of several events occur in the future) to make up the difference. (Note: Effective December 10, 2013 through June 30, 2014 the First Time Homebuyer Program is on hold and will not be accepting applications).

To complete the sale and close escrow on a Measure O unit, the buyer is required to sign an Affordable Housing Declaration of Restrictions to run with the land. The buyer must also sign a Performance Deed of Trust and other title documents, many of which are recorded against the property.

Selection of Measure O Buyer:

Sellers of for-sale units constructed under previous Measure O regulations may sell to any eligible buyer of their choice.

Sellers of newly constructed Measure O units must give preference to those who live and work in the City of Santa Cruz, followed by those who live and work in the County of Santa Cruz. A family member or employee of any person having an interest in the development is ineligible to purchase an inclusionary unit.

Subsequent Resales of a Measure O Unit:

All subsequent sellers and buyers of Measure O units must comply with the above information and procedures for as long as the unit is governed by the applicable Affordable Housing Declarations of Restrictions.

Units for Rent

Measure O units are restricted for rent to households of very-low and low income households, or those households having a Section 8 Housing Choice Voucher from the Housing Authority of the County of Santa Cruz. The maximum allowable rent, as well as the maximum income that a Measure O tenant may have, are determined through a formula designated in a City resolution governing the unit’s affordability. Tenants must report their income on an annual basis. The City maintains a list of available Measure O rental units and income limits for tenants

The owner of a Measure O unit must submit to the City a Notice of Measure O Unit Available for Rent. The City establishes a maximum allowable rent according to the governing resolution, and authorizes the owner to sell the property to an eligible buyer.

How To Rent A Measure O Unit:


Potential renters may have incomes no greater than those allowable under the governing Resolution for the unit. Renters of Measure O units should access the list of Measure O rental units and income limit for tenants and, after determining that their incomes are below the maximum allowed, directly contact the landlord of a unit they are interested in. The prospective tenant must then convince the landlord that 1) the tenant’s income will be below the maximum allowed for that unit when verified, and 2) that the tenant will be a good choice to rent the unit.

If the landlord agrees to consider a potential tenant, the tenant must submit a Measure O Eligibility Application to the Housing Authority of the County of Santa Cruz. This may only be done with the concurrence of the landlord, and only for a specific Measure O unit. No pre-qualifying for Measure O is permitted.

The application includes a letter of referral from the landlord to the Housing Authority requesting that the renter be verified as income eligible. The landlord must also pay an application processing fee to the Housing Authority which must be included with the application.

The landlord (as well as the City and the tenant) will receive a letter of eligibility from the Housing Authority confirming the tenant is income-eligible to rent the unit.

Landlords of units constructed under previous Measure O regulations may rent to any eligible tenant of their choice.

Landlords of rental units created after January 15, 2007, must give preference to 1) residents of the City of Santa Cruz with at least one year’s worth of residency, 2) those who work in the City of Santa Cruz, 3) residents of the County of Santa Cruz with at least one year’s worth of residency, and 4) those who work in the County of Santa Cruz. A family member or employee of any person having an interest in the development is ineligible to rent an inclusionary unit.


List of Measure O for-sale units and income limits for buyers  
List of Measure O rental units and income limits for renters 
Current Measure O incomes and rents

Measure O Resolutions and Ordinances

Last updated: 2/5/2014 3:35:50 PM