Santa Cruz proposes downtown density bonus to boost affordable housing production

The Santa Cruz City Planning meeting on April 17, 2025, unveiled a new initiative aimed at addressing the city's pressing housing needs through a proposed Downtown Density Bonus program. This program is designed to encourage developers to build more affordable housing while maintaining lower building heights, a response to community concerns about urban density and aesthetics.

The Downtown Density Bonus seeks to produce a maximum of 1,600 housing units while keeping the floor area ratio (FAR) at 3.5. The program offers two primary options for developers: one allows for an 8-story building with no limit on FAR, potentially leading to a significant increase in affordable units, while the second option permits heights up to 12 stories but caps the bonus at 75%. This flexibility aims to make the program more appealing than the existing state density bonus, which often limits local control over development.

Key to this initiative is the requirement for below-market-rate housing. Developers opting for the Downtown Density Bonus would need to provide at least 21.3% of units as affordable if built on-site, or 26.7% if constructed off-site. This is a notable increase compared to the state density bonus, which typically yields a lower percentage of affordable units. The city is also considering an in-lieu fee option, allowing developers to contribute financially to affordable housing projects instead of building them directly.

The proposed policy includes an architectural review committee to ensure that new developments meet design standards, addressing concerns about the potential for unattractive, box-like structures. This committee will help maintain the character of downtown Santa Cruz while facilitating the construction of much-needed housing.

Overall, the Downtown Density Bonus program represents a significant step towards meeting the housing demands of Santa Cruz residents, balancing the need for increased density with community preferences for design and affordability. As the city moves forward, the focus will remain on creating sustainable and inclusive housing solutions that benefit all residents.