SANTA CRUZ >> Despite a revised, slightly downscaled plan, residents at a recent meeting renewed their concerns about a proposed apartment complex on Water Street in Santa Cruz. A new state law could fast track its approval. 

More than 200 people gathered in an online community meeting Thursday evening to discuss a controversial proposed housing development at 831 Water St. 

Last month, the proposed mixed-income development faced heavy pushback from members of the public concerned about the impact of two large, five-story buildings on the surrounding neighborhood. 

A revised development plan for 831 Water St., Santa Cruz reduces the two buildings’ footprint by 14% and shortens one building from five stories to four stories. (Rendering: Novin Development and Lowney Architecture)

From five stories to four

Developer Iman Novin of Walnut Creek-based Novin Development presented a revised plan in response to public criticism of the development’s scale. The new plan removes four apartments, tightens the project’s footprint, and lowers one building from five to four stories. “We’re here to talk to you and show we’ve listened to your concerns,” Novin said.

The new plan reduces the project from 149 to 145 apartments. Of those, 71 will have rents set at affordable rates for people who earn 30% to 80% of area median income. Neither city staff nor the developer estimated those rents. 

The revised plan eliminates several retail spaces and creates five “live-work units” where local artisans or other business people would rent a floor-level retail unit with an apartment above. It also replaces several market-rate studio and one-bedroom apartments with two- and three-bedroom apartments.

To try to address noise and privacy concerns, the revised 831 Water St. plan eliminates a previously planned rooftop bar and replaces it with a community garden and tables open only to residents.

New plans replace a proposed rooftop bar with a community garden and putting green not open to the public. (Rendering: Novin Development and Lowney Architecture)

Recent state laws

The proposal is the first project in Santa Cruz to seek streamlined approval under state law SB 35. The law, which took effect in 2018, aims to incentivize housing development in cities which have not met state targets for low-income and moderate-income housing.

Because Santa Cruz did not make enough progress on its Regional Housing Needs Assessment goals, the city council’s power to change the project is limited if the proposal meets the SB 35 requirements. 

Requirements for streamlined approval in Santa Cruz include:

  • Designating at least half of units as below market-rate rentals
  • Providing multifamily housing rather than single-family homes
  • A commitment by the developer to pay the state’s prevailing wage to contractors

Projects which meet the requirements are not required to undergo approval under the California Environmental Quality Act, or CEQA. At Thursday’s meeting, city staff emphasized that the city council may only evaluate the project on “objective standards” for multi-family housing projects.

These standards, which include rules for building materials and setbacks, “do not include any subjectivity,” said senior planner Ryan Bane. “There is really little that the city can do to effectuate changes in the design of the building.” 

Principal planner Samantha Haschert said city staff are working through regulations to determine which standards qualify as objective. A complete list of objective standards will be available before the city council reviews the proposal at its Sept. 14 meeting. The city is required to respond to the proposal by Sept. 27. 

The developer also applied for a “density bonus,” which allows the project to exceed city height standards. In return, the developer would build more affordable housing for people with qualifying incomes under state law.

The council has “really limited discretion” to deny that bonus height, Haschert said in an interview. To deny the density bonus, the city council would have to prove that the added height does one of the following:

  • Does not reduce overall cost to allow affordable housing
  • Has a negative impact on “public health and safety or the physical environment” and cannot be fixed without making the proposal unaffordable to people with lower incomes
  • Is against state or federal law

Neighbors remain critical

Due to the virtual meeting’s high attendance, written comments and questions from the public were submitted through Zoom. By the meeting’s end, over 400 responses had been submitted. The majority of respondents expressed skepticism about the project. Many expressed frustration about the expedited approval process. 

One resident, Gabrielle Laney-Andrews, wrote that the project “is beyond anything resembling reasonable in size,” and “will cast a shadow (literally) over multiple streets in our area of the city many months of the year.” 

Although some attendees expressed support for the project because it helps relieve the city’s housing shortage, many expressed frustration about the city council’s limited oversight of the project. 

Other commenters raised concerns that the development will worsen the area’s traffic problems and decrease the availability of neighborhood street parking. The proposal includes a garage with 141 spaces. Each space will cost tenants $300. City staff said if the project is approved, they may consider instituting permit parking in the neighborhood.

City staff said the public comment will be heard when the city council is expected to consider the development Sept. 14. 

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Jesse Kathan is a staff reporter for Santa Cruz Local through the California Local News Fellowship. They hold a master's degree in science communications from UC Santa Cruz.

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Kara Meyberg Guzman is the CEO and co-founder of Santa Cruz Local. ​Prior to Santa Cruz Local, she served as the Santa Cruz Sentinel’s managing editor. She has a biology degree from Stanford University and lives in Santa Cruz.