A six-story hotel is proposed at 324 Front St. in Downtown Santa Cruz. (BCV Architecture + Interiors)

Correction: An earlier version of this story misstated the councilmembers who voted in favor and against the hotel project.

SANTA CRUZ >> The Santa Cruz City Council on Tuesday approved a six-story hotel at 324 Front St. in Downtown Santa Cruz. 

The hotel project is set to include: 

• A 232-room hotel at Front and Laurel streets.
• Shops, a café and a restaurant on the ground floor.
• A publicly accessible rooftop bar with three pools.
• A banquet hall and conference space.
• Three floors of underground parking with 214 spaces and an automated valet system. It does not include parking for about 130 anticipated employees.
• A public outdoor dining area and lawn with a path to the Santa Cruz Riverwalk on the San Lorenzo River levee.

The council voted 5-1 to approve the hotel. Santa Cruz Mayor Fred Keeley, Vice Mayor Renee Golder, and Councilmembers Shebreh Kalantari-Johnson, Scott Newsome and Martine Watkins voted in favor. Councilmember Sandy Brown voted against it. Councilmember Sonja Brunner was absent.

Owen Lawlor, a partner with SCFS Venture, said he expects an appeal of the project to the California Coastal Commission. The Coastal Commission would then consider final approval of the project.

“I know it’s been a long time to get to the point where this really is in the benefit of the community,” said Kalantari-Johnson. “It will bring new and old visitors back.”

Brown said she would have liked to see a project labor agreement that requires the developer to hire union workers and a higher fee to the affordable housing trust fund. 

Brown said the hotel would hasten “the hollowing-out of our community.” Brown added, “I see the city accepting gentrification and displacement as acceptable outcomes from our non-policies – and I don’t support that.” 

The land includes a former Santa Cruz Community Credit Union building and two city-owned lots. The city council Tuesday voted to sell those lots to SCFS Venture LLC for $2.55 million and deposit the money in the city’s affordable housing trust fund.

A six-story hotel is proposed on two city lots and a former credit union building near Laurel and Front streets in Downtown Santa Cruz. Across Front Street, the six-story Pacific Front Laurel housing project started leasing this month for occupancy in June. (Stephen Baxter — Santa Cruz Local file)

Developer SCFS Venture has agreed to:

• Pay $5.17 million to help pay for development or maintenance of low-cost accommodations elsewhere in the county, including possible cabins at Greyhound Rock County Park.
• Develop a city-owned parcel north of the hotel into a public dining area and path to connect Front Street to the river levee. 
• Require the hotel to lease four market-rate apartments for hotel employees and rent them at subsidized rates for 20 years.
• Donate $50,000 each to the Boys and Girls Clubs of Santa Cruz County, the Santa Cruz Hostel Society, and the city’s trolley service between downtown and Main Beach.
• Provide six family suites with kitchenettes that allow families to share a single hotel room.
• Provide at least three days annually for local nonprofit groups to use the hotel’s rooftop or conference facilities at a discounted rate. 
• Provide public bike rentals that are free for the first 90 minutes.

A public dining area near the San Lorenzo Riverwalk is included in a hotel project at Laurel and Front streets in Downtown Santa Cruz. (BCV Architecture + Interiors)

The proposed building takes advantage of a change to the Downtown Plan approved by the city council in October. Under previous rules, buildings in some parts of downtown could be up to 70 feet tall if they include housing. The changes allow buildings without housing to qualify for the extra height. 

Buildings without housing that include the extra height must pay $5 per square foot to the city’s Affordable Housing Trust Fund. The rule requires the hotel developer to pay about $230,000.

The council also directed staff to consider setting aside a portion of the hotel’s annual transient occupancy tax towards the trust fund or other affordable housing programs. The hotel is expected to raise about $2.4 million in transient occupancy tax annually, said Bonnie Lipscomb, the Santa Cruz director of economic development.

Separately, the council voted to require the hotel to provide free or low-cost parking for employees. 

Several members of the hospitality workers union Unite Here said they did not support the project. 

“The provisions for lower cost overnight accommodations are grossly inadequate,” said Celica Valdez, a Unite Here member. She questioned why the developer has suggested an $5 million in-lieu fee for overnight accommodations rather than providing more discounted rooms at the hotel. 

“We have a serious concern about whether this fee will ever result in the creation of more low-cost accommodations,” Valdez said.

Frank Petrilli, a lawyer who represents SCFS Venture, said the in-lieu fee is a pre-emptive attempt to address an anticipated appeal to the Coastal Commission. The commission requires hotels in the coastal zone to provide low-cost accommodations.

Money to pay for cabins or other low-cost accommodations across Santa Cruz County would be more impactful than adding more low-cost hotel rooms to the City of Santa Cruz, said Lawlor.

 “We’re not Santa Monica, we’re not La Jolla,” he said. “We’ve always served, as a community going back 100 years, visitors of modest means.”

A rooftop pool, bar and views are part of a proposed six-story hotel at 324 Front St. in Santa Cruz. (BCV Architecture + Interiors)

Developers proposed a public outdoor dining area and a walk and bike path that connects Front Street to the San Lorenzo Riverwalk. (BCV Architecture + Interiors)

A rooftop pool, bar and views of Monterey Bay are part of a proposed six-story hotel at 324 Front St. in Santa Cruz. (BCV Architecture + Interiors)

Editor’s note: This story has been updated to clarify California Coastal Commission rules. 

Read more

• Front Street hotel proposal advances in Santa Cruz — Feb. 16, 2024
• Proposed hotel height allowed in Downtown Santa Cruz — Oct. 25, 2023
• Santa Cruz credit union board to discuss building sale for hotel — July 9, 2021
• Hotel plan could include city land in downtown Santa Cruz — May 25, 2021
• Housing and Construction projects in Santa Cruz County: 324 Front St. hotel

Questions or comments? Email [email protected]. Santa Cruz Local is supported by members, major donors, sponsors and grants for the general support of our newsroom. Our news judgments are made independently and not on the basis of donor support. Learn more about Santa Cruz Local and how we are funded.