A 90-unit, below-market-rate apartment complex is proposed at 525 Water St., Santa Cruz. (Hochhauser Blatter Associates)

Described in an online community meeting with city planners and leaders of Marin County-based Zen Development Consultants LLC, the proposal included:

• 90 apartments including one manager’s unit.
• One-, two-, three- and four bedroom units, with 190 bedrooms in all.
• About 5,000 square feet on the ground floor for a potential gym, office, mailroom or other space at Water and Market streets.
• 32 parking spaces and 90 bike parking spaces.

All units would be leased below market rate, with potential rents from $1,100 for a one bedroom to $3,100 for a four-bedroom unit, said Zen Development CEO Jeremy Hoffman.

The proposal is about three blocks from a planned six-story apartment complex on the 900 block of Water Street approved in January and a planned five-story apartment complex at 831 Water St. approved in December. 

Developers of 525 Water St. applied for ministerial approval of the project on March 11 under state law AB 2011. It essentially allows streamlined approval of affordable housing building permits without city council approval. 

“We’re going to be providing housing to those with the most need, including formerly homeless veterans and people with disabilities,” Hoffman said.  

The development would contain 67 units for “low income” tenants and 22 units for “very low income” tenants based on state-set income levels. Twenty-three units are anticipated to be set aside for veterans and 10 units for people with vouchers from the Housing Authority of the County of Santa Cruz. 

The Santa Cruz Zoning Administrator is expected to consider the proposal May 7. It does not appear to need Santa Cruz Planning Commission or city council approval. Developers said they hope to begin construction in February 2026 and start leasing as early as January 2028.

Ginza Japanese restaurant closed in 2019. It could be redeveloped into below-market-rate housing. (Nik Altenberg — Santa Cruz Local file)

A six-story apartment complex is proposed on Water Street in Santa Cruz. (Hochhauser Blatter Associates)

Restaurant vacant for years

Ginza Japanese Steak House and Sushi operated on the site until city officials forced its closure in 2019 in part because 10 employees were living in the building, the Santa Cruz Sentinel reported.

In August 2024, developers submitted a pre-application for a six-story mixed-use building with 5,000 square feet of commercial space. After developers spoke with neighbors on Victorian Court north of the property, plans were reduced to five stories and more parking was added by removing much of the ground floor commercial space.

“We did a lot of soul searching, understanding the city’s position about wanting to include a commitment to commercial space, but it’s not exactly right for us vis-a-vis the financing of such a project,” said Jan Hochhauser, principal architect at Santa Barbara-based Hochhauser Blatter Associates.  

 “We are making the spaces available in the future should the situation warrant that, both for retail spaces, office spaces,” and community common space, Hochhauser said.

Neighbors’ reactions

Neighbors’ reactions ranged from supportive to concerned, with some comments on building height and parking.

Audrey Wingo, a dentist at 550 Water St., said her complex provides patient parking but has never had to regulate the site for unauthorized parking before. 

“That would be something our medical complex would have to regulate, which is not something we want to have to get involved in,” she said.

The project is at Water and Market streets. A woman who said she lives on the 100 block of Market Street invited developers to look at Market Street traffic and parking at 6 p.m. on a weekday. “While these are some of the best laid plans, how feasible they really are is a major concern,” she said.

Another participant said 32 parking spaces for 190 bedrooms in the project was  “woefully inadequate.” 

Other neighbors said they don’t see a problem with bringing more people into the neighborhood with the parking provided, and countered the claim that each new tenant will need a car. 

Erin Owl, who said she is a neighbor to the north of the proposed project, said she was not that concerned about parking and “would love to see our neighborhood more walkable.”

Ryan Lawler commented, “I fully support this project. People need places to live, and this is a great walkable location for people to live.”

Ryan Meckel, a Santa Cruz YIMBY member, thanked the developers for “not overparking this development, giving folks the opportunity without the burden of a car in Santa Cruz.” He asked if the applicant had considered buying Santa Cruz Metro bus passes for tenants and charging for parking.

Developer Jeremy Hoffman said that due to tax credit requirements, they weren’t allowed to charge for parking. Developers and Santa Cruz City Planner Tim Maier also said they believed many of the tenants might not require parking.

“I think maybe due to the nature of the population, the rate of auto ownership will probably be expected to be less than the other general public,” said Maier. 

Hochhauser said state rules allow the amount of parking proposed. “Many of the projects I’m working on are experiencing this kind of pushback from neighborhoods, but it seems like the state has come to the conclusion that the housing crisis kind of overrides the parking crisis,” he said.

AB 2011 projects are exempt from the California Environmental Quality Act and must pay prevailing wages to contractors.

A restaurant has been closed at 525 Water St. since 2019. (Nik Altenberg — Santa Cruz Local file)

The complex is proposed with ground-floor commercial space. (Hochhauser Blatter Associates)

Neighbors had mixed feelings about more residents and traffic on Water Street. (Hochhauser Blatter Associates)

The proposal would include below-market-rate apartments. (Hochhauser Blatter Associates)

A rendering of a proposed apartment complex at 525 Water St. (Hochhauser Blatter Associates)

Another view of a proposal at 525 Water St., Santa Cruz. (Hochhauser Blatter Associates)

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