The latest proposal includes:

• 63 apartments including four deed-restricted affordable units for tenants with extremely low income, based on state-set income limits.
• Studios and one- and two-bedroom apartments.
• A laundry room and mailroom.
• 33 parking spaces including three accessible spaces, in addition to bike parking. 
• An on-site manager.

“Our goal is to create something that is totally livable, beautiful, great design aesthetic, but also something that doesn’t hit the top of the market,” said Tim Gordin, CEO of Santa Cruz-based Workbench.

Workbench staff said the purpose of the meeting was to gather feedback from residents before submitting the final version of the plan to county staff. 

Last year, Workbench proposed a three-story, 40-unit complex, then revised it down to 23 units, but the proposal “ended up not penciling,” said Clayton Toombs, senior development manager at Workbench. That proposal was itself a revision from a January 2023 proposal to build 15 homes for sale.

Projects must be economically viable to “pencil out” for the developer, property owners or investors.

“Construction costs keep getting higher, interest rates have not gone down very much, and those previous projects just didn’t pencil. This is why we are presenting this project today,” Toombs said.

Since the initial proposal in 2023, the county changed the zoning of the property to allow greater density. State laws also have changed since then to allow even greater density when affordable units are included. 

Neighbors at the meeting expressed concerns about cars, affordability and the scale of the development. Live Oak resident Jeanette Miller said she recognized the efforts developers made to assuage concerns, but said the project still wasn’t going to be welcome in the neighborhood.

“I don’t think Live Oak and a five-story, 63-unit building is going to be quite the right fit,” she said.

A single-family home at 841 Capitola Road could be replaced by a five-story building with 63 apartments. (Jesse Kathan — Santa Cruz Local)

State incentives to build housing

Workbench staff leveraged several state laws meant to encourage housing development, Toombs said. These include a law that allows fewer required parking spaces since it’s near a transit route, “density bonus” rules that allow more homes than local zoning would permit because it includes below-market-rate units, and the Builder’s Remedy.

The Builder’s Remedy allows for housing projects that don’t follow zoning if the local government fails to create a state-approved plan for housing development, called a Housing Element. The project is in unincorporated Santa Cruz County and the county’s Housing Element had lapsed when Workbench submitted an application for the Capitola Road project.

Soon after the submittal, the county received state approval for its new Housing Element. But the application still benefits from the Builder’s Remedy rules, and was able to be amended to grow even larger. The county planning commission, zoning administrator and supervisors have essentially no say over it. 

County staff can request changes to the project, but the developer “can say thanks, but no thanks,” county spokesman Jason Hoppin said last year. 

State law outlines some exceptions to the Builder’s Remedy, but none are applicable to the proposed site, Hoppin said. Last year Workbench also proposed an 84-unit complex at 3500 Paul Sweet Road utilizing Builder’s Remedy rules.

“We’re doing our best to take steps towards meeting the goals that are set by the state and by the county. And this is just one project that will help do that,” Gordin, the Workbench CEO, said at the community meeting.

Traffic, parking, affordability concerns

At the meeting, neighbors described concerns about parking, traffic and affordability.

Several residents on Grey Seal Road were upset with the development using their road as an entrance to the apartment complex.

“We love our little neighborhood and our cul-de-sac,” said Katie Poletti, who lives on Grey Seal Road. She said she and her husband were concerned about safety issues from increased traffic to their neighborhood.

A rendering shows the proposed building from Capitola Road. (Workbench)

“Our kids play every single day together there, and there’s been a lot of problems with bicycles getting hit by cars in the neighborhood,” she said.

Gayne Kemper, also on Grey Seal Road, said that both traffic safety and parking were a concern to her.

“What are you going to do about all these cars going past my front yard?” she asked the development team.

Pete Rasmussen, a Santa Cruz METRO transportation planner who lives nearby on 7th Avenue, said he was glad to see the project be built so close to multiple bus lines on Soquel Avenue and Capitola Road. He also said he agreed with the choice to include fewer parking spaces than units, and said it would provide rental options for people without cars.

“I’d like to remind people that there’s self selection. If you provide abundant parking, you’re going to get a lot of people who bring a lot of cars and a lot of traffic,” said Rasmussen. 

A commenter who gave just the first name Karen questioned whether the apartments would be affordable to middle-class people. She said recently built luxury apartments in downtown Santa Cruz “may meet goals of having housing,” but aren’t fully occupied.  

Gordin said that Workbench intended for this building to help meet the “missing middle” of rental market affordability and aimed to set rents 10% to 20% below average.

A rendering shows the proposed building from its parking lot. (Workbench)

A rendering shows the proposed building from a neighboring property. (Workbench)

Correction: An earlier version of this story misstated the community meeting date and Gayne Kemper’s name.

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