Quick Take:
A couple of hundred new tenants will be moving in next door, but is that good or bad for a used-car business?
From his cluttered car-lot office in the remnants of an old Texaco gas station, Mike Gay has had a front-row seat for the expansive overhaul underway at the busy corner at Branciforte Avenue and Water Street.
With multi-story apartment buildings rising on either side of his lot, the surrounding neighborhood, and his business, are on the cusp of potentially jarring change.
Gay has observed it all with an evolving range of sentiments over the years – optimism, consternation, resignation, and, eventually, bemusement.
He told Lookout in September of 2022, before either of the projects had been approved, that, “I know there are ongoing talks with the neighbors around here, but I’m personally not too worried about it. It seems like the developers are trying to do the right thing, and I think they’ll do it right.”
When reminded of that quote in a recent interview, he said attempts by the various developers to assuage concerns of residents were misleading.
“They sounded like they were listening,” he said, but they then moved ahead as planned.
“At this point, it is what it is, you know?” Gay said. “Given the politics involved, it was a fait accompli.”
The politics Gay was referring to is the streamlined – some would say aggressive – approach to development that is transforming the Santa Cruz skyline in real time.
Downtown is now bristling with high-rise apartment buildings, with plans for more south of Laurel Street. Smaller projects are sprouting throughout the county, including the two at Branciforte and Water.
Under recent state housing laws, cities must meet strict development quotas. Projects that are 100% rent-restricted affordable housing – like those at the Water Street corner – are eligible for streamlined approval.
The buildings that soon will hover over Gay’s lot – The Argus Company, a fixture at the corner for more than 20 years – will go to renters earning 30%-80% of the area’s median income, which as of 2024 was about $133,000.
His main concerns are mostly the ones that had neighborhood groups up in arms during the proposal phase of the projects: Lack of parking, tall buildings blocking sunlight, and privacy of the nearest homes.
“One project (831 Water Street) has 140 units, but only 43 parking spaces,” Gay said. “Where are the rest going to park?”
But from a business perspective, he said, half-jokingly, “Maybe some of them will come across the street and buy a car.”
In fact, he filmed a tongue-in-cheek video with a friend recently touting a new “Olympic-sized swimming pool” being built across the street – gesturing to the excavated pit that will eventually be underground parking at the 831 complex.
Gay finished the bit with a “come buy a car” pitch, which perhaps reflects the bemusement stage of processing the events of the past few years.
Gay has leased the property his lot sits on since 2002. The landlord is another long-time Santa Cruz resident, and local property developer, Bill Lau, who lives a couple of houses down from the Argus lot.
Lau told Lookout that there was plenty of wheeling and dealing between property owners in the area and the developers who wanted to build the high-rises. He said Ovin Development, which is building the five-story complex across the street, wanted to buy him out.
He wouldn’t discuss the specific amount, but said “It was 10 cents on the dollar – I just couldn’t do it.”
Lau is circumspect about the future of the corner lot. He sees no reason to sell anytime soon.
“I might just leave it to my kids to make those decisions,” he said. “I’ve been in this house for 45 years, and I don’t see myself moving.”
Back at the Argus lot, Mike Gay expressed appreciation for Lau’s decision-making: “I wouldn’t be here right now if it weren’t for Bill.”
Between potential buyers poking their heads into his office for a look at the cars, and trouble-shooting a leaky water line in the outhouse, Gay talked more about his business.
He’s always been a car guy, he said, first as a mechanic and then in sales. He moved to Santa Cruz in 1973 from the East Coast, attended Cabrillo College, worked at a Datsun shop and other places in town before branching out on his own with a two-car lot on East Cliff Drive.
He landed at what is now the Argus lot in 2002 and has been there ever since. He carries about 35 pre-owned cars on the lot at any given time – mostly luxury models like BMW, Mercedes, Porsche and others. Although Gay is quick to point out there are also more affordable models – a Honda here, a Toyota there. He said he sells about 12-14 cars a month, “which is enough to keep the doors open.”
Although Gay is resigned to the fact that there’s nothing anyone can do about the developments at this point – the construction noise on either side of his lot is a constant reminder of that – he still feels some unease about what the future holds for the neighborhood, and his business.
“It’s hard to predict,” he said. “I honestly think these kinds of large buildings don’t really belong in neighborhoods like this. But again, what’s done is done. We’ll just have to wait and see what happens.”
The projects
831 Water Street
- Developer: Novin Development
- Two buildings, one five stories and one four, totaling 140 below-market units
- 41 underground parking spaces
- Ground-floor commercial/retail space and a community room
- Estimated completion: Spring 2028
900 Water Street
- Developer: CRP Affordable Housing and Community Development
- One six-story building, 82 below-market units
- 38 parking spaces
- Ground-floor commercial space, including an outdoor patio designed for a potential restaurant
- Estimated completion: Spring 2028
