Cabrillo College, UCSC break ground on joint housing project after last-minute deal to save state funding

Cabrillo College and UC Santa Cruz officials on Monday broke ground on their joint 624-bed housing project at the community college’s Aptos campus, citing the urgent need to reduce rates of homelessness among both of their student populations. 

Speaking before a crowd of more than 120 people at a groundbreaking ceremony, Cabrillo College Student Trustee Grace Goodhue said affordable housing is “critically important” for student success and this project will be a relief for Cabrillo students. 

She cited a Community College League of California survey finding that about 54% of the students in the college’s region are directly affected by housing insecurity, and about 25% said they had been homeless in the past year. 

“Having stable, affordable housing will allow Cabrillo and UCSC students to focus on their schoolwork and succeed in their educational and career goals,” she said. “I, and all of the fellow students as well as future residents that I represent, are so grateful to all who made this project possible.”

Cabrillo College President Matt Wetstein said the college’s leasing office will start accepting applications for residents next August, and residents will begin moving in starting August 2027. The project, named Costa Vista, will have three buildings across 257,000 square feet next to the college’s softball fields. A total of 376 beds (60%) will be available for Cabrillo students, and the remaining 248 beds (40%) will be for UCSC students. 

Costa Vista will also have a child care center run by Community Bridges and offer spaces for 50 to 64 infants, toddlers and preschoolers between 6 months and 3 years old.

State Sen. John Laird said he rarely heard about students experiencing homelessness when he served on the college’s governing board from 1994 to 2002. But now, he said, “it’s become a big issue.” 

Laird chairs the state legislature’s education budget subcommittee and vigorously advocated for state funding for the project over the past several years. 

He told the crowd that even as recently as this summer, the state’s Department of Finance told him the financing couldn’t happen as was agreed to over a year ago – which was news that sent Laird “through the roof.” But after calling for several meetings with the right people, he got a fix that legislators “adopted just a few weeks ago and that the governor just signed a couple of weeks ago.” 

“So, you don’t know how exciting this is today,” he said. “Because this has really been a path to get here.”

Who is part of this project and how is it being paid for?

To better understand how Cabrillo College is partnered with different organizations to build and operate Costa Vista, what changes were made by the state Department of Finance and how the project is financed, Lookout spoke to the senior project manager of the consulting firm that has for the past several years helped guide Cabrillo through the planning process. The firm, Jones Lang LaSalle, or JLL, is a Chicago-based commercial real estate brokerage. 

Originally, the college was going to receive a $111 million grant through the state’s Higher Education Student Housing Grant Program to fund the Cabrillo College portion of costs, with UC Santa Cruz intending to fund its portion of the costs, $70 million, through bonds. The total cost of the Costa Vista is about $181 million. 

But then the state’s budget “tanked” in 2023, and state officials tried to claw back the funds to cover its deficit, as Laird told the crowd Monday. That sent the financing on a path of several iterations over the next two years. 

JLL senior project manager Brynna McComb told Lookout that instead of providing the $111 million grant, the state decided that year to instead provide the funding in $8 million annual appropriations; the college has so far received three years’ worth of funding, for about $24 million total. She said Cabrillo College planned to use that money to pay back about $120 million in bonds sold by the project owner, Collegiate Housing Foundation, to support the Cabrillo part of the project’s costs. 

But late this summer, Department of Finance officials told Laird that the college couldn’t use the appropriations to pay off bonds.  

“They said, ‘Well, we have a problem. You can’t do it that way,’” Laird recalled for the crowd. “And I went through the roof because it was a week after the budget was over. It’s like, really, now you’re discovering this?”

McComb said the Department of Finance told Laird that the appropriations can’t be used to secure bonds: “You can’t tell investors that the State of California’s money is going to pay back your bonds. So there was a little bit of an issue there.” McComb said it wasn’t entirely clear why.  

Laird got to work with the state finance director on a fix, and instead of providing the $111 million grant in annual appropriations, the state budgeted the remaining $87 million (because $24 million was already distributed to the college) into its main budget bill and as part of the capital outlay for community colleges.

McComb said that with this fix, the $87 million goes to the California Community Colleges Chancellor’s Office and money can be used to reimburse Cabrillo for its monthly spending on the project. She added that the college estimates monthly costs will be between $6 million and $10 million. 

The UCSC portion of the costs for the housing project, about $70 million, will still be paid for through bonds sold by Collegiate Housing Foundation. 

Cabrillo College is leasing the ground that the project sits on to Collegiate Housing Foundation, an Alabama-based nonprofit that helps colleges and universities develop housing. The 35-year lease agreement includes a requirement that the foundation develop and operate the housing project. 

Collegiate Housing Foundation hired developer Greystar to construct the housing project.  Greystar in turn signed contracts with architecture firm WRNS Studio and Devcon Construction. 

As the project owner, the housing foundation will go out to investors for tax-exempt bonds on the private market, McComb said, adding that the bonds are allowed to be tax-exempt because they are supporting a public education institution. The foundation pays back the bonds with revenue from the project, or the rent from the beds. 

“Even at the affordable rental rates, we’re able to [pay the bonds back], because we have 624 beds,” she said. “It’s paid back over the term of 35 years.” 

McComb added that the lease agreement requires that any extra cash from the rent that isn’t needed to pay back bonds each year be reinvested into the housing project. Once the bonds are paid back, ownership of the project goes back to Cabrillo.

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