Quick Take:

A draft of the Coral Street Visioning Report, to be presented Thursday at a meeting of the City of Santa Cruz Planning Commission, aims to transform several Coral Street buildings into additional services for the unhoused, temporary shelters and permanent supportive housing. But the report is already generating controversy from area residents and businesses because its current map also includes three privately owned buildings.

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A City of Santa Cruz project to expand an area of Coral Street into a hub for housing and services for the houseless is drawing concern from some local business owners who say they are worried about being pushed out of the neighborhood.

The city’s Coral Street Visioning Report is a high-level planning document meant to guide development over the next 20 to 40 years for an area of Coral Street bounded by Fern Street, River Street and Highway 1.

The neighborhood is currently home to the campus of Housing Matters, a nonprofit that operates emergency shelters for roughly 200 people on any given night among the Paul Lee Loft, Rebele Family Shelter and individual, tiny pallet homes. Housing Matters also operates daily services for unhoused individuals such as access to mail and showers, along with working to place people into permanent housing.

In October, the nonprofit was awarded an $18.2 million grant to begin construction later this year on the Harvey West Studios, a five-story building on the Housing Matters campus slated for 120 units of permanent housing.

A draft of the Coral Street Visioning Report, to be presented at a special meeting of the City of Santa Cruz Planning Commission on Thursday, aims to transform several Coral Street buildings into additional homelessness services, temporary shelters and permanent supportive housing.

Among them is the Housing Matters campus, as well as a few buildings the nonprofit already leases, such as 112-116 Coral Street. There is also 801 River St., a Victorian owned by the nonprofit that is slated to open as the county’s third Project Homekey site, providing seven units of permanent housing for individuals, and 125 Coral St., which the city purchased last May for $3 million.

A map showing properties identified as part of the City's Coral Street Visioning Report.
A map showing properties identified as part of the City’s Coral Street Visioning Report. Credit: Via City of Santa Cruz

However, the visioning report is already generating controversy from area residents and businesses. That’s because the report’s current map also includes three privately owned buildings — 133 Fern St., 129 Coral St. and 118 Coral St. That last site is better known as Santa Cruz Rehearsal Studios (SCRS) to local musicians.

That has alarmed the building’s owners, Jennifer and Paul Gallacher, who say they are worried that being identified on the report’s map could set them up to be forcibly removed through eminent domain by the city, or otherwise pressured to vacate their property to make way for planned development.

“We’re not leaving,” Jennifer Gallacher said.

Her husband, Paul, agreed: “We don’t intend to leave or stop operating.”

The Gallachers admit the city does not have a case for eminent domain and it would be “very hard” to do that. However, they say the visioning report comes at a time when the business has finally been able to pay off construction loans and has begun to operate at a level where they are making a profit.

For the past 13 years, SCRS has been the go-to studio for musicians in the area to practice — and sometimes even record. Owning the building allows the Gallachers the freedom to keep their rates low ($17-$22 an hour), with an average of seven to 10 acts renting the studio daily.

Up-and-coming bands like Drain, Scowl and the now-defunct Gulch, along with well-established acts like Good Riddance and James Durbin, have all rented the rooms at one point or another.

“We’ve even had Neko Case in there for a week or so,” Paul said.

The Gallachers say they were blindsided in December when they first discovered their business on the original master plan map. They specifically chose to buy on Coral Street because it was commercially zoned and the nature of their business requires them to be away from any residential areas, making any move out of the question.

“You can’t have death metal at 10:30 at night,” Paul said of moving to an area near residential housing.

Since first proposing the vision to the public last December under the name Coral Street Master Plan, the city has become more transparent in identifying SCRS as a private business on its project map. (The city also changed the plan’s name to the Coral Street Visioning Report to reflect that the plan is still just a long-term vision.)

However, the Gallachers still wonder why their business is even on the map at all. They want the line demarcating properties identified in the visioning report to be redrawn to omit their property.

“Move the line,” Jennifer said. “This is what I’ve asked [the city] from day one. Just move the line and continue to serve the homeless population, which is very important, and we’ll continue to serve musicians, which is also very important.”

Santa Cruz Rehearsal Studios on Coral Street.
Santa Cruz Rehearsal Studios on Coral Street. Credit: Kevin Painchaud / Lookout Santa Cruz

Even if the boundaries are redrawn, she worries SCRS will become “an island” in the middle of a larger unhoused services complex, or that the city will eventually change its mind and offer to buy 118 Coral St. — neither of which would benefit the rehearsal studio’s business.

City of Santa Cruz Senior Planner Sarah Neuse told Lookout that the visioning report is not a development plan, but rather a high-level document that explores a variety of possible options for the area, none of which are set in stone. The public comment period is still open, and with the city’s plan exploring multiple visions for the area, the proposal is still very fluid. “It’s presenting options and looking at different scenarios of ways the area could develop over the next decades of time, 20 to 40 years,” she said.

Neuse adds that SCRS is included within the boundaries of the visioning report because it makes sense for planners to study the entire neighborhood. Including SCRS and other privately owned businesses within the map boundaries is a way for the city to be prepared in case one of the spaces becomes available in the future.

In the visioning report draft that will be presented to the city council at Thursday’s meeting, SCRS — along with 133 Fern St. and 129 Coral St. — are discussed under the “Future Opportunity Sites” section.

“It makes sense to consider the options and consider what might happen here if various dominos might happen to fall,” Neuse said. “There is nothing in any plan that the city does, anywhere in the city, that incorporates elements of eminent domain, taking property or shutting down businesses. That’s not what we do.”

She added that, as an example, the City of Santa Cruz has various plans for other areas — such as the Seabright neighborhood — despite not owning any property there.

Still, others in the Coral Street area are wary of the visioning report’s ambitions to expand homeless services when they say much of the unhoused situation is not being taken care of at the moment.

At a Feb. 6 public meeting to discuss the project, one audience member, who identified himself only as the owner of 117 Fern St., said while he sees “some good ideas” in the visioning plan, he feels the city needs to do more to address the safety concerns of existing business owners in the area. He said he had to hire a security guard because people were sleeping and defecating on his property, as well as leaving their cars “for up to two weeks at a time.”

“There are issues we’ve had for so long that are not being taken care of today,” said the concerned owner.

Jennifer Gallacher echoes those concerns.

“I don’t think the problems on Coral Street are a mystery to anyone who has gone to Costco,” she said. “I have been in the meetings and expressed my concerns about building more when we aren’t managing what we have now in terms of problems in the neighborhood.”

The Housing Matters campus at Coral Street and Highway 9 in a 2021 file photo.
The Housing Matters campus at Coral Street and Highway 9 in a 2021 file photo. Credit: Kevin Painchaud / Lookout Santa Cruz

While a couple of visioning report options do take parking into consideration — with limited to-be-built lots for Housing Matters employees and guests or residents — both Neuse and Housing Matters CEO Phil Kramer admit it is a major concern in such a limited area.

Kramer has led the nonprofit since 2015, seeing it through some of its most ambitious growth, including expanding its operating budget from $3 million to $12 million. The campus now has 85 employees, up from 40 in 2015, with 10 positions currently open. While Kramer says he understands the concerns of residents and business owners, he notes that homelessness has reached crisis levels.

“It’s a big growth and I wish we didn’t have to, but the reality is — across the country — we are not keeping up with the needs of folks that are unhoused,” he said. “As an organization, I’m proud of the work we do, but it’s really the result of a broken system.”

Neuse says that working toward a better model for the houseless while working on the current problems they and the community face are not mutually exclusive.

“We’re always trying to do both things,” she said. “The city has teams that are dedicated to our existing homeless crisis and we also have teams that are dedicated to planning for the future. This plan really is on the later half of that. Hopefully, if we plan well, we won’t have the same problems that we have now, in the future.”

The planning commission will hold a special visioning report presentation at Santa Cruz City Hall, 809 Center St., on Thursday at 7 p.m.

More on the Coral Street Visioning Report

The Coral Street Visioning Report covers an area of Coral Street bounded by Fern Street, River Street and Highway 1. It incorporates the Housing Matters Campus, along with 801 River St. and 125 Coral St.

801 River St.

Purchased in 2019 for $825,000, 801 River St. has undergone complete renovations in the past four years. Last year, it received an additional $2.2 million from the state to provide seven units of permanent housing as part of Project Homekey. Slated to open last February, Housing Matters CEO Phil Kramer says the delays haven’t derailed his optimism.

“There have been so many challenges with supply chain delays related to COVID, material costs and parts we’ve been waiting on for over a year,” he said. “But we should have folks moving in by this summer and we are very excited about that.”

125 Coral St.

The visioning report also includes 125 Coral St., which previously housed Sea Berg Metals Fabricators Inc. The city purchased the property last May. Since the visioning report is in just its fledgling stages, four separate options are proposed for the site. One would include a five-story building with 14,250 square feet of residential units per floor as well as 4,200 square feet of programmable space. Another possible option includes a navigation center, which will act as mixed-use residential housing and a services center.

Funding for the possible future plans will come from multiple sources, including private funding as well as grants along with state and federal aid such as Project Homekey.