Quick Take
Transparency activist Marv Lewis believes the City of Santa Cruz might have missed a key deadline for the downtown library project, jeopardizing $53 million in tax credits. The project, centered on the Lot 4 site, has sparked controversy over the removal of heritage trees, displacement of the farmers market and use of Measure S funds. On June 24, the city council granted sweeping powers to the city manager to fast-track deals, which Lewis believes shut out the public. Here, he raises concerns about transparency and public accountability. With no visible construction underway, he calls for more disclosure on the project's timeline.
Have something to say? Lookout welcomes letters to the editor, within our policies, from readers. Guidelines here.
The newest act in Santa Cruz’s long-running downtown redevelopment show opens with high stakes: The future of the public library — and its promised affordable housing — now hangs in the balance.
An essential June 30 start deadline has quietly passed, and city leaders are now making key decisions behind the scenes. The public needs transparency and accountability from our leaders.
At the heart of the project is Lot 4, a downtown parcel long used as a community gathering place, home to the downtown farmers market and shaded by heritage trees. The community has cherished the parking lot as a rare commons in a changing city.
That space is now slated for the large mixed-use library complex that will, in addition to the library, contain 124 units of affordable housing, a parking garage and retail.
Let’s rewind. Measure S – the funds used for the project – was not a blank check. It was a $67 million bond passed in 2016 with one clear purpose: fix up the libraries. That’s what voters signed on for when they voted for it.
DOWNTOWN LIBRARY/AFFORDABLE HOUSING PROJECT: Read past Lookout coverage here
But nearly a decade later, that bond has become the opening act for something far bigger than imagined, something that for many feels like a psychedelic trip to the dark side. What once felt like a civic upgrade now has become a teardown. Heritage trees in the heart of downtown are slated for removal. The farmers market has been displaced. And the vision of a welcoming public square has given way to a looming glass-and-concrete block.
On June 24, with barely a pause for discussion, the Santa Cruz City Council passed item 20 — an extraordinary move that handed sweeping authority to the city manager. This transfer of power allowed for the subdivision of 119 Lincoln St., the finalization of two 99‑year ground leases, the closure of more than $7 million in city loans, and the execution of investment documents — all in an apparent end‑run to meet the California Tax Credit Allocation Committee’s (CTCAC) June 30 construction‑start deadline.
To fund the housing portion of the project, the city is relying heavily on low-income housing tax credits, or LIHTCs — the cornerstone of its $150 million-plus financial structure. These credits can be sold to investors, who provide upfront capital in exchange for reduced state tax liability. The deal is worth $55.1 million — provided that, under CTCAC rules, groundbreaking as defined by the committee began by June 30.
It is unclear whether city officials met that deadline. We have not had any public updates.
If it was not, CTCAC could recapture the credits, pulling them back from the project and reallocating them to other developments. Such a loss could take with it the affordability guarantees, the housing itself, and the project’s remaining financial cohesion.
As of this first week, there are no shovels, no grading, no foundation work — just unanswered questions and a few flowers pushing up through the sidewalk, quietly bearing witness to what happens when the voice of a community, as expressed through Measure S, is treated as an afterthought, pushed to the back row while other priorities take the stage.
If this is to be more than a dress rehearsal for regret, a course correction is needed now — before the concrete is poured and the trees are gone. The city council can still open a clear avenue for public oversight by taking the following steps:
The first step is to reaffirm public trust in Measure S. That calls for the city to commission an independent audit to verify whether library bond funds have remained dedicated to modernizing the library system rather than being used to assemble unrelated financing.
The second step is to make the LIHTC timeline fully accessible.
The city council owes the community a plain‑language explanation of the timeline, risks and a transparent contingency plan should the tax credits fall through.
Third, the city should guarantee affordability now.
That means it should record and secure deed restrictions on all affordable units before financing closes. If the LIHTCs fall through, affordability must still be protected.
Finally, it must restore democratic oversight. That means requiring that all amendments, lease terms and city loans return to the city council for a full public vote — maintaining a public view.
Answers matter, especially given that on July 16, the city secured $4.5 million in Phase II funding from the California State Library’s Building Forward initiative to help outfit the library’s interior. Yet despite this milestone, the council has not shared a comprehensive Phase II budget or specified exactly how or when the funds will be used within the project’s timeline, leaving key questions about scope, costs, scheduling and potential spending deadlines unanswered.
Transparency and oversight are now indispensable.
Public support for the library project on Lot 4 has never earned a standing ovation. This is true contrary to ongoing claims that voters’ rejection of Measure O in November 2022 gave the city a blank check to redevelop the heart of downtown. Measure O would have preserved the downtown library and farmers market while prioritizing affordable housing on other city-owned lots.
The house lights are still up on this play, with the finale poised to be nothing more than a well-staged ruse, one that risks revealing market-rate housing as the real headliner if the already-questionable financing collapses.
What happens next will shape not only the future of the library, the trees, and the meaning of affordable housing guarantees, but also the public’s trust in local governance for years to come. There is still time for the council to choose openness, honor its commitment and place transparency and accountability at the forefront.
The moment for this encore has arrived.
Marv Lewis is a longtime Santa Cruz resident and writer on transparency, public trust and community spaces.