Santa Cruz City Council to vote to restrict rent hikes at St. George — and other buildings like it in the city

As tenants of the St. George Residences in downtown Santa Cruz brace for significant rent hikes in November, the Santa Cruz City Council plans to vote on a proposed city ordinance that would prevent landlords of government-assisted housing developments from excessively hiking rents.

At its next meeting, on Tuesday, the city council is slated to consider an ordinance that would cap rent increases at the St. George Residences, prohibiting the building’s owner from raising rents beyond the limits established by Assembly Bill 1482, passed in 2019. That bill limits annual rent hikes to 5% plus inflation, or 10% (whichever is lower), but includes exceptions for government-assisted housing developments like St. George. The ordinance, if passed, would extend those tenant protections to all government-assisted housing developments in the city that have expiring rent restrictions.

Santa Cruz City Councilmembers Scott Newsome, Shebreh Kalantari-Johnson and Sandy Brown submitted the ordinance.

In July, Lookout broke the news that tenants in 70 low- to very-low-income units in the 122-unit building between Pacific Avenue and Front Street were facing varying degrees of rent increases starting at the beginning of November that threaten to make the apartments unaffordable for some. Many of the tenants affected by the hikes are older adults who rely on Social Security for their incomes. Some are looking at a near-doubling of their rents overnight on Nov. 1.

Green Valley Corporation, the parent company of San Jose-based developer Swenson Builders, rebuilt the property after the 1989 earthquake and owned it for many years. The building is now owned by a company named Barron Ranches, Inc., which acquired the property in 2021. 

It is unclear whether a person or entity affiliated with Swenson still owns the property, but Barron Ranches’ CEO is Rebecca Menne. Menne is Swenson Chairman Barry Swenson’s daughter and also owned a 15.5% stake in Green Valley Corp. as recently as 2021, according to a 2019 lawsuit. 

Newsome, whose District 4 encompasses downtown Santa Cruz, shared the news with a newly formed tenant group at the apartment building, St. George Residents for Tenant Protections, at its weekly meeting on Wednesday — and said he is confident that the ordinance will be passed. The gathering of about 15 applauded the announcement.

“We have a housing crisis and a lot of people that are trying to find housing, and losing housing, too,” Newsome told Lookout on Wednesday, adding that the city council had been working on an ordinance for about a month. “I think this is very important to get through the council.”

Newsome added that proactive measures to keep people housed are a top priority.

“We had a report come to council before July recess that said one of the best ways we can address the housing issue in our community is to prevent people from falling into homelessness,” he said. “This is definitely something aimed at that.”

Kevin Cummings, a retired paralegal and 31-year resident of the building, has been in back-and-forth communication for weeks with both a Barron Ranches representative and Santa Cruz City Attorney Tony Condotti about possible ways to maintain the affordable rents. 

He has considered the possibility of the state rent-control bill protecting the St. George tenants in this situation. Cummings said he also considered filing a motion in court to enforce a 2023 settlement agreement that Green Valley Corp. entered into with the state. California Attorney General Rob Bonta announced last June that Green Valley Corp. had agreed to pay almost $400,000 in restitution and penalties for evicting or raising rents by more than 150% on nearly 20 employee tenants who had been paying below-market rates.

News of the city’s planned vote on an ordinance, however, has Cummings thrilled.

“I went into this not wanting to create false hope, but now, I’m really overwhelmed that the city council has listened to us, that we’ve been heard, and that they came up with a solution,” he said. “I’m just really grateful.”

Cummings said that it’s easy to get discouraged when pushing for change, but the ordinance heading to a vote is a great feeling.

“I can be kind of cynical at the national and state level, but if you get involved locally, sometimes you get results. That’s pretty rewarding,” he said.

Other St. George residents said they too were elated and relieved with the development. 

John Daugherty, 64, is a former Santa Cruz Metro employee and 30-year resident of St. George. He said that he and his partner have lived in separate apartments in the building but would need to move into one room in order to afford to stay in the building. Because both Daugherty and his partner use wheelchairs, it would be very difficult.

“I guess this is me being giddy at my advanced age at the prospect of being able to breathe easier and not be scared,” he said.

Resident Annie McCollough said that forcing residents out of St. George hurts not only the residents, but the downtown Santa Cruz landscape as well.

“Everybody knows us, we frequent all of these businesses down here and when they heard about this it was very upsetting to them,” she said. “We help keep their businesses going and that matters.”

City Attorney Condotti told Lookout that the city is legally allowed to enact its own tenant protections that exceed those laid out in AB 1482. The state law does not preempt any local ordinance that is more protective and covers the same or similar issues.

Condotti said that, theoretically, the owner of the building could file a lawsuit against the city to block the ordinance, but he doesn’t believe such a lawsuit would succeed. 

“Anyone can file a lawsuit for any reason, but that doesn’t necessarily mean it would have merit,” he said. “We’ve looked at it pretty carefully and we believe that it’s enforceable and it would withstand a legal challenge based on specific language [in AB 1482] that says it doesn’t preempt any local ordinance.”

Attorney and Barron Ranches spokesperson William Van Roo did not return Lookout’s request for comment by publication time.

If the ordinance passes on Tuesday, it would return to the council for a final read on Sept. 24. If it passes again, the ordinance would take effect within 30 days — or on Oct. 24, before the rents at St. George are slated to increase on Nov. 1. The city council could also declare it an emergency ordinance, in which case the law could take effect immediately.

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