Quick Take:

A new arena for the Santa Cruz Warriors. Lots of new housing in tall buildings. Street reconfiguration. These factors are all in play as Santa Cruz officials prepare to update the public on where things stand with the neighborhood south of Laurel Street downtown — and a ballot measure governing building heights and affordability could yet change the calculus.

A petition submitted earlier this week seeks to permanently transform the process of building much-needed multifamily housing in the city of Santa Cruz. It proposes that voters should decide whether a new development can exceed existing height limits, and that a quarter of new units in larger projects should be reserved for low-income tenants.

Within the next month, we will find out if as many eligible city of Santa Cruz residents signed the petition as organizers say and, if so, voters will get to decide whether to make it law in the March 2024 primary. This effort to shape and limit land use through direct democracy is directly tied to the city’s most ambitious growth goal yet: to expand downtown Santa Cruz to the neighborhood south of Laurel Street, accompanied by 12-story residential buildings, 1,600 new housing units and a new Santa Cruz Warriors arena.

The idea of a Santa Cruz that builds 12-story buildings has made people nervous. Keresha Durham, whose organization Housing for People – Not Unaffordable Towers! authored the petition, said most people she spoke with who added their signature did not know the city had planned to build so tall. That’s likely due, in part, to the attention most regular residents pay to local bureaucracy and politics, and in part to the fact that the plans haven’t been discussed publicly since a Santa Cruz City Council meeting in January, when elected officials told city staff to begin drawing up plans.

So what exactly is the city picturing for this new downtown neighborhood? Call it good timing, but over the past month, the city’s planning department has been workshopping its downtown expansion vision to focus groups, and is scheduling a public meeting on the project for the first week of November. Here’s what we know so far.

The reality of, and vision for, a new arena

The reality of a new arena remains up to negotiations between the Warriors and property owner Santa Cruz Seaside Company, which also owns the Beach Boardwalk. When the city council approved a new three-year lease for the Warriors to stay at Kaiser Permanente Arena last month, city staff noted that the Warriors have received significant interest from other Bay Area cities wanting to host the developmental G League team. Despite this, Santa Cruz Warriors President Chris Murphy recently told Lookout that the Warriors want to stay in Santa Cruz and the new arena is very much “still the goal and still a reality.”

Kaiser Permanente Arena, home of the minor league Santa Cruz Warriors since 2012.
Kaiser Permanente Arena, home of the minor league Santa Cruz Warriors since 2012. Credit: Kevin Painchaud / Lookout Santa Cruz

However, Sarah Neuse, one of the city’s senior planners working on the project, and Mayor Fred Keeley have told Lookout that the city is not involved in those negotiations and is focused on drawing up land-use regulations to make room for the possibility of a new arena. Keeley has said publicly multiple times that he will not support putting public money into the construction of a new arena, and Murphy said last week that the organization is working on securing private financing.

According to early environmental preparation documents describing the broad shape of the project, the aim is for the arena to be an 180,000-square-foot, multipurpose venue, “with spectator seating for approximately 3,200 seats for basketball and approximately 4,000 seats for concerts, performances, etc.”

On Tuesday, Neuse said the city is still working under those assumptions.

“We’ve heard from the Warriors that that is what they’re after,” Neuse said. “They want to have a place they can run events year-round in. They also want to have a place that is appropriate for the symphony, or concerts, or comedy shows or whatever other kinds of events like that.”

Two locations have long been considered for the new Warriors’ home: the lot where they currently play, or across Front Street, where Firefly Coffee House, an apartment building, a used-car lot and a yoga studio, among other small businesses, sit. The latter is the preferred location at this point, Neuse said, as its oblong shape is more befitting a basketball arena than the existing location, whose square shape works better for housing development.

Should an arena materialize, the city is also thinking about reorienting the layout of surrounding streets and parking. A rough mock-up shows the closure of most of the existing Laurel Street Extension near the arena to move it south and connect it to Front Street. Neuse said this would make more room for an enhanced riverwalk and housing. Spruce Street between Front Street and Pacific Avenue, which would abut the new arena, could be temporarily shut down to traffic on game days, or permanently as a part of a public square.

A rough draft of the street reconfiguration being considered by the city as part of the downtown expansion plan.
A rough draft of the street reconfiguration being considered by the city as part of the downtown expansion plan. Credit: Via City of Santa Cruz

The city is considering placing a roundabout to connect Front Street, Third Street and Pacific Avenue at the southern end of the proposed arena lot. Pacific Avenue south of Laurel Street would have angled parking and become a flex space in which the street could easily transition into a pedestrian-only throughway during special events, and outdoor dining or festival booths could replace street parking.

Housing? Tall buildings?

Over the past two months, the city has been surveying residents on what they want to see in the new development and workshopping its early mock-ups with focus groups. People have reacted differently to the thought of 12-story buildings. Neuse emphasized that for the lots that do see tall buildings, only a portion of a lot might be designated for 12 stories, with the remainder capped at six or seven stories.

“That’s so there is variation in the skyline so we’re not just creating Soviet blocks,” Neuse told me. People have had mixed reactions after seeing examples of what modern 12-story architecture could look like Santa Cruz, varying between excitement and deep concern.

Current zoning in the area surrounding the existing Kaiser Permanente Arena and extending south along Front Street to Center Street could yield “about 1,000 units,” Neuse said. In order to reach the 1,600 units the Santa Cruz City Council desires, she said the city would likely need to increase the height limits on three lots in the area: the lot on which the arena currently sits, the lot across the Laurel Street Extension that hosts Wheel Works, and a lot at the southwest corner of the project area, along Center Street, occupied by Scott’s Body Shop. Current zoning allows the surrounding lots to reach six to eight stories if they take advantage of the state’s density bonus, which gives developers added entitlements, such as height, if they include certain levels of affordability in their project.

However, Neuse said staff has been working toward the 12-story direction with an understanding that it might need to be flexible.

“We’ve been telling the city council that we will do our best to come up with a policy that makes 12 stories, 1,600 units with 20% affordable housing the most likely outcome,” Neuse said. The economics might not make sense for a developer to do 12 stories. At a certain height, buildings need to be built with steel instead of wood, a change that significantly increases construction costs.

A rough mockup of the possible size of buildings allowed in the proposed Santa Cruz downtown expansion plan zoning.
A rough mock-up of the possible size of buildings allowed in the proposed downtown expansion plan zoning. The lots in gold represent properties the city believes are most likely for redevelopment. Credit: Via City of Santa Cruz

Neuse said the state’s dynamic housing laws could also change the playing field of the city’s ability to shape a downtown expansion, and already have. Earlier this year, a law went into effect that cities could no longer require on-site parking for new developments within a half-mile of quality transit options. The city responded to this by proposing angled parking along Pacific Avenue as a way to fit more parking spaces on public streets. Similarly, the state’s density-bonus law, amended last year, now allows developers of 100% affordable housing projects to claim 33 feet of additional height.

The petition effect

If the Housing for People petition makes it to the ballot and draws majority support, any zoning change to allow 12-story buildings would have to be voted on by Santa Cruz residents. The new law could also shift the financial formula of the developments if 25% of the new units need to be reserved for low-income tenants. This all could change the reality of a new Warriors arena, which is seen as not only an anchor of the new downtown neighborhood, but a trigger to encourage property owners to redevelop their lots into the mixed-use residential buildings envisioned for the area. The Warriors have said they want their G League team to be in Santa Cruz; however, the organization has also received interest from other Bay Area cities. Whether the Warriors are willing to persevere through a new set of obstacles to staying here remains to be seen.

That’s a lot of variables, but Neuse said the city is pushing forward with drawing its plans.

“Sometimes planning processes happen and after years none of the property turns over and nothing has been developed. That happens,” Neuse said. “What is different here is that we know the Warriors cannot stay in their current spot. That arena is in year 13 of a 10-year lifespan. Something is going to change down there. Either they’re going to build something new in Santa Cruz or they’re going to close up shop and that area will basically become a parking lot.

“If the arena isn’t built, we’ll have language that will allow housing to go in its place. But we don’t expect that to happen.”

The city plans to bring the public in on its progress in a yet-unscheduled meeting during the first week of November, where city staff will share the results of the citywide survey, focus groups and mock-ups. Neuse said the planning department expects to publish a draft of the plan in January, with public meetings and votes to approve it likely coming in the spring.

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Over the past decade, Christopher Neely has built a diverse journalism résumé, spanning from the East Coast to Texas and, most recently, California’s Central Coast.Chris reported from Capitol Hill...