Rendering of 831 Water Street development.

A tale of two affordable housing projects: Contentious in Santa Cruz, smooth in Watsonville

The 831 Water Street project, which would have 50% of its units classified as affordable housing, is very contentious in Santa Cruz. But a similar development in Watsonville was approved without much in the way of outcry.

The saga surrounding the 831 Water Street development has led to many late nights and prolonged conversations between Santa Cruz community members, city staff and developers — and the fate of the project still has several key hurdles to clear if it’s to become a reality.

Meanwhile, a similar project based in Watsonville was submitted and approved in a matter of months with very little fanfare, let alone outrage. Both are classified as SB 35 projects, after a 2017 state law that requires streamlined approval processes for developments with significant affordable housing elements.

No one knows the discrepancy between trying to get affordable housing built in Santa Cruz vs. Watsonville more than 831 Water Street developer Iman Novin, who said the process across the state goes more like the one in South County, which was proposed in December 2020 and approved in late February.

“I think the major difference we experienced is the groundswell of NIMBY opposition to the project, from a very well-organized opposition group that has a lot of time on their hands and involves CEQA attorneys,” he said, addressing the California Environmental Quality Act, passed in 1970 to institute a statewide policy of environmental protection. “It really brought a spotlight to our project compared to Watsonville.”

That said, Novin is hopeful the fight won’t have been for naught: “Could it have been less contentious? Yes, I think so. But the first project always takes the brunt and the heat. Hopefully some of the lessons learned will help future developers in using SB 35.”

According to Watsonville’s community development director, Suzi Merriam, it’s a matter of providing fair housing countywide that needs to be addressed.

“What’s really important is to make sure that we spread those affordable units throughout the county and spread them to the areas where the jobs are,” Merriam said.

What’s left for Santa Cruz’s project?

The City of Santa Cruz still has much to decide with 831 Water Street. By Thursday, the city’s planning and community development department is required to respond with its “objective standards” — development standards used to review new housing development applications under SB 35. Since it was submitted to the city by Novin Development on July 1, it’s become hotly debated, highlighting the growing contentions between both the pro-growth and slow-growth factions of the county.

The city will then have until Nov. 13 to either approve or deny the development application, a strict timeline required by the law.

If approved, it would be Santa Cruz’s first SB 35 project. It consists of 140 residential units and ground commercial space, with 50% of the units dedicated to affordable housing and 50% at market rate. The project is made up primarily of studios and one-bedroom units, with 15 two-bedroom units and three three-bedroom units.

Since the first community meeting surrounding the project, some community members have raised concerns as to the project’s height and scale in relation to the immediate neighborhood, as well as traffic impacts, the groundwater table and spillover parking.

Guy Lasnier, who lives near the proposed site and is a spokesman for the 831 Responsible Development group, said the main issues with the Novin proposal is that it isn’t 100% affordable, and that it is overbearing for the single-family homes directly in its vicinity.

“The project was ill-conceived, it was an overreach,” he said. “If it had been somewhat modified, it could have been built by now — if you compare the project to Watsonville, it really shows why 831 is taking advantage of current state laws to build something that is much too big for that particular parcel.”

Next steps in Santa Cruz

Sam Heschert, principal planner for the city’s Current Planning division, and Eric Marlatt, assistant director of Planning and Community Development, both noted via Zoom that this project has been primarily challenging because it is the city’s first SB 35 project.

As Heschert said, the city “wants to be careful” with this project, while also following the required timeline for the proposal. With the additional proposal extensions over the past few weeks, the city must next submit its objective standards to Novin by this Thursday.

“If we don’t act in a certain amount of time, the project is deemed eligible and can move forward,” she said. “We’re trying to be careful and not miss any of the deadlines ... we’re trying to be very careful with our reviews and make sure we’re not missing any of the details.”

One of the main concerns, as Lasnier said, was the building’s size. Both Heschert and Marlatt acknowledged that had been a primary concern.

“We have projects that are larger in scale, but primarily in the downtown,” Marlatt said. “I think the only other building of similar height was approved but not yet built — so this is the first of its kind in scale and massing.”

How Watsonville got it done so quickly

Meanwhile, 18 miles south, a project was submitted and approved swiftly. The project — at 1482 Freedom Blvd. in Watsonville — was introduced to Watsonville City Council in December 2020 by affordable housing developer Eden Housing, and received final approval on Feb. 23.

The project is 100% affordable, with 53 one-, two- and three-bedroom units. The development is focused on 25 to 50% of average median income, with units designated toward disabled residents, farmworkers, and homeless residents with project-based Section 8 vouchers.

A rendering of 1482 Freedom Boulevard, with multiple housing buildings along a street with cars.
A rendering of 1482 Freedom Blvd., an SB 35 project in Watsonville offering 53 units of 100% affordable housing. The project proposal was submitted by Eden Housing in December 2020, and approved in February.
(Courtesy of Eden Housing)

According to the city’s principal planner, Justin Meek, using the SB 35 route made the process much smoother.

“It made for an easy way for [the project] to be not only reviewed by staff, but also the electeds and the public, so that the plans were clear and understood and easy to review by everybody,” he said.

Merriam said the city has had a long-running track record of being more receptive to development than the rest of the county, both in relation to commercial and residential projects.

“It’s a bit of a different world down here in Watsonville,” she said. “We tend not to get as much opposition to projects as we do in other parts of the county.”

Because the city’s general plan and zoning standards don’t yet address SB 35, Merriam said the project was brought to Watsonville City Council for approval, which was required within 60 days of the applicant’s submission. The city council then reviewed the density bonus and the design review for the project.

While city staff said that Watsonville has done a great deal in building more affordable units, the problem goes beyond its limits. As Meek noted, there are currently 221 other cities and towns throughout California that had not provided the adequate number of affordable units needed to avoid triggering SB 35, including Watsonville.

“That just highlights the importance of providing more housing in general, in all parts of California,” he said.

For 1482 Freedom Blvd., there were a few negative comments toward the development plans, which were shared with Watsonville councilmembers and raised during the public hearing. They included concerns about an over-concentration of affordable units in Watsonville and questions about parking. However, ultimately, the council voted to approve the project.

Merriam said effective affordable housing needs to consider where people work.

“Let’s look at where residents are going for work, and give weight to the fact that a lot of residents have to commute elsewhere for those jobs,” she said. “Because it’s an inequity that lower-income workers have to travel further for their work, while higher-wage workers can work where they live.”

The future of Santa Cruz affordable housing

As time ticks away, the city of Santa Cruz must address the greater community’s housing needs, which would likely mean more development alongside single-family zoned neighborhoods. Because Santa Cruz has not reached its state-mandated volume of very-low and extremely-low income housing, the city could likely see even more developments like the 831 Water St. proposal in the near future.

Don Lane, a former Santa Cruz mayor and member of the Community Advisory Committee on Homelessness, believes SB 35 will change the story of the city, even as adjacent community members aim to incorporate their opinions on development.

While community members could feel frustrated by elected officials’ seeming inaction, the officials are also unable to follow through on community members’ demands under SB 35.

“It’s hard for both the elected officials and the community to believe,” he said. “The historic inequities around housing are rooted in the fact that the housing system has really favored single-family homes. Now, a lot of us are realizing that’s why we’re in the bad place we’re in with affordable housing.”

Lane believes the county as a whole is moving in a direction of thinking about who’s benefiting from the development proposals, and he hopes that every part of the community steps up to address the housing needs.

“We all have to embrace this new reality, and embrace the needs of people in our community who don’t have housing right now,” he said.

Tim Willoughby, chair of Affordable Housing Now, said the point of SB 35 is to develop affordable housing in a streamlined manner, and the city needs to follow that requirement, regardless of neighborhood opposition.

“There’s no project in Santa Cruz that doesn’t have community pushback against it,” he said. “These are people in million-dollar homes complaining — what are you whining about? When (people) commute from Watsonville an hour each way every day, but you don’t want them living in your neighborhood?”

Ultimately, 831 Water Street will be a test case for how the city will approve future housing developments, and Willoughby believes the “law is on the side of things being built.”

“The community is just now realizing, after all of these years of fighting, that the state says, ‘No, you can’t fight anymore,’” he said. “This was a wake-up call that the state laws have taken away community control of the process.”