Ask Lookout: Are there any big plans for that empty lot at 41st and Soquel?

The lot at the intersection of 41st Avenue and Soquel Drive near Soquel Village.
(Kevin Painchaud / Lookout Santa Cruz)

A barren lot at 41st Avenue and Soquel Drive has been in limbo for the past few years, after a car dealership project approved by the Santa Cruz County Board of Supervisors didn’t go as planned. Given its location at one of the highest-traffic intersections in the county, what can become of the parcel? Could we see more housing?

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If you find yourself staring at brake lights at the intersection of 41st Avenue and Soquel Drive and your eyes begin to wander, you might have noticed a big, empty parcel, weeds now growing amid a few small dilapidated structures and beat-up cars.

Across 41st sits the retail development that’s home to Safeway, Home Depot and Best Buy, with a Starbucks-centered business complex on one corner. Just behind the empty 2.6-acre lot sits the Cruz Car Wash.

You might remember a longtime local business that used to occupy the empty lot, King’s Paint and Paper, and the clever jokes and snarky puns that graced its small billboard. But King’s is long gone, scrapped for a development — a project approved by the Santa Cruz County Board of Supervisors — that never happened.

One of the many jokes displayed on the sign that stood in front of King's Paint and Paper for years.
(Via Facebook)

The story of why is intriguing, and poses a bigger one for the future of this prominent piece of real estate now on the market — and maybe close to a sale — for $9.8 million.

Not long ago, the lot caught the eye of Don Groppetti, who runs his family-owned automotive group with six dealerships in Visalia and one in Gilroy.

Groppetti Automotive expanded into the Santa Cruz market in 2016 with a Nissan dealership farther west, on Soquel Avenue within Santa Cruz city limits, at a too-tight location at San Juan Avenue. Groppetti wanted more space.

So in May 2018, the board of supervisors approved a project that would have seen the dealership invest $12 million investment for the development and relocate to the lot at 41st and Soquel, citing 25 full-time jobs it would create.

Only a month passed before trouble arose.

In June 2018, community advocacy group Sustainable Soquel filed a complaint in Santa Cruz County Superior Court, aiming to overturn the approval. The group critiqued the traffic impact of the would-be new dealership, and claimed an insufficient environmental impact report. The group ultimately lost the case, and the Nissan dealership began to move forward.

The movement was short-lived, and one of the reasons is a now-familiar one: COVID. Groppetti, faced with ballooning construction costs, decided to sell the eight parcels that would have comprised his new dealership. For nearly three years since, the land has remained lifeless.

Parcel breakdown map of the property with the square footage of each parcel labeled.
(Via Cushman & Wakefield)

Now, as COVID stabilizes (kind of), what will become of the lot that boasts a list price of $9.85 million?

Don Groppetti did not respond to Lookout’s multiple requests for comment, but some local officials have floated some ideas.

Sustainable Soquel pushed for mixed-use retail and housing in lieu of the dealership. 1st District Supervisor Manu Koenig — whose district includes the lot, and who also opposed the dealership — has similar feelings.

“We urgently need to change our urban environment to be more walkable. Every time someone turns on a gas-powered car, more heat is pumped into the air,” he said, adding that transit-oriented housing and walkable retail are two major components he’d like to see. “The result is heat waves, drought, and disasters like the CZU fire. 41st Avenue and Soquel is one of the busiest corners in our county and provides a highly visible opportunity to start building more sustainably.”

Koenig said that for the vision of transit-oriented housing and walkable retail to become a reality, the parcel would need rezoning — or perhaps, re-rezoning.

“The board of supervisors rezoned the parcel to C-4, which allows auto mechanics, storage and other light industrial uses,” said Koenig. “The parcel, or at least a portion of it, could be changed back to C-2, which is community-serving commercial that allows mixed-use housing.”

Koenig said reverting to C-2 zoning should be a quicker process than a new C-2 zoning would normally be.

No one knows for sure.

“We do not know the current status of the property. You would have to speak to the property owner to know what is being considered for the site,” Santa Cruz County Principal Planner Stephanie Hansen told Lookout.

Reuben Helick, a managing director of Cushman & Wakefield’s Central Coast office, said the property is in contract to sell, restricting him from discussing details.

“The property is in contract for sale. It may go through, or it may not,” he said.

Might the new buyers be eyeing perhaps the most acute need of our time and place: housing? The county already needs to build nearly 13,000 units by 2031 to meet anticipated needs.

Top view of the lot.
(Kevin Painchaud / Lookout Santa Cruz)

If the first question is housing, the second is how much of it.

In Cushman & Wakefield’s real estate listing, it notes what might seem increasingly obvious in an environment with high housing needs and low commercial-space needs: “As the presumed best use is residential, the developer would need to receive a variance and/or a rezoning of the property.”

The listing then offers the hypothetical for how a housing developer might look at the property:

“By example only, the location should lend itself to mid-rise apartments. A residential apartment development at 60-100 units per acre would result in 150 to 250 units. At the advertised sales price, 250 units results in a price of $39K per door unentitled. Once entitled, then develop or sell as an entitled project, or go forward with construction drawings to provide a ‘shovel ready’ opportunity. At that point, either build or sell. Assume $80K per door entitled. If so, then the land lift for 250 units would be circa $10MM. Or this may be an opportunity for 100% affordable housing reliant on governmental participation (bonds, etc.). It should ‘score’ well as an affordable residential development due to its proximity to shopping, services, schools, transportation, etc.”

Currently, Santa Cruz County Code says that any development on a C-2 parcel may not exceed 35 feet or three stories in height — quite different from the plans for major redevelopment in downtown Santa Cruz we reported on last month.

Is the broker housing estimate a good one? County planner Hansen says it’s hard to say.

“So much depends on what is proposed and how it’s designed. The most I can say is that currently, up to 50% of the square footage can be devoted to residential units,” she said. “Sometimes developers will provide affordable units and get a density bonus to exceed one or more standards.”

But those numbers could themselves be subject to change as housing becomes the driver of more decision-making.

Could what was recently an operation supporting automotive travel become another new symbol of a more walkable, more urbanized Santa Cruz? We’ll keep our eyes on this corner.