Supervisors order review of 57-unit Capitola Road project

A contentious housing project in Live Oak led by local development and architecture firm Workbench will be reviewed again by the Santa Cruz County Board of Supervisors after elected officials ruled that the county’s planning commission erred in approving the project. 

The 57-unit project at 841 Capitola Rd., near 7th Avenue, was approved in October by the county’s planning commission through a process known as the builder’s remedy mechanism, a state provision that allows developers to bypass local zoning laws if a jurisdiction does not comply with state housing development requirements. 

In the case of 841 Capitola Rd., developers were able to use the builder’s remedy because the county did not have its housing element – a plan to accommodate a minimum amount of new housing growth – certified by the state by the deadline of Dec, 13, 2023. Under the remedy, developers are able to bypass any local requirements, even if a project does not comply with local standards. 

Last month, neighbors filed an appeal against the commission’s decision, arguing that the county’s housing element was found to be compliant with state housing law before Workbench submitted its application. Resident Mike Reis, who filed the appeal on behalf of the neighbors living on Grey Seal Road, previously told Lookout that, according to emails between county planning staff and the state department of housing he obtained via a public records request, the county was in compliance with state law. Therefore, the builder’s remedy should be revoked. 

County elected officials, during a jurisdictional hearing on Dec. 9 to determine whether to move forward with Reis’ appeal at a future meeting, unanimously ordered another review of the Workbench project to be scheduled within 60 days. 

Supervisor Manu Koenig said he was concerned that the planning commission approved the project despite not having all the information it was seeking. “Each of the five commissioners,” he said, “either asked questions of staff or sought guidance from counsel on how to deny or condition this project.” 

Koenig added that he felt that some of the commissioners’ questions were left unanswered and the “right thing to do” would have been to continue the hearing at a different date to acquire more information, rather than voting to approve the project. “I believe that they actually erred in doing so,” he said. 

Reis told supervisors that internal memos from the California Department of Housing and Community Development – obtained through his public records request – confirmed that the county’s housing element was confirmed by March 15, 2024, a few weeks before Workbench filed its application. 

“We believe, based on the evidence, that the county was compliant on the 15th with state law, and therefore this project was never eligible, or shouldn’t be eligible for the builder’s remedy,” Reis told Lookout. 

However, county staff at the Dec. 9 meeting argued that the state certified the county’s housing element on April 12, 2024, which allowed developers to submit applications to qualify under the builder’s remedy before that date. Workbench submitted a preliminary application for the project on April 9 of that year and a formal application on Oct. 3, according to the county’s website.

There are more details regarding the project and the county’s housing element that need to be discussed, said Supervisor Justin Cummings. He added that some of the concerns brought forward in Reis’ appeal, such as an increase in traffic in the neighborhood, should also be addressed in a future discussion. 

Cummings also said he shared concerns over the number of affordable units offered, and encouraged community members to contact their state legislators about their frustrations with these newer housing laws. The developers currently have four affordable units planned for the project.

Workbench CEO Tim Gordin told supervisors that if they went forward with reviewing the project again, the county could face litigation. He added that elected officials would be giving residents a sense of “false hope” by looking at Reis’ appeal, and that could delay new housing. 

Reis and his neighbors see the supervisors’ decision to review the project as a win. The group expects Workbench to build something but would rather it not be a five-story building, he said. “All we’ve been asking,” Reis said, “is that the project be something that the community can be proud of, something that fits the zoning for the property.”

The 57-unit rental project planned for 841 Capitola Rd. has undergone many changes since it was first proposed in 2022, primarily due to escalating mortgage costs. It was first envisioned as 15 single-family homes, each with its own accessory dwelling unit (ADU), and intended for first-time homebuyers. 

But by 2023, as mortgage rates climbed, Workbench reimagined the project as an apartment building. Developers also added four affordable units to the project. Earlier this year, the project was planned for 63 units, and later downsized to 57. 

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