Quick Take

In her weekly look at local business, Jessica M. Pasko reports on the challenges facing businesses in downtown Santa Cruz, help for entrepreneurs and a roadmap for county passenger rail.

Each week, we’re taking a closer look at the movers and shakers, the growth of industries and what’s really driving the Santa Cruz County economy. I’ll be spotlighting some of the biggest areas for opportunity, updates on local development and all things underpinning the regional business scene each Wednesday.

Got ideas? Send them my way to news@lookoutlocal.com with “Business News” in the subject line.

Rising costs, red tape make opening – and operating – businesses in downtown Santa Cruz a significant challenge

Opening a business in Santa Cruz isn’t for the faint of the heart. Not only do entrepreneurs have to grapple with various state and city regulations, they also face ever-rising construction costs, increasing rents and struggles with city permits. That’s not to mention navigating national trends that show consumers’ preferences for online shopping are rising, along with the undercurrent of concerns around tariffs andother challenges. 

Lily Belli and I recently spoke to a mix of city officials, entrepreneurs trying to open downtown, and longtime downtown business owners to gain a deeper understanding of what they’re struggling with and what the city is doing to help businesses open – and stay afloat. 

Scott Vankman and Nicole Rimedio are in that latter group. They’ve run Variance Objects, a fine jewelry store, in a space tucked off Pacific Avenue, just across from Hidden Peak Teahouse, for almost a decade. They love their location and feel they’ve built their business to a good place, but they’re starting to reconsider whether downtown still makes the most sense — financially and geographically — or whether they should go somewhere else, like the Westside of Santa Cruz. Still, even as they worry about rising rents, parking limitations and how the new construction downtown will affect the area, they’ve been happy with their storefront and would prefer to stay put. 

“I love this location — and people who want to see our jewelry will come here,” said Vankman. “We’re becoming a destination spot, not just for locals but for visitors, too. It takes time to grow retail, but I definitely feel like we’re about there.”

Variance Objects co-owner Scott Vankman is considering moving his business away from downtown. Credit: Kevin Painchaud / Lookout Santa Cruz

Other business owners, like Max Turigliatto, recognize the value of being downtown but have grown frustrated with what they view as an overly complicated permitting process on top of high construction costs. Turigliatto, the owner of neighborhood pub Mission West, signed a lease for the former The Poet & The Patriot Irish pub on Cedar Street in January 2023, but is yet to open thanks to expansive building upgrades he’s had to make to meet state and local requirements. 

Turigliatto and the Variance Objects team both say they’d like to see the city do more to help small businesses like themselves, and city officials say they’re trying. In fact, the city’s economic development department is working on new programs to make the permitting process less arduous. 

On Tuesday, city councilmembers approved recommendations from the city’s economic development department that will eliminate some planning and building fees – up to $14,000 in building plan check and building permit inspection fees – for some qualifying new commercial businesses. (Qualifying businesses include any new business applying for a commercial building permit for tenant improvement.) That will significantly reduce the timeline for permitting and startup costs for new businesses, city officials say. The city’s economic development department is also working on amended zoning and permitting codes that are expected to streamline the permitting process for some businesses.

Also moving forward is the new vibrancy ordinance, which will require owners of storefronts downtown that have sat vacant for longer than two years to pay to register the vacancy with the city and provide a plan for upkeep while it’s empty. That annual fee will be set at $1,621.90, to cover the costs of staff time. Rebecca Unitt, the city’s economic development manager, said her team will begin working with property owners who need to register in the coming weeks.

Additionally, a plan to extend the life of some active commercial permits was approved by the city council and will go to the planning commission for review next month. Currently, an approved permit expires within 36 months if it isn’t used and the permit expires six months after a property stops being used for a given purpose. For instance, if a restaurant wants to open in a former restaurant that has been empty for seven months, it would have to apply for brand-new use permits. 

Check out the full story on the challenges businesses face in launching and staying afloat downtown here.

You can see all of our recent coverage of the changes happening in downtown Santa Cruz here.

For local entrepreneurs, Santa Cruz County Small Business Development Center offers free guidance on everything from permits to leases to fundraising

Opening a business in downtown Santa Cruz comes with its own unique challenges, but the reality is that starting a business anywhere is no small feat. Keith Holtaway has lived and breathed that journey as the original proprietor of Pizza My Heart. Now he’s helping other entrepreneurs navigate the steps to opening a new business as an expert with the Santa Cruz County Small Business Development Center in Aptos.

When I spoke to him recently about the steps that go into opening a business in Santa Cruz County, he mentioned that one of the first things he tells any mentee is that they need to carefully consider the zoning restrictions of any location they might be looking at – especially because some use cases (such as a restaurant) can require additional steps like traffic impact fees or change of use permitting. It’s sound advice, given that traffic impact fees can cost as much as mid-to-high five figures, according to Holtaway. 

“I always recommend that my clients check with the public works department [the city or the county’s, depending on location] before they sign any lease to see if there would be a traffic fee associated with that location for their business,” he said. 

Holtaway, who opened his first Pizza My Heart shop in Capitola Village, later opened the downtown Santa Cruz location in 1982 and watched the city rebuild Pacific Avenue after the Loma Prieta earthquake. He also previously served as executive director of the Downtown Association of Santa Cruz, so he’s well-versed in doing business in the area. 

He and other experts at the Small Business Development Center have long provided new business owners with guidance on everything from creating a business plan to finding investors, reviewing leases and determining what permits are needed. The center is part of the Northern California chapter of America’s SBDC, a national nonprofit association of small business development centers, which has been providing entrepreneurs guidance in the form of workshops, training, mentoring and more for more than 40 years.

Entrepreneurs looking to start a new business or grow an existing one can register for the center’s upcoming workshops and training sessions, or sign up here to get connected with an advisor for free assistance. Among the many local businesses the organization has helped are Margins Wine, Terra & Self and Living Swell Kombucha.

ICYMI: 22 miles, 9 stops and $4.3 billion: RTC unveils vision for 30-minute train service in Santa Cruz County

An image of Coradia iLint, a hydrogen fuel cell powered train
An image of Coradia iLint, a hydrogen fuel cell-powered train, one of the passenger rail types being explored for the Santa Cruz Branch Rail Line. Credit: Alstom Coradia iLint

Passenger train service between Santa Cruz and Pajaro could cost more than $4 billion to build and as much as $41 million annually to operate. That’s according to a new report from the Santa Cruz Regional Transportation Commission that details the vision for a 22-mile rail network through Santa Cruz County. 

The commission will present its full vision to transportation commissioners later this week, following the release of the summary report. Read more here.

Ch-ch-changes: Openings, closings and other developments

  • Terra & Self reopening in Capitola Mall: Skin care business Terra & Self is reopening a brick-and-mortar store later this month, this time at the Capitola Mall. Kenne Johnson started the business in 2020 and later opened a temporary store on Pacific Avenue in Santa Cruz through the Downtown Pops! program before moving to Soquel Avenue and Ocean Street. She closed shop in October but will be reopening in her new location on June 28.
  • Longtime Granite Construction executive to retire: James Radich, executive vice president and chief operating officer at Watsonville-based Granite Construction, will retire on July 4. Radich’s role will not be filled with a successor; instead, the company’s three senior vice presidents of construction and the senior vice president of materials will report directly to Granite’s president and CEO, Kyle Larkin. Radich joined the company in 1980, rising up the ranks to his current position.
  • New administrator on board for Pacific Collegiate School: Chris Guyer was hired as the new head of school for Santa Cruz-based Pacific Collegiate School. He replaced Maria Reitano, who is headed to the Santa Cruz County Office of Education. Guyer comes to the school from Riverside Unified School District in Southern California.
  • San Lorenzo Valley Water District hires new general manager: Jason Lillion will start his new role as the general manager of the San Lorenzo Valley Water District on July 1. Lillion comes from the Indian Wells Valley Water District in Kern County, where he’d served as operations manager since 2012.
  • New intern program for local businesses: Santa Cruz Works, Digital Nest and the City of Santa Cruz have partnered on a new program designed to match local businesses with interns and support talent development in underserved areas. The Santa Cruz Affordable Housing and Sustainable Communities Workforce Development Grant will fund fully paid, six-month internships for 10 Santa Cruz County employers. Applications are being accepted now.

Got hires, promotions, or departures to report? Send them to news@lookoutlocal.com with the subject line “Career changes.”

What’s new on the Lookout Job Board

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Looking at the numbers

  • 58: That’s the number of Fortune 500 companies headquartered in California, making it the state with the most corporations generating the largest revenues, according to state officials. Texas ranks next with 54 and New York with 53. The Fortune 500 list ranks the 500 U.S.-based companies with the highest revenue. 

Save the date 

  • Wednesday, June 11: The Santa Cruz Area Chamber of Commerce will hold a ribbon-cutting ceremony for Bandit Systems’ new office at 1320 Mission St., Santa Cruz. The event takes place from 5 p.m. to 7 p.m. Bandit Systems provides advanced video surveillance and security systems. Details and tickets here.
  • Saturday, June 14: The Small Business Development Center of Santa Cruz will host an informational workshop on business planning for startups. The free session takes place from 9:30 a.m. to 12:30 p.m. at Cabrillo College Lower Campus Room 1522 in Aptos. Details and registration here.
  • Wednesday, June 18: Surfboard shaper Bob Pearson of Pearson Arrow Surfboards will be at the Santa Cruz Museum of Art & History to unveil new replica surfboards as part of its upcoming summer exhibition, Princes of Surf 2025. The event takes place from 11 a.m. to 1 p.m. at the museum. 
  • Wednesday, June 18: Leadership Santa Cruz County will host a graduation ceremony for its 38th cohort at Seascape Golf Club in Aptos from 5:30 to 9 p.m. Details and registration here. The Leadership Santa Cruz County program, founded in 1985, educates, fosters connections and increases participation of individuals in leadership roles in the county. Training is facilitated by Executive Director (and former Santa Cruz County supervisor) Ryan Coonerty, along with more than 100 community members working in different fields.
  • Thursday, June 26: CIONIC, a biotech company focused on creating devices for people with limited mobility, will host a demo day at its facility on Green Hills Road in Scotts Valley. Executives will talk about the company’s work and demonstrate its neural sleeve, a wearable fabric device that uses sensors and electric signals to help stimulate muscle movement. Those interested in attending and seeing a demo should email maddi@cionic.com.
  • Saturday, July 26: The Pajaro Valley Chamber of Commerce and Agriculture will hold its annual awards dinner and auction. The event takes place from 4 p.m. to 9 p.m. at the Santa Cruz County Fairgrounds. Details and tickets here.

Add your business or networking events to Lookout’s free public calendar, BOLO. Click here to add your event.

Business news worth reading

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Jessica M. Pasko has been writing professionally for almost two decades. She cut her teeth in journalism as a reporter for the Associated Press in her native Albany, New York, where she covered everything...