.Will Coastal Commission Block Affordable Housing in Santa Cruz?

It was well over a year ago now that the Santa Cruz City Council approved an 89-unit condominium complex, complete with eight very-low-income homes and two other affordable ones, to go with dining and shopping on the first floor.

The new complex should transform Bay Street and West Cliff Drive, reshaping a single-story parking lot into an epicenter of activity, and linking Beach Street to the Westside. In meetings, some neighbors worried it would tower over the area, including a trailer park next door. But given the project’s affordable units, the project qualified for a density bonus and a relatively streamlined approval process. State lawmakers had laid all of that out in recent state laws aimed at curbing California’s housing shortage, especially in expensive communities like Santa Cruz. 

That’s why anyone who walks, bikes and drives by the site now might find it odd not to see a single shovel in the ground. Not only that, but the developer, Ensemble Real Estate Investments, has not yet been able to finish the design plans. That’s because—streamlining aside—the developer is actually still waiting for an additional green light from a state agency on a project that the City Council approved in October 2019.

The staff for the California Coastal Commission are currently studying four housing projects, including 190 West Cliff and two 100% affordable projects—all of them in various stages of approval and planning. The commission has received four appeals over the project. And given that the density bonus laws are relatively new, the state commission’s staffers admit they’re in uncharted waters.

“It’s a new analysis for us,” says Ryan Moroney, the Coastal Commission’s Central Coast District supervisor. 

The Coastal Commission, which takes its authority from the California Coastal Act of 1976, is a powerful land-use body, although its jurisdiction covers only the Coastal Zone, an area that sits between the state’s coast and a zigzagging boundary that was drawn decades ago.

Staffers are looking at how to reconcile the state density bonuses with the California Coastal Act and Santa Cruz’s Local Coastal Plan. Critics, meanwhile, worry the commission is standing in the way of critical affordable housing construction.

Ensemble Principal Tyson Sayles, who works on multi-family and mixed-use developments, says the delays have frustrated him. 

Moroney points out that Ensemble did waive its right to a 49-day review period, paving the way for a slower, more deliberative process.

In a 2019 email obtained by GT, Moroney told Sayles that, if they did not agree to the waiver, staff would not have time to vet the appeals and would likely recommend that the commission seek to overrule the city’s approval of his housing project. After he signed the waiver, Sayles hoped that the commission would approve his project by February of last year, but the delays kept piling up.

Moroney says the Covid-19 pandemic introduced new challenges, including staff furloughs. Moroney tells me that he hopes that the 190 West Cliff project can have its public hearing in front of the California Coastal Commission before the summer. Then Sayles would know if he can move forward.

Eager to get started on construction, Sayles wonders how many more months he’ll be waiting.

“These kinds of delays kill projects and cause them to go bankrupt,” he says. “Thankfully, we’re able to be more patient than a lot of developers, because our parcel is a parking lot and not a vacant property that we’re having to pay off. But it’s expensive. At some point in time, the delays do create all kinds of challenges. Building codes change. Markets change. In the meanwhile, there’s no housing being built. There are people who would like to live in these units. And there’s workers that don’t have the economic benefit of consistent work. It’s just a shame to see a 49-day timeline expand to 18-month-plus waiting period, especially in a housing crisis.”

ON COMMISSION

The Coastal Commission’s most well-known mission centers on protecting public access to beaches. 

But the commission, with guidance from its staff, has other roles and votes on development projects within the coastal zone—which, in Santa Cruz, extends into the southern portion of downtown. The commission will weigh whether such projects align with a Local Coastal Plan or with the Coastal Act. The charge is for the commission to protect “coastal resources.” Those resources do include coastal access, Moroney says, as well as recreational opportunities. Staff additionally study areas that local governments also study, like water quality and potential geological hazards. On top of that, there are standards that are less objective, like the aesthetics of a proposed development and community character.

It’s unclear how easily the coastal rules mandating certain guidelines can coexist with the recent state laws aimed at reducing housing costs in the most expensive areas, many of which are along the coast. 

In an unrelated presentation from January 2020, a Santa Cruz County planner advised the Board of Supervisors that the Coastal Act actually supersedes the state’s new laws. 

Although he and his colleagues are still studying the issues, he says staff’s goal will be to harmonize the various laws as much as possible.

RECORD TIME

It isn’t only developers who sweat the mounting delays.

A public records request filed by the housing advocacy group Santa Cruz YIMBY with the Coastal Commission returned troves of email correspondence and draft analyses about the housing issues that staff are studying. Included were several emails sent early last year by neighbors of the West Cliff project, who oppose the project but want to have the public hearing, so they can put the saga behind them. (Moroney says the frequent emails from neighbors don’t influence staff’s interpretation of the coastal law, although sometimes they call attention to a violation or raise points worth hearing.)

Kyle Kelley, a leader of Santa Cruz YIMBY, says that if these trends of long delays continue, large out-of-town developers will have an easier time weathering the uncertainty than small-time local ones ever could. 

He would also like to see California and its cities make it easier to build 100% affordable housing complexes, and he worries that isn’t happening. 

The Bay Area affordable housing developer Midpen Housing was recently in a holding pattern, while awaiting word from commission staff about whether it had to file a special local coastal permit to build an all-affordable complex in the Lower Ocean neighborhood. The developer was simultaneously getting ready to apply for state funding. Commission spokesperson Noaki Schwartz says staff have determined that the developer will, in fact, need a permit.

Kelley says the state should be tearing down whatever barriers it can when it comes to affordable housing construction, including these permit requirements. If such a project were a few blocks farther north, he notes, it would not need a permit.

Moroney says staff supports affordable housing, but he adds that they can’t change the requirements. 

“Even though we support a project and it has great benefits and potentially not a lot of coastal resource impacts, we can’t circumvent the law,” he says.

ACCESS DEMAND

There are other projects that the Coastal Commission could impact.

The public records requested by Santa Cruz YIMBY show the commission is studying the Pacific Station South, a proposed all-affordable housing development for the Coastal Zone.

And then there’s the proposed Riverfront housing project, recently greenlit by the City Council, pending Coastal Commission approval. Santa Cruz Planning Director Lee Butler says the project, which would overlook the San Lorenzo River, offers enough very-low-income units to allow it to rise up to 78 feet in height, in accordance with state law.   

Some activists and planning commissioners want the city to fight developer Owen Lawlor and try to force him to make more condominiums affordable, even if it means getting sued in court—an expensive legal battle that Santa Cruz leaders and consultants insist the city would lose. Lawlor also says it could sink his project, which doesn’t have any organized opposition.

The coastal impacts, laid out by Moroney in this case, are mostly visual.

Although the state passed its density bonus laws in the name of increasing housing affordability, Moroney isn’t sure if the level of affordability outweighs the downsides of having such a tall building so close to the river—about a mile’s walk from the beach, down the San Lorenzo Riverwalk levee paths. 

Against the backdrop of all this, there has already been something of an awkward standoff between the city and the Coastal Commission staff over the Riverfront project. When the project went to the City Council in November, commission staff didn’t submit a letter of concern until after the meeting had started, and the letter had at least one factual error. The letter’s timing elicited tough words from city councilmembers, who felt forced to delay their vote at the last minute until January, when they ultimately gave it their support, pending Coastal Commission approval. 

Moroney says Coastal Commission staff isn’t opposed to upzoning for greater density, but he adds that it needs to be done in a way that preserves “coastal resources,” including the aesthetics of the river.

Kelley, of Santa Cruz YIMBY, counters that the state’s housing crisis has become a humanitarian problem. 

As the sprawling state of California grows only more expensive and hotter, he says it would be wise and energy-efficient to plan for more growth near the state’s coast—close enough to the ocean breezes and far enough from the rising tides.

“When does the Coastal Commission see that with urgency? Because right now, in those emails, there is no urgency,” he says. “They could keep waiting.”