Why 831 Water Street project foundered

The proposed development at 831 Water Street in Santa Cruz has proved, if any further proof was needed, that nothing brings together community opposition like a major building project.

Slow growth (meaning limits on new housing development, even if it is so-called “affordable”) has long been the prevailing opinion in much of the city and county and this project seems to run right up against that wall.

Mix in a state law that essentially strips much of the ability of local government to control new housing developments, and the result seems inevitable: a political and legal battle that could take years to resolve, if the developer doesn’t make concessions – or drop out first.

The four- and five-story buildings, as proposed by developer Iman Novin, would include 145 units: 74 studios, one-, two- and three-bedroom units for middle income households – along with 71 studios, one- and two-bedroom units for low and very low-income households, including 54 units for tenants on the Santa Cruz County housing authority’s waiting list.

The development would be built on a hill currently occupied by a strip mall but that has historical value, from the Villa de Branciforte adobe village located there in the late 17th century.

Opponents, and they are legion, also cite traffic and bike safety concerns, a lack of community engagement by the developer and, correctly, the “segregation” of low income units from the middle or higher income tenants.

Indeed, Novin Development brought just such a plan forward last week to the Santa Cruz City Council that would have put all the “affordable” (read, for lower-income residents) units in one wing, and the “market-rate” (meaning financially out of reach for many Santa Cruzans) units all to be in the other building.

And that seemed too much for council members. Despite SB 35, the 2017 law that requires cities to look at housing applications objectively and not subject to local opinion or prevailing political winds, the council by a 6-1 vote rejected the application.

Does that mean that the saga of 831 Water Street is over?

Hardly.

The developer has pointed out previously the concessions he’s already made to bring the development more in line with what local residents would prefer to see there.

But the strongest argument Novin will undoubtedly make is that rejecting the plan is a violation of SB 35 – a law that many in the community, including some elected leaders, despise, since they feel it strips away local control from development proposals.

But, the next step is for the city to formally explain to the developer why the project was rejected.

If the city doesn’t do that, then under the rules and regulations of SB 35, which limit the amount of time a project can be reviewed, 831 Water Street would automatically be approved.

But once this is explanation is made, and considering the council’s rejection, the developer has several options.

One is obvious: Novin can take the city to court, contending the project falls within the “objective standards” that SB 35 says are a legitimate reason why an affordable housing development can be rejected. Moreover, the state has previously said the city is subject to SB 35 because it has fallen short on housing for low-income residents – and 831 Water Street would provide those units, segregation objections or not.

There’s also another option, and one that many local people would prefer, Novin, rather than filing a lawsuit, could just walk away from the project. Considering the investment already made by the developer, that seems unlikely, but many a project proposed for Santa Cruz has foundered on rocky shores of public sentiment opposing large-scale developments.

But here’s a better idea: The developer can come back to the city with a redesigned proposal that would not segregate the low-income units from the market-rate ones.

Would that appease opponents? No. But within the regulatory confines set up to provide affordable housing, it might be the only outcome that will satisfy SB 35.