SANTA CRUZ >> Santa Cruz County is in the middle of a $320 million construction boom, the biggest since the 2008 crash.
This year, not only are more hotels being built but also town homes and condos. Construction jobs are up by 500 compared to a year ago.
“This is welcome news,” said Andy Constable, economic development manager for the County of Santa Cruz. “Skilled trades are an important part of the workforce in Santa Cruz County. These numbers translate into jobs for our friends and neighbors.”
Nine housing developments are being built, bringing 430 new homes for sale plus 100 rentals, according to a tally by the Sentinel, and three projects with 89 units have approvals but not building permits.
This adds up to $250 million in new housing.
The biggest housing developments under construction are:
• The Grove from City Ventures: 50 town homes designed by San Francisco architect Hunt Hale Jones at the end of Enterprise Way near Highway 17 in Scotts Valley.
• Blackbird Homes from Elite Developments, 48 town homes designed by Santa Cruz architect Thacher & Thompson on a hilltop at 35 Harkins Slough Road in Watsonville.
• Sunshine Gardens, a Chinese investment with 77 town homes and 10 single-family homes at 1773 Santa Victoria in Watsonville, off Ohlone Parkway behind Target.
• Pippin Orchards, a $29 million MidPen Housing complex with 46 affordable rentals at 56 Atkinson Lane, Watsonville, with application signups starting in May at midpen-housing.org.
More than $70 million is being invested to build or renovate four hotels with 362 rooms. Courtyard by Marriott in Santa Cruz, Four Points Sheraton is in Scotts Valley, Coastview Hotel in Santa Cruz and the Brookdale Lodge.
A building permit has been issued for the 10-room Surf Colony Hotel in Santa Cruz.
In Watsonville, two hotels with 192 rooms are awaiting building permits and a third has Planning Commission approval.
In Santa Cruz, the Sunset Inn was demolished to make way for a 60-room Hampton Court Inn and builders have permission to start demolition to make way for the 60-room Lanai Lodge.
All this adds up to $95 million in hotel construction and 600 rooms.
Hotels tend to be viewed favorably by city and county officials because they mean a new and steady source of revenue from room taxes unlike housing developments, which boost property taxes, but that revenue must be shared with state government, schools and fire districts.
BOOMING
In Watsonville, Suzi Merriam, a city planner for 17 years, said it’s the busiest she can remember since hundreds of homes were built behind the Target shopping center.
A Chinese company affiliated with Sunshine Gardens wants to build 151 more homes in Watsonville; that project is in review.
Downtown, William Hansen’s luxury apartment complex with 54 units at 445 Main St. is nearing completion.
Building permit applications have come in for 24 condos at 1482 Freedom Blvd., 16 town homes at 1205 Freedom Blvd., a 112-room hotel, retail and a drivethru restaurant at 1715 W. Beach St. and an 80-room hotel at 1 Western Drive.
Alexis Gevorgian, whose company owns the Freedom Boulevard property, hopes to start building the condos this year.
“There is a lot going on,” Merriam said.
Rather than rely on an outside consultant to check plans, the city “hired our first ever plans checker in-house last year,” which Merriam said will mean faster turnaround on projects.
Watsonville hired a new building official, Eric Simonson, who came from the city of Santa Cruz, where he had experience on large commercial projects such as hotels.
MORE JOBS
Construction jobs, which tend to pay more than retail or hospitality work, held steady during the winter, with 4,500 in January and 4,700 in February.
This is up from 4,000 a year ago — a boost for a sector that had shrunk to fewer than 3,500 jobs for six straight years after the 2008 housing crash.
Still, construction jobs have not returned to the January 2005 pre-crash peak of 5,300.
A couple of storm clouds are on the horizon.
With a bulge of construction work ongoing and in the pipeline, a policy change in Washington, D.C., took developers by surprise.
Tariffs on imported steel and aluminum announced last month by President Trump won’t affect Pippin Orchards, which began construction late in 2016, but they could mean higher costs for Watsonville developer Raied Farhat, who expects to start building 49 town homes at 221 Airport Blvd. next year.
He needs final map approval by the city, then will line up financing.
“The majority of materials do come from China,” he added. “If tariffs are imposed on steel and lumber, they’ll be going up in price. It will affect our building price. It kind of threw us for a loop.”
Farhat said he is fortunate to be working with a construction crew for 15 years, but labor shortages can limit what developers can do.
“To do multiple projects at same time, it has been a challenge,” he said.
HOW MANY STORIES?
He’s caught in the middle between demands for more affordable housing and neighborhood objections to multi-story housing.
“The more stories you build, the less expensive it is per unit,” he said.
Yet neighbors and city leaders do not necessarily want housing that is taller and higher density.
“How could we really make it affordable if we can’t build very dense?” Farhat asked.
For Don Lane, former Santa Cruz mayor, the town home boom does little for ”tens of thousands of local residents who don’t have a high enough income to buy a house.”
He sees 100 rental units as “way too small a number” to significantly improve the rental housing situation for thousands of seniors, younger workers and their families living here.
“We have not built very much housing — especially multi-family rental housing — over the last several years,” he said.
For more than a year, he’s talked with employers and affordable housing advocates about solutions. That group plans five community meetings starting April 11 to get feedback on a bond of up to $250 million for affordable housing on the Nov. 6 ballot.
PROJECT UPDATE
SANTA CRUZ: Delaware Addition’s $35 million apartment and commercial project at 2120 Delaware Ave. with more than 200 bedrooms is scheduled to open in 2020 or 2021; lots are for sale to build commercial buildings with work/live flex units possible. Nonprofit insurance office and a mixed-use building are under review; Cat and Cloud will anchor 719 Swift St., and Ingalls Alley will connect the two properties this summer.
On Mission Street, construction is underway for Blaze Pizza, Starbucks and Primal Kitchen.
APTOS: Aptos Village town homes will be ready in early May, cluster homes in mid-July, condos in late July; New Leaf Community Markets aims to open in the fall. Alistair Craft and Jerid Kiedrowski of Sereno Group are taking queries on homes; Joe Appenrodt is handling leasing queries.
The renovation is progressing at Rancho Del Mar shopping center, where Erik’s DeliCafe will reopen in late spring and Comerica will move in the summer to the former Windjammer space. The Rite Aid and Ace Hardware buildings are getting upgrades, with mid-summer work scheduled for Aptos Shoes and the building where Comerica is now.
SCOTTS VALLEY: Comments are due April 16 on the environmental impact report on a proposal to change zoning for 29 acres of the 43-acre site at 440 Kings Village Road, formerly Aviza Technology, from light industry to medium-high density residential and open space. Email tbateman@scottsvalley.org.
Palisades Builders is working on a design with housing and retail space for the Town Center on 14 acres off Mount Hermon Road.
CAPITOLA: Terra Commons, four homes built by Ian Carney, part of 11 planned at 1575 38th Ave. are to be ready this summer, priced in the $800,000s; email sheila@shermanandboone.com.
Marie Callender’s restaurant was demolished to make way for Olive Garden at 3400 Clares St.
Capitola Mall owners want people to fill out an online survey about what they want at the mall.
WATSONVILLE: Popeye’s will open in a vacant space next to Grocery Outlet.
Brian and Kevin Dueck of Aptos are renovating 45 Aviation Way for multiple tenants including Beer Thirty.
Nordic Naturals is adding 58,000 square feet of office and R&D space.
Four cannabis manufacturing businesses have applied for tenant improvement permits.
