State grants nearly $21 million for Santa Cruz housing, infrastructure project

SANTA CRUZ – The City of Santa Cruz on Thursday received $20.9 million in grant funding for its Pacific Station Redevelopment project which will provide 100% affordable housing and infrastructure improvements to the city.

The California Department of Housing and Community Development awarded the city the funding out of its Infill Infrastructure Grant program, which provided $158 million to cities across California. The program, which gets its funding from Proposition 1, passed in 2018, is designed to promote the development of infill housing — housing built in already developed lots — in cities across the state.

While the nearly $21 million, the city received will help lay the groundwork for the project, it won’t fund it directly, according to city Spokesperson Elizabeth Smith. Instead, the grant funds site preparations and infrastructure improvements for the project.

Those costs include the demolition of the current METRO station, and other buildings on the project site, grading of the site and stormwater management system installation.

It will also include infrastructure improvements such as better traffic signals, bike lanes, bus turn lanes, landscaping, wayfinding and lighting. A pedestrian and bicycle paseo to connect downtown to the Riverwalk is an additional part of the plan.

“Communities identify infrastructure as one of the challenges to building housing,” HCD tweeted Friday afternoon. “That is why (Gov. Gavin Newsom) and HCD provide Infill Infrastructure Grants statewide.”

The Pacific Station Redevelopment boasts two apartment buildings, appropriately named Pacific Station North and Pacific Station South. Both buildings promise to be filled with only affordable housing units, in the heart of the downtown sector.

Between the two buildings, the city will add 165 affordable housing units. Ninety-five units are planned for the north building, while the remaining 70 are planned for the southern building. The affordable units are deed-restricted for very-low-income — 50% of the area median income or lower — and extremely-low-income units — 30% of the area median income or lower.

“When facing our state’s housing crisis, it’s imperative that we utilize all the tools and resources at our disposal,” HCD Director Gustavo Velasquez said of the statewide grant dispersal. “This grant funding will ultimately provide 4,000 individuals and families with safe affordable homes that will remain affordable for 55 years or longer, serving multiple households over time and allowing families to break the cycle of poverty.”

Units of the lower two affordability brackets are a high need for the city. Its current Regional Housing Needs Allocation have been met for all types of units except for very-low-income units. The city still needs to produce 123 of those units by the end of 2023.

Development of very-low-income units is crucial for the city moving forward, as Regional Housing Needs Allocation numbers in Santa Cruz are expected to more than quadruple for the next cycle.

“These critical funds for infrastructure improvements and site preparation help leverage the city’s Affordable Housing Trust funds to provide a majority of much-needed extremely-low-income and very-low-income family rental apartments in this 100% affordable housing development in the heart of the city’s downtown,” Affordable Housing Manager Jessica de Wit said in a statement.

The project will also provide infrastructure improvements to the city’s downtown sector. The north building project will include an overhaul of the city’s downtown METRO station, including 22 new bus bays and a new pedestrian circulation.

Additionally, the development promises a low-income medical and dental clinic as well as space for storefronts.

Development for Pacific Station South is set to begin in the spring. The timeline for the Pacific Station North development has yet to be determined as the project “is much more complicated,” Smith noted.

However, the work the grant funds will allow the project to be completed faster after development begins since major infrastructure needs will already be addressed, she added.

“The Pacific Station project is a key part of our revitalization efforts on low Pacific Avenue and will bring enormous benefits to the whole downtown,” Economic Development Director Bonnie Lipscomb said in a statement.