Three below-market-rate housing projects with 162 homes are on tap in Scotts Valley and expected to finish construction in 2027.
Many of the units are expected to be filled from the Housing Authority of the County of Santa Cruz’s Section 8 waitlist. That waitlist is closed, but could open in 2026, Jenny Panetta, director of the housing authority, said in July. Interest lists for the remaining units are expected to become available closer to the completion of construction.
The homes will be available to households earning 30% to 70% of area median income, based on state-set income limits. For an individual, 30% of Santa Cruz County area median income is $41,550 and 70% is $96,950. Income limits are updated annually.
San Diego-based real estate firm CRP Affordable Housing and Community Development is the developer of a 25-unit proposal at 4444 Scotts Valley Drive and a 40-unit project at 75 Mount Hermon Road. CRP and Santa Cruz-based developer Workbench are co-developers of a 100-unit project at 4575 Scotts Valley Drive that broke ground this month.
Scotts Valley hasn’t had a fully below-market-rate housing project in more than 25 years — when nonprofit developer MidPen Housing built the city’s first affordable housing project in 1999.
“Scotts Valley is excited to see affordable housing getting built in town,” Timm said Monday. “There’s been a lot of projects that were stalled for various reasons. In town, after the ’08 crisis, a lot of projects just didn’t move forward,” he said, including the Town Center proposal.
Financing below-market-rate developments has been a challenge since California diverted property tax revenue away from redevelopment amid the fallout of the 2008 financial crisis, Scotts Valley City Manager Mali LaGoe wrote in an email.
“When Scotts Valley used to receive redevelopment funding from property tax, we were able to contribute a local match to help projects qualify for tax credits,” LaGoe wrote. Tax credits are a critical source of funding for below-market-rate housing projects and in recent years have become less competitive, LaGoe said, allowing projects to qualify without a local match.
Funding sources for the three projects include state and federal tax credits, low-interest state loans and Section 8 housing vouchers. Beverly Gardens Apartments, at 4444 Scotts Valley Drive, is funded in part by a federal housing grant for recovery from the August 2020 CZU Lightning Complex Fire.
Offices and shops at 4444 Scotts Valley Drive could be redeveloped into a 25-unit below-market-rate apartment building. (Amaya Edwards — Santa Cruz Local/CatchLight Local)
Demolition of a vacant office building began this month to make way for a below-market-rate housing project at 4575 Scotts Valley Drive. (Amaya Edwards — Santa Cruz Local/CatchLight Local)
State laws override local input
The 100-unit project at 4575 Scotts Valley Drive required the razing of a vacant office building, and was not in line with the city’s vision for development, Timm said. As part of a state-mandated plan for housing development, he said the city worked for years to gather input from residents and identify dozens of sites for new housing.
“There were a lot of locations in Scotts Valley, properties that we would like to see replaced or built. This was not one of them,” he said. The office buildings were built with “steel-reinforced cement walls, it was built to withstand earthquakes, all the things. And then across the street is a vacant lot,” Timm said.
CRP and Workbench utilized state law AB 2011, which allows housing to be built on commercially zoned property.
Like many state laws adopted in the past several years, it allows housing projects to move forward with little or no input from local authorities — at times sparking tension between developers and city leaders. In Santa Cruz, Workbench sued the city over its refusal to allow 11 additional units in a project and the case is ongoing.
“Workbench uses state housing laws on 100% of our projects because we must. Local land use policies do not do enough to progress housing,” Tim Gordin, founding partner at Workbench, wrote in a December statement about the Scotts Valley Drive project.
LaGoe, the city manager, said the height of the building doesn’t fit “the character of our town” and there are too few parking spaces included. “The neighboring businesses have expressed concerns over where the new tenants will park.”
A 100-unit apartment complex at 4575 Scotts Valley Drive began work this month and includes three buildings. (Workbench)
Timm echoed her concern about the proposal, adding, “You can be supportive of affordable housing and at the same time your community can say, ‘But we do want to have input.’”
He said residents did not have an opportunity to weigh in on the proposal. “The first thing many people saw on that project was when the bulldozers showed up a week and a half ago.”
On the other hand, the project proposed across the road at 4444 Scotts Valley Drive was one of the sites envisioned in Scotts Valley’s housing plan, Timm said, and “was in line with everything our community wanted to see.”
Read more about each project on Santa Cruz Local’s Housing Project Tracker:
4575 Scotts Valley Drive.
- 99 units plus one manager’s unit.
- 21 one-bedroom units, 40 two-bedroom units and 39 three-bedroom units.
- Households earning 30% to 70% area median income.
- Demolition began this month and construction is expected to finish in July 2027.
4444 Scotts Valley Drive, Beverly Gardens Apartments.
- 24 units plus one manager’s unit.
- Four one-bedroom, 12 two-bedroom and nine three-bedroom homes.
- Households earning 30% to 50% area median income.
- Expected to break ground in December and finish in June 2027.
75 Mount Hermon Road, Pinnacle Pass Apartments.
- 39 units plus one manager’s unit.
- 23 two-bedroom and 17 three-bedroom homes.
- Households earning 30% to 70% area median income.
- Expected to break ground in February 2026 and finish in November 2027.
-Nik Altenberg, Santa Cruz Local August 26, 2025
