Client: County of Santa Cruz

Gruen Gruen + Associates (GG+A) was part of a team retained by the County of Santa Cruz to develop a long-range facilities plan and master plans for its two largest campuses. GG+A contributions included estimating and forecasting the County’s real estate occupancy costs, assessing real estate market conditions, and evaluating the economic feasibility of alternative re-use options for County-owned property at its main administrative campus in downtown Santa Cruz. GG+A also provided analysis and guidance about trade-offs between some of the County’s strategic initiatives, such as creating below market rate housing for its own workforce and with real estate revenue generation potential to fund campus reinvention for its staff.

GG+A built a comprehensive financial model to evaluate and compare the costs incurred by the County to occupy different arrangements of building space. The financial model simulated the annual occupancy costs of leasing and owning space over a long-term period (through 2040). The analysis identified a “Base Case” scenario to house the County’s projected workforce and reorganize service delivery.

A housing market analysis was also completed by GG+A to evaluate the market potential for multi-family uses to be absorbed and occupied if portions of the County’s two largest real estate holdings, in Downtown Santa Cruz and Freedom Boulevard in Watsonville, were made available for alternative uses. The market assessment identified competitive housing supply, market fundamentals, and demographic and economic determinants of current and future housing demand for both market areas. The analysis concluded with estimates of near- and long-term housing demand potential for each site and market pricing estimates.

GG+A collaborated with Gensler to identify conceptual development alternatives for multi-family housing on portions of the main County Government Campus at 701 Ocean Street in Santa Cruz. The alternatives considered differing construction types, building heights, amount and arrangement of parking, and overall housing yields for potentially surplus portions of the property. A prior proposal to build a 2,500-seat arena for the development league affiliate of the Golden State Warriors was also incorporated into several of the alternatives. In addition, because development of multi-family housing and/or arena for the Warriors would displace a considerable amount of surface parking, the analysis considered the options and likely costs to replace parking for the County’s workforce. The economic feasibility analysis further considered three potential segments of housing for potential development at the site: (1) market rate; (2) workforce; and (3) affordable under LIHTC requirements. GG+A estimated the market, operating, and financing parameters for each type of housing along with estimates of vertical development costs. Findings are made about the amount of market rate housing needed to support the costs to replace County parking to accommodate a potential Warriors arena and the implications for how much affordable housing could be built before the development options became infeasible.

GG+A staff attended staff meetings to present the findings, conclusions, and recommendations. Due to the coronavirus pandemic, the project was put on hold.