Santa Cruz City Council to vote to restrict rent increases at St. George and other similar buildings in the city

As tenants at the St. George Residences in downtown Santa Cruz brace for significant rent increases in November, the Santa Cruz City Council plans to vote on a proposed city ordinance that would prevent landlords of government-assisted housing complexes from raising rents excessively.

At its next meeting Tuesday, the City Council is scheduled to consider an ordinance that would cap rent increases at the St. George Residences, prohibiting the building’s owner from raising rents beyond limits set by Assembly Bill 1482, passed in 2019. That bill caps annual rent increases at 5% plus inflation, or 10% (whichever is less), but includes exceptions for government-assisted housing developments like the St. George. The ordinance, if passed, would expand those tenant protections to all government-assisted housing developments in the city that have rent restrictions set to expire.

Santa Cruz City Councilmembers Scott Newsome, Shebreh Kalantari-Johnson and Sandy Brown introduced the ordinance.

In July, Lookout broke the news that tenants in 70 low- to very low-rent units in the 122-unit building between Pacific Avenue and Front Street were facing varying degrees of rent increases starting in early November that threatened to make the apartments unaffordable for some. Many of the tenants affected by the increases are seniors who rely on Social Security for their income. Some are facing a near-doubling of their rents overnight, on Nov. 1.

Green Valley Corporation, the parent company of San Jose-based construction firm Swenson Builders, rebuilt the property after the 1989 earthquake and owned it for many years. The building is now owned by a company called Barron Ranches, Inc., which acquired the property in 2021.

It’s unclear whether a person or entity affiliated with Swenson still owns the property, but Barron Ranches’ CEO is Rebecca Menne. Menne is the daughter of Swenson’s chairman, Barry Swenson, and also owned a 15.5% stake in Green Valley Corp. in 2021, according to a 2019 lawsuit.

Newsome, whose District 4 encompasses downtown Santa Cruz, shared the news with a newly formed tenant group at the apartment building, St. George Residents for Tenant Protections, at its weekly meeting Wednesday, and said he is confident the ordinance will pass. The gathering of about 15 people applauded the announcement.

“We have a housing crisis and a lot of people who are trying to find housing are also losing housing,” Newsome told Lookout on Wednesday, adding that the city council had been working on an ordinance for about a month. “I think it’s very important that the city council pass it.”

Newsome added that proactive measures to keep people housed are a top priority.

“Before the July recess, we received a report at council that said one of the best ways to address the housing issue in our community is to prevent people from falling into homelessness,” she said. “This definitely has that goal.”

Kevin Cummings, a retired paralegal and resident of the building for 31 years, has been in back-and-forth communication for weeks with a representative from Barron Ranches and Santa Cruz City Attorney Tony Condotti about possible ways to keep rents affordable.

Cummings has considered the possibility that the state’s rent control bill would protect St. George tenants in this situation. Cummings said he also considered filing a motion in court to enforce a 2023 settlement agreement that Green Valley Corp. signed with the state. California Attorney General Rob Bonta announced last June that Green Valley Corp. had agreed to pay nearly $400,000 in restitution and penalties for evicting or raising rents by more than 150% to nearly 20 employee tenants who had been paying below-market rates.

News of the city’s planned vote on an ordinance, however, has Cummings excited.

“I didn’t set out to create false hopes, but I am now really overwhelmed by the fact that the city council has listened to us, heard us and found a solution,” he said. “I am really grateful.”

Cummings said it’s easy to get discouraged when fighting for change, but the ordinance up for a vote is a great feeling.

“I can be a little cynical at the national and state level, but if you get involved at the local level, sometimes you get results. That’s pretty gratifying,” he said.

Other St. George residents said they were also delighted and relieved with the development.

John Daugherty, 64, is a former Santa Cruz Metro employee and a 30-year resident of St. George. He said he and his partner have lived in separate apartments in the building, but would need to move into one room in order to continue living in the building. Because both Daugherty and his partner use wheelchairs, that would be very difficult.

“I guess this is due to my excitement at my advanced age at the prospect of being able to breathe better and not be afraid,” he said.

Resident Annie McCollough said forcing residents out of St. George not only hurts residents, but also the landscape of downtown Santa Cruz.

“Everyone knows us, we frequent all these businesses here and when they heard about this they felt very bad,” she said. “We help their businesses to continue to operate and that is important.”

City Attorney Condotti told Lookout that the city is legally allowed to enact its own tenant protections that exceed those set forth in AB 1482. State law does not preempt any local ordinance that is more protective and covers the same or similar issues.

Condotti said the building owner could theoretically file a lawsuit against the city to block the ordinance, but he doesn’t think such a lawsuit would be successful.

“Anyone can file a lawsuit for any reason, but that doesn’t necessarily mean it has merit,” he said. “We’ve looked at it pretty closely and we believe it’s enforceable and would withstand a legal challenge based on specific language (in AB 1482) that says it doesn’t preempt any local ordinance.”

Barron Ranches attorney and spokesman William Van Roo did not respond to Lookout’s request for comment before publication.

If the ordinance passes Tuesday, it would go back to the council for a final reading on Sept. 24. If approved again, the ordinance would take effect within 30 days, or Oct. 24, before rents in St. George are set to increase Nov. 1. The city council could also declare it an emergency ordinance, in which case the law could take effect immediately.

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