A controversial plan to build housing for low-income families and seniors in Felton was terminated by county leaders last week.
With a vote of the Santa Cruz County Board of Supervisors at its March 6 meeting, the controversial Zayante Oaks affordable-housing project planned for Felton Meadows, on the county’s back burner since 2009, was officially taken off the stove.
County supervisors, acting as the successor agency to the defunct redevelopment agency, agreed to allow the property owner, South County Housing, to pursue a short sale of the 14.8 acres adjacent to the Felton Faire shopping center.
The county will forgive nearly $1.7 million in predevelopment loans given to the Gilroy-based nonprofit affordable-housing developer.
The agreement allows South County Housing to repurpose part of a $725,000 up-front payment by the county that was intended for the planned Canterbury Park housing project in Aptos. South County plans to use $500,000 of the payment toward a $2.5 million debt to the Local Initiatives Support Corp. — which holds the deed of trust on the Felton property — to facilitate a short sale of the property.
The two Felton Meadows parcels were assessed at $1.22 million in 2011.
According to 5th District Supervisor Mark Stone, the agreement means the county is relieved of all obligations regarding the Felton parcel, in exchange for forgiving the loans and allowing the Canterbury funds to go toward South County’s debt.
The county is also freed from an obligation to purchase any unsold units in the Canterbury project.
“It cuts our ties to (the Felton) project, which is a good thing,” Stone said. “In the long-term, (buying unsold Canterbury units) would have cost us a lot more than $725,000.”
‘The county got too far ahead of itself’
The proposed Felton development, called Zayante Oaks, was introduced in 2005. Plans called for 20 rentals intended for low-income seniors and 35 homes to be sold to low-income families.
The county’s redevelopment agency lent South County $200,000 in June 2006 to cover predevelopment costs. By November 2008, the county had agreed to nearly $1.8 million in additional loans.
But a threat of litigation against the project, related to the amount of money the county had committed before environmental studies had been completed, led the redevelopment agency to step back in March 2009.
The agency agreed at the time to give South County Housing nearly $1.2 million of the original $1.8 million in loans as a settlement with the developer.
Later, environmental and drainage reports declared the land unsuitable for the proposed housing.
“The county got too far ahead of itself,” Stone said. “We went too far with that project before (environmental studies had been done).”
According to Andy Lief, director of housing development for South County Housing, the company has a buyer lined up for the property and hopes to close a deal by the end of March.
County documents show that the property could be used for “recreational purposes,” but Lief declined to comment on that.
Beth Hollenbeck, a member of SLVCore, a community action group that opposed the development, said it was no shock to see the county give up on the project.
“It’s not a surprise that (the project) fell through,” she said. “It was a real eye-opener at the time how loosely money is spent before an environmental impact report is done.”
To comment, email reporter Joe Shreve at jo*@pr*********.com, call 438-2500 or post a comment at www.pressbanner.com.
At a glance
Santa Cruz County spent more than $2.1 million in loans and settlements related to a proposed housing development in Felton between its introduction in 2005 and its final cancellation last week.
June 2006: $200,000
December 2006: $496,710
November 2008: $971,153 (amended in March 2009 from $1,273,561)
March 2012: $500,000
Total: $2,167,863
