The two-decade-old Town Center project has ground to a halt, as developer Foothill Partners and City of Scotts Valley are unable to agree to terms with the City of Santa Cruz.
Santa Cruz is involved because it owns the land at the heart of the project, on the site of of the former Santa Cruz Airport, Skypark.
Located on 15 acres of mostly vacant land, bordered by Mt. Hermon Road, Sky Park Drive, Blue Bonnet Lane and a residential development, the Town Center has been envisioned as a magnetic blend of restaurants, residential spaces and boutique retail stores.
“Developers put their toe in the pool and are surprised at the cost of the land,” said Scotts Valley Mayor Randy Johnson. Johnson has been a supporter and advocate of the Town Center since first being elected to the City Council in 1996, and more recently used the project as a plank in his reelection campaign last November.
Johnson, City Manager Jenny Haruyama and Vice Mayor Jim Reed are continuing closed-session negotiations with Bonnie Lipscomb Santa Cruz economic director.
If the price isn’t right, Scotts Valley cannot force the developer to make a decision to move forward.
Perhaps, Johnson said, some degree of good luck would be helpful. “The Town Center needs a (good) break,” he said.
A combination of a gloomy retail picture and potential environmental clean-up costs have caused developer Foothill Partners to balk at the $8.3 million appraised price, Johnson said.
That parcel was appraised by Santa Cruz-based Zeller Appraisal Services, endorsed by the Santa Cruz City Council during closed session and forwarded to Scotts Valley “sometime last spring,” according to Lipscomb.
“The ball is in Scotts Valley’s court,” she said this week.
Santa Cruz owns the 8.15-acre of land — one of three contiguous parcels — that were previously a part of the Skypark Airport until it closed in 1982. The other two parcels are privately-owned: the former AmeriGas location and the existing Scotts Valley Boat and RV Storage.
El Dorado-based Foothill Partners, which has an exclusive agreement to purchase the Town Center, is being extremely cautious about responding to Santa Cruz’s asking price, city officials said.
“The community has said you can’t just put anything there,” Johnson said, referring to the specific plan created for the Town Center in 2008.
The 241-page plan and accompanying environmental impact report recommends an appropriate mix of land uses, urban design concepts and architectural design guidelines.
“I’d like to move forward with the Town Center,” said Councilman Jack Dilles. “But I want to do it right.”
The overall retail economy is in turmoil. Online sales are forcing a rapidly changing retail landscape – a shift from brick-and-mortar to click-and-mortar.
Johnson recalled that the Town Center had lurched forward in 2001 and 2008, only to become derailed by stalled economic cycles. He called the current situation “challenging.”.
Three years ago, Santa Cruz was negotiating with a company that wanted to build a Safeway-anchored shopping mall as part the Town Center, but the investors backed out.
Johnson remains cautiously hopeful. “I’ve been optimistic before and disappointed before,” he said. “But given the right circumstances this thing will happen.”
The one bright spot on the multi-owner property involves local developer Corbett Wright.
Escrow recently closed on Wright’s 1.5 acre parcel, located on the old Suburban Propane property at 260 Mt. Hermon Road.
Wright plans to build a restaurant brew pub called the Hangar with partner Rob Stuart of Timberworks. The next step is to secure building permits from the city.
