After a roller-coaster ride lasting several months, the beach town of Santa Cruz has finally approved a scaled-down plan to expand its historic boardwalk area — and election results in November's city council races are expected to offer a public referendum on the council's decision. The proposed expansion is the latest development issue to divide Santa Cruz -— a college town known for its environmental, non-traditional bent that has undergone a series of bruising growth and redevelopment battles in the last decade. When the boardwalk expansion was first introduced, a majority of the progressives on the city council thought they'd found a way to increase the city's commercial base while improving housing for residents and finding additional revenues for the city. However, when strong public opposition surfaced, the proposed plan was significantly changed. Santa Cruz's boardwalk area includes a historic amusement park and roller-coaster that date back to the turn of the century. However, the boardwalk is separated from the city's strong downtown by a group of run-down neighborhoods — including the ethnically mixed Beach Flats neighborhood, where some houses would be purchased and razed by the city for the project. Less than a decade ago, Santa Cruz underwent a similar battle over redevelopment of the downtown, which was largely destroyed by the Loma Prieta earthquake. After the ‘'quake, several historic buildings were quickly razed by city officials. Downtown merchants and social activists then engaged in a lengthy dispute over whether the reconstruction of downtown should seek to upgrade the area or continue to accommodate its considerable homeless and transient population. In similar fashion, the boardwalk proposal pitted the city's business community against social activists, with the city government itself caught in the middle. Under the original proposal, the Santa Cruz Seaside Co., owners of the historic amusement park, planned a 1.4-acre expansion of the 12-acre boardwalk, a 225,000-square-foot-shopping center, realignment of a street, and construction of a parking garage and a nature center, with the city condemning residential property nearby. The properties were 19 apartments in the Beach Flats neighborhood, which housed 48 residents. The Seaside Co. was to contribute money or land toward construction of affordable housing, and provide public improvements such as bicycle paths. Additionally, a traffic shuttle from downtown was planned to reduce the impact of increased traffic on local neighborhoods. Beach Flats is considered the city's most rundown neighborhood. Nearly all its residents are renters. The neighborhood sits directly behind the Boardwalk amusement park and is surrounding by old motels and a hilly area of restored Victorian homes. Downtown Santa Cruz is about one mile further inland behind the neighborhood. The plan had already been reduced in size before it reached the council for vote last month: the shopping center would have only 125,000 square feet, and the parking garage and nature center were both eliminated. The plan unanimously adopted by the seven-member city council last month dropped all of the major commercial components of the plan. The only items approved were construction of a 275-room hotel conference center and up to 28 units of low-income housing and public improvements such as building rehabilitation. A traffic shuttle is still planned, but funding for it and other improvements will have to come from other sources. Opposition to the expansion ran 2 to 1 at public hearings, according to Mayor Celia Scott, who criticized the expansion for the traffic it would create and for the removal of homes. "The community had a very strong history of consensus building after the earthquake," which destroyed the city's downtown, said Planning and Community Development Director Eileen Fogarty. But that consensus wasn't reached on the boardwalk plan, and now Fogarty's department will continue to meet with citizens to develop a plan that meets their approval. One factor that may have galvanized opposition was construction earlier this year of a "power center" on the eastern entrance to the city, according to activist Doug Rand, a leader of Beach Area Working Group, which opposed the amusement park's expansion. In many cities, construction of boxy Petsmart and Office Max buildings doesn't ruffle many feathers. But in Santa Cruz, "It's like a Trojan horse coming over the hill from San Jose," he said. To the city's social activists, the power center created the impression that commercial interests were gaining greater influence in the city — and a backlash against that influence spilled over into the boardwalk discussion. The boardwalk is a major source of income to the city, contributing $500,000 in parking and admissions tax revenue each year plus tax-increment money for redevelopment projects. It drew 3.2 million visitors last year, making it the 14th most visited attraction in the nation, according to the San Jose Mercury News. Ted Whiting II, vice president of operations for the Santa Cruz Seaside Company, said he was disappointed by the city council's decision, but the company would take "a wait and see" approach. He said each element of the plan would have gotten its own discretionary review before permits were issued. The total plan encompassed 205 acres. "It was an area plan, he said. "No one project was approved. People didn't understand that." The plan was drawn up after numerous public hearings and meetings, but Mayor Scott and others said the meetings didn't take community concerns into account. Rand said that four members of the council who had originally backed the beach plan "betrayed their own electorate." When the final decision on the plan was made October 6, opponents were already discussing the possibility of a referendum on the subject and a capacity crowd packed the council chambers. Rand said that opponents were pleased that the boardwalk expansion and realignment of Third Street were removed from the plan. There are "mixed feelings," he said, on the hotel/conference center, which will have "tremendous impact on the beach area." The new hotel will retain some of the components of the historic Bahia Hotel, which is currently on the site and dates to the 1920s. Rand, a longtime community activist, said that the goals of revitalizing the area "are admirable." But with a plan that wiped out the Beach Flats neighborhood, he said, "we couldn't identify the public benefit here." Election results in November will serve as a referendum on the plan, he said. Three opponents of the plan are running for the city council. He said that opponents of the beach plan are still considering legal action to challenge the plan's environmental impact report. While deciding on the boardwalk's future, the Santa Cruz City Council also voted in October to accept a settlement with the Seaside Co. on some acreage near the boardwalk. Rand said that settlement might also be the subject of a legal challenge. At issue is about four acres of land along the San Lorenzo River, which ends at the boardwalk. The land is currently used for parking, but a portion may be turned into a park under the settlement. An opponent of the boardwalk expansion plan wrote to the State Lands Commission last year that the Seaside Company was using tidelands as a parking lot, and that the land belonged to the public. "The whole area has been underwater and is...public tideland," Rand said. Under the state constitution and the city charter, the land is supposed to be public, he said. The Lands Commission determined that actual ownership of the site was a murky question. Under the settlement the state gets 20 % of the land, which will then be leased to the city. Seaside gets clear title to the rest. Contacts: Ted Whiting II, Vice President, Santa Cruz Seaside Company, (831) 423-5590. Doug Rand, Beach Area Working Group, (831) 458-3434. Celia Scott, Mayor, (831) 429-3540. Eileen Fogarty, Planning and Community Development Director, (831) 429-3555.