Devastated Santa Cruz Back in Business : Quake victims: Weekend festival celebrates community’s rebirth after devastation of Oct. 17, 1989, shaker.

SANTA CRUZ — This beachside mecca for the young felt its historic heart smashed and broken by the 1989 Loma Prieta earthquake. But it planned to came back to life Saturday with a festival celebrating a rebirth. Almost.

Organizers hoped visitors wouldn’t mind the occasional gaping ruins, crumbling buildings and vacant lots.

To take their minds off the bad patches, city officials, chamber musicians, pipe-and-drum and high school marching bands were on hand to entertain the thousands of residents expected to turn out on the rebuilt Pacific Avenue mall.

It’s been a slow and dusty recovery for this university town of 50,000 people 75 miles south of San Francisco on Monterey Bay, known more for its easy-going ambience than redevelopment schemes.

That laid-back attitude was shaken in 15 violent seconds on Oct. 17, 1989, when the 7.1-magnitude quake named for a nearby mountain and its epicenter a mere eight miles away rumbled through Northern California. When it was over, 66 people were dead, 3,000 more were injured and the physical toll on Santa Cruz was two dozen buildings with severe damage.

Those buildings comprised the city’s quaint commercial heart.

Only eight buildings were rebuilt. Where a dozen others stood, empty lots gape like missing teeth. The rest stand broken because their owners were unable or unwilling to pay for repairs.

Only a few months ago, the eyesore of big post-quake tents sheltering businesses folded as one by one the merchants moved back into four walls.

The city emerging from this devastation now shows off two-dozen square blocks with probably more espresso bars and T-shirt shops and wider bike lanes than any other community in coffee-happy, T-shirted and bike-crazy California.

The jewel of Santa Cruz was a shopping district of old brick buildings. This is gone now, given over to concrete, glass and steel. Even the old city jail was turned into a museum and arts center.

The city raised money for the $18-million reconstruction with a half-cent sales tax increase, federal loans and other assistance. Private banks largely have been unwilling to help, officials said.

It took far longer than anyone thought.

City officials blame a Catch-22. Banks won’t loan developers money unless they have tenants signed to occupy the future buildings. Tenants won’t sign leases unless they know a building will go up.

The city learned a lesson, said Mayor Neal Coonerty: “Don’t have a disaster in a recession.”

Bob Rader and his brother Tom own a pawnshop on Pacific Avenue, a one-lane street and the town’s main drag that was the center of the revival.

They tried in vain for months to get a loan, Bob Rader said.

The Raders ended up paying for the repairs themselves, but with all the disruption, business is rotten. “We had a whole year we didn’t have a street,” Bob Rader said.

With a campus of the University of California crowning a hill above the city and a City Council dominated by liberals, Santa Cruz has a progressive, almost New Age image.

This is a city, for instance, that outlawed discrimination against unconventional people.

The Raders and others suspect such attitudes hindered the city’s redevelopment too.

Coonerty concedes the liberal council was slow to comprehend the needs of business people.

“We have very strong growth-control stuff,” said Coonerty, who runs a bookstore. But the city’s building codes and planning rules are only to enhance life, he said.

“Here, environmentalism has been raised up almost to a deity,” he said.

Still, Coonerty said, “the earthquake has changed a lot. It’s forced our attention to rebuilding, things liberals usually don’t pay much attention to.

“It did, I think, bring a lot of the community together.”