"You don't understand why we're unique and special and therefore need special housing rules that just so happen to be identical to the ones in every other town" is also a bog-standard NIMBY argument. You're really ticking every single checkbox here.
Ok, I'm NIMBY. So? I'm sure you would too if they were to build a 5 story apartment building overlooking your backyard. My point is that Santa Cruz and San Jose are very different. Santa Cruz is a spot of natural beauty worth preserving. There really aren't many beach towns like it on the coast. The closest one to the North is probably Pacifica 50 miles north. Santa Cruz doesn't have much more land available while San Jose has a lot of land. Also it makes sense to build up in San Jose, which it's doing. San Jose has a lot of room for growth, Santa Cruz does not. San Jose is a like many other California cities, Santa Cruz is unique, which is why massive amounts of tourists come from the Central Valley and Santa Clara Valley to enjoy a day at the beach at the Santa Cruz Boardwalk.
Didn't get a big nimby vibe from your first post, just sounded like you were explaining the local situation.
But now you've mentioned it, nimby is the reason your nieces and nephs won't be able to live there. The richest folks always win when there is a refusal to build.