The Santa Cruz County Sheriff's Department has taken over patrolling city streets, but authorities say there is no longer any danger to the public.
Police say shots were fired just after 3:30 p.m. on the 800 block of North Branciforte Avenue. A second round of gunfire was reported on Doyle Street a short time later.
A witness near the scene on North Branciforte Avenue described hearing a large amount of gunfire before being ordered by police to stay inside.
A citywide manhunt is underway. The FBI, Santa Cruz County Sheriff's Department and other nearby agencies are assisting in the search.
Several schools in the area, including Branciforte Middle School and Costa Noa High School, are on lockdown due to the police activity. Parents can go to 701 Ocean Street to pick up their children.
Stay with ABC7NEWS.COM for updates on this developing story.