Maddy Middleton, 8, found dead in dumpster near Santa Cruz home

Friends and family members scoured the artist community where she was last seen Sunday afternoon local time when she vanished while pushing her brand-new scooter in a purple dress and black bicycle helmet.

Cops circulated photos of the girl everyone just called Maddy: an adorable eight-year-old with freckles and a gap-toothed smile.

Hundreds of volunteers arrived to search the surrounding neighbourhood, which locals admit is not the nicest in this free-spirited college town.

Even homeless Santa Cruzans helped by checking the local levee to make sure Maddy hadn't fallen in.

From the beach to the mountains framing this scenic city, everybody was looking for Maddy. "This is extraordinarily heartbreaking news I'm about to give to you," said Santa Cruz Police Chief Kevin Vogel during a late-night news conference. 

"This evening at approximately 7.55pm. … our detectives discovered the body of a young female inside of a dumpster at the complex located behind me."

On top of tearing apart a family, the grim revelation is also roiling a once tight-knit community.

But as the search spread beyond Santa Cruz and entered its second day, authorities made a sudden and sickening discovery.

Inside a recycling dumpster — just a stone's throw from Maddy's front door — they found her body.

That's because the person taken into custody for questioning in the still-mysterious child slaying is a 15-year-old boy — a boy who lived in the same complex as Maddy.

"We have arrested and taken into custody a 15-year-old male who was on the property at the time of the discovery," Vogel told reporters.

The Associated Press reported that the teen was arrested on suspicion of murder.

"This has just been a horrific, horrific experience," Vogel told reporters, according to Reuters. "My staff was so hopeful that we were going to find her alive."

It's a cruel twist for a community that had been looking outside for answers, only to find one within.

"We all had this idea that she had been taken from the site," neighbour Jeannie Cartabiano told The Washington Post.

"That's what's so shocking," she said. "To find out that" that it might be "one of our own is shocking. That she was at the site this whole time is shocking. The whole thing is hard to comprehend."

Cartabiano did not identify the 15-year-old. Neither did police. Local news stations aired footage of the boy's mother wailing as her son was taken into custody for questioning Monday night, but blurred out the minor suspect's image.

Much else remains blurry, at least for the time being. How Maddy died, for instance. And perhaps most important of all, why?

What is already clear, however, is that her community, which banded together to search for Maddy, is showing strain and assigning blame now that her body has been found.

"As heinous as this was, we felt like a cohesive community" at first, Cartabiano told The Post. But something had broken with the discovery of Maddy's body and the boy's arrest.

"Quite frankly, I think this is going to pose lots of questions about our community internally," she said. "You can't look at this without asking: How could this happen?"

The community in question is the Tannery Arts Centre, a gleaming new $US55 million mixed-use complex that seemed like the last place something like this would happen.

The artists' colony was one of Santa Cruz's shining achievements. Its saga began in 2001, when America's last operating tannery, Salz Leather, shut down. Surrounded by other industrial and commercial buildings, some of them similarly abandoned, the old Salz factory became a public eyesore.

"If you walked around the site a couple of years ago, on the spot of the defunct Salz Tannery on the Highway 9 side of River Street, you would have sworn you were looking at a relic of a forgotten Nevada mining town," the Santa Cruz Sentinel wrote. "The place was fenced up, but it was so dilapidated and scary-looking that a 'Keep Out' sign hardly seemed necessary."

In 2004, however, the Santa Cruz Redevelopment Agency approved a plan to turn the 150-year-old factory into a mix of artists' lofts and affordable housing for artists and their families. The agency provided $US1.9 million, with the vast majority of the project coming from state or federal housing grants and Artspace, the Seattle non-profit that built the project.

Somehow, the project survived local politics and California's budget crisis.

By the time Maddy and other residents moved into the Tannery Arts Centre's 100 affordable housing units in late 2008, the eight-acre complex included a cafe and a dance studio. In the years since, its private studios have filled up. A literary magazine moved in. So did notable art galleries. Residents started a garden. And a 200-seat theatre is scheduled to open later this year.

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Developers billed the TAC as a "first-in-the-nation art community that provides a sustainable, accessible and vibrant home for the arts in Santa Cruz County."

Politicians boasted about helping to build it.

Privately, however, Tannery residents complained that the city wasn't doing enough to protect the arts campus, which sat in a questionable neighbourhood.

"It's a lot of hard work," said Cartabiano. "We're a place of transformation. We have a very cohesive vision but if you know anything about our area, we are located in a commercial/industrial zone. There is heavy drug trafficking going on around us. It's just never-ending. It's getting better bit by bit, but it's still there."

And so it was that when Maddy Middleton went missing Sunday, the search quickly escalated from the Tannery to the surrounding neighbourhood and then to all of Santa Cruz.

Some blamed the city's sizeable homeless population.

"Are we still going to allow all the drifters and fugitives to sleep and live long term here?" asked one man in the comments section of an article about Maddy's disappearance. "Are we going to continue to allow them to camp by the river, in view of the Tannery, further jeopardising public safety? Do you still want to help the homeless? If we find out this was a transient that had been living down there what should be the reaction? I pray they find here before any more harm is done."

But Cartabiano said that, for the most part, the community rallied together to find Maddy.

"Hundreds and hundreds of people were looking for her," she said. "You couldn't throw a rock without hitting somebody looking for her night and day."

The only clue was video footage showing Maddy on her scooter at the Tannery at 4.12pm on Sunday.

Maddy's parents spent all Sunday night looking for their daughter and frantically speaking to investigators. On Monday, her mother, Laura Jordan, told reporters how worried she was.

"I can't explain how difficult this is," Jordan said, according to the Associated Press.

Police interviewed the complex's residents: once, twice, then a third time. The FBI was called in to assist. The search soon expanded to the San Lorenzo River and up and down the coast.

"This is our town, and this just shouldn't happen here," volunteer David Giannini told the AP. "We all should do everything we can to find this girl."

But when a break came in the case, it came from within.

On Monday night, roughly 24 hours after Maddy's disappearance, a SCPD detective found her body in a dumpster at the Tannery Arts Centre.

"We actually had people look in this area so I don't know" how we missed her, said Cartabiano, who, like her neighbours, had assisted in the search. "I don't want to get too graphic but I imagine that she was really hidden."

As detectives marked off the crime scene, cops also detained a 15-year-old Tannery resident.

Cartabiano said locals were shocked by his arrest.

"We love this guy. All of us, if you ask us what you think of him, we'd tell you he's an outstanding kid," she said. "He was always in there to help with environmental clean up. He was our poster child."

"I've known him for a long time. He was a nice kid," Terrence Keller, another neighbour, told NBC Bay Area. "He was very well spoken for his age. He was seemingly a nice guy. So it's a very unfortunate circumstance, to say the least."

According to Cartabiano, the two children — victim and alleged killer — were close.

"They were great friends, that's what makes it so ludicrous," she told The Post. "I'm shocked. I'm numb."

Police haven't said how Maddy died or what motive the 15-year-old suspect might have had.

"With respect to what that evidence is I'm going to hold back on that," Vogel told reporters, the Santa Cruz Sentinel reported.

Vogel told reporters that he thought Maddy had a "reasonable amount of trust" in the teenage suspect, and described the two as "acquaintances."

Investigators believe the victim was "lured to the suspect's apartment willingly and murdered in the suspect's apartment and transported to the recycling bin," Vogel told reporters, according to the newspaper.

"Our hearts and our thoughts and our prayers go out to those close to Madyson who have been devastated by the loss of this very precious life," Santa Cruz Mayor Don Lane said at a news conference Tuesday, according to the Sentinel. "Today is a day to honour Madyson and to offer our support."

Without many firm answers, Cartabiano and her neighbours have been left to guess at what could have turned their artist colony into a crime scene.

"We heard that it was possibly a horrible accident, that something went all wrong," she said, suggesting that multiple kids could have been involved. "Whoever it was was young enough to be frightened and tried to hide the scene."

Whatever happened Sunday night, the death is raising questions about the community Cartabiano felt so close to just 24 hours ago.

"We are confounded why they wouldn't go to their parents or go to the office," she said of the suspect or suspects. "There are so many of us here to support them."

Cartabiano said the community could go in one of two ways after the killing: come together or fall apart.

"I am trying to feel optimistic about it, but we have a huge challenge in front of us, and that is to heal from this," she said.

"It is amazing how resilient a community can be," she said before hesitantly adding, "if we do stick together."

The Washington Post