Capitola City Council pushes mall zoning code vote to March

The Capitola City Council pushed a vote to March on zoning changes for the Capitola Mall site during a special meeting on Monday evening, giving councilmembers more time with the large amount of information presented and to consider new requests from the mall’s owner, San Francisco-based Merlone Geier Partners (MGP).

While the five-member council considers zoning changes to allow for a hotel, conference space, retail and housing, MGP sent a flurry of last-minute requests to city staff on Monday afternoon, asking to plan for 25,000 to 35,000 square feet to ensure it’s financially feasible, plus other technical changes.

“This is one of the largest decisions that our city will be making for many years,” said Councilmember Gerry Jensen. “We want to make sure we gather the comments we heard tonight, and the letter we received [from MGP] is very important to look at.”

There is currently no project application for the mall, but approving the zoning code updates and general plan land use is a meaningful step toward formal development plans.

“The Capitola Mall is the largest piece of property in town that we’re going to look at as far as being developed, and we’ve gotten a lot of information tonight,” said Councilmember Susan Westman. “I think we’re going to have to take a little time to digest that.”

For about a decade, the city has considered redeveloping the 50-year-old Capitola Mall site. In 2019, MGP proposed developing the retail center into a mixed-use development with 637 homes and 339,000 square feet of commercial space, but the plans never came to fruition.

In 2023, Capitola officials identified the mall site as vital to meet a state mandate to permit 1,336 new housing units by 2031. In 2024, the city updated its general plan housing element to allow buildings up to 75 feet tall and a floor area ratio of 2.0, which means that a building’s total floor area can be up to twice the size of the total lot area it’s situated on. 

Now the city needs to update the zoning code at the mall to fulfill the commitment made in its most recent general plan. The new proposed zoning code amendments go beyond the state mandates to allow for at least 1,777 units on the mall site, except for on the Target and Kohl’s properties. The city initially aimed to plan for fewer units, but the state said that it would not be economically feasible, as the city was proposing 65% of the units in the low- to moderate-income range and 35% at market rate. It revised the proposal to 80% market rate and 20% affordable, adding more market-rate units, to make it work.

The city also needed to approve objective design standards for the site, which dictate the form, design and layout of the buildings and the development. This means everything from street width to landscaping, building height and open space dimensions.

Zoning code updates for the mall site are also necessary to allow mixed-use housing development in compliance with the city’s housing element. The proposed zoning code updates split potential development sizes and types into “tiers.” A developer can work within these sets of guidelines to plan a future project.

A “tier 1” development would allow 75-foot buildings within the “core area” where the mall and parking lots sit, and buildings of about six stories in the perimeter zone, which is a 125-foot buffer area between the mall site and the surrounding streets. Within the core area, the Kohl’s store, adjacent parking lots, as well as a section of the main mall and parts of the parking lots around it, are not being considered for housing due to lease terms and parking agreements.

A “tier 2” development would allow for an 85-room hotel, and allow for seven- or eight-story buildings on the main site and up to 65-foot buildings in the perimeter zone, along with 3,000 square feet of hotel meeting space and 30,000 square feet of new commercial space. 

“Tier 3” developments are split into two options, one with a 125-room hotel, 4,000 square feet of hotel meeting space, 40,000 square feet of new commercial space and 85-foot buildings in the core development area, with 65-foot buildings on the perimeter. The second option would keep heights the same but include no hotel, and a much higher 200,000 square feet of commercial space.

Westman said she would like a plan for 120 hotel rooms and 35,000 square feet of commercial space, because that’s what MGP had requested to meet demand and make the development profitable. She also said she would like to decrease the buffer area to 75 feet along 41st Avenue and Capitola Avenue, but keep it at 125 feet for Clares Street, where there are more residences.

Public comment was largely supportive of new housing, although some residents said they want more affordable units and possible larger units in the plan. Others said any hotel development must be well-vetted and studied, and others expressed concern over excluding some parcels from the rezoning process, worrying it will eventually require the city to go through this process all over again.

The council is expected to revisit and vote on the matter at a special meeting on March 16.

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