With city council vote, path to Capitola Mall redevelopment begins to take shape

Capitola leaders revived plans Thursday to transform the city’s aging mall into a major housing development, approving a rezoning process that could kickstart the long-stalled project.

The city council unanimously voted to push ahead with zoning code updates for the Capitola Mall through a process that is expected to involve several public meetings, with plans to have the site rezoned for development as soon as January. After that point, the mall’s owner and developer, San Francisco-based Merlone Geier Partners (MGP), would be able to design a project and submit a formal application to redevelop the properties between Clares Street, 41st Avenue and Capitola Road. 

Jamas Gwilliam, managing director for Merlone Geier Partners, said that while the company does not have a fully formed vision for the site, the zoning process will serve as the starting point for preparing a project.

“Then we can share that with the community, run studies to look at traffic, talk to the community more about the placemaking aspects, the number of units and affordable units and get you the specifics on what that exactly looks like,” he said. 

The city has been considering redeveloping the 50-year-old Capitola Mall for nearly a decade. The 46-acre site could be used for up to 1,700 housing units.

In 2019, MGP proposed transforming the aging retail center into a mixed-use development with 637 homes and 339,000 square feet of commercial space. But those plans never materialized.

The project gained new momentum in 2023 when Capitola officials, facing state requirements to permit 1,336 new housing units by 2031, identified the mall site as crucial to meeting these targets.

Capitola updated its general plan housing element last year to allow buildings up to 75 feet tall and a floor area ratio of 2.0, which means a building’s total floor area can be up to twice the size of the total lot area it is situated on. The city is now working to implement that plan, which some city leaders say they hope will be a starting point for the mall’s redevelopment.

The city council considered several different approaches to rezone the site and move the mall redevelopment forward.

Initially, city staff had prepared three options, but added a fourth before Thursday’s meeting. Each option established slightly different rules about what the developer could build, with different completion timelines and levels of public engagement.

Three of the options were based on objective design standards, which require builders to follow specific requirements for the form and design of structures and layout of the development. One option would have required a significant number of community workshops and would have likely prevented the mall’s owner from submitting a development plan until next April. Another option would have eliminated one community workshop and three stakeholder meetings but wrapped up the rezoning process by January. 

A fourth option would have given the city more say over ensuring cohesive design standards for a variety of factors like height, setbacks, architecture, landscaping and public amenities, and might have required commercial uses along main streets, or gathering areas. It would have allowed for the least flexibility in design.

That approach would have allowed the city more control over the project’s design, but would have also been the most expensive and taken the longest time to complete — likely not until next May. MGP said it preferred a speedier approach.

On Thursday, councilmembers chose an option based on objective standards that gives the developer more leeway over how to design the project but includes two stakeholder meetings, one community meeting and multiple planning commission sessions, while also aiming to wrap up the process by January. 

City leaders said that although the option they chose is a little bit more expensive than the one MGP preferred, they believe it is worth it to better engage with the community while keeping a speedy timeline in place. Mayor Joe Clarke added that despite having a limited ability to push back on state-mandated growth, the city’s leaders and residents should make themselves heard.

“A lot of people live here in Capitola and care about it deeply,” he said. “I think, in every chance we get, we should do what we can to keep it Capitola.”

Councilmember Melinda Orbach added that while she’s excited to see new housing, retail and community spaces at the site, she thinks a hotel with an event space and conference center would suit a project well and provide a strong option for large events.

“Many of us working professionals travel to conferences where we spend thousands of dollars each year out of the pocket of our employers,” she said. “Why not spend the money here? People already want to come to Capitola. Why not build the infrastructure needed to support this tourism industry?”

Public comment was largely brief, with most people saying that they were excited to eventually see plans for a mall that they considered long underused, as well as more much-needed housing in the area. However, some residents implored the council to not rush any plans, and said that any eventual project needs to suit the city well.

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