Community development staff updated the City Council on housing activity and early discussions with mall ownership about redevelopment and zoning changes.

Katie Herlihy, community development director, said the 36‑unit Bluffs project at 4401 Capitola Road is in the final stages and staff anticipates issuing certificate of occupancy this summer or early fall. The city also has a $500,000 Community Development Block Grant award tied to supportive services for low‑income families in connection with that project, Katie said.

On the 52‑unit project (MidPen Housing at 1098 30th Avenue), staff said the developer has secured roughly half of required grant funding and the city has provided a $1.6 million loan from housing funds; MidPen is applying for additional grant sources and staff said they hope to see final funding this coming year before issuing construction permits.

Planning staff also reported monthly meetings with the Capitola Mall ownership (identified in the record as Merlon Geier) to discuss zoning and redevelopment strategy. The city noted a prior housing‑element commitment to allow increased height on the mall parcel (up to 75 feet) and staff emphasized a desire to partner with the owner on code changes that support feasible redevelopment while protecting community objectives.

The Hill Street hotel permit is moving forward through building plan review, and staff said the applicant has received initial building‑plan comments back from plan checkers and the project is advancing slowly but steadily through the process.

Councilors asked about annexation feasibility and workforce housing partnerships; staff said the pending annexation feasibility study will evaluate revenue neutrality and service costs as part of LAFCO expectations and that staff will pursue coordination with local school and transit partners where appropriate.