City planners told residents the Capitola Mall block is central to the city’s housing‑element strategy and that zoning and objective‑standards work is underway to accommodate new housing. “We are anticipating about 1,100 more units… For the entire mall block, when you look at the whole block, the projections are up to 1,777 units,” Community and Economic Development Director Katie Hurley said.

Hurley said the city is not the developer and has not received a formal project submittal. Planning staff are drafting objective standards — measurable rules on heights, setbacks and design — to replace subjective “neighborhood compatibility” tests. Those standards would implement commitments in the housing element, including increasing the allowable Mall height (currently 40 ft) to 75 ft or possibly 85 ft, with 85 ft limited to projects that include a hotel and retail.

At a recent planning‑commission work session, commissioners requested a 100–125‑foot buffer from 41st Avenue with lower heights inside the buffer and taller buildings allowed beyond it. Hurley said the Mall owner (Malone Geyer) previously told the state the initial proposal (high affordable share) was infeasible; as a result, the city revised feasibility assumptions and increased market‑rate units while keeping an affordable target of about 350 units.

Residents pressed staff on feasibility, services and infrastructure. Officials said they have modeled fiscal effects and would encourage commercial and hotel space in development to help maintain city service levels. Hurley and other staff also described outreach steps — public workshops, stakeholder meetings and planning‑commission review — and said the first draft of objective standards was expected to return to council in early 2026.