Capitola City Council advances zoning amendments for Capitola Mall, setting tiers, heights and hotel requirements

Capitola, Calif. — The Capitola City Council on March 16 advanced a package of zoning‑code amendments intended to implement the city’s housing element and guide redevelopment of the Capitola Mall block, voting unanimously to move the ordinance to the next step and to submit the amendment for California Coastal Commission certification.

The council’s direction specifies a three‑tier framework with a residential‑only baseline and two incentivized options. Under the preferred higher‑incentive tier the council set a 35,000‑square‑foot minimum for ground‑floor commercial, a target of about 120 hotel rooms and roughly 3,600–4,000 square feet of meeting space, and core heights of up to 85 feet while keeping lower perimeter heights along major streets to preserve a human scale.

Planning staff told the council the amendments are designed to align the mall site with the city’s updated housing element and to create objective standards that make review measurable and predictable. "The Capitola Mall zoning code amendments must align with the housing element and implement program 1.7," a staff presenter said during the briefing. Staff also noted state housing law places constraints on local review and explained the proposed fiscal‑impact analysis requirement that would accompany applications to estimate net costs and revenues to the city.

Public commenters at the meeting included union representatives and local residents who urged caution. "Our members are excited about a project that can respond to the housing crisis," said Hector Espelqueta of UnitedHealthcare Local 9, but he asked the council to keep permitting oversight for hotels so the city can ensure responsible development. Daya Kunkun, speaking for a hospitality workers’ union and allied building trades, urged the council to retain conditional‑use review for hotels, saying removing that requirement would strip the city of a tool to attach conditions that protect public health, safety and community interests.

A representative for the property owner said the developer supports incentives that make a hotel feasible and believes streamlining could help bring jobs and investment. "We are fully committed to making this a project that the city is proud of," the representative said.

Council discussion focused on balancing fiscal risk and community benefits. Staff presented a sensitivity analysis showing the mall redevelopment scenarios are sensitive to assumptions such as household size and commercial‑space retention; one planning‑commission scenario produced a projected net fiscal gain of roughly $270,000 in the example offered, but speakers stressed results vary with assumptions.

On multimodal planning, the council directed staff and the Planning Commission to keep required bike lanes on internal new streets but to study bicycle‑parking requirements citywide before adopting new bike‑parking rules tied to this code update.

Council member Orbach moved the staff‑recommended action as amended in discussion; the motion was seconded and passed on a unanimous roll call vote (5–0). The action advances the amendment for subsequent readings and sends required materials to the California Coastal Commission for certification where applicable.

The council also directed staff to ensure deed‑restriction language and project‑phasing tools are available at the entitlement and mapping stage — either through recorded deed restrictions or through certificate‑of‑occupancy phasing or annual fee payments that hold developers to commercial or hotel commitments until those uses are constructed.

Next steps: the ordinance and related resolutions will return for additional readings as required and staff will forward the coastal submittal. The Planning Commission will be asked to study citywide bicycle‑parking requirements before the city finalizes that piece of the parking chapter.