Blog Santa Cruz YIMBY comments on the City of Capitola May 2023 Draft Housing Element

Letter sent to Capitola Planning Staff

June 8, 2023

Santa Cruz YIMBY advocates for abundant housing at all levels of affordability to meet the needs of a growing population in Santa Cruz County. We support sustainable growth, including along transportation corridors and activity centers and a commitment to lower Vehicle Miles Traveled by housing people near services and jobs.

We submit the following comments on the City of Capitola’s 6th cycle Housing Element draft of May 10, 2023 (1).

Summary of feedback:

  • The City has not adequately considered and addressed the constraints which currently limit housing production.
  • The programs in this draft will not enable the 2000% increase in housing production needed to meet the 6th cycle RHNA.
  • Capitola's failure to meet its 5th cycle RHNA, particularly the low-income targets, highlights the need for a stronger approach towards housing construction at the mall, affirmatively furthering fair housing, and promoting affordable housing development.
  • Please see this supplemental document2 for more granular feedback.

(1) Capitola Housing Element Update - Public Review Draft 5.10.2023

Housing Production

In the 5th cycle (2015-2023), Capitola permitted only 60 units, none of which were multifamily projects larger than four units (3). Extrapolated to the upcoming 6th cycle, this level of production is 4% of the 1336 units the City must plan for. In order to meet this target, Capitola needs to see production increase by 2000%.

Given the lack of substantial housing development in Capitola thus far, and without substantial changes to the status quo, it is difficult to accept the City's claims of future progress. Capitola’s Housing Element must more directly address what has hindered housing production to date, and add incentives to produce significantly more housing in the coming eight years.

Capitola recently completed an Affordable Housing Fee Feasibility Assessment (4) which concluded that with current conditions, NO rental development pencils out: “Even without any inclusionary requirements or in-lieu/impact fee obligations, rental development appears to fall somewhat short of industry-standard return thresholds.”

Capitola must better analyze the extent to which zoning and development standards are constraints on housing. While Capitola acknowledges "market constraints" as a hindrance to achieving maximum density, the City has yet to thoroughly examine whether revising development requirements (5) and associated land use controls could effectively incentivize development.

We want to see yearly monitoring to verify that development is occurring on schedule, with more specific commitments e.g upzoning of specific areas listed in this Housing Element or modification of other zoning/development standards if housing is not being developed on schedule.

Critical goals such as Affordable Housing Development (Goal 2.0), Housing for Persons with Special Needs (Goal 3.0) and Affirmatively Furthering Fair Housing (Goal 7.0) are predicated on an increased housing supply. Without a genuine commitment to programs that result in the actual construction of additional housing units, the realization of these goals, which aim to foster an "economically and socially balanced community," will remain unattainable at best and continue to harm Capitola’s most vulnerable populations at worst.


(3) HCD Annual Progress Report Dashboard
(4) Affordable Housing Fee Feasibility Assessment, 2021
(5) Housing Element, 3-10

Probability of Meeting Low Income Targets

Capitola has indicated 50% of the units as lower income for nearly every parcel in the Site Inventory, but provides little evidence that the City's existing zoned capacity will realistically produce this level of affordable units. The City considers 20 du/acre “adequate for facilitating the production of affordable housing” (6) even as many of Capitola’s sites have realistic densities that fall short of this level. (7) The City is also considering “recent development trends within Capitola” for the suitability to different income levels, despite having little development history to trend. Less than 12% of permitted units in the 5th cycle were very low income (VLI) or low (LI) units. Six of these units were non-deed restricted ADUs and the other was a non-deed restricted single family home.

Capitola claims (8) that the City's Affordable Housing Overlay (AHO) (9) and local Density Bonus ordinances “are actually more successful in lowering per unit land costs than are across-the-board zoning changes that allow density increases,” however, neither has been used to build affordable housing. Neither ordinance provides greater incentives than State Density Bonus law (SDBL), and the City's zoning and development standards such as building height, FAR, and parking introduce constraints that preclude housing projects from achieving even base densities.

The site inventory identifies a significant number of small parcels for consolidation and development, all of which are projected to accommodate low income units. Per HCD’s Site Inventory Guidebook (10) “A parcel smaller than one half acre is considered inadequate to accommodate housing affordable to lower income households, unless the housing element demonstrates development of housing affordable to lower income households on these sites is realistic or feasible.”

The City acknowledges that “[s]everal of the non-vacant sites identified consist of multiple smaller parcels with different owners, and their development within the planning period will depend on whether they can be consolidated.” (11) The Housing Element includes no programs or policies in the Housing Plan with specific incentives to facilitate consolidation.

Capitola’s existing affordable housing stock is at risk as well: 78% of Capitola’s housing stock is over 30 years old (12). Two of the larger rental properties with extremely low and very low income homes serving those with disabilities and seniors are now old enough that they may require rehabilitation in this cycle (13).

(6) Housing Element, 4-18
(7) Housing Element, Appendix D
(8) Housing Element, 3-3
(9) Capitola Municipal Code 17.40.020
(10) HCD Site Inventory Guidebook, page 16
(11) Housing Element, 4-21
(12) Housing Element, 2-42
(13) Housing Element, 2-52 - 2-53

Rezoning and Development Standards as Constraints

We expect projects in the C-C, C-R, and MU-N zones to make use of State Density Bonus law for feasibility of development of affordable housing. Currently, Capitola zoning codes include constraints and limitations that could limit affordable multifamily or mixed-use housing from achieving assumed base densities. These include building height, FAR and parking requirements.

Program 1.6 “Development Regulations” must be more specific and go further. The City must do more than “consider” modifications and more often than once by the end of 2024. We recommend yearly monitoring to verify that the development is occurring on schedule, with specific intra-cycle commitments if not. Informed by market analysis, these commitments could include:

  • Upzoning of specific areas listed in this Housing Element
  • Increased building height that enables the density that Capitola needs in the C-C and C-R districts, including the mall project or other mixed-use development.
  • Increased FAR along other corridors emphasized in the site map (Capitola Rd, Clares St, and Bay Ave), as is the case with the 41st Ave corridor Other commitments could be:
  • Tracking commercial occupancy, and if vacancy is too high, relax commercial requirements in favor of more residential, including live/work units
  • Reduced parking requirements (see “Parking” below)

Capitola Mall

We would like to see more in the Housing Element to indicate that the City is determined to see the Capitola Mall (“Mall”) project succeed. The projected affordability of 50% low income (total 435 units) is unrealistic. If the City is in fact committed to seeing the Mall developed and misses this affordable target, the City has a daunting task to identify other sites under the No Net Loss law.

Rather than true incentives to ensure this project moves forward, we see hurdles. The Mall requires a “Development Agreement” and after that, “various entitlements would be required for residential development.” Through the Incentives for Community Benefits (14) Capitola offers modest benefits of increased FAR (2.0) and height (50’) for items of significant cost as well as discretionary review. This clearly has not facilitated development along 41st Ave as intended.

In contrast, Capitola could seek permissive standards or streamlined approvals that make it attractive for a developer to build affordable housing, including use of recently enacted state laws. As just one example, Capitola Mall is an ideal site for AB 2011 (15) which incentivizes affordable housing development on commercial properties. A program to develop local implementation ordinances that go beyond state law would incentivize the affordable housing on sites along the transit corridors that make up much of the City’s site inventory.


(14) Capitola Municipal Code Chapter 17.88 INCENTIVES FOR COMMUNITY BENEFITS
(15) AB 2011 - California YIMBY

Affirmatively Furthering Fair Housing (AFFH)

AFFH compliance includes the distribution of affordable housing throughout a city. The site inventory is focused on the west side of Capitola, so the RHNA low income group is concentrated in the western area of the community. The east side of Capitola has a large amount of R1 zoning and contains several schools and parks. In this area, the current site inventory identifies two church sites, one school site and ADUs, totalling only 14 low-income units.

Because all of Capitola is a high (or highest) resource area according to the 2023 TCAC map(16), AFFH goes beyond the site inventory to include housing programs and plans that enhance housing mobility and encourage development of new affordable housing.

Capitola has a local employment base made up of relatively low-wage jobs in the service, retail, and tourism sectors.(17) The City recognizes that its high-cost housing precludes these employees from living in Capitola which may contribute to the City’s comparatively low degree of racial and ethnic diversity.(18) A supply of housing that is affordable to the Capitola workforce would reduce the need for these workers to commute from out of the area.(19) and add to the diversity of the City.

Capitola can promote naturally occurring missing middle (20) affordable housing more equitably throughout the entire city. Capitola mentions missing middle housing in the Housing Needs Assessment, but the program to support this is simply exploration of “options”. We urge the City to adopt more specific and rigorous programs for missing middle housing which would include:

  • If it is legal to build a 5000 square foot house for one family it should also be legal to build two 2000 square foot homes or three 1300 square foot homes in the same building envelope throughout Capitola. Consider amending zoning to permit 5 DUA on all parcels. This can be achieved without an EIR thanks to Senate Bill 10 (21).
  • Expand ADU programs beyond website updates and one intra-cycle review, including an ADU bonus program to incentivize more affordable ADUs.
  • Update the City’s SB9 ordinance (22), including allowable square footage in alignment with underlying zoning rather than a limit of 800 sq ft each
  • Reduce parking minimums to no more than half a space per unit, uncovered.
  • Reduce front and rear setbacks and minimum lot size; increase heights, maximum lot coverage requirements.


(16) 2023 CTCAC HCD Opportunity Map
(17) Housing Element, 2-8
(18) Ibid
(19) Ibid
(20) Missing Middle Housing
(21) SB 10 - California YIMBY
(22) Capitola Municipal Code 17.75

Intra-cycle Reviews

Intra-cycle reviews and adjustments will be essential to housing production. In addition to an intra-cycle review for ADU development, several other intra-cycle reviews and commitments are critical if housing is not being developed on schedule:

  • Update Program 1.1 Adequate Housing Sites and Monitoring of No Net Loss to track general RHNA progress with more specific commitments to revisions/incentives if not meeting goals
  • Update Program 1.6 Development Regulations to include market analysis and modification of zoning and development standards with more specific commitments (described above) if not meeting goals.
  • Update Program 1.4 Mixed-Use Developments to review occupancy/vacancy levels of commercial spaces in mixed-use zoned areas. Consider modifications to residential levels, including live/work units or other alternative housing types of Program 1.5 Alternative Housing.


Parking requirements significantly contribute to the cost of housing (23). Capitola recognizes that existing parking requirements are a constraint yet does not commit to reducing or eliminating this barrier to housing. The requirement of 2.5 spaces per unit (regardless of bedrooms or size) is unreasonable. We see the following opportunities:

  • Reduce parking minimums to no more than half a space per unit, uncovered.
  • Reduce parking requirements for multifamily dwellings in C-C and C-R zones, especially for development along transit corridors or that include smaller units such as SROs.
  • Remove parking studies for mixed-use developments in favor of clearly reduced objective requirements.
  • More explicitly align the intent in Program 1.6 Development Regulations to reduce parking for senior and special needs developments with AB 2162 which has by-right approvals and eliminates parking requirements.


(23) Low-income renters pay a high, and hidden, price for city parking requirements | UCLA

Transit Oriented Development

Despite being home to the Capitola Mall Transit Center, Capitola lacks any current or planned high quality transit stops. In the 2040 MTP/SCS (24) the Capitola Mall was identified as such a site, however, it was subsequently removed in the 2045 MTP/SCS (25). We encourage Capitola to commit to working with AMBAG in the 2050 MTP/SCS (scheduled for June 2026) to designate the Capitola Mall as a planned high quality major transit stop. This designation would incentivise more sustainable, affordable, and equitable development in an area identified for large amounts of new housing in the 6th RHNA cycle.

The RTC has multiple scenarios for a passenger light rail route. In all scenarios, a station would be located at 41st Ave and in most scenarios, an additional station would be on Depot Hill (26). We encourage a program to look at additional density along the Coastal Rail Trail, with a focus on these two station locations.



Other Opportunities

We noted other opportunities that could be included in the City's Housing Element, several building on recent accomplishments or in support of stated goals/policies:

General: Policy and Programs

  • Each of the policies should include a corresponding program.
  • Use more action-oriented language and add specific dates throughout the 6th cycle for objectives.

Objective Standards
Capitola recently updated the Zoning Code to incorporate Objective Standards for multifamily and mixed-use residential developments. Use Objective Standards to:

  • Remove the hurdle of conditional use permits required for 90% of the total site inventory and 88% of low income units.
  • Replace the subjective “balanced site design and architecture” for Policy 5.2 “Protect the integrity of existing single-family and multifamily neighborhoods”

Supportive Housing

  • Program 3.2 is good! Expand this and request council approval for specific projects that could go beyond the 50 units max.

Walkable Neighborhoods

  • Policies 5.1, 6.1, and 6.2 speak to walkable neighborhoods, alternative transportation, and a jobs/housing imbalance. Capitola employees do not live near where they work and yet there are no programs to support these policies.

Affordable Housing Ordinances
Program 1.6 “Development Regulations'', includes an update to the City’s Density Bonus Law to match the state. The City has an opportunity to truly incentivize affordable housing through:

  • An update to the local Density Bonus ordinance that goes further than state law
  • An update to the Incentives for Community Benefits to offset costs with incentives that exceed the State Density Bonus Law and remove discretionary review
  • An update to the Affordable Housing Overlay (AHO) that goes beyond offering minimum Mullin (20 du) density for 100% affordable housing to one that exceeds the SDBL or does not preclude the use of SDBL

Mobile Homes

Program 2.1 Mobile Home Park Assistance - this section should include making permanent the Mobile Home Park Rent Stabilization recently passed

Ministerial Approval
We recommend Capitola explicitly identify the types of projects eligible for ministerial approval by City staff, e.g. projects under 50 units or 100% affordable that meet Objective Standards.

Site Inventory
There are state-owned parcels on the site inventory without evidence that the state wishes to develop them with housing:

  • Department of Motor Vehicles location at 4175/4200 Capitola Rd (27).
  • New Brighton State Beach (28)


(27) Parcels 03411140 and 03411146
(28) Parcel 03620103