Merlone Geier, Capitola Work to Redevelop Mall Into Housing

An aging mall in Capitola is getting closer to redevelopment into a large new housing project.

The Capitola City Council is considering zoning options that would make way for up to 1,700 new homes on the 46-acre Capitola Mall site, the Silicon Valley Business Journal reported.

Mall owner and developer Merlone Geier Partners has been in talks with city leaders for more than a decade, according to the Business Journal.

A 2019 proposal from Merlone Geier called for 637 residential units and about 339,000 square feet of commercial space for retail, restaurants and entertainment. That plan included mixed-use buildings with ground-floor retail and upper-floor apartments wrapped around parking garages. The application ultimately didn’t advance but provided a blueprint for Merlone Geier’s future plans.

Late last month, City Council members considered three zoning proposals for the Capitola Mall site.

The first would be a traditional update process, which would require extensive community outreach and delay approvals until next year. The second, which Merlone Geier supports, would streamline approvals and reduce community input to get shovels in the ground fast. The third option would be a form-based code development that emphasizes walkability, cohesive design and integration with surrounding neighborhoods, though that would require more time and coordination in order to come to fruition.

“People are interested in seeing a design,” Council Member Melinda Orbach said in the City Council meeting. “We have to move things along so that Merlone Geier can come to us with a design, with a proposal, with a project, so then we can talk about it, and our residents can chime in on what works and what doesn’t for them.”

The council voted to form a subcommittee to work with Merlone Geier and reconvene within two weeks with more information around a future development.

“This is going to be one of the biggest things we do in Captiola,” Mayor Joe Clarke said during the meeting. “So taking two weeks, it’s not a long time. I’d like to see our subcommittee reach out to Merlone Geier and the other stakeholders, and let them know that we’re committed to seeing the project through.”

The Capitola Mall was built in 1977 and expanded in 1989. It currently houses 68 retail tenants and is anchored by a Target, Macy’s and Kohl’s.

The city of Capitola must plan for 1,336 new housing units by 2031 as part of its Housing Element. More than half of those must be set aside for low-income and very-low-income households, or those making between $63,400 and $101,750 annually.

— Chris Malone Méndez