Santa Cruz YIMBY

To: Capitola City Council

Date: October 11, 2023

Subject: Agenda Item 8.B Citywide Housing Element Update

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.

The Housing Element is an opportunity for Capitola to address the housing crisis on its own terms. We want Capitola to have a compliant Housing Element that meets the 6th cycle RHNA, but more importantly, we want commitments to policies and programs that result in more affordable housing throughout the city.

Santa Cruz YIMBY provided detailed comments on the Housing Element drafts and had conversations with both Capitola's Community Development office and California Housing and Community Development (HCD). Our past comments are posted on our Housing Element webpage. There remain some critical changes to Capitola’s Housing Element in response to HCD’s letter.

Identify and address constraints on housing development, especially affordable housing.

Add to Program 1.4 a commitment to analyze the zoning and development standards in the Incentives for Community Benefits Ordinance, using the Mall land use study to modify the incentives.

• HCD’s comment: “Other Locally Adopted Ordinances – Incentives for Community Benefit: While the element provides some general information on the City’s Incentives for Community Benefit Ordinance, it should analyze the Ordinance’s impact on housing supply and affordability.“
• In Program 1.4, Capitola expands the application of Incentives for Community Benefit to more sites in the Sites Inventory. It has not incentivized any development where it already applies.
• The expected land use study for Capitola Mall can inform how to change the incentives in this ordinance and more broadly affect other mixed-use sites on the inventory.

Expand Program 2.8 to analyze the zoning and development standards as constraints which affect economic feasibility of affordable housing development.

• HCD comment: “Upon a complete analysis of potential governmental constraints, the City may need to revise or add programs and address and remove or mitigate any identified constraints.”
• In 2021, after rezoning, Capitola completed an Affordable Housing Fee Feasibility Assessment 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.”