The Capitola Municipal Code is current through Ordinance 1051, passed April 28, 2022.
Chapter 17.28
VISITOR SERVING OVERLAY ZONE
Sections:
17.28.010 Purpose of the visitor serving overlay zone.
17.28.020 Land use regulations.
17.28.030 Development standards.
17.28.010 Purpose of the visitor serving overlay zone.
A. General. The purpose of the visitor serving (-VS) overlay zone is to provide the visiting public with a range of opportunities to enjoy Capitola’s coastal location. The -VS overlay zone accommodates a range of visitor serving uses including overnight accommodations, dining establishments, and active and passive recreational facilities.
Specific permitted uses depend on the resources present on the site and the surrounding land use and environmental context. The -VS overlay zone implements policies to maintain and enhance visitor serving uses in Capitola consistent with the general plan and local coastal program (LCP).
B. Visitor Serving Overlay Subzones. The -VS overlay zone is divided into subzones (see Figure 17.28-1) with unique land use and development standards:
1. Visitor Serving – Rispin (VS-R). Applies to the Rispin site (APNs 035-371-01 and 035-371-02).
2. Visitor Serving – Shadowbrook (VS-SB). Applies to the Shadowbrook site (APN 035-111-04).
3. Visitor Serving - Monarch Cove Inn (VS-MC). Applies to the Monarch Cove Inn site (APN 036-143-31 & 036-142-27) and the portion of parcel 036-142-28 that is located between the two Monarch Cove Inn parcels.
34. Visitor Serving – El Salto (VS-ES). Applies to the El Salto site (APN 036-143-35).
45. Visitor Serving – General (VS-G). Applies to all other parcels with a visitor serving subzone overlay designation. The -VS zoning overlay designation on the Inn at Depot Hill site (APNs 036-121-38 and 036-121- 33) acts as both the base zoning district and an overlay district (i.e., the permitted land uses identified in Table
17.28-1 are the only permitted land uses allowable on the site and the applicable land use regulations and development standards are limited to those identified in this chapter). 190
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Capitola Municipal Code
Chapter 17.28 VISITOR SERVING OVERLAY ZONE
The Capitola Municipal Code is current through Ordinance 1051, passed April 28, 2022.
Figure 17.28-1: Visitor Serving Districts
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Capitola Municipal Code
Chapter 17.28 VISITOR SERVING OVERLAY ZONE
The Capitola Municipal Code is current through Ordinance 1051, passed April 28, 2022. (Res. 4223, 2021; Ord. 1043 § 2 (Att. 2), 2020)
17.28.020 Land use regulations.
A. Permitted Land Uses. Table 17.28-1 identifies land uses permitted in the -VS overlay subzones.
Table 17.28-1: Permitted Land Uses in the Visitor Serving Overlay Zone Key -VS Subzones
Additional Regulations
P Permitted Use
VS-G VS-R VS-SB VS-ES
A Administrative Permit
required
M Minor Use Permit required
C Conditional Use Permit
required
– Use not allowed
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Chapter 17.28 VISITOR SERVING OVERLAY ZONE
The Capitola Municipal Code is current through Ordinance 1051, passed April 28, 2022.
Key
P Permitted Use
M Minor Use Permit required
C Conditional Use Permit required
– Use not allowed
-VS Subzones
VS-G VS-R VS-SB VS-MC VS-ES Additional Regulations
Residential Uses
Employee Housing C [1] – – - –
Multifamily Dwellings C [2][11] – – - C [2]
One Caretaker Unit for On-Site Security C C C C C
Single-Family Dwellings C [3][11] – – C [3][12] C [3]
Public and Quasi-Public Uses
Community Assembly C C – - –
Cultural Institutions C C – - –
Day Care Centers C – – - –
Habitat Restoration and Habitat Interpretive
Facilities
C C C
C
–
Parks and Recreational Facilities C C – - –
Public Parking Lots C C – - –
Public Paths and Coastal Accessways C C C C C
Public Safety Facilities C – – - –
Public Wharfs C – – - –
Schools, Public or Private – – – - –
Commercial Uses
Business Establishments that Provide
Commercial Places of Amusement or
Recreation, Live Entertainment, or Service of
Alcoholic Beverages
C [4] C [4] C
-
–
Business Establishments that Sell or Dispense
Alcoholic Beverages for On-Site
Consumption
C C C
C
–
Restaurants
Full Service C [5] C [5] C [5] - –
Lodging
Hotels, Inns, Bed and Breakfast,
and Hostels
C C –
C
C
Campgrounds [6] C – – - –
Recreational Vehicle Parks C – – - –
Vacation Rentals – – – C –
Utilities, Major C C C C C
Utilities, Minor P P P P P
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Capitola Municipal Code
Chapter 17.28 VISITOR SERVING OVERLAY ZONE
The Capitola Municipal Code is current through Ordinance 1051, passed April 28, 2022.
Wireless Communications Facilities See Chapter
17.104
Other Uses
Access Roadways C C C C C
Accessory Structures and Uses, New C [7] C C C C
Accessory Structures and Uses Established
Prior to Primary Use or Structure
C C –
C
–
Change of Visitor Serving Commercial Uses
within a Structure
C [8] – –
-
–
Food Service Accessory to a Lodging Use [9] C C – C C
Home Occupations C – – - – Section 17.96.040
Expansion of a Legal Nonconforming Use
within an Existing Structure
C – –
-
–
Legal Nonconforming Use Changed to a Use
of a Similar or More Restricted Nature
C – –
-
–
Live Entertainment C C C - –
Offices Accessory to Visitor Serving Use C C C C –
Parking Areas to Serve the Primary Use C C C C C
Retail Accessory to a Visitor Serving Use C C – C –
Temporary Assemblages of People, such as
Festivals, Fairs, and Community Events
C [10] C [10] C [10] C [13]–
Weddings C C C C –
Notes:
[1] Permitted only as an accessory use.
[2] Multifamily dwellings shall comply with development standards in the multifamily residential, medium density (RM-M) zoning district. [3] Single-family dwellings shall comply with development standards in the single-family residential (R-1) zoning district. [4] May not be located within two hundred feet of the boundary of a residential zoning district. [5] Drive-up and car service is not allowed.
[6] May include moderate intensity recreational uses, including tent platforms, cabins, parks, stables, bicycle paths, restrooms, and interpretive facilities.
[7] Intensification of the primary use is not allowed.
[8] The new use may not change the nature or intensity of the commercial use of the structure. [9] Permitted only to serve guests of the lodging use.
[10] Events may not exceed ten days and may not involve construction of permanent facilities. [11] Prohibited on the former Capitola Theater site (APNs 035-262-04, 035-262-02, 035-262-11, and 035-261-10) and the Inn at Depot Hill (APNs 036-121-38 and 036-121-33).
[12] Allowed in conjunction with overnight accommodation use (at least one on property) or grant of public access to a viewpoint. [13] Limited to a single two-day or less event per year.
B. Civic Uses in the VS-R Overlay Subzone. The planning commission may allow additional civic uses in the VS-R overlay subzone beyond those specifically identified in Table 17.28-1 if the planning commission finds the additional civic use to be consistent with the purpose of the VS-R overlay subzone and compatible with existing uses present on the site. (Res. 4223, 2021; Ord. 1043 § 2 (Att. 2), 2020)
17.28.030 Development standards.
A. General. Table 17.28-2 identifies development standards that apply in the -VS overlay zone outside of the mixed use village (MU-V) zoning district.
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Capitola Municipal Code
Chapter 17.28 VISITOR SERVING OVERLAY ZONE
The Capitola Municipal Code is current through Ordinance 1051, passed April 28, 2022.
Table 17.28-2: Development Standards in the Visitor Serving Zoning Districts -VS Overlay Zone Additional Standards
Parcel Area, Minimum 5,000 sq. ft.
Impervious Surface, Maximum VS-R: 25%
VS-SB, VS-MC and VS-ES: 50% [1]
VS-G: No maximum
Floor Area Ratio, Maximum 0.25
Setbacks, Minimum See Section 17.28.030(B)
Height, Maximum 30 ft. Section 17.28.030(C)
Note:
[1] In the VS-SB overlay subzone, the impervious surface requirement applies to the parcel located directly adjacent to Soquel Creek. In the VSES overlay subzone, the impervious surface calculation excludes the portion of parcel 036-142-28 located outside of the Monarch Cove Inn.
B. Setbacks. The following setback requirements apply in the -VS overlay zone:
1. The planning commission may require front, side and rear setbacks through the design review process to provide adequate light and air, ensure sufficient distance between adjoining uses to minimize any incompatibility, and to promote excellence of development. Where a side or rear yard abuts residential property, a setback of at least ten feet shall be provided.
2. Front and exterior side yards shall not be used for required parking facilities.
3. For the visitor serving El Salto parcels located adjacent to the bluff top, new development shall adhere to the setback and development provision provided in the LCP natural hazards policies and in Chapter 17.68 (GH Geologic Hazards District).
4. To protect the waters and riparian habitat of Soquel Creek, new development on the Shadowbrook Restaurant and Rispin parcels shall adhere to the LCP natural systems policies and Chapter 17.64 (Environmentally Sensitive Habitat Areas).
C. Height Exceptions. With a recommendation from the planning commission, the city council may approve additional height up to a maximum of thirty-six feet in the -VS overlay zone outside of the MU-V zoning district when all of the following findings can be made:
1. The proposed development and design is compatible with existing land uses in surrounding areas, the general plan, and the LCP.
2. Streets and thoroughfares are suitable and adequate to serve the proposed development.
3. The proposed development does not produce shadows which may adversely affect the enjoyment of adjacent streets, buildings, or open space.
4. Major public views of the shoreline, as identified in Capitola’s local coastal program, are not blocked by the proposed development.
D. Landscaping. See Table 17.72-2 in Chapter 17.72 (Landscaping) for minimum required landscaping requirements for visitor serving properties.
E. Lighting. In addition to outdoor lighting standards in Section 17.96.110 (Outdoor lighting), the following lighting requirements apply in the -VS overlay zone:
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Capitola Municipal Code
Chapter 17.28 VISITOR SERVING OVERLAY ZONE
The Capitola Municipal Code is current through Ordinance 1051, passed April 28, 2022.
1. All exterior lighting shall be minimized, unobtrusive, down-directed and shielded using the best available dark skies technology, harmonious with the local area, and constructed or located so that only the area intended is illuminated and off-site glare is fully controlled and that light spill, sky glow and glare impacts are minimized.
2. Lighting of natural areas (such as creeks, riparian areas, the beach, etc.) shall be prohibited past the minimum amount that might be necessary for public safety purposes, except when temporarily permitted in conjunction with a temporary event.
3. The location, type and wattage of exterior lighting must be approved by the community development director prior to the issuance of building permits or the establishment of the use.
F. Coastal Development Permit. If a proposed development is located in the coastal zone, it may require a coastal development permit (CDP) as specified in Chapter 17.44 (Coastal Overlay Zone). Approval of a CDP requires conformance with the CDP findings for approval as specified in Section 17.44.130 (Findings for approval). (Res. 4223, 2021; Ord. 1043 § 2 (Att. 2), 2020)
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Capitola Municipal Code
Chapter 17.30 VISITOR SERVING DISTRICT –
MONARCH COVE INN
Chapter 17.30
VISITOR SERVING DISTRICT – MONARCH COVE INN
Sections:
17.30.010 Applicability.
17.30.020 Purpose.
17.30.030 Architectural and site approval.
17.30.040 Conditionally permitted uses – Monarch Cove Inn.
17.30.050 Accessory uses.
17.30.060 Height.
17.30.070 Lot area.
17.30.080 Lot coverage.
17.30.090 Yards.
17.30.100 Parking.
17.30.110 Loading areas.
17.30.120 Landscaping and lighting.
17.30.010 Applicability.
The regulations set forth in this chapter apply to the Monarch Cove Inn parcels. (Res. 4223, 2021)
17.30.020 Purpose.
The purpose of the V-S district is to accommodate the visiting public with a range of opportunities to enjoy the city of Capitola’s coastal location. (Res. 4223, 2021)
17.30.030 Architectural and site approval.
A design permit shall be secured for the establishment and conduct of any conditional or accessory use in a V-S district as provided in Chapter 17.120. (Res. 4223, 2021)
17.30.040 Conditionally permitted uses – Monarch Cove Inn.
The following are the conditionally permitted uses allowed on the Monarch Cove Inn parcels and the portion of parcel 036-142-28 that is located between the two Monarch Cove Inn parcels:
A. Accessory structures and accessory uses appurtenant to any conditionally allowed use; B. Hotels, motels, hostels, inns; bed and breakfast lodging; C. Food service related to lodging;
D. Assemblages of people, such as festivals, not exceeding ten days and not involving construction of permanent facilities;
E. Accessory structures and uses established prior to establishment of main use or structure; F. Habitat restoration; habitat interpretive facility;
G. Live entertainment;
H. Public paths;
I. Business establishments that provide commercial places of amusement or recreation, live entertainment, or service of alcoholic beverages and that are located within two hundred feet of the boundary of a residential district; J. Weddings;
K. Business establishments that sell or dispense alcoholic beverages for consumption upon the premises; 197
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Capitola Municipal Code
Chapter 17.30 VISITOR SERVING DISTRICT –
MONARCH COVE INN
L. Other visitor serving uses of a similar character, density, and intensity as those listed in this section and determined by the planning commission to be consistent and compatible with the intent of this chapter and the applicable land use plan;
M. Offices and limited retail use, accessory to visitor serving uses; N. One caretaker unit for the purpose of providing on-site security; O. Access roadway;
P. Residential use by the owners and their family members of up to one unit per parcel on the three parcels, as long as a minimum of six guest bedrooms are available for visitor serving use within the three parcels; Q. Nonfamily residential use during the off-season months (November through April). (Res. 4223, 2021)
17.30.050 Accessory uses.
The following are accessory uses permitted in a V-S district:
A. Signs complying with the applicable regulations set forth in the sign ordinance; B. Accessory uses and buildings customarily appurtenant to a permitted use. (Res. 4223, 2021)
17.30.060 Height.
No structures shall exceed thirty feet in height. Exceptions up to thirty-six feet in height may be granted subject to approval by the city council upon the recommendation of the planning commission when the following findings can be made:
A. The proposed development and design are compatible with existing land uses of surrounding areas and the general plan;
B. Streets and thoroughfares are suitable and adequate to serve the proposed development; C. The proposed development does not produce shadows which may adversely affect the enjoyment of adjacent streets, buildings or open space;
D. Major public views are not blocked by the proposed development. (Res. 4223, 2021)
17.30.070 Lot area.
The minimum lot area required shall be five thousand square feet. (Res. 4223, 2021)
17.30.080 Lot coverage.
There shall be no specific maximum lot coverage set except as follows:
A. Sufficient space shall be provided to satisfy off-street parking and loading area requirements, notwithstanding that all parking may be provided within a structure(s); B. Front yard and open space requirements shall be satisfied; C. For the Monarch Cove Inn parcels, the allowable impervious site coverage (e.g., buildings, paving, decks, etc.) is fifty percent. (Res. 4223, 2021)
17.30.090 Yards.
A. Front, side and rear yard setbacks may be required through design permit approval in order to provide adequate light and air, assure sufficient distance between adjoining uses to minimize any incompatibility and to promote excellence of development. Where a side or rear yard abuts residential property a setback of at least ten feet shall be provided.
B. Front yards and corner lot side yards shall not be used for required parking facilities.
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Capitola Municipal Code
Chapter 17.30 VISITOR SERVING DISTRICT –
MONARCH COVE INN
C. For the Monarch Cove Inn parcels located adjacent to the bluff top, new development shall adhere to the setback and development provisions provided in the LUP’s natural hazards policies and in certified zoning Chapter 17.68 (GH Geologic Hazards District). (Res. 4223, 2021)
17.30.100 Parking.
Parking standards shall be as provided in Chapter 17.76. (Res. 4223, 2021)
17.30.110 Loading areas.
Loading areas shall be as provided in Chapter 17.76. (Res. 4223, 2021)
17.30.120 Landscaping and lighting.
A minimum of five percent of the lot area shall be landscaped to ensure harmony with adjacent development in accordance with architectural and site approval standards. For the visitor serving Monarch Cove Inn parcels, fifty percent of the parcels shall consist of landscaped or open space areas. The planting of invasive plant species is prohibited. All exterior lighting shall be unobtrusive, harmonious with the local area and constructed or located so that only the area intended is illuminated and off-site glare is fully controlled. The location, type and wattage of the exterior lighting must be approved by the community development director prior to the issuance of building permits or the establishment of the use. (Res. 4223, 2021)
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Chapter 17.72
LANDSCAPING
Sections:
17.72.010 Purpose.
17.72.020 Applicability.
17.72.030 Water efficient landscape design and installation ordinance.
17.72.040 Landscape plans.
17.72.050 Required landscape areas.
17.72.060 Landscape standards.
17.72.070 Landscape maintenance.
17.72.010 Purpose.
This chapter establishes landscaping standards to enhance the aesthetic appearance of developed areas in Capitola and to promote the efficient use of water resources.
17.72.020 Applicability.
A. Multifamily and Nonresidential Projects. The following multifamily and nonresidential projects shall comply with all requirements of this chapter:
1. Construction of new structures.
2. Additions that increase the floor area of a multifamily or nonresidential structure by three thousand square feet or more.
B. Single-Family Residential Projects.
1. New single-family homes shall comply with all requirements of this chapter.
2. If existing landscaping is disturbed or new landscaping is added as part of a remodel or addition to an existing single-family home that requires a design permit, the new landscaping shall comply with the standards in Section 17.72.060 (Landscape standards). The city will evaluate compliance with these standards based on the plans and materials submitted as part of the design permit application. Submittal of a landscape plan for the entire site in accordance with Section 17.72.040 (Landscape plans) is not required.
C. Coastal Development Permit. A proposed development that is located in the coastal zone may require a coastal development permit (CDP) as specified by Chapter 17.44 (Coastal Overlay Zone) and the findings for approval of a CDP as specified in Section 17.44.130 (Findings for approval).
17.72.030 Water efficient landscape design and installation ordinance.
In addition to the requirements of this chapter, all applicable development in Capitola shall also comply with the applicable water provider’s (i.e., the city of Santa Cruz water department or Soquel Creek Water District) landscape water use efficiency ordinance. If conflicts occur between the applicable water provider’s landscape water use efficiency ordinance and the zoning code, the more restrictive policy to conserve water shall control.
17.72.040 Landscape plans.
A. Landscape Plan Required. Projects subject to the requirements of this chapter shall submit a landscape plan as part of planning permit applications (e.g., design permit/coastal development permit applications) and subsequent building permit applications.
B. Required Contents. Landscape plans shall include the following features and information:
1. Site boundaries.
2. Existing conditions on the property, including contours and existing structures. 200
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3. Structures immediately adjacent to the property.
4. New structures and improvements proposed as part of the development project.
5. Existing landscaping, trees, and vegetation to be retained specifying plant location, species, and size. Details of all existing trees shall also include tree diameter measured forty-eight inches above existing grade and outer limit of tree canopy and a label identifying if the tree will remain or be removed.
6. New landscaping proposed as part of the development project specifying plant location, species, and size.
7. Irrigation plan specifying the location, type, and size of all components of the irrigation system.
8. Proposed grading.
9. Additional information as determined by the community development department to demonstrate compliance with the requirements of this chapter.
C. Review and Approval. The community development department shall review all landscape plans to verify compliance with this chapter. Landscape plans shall be approved by the review authority responsible for approving the planning permits required for the proposed project.
D. Changes to Approved Landscape Plans.
1. Substantial modifications to an approved landscape plan shall be allowed only by the review authority which approved the landscape plan.
2. The community development director may approve minor modifications to a landscape plan previously approved by the planning commission. Minor modifications are defined as changes to a landscape plan that do not alter the general design character of the landscaped area or alter a feature of the landscaped area specifically required by the planning commission.
17.72.050 Required landscape areas.
A. Residential Zoning Districts.
1. All required front and street side setback areas, excluding areas required for access to the property, shall be landscaped and maintained. See Figure 17.72-1.
2. Landscaping may consist of any combination of living plants, such as trees, shrubs and grass with related natural features, such as rock, stone, or mulch; and may include patios, courtyards, and outdoor dining areas.
Artificial grass may be used within required landscaping areas. Decorative hardscape featuring pervious materials is permitted within required landscaping areas when combined with natural vegetation. 201
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Figure 17.72-1: Required Landscape Area in R-1 Zoning District B. Nonresidential Zoning Districts.
1. Except in the I zoning district, all required front and street side setback areas shall be landscaped, excluding areas required for access to the property and public or quasi-public open space such as courtyards and outdoor seating.
2. The minimum landscaped area on a site is shown in Table 17.72-1.
3. In the MU-V and MU-N zoning districts, up to seventy-five percent of the minimum landscaped area may be occupied by outdoor dining areas, courtyards, and other similar quasi-public areas with planning commission approval. Hardscape areas counting towards landscaping requirements must contain aboveground planters and other similar features that incorporate greenery and plantings into the space design. In all other zoning districts these areas may not count toward landscaping requirements.
Table 17.72-1: Minimum Landscaped Area in Nonresidential Zoning Districts Zoning Districts Minimum Landscaped Area
MU-V, MU-N, C-R, C-C, CF, I 5%
P/OS, PD, -VS As determined by the permit approval process C. Visitor Serving Properties. Minimum required landscaping for certain visitor serving properties are shown in Table 17.72-2. Minimum landscaping requirements are intended to ensure harmony with adjacent development in accordance with architectural and site approval standards. The planting of invasive plant species is prohibited.
Table 17.72-2: Minimum Landscaped Area for Visitor Serving Properties Property Minimum Landscaped Area
Rispin site 75% as either landscaped areas in developed areas of the site, or unlandscaped natural areas in areas subject to conservation easements
Shadowbrook restaurant parcel and visitor
serving El Salto and Monarch Cove parcels
50% landscaped area or undeveloped open space
All other visitor serving properties 5%
17.72.060 Landscape standards.
A. General Standards. The following standards apply pursuant to Section 17.72.020 within all zoning districts:
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1. Plant Selection. A minimum of ninety percent of plants and trees shall be drought-tolerant as defined by the Water Use Classification of Landscape Species (WUCOLS). Native plants adapted to the local climate are preferred.
2. Plant Selection Along Blufftop, Beach, or ESHA. Native plants adapted to the local climate shall be required within fifty feet of the blufftop edge, the beach, or ESHA. See Chapter 17.64 (Environmentally Sensitive Habitat Areas) for habitat requirements.
3. Storm Water Management. The landscape plan shall incorporate storm water management controls in compliance with the Regional State Water Resources Control Board.
4. Turf Lawns.
a. Turf areas shall be limited to twenty-five percent of the landscaped area. The planning commission may approve larger areas if the lawn area provides functional open space. b. Drought-tolerant grass species shall be used exclusively. c. Turf shall not be used on berms, slopes, or median islands where runoff is a problem.
5. Slopes. Turf and high water use plants shall not be planted on berms and slopes greater than twenty-five percent.
6. Plant Groupings. Where irrigation is proposed, plants shall be grouped in separate hydrozones (i.e., plants within each irrigation valve area shall have the same watering requirements).
7. Water Features. Decorative water features (e.g., fountains, ponds, waterfalls) must be approved by the planning commission and shall have recirculating water systems. Automatic fill valves are not recommended for use within water features.
8. Watering Times. Watering shall be limited to between eight p.m. and ten a.m.
9. Public Safety. Plant species shall be selected and located so that at maturity they do not interfere with pedestrian, bicycle, or vehicular circulation or safety and do not conflict with overhead lights, or utility lines.
B. Irrigation and Water Efficiency. Irrigation systems shall be designed to avoid runoff, low head drainage, overspray, and other similar conditions where water flows outside of landscaped areas. Irrigation systems shall feature the following equipment:
1. Irrigation systems shall meet a minimum irrigation efficiency standard of the applicable water provider.
2. Separate landscape water meters for landscape areas exceeding ten thousand square feet for single-family residential uses and five thousand square feet for all other uses.
3. Irrigation controllers capable of percent adjustment, multiple programming, and rain sensor.
4. Overhead sprays shall have a precipitation rate of no more than three-quarters of an inch per hour.
5. Separate valves and circuits based on water use and sun exposure. Separate valves for turf and nonturf and berm areas are required.
6. Sprinkler heads and emitters selected for proper area coverage, application rate, operation pressure, adjustment capability, and ease of maintenance.
7. Rain-sensing override devices are required for all irrigation systems.
8. Drip or bubble irrigation is required for all trees. Bubblers should not exceed a flow rate of one and one-half gallons per minute.
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9. State-approved backflow prevention devices shall be installed on all irrigation systems.
C. Timing of Installation. Landscaping systems shall be installed prior to final building permit inspection or certification of occupancy.
17.72.070 Landscape maintenance.
The following landscape maintenance requirements apply to multifamily and nonresidential properties:
A. General. Landscape areas shall be maintained in a neat and healthful condition at all times.
B. Mulch. Mulch shall be periodically added to the soil surface in all landscape areas.
C. Replacement of Dead or Dying Plants. Plants that are dead or severely damaged or diseased shall be replaced by the property owner.
D. Removal of Landscaping. Any removed mature landscaping shall be replaced with landscaping of similar size and maturity as that which was removed. Trees may only be removed and/or replaced in accordance with the city’s tree ordinance, Chapter 12.12.
E. Irrigation Systems. Irrigation systems shall be maintained in a fully functional manner as approved by the city and required by this chapter. Watering schedules should be adjusted periodically to reflect seasonal variations. 204
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Zoning Map/LCP-IP Proposed Modifications
for Monarch Cove Inn Parcels
Existing Land Use: Visitor Serving
Proposed Land Use: R-1 Single-Family Residential with Visitor Serving Overlay 205
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General Plan and Local Coastal Program Land Use Map Proposed Modifications for Monarch Cove Inn Parcels
Existing Land Use: Visitor Serving
Proposed Land Use: Single-Family Residential with Visitor Serving Overlay 206
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Kosmont Companies
Mailing Address: 1601 N. Sepulveda Blvd., #382 (424) 297-1070 Physical Address: 1230 Rosecrans Ave., #630 Manhattan Beach, CA 90266 www.kosmont.com Manhattan Beach, CA 90266 August 29, 2022
Mr. Brian Froelich
Senior Planner
City of Capitola
420 Capitola Ave.
Capitola, CA 95010
Re: Monarch Cove Inn Feasibility Analysis
Dear Mr. Froelich:
Kosmont & Associates, Inc. doing business as Kosmont Companies (“Consultant” or “Kosmont”) is pleased to present our findings relative to the California Coastal Commission request for a feasibility analysis of future hospitality use for the historic Monarch Cove Inn, an 11-room hotel (“Property”) on 1.4-acres owned by the Blodgett family (“Owner”), and located at 620 El Salto Drive in Capitola (“City”).
BACKGROUND
In 2020, the City initiated a zoning change for the subject Property from Commercial to R-1. As part of the Local Coastal Plan review, the California Coastal Commission (“CCC”) requested an independent 3rd party study to assess the feasibility of the Property to continue as a visitor serving facility. The main house was built in 1886 and has undergone extensive renovations, but overall amenities are lacking compared to competitive facilities limiting achievable room rates.
Due to its small size of 11 rooms and regulations limiting special events (i.e., weddings), the Property has been unable to generate sufficient net operating income to cover the annual debt service. CCC wants to know if there are any modifications that can be made to allow the Property to operate profitably (e.g., additional rooms, restaurant, special event facilities).
To address CCC concerns, the City retained Kosmont Companies to provide an independent assessment of the hotel operations and the financial feasibility of adding new facilities to the Property.
Consultant toured the Property and met with Owner to understand operating challenges, and see the historic financial performance records. Consultant worked with City staff to understand the terms of the existing Conditional Use Permit.
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Hotel Description
The 620 El Salto Drive Property is located at the end of a narrow cul-de-sac street. It was developed as a single family estate in the late 1890’s with the construction of a ~4,000 SF main house. The family also owned most of the property along El Salto Drive. Over the years many parcels were sold to other individuals who built single family homes.
In 1991, the family converted the property into a visitor serving facility called the Monarch Cove Inn. While primarily a hospitality facility, the major source of revenue was outdoor weddings and special events prior to CUP restrictions, generating over $250,000 per year in operating income that often exceeded the hotel room revenue.
The Property is surrounded by single family residences to the north and west and the Pacific Ocean on the south. In the 1880’s the property was surrounded by a 60 foot wide Escalona Drive right of way connecting to Grand Ave. The majority of Grand Avenue has been eroded away and right of way is now a pedestrian path.
The Property is comprised of 4 parcels. In the 1989 General Plan, the City designated three parcels as Visitor Serving (V-S) with the fourth parcel 036-143-36 zoned Parks and Open Space (P/OS).
Due to adjacent neighbor complaints about noise and parking on city streets, the lodging has been operates under a Conditional Use Permit since 2001, that restricts special events to no more than two per week and six per month. Events during the week (M-F) are limited to 40 people and during weekends they are limited to 75 people, which negatively impacts revenue from wedding substantially.
Another factor that has restricted guest attendance is parking. The subject Property currently has approximately a dozen parking spaces on site. Guests used to be able to park on offsite lots and drives that were privately owned. As those parcels were sold and developed, parking became an problem for the community. Property now must arrange for offsite parking and shuttle systems to bring guests at significant cost.
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Subject Property
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Hotel Operations
Kosmont gathered hotel market data for the Santa Cruz/Capitola submarket from Smith Travel Research (STR) to understand the competitive hotel market room rates and occupancy rates for the time frame pre-Covid up to the current year.
The Property has extraordinary maintenance needs with an acre of gardens and three Victorian buildings requiring a full time handyman and full time gardener. Engineering assessments have also identified the need for a new foundation and a seismic retrofit that would cost approximately $800,000.
Table 1 shows that despite increasing hotel operating revenues, expenses have climbed faster resulting in lower net operating income and cash flow during the past 8 years.
Table 1
As shown above, the Monarch Cove Inn has struggled for years to achieve breakeven operations, despite high room rates and strong occupancy. Wedding and other event revenues have continued their significant decline. With a return on investment of less than 4%, Owner is not able to invest in long term improvements needed to maintain a hospitality use.
Monarch Cove Inn
Financial Performance
2014 2015 2016 2017 2018 2019 2020 2021
Occupancy Rate 47% 72% 78% 81% 79% 64% 55% 82%
Average Daily Rate $ 193 $ 178 $ 176 $ 171 $ 178 $ 200 $ 173 $ 193 Room Revenue (net of TOT) $ 364,000 $ 516,000 $ 552,000 $ 557,000 $ 564,000 $ 515,000 $ 382,000 $ 634,000 Other Revenue 82,000 97,000 54,000 46,000 58,000 42,000 14,000 29,000 Total Revenue $ 446,000 $ 613,000 $ 606,000 $ 603,000 $ 622,000 $ 557,000 $ 396,000 $ 663,000 Operating Costs $ 317,000 $ 355,100 $ 433,000 $ 463,200 $ 463,000 $ 387,000 $ 357,400 $ 523,400 Net Operating Income $ 129,000 $ 257,900 $ 173,000 $ 139,800 $ 159,000 $ 170,000 $ 38,600 $ 139,600 Return on Investment /1 3.2% 6.4% 4.3% 3.5% 4.0% 4.3% 1.0% 3.5% Less: Debt Service /2 $ 114,000 $ 125,900 $ 105,000 $ 128,800 $ 105,000 $ 123,000 $ 116,000 $ 105,000 Net Cash Flow $ 15,000 $ 132,000 $ 68,000 $ 11,000 $ 54,000 $ 47,000 $ (77,400) $ 34,600 Source: Monarch Cove Inn
/1 $4 million estimated debt and equity investment
/2 Excludes deferred interest on $2 million loan
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Hotel Market
The Santa Cruz / Capitola hotel market contains over 3,000 hotel rooms plus over one hundred nearby camping spaces at New Brighton State Beach and over 60 RV camp sites at Seacliff State Beach Campground.
The potential loss of 11 rooms at Monarch Cove represents less than 0.3% of the dedicated hospitality inventory, not counting the hundreds of single family homes renting rooms via Airbnb.com and similar websites.
Table 2 illustrates the major hotel properties in Santa Cruz/Capitola that have been historically surveyed by STR as to room rates and occupancy.
Table 2
Competitive Set
Hotel Properties in Capitola and Santa Cruz
Miles
from
Site
Property Name Property Address City Hotel
Class Rooms Year Built / Renovated
0.7 Quality Inn & Suites
Capitola By The Sea 822 Bay Ave Capitola Midscale 55 1980
1.2 Best Western Plus 1435 41st Ave Capitola Upper
Midscale 58 2000
1.2 Fairfield Inn & Suites
Santa Cruz Capitola 1255 41st Ave Capitola Upper Midscale 84 2011
1.9 Seacliff Inn Aptos,
Tapestry Collection
7500 Old
Dominion Ct Aptos Upscale 148 1980
4.1 Best Western Plus All
Suites Inn 500 Ocean St Santa Cruz Upper Midscale 77 1989 / 2022
4.1 Comfort Inn Beach
Boardwalk Area 314 Riverside Ave Santa Cruz Upper Midscale 28 1996
4.1 Hyatt Place Santa Cruz 407 Broadway Santa Cruz Upscale 106 2017
4.2 Autograph Collection
Hotel Paradox 611 Ocean St Santa Cruz Upper Upscale 170 1969 / 2012
4.3 Holiday Inn Express &
Suites Santa Cruz 1410 Ocean St Santa Cruz Upper Midscale 100 2009
4.3 Quality Inn Santa Cruz 1101 Ocean St Santa Cruz Midscale 42 1972
4.4 Comfort Inn Santa Cruz 110 Plymouth St Santa Cruz Upper Midscale 62 1970
4.4 Best Western Inn Santa
Cruz 126 Plymouth St Santa Cruz Midscale 28 1983
4.4 Hampton Inn Santa Cruz 1505 Ocean St Santa Cruz Upper Midscale 46 2000
Source: STR
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Market area hotel performance metrics, based on the hotel competitive set identified above, are summarized in the Table 3 below. The data shows that Monarch Cove Inn Property achieved higher room rates ($193) and occupancy rates(82.2%) than the competitive hotels in 2021.
Table 3
Source: Costar / STR
Significant seasonality is highlighted by the Capitola/Santa Cruz market’s monthly performance data over the past year as summarized below:
Monthly Hotel Performance:
Previous 12-month Period
Month Avg.
Occupancy ADR RevPAR
Jun 21 73.8% $207.45 $153.14
Jul 21 81.5% $243.12 $198.20
Aug 21 71.9% $224.87 $161.61
Sep 21 67.9% $208.10 $141.31
Oct 21 66.1% $169.49 $111.96
Nov 21 65.1% $146.87 $95.58
Dec 21 57.8% $129.16 $74.70
Jan 22 55.9% $118.70 $66.34
Feb 22 66.9% $139.95 $93.66
Mar 22 70.6% $148.90 $105.14
Apr 22 78.3% $186.05 $145.70
May 22 70.7% $180.89 $127.86
Average 68.9% $175.30 $122.93
Source: Costar / STR
Year Avg.
Occupancy ADR
Supply of
Room
Nights
Demand
for Room
Nights
Change in
Occupied
Room Nights
RevPAR Change in
RevPAR
2014 65.8% $140.27 328,135 215,790 $92.25
2015 70.2% $153.69 328,135 230,197 6.7% $107.82 16.9%
2016 70.2% $160.08 328,135 230,225 0.0% $112.31 4.2%
2017 70.6% $161.19 344,353 243,264 5.7% $113.87 1.4%
2018 74.3% $165.26 366,825 272,543 12.0% $122.78 7.8%
2019 74.6% $165.73 366,825 273,776 0.5% $123.69 0.7%
2020 51.8% $141.22 366,491 189,670 -30.7% $73.09 -40.9% 2021 64.2% $175.91 366,460 235,319 24.1% $112.96 54.6%
2022* 68.5% $157.44 $107.77
Market Hotel Performance: 2014 - 2021
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Limiting Conditions per Conditional Use Permit (“CUP”)
The various operational constraints imposed by the CUP have had a dramatic impact on the feasibility of continued hospitality operations at the Property.
1. Maximum of two weddings per week and six per month
2. Maximum of 40 guests allowed Monday thru Thursday
3. Maximum of 75 guests will be allowed Friday thru Sunday
4. All events must occur prior to 6:00 pm
5. No event parking may take place in residential neighborhood. City allows remote parking if a shuttle is provided
6. A security guard is required on site during all events With 80% of weddings occurring between May and October, the limit of 6 weddings per month impacts revenue substantially, eliminating 2-3 weekend event days during peak months (according to Brides.com). The most significant constraint is the limitation of 75 guests on weekends, as pre-pandemic wedding parties averaged 130 guests (theknot.com). The financial data shown above clearly demonstrates the dramatic decline in non-hotel room revenue, a trend that continues today.
Feasibility of New Development
One potential option to improve operating revenues would be an expansion of hotel rooms or addition of restaurant/bar area. In 2014, the Owner Robert Blodgett applied to the City for an expansion of the facility into a 41-room hotel complex that would retain the historic Victorian Inn, demolish and replace the two cottages and garage area with a subterranean garage for 56 cars and two new hotel buildings with 32 guest rooms, meeting rooms and kitchen facilities. The Owner prepared a full Environmental Impact Report, but the Project application was withdrawn by the Owner due to massive community opposition.
With current resident sentiment opposed to hospitality uses, no changes to the commercial uses allowed on the Property can be expected to be approved by the City.
Finding
Kosmont’s analysis of the Monarch Cove Inn Property shows the hospitality operations yield an inadequate return on investment of less than 4% to justify operations as a hospitality venue.
Given the long term capital investment required, continued hotel use of the property is not financially feasible.
Disclaimer:
The analyses, projections, assumptions presented herein are for illustrative purposes and are not a guarantee of actual and/or future results. Actual results may differ from those expressed in this analysis, as results are difficult to predict as a function of market conditions, natural disasters, pandemics, significant economic impacts, legislation and administrative actions. 213
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Kosmont Realty
Mailing Address: 1601 N. Sepulveda Blvd., #382 (424) 297-1076 Physical Address: 2301 Rosecrans Ave., Ste. 4140 Manhattan Beach, CA 90266 www.kosmontrealty.com El Segundo, CA 90245 90245 August
, 22
Mr. Brian Froelich, AICP
Senior Planner
City of Capitola
420 Capitola Ave.
Capitola, CA 95010
Re: Monarch Cove Inn Property Broker Opinion of Value (BOV) Dear Mr. Froelich;
Kosmont Real Estate Services, Inc. (“KRES”) dba Kosmont Realty (“KR”), a licensed California brokerage firm (Department of Real Estate License #02058445), is pleased to present this broker opinion of value (“BOV”) in connection with the Monarch Cove Inn (“Property”) located at 620 El Salto Drive in Depot Hill neighborhood of Capitola (“City”). APNs for the four parcels are 036-142-27, 036- 142-28, 036-143-31, 036-143-36.
The BOV considers the Property’s zoning/allowable uses, current market and economic conditions, and other relevant data/information to evaluate the range of fair market value of the Property.
Valuation Summary
For hotel use, KR estimated stabilized long term net operating income and used market cap rates to estimate the “As Is” value of continued hotel operations. This analysis does not include mortgage interest or other financing costs. The value of the property in hotel use is $3.1 million.
For residential use, KR compiled per acre land sale comp data and made adjustments as appropriate given the Property’s allowable density and location to estimate the value of the Property for residential redevelopment and as a single family residence, which was its original use. The average value for those two residential scenarios is $4.25 million ($3.9 million and $4.6 million).
The Property’s estimate of value was derived from the Sales Comparison Methodology with supportable adjustments, and Income Capitalization Methodology as shown below. .
Value Summary
Bldg / Land Area Estimated Value
Residential Zoned Land 61,000 $3,900,000
Residential Reuse of Buildings 5,000 $4,600,000
Hotel Use 5,000 $3,100,000
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BOV for Monarch Cove Property
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I. BACKGROUND AND OBJECTIVE
In 2020, the City initiated a zoning change for the Property from Commercial to R-1 Residential. As part of the Local Coastal Plan review, the California Coastal Commission (“CCC”) requested an independent 3rd party study to assess the feasibility of the Property to continue as a visitor serving facility. The Property was built in 1886 and has undergone many renovations and continues to have extraordinary maintenance needs.
Due to its small size of 11 rooms and regulations limiting special events (i.e., weddings), the Property has been unable to generate sufficient net operating income to cover the annual debt service. CCC has requested an independent evaluation of the Property value in current hotel use, as well as a valuation of the Property with a residential rezoning.
Property Orientation
KR toured the Property, gathered information on building size and condition and reviewed the parcel data to identify the Property dimensions, as well as gathered info on hotel revenue and operating cost trends. KR also interviewed owners and reviewed financial statements regarding extraordinary maintenance costs associated with the historic building.
Market Research
KR gathered Santa Cruz/Capitola hotel operating data from CoStar/STR to understand the Property’s competitive position in the local market. KR gathered hotel sales comps to understand per room values and capitalization rates. KR also gathered data on single family homes sales values and undeveloped residential land sale comps in the Capitola area.
Permitted Uses – Residential & Commercial Zoning
KR gathered information from the City on underlying R-1 residential density (3 single family units), as well as allowable uses on the hotel Property under the current commercial zoning, with the various regulations imposed, as discussed later.
Market Conditions
It is important to note that residential home values have seen extraordinary appreciation in the past two years across California, especially in suburban areas away from large metropolitan centers, subject to various lockdown constraints. Demand for housing and prices may soften with mortgage rates spiking by over 200 basis points since January 2022.
II. Property Information
Location
The Property is located on a beachfront cliff in the Depot Hill neighborhood of the City, which is adjacent to Santa Cruz, about 35 miles southwest of San Jose via SR 17. It is located at the end of a narrow cul-de-sac at 620 El Salto Drive.
A City Location Map, Property Aerial Map, Parcel Maps, and Property Photos are provided as Exhibits A, B, C, and D, respectively.
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Existing Conditions
The Property is comprised of 4 parcels. In the 1989 General Plan the City designated three parcels as Visitor Serving (V-S) with the fourth parcel 036-143-36, zoned Parks and Open Space (P/OS).
The Property is a 61,000 SF irregular shaped lot. The Property contains a 4,000 square foot 120- year old Victorian building, that currently has 9 guest rooms. The Property also has two guest houses, a garage, and an outdoor event pavilion. Due to adjacent neighbor complaints about noise and parking on the street, the lodging now operates under a Conditional Use Permit (“CUP") that restricts special events to no more than two per week and six per month. Events during the week (M-F) are limited to 40 people and during weekends limited to 75 people. 216
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History
The Monarch Cove Inn was originally developed as a single-family estate in the late 1880’s with the construction of a ~4,000 SF main house. The family also owned most of the property along the El Salto Drive. Over the years, many parcels were sold to other individuals who built single family homes.
In 1991, the family converted the Property into a visitor serving facility called the Monarch Cove Inn.
While primarily a hospitality facility, the major source of revenue was outdoor weddings and special events prior to CUP restrictions.
The Property is surrounded by single family residences to the north and west and the Pacific Ocean on the south. In the 1880’s, the Property was surrounded by a 60-foot wide Escalona Drive right of way connecting to Grand Ave. The majority of Grand Avenue has been eroded away and right of way is now a pedestrian path.
III. Valuation Methodology
Standard methods for the valuation of real estate include replacement cost methodology, income capitalization methodology, and the sales comparison methodology.
Replacement Cost Methodology
The replacement cost methodology was not considered to be an accurate determinate of value because the current building improvements are an historic structure.
Income Capitalization Methodology
KR utilized the income capitalization methodology to value the Property in current hotel use.
Sales Comparison Methodology
KR utilized the sales comparison methodology for both the hotel use and for residential use based on recent comparable property sales in the immediate area.
IV. a. Valuation Analysis - Residential
To estimate the value of the Property as residential use, KR used the Sales Comparison Method and surveyed comparable vacant land sales over the last three years in Capitola/Santa Cruz. Finding comparable sales is difficult due to the unique character of the subject Property (120-year old Victorian on 4 parcels with cliffside ocean views).
As shown in the table below, four (4) comparable homes were recently evaluated on a price per square-foot of building basis:
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Home Sales Comparables
Address Location Sale Date
Home
Size
SF
Sales Price $/PSF Use
SUBJECT PROPERTY
620 El Salto Drive Capitola N.A. 5,000 n.a. n.a. Hospitality
SALE COMPARABLE
709 El Salto Drive Capitola 4/29/22 1,467 $1,630,000 $1,111 Single Family 30 Moran Way Santa Cruz Listed 2,160 $2,699,000 $1,250 Single Family 602 El Salto Drive Capitola 8/27/21 2,760 $2,900,000 $1,050 Single Family 501 El Salto Drive Capitola 9/28/20 2,630 $2,090,000 $ 795 Single Family Average Sales Price/PSF $1,050
Source: Redfin, Homes.com, Zillow
Based on the above comparable sales transacted between 2020 and 2022, home values range from approximately ~$800 PSF to ~$1,200 PSF with an average of $1,050 PSF. Due to significant appreciation in home values in past two years, the first two sales listed are most comparable to the subject Property, despite being new construction, and would indicate a value of $1,200 PSF for equivalent condition.
Adjustments
In order to determine a fair value for the subject Property in residential use, KR made the following adjustments for the 4,000 SF Victorian building foundation repair/earthquake retrofit and conversion of hospitality to single family use:
Preliminary Value 5,000 SF x $1,200 = $6,000,000
Less: Foundation Repair ($200/SF) /1 (800,000)
Less: Conversion from Hospitality ($150/SF) /2 (600,000) Adjusted Value in Residential Reuse $4,600,000
___________
/1 Foundation cost estimate provided by engineering firm hired during the 2014 redevelopment planning /2 Conversion cost estimates per KR, based on discussions with Owner. 218
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Residential Zoned Land
KR examined land sales for residentially zoned land in the Capitola/Santa Cruz area. Due to limited development and sales transaction activity because of negative market factors/conditions caused by the Covid-19 pandemic (e.g. rise in construction costs), there were few land sales for residential development. Therefore, KR utilized sales comparables dating back to 2019, as shown in the table below.
Residential Land Sales
Address Location Sale Date Lot
Acres Sales Price $/Acre Use
SUBJECT PROPERTY
620 El Salto Drive Capitola N.A. 1.4 n.a. n.a. Hospitality
SALE COMPARABLE
1260 7th Ave Santa Cruz 12/13/19 0.95 $1,580,000 $1,600,000 Vacant Land 217 Protrero St Santa Cruz 10/9/19 0.21 $ 600,000 $3,000,000 Single Family 961 Beach St Santa Cruz 1/25/19 0.50 $1,135,000 $2,270,000 Vacant Land Average Sale Price/Acre $1,400,000
Source: CoStar
The sales comparables shown in the table above represent a wide range of values due to location and allowable density with an average of $1.4 million per acre. The last two sales are most comparable to the subject Property, but allow for much higher density. With a lower density allowed on Subject, KR estimates the value of subject Property with residential zoning for 3 units to be $2.8 million per acre or $3.9 million.
IV. b. Valuation Analysis – Hotel
To estimate the value of the Property for continued hotel use, KR used the Income Capitalization Method and projected net operating income and market capitalization rates. Table 1 on the following page shows that the net operating income has ranged from $140,000 to $170,000 with an average of $150,000, excluding the significant negative impact Covid-19 had on the hotel’s 2020 operations. 219
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Table 1
Capitalized Value
Hotel capitalization rates are typically higher than those for industrial, retail and apartments as the risk level is greater. KR’s survey of hotel sales in the San Jose / Santa Cruz area indicates market capitalization rates from 5% to 7%, with a 9-room Victorian Inn listed (listed in July 2022) at 6.2% cap rate. KR believes a 5.5% capitalization rate is appropriate for the Property. With average net operating income of $150,000, the supportable sales value is estimated at $2.7 million.
Hotel Sales Comparables
KR researched hotel sales in the Capitola / Santa Cruz area since 2018. Several properties were found with a wide range of size, location and type of construction.
Hotel Sales
Address Location Sale
Date
Bldg
SF Sales Price $/PSF Use
SUBJECT PROPERTY
620 El Salto Drive Capitola N.A. 5,000 n.a. n.a. Hospitality
SALE COMPARABLE
Beach St Inn Santa Cruz 10/20/21 20,000 $14.1 million $700 Hospitality 118 1st St Santa Cruz 9/22/21 3,100 $1.93 million $615 Hospitality Darling House 314 W. Cliff Santa Cruz 8/30/19 7,870 $5.0 million $1,160 Hospitality Capitola Hotel 210 Esplanade Capitola 6/20/18 3,400 $3.0 million $890 Hospitality Average Sales Price/PSF $900
Source: CoStar
Monarch Cove Inn
Financial Performance
2017 2018 2019 2020 2021
Occupancy Rate 81% 79% 64% 55% 82%
Average Daily Rate $ 171 $ 178 $ 200 $ 173 $ 193
Room Revenue (net of TOT) $ 557,000 $ 564,000 $ 515,000 $ 382,000 $ 634,000 Other Revenue 46,000 58,000 42,000 14,000 29,000
Total Revenue $ 603,000 $ 622,000 $ 557,000 $ 396,000 $ 663,000 Operating Costs $ 463,200 $ 463,000 $ 387,000 $ 357,400 $ 523,400 Net Operating Income $ 139,800 $ 159,000 $ 170,000 $ 38,600 $ 139,600 Source: Monarch Cove Inn
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The last two sales represent properties located in commercial area by the water with ocean views.
The 118 1st St. property is a 9-room Victorian property being rehabbed and converted into a Bed and Breakfast. It is located two blocks from the beach, but with limited ocean views and represents a strong comparable given the need for major renovation. Considering the Property’s premium views and the need for renovation, KR estimates the fair value of subject Property based on Sales Comparison Methodology to be $700 PSF or $3.5 million.
Reconciling the Income Approach and Sales Comparison Approach for Hotel use results in an average value of $3.1 million.
V. Conclusion – Broker Opinion Value
Based on the Sales Comparison Methodology with supportable adjustments, and Income Capitalization Methodology, KR estimates the value of the Property under two alternative residential scenarios (average of $4.25 million) and as hotel ($3.1 million) as shown below. .
Value Summary
Costar Bldg / Land Area Estimated Value
Residential Zoned Land 61,000 $3,900,000
Residential Reuse of Buildings 5,000 $4,600,000
Hotel Use 5,000 $3,100,000
Note: This evaluation is a Broker Opinion of Value (“BOV”). It is not an appraisal, which generally provides a more detailed evaluation of value and related property characteristics. BOV based on typical market conditions, which do not reflect extraordinary events that can impact supply/demand market characteristics which in turn impact property valuation.
Respectfully Submitted:
Kosmont Real Estate Services
doing business as “Kosmont Realty”
Larry J. Kosmont, CRE®
Chairman & CEO
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Exhibit A1 – City Location Map
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Exhibit B – Property Aerial
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Exhibit C – Assessor Parcel Map
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Exhibit D – Property Photos
Main House
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Event Pavilion
Entrance on El Salto Drive
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City of Capitola
BOV for Monarch Cove Property
August 2022
Kosmont Realty 15 | Page
(424) 297-1076
www.kosmontrealty.com
Ocean View from backyard
Guest House
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RESOLUTION NO. ____
A RESOLUTION OF THE CITY OF CAPITOLA APPROVING AMENDMENTS TO
THE GENERAL PLAN LAND USE MAP TO CHANGE THE MONARCH COVE INN PROPERTY FROM A VISITOR SERVING BASE ZONE TO R-1 SINGLEFAMILY RESIDENTIAL BASE ZONE WITH A VISITOR SERVING OVERLAY ZONE
WHEREAS, on October 12, 2020 the City of Capitola adopted a General Plan Land Use Map amendment to change the Monarch Cove Inn property (620 El Salto Drive, Parcel Numbers 036-143-31, 036-142-27, and 036-142-28) from a Visitor Serving base zone to R-1 Single-Family Residential base zone with a Visitor Serving overlay zone; WHEREAS, the Monarch Cove Land Use Map Amendment requires certification by the California Coastal Commission as the property is located within the Coastal Zone; and
WHEREAS, on April 15, 2021 the Coastal Commission did not certify the Monarch Cove Land Use Map Amendment and associated Zoning Code and Zoning Map amendments;
WHEREAS, on April 15, 2021 the Coastal Commission advised the Monarch Cove Inn owner and the City of Capitola to bring the proposed Monarch Cove Inn amendments back before the Coastal Commission as a separate item for consideration; WHEREAS, at duly notice public hearings on October 20 and November 3, 2022, the Planning Commission reviewed the Monarch Cove General Plan Land Use Map Amendments and associated Zoning Code and Zoning Map amendments; and WHEREAS, on November 3, 2022, the Planning Commission recommended to the City Council adoption of the proposed Monarch Cove General Plan Land Use Map Amendments and associated Zoning Code and Zoning Map amendments.
BE IT ORDAINED by the City of Capitola as follows:
Section 1: General Plan Land Use Map Amendment
The General Plan Land Use Map is amended to change the Monarch Cove Inn property (620 El Salto Drive, Parcel Numbers 036-143-31, 036-142-27, and 036-142-28) from a Visitor Serving base zone to R-1 Single-Family Residential base zone with a Visitor Serving overlay zone as shown in Attachment 1, attached hereto and incorporated herein by this reference.
Section 2: Environmental Review.
The City Council finds and determines that the General Plan Land Use Map Amendment is statutorily exempt from the provisions of the California Environmental Quality Act 309
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("CEQA"), pursuant to CEQA Guidelines Sections 15061(b)(3), the common sense exception that CEQA applies only to projects which have the potential for causing a significant effect on the environment and 15183, projects consistent with a community plan, general plan or zoning.
PASSED AND ADOPTED by the City Council of the City of Capitola at a regular meeting held on ____, 2022 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Sam Storey, Mayor
Attest:
Chloe Woodmansee, City Clerk
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General Plan and Local Coastal Program Land Use Map Proposed Modifications for 620 El Salto Parcels
Existing Land Use: Visitor Serving
Proposed Land Use: Single-Family Residential with Visitor Serving Overlay 311
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Capitola City Council
Agenda Report
Meeting: November 10, 2022
From: Community Development Department
Subject: Consider a Permanent Local Housing Allocation Resolution Recommended Action: Adopt proposed resolution authorizing the City Manager to execute the Permanent Local Housing Allocation (PLHA) Program Application with 5-year plan, the PLHA Standard Agreement, and any subsequent amendments or modifications thereto, as well as any other documents which are related to the Program or the PLHA grant award.
Background: In 2017, Governor Brown signed a 15-bill housing package aimed at addressing California’s housing shortage and high housing costs. Specifically, it included the Building Homes and Jobs Act, known as Senate Bill 2 (SB 2) to increase the supply of affordable homes in California. The Bill established a $75 recording fee on real estate documents and created the Permanent Local Housing Allocation Fund (PLHA). Beginning in 2019, the Bill authorized the California Department of Housing and Community Development (HCD) to allocate 70 percent of PLHA fund moneys to local governments for eligible housing and homelessness activities. The intent of the bill is to provide a permanent, on-going source of funding to local governments for housing-related projects and programs that address the unmet housing needs of their local communities.
The California Department of Housing and Community Development (HCD) issued the first Notice of Funding Availability (“NOFA”) under the PLHA program making affordable housing funding available statewide. HCD calculates and publishes the PLHA allocation annually. The following table includes Capitola’s funding for 2020 – 2022 and estimated funding for 2023 and 2024.
Year PLHA NOFA
Allocation
2020 $105,092
2021 $180,868
2022 $195,772
2023 $74,713
2024 $74,712
Total $630,557
The state estimates a total of $630,557 in funding for Capitola over the five-year funding cycle. To apply for the funding, the City must submit a signed resolution with a 5-year plan explaining which eligible activities the funding will be applied toward.
On October 27, 2022, the City Council received a presentation on the PLHA program and provided direction on the 5-year plan, as further summarized in the analysis section of this report.
Analysis: The PLHA funding must be used for the following eligible activities:
1. The predevelopment, development, acquisition, rehabilitation, and preservation of multifamily, residential live-work, rental housing that is affordable to extremely low-, very low-, low-, or moderate-income households, including necessary operating subsidies 312
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2. The predevelopment, development, acquisition, rehabilitation, and preservation of Affordable rental and ownership housing, including Accessory Dwelling Units (ADUs), that meets the needs of a growing workforce earning up to 120-percent of AMI, or 150-percent of AMI in high-cost areas. ADUs shall be available for occupancy for a term of no less than 30 days
3. Matching portions of funds placed into Local or Regional Housing Trust Funds
4. Matching portions of funds available through the Low- and Moderate-Income Housing Asset Fund pursuant to subdivision (d) of HSC Section 34176
5. Capitalized Reserves for Services connected to the preservation and creation of new permanent supportive housing
6. Assisting persons who are experiencing or at risk of homelessness
7. Accessibility modifications in lower-income owner-occupied housing
8. Efforts to acquire and rehabilitate foreclosed or vacant homes and apartments
9. Homeownership opportunities, including, but not limited to, down payment assistance
10. Fiscal incentives made by a county to a city to incentivize approval of one or more affordable housing projects, or matching funds invested by a county in an affordable housing development project in a city within the county
Of the ten eligible activities listed above, the City Council directed staff to allocate funding to the following two items:
Activity 1: The predevelopment, development, acquisition, rehabilitation, and preservation of multifamily, residential live-work, rental housing that is affordable to extremely low-, very low-, low-, or moderateincome households, including necessary operating subsidies.
The City is in the initial phase of updating its housing element to accommodate the 1,363 new units allocated to the City through the Regional Housing Needs Assessment (RHNA). Thus, the City could utilize funding to partner with local non-profits and developers to assist with future affordable housing projects. Designating PLHA funds for predevelopment, development, acquisition, rehabilitation, and preservation of affordable housing rental units would provide an opportunity for future collaboration on an affordable housing project. Staff recommends most of the funds be dedicated toward this first Item to ensure the City can contribute to affordable housing production.
Activity 6. Assisting persons who are experiencing homelessness Annually, the City of Capitola contributes approximately $31,000 toward the Housing for Health Partnership (H4HP) program administered by the County of Santa Cruz. The H4HP utilizes jurisdictional contributions to support year-round emergency shelter operations, including the Salvation Army in Watsonville and Housing Matters in the City of Santa Cruz. Staff proposes funding the H4HP in 2023 and 2024 up to $35,000 per year with PLHA funds.
In summary, the City Council recommended the PLHA 5-Year Plan for allocation be as follows:
Year PLHA NOFA Allocation Allocation
2020 $105,092
2021 $180,868 Activity 1: Affordable Rental Project
2022 $195,772
2023 $74,713 Activity 1: Affordable Rental Project $39,713 Activity 6: Homeless Shelter $35,000
2024 $74,712 Activity 1: Affordable Rental Project $39,712 Activity 6: Homeless Shelter $35,000
Fiscal Impact: Submitting a resolution for PLHA funding will provide $630,557 of additional affordable housing funds for the City of Capitola in the next 5-years. 313
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Attachments:
1. Proposed resolution
Report Prepared By: Katie Herlihy, Community Development Director Reviewed By: Chloé Woodmansee, Assistant to the City Manager, Samantha Zutler, City Attorney Approved By: Jamie Goldstein, City Manager
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Resolution No: _____________
City of Capitola
AUTHORIZING RESOLUTION OF THE CITY MANAGER
AUTHORIZING THE APPLICATION AND ADOPTING THE PLHA PLAN FOR THE
PERMANENT LOCAL HOUSING ALLOCATION PROGRAM
A majority of the City Council Members of the City of Capitola hereby consents to, adopts, and ratifies the following resolution:
A. WHEREAS, the Department is authorized to provide up to $335 million under the SB 2 Permanent Local Housing Allocation Program Formula Component from the Building Homes and Jobs Trust Fund for assistance to Cities and Counties (as described in Health and Safety Code section 50470 et seq. (Chapter 364, Statutes of 2017 (SB 2)).
B. WHEREAS the State of California (the “State”), Department of Housing and Community Development (“Department”) issued a Notice of Funding Availability (“NOFA”) dated 8/17/2022 under the Permanent Local Housing Allocation (PLHA) Program;
C. WHEREAS, the City of Capitola is an eligible Local government who has applied for program funds to administer one or more eligible activities, or a Local or Regional Housing Trust Fund to whom an eligible Local government delegated its PLHA formula allocation.
D. WHEREAS the Department may approve funding allocations for PLHA Program, subject to the terms and conditions of the Guidelines, NOFA, Program requirements, the Standard Agreement, and other contracts between the Department and PLHA grant recipients;
NOW THEREFORE BE IT RESOLVED THAT:
1. If Applicant receives a grant of PLHA funds from the Department pursuant to the above referenced PLHA NOFA, it represents and certifies that it will use all such funds in a manner consistent and in compliance with all applicable state and federal statutes, rules, regulations, and laws, including without limitation all rules and laws regarding the PLHA Program, as well as any and all contracts Applicant may have with the Department.
2. Applicant is hereby authorized and directed to receive a PLHA grant, in an amount not to exceed the five-year estimate of the PLHA formula allocations, as stated in Appendix C of the current NOFA $630,557.00 in accordance with all applicable rules and laws.
3. Applicant hereby agrees to use the PLHA funds for eligible activities as approved by the Department and in accordance with all Program requirements, Guidelines, other rules and laws, as well as in a manner consistent and in compliance with the Standard 315
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Agreement and other contracts between the Applicant and the Department. 4.
Pursuant to Section 302(c)(4) of the Guidelines, Applicant’s PLHA Plan for the 2019-2023 Allocations is attached to this resolution, and Applicant hereby adopts this PLHA Plan and certifies compliance with all public notice, public comment, and public hearing requirements in accordance with the Guidelines.
5. If applicable: Applicant certifies that it was delegated by City Council to submit an application on its behalf and administer the PLHA grant award for the formula allocation of PLHA funds, pursuant to Guidelines Section 300(c) and 300(d), and the legally binding agreement between the recipient of the PLHA funds and the Applicant is submitted with the PLHA application.
6. If applicable: Applicant certifies that it has or will subgrant some or all of its PLHA funds to another entity or entities. Pursuant to Guidelines Section 302(c)(3), “entity” means a housing developer or program operator, but does not mean an administering Local government to whom a Local government may delegate its PLHA allocation.
7. If applicable: Applicant certifies that its selection process of these subgrantees was or will be accessible to the public and avoided or shall avoid any conflicts of interest.
8. If applicable: Pursuant to Applicant’s certification in this resolution, the PLHA funds will be expended only for eligible Activities and consistent with all program requirements.
9. If applicable: Applicant certifies that, if funds are used for the acquisition, construction or rehabilitation of for-sale housing projects or units within for-sale housing projects, the grantee shall record a deed restriction against the property that will ensure compliance with one of the requirements stated in Guidelines Section 302(c)(6)(A),(B) and (C).
10. If applicable: Applicant certifies that, if funds are used for the development of an Affordable Rental Housing Development, the Local government shall make PLHA assistance in the form of a low-interest, deferred loan to the Sponsor of the Project, and such loan shall be evidenced through a Promissory Note secured by a Deed of Trust and a Regulatory Agreement shall restrict occupancy and rents in accordance with a Local government-approved underwriting of the Project for a term of at least 55 years.
11. Applicant shall be subject to the terms and conditions as specified in the Standard Agreement, the PLHA Program Guidelines and any other applicable SB 2 Guidelines published by the Department.
12. The City Manager is/are authorized to execute the PLHA Program Application, the PLHA Standard Agreement and any subsequent amendments or modifications thereto, as well as any other documents which are related to the Program or the PLHA grant awarded to Applicant, as the Department may deem appropriate. 316
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PASSED AND ADOPTED at a regular meeting of the City Council this 10th day of, November 2022, by the following vote:
AYES: ABSTENTIONS: NOES: ABSENT:
Signature of Approving Officer:_
______________________________
Mayor Sam Storey
INSTRUCTION: The attesting officer cannot be the person identified in the resolution as the authorized signor
CERTIFICATE OF THE ATTESTING OFFICER
The undersigned, Officer of City of Capitola does hereby attest and certify that the foregoing Resolution is a true, full and correct copy of a resolution duly adopted at a meeting of the Capitola City Council which was duly convened and held on the date stated thereon, and that said document has not been amended, modified, repealed or rescinded since its date of adoption and is in full force and effect as of the date hereof.
ATTEST:
Signature of Attesting Officer
Chloe Woodmansee, City Clerk
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