Agenda packet — Capitola City Council, September 10, 2026

REVISED 9/10/2026 AT 4:10 PM
City of Capitola
City Council Meeting Agenda
Thursday, September 10, 2026 – 6:00 PM
City Council Chambers
420 Capitola Avenue, Capitola, CA 95010
Mayor: Margaux Morgan
Vice Mayor: Gerry Jensen
Council Members: Joe Clarke, Melinda Orbach, Susan Westman Closed Session – 4:45 PM
Closed Sessions are not open to the public and held only on specific topics allowed by State Law (noticed below). An announcement regarding the items to be discussed in Closed Session will be made in the City Hall Council Chambers prior to the Closed Session. Members of the public may, at this time, address the City Council on closed session items only. There will be a report of any final decisions in City Council Chambers during the Open Session Meeting.
i. PUBLIC EMPLOYEE PERFORMANCE EVALUATION (Govt. Code § 54957(b)) City Council's Performance Evaluation of the City Manager Regular Meeting of the Capitola City Council – 6 PM

1. Roll Call and Pledge of Allegiance
Council Members Joe Clarke, Melinda Orbach, Susan Westman, Vice Mayor Gerry Jensen, and Mayor Margaux Morgan

2. Additions and Deletions to the Agenda

3. Presentations
Presentations are limited to eight minutes.

A. Proclamation Recognizing September 2026 as Childhood Cancer Awareness Month, Presented to Jordan Thorpe, President of the Jacob's Heart Board B. Proclamation Honoring Santa Cruz Regional 911 Dispatchers C. Presentation of the Red Cross Life Saving Award to Sergeant Scott Newton

4. Report on Closed Session

5. Additional Materials
Additional information related to an agenda item on this agenda and submitted to the City after distribution of the agenda packet pursuant to Government Code §54957.5. All correspondence received prior to 5:00 p.m. on the Wednesday preceding a Council Meeting will be distributed to Councilmembers to review prior to the meeting. Information submitted after 5 p.m. on that Wednesday may not have time to reach Councilmembers, nor be read by them prior to consideration of an item.

A. Item 6 - Correspondence Received
B. Item 8A - Correspondence Received & Staff Memorandum with Updated Attachment 1 City Council Meeting Agenda – September 10, 2026
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C. Item 8B - Correspondence Received & Staff Memorandum with Updated Attachment D. Item 8E - Correspondence Received
E. Item 9B - Correspondence Received
F. Item 9C - Staff Memorandum with Updated Information & Correspondence Received G. Item 9D - Correspondence Received
H. Item 9E - Correspondence Received

6. Oral Communications by Members of the Public
Oral Communications allows time for members of the Public to address the City Council on any “Consent Item” on tonight’s agenda, or on any topic within the jurisdiction of the City that is not on the “General Government/Public Hearings” section of the Agenda. Members of the public may speak for up to three minutes, unless otherwise specified by the Mayor. Individuals may not speak more than once during Oral Communications. All speakers must address the entire legislative body and will not be permitted to engage in dialogue. A maximum of 30 minutes is set aside for Oral Communications.

7. Staff / City Council Comments
Comments are limited to three minutes.

8. Consent Items
All items listed as “Consent Items” will be enacted by one motion in the form listed below. There will be no separate discussion on these items prior to the time the Council votes on the action unless members of the City Council request specific items to be discussed for separate review. Items pulled for separate discussion will be considered following General Government. Note that all Ordinances which appear on the public agenda shall be determined to have been read by title and further reading waived.

A. City Council Meeting Minutes
Recommended Action: Approve minutes from the special meeting on August 25, 2026, the regular meeting on August 27, 2026, the special meeting on September 2, 2026, and the special meeting on September 3, 2026.

B. Elections Code Section 21130(f) Report
Recommended Action: Direct City staff and the City’s retained demographer, National Demographics Corporation, to issue and post the Elections Code Section 21130(f) report.

C. Alcohol Policing Partnership Grant
Recommended Action: Adopt a resolution accepting a Department of Alcoholic Beverage Control Alcohol Policing Partnership Grant in the amount of $57,881 and amending the FY 2026- 27 General Fund operating budget to increase revenues and expenditures by $57,881.

D. Update on Additional Improvements at the Park at Rispin Mansion Recommended Action: Receive an update on progress towards additional improvements at the Park at Rispin Mansion and ongoing efforts to raise funds through an engraved brick program.

E. Chapter 8.40: Capitola Municipal Code
Recommended Action: Adopt an ordinance amending Chapter 8.40 of the Capitola Municipal Code to remove the expiration language in Section 8.40.150(G).

9. General Government / Public Hearings
All items listed in “General Government / Public Hearings” are intended to provide an opportunity for public discussion of each item listed. The following procedure pertains to each General Government 2 City Council Meeting Agenda – September 10, 2026
City of Capitola Page 3
item: 1) Staff explanation; 2) Council questions; 3) Public comment; 4) Council deliberation; 5) Decision.

A. Capitola Wharf Status Update
Recommended Action: Receive an update regarding the Request for Proposals for a restaurant and commercial marketplace project on the Capitola Wharf and provide direction to staff regarding the next steps for future uses on the Wharf.

B. Stockton Avenue Bridge and Soquel Creek Implementation Update Recommended Action: 1) Receive an update regarding implementation of the City Council’s August 27, 2026, direction, including the bridge preservation and project-development solicitation, continued community outreach, and the annual Soquel Creek inspection and coordination; and 2) provide direction regarding whether staff should continue developing the Caltrans-recommended polyester concrete overlay and return with a revised funding request, or pursue a methacrylate deck treatment as a lower-cost interim maintenance measure.

C. Underground Utility District No. 6 and Rule 20A Program Update Recommended Action: Receive updated information regarding a potential shortened Rule 20A undergrounding project along Monterey Avenue and provide direction as desired. (Continued from the August 27, 2026, City Council meeting)
D. Citywide Municipal Code Amendments
Recommended Action: 1) Introduce for first reading, by title only, waiving further reading, an ordinance amending Capitola Municipal Code Title 17 (Zoning) to repeal and replace Chapter

17.88: Incentives for Community Benefits, relocate existing village hotel incentives to Chapter

17.90: Incentives for a Village Hotel with Community Benefits, amend Chapter 17.74: Accessory Dwelling Units, Repeal Chapter 9.08: Tattoo Establishments, make related amendments for Body Art Studios to Chapter 17.20: Mixed Use, Chapter 17.24: Commercial and Industrial Zoning Districts, Chapter 17.96: Supplemental Regulations, and Chapter 17.160 Glossary, and finding that adoption of the ordinance is exempt from CEQA; 2) adopt a resolution authorizing submittal of the proposed changes to the California Coastal Commission for the certification of an amendment to the Local Coastal Program; and 3) approve an administrative policy for the selection of body art service providers.

E. Fiscal Year 2025-26 Revenue and Expenditure Update
Recommended Action: Receive the Fiscal Year 2025-26 revenue and expenditure update and provide direction regarding the use of the $1 million insurance settlement received for repairs associated with the 2023 Wharf storm damage.

10. Adjournment
The next regularly scheduled City Council meeting is on September 24, 2026, at 6:00 PM. _____________________________________________________
How to View the Meeting
Meetings are open to the public for in-person attendance at the Capitola City Council Chambers located at 420 Capitola Avenue, Capitola, California, 95010.

Other ways to Watch:

Spectrum Cable Television channel 8
City of Capitola, California YouTube Channel
How to Provide Comments to the City Council
3 City Council Meeting Agenda – September 10, 2026
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Members of the public may provide public comments to the City Council in-person during the meeting.

If you are unable to attend in-person, please email your comments to [email protected] and they will be included as a part of the record for the meeting.

Notice regarding City Council: The City Council meets on the 2nd and 4th Thursday of each month at 6:00 p.m. in the City Hall Council Chambers located at 420 Capitola Avenue, Capitola.

Agenda and Agenda Packet Materials: The City Council Agenda and the complete Agenda Packet are available for review on the City’s website and at Capitola City Hall prior to the meeting. Need more information? Contact the City Clerk’s office at 831-475-7300.

Agenda Materials Distributed after Distribution of the Agenda Packet: Pursuant to Government Code §54957.5, materials related to an agenda item submitted after distribution of the agenda packet are available for public inspection at the Reception Office at City Hall, 420 Capitola Avenue, Capitola, California, during normal business hours.

Americans with Disabilities Act: Disability-related aids or services are available to enable persons with a disability to participate in this meeting consistent with the Federal Americans with Disabilities Act of 1990. Assisted listening devices are available for individuals with hearing impairments at the meeting in the City Council Chambers. Should you require special accommodations to participate in the meeting due to a disability, please contact the City Clerk’s office at least 24 hours in advance of the meeting at 831-475-7300. In an effort to accommodate individuals with environmental sensitivities, attendees are requested to refrain from wearing perfumes and other scented products.

Si desea asistir a esta reunión pública y necesita ayuda - como un intérprete de lenguaje de señas americano, español u otro equipo especial - favor de llamar al Departamento de la Secretaría de la Ciudad al 831-475-7300 al menos tres días antes para que podamos coordinar dicha asistencia especial o envié un correo electrónico a [email protected].

Televised Meetings: City Council meetings are cablecast “Live” on Charter Communications Cable TV Channel 8 and are recorded to be rebroadcasted at 8:00 a.m. on the Wednesday following the meetings and at 1:00 p.m. on Saturday following the first rebroadcast on Community Television of Santa Cruz County (Charter Channel 71 and Comcast Channel 25). Meetings are streamed “Live” on the City’s website by clicking on the Home Page link “Meeting Agendas/Videos.” Archived meetings can be viewed from the website at any time. 4 1
Gautho, Julia
From: John <[email protected]>
Sent: Friday, September 4, 2026 6:00 PM
To: City Council; City Clerk
Subject: City council meeting 9/10/2026 Section 6 Comment (Public Comment).

Peter Wilk doesn’t even live in Capitola. Come on folks. Can y’all hold anyone to account for anything? You can’t even address let alone solve glaringly systemic issues when they have straighƞorward processes already in place to address them. You just have to do the job. Such a shame the talent gap in this place.

Warmly JM
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1 Gautho, Julia
From: Bob Hickman <[email protected]>
Sent: Sunday, September 6, 2026 5:54 PM
To: City Clerk; City Council; Goldstein, Jamie; [email protected]; Woodmansee, Chloe Subject: 9/10 city council meeting
Please add this to the City Council meeting Item 8a
Before you approve Item 8a From the 8/27 city Council meeting minutes I need you to look at the following Information. Perhaps you should pull this from Consent and discuss it further.

Subject: Request to Pause Proposition 43 Advocacy and Clarify Authority for Staff Work Dear City Manager, City Attorney, City Clerk, and Councilmembers, In response to an email from Chloe Woodmansee on 9/2
Thank you for your email. As requested by two City Council members, staff is preparing a report and draft letter opposing Proposition 43, which will return to City Council at a future meeting for their review, discussion, and vote. We have double-checked with our City Attorney, who confirmed staff is permitted to spend time on this preliminary work, and the topic will return to City Council as a properly noticed agenda item.

Thank you for confirming that no official City position on Proposition 43 has yet been adopted and that the matter will return to the full Council at a properly noticed public meeting.

That confirmation raises an important procedural question:

On what authority did City staff begin preparing a staff report and draft opposition letter before the Council had publicly considered Proposition 43 or voted to direct that work? The request appears to have arisen during Council comments, not through a noticed agenda item. No vote was taken. The City Manager did not publicly state at that time that staff was being directed to prepare an opposition letter, nor was there a public discussion establishing the scope, priority, or expenditure of City resources for that work.

Capitola’s own Council policies contemplate that requests for staff work are made through the City Manager and caution individual Councilmembers against influencing staff workloads and priorities without appropriate Council authorization. I therefore respectfully request that the staff report identify the precise authority under which this work began, including any City Manager authorization given after the meeting.

I also ask the City to pause preparation or distribution of advocacy materials and instead provide the Council with a neutral report giving equal and meaningful consideration to:
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Item 5 B.
2 1. Support Proposition 43

2. Oppose Proposition 43

3. Take no official City position
That approach is especially appropriate given the additional METRO context now in the public record.

METRO’s November 2025 committee records show the agency itself discussing election procedures and “conducting a citizens initiative in parallel” with a Board-sponsored tax option. Friends of Santa Cruz METRO subsequently organized as a ballot-measure committee, with METRO Chair Manu Koenig identified as a principal officer. METRO Vice Chair Melinda Orbach has publicly promoted the initiative, including bringing petitions to a Capitola Council meeting and encouraging residents to sign them.

METRO then sponsored and supported AB 1919, legislation specifically addressing the authority and election procedures necessary for a qualified voter initiative to impose a METRO transactions-anduse tax. That history creates a legitimate public question about the relationship between METRO’s governmental activity and the private citizen-initiative campaign.

Proposition 43 directly affects the voter-threshold distinction central to that strategy: voter-proposed local special taxes can currently pass by majority vote, while government-proposed special taxes generally require two-thirds approval. Proposition 43 would require two-thirds approval for voterproposed local special taxes beginning in 2027.

Councilmember Orbach subsequently asked Capitola to oppose Proposition 43 specifically because of its effect on the METRO initiative.

I am not asserting in this correspondence that these overlapping activities establish a legal violation. I am saying that Capitola should not begin from a predetermined advocacy position before the full Council and public have examined those facts.

There is also an important legal distinction between preparing factual information for Council consideration and using public resources for campaign advocacy. The FPPC explains that government-funded communications can become campaign activity when they expressly advocate an election result or, considering their style, tenor, timing, and context, unambiguously urge a particular outcome. It also specifically identifies staff salaries, research, consultants, and production costs as potentially relevant public expenditures.

The FPPC further states that public entities may provide impartial information, but public money used for communications intended to persuade voters can create campaign-reporting obligations, while the underlying prohibition on publicly funded express advocacy is enforced under laws outside the Political Reform Act.

Accordingly, before further City resources are committed, please have the forthcoming staff report publicly address:

1. Who authorized the Proposition 43 work, when, and under what Council policy or City Manager authority;

2. Whether staff was directed to prepare neutral information or specifically instructed to draft an opposition letter;

3. Why an opposition draft was initiated before the Council considered support, opposition, and neutrality;
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3 4. What staff, City Attorney, consultant, and other City resources have already been expended;

5. The specific and independent City of Capitola public purpose served by taking a position on Proposition 43;

6. The relationship, if any, between Capitola’s proposed position and the METRO citizen initiative;

7. The relevant overlapping roles of Councilmember Orbach as Capitola Councilmember, Capitola’s METRO representative, METRO Vice Chair, and public supporter of the initiative;

8. The safeguards being applied under Stanson, Vargas, FPPC Regulation 18420.1, Government Code section 8314, and other applicable law;

9. Whether any City-funded communication would be limited to communicating a duly adopted governmental position rather than attempting to persuade voters; and

10. Whether the City Attorney has evaluated any disclosure, recusal, common-law conflict, or other participation issues arising from these overlapping roles.

Until those questions are answered publicly, I respectfully request that the City not issue, publish, distribute, or otherwise disseminate any Proposition 43 advocacy communication.

The full Council should first receive a neutral record, hear from the public, and decide whether Capitola should support Proposition 43, oppose it, or remain neutral.

This is not an attempt to prevent the Council from exercising its lawful authority. It is a request that Capitola’s institutional voice and public resources be used only after a transparent, properly authorized public process.

Please include this correspondence and the previously provided FPPC filings in the public record for the forthcoming Proposition 43 agenda item.

Thank you,
Bob Hickman Capitola Resident

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1 Gautho, Julia
From: Kevin Maguire <[email protected]>
Sent: Tuesday, September 8, 2026 4:27 PM
To: City Clerk; City Council; [email protected]; Goldstein, Jamie Subject: 9/10/2026 Agenda Item 8A - Consent Items - Council Minutes / Request for Full Public Review on Proposition 43 Position
Dear Mayor Morgan, Councilmembers, City Manager Goldstein, and City Attorney, I am writing regarding Councilmember Orbach's request that the City of Capitola formally oppose Proposition 43.

I respectfully ask that this matter not be handled as routine Consent business and that Capitola take no position unless and until the Council holds a dedicated public discussion, receives a balanced staff analysis, and identifies a specific City of Capitola interest requiring an official position.

An official City position on a statewide constitutional amendment is a significant policy decision. It deserves more than a proposed opposition letter prepared before the Council has publicly considered the alternatives.

Capitola has precedent for taking a more careful approach. In 2016, after questions arose concerning Propositions 65 and 67, the Council directed staff to return with a dedicated agenda item. Staff then prepared a report explaining both measures and presenting arguments made by supporters and opponents before asking the Council for direction.

Capitola also has its own history with the two-thirds requirement for special taxes.

In 2018, Capitola voters considered Measure J, a special transient-occupancy tax. Because it was a special tax, it required two-thirds voter approval. Capitola voters approved it with 75.34% voting Yes — 3,642 Yes to 1,192 No.

That history is directly relevant to the policy question before the Council. Proposition 43 would not generally change the rules for ordinary citizen initiatives such as municipal-code amendments.

According to the State's official analysis, it specifically concerns new, increased, or extended local special taxes proposed by voters. Those currently can qualify for majority approval; Proposition 43 would require two-thirds beginning January 1, 2027.

In other words, before Capitola officially opposes Proposition 43, I believe the Council should publicly address a basic question:

Why should Capitola oppose requiring the same two-thirds level of voter support for voterproposed special taxes that Capitola's own 2018 special tax was required to obtain — and successfully obtained with 75.34% support?
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2 There are arguments on both sides. The State's official voter guide describes the competing positions:
supporters argue that special taxes should require broad voter agreement regardless of who places them on the ballot, while opponents argue that requiring two-thirds allows a minority of voters to prevent a tax supported by a majority.

Those competing policy arguments should be presented to the Council and public rather than having the City begin with a predetermined opposition position.

I am also concerned about process. Staff has indicated that a report and draft opposition letter are already being prepared even though the full Council has not yet considered whether Capitola should support Proposition 43, oppose it, or take no position.

I am not suggesting that staff necessarily lacked authority to perform preliminary work. I am asking that the process and expenditure of City resources be transparent.

Before any Council action, I respectfully request a dedicated regular-agenda item that:
 fairly explains Proposition 43 and current law;
 presents the principal arguments for and against the measure;  presents no City position as a legitimate alternative;  includes Capitola's own experience with Measure J and the two-thirds threshold;  identifies the specific fiscal or governmental effect Proposition 43 would have on the City of Capitola itself;
 explains what staff and City Attorney resources have already been used;  identifies the authority under which an opposition letter was prepared before Council action; and  provides sufficient time for residents to review the report and proposed letter before the Council votes.
 Provide costs to General Funds or whatever Citys costs for these requests, or costs for staff, attorney, etc cost to the City for preparing and supporing a Yes or No on any proporsistions, and a template for future requests.

If the City cannot identify a compelling Capitola-specific reason to intervene in this statewide ballot campaign, remaining neutral is a legitimate option and should be presented as such.

Please place this matter on the regular agenda rather than Consent and allow the Council and public to consider support, opposition, and neutrality through the same kind of transparent process Capitola has used when evaluating statewide propositions in the past.

Thank you for your consideration,
Best,
Kevin Maguire
Capitola Citizen since 74'
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1 Gautho, Julia
From: Kevin Maguire <[email protected]>
Sent: Wednesday, September 9, 2026 3:59 PM
To: Gautho, Julia
Subject: 9/10 Agenda questions / issues...

Hi Julia,
I noticed a few apparent corrections in the September 10 agenda packet:

Item 8A – September 3 Special Meeting Minutes: The roll call lists Councilmember Orbach as both present and absent. The subsequent vote lists her as absent, so it appears her name should be removed from the “in attendance” portion.

Item 8B – Elections Code §21130(f) Report: The explanation regarding the West Capitola split states that it was impossible to unite “West Capitola, the Extended Jewel Box, the Tool Box and West Capitola” in one district. West Capitola is listed twice. Please confirm the intended neighborhood and correct the report before it is formally issued and posted.

Item 9E – FY 2025-26 Revenue and Expenditure Update: The report states that General Fund revenues were approximately $591,000 above budget and revenues exceeded expenditures by approximately $486,000. The conclusion appears to instead state that revenues exceeded the adopted budget by approximately $486,000. Please confirm whether that should read $591,000, with $486,000 representing the operating surplus.

Thank you,
Kevin
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Item 5 B.

Memo
To: City Council
From: Julia Gautho, City Clerk
Date: September 10, 2026
Re: Item 8A – Approval of the September 3, 2026, Special Meeting Minutes Mayor and City Council,
Staff has made two corrections to the September 3, 2026, Special Meeting Minutes for your consideration before approval:

1. Correction to the roll call – Council Member Orbach was not present.

2. Correction to the speaker list for Item 3A –Ms. Pruitt was originally listed as a public speaker, but staff invited her to provide comments on the item, so this has been clarified in the meeting minutes.

CITY MANAGER DEPT.
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City of Capitola
Special City Council Meeting Minutes
Thursday, September 03, 2026 – 4:00 PM
City Council Chambers
420 Capitola Avenue, Capitola, CA 95010
Mayor: Margaux Morgan
Vice Mayor: Gerry Jensen
Council Members: Joe Clarke, Melinda Orbach, Susan Westman Special Meeting of the Capitola City Council – 4 PM

1. Roll Call
The meeting was called to order at 4:00 PM. In attendance: Council Members Clarke, Westman, Vice Mayor Jensen, and Mayor Morgan. Absent: Council Member Orbach.

2. Additional Materials
A. Item 3A – Two emails received after publication of the agenda packet.

B. Item 4 – One piece of correspondence received after publication of the agenda packet.

3. General Government
A. Chapter 8.40: Capitola Municipal Code
Recommended Action: 1) Adopt an urgency ordinance amending Chapter 8.40 of the Capitola Municipal Code to remove the expiration language in Section 8.40.150(G), so the City’s safe drug and sharps disposal requirements remain in effect; and 2) introduce for first reading, waiving further reading, an ordinance amending Chapter 8.40 of the Capitola Municipal Code to remove the expiration language in Section 8.40.150(G).

Public Works Director Kahn presented the staff report. Staff invited Darcy Pruitt, staff member from Santa Cruz County, to speak about the item.

Public Comment: None
The Council provided positive feedback on the City’s existing safe disposal program for medications and sharps containers.

Motion to adopt Urgency Ordinance No. 1077 and introduce Ordinance No. 1078: Council Member Westman
Second: Council Member Clarke
Voting Yea: Council Members Clarke, Westman, Vice Mayor Jensen, Mayor Morgan

Absent: Council Member Orbach

4. Oral Communications by Members of the Public – None
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Item 5 B.

Special City Council Meeting Minutes – September 03, 2026 City of Capitola Page 2

5. Adjournment
The meeting adjourned at 4:10 PM. The next regularly scheduled City Council meeting is on September 10, 2026, at 6:00 PM.
________________________
Margaux Morgan, Mayor
ATTEST:
______________________
Julia Gautho, City Clerk
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1 Gautho, Julia
From: Kevin Maguire <[email protected]>
Sent: Wednesday, September 9, 2026 3:59 PM
To: Gautho, Julia
Subject: 9/10 Agenda questions / issues...

Hi Julia,
I noticed a few apparent corrections in the September 10 agenda packet:

Thank you,
Kevin
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Item 5 C.

Memo
To: City Council
From: Julia Gautho, City Clerk
Date: September 10, 2026
Re: Item 8B – Acceptance of the Elections Code Section 21130(f) Report Mayor and City Council,
Staff has made a correction to the Elections Code Section 21130(f) report included as Attachment 1 to Item 8B. The report originally stated: “The West Capitola neighborhood is divided because within the required population counts it is impossible to unite West Capitola, the Extended Jewel Box, the Tool Box and West Capitola in one district.”
Staff has amended the report to state the following: “The West Capitola neighborhood is divided because within the required population counts it is impossible to unite the Jewel Box, the Extended Jewel Box, the Tool Box and West Capitola in one district.” CITY MANAGER DEPT.
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City of Capitola July 24, 2026
Elections Code Section 21130f Disclosure Report
Phone: (818) 254-1221 P.O. Box 5271 [email protected] FAX (818) 254-1221 Glendale, CA 91221 www.NDCresearch.com Elections Code Section 21130(f) language:
f)… the districting body shall issue a report that explains the basis on which the districting body made its decisions in achieving compliance with the requirements and criteria described in this section, including, as to each neighborhood, community of interest, city, or census designated place that was split into two or more districts, the reason for that split.

Disclosure:

National Demographics Corporation (NDC), on behalf of the City of Capitola, has analyzed the City’s adopted map and prepared the following analysis of the map’s compliance with the criteria of Elections Code Section 21130:
21130(a): Population Equality
The ideal population in a 4-district map for Capitola is 2,487. In the adopted map, the largest district has a population of 2,590 (4.14% over the ideal) and the smallest district has a population of 2,447 (1.61% under the target population). At a total difference of 5.75% between the largest and smallest districts, the districts in the adopted map are well within the “presumed constitutional” 10% range of state and federal law, and the deviations all exist to achieve compliance with Federal and/or State criteria. 21130(b): Voting Rights Act reports
The City fully complied with the reporting requirements of Section 21130(b). That report is posted to the City’s districting project website.
21130(c)(1): Contiguity
All of the districts are contiguous.
21130(c)(2): Minimize divisions of each “local neighborhood or local communities of interest” Public comment and review of the city’s geography identified local neighborhoods or local communities of interest, each was mapped, and the map was shared publicly during the districting process.

1. The Jewel Box neighborhood is entirely in one district.

2. The Extended Jewel Box neighborhood is entirely in one district.

3. The Tool Box neighborhood is entirely in one district.

4. The Village neighborhood is entirely in one district.

5. The Depot Hill neighborhood is entirely in one district.

6. The Cliffwood Heights neighborhood is entirely in one district.

7. The Upper Village neighborhood is entirely in one district.

8. The North River neighborhood is entirely in one district.

9. The Riverview Terrace neighborhood is entirely in one district.

10. The Castle Estates neighborhood is entirely in one district.

11. Four of the other five mobile home parks are individually entirely in one district.

12. The West Capitola neighborhood is divided because within the required population counts it is impossible to unite the Jewel Box, the Extended Jewel Box, the Tool Box and West Capitola in one district.

13. The Turner Lane mobile home park has its western edge divided into another district because within the required population counts it is impossible to unite Turner Lane, North River, and Cliffwood Heights in a single district, and because adding that western edge to District 4 would divide the residential area along Capitola Terrace from the rest of its community across Capitola Avenue. 147
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National Demographics Corporation

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21130(c)(3) does not apply to a city
21130(c)(4): Follow easily identifiable boundaries
“To the maximum extent practicable” the boundaries of the adopted districts follow easily-recognized roads: Capitola Road; Soquel Wharf Road; the railroad tracks; Bay Avenue; and the border of Noble Gulch Park. The rest of the boundary between districts 3 and 4 follows Census Block boundaries and secondary roads due to population balancing requirements and the goal of minimizing the division of mobile home parks. The west end of the border between districts 1 and 2 crosses Capitola Road due to population balancing requirements. The area included in district 2 across Capitola Road is "The Landing at Capitola" apartment complex, which is a stand-alone neighborhood that is separated from district 1 by unincorporated territory not in the City.
21130(c)(5): Compactness
No population is “bypassed in favor of more distant populations” in any district. 21130(d): No purpose of favoring or discriminating against an incumbent, political candidate, or political party
The map does not favor or discriminate against any incumbent, political candidate, or political party. 21130(e): Do not prioritize any criterion over the criteria listed in Section (c) of the statute The adopted map does not prioritize any criterion over the criteria listed in Section (c) of the statute. 148
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R. Morgan Gilhuly
333 Bush Street, Suite 1500
San Francisco, CA 94104
+1.415.262.4014
[email protected]
September 9, 2026

VIA EMAIL
Capitola City Council
City of Capitola
420 Capitola Avenue
Capitola, CA 95010
[email protected]
Re: September 10, 2026 Agenda Item 8.E - Chapter 8.40; Urgency Ordinance No. 1077 and Proposed Ordinance No. 1078 (re City’s Safe Drug and Sharps Disposal Ordinance) Members of the City Council:

Beveridge & Diamond PC represents MED-Project, LLC (MED-Project). We submit this letter for the Capitola City Council's (Council) consideration at its September 10, 2026 meeting concerning Agenda Item 8.E. The City of Capitola's (City) Safe Drug and Sharps Disposal Ordinance No. 1006, codified at Chapter 8.40 of the Capitola Municipal Code (2016 Ordinance), sunsetted on September 8, 2026.

Five days before that sunset, the Council convened a special meeting and adopted Ordinance No. 1077, an urgency ordinance deleting Section 8.40.150(G), the sunset provision, and purporting to take effect immediately (Urgency Ordinance). The Urgency Ordinance is unlawful.

The City had ten years’ notice of the sunset written into its own law, and then invoked an extraordinary procedure five days before the sunset took effect. The record does not establish facts showing that immediate enactment was required to preserve public health or safety.

Furthermore, even if the Urgency Ordinance was lawful, its September 3, 2026 effective date makes the local program subject to express preemption under SB 212.1 The Council also introduced Ordinance No. 1078, a regular ordinance scheduled for consideration and possible adoption on September 10, 2026 (Proposed Ordinance). That ordinance cannot cure the problem. First, the Urgency Ordinance did not lawfully remove the September 8 sunset. Thus, the 2016 Ordinance expired before the Proposed Ordinance could take effect. Second, because the Proposed Ordinance has a 2026 effective date, it is also preempted by state law.

For these reasons, the City should reject the void Proposed Ordinance, rescind the void Urgency Ordinance, and acknowledge the forthcoming transition to the state drug and sharps take-back program.

The Council unlawfully adopted the Urgency Ordinance.

The Council circumvented California’s procedural safeguards by passing the Urgency Ordinance without justification. A regular city ordinance generally cannot be passed within five days of introduction or at a special meeting, and it ordinarily does not take effect until 30 days after final passage. Those safeguards create time for notice, review, deliberation, and public participation.

The urgency exception is not a shortcut around that process. Government Code section 36937(b) provides a narrow urgency ordinance exception that requires an ordinance to be 1 City of Capitola, Special City Council Meeting Minutes, Sept. 3, 2026 (recording adoption of Urgency Ordinance No. 1077 and introduction of Ordinance No. 1078); City of Capitola Urgency Ordinance No. 1077, § 6 (Sept. 3, 2026) (providing that the ordinance would take effect immediately). 153
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Beveridge & Diamond PC | September 9, 2026 | Page 2
Austin | Baltimore | Boston | New York | San Francisco | Seattle | Washington, DC www.bdlaw.com necessary for the immediate preservation of the public peace, health, or safety, to declare the facts constituting the urgency, and to receive a four-fifths vote. Urgency ordinances exist for situations in which action truly must be taken immediately, not to enact a regular ordinance in the guise of an urgency measure.2
The Council cannot invoke the statutory exception merely by labeling Ordinance No. 1077 “urgent.” The declaration is not conclusive. The record itself must establish the urgency required by section 36937(b).3
The Urgency Ordinance’s own explanation does not satisfy that requirement. It states that an ordinance enacted through the ordinary process would not take effect before the known sunset.

But that timing problem, created by the City’s own inaction, does not establish a need for immediate action to preserve public peace, health or safety. The City’s own delay cannot supply the facts required for immediate effectiveness. The sunset was part of the 2016 Ordinance from the day the Council adopted it. The City’s agenda report reinforces that conclusion. It is our understanding that the City had not taken steps to attempt to address the sunset date until Santa Cruz County staff contacted City staff at the end of August 2026 and encouraged the City to act. The Council then called a special meeting on September 3, only five days before the sunset.4 Nothing in that sequence of events reflects a newly arising threat requiring emergency legislation.

Nor does the record establish an actual service emergency. By September 3, 2026, MEDProject had advised the City that MED-Project USA (MPUSA), a separate entity that operates the statewide program, would implement the statewide program within the City without interruption. The City's materials identified no reason to suggest that MPUSA (or any other program operator) would not maintain a drug and sharps take-back program for residents.5 The staff analysis provided in the written agenda packet as well as during the September 3, 2026 special meeting failed to accurately represent state program transition plans.

The Urgency Ordinance’s passage compounded these defects. The City did not publish the September 3, 2026 Special Meeting agenda until approximately 2:25 pm on Wednesday, September 2, 2026. The City's agenda warned that materials submitted after 5:00 p.m.

Wednesday might not reach Councilmembers, or be read by them, before consideration.

MED-Project transmitted its September 2 letter at approximately 7:00 p.m. that Wednesday. The City then revised the special meeting materials at approximately 3:00 p.m. on Thursday for a 4:00 p.m. meeting. The official minutes show that the entire special meeting lasted ten minutes.

Staff presented the item, the only listed public commenter was a Santa Cruz County representative (apparently allowed to comment remotely), and the Council adopted the Urgency 2 Cal. Gov. Code §§ 36934, 36937; 216 Sutter Bay Assocs. v. County of Sutter, 58 Cal. App. 4th 860, 873-74 (1997) (stating, under parallel county urgency provisions, that urgency ordinances contemplate situations where "action must be taken immediately" and that a legislative body may not enact "a regular ordinance in the guise of an urgency ordinance").
3 Cal. Gov. Code § 36937(b); In re Hoffman, 155 Cal. 114, 120 (1909) (stating that "the mere declaration of the council" that an ordinance immediately preserves public health "is neither conclusive nor yet sufficient"). 4 City of Capitola, Agenda Report, Chapter 8.40: Capitola Municipal Code, Sept. 3, 2026 (stating that, at the end of August 2026, Santa Cruz County staff contacted City staff regarding expiring local ordinances and "encouraged the City to take action" to maintain the local program).
5 Note that the 2016 Ordinance makes sharps kiosks optional, not mandatory: retailers or providers can provide mailback systems instead. See 2016 Ordinance Section 8.40.080(B)(1). 154
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Austin | Baltimore | Boston | New York | San Francisco | Seattle | Washington, DC www.bdlaw.com Ordinance 4-0 with one Councilmember absent. The official minutes do not reflect any consideration or discussion of MED-Project's service continuity assurance before the vote.6 The ordinary ordinance process exists precisely so that a legislative body does not make a permanent policy decision through an emergency exception without public and Council review and input. Here, the City published the Urgency Ordinance agenda with a little over two hours' notice of the deadline to receive materials and provided one hour for the Council to review those materials. Considering that the sunset provision had existed for nearly a decade before the City rushed a meeting to make the local program indefinite, it is clear this is not the type of factsupported urgency ordinance section 36937 authorizes.

SB 212 independently preempts the local program purportedly continued by the Urgency Ordinance.

Senate Bill 212, Solid Waste: Pharmaceutical and Sharps Waste Stewardship (SB 212), preempts the local stewardship program purportedly continued by the Urgency Ordinance. Its express-preemption rule is direct: the statewide chapter "shall preempt a local stewardship program for drugs or sharps enacted by an ordinance or ordinances with an effective date on or after April 18, 2018.” A conflicting local ordinance is therefore preempted and void.7 The Urgency Ordinance purported to take effect immediately when adopted on September 3, 2026. That is more than eight years after SB 212's April 18, 2018 cutoff. The City cannot avoid a date-based preemption rule by characterizing a 2026 ordinance as merely preserving the 2016 program. The 2016 Ordinance made the program temporary. The Urgency Ordinance removes the very provision that ends it and supplies the legal authority for a local program that will continue indefinitely. Its 2026 effective date therefore falls squarely within SB 212's preemption provision.8
SB 212, subsection (c) does not save the City’s action. It permits a qualifying pre-2018 local program to “continue in operation,” but it does not override the local ordinance’s own expiration date or exempt a later ordinance from subsection (b). Nor does subsection (a) regarding an “ordinance that took effect before April 18, 2018.” After the 2016 Ordinance’s sunset, continued local operation necessarily depends on the legal authority supplied by the 2026 enactment. The City cannot use subsections (c) or (a) to convert an expressly temporary grandfathered ordinance into an indefinite one while disregarding the Legislature’s effective-date cutoff.

The Proposed Ordinance cannot cure these defects.

The September 10 Proposed Ordinance will not lawfully extend the City’s program. SB 212 expressly preempts the Proposed Ordinance because its effective date is more than eight years following SB 212’s April 18, 2018 cutoff. Labeling the Proposed Ordinance an amendment does not change what it does: it attempts to give indefinite legal force to a program whose original legal authority was expressly temporary.9 The extension of an expressly temporary ordinance is 6 City of Capitola, Revised Special City Council Meeting Agenda, Sept. 3, 2026 (revised at approximately 3:00 p.m. for a 4:00 p.m. special meeting); City of Capitola, Special City Council Meeting Minutes, Sept. 3, 2026 (recording a 4:00 p.m. call to order, staff presentation, public comment by Darcy Pruitt of Santa Cruz County, adoption of Urgency Ordinance No. 1077 by four affirmative votes with Council Member Orbach absent, and adjournment at 4:10 p.m.). 7 Senate Bill 212, Solid waste: pharmaceutical and sharps waste stewardship, 2018 Cal. Stat. ch. 1004, codified at Cal. Pub. Res. Code §§ 42030-42036.4; Cal. Pub. Res. Code § 42036.2(b); O'Connell v. City of Stockton, 41 Cal. 4th 1061, 1067 (2007) (stating, "Any conflicting ordinance is preempted by state law and thus void."). 8 City of Capitola Urgency Ordinance No. 1077, § 6 (Sept. 3, 2026); Cal. Gov. Code § 36937(b); Cal. Pub. Res. Code § 42036.2(b).
9 City of Capitola Proposed Ordinance No. 1078, § 5 (providing that the ordinance takes effect 30 days after adoption); Cal. Gov. Code § 36937 (providing that ordinances ordinarily take effect 30 days after final passage). 155
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Austin | Baltimore | Boston | New York | San Francisco | Seattle | Washington, DC www.bdlaw.com a new governmental enactment. Whether characterized as an amendment, revival, or reenactment, the Council cannot use a September 2026 enactment to avoid SB 212's express effective-date rule.10
Conclusion
The City knew the 2016 Ordinance would sunset since its adoption. In a futile attempt to revive it, the City relied on a last-minute urgency procedure with a record unsupported by a genuine service emergency. The resulting Urgency Ordinance is therefore invalid. The Urgency Ordinance also carries a 2026 effective date that SB 212 expressly preempts. The Proposed Ordinance likewise cannot extend the City’s program. SB 212 expressly preempts it.

Accordingly, the City should reject the Proposed Ordinance, rescind the Urgency Ordinance, and recognize the City’s transition to the state program.

Sincerely,

BEVERIDGE & DIAMOND PC
/s/ R. Morgan Gilhuly
R. Morgan Gilhuly
333 Bush Street, Suite 1500
San Francisco, CA 94104-2850
+1.415.262.4014 | [email protected]
Jesse C. Miles
600 University Street, Suite 1601
Seattle, WA 98101-3109
+1.206.620.3061 | [email protected]
cc:

Jamie Goldstein
City Manager
City of Capitola
420 Capitola Avenue
Capitola, CA 95010
[email protected]
Chloe Woodmansee
Assistant to the City Manager
City of Capitola
420 Capitola Avenue
Capitola, CA 95010
[email protected]
10 Arcadia Dev. Co. v. City of Morgan Hill, 169 Cal. App. 4th 253, 264-65 (2008) (holding that extension of an expressly temporary restriction was a new governmental decision that depended on then-existing circumstances); Cal. Pub. Res. Code § 42036.2(b).
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Beveridge & Diamond PC | September 9, 2026 | Page 5
Austin | Baltimore | Boston | New York | San Francisco | Seattle | Washington, DC www.bdlaw.com Jessica Kahn
Public Works Director
City of Capitola
420 Capitola Avenue
Capitola, CA 95010
[email protected]
Marc Tran
City Attorney, City of Capitola
Burke, Williams & Sorensen, LLP
420 Capitola Avenue
Capitola, CA 95010
[email protected]
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1 Gautho, Julia
From: Irina Butler - ppswg.org <[email protected]>
Sent: Thursday, September 10, 2026 4:50 PM
To: City Council
Subject: Capitola Safe Drug and Sharps Disposal Ordinance Attachments: PPSWG Capitola letter - DRAFT 9.10.26.pdf
Good afternoon,
Please see the attached for your consideration.

Irina

Irina Butler
Executive Director
Pharmaceutical Product Stewardship Work Group
1800 M Street, NW, Suite 400 South | Washington, DC 20036 (e) [email protected]
CONFIDENTIALITY NOTICE: The contents of this email message and any attachments are intended solely for the addressee(s) and may contain confidential and/or privileged information and may be legally protected from disclosure. If you are not the intended recipient of this message or their agent, or if this message has been addressed to you in error, please immediately alert the sender by reply email and then delete this message and any attachments. If you are not the intended recipient, you are hereby notified that any use, dissemination, copying, or storage of this message or its attachments is strictly prohibited.
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Pharmaceutical Product Stewardship Work Group
1800 M Street, NW | Suite 400 South | Washington, DC 20036 Phone: (202) 495-3131 | Fax: (202) 530-0659
[email protected]
1 VIA ELECTRONIC MAIL
September 10, 2026
Capitola City Council
Capitola City Hall
420 Capitola Ave.

Capitola, CA 95010
Email: [email protected]
Capitola City Councilors:

The Pharmaceutical Product Stewardship Work Group (“PPSWG”) had previously provided comments for the Capitola City Council’s Special Meeting on September 3, 2026, in order to express our concerns regarding the Council’s proposed adoption of an urgency ordinance, and adoption of a regular ordinance, with the intent of amending Chapter 8.40.150(G) of the Capitola Municipal Code to remove the existing expiration language from the Capitola Safe Drug and Sharps Disposal Ordinance of 2016 (the “Ordinance”). MED-Project LLC (“MED-Project”), which serves as the program operator designated by PPSWG’s members to implement and operate mandated takeback programs, has separately provided comments dated September 2, 2026 and September 9, 2026, as well as comments dated September 9, 2026 through its counsel, Beveridge & Diamond PC. Each of these letters addresses specific concerns with the Council’s contemplated course of action regarding the Ordinance, namely: that this course of action is predicated on misconceptions regarding the effect of the Ordinance sunsetting and the transition of take-back services in Capitola to the California state-wide program under Senate Bill (SB) 212 (2018); that the Council has not provided a sufficient factual or legal basis for the adoption of the urgency ordinance; that any newly adopted ordinance attempting to extend the Capitola Safe Drug and Sharps Disposal Ordinance of 2016 would be expressly preempted by the provisions of SB 212; and that the Ordinance has, in fact, expired as of September 8, 2026.

We are providing this letter to support MED-Project’s comments and reiterate PPSWG’s concerns regarding item 8.E of the City Council’s September 10, 2026 meeting agenda, the adoption of Proposed Ordinance No. 1078 with the intent of removing the sunsetting provisions from the Capitola Safe Drug and Sharps Disposal Ordinance of 2016. We urge the City Council to carefully consider those prior comment letters. The Council’s contemplated action would attempt to extend the requirements of the Ordinance in a factually unsupported and legally unsound manner. Contrary to the Council’s concerns, the sunsetting of the Ordinance begins the orderly transition of services under the state-wide program pursuant to the requirements of SB 212, as described in detail in MEDProject’s comments of September 9, 2026.

We ask therefore that the City Council reject the adoption of Proposed Ordinance No. 1078, rescind the adoption of Urgency Ordinance No. 1077, and recognize the sunsetting of the Ordinance and the transition of take-back services in Capitola under the SB 212 state-wide program. 166
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Pharmaceutical Product Stewardship Work Group
1800 M Street, NW | Suite 400 South | Washington, DC 20036 Phone: (202) 495-3131 | Fax: (202) 530-0659
[email protected]
2 We appreciate your consideration on this issue.

Thank you,
Irina Butler,
Executive Director
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1 Gautho, Julia
From: Kevin Maguire <[email protected]>
Sent: Wednesday, September 9, 2026 10:40 AM
To: Margaux Morgan; Gerry Jensen; City Clerk; Clarke, Joe; Goldstein, Jamie; Melinda Orbach; Westman, Susan
Subject: Item 9B – Stockton Avenue Bridge: Determine Caltrans Funding Before Committing Local Funds
Subject: Item 9B – Stockton Avenue Bridge: Determine Caltrans Funding Before Committing Local Funds
Mayor Morgan and Councilmembers,
I appreciate the Council's unanimous August 27 direction to finally address the Stockton Avenue Bridge maintenance recommendations and to develop a genuine preservation and rehabilitation strategy.

However, the information in tonight's report changes the equation substantially.

Council's August 27 direction contemplated completing the Caltrans-recommended polyester concrete overlay for construction costs not exceeding $150,000 and, if possible, before winter. We now know the preliminary project cost is approximately $410,000 — $126,000 for engineering and approximately $284,000 for construction — before traffic control, approach-roadway work, inspection and materials testing are included.

Staff is therefore presenting methacrylate treatment as a lower-cost interim alternative at approximately $172,000, again before several additional costs are included. Staff itself describes methacrylate as an interim preservation measure rather than the treatment recommended by Caltrans.

I don't believe Council should allow the desire to complete something before winter to drive the engineering decision.

There is also a major funding question missing from tonight's report.

In April, the City's own structural consultant stated that, based on the 2022 Caltrans inspection report, the Stockton Avenue Bridge is currently eligible for Bridge Preventive Maintenance Program funding to repair the bridge deck. The consultant also indicated that the newer 2026 condition information could result in Caltrans reassessing the bridge for Highway Bridge Program funding for rehabilitation and potentially replacement.

Caltrans' Highway Bridge Program provides federal aid to local agencies for bridge rehabilitation and preventive maintenance. Federal preventive-maintenance eligibility has existed for local public bridges for many years.

So before Capitola commits $172,000, $410,000 or potentially considerably more of local money, I ask Council to direct staff to obtain answers to five questions:
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2 1. Has the City ever applied for HBP or BPMP funding for Stockton Avenue Bridge, particularly for the Caltrans-recommended deck work?

2. What portion of the polyester overlay is currently eligible for federal reimbursement, and what local match would Capitola actually have to provide?

3. Has Caltrans reviewed the March 2026 condition findings, and could those findings make a more comprehensive rehabilitation project eligible for HBP funding?

4. Would proceeding now with locally funded methacrylate or polyester work affect future reimbursement or eligibility for a larger rehabilitation project?

5. What immediate work does the bridge engineer say is actually necessary before this winter for safety, as opposed to desirable preventive maintenance that could be properly designed and funded?

6. Was that April recommendation carried out?

7. Were the March 2026 inspection findings and photographs actually sent to Caltrans, when were they sent, and

8. what response has the City received regarding updated HBP eligibility? The City's future RFP now calls for a consultant experienced in the Caltrans local-assistance process and in identifying state and federal funding. That's good. But that funding analysis should happen before, not after, Council commits hundreds of thousands of dollars from local reserves.

Council inherited a maintenance problem that appears to have accumulated for years. Please don't allow that past delay to create an artificial urgency that leads to another rushed decision.

Do the necessary safety work. Monitor the bridge through winter. But take the time to design the right preservation project, pursue every available Caltrans and federal dollar, and bring Council an apples-toapples comparison of cost, lifespan and long-term rehabilitation compatibility before committing substantial local funds.

Finally, I ask Council to address the management failure that brought us here. It is unacceptable for inspection reports concerning a major piece of City infrastructure to be received for years while significant maintenance recommendations apparently never reach the City Manager or Council for a funding decision.

Please direct the City Manager to establish a formal infrastructure accountability process for all major City assets — bridges, roads, storm infrastructure, the Wharf and other critical facilities.

Every inspection report should be logged, reviewed, assigned to a responsible department, its recommendations tracked to completion or formally deferred, available grant funding evaluated, and significant unfunded needs reported to Council, and published on the city web portal for public transparency.

That is the accountability piece still missing from this discussion.

If staff recommends deferring maintenance, that should be a documented management decision — not something Council discovers a decade later.

Stockton Bridge cannot simply become a lesson about what went wrong. Council should require the City Manager to show you what management controls are being put in place so this cannot happen again.
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3 Kevin Maguire
Capitola
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Memo
To: Julia Gautho, City Clerk
From: Jessica Kahn, Public Works Director
Date: September 8, 2026
Re: Underground Utility District No. 6 and Rule 20A Program Update Following publication of the agenda, the City received the attached email from PG&E providing additional information regarding the potential Monterey Avenue undergrounding project. The information includes a preliminary Class 5 estimate of approximately $2.7 million and considerations related to project constructability and schedule.

The email is provided as additional material for the Council’s consideration.

Public Works Department
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1 Gautho, Julia
From: Gautho, Julia
Sent: Tuesday, September 8, 2026 11:44 AM
To: Gautho, Julia
Subject: FW: Monthly Capitola Rule 20A Project Check-In PM35655679 From: Pace, Kathy <[email protected]>
Sent: Tuesday, September 8, 2026 9:40 AM
To: Kahn, Jessica <[email protected]>
Subject: RE: Monthly Capitola Rule 20A Project Check-In PM35655679 Classification: Public
Good morning, Jessica,
The preliminary Class 5 AACE estimate for the proposed Monterey Avenue project (Fanmar Way to Cherry Avenue) is approximately $2.7 million. This estimate is based on the projected footage and service count within the project limits, as well as historical data from similar Rule 20A projects. I do have concerns regarding the constructability of the services located behind the retaining wall. Should the City decide to pursue this project, PG&E would need to review the retaining wall as-built drawings during the design phase to evaluate potential construction approaches and ensure that any work can be performed without impacting the wall's structural integrity. Addressing this challenge would likely increase both project costs and schedule duration.

Regarding project feasibility, I would like to reiterate that PG&E's current planning assumptions indicate there may be insuƯicient time to complete the project that has already been designed. Introducing a new project that has not yet entered the design phase would create additional and significant risk that the project could not be completed prior to the CPUC mandated program sunset date.

Please let me know if you have any questions or would like to discuss.

Kathy Pace, PMP
Rule 20A Program Liaison, Municipal Projects & Programs Pacific Gas and Electric Company
805-588-4117
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1 Gautho, Julia
From: Kevin Maguire <[email protected]>
Sent: Tuesday, September 8, 2026 1:27 PM
To: City Clerk; City Council
Subject: Agenda 9 C- Underground Utility District No. 6 and Rule 20A Program Update Good evening Mayor and Council.

I want to comment on the Rule 20A undergrounding discussion and, in particular, the choice between continuing with the Bay and Capitola Avenue project, looking at Monterey Avenue, or simply letting this program go.

After listening to the discussion from last council meeting and reviewing the staff report, I think there is an important financial question that needs to come before the question of where we put the poles underground.

The approximately $3 million in Rule 20A credits is not $3 million in cash sitting in the City's bank account. It is a utility credit that can be used for eligible undergrounding work, and there are substantial costs that Rule 20A does not cover.

For the Bay and Capitola project, the last estimate was approximately $4.5 million, and that estimate is already several years old. We were told that construction costs have increased, and the City could potentially be responsible for a very substantial gap, along with easements, restoration, lighting, traffic control and other costs.

I have a hard time supporting the City spending potentially a million dollars or more of scarce local money simply because we have a credit that expires.

We have real infrastructure needs in Capitola. We have roads, sidewalks, the Wharf, the trestle and other projects competing for limited City resources. I don't think we should take money away from those priorities simply to make use of a Rule 20A credit.

That said, if the City is going to pursue undergrounding, I agree with the idea of looking at Monterey rather than Bay and Capitola.

Monterey is one of the most visible approaches into Capitola and has a much greater opportunity to produce a meaningful public and aesthetic benefit. If we're going to use a limited undergrounding opportunity, I would rather see it produce a significant benefit to the community than spend a large amount of local money to underground one intersection. (Side note regarding the telephone pole in the sidewalk at Bay/Capitola, there appears to be an easement in front of the bank, or city property.

To add 2 feet of sidewalk to make the wider is a lot simpler and cheaper than trying to underground only 4 poles)
But I think there needs to be a very clear line drawn here:
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2 If Monterey can be fully funded with the Rule 20A credits and outside grant funding, without requiring the City to come up with significant matching funds, then absolutely, let's investigate it.

But if Monterey also requires the City to commit substantial General Fund or other scarce local capital, I think we should let this go.

We shouldn't spend money simply because we have a credit. And we shouldn't spend staff time chasing a project that we already know we cannot afford.

I would encourage Council to ask staff and PG&E to provide the preliminary Monterey estimate, identify every cost that would fall outside the Rule 20A credits, and identify whether there is an actual grant or outside funding source available to cover those costs.

Then I think the decision becomes very simple:

If it can be done without a significant City contribution, pursue it. If it requires substantial City funding, move on and invest our limited resources in projects that are actual City priorities.

Thank you.

Kevin Maguire
Capitola since 74'
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1 Gautho, Julia
From: Capitola Child Care <[email protected]>
Sent: Wednesday, September 9, 2026 9:29 AM
To: Gerry Jensen; Margaux Morgan; Melinda Orbach; Clarke, Joe; Westman, Susan; City Council
Subject: Agenda 9D - Citywide Municipal Code Amendments Mayor and Councilmembers,
I am asking you not to adopt the Chapter 17.88 portion of Item 9D as written tonight, and specifically to restore childcare as an eligible community benefit.

I operate a licensed Family Child Care Home here in Capitola. An FCCH is not technically the same zoning classification as a child care center — your own code separately identifies “Home Day Care” and “Day Care Centers.” But both are part of the same child-care infrastructure that working families depend on.

What concerns me is that the City is taking childcare out of the community-benefit program at the exact moment it is encouraging more mixed-use housing.

The City's adopted Housing Element could hardly be clearer. Program 1.4 calls for an expanded list of community benefits that complement mixed-use residential development and specifically identifies childcare facilities as an example.

The existing Chapter 17.88 already recognizes “child care centers and other facilities providing daytime care and supervision to children” as a community benefit.

Yet the replacement ordinance deletes childcare from that list.

Even more difficult to understand, the ordinance before you tonight keeps childcare as a community benefit for the Village Hotel, while eliminating it from the chapter governing mixed-use development along 41st Avenue and Capitola Road.

So I have a basic question:

Why is providing childcare considered a valuable enough public benefit to justify development incentives for a hotel, but not for a mixed-use residential project where new families and children will actually live?
If the concern is that the Housing Element requires objective standards, then create objective standards for childcare. Establish a minimum licensed capacity, minimum square footage, required operating period, or another measurable standard. The answer should not be to delete the benefit altogether.
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2 We are talking about giving developers significant incentives — potentially greater height, increased floor area, and other development benefits. If the community is giving something of value, Capitola should preserve the ability to receive something families genuinely need in return.

Childcare supports working parents, employers, housing, and the economic vitality of the community. Housing and childcare are not competing priorities. More housing creates more need for childcare.

Please don't adopt a Housing Element implementation ordinance that removes one of the very community benefits the Housing Element itself specifically identifies. And please don't tell us childcare is a community benefit for a hotel, but somehow not for housing. Restore childcare to Chapter 17.88.
--
Thank you,
Teresa Maguire
Owner / Director
Capitola Child Care
83l-247-8925
To help
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1 Gautho, Julia
From: Eric <[email protected]>
Sent: Thursday, September 10, 2026 3:35 PM
To: City Council
Subject: Item 9.D - Body Art Ordinance - Temporary & Mobile Operations Dear Mayor Morgan and Members of the City Council,
I'm a Capitola resident, and I'm excited to see this ordinance reach the Council. Thank you to City staff, the Planning Commission, and the Council for the thoughtfulness you've brought to this process. I fully support adoption, and offer one small recommendation.

The ordinance's glossary defines a “Temporary or Mobile Body Art Facility,” yet Section 17.96.080.F.7 prohibits it outright. The State Safe Body Art Act and Santa Cruz County already license and regulate these operations, and they are common and professionally run at conventions, fairs, and festivals. As written, no licensed studio could even offer body art at the City's own events, like the Art & Wine Festival.

I'd respectfully recommend allowing temporary, mobile, and outdoor body art operations by City permit, with appropriate conditions, rather than prohibiting them. It's a minor adjustment, consistent with existing State and County regulation, that supports small businesses and won't slow adoption.

Thank you again for all the hard work on this and for the opportunity to comment.

Respectfully,
Eric Cirignano
177
Item 5 G.
1 Gautho, Julia
From: Sophie Haugen <[email protected]>
Sent: Thursday, September 10, 2026 4:09 PM
To: City Clerk
Cc: Goldstein, Jamie; Planning; Herlihy, Katie; [email protected] Subject: Public Comment re item 9D for tonight's City Council Meeting Attachments: Capitola - ADU Ordinance - 9_10_2026.pdf
Dear City of Capitola,
The California Housing Defense Fund (CalHDF) submits the attached public comment re item 9D for tonight's city council meeting, the proposed amendments to the ADU ordinance.

Sincerely,
Sophie Haugen
California Housing Defense Fund
[email protected]
CalHDF is grant & donation funded
Donate today - https://calhdf.org/donate/;
178
Item 5 G.

Sep 10, 2026
City of Capitola
420 Capitola Ave
Capitola, CA 95010
By Email: [email protected];
CC: [email protected]; [email protected]; [email protected]; [email protected];
Re: Proposed Amendment to the City’s Accessory Dwelling Unit Ordinance Dear City of Capitola,
The California Housing Defense Fund (CalHDF) submits this letter as a public comment concerning item 9D for the Council meeting of September 10th, 2026, a proposed amendment to the City’s code sections governing the development of accessory dwelling units (ADUs) and junior accessory dwelling units (JADUs).

We appreciate that the City is updating its ordinance to keep pace with changes in state law.

However, the proposed ordinance does not comply with state ADU law for the reasons discussed in this letter. The City must amend the proposed ordinance in order to address these issues.

Background
The law gives local governments authority to enact zoning ordinances that implement a variety of development standards on ADUs. (Gov. Code, § 66314.) The standards in these local ordinances are limited by state law so as not to overly restrict ADU development. (See id.) Separately from local ADU ordinances, Government Code section 66323 establishes a narrower set of ADU types that local governments have a ministerial duty to approve. “Notwithstanding Sections 66314 to 66322 ... a local agency shall ministerially approve” these types of ADUs. (Id. at subd. (a).) This means that ADUs that satisfy the minimal requirements of section 66323 must be approved regardless of any contrary provisions of the local ADU ordinance. (Ibid.) Local governments may not impose their own standards on such ADUs. (Gov. Code, § 66323, subd. (b) [“A local agency shall not impose any objective development or design standard that is not authorized by this section upon any accessory dwelling unit that meets the requirements of any of paragraphs (1) to (4), inclusive, of subdivision (a).”].) 2201 Broadway, PH1, Oakland, CA 94612
[email protected]
179
Item 5 G.

In addition, ADUs that qualify for the protections of Government Code section 66323, like other ADUs, must be processed by local governments within 60 days of a complete permit application submittal. (Gov. Code, § 66317, subd. (a).) State law also prohibits creating regulations on ADU development not explicitly allowed by state law. Government Code Section 66315 states, “No additional standards, other than those provided in Section 66314, shall be used or imposed, including an owner-occupant requirement, except that a local agency may require that the property may be used for rentals of terms 30 days or longer.”
Impermissible Discretionary Process
Code section 17.74.030(B), 17.74.070, and 17.74.100 all require Planning Commission approval of a design permit while 17.74.070(B) explicitly excludes "accessory dwelling units approved pursuant to Section 17.74.050." However, state law does not allow any such process for any ADU type.

Government Code section 66316:
“An existing accessory dwelling unit ordinance governing the creation of an accessory dwelling unit by a local agency or an accessory dwelling ordinance adopted by a local agency shall provide an approval process that includes only ministerial provisions for the approval of accessory dwelling units and shall not include any discretionary processes ...”
Government code section 66317, subdivision (a):
“ A permit application for an accessory dwelling unit or a junior accessory dwelling unit shall be considered and approved ministerially without discretionary review or a hearing ...”
If the City wishes to create a path for approval of certain ADUs that are taller or larger than a given threshold, then it should write objective criteria into its code and allow ministerial approval by City staff.

While the City may think that is helping applicants by providing a more flexible, discretionary path, on the contrary it is vastly more helpful to establish clear rules and objective criteria that are approved ministerially, rather than let an applicant embark on a longer, more challenging and expensive discretionary path. ◄ ►
2 of 3
180
Item 5 G.

We applaud the City for updating its ADU as state law changes. However, the City must amend its ADU ordinance to address the above issues.

CalHDF is a 501(c)(3) non-profit corporation whose mission includes advocating for increased access to housing for Californians at all income levels, including low-income households. You may learn more about CalHDF at www.calhdf.org.

Sincerely,
Dylan Casey
CalHDF Executive Director
James M. Lloyd
CalHDF Director of Planning and Investigations
3 of 3
181
Item 5 G.
1 Gautho, Julia
From: Kevin Maguire <[email protected]>
Sent: Wednesday, September 9, 2026 9:47 AM
To: Gerry Jensen; Margaux Morgan; Melinda Orbach; Clarke, Joe; Westman, Susan; City Council; City Clerk; Goldstein, Jamie
Subject: 9/10/26 - Item 9E – FY 2025-26 Revenue and Expenditure Update Item 9E – FY 2025-26 Revenue and Expenditure Update
I support the prudent use of the $1 million one-time Wharf insurance settlement to restore City reserves rather than using one-time revenue for ongoing expenditures. However, before Council directs the allocation, I ask that the public be provided a clear reserve schedule showing each established reserve target, the current balance of each reserve, and the proposed balance after applying the insurance proceeds.

I also ask Council for greater detail regarding City Attorney expenditures. The City budgeted $325,000 and spent $629,625, an approximately $304,625 unfavorable variance. The report identifies districting, Mall/Housing Element work, PRA costs and flume litigation generally, but does not show the cost attributable to each or identify the amount staff expects to reallocate to special revenue funds. A variance of this magnitude warrants a transparent breakdown.

Finally, please clarify the apparent inconsistency in the report: General Fund revenues exceeded budget by approximately $591,000, while the approximately $486,000 figure appears to represent revenues exceeding expenditures, not revenues exceeding budget.

Given the pending Stockton Bridge costs, Laurence Avenue repairs, winter risks and the Finance Advisory Committee's planned review of the reserve policy, I would also encourage Council not to treat the approximately $100,000 above today's reserve target as discretionary money until that reserve-policy review is completed.

Kevin Maguire - Capitola Citizen
182
Item 5 H.
1 Gautho, Julia
From: Kevin Maguire <[email protected]>
Sent: Wednesday, September 9, 2026 3:59 PM
To: Gautho, Julia
Subject: 9/10 Agenda questions / issues...

Hi Julia,
I noticed a few apparent corrections in the September 10 agenda packet:

Thank you,
Kevin
183
Item 5 H.

Capitola City Council
Agenda Report
Meeting: September 10, 2026
From: City Manager Department
Subject: City Council Meeting Minutes
Recommended Action: Approve minutes from the special meeting on August 25, 2026, the regular meeting on August 27, 2026, the special meeting on September 2, 2026, and the special meeting on September 3, 2026.

Background: Attached for City Council review and approval are the draft minutes from the special meeting on August 25, 2026, the regular meeting held on August 27, 2026, the special meeting on September 2, 2026, and the special meeting on September 3, 2026..

Alignment with 2025-2029 Strategic Plan Priority: Accountable Government Attachments:

1. Special Meeting 8/25/2026

2. Regular Meeting 8/27/2026

3. Special Meeting 9/2/2026

4. Special Meeting 9/3/2026
Report Prepared By: Julia Gautho, City Clerk
Approved By: Jamie Goldstein, City Manager
184
Item 8 A.

City of Capitola
Project Celebration / Special City Council
Meeting Minutes
Tuesday, August 25, 2026 – 12:00 PM
Jade Street Park
4400 Jade Street, Capitola, CA 95010
Mayor: Margaux Morgan
Vice Mayor: Gerry Jensen
Council Members: Joe Clarke, Melinda Orbach, Susan Westman Special Meeting of the Capitola City Council – 12 PM

1. Roll Call – The meeting was called to order at 12:00 PM. In attendance: Council Members Orbach, Westman, Vice Mayor Jensen, and Mayor Morgan. Absent: Council Member Clarke.

2. General Government
A. Jade Street Park Reimagined: Grand Opening Celebration for the Community Center and Treasure Cove Playground
Recommended Action: None. No Council Action will be taken.

Public Comment: None

10. Adjournment
The meeting adjourned at 12:40 PM. The next regularly scheduled City Council meeting is on August 27, 2026, at 6:00 PM.
________________________
Margaux Morgan, Mayor
ATTEST:
______________________
Julia Gautho, City Clerk
185
Item 8 A.

City of Capitola
City Council Meeting Minutes
Thursday, August 27, 2026 – 6:00 PM
City Council Chambers
420 Capitola Avenue, Capitola, CA 95010
Mayor: Margaux Morgan
Vice Mayor: Gerry Jensen
Council Members: Joe Clarke, Melinda Orbach, Susan Westman Regular Meeting of the Capitola City Council – 6 PM

1. Roll Call and Pledge of Allegiance – The meeting was called to order at 6:00 PM. In attendance: Council Members Clarke, Orbach, Westman, Vice Mayor Jensen, and Mayor Morgan.

2. Additions and Deletions to the Agenda – None

3. Additional Materials
A. Item 6C – One email received after publication of the agenda packet.

B. Item 6D – One email received after publication of the agenda packet.

C. Item 7C – Four emails received after publication of the agenda packet.

D. Item 7D – One email received after publication of the agenda packet.

E. Item 7E – One email received after publication of the agenda packet.

4. Oral Communications by Members of the Public
 Terre Thomas
 Leslie Nielsen
 Kevin Maguire
 Molly Turner

5. Staff / City Council Comments
 City Manager Goldstein thanked staff, the community, and the City Council for attending the opening of the Jade Street Park Community Center and Treasure Cove Playground; and advised the public that the City will be hosting a Town Hall meeting on November 19, 2026, at the Jade Street Community Center. He also introduced Interim City Clerk Lesley Milton.  Community and Economic Development Director Herlihy advised the public that there will be a community meeting to discuss the Cliff Drive Resiliency Project at 5 PM on September 2, 2026.
 Mayor Morgan paused Staff and Council Comments to hear Item 7A, as it was a time-sensitive public hearing.
 Council Member Westman thanked staff for scheduling a Town Hall meeting; clarified her comments from the July 23rd Council meeting about the City Manager’s performance evaluation and requested that his evaluation be rescheduled for Spring 2027; and she provided updates from recently attended AMBAG and Seniors Council meetings.  Vice Mayor Jensen inquired about staff’s response to correspondence received related to the use of e-bikes on the Riverview pathway. He provided comments on his attendance at the 186
Item 8 A.

City Council Meeting Minutes – August 27, 2026
City of Capitola Page 2
Wharf to Wharf race, National Night Out, a recently attended MBARD meeting, the reopening of the Jade Street Community Center and Park, a recently attended Ecology Action meeting, a community meeting with Congressman Panetta at the Monterey Bay Aquarium, a recently attended RTC meeting, and provided an update on the Grand Jury report received by the RTC.
 Council Member Orbach requested an agenda item that would authorize the City to send a letter opposing Proposition 43 on the ballot in November. She also requested staff and Council support to recognize “Week Without Driving,” held October 1 through October 8.  Council Member Westman agreed with Council Member Orbach’s request for an agenda item to provide a letter of opposition to Proposition 43.
 Council Member Clarke thanked Vice Mayor Jensen for his efforts representing the City on the RTC and reminded the public of the upcoming Movies on the Beach event on August 28th.  Mayor Morgan thanked the public for attending the Jade Street Park reopening event and thanked Public Works staff for their community outreach efforts related to the Active Transportation Plan and Esplanade Park.

6. Consent Items
A. City Council Meeting Minutes
Recommended Action: Approve minutes from the regular meeting on July 23, 2026.

B. City Check Registers
Recommended Action: Approve check registers dated June 19, 2026, July 3, 2026, July 17, 2026, and July 31, 2026.

C. Contract Amendment for Planning and Building Services Recommended Action: Authorize the City Manager to execute 1) Amendment 2 to the Professional Services Agreements with CSG Consultants, Inc. for Planning Consultant Services to increase contract funding by $50,000; and 2) Amendment 1 to the Professional Services Agreement with CSG Consultants, Inc. for Building Consultant Services to increase contract funding by $95,000.

D. Ben Noble Planning Contract
Recommended Action: Adopt a resolution authorizing the City Manager to execute a sole source Professional Services Agreement, in a form acceptable to the City Attorney’s Office, with Ben Noble Planning in an amount not to exceed $80,000 for a two-year term to provide General Plan implementation services for Zoning Code updates. (Pulled for further discussion by Council Member Clarke)
E. OPC SB 1 Sea-Level Rise Adaptation Planning Grant
Recommended Action: Authorize staff to submit an application to the Ocean Protection Council’s SB 1 Sea-Level Rise Adaptation Planning Grant Program.

F. ECYP Fund Allocation
Recommended Action: Adopt a resolution authorizing an allocation of $40,000 from the Early Childhood and Youth Programming (ECYP) Fund for youth program scholarships for Fiscal Year 2026-27 and approving the corresponding budget amendment to appropriate the funds for this purpose. (Resolution No. 4506)
Council Member Clarke requested to pull Item 6D for further explanation from staff.

Motion to approve Items 6A-C and 6E-F: Council Member Orbach Second: Council Member Westman
Voting Yea: Council Members Clarke, Orbach, Westman, Vice Mayor Jensen, and Mayor Morgan
187
Item 8 A.

City Council Meeting Minutes – August 27, 2026
City of Capitola Page 3

7. General Government / Public Hearings
A. Fifth Public Hearing to Receive Community Input and Adopt an Ordinance Transitioning to District-Based Elections
Recommended Action: 1) Conduct a time-certain duly noticed public hearing at 6:15 PM to receive community input; and 2) Adopt an ordinance of the City of Capitola amending Chapter

2.04 of Title 2 of the Capitola Municipal Code to provide for the election of City Council Members by four districts with an elected mayor; establish district boundaries and election order for each district; and make other amendments.

City Clerk Gautho provided the staff report.

Public Comment:
 Cami Corvin
 Terre Thomas
The Council thanked staff and the Council Members for their efforts in the districting process and requested clarification on mailing issues. Staff confirmed that mailing issues had been resolved prior to the sending of the second mailer.

Motion to adopt Ordinance No. 1076: Council Member Westman Second: Vice Mayor Jensen
Voting Yea: Council Members Clarke, Orbach, Westman, Vice Mayor Jensen, Mayor Morgan
B. Agreement with the RTC for the Capitola Trestle Assessment Recommended Action: Authorize the City Manager to execute a Cooperative Agreement with the Santa Cruz County Regional Transportation Commission (RTC) for the Capitola Trestle Assessment.

Public Works Director Kahn provided the staff report.

Public Comment: None
Council expressed appreciation for the collaboration of the City and the RTC for this cooperative agreement.

Motion to authorize the City Manager to execute a Cooperative Agreement with the RTC for the Capitola Trestle Assessment: Council Member Clarke Second: Vice Mayor Jensen
Voting Yea: Council Members Clarke, Westman, Vice Mayor Jensen, Mayor Morgan Voting Nay: Council Member Orbach
C. Stockton Avenue Bridge Existing Conditions Assessment and Project Development Services Agreement
Recommended Action: Authorize the City Manager to execute a Professional Services Agreement with CSW/ST2 for the assessment of Stockton Avenue Bridge’s existing conditions and project development services in an amount not to exceed $474,912.

Public Works Director Kahn provided the staff report.

Public Comment:
 Keith Cahalen
 Speaker
 Tory Del Favero
 Leslie Nielsen
 Terre Thomas
 Bob Hickman
188
Item 8 A.

City Council Meeting Minutes – August 27, 2026
City of Capitola Page 4
 Michael Morrissey
 Speaker
 Cheryl
 Mary Beth Cahalen
The Council discussed the importance of the Stockton Bridge to the City and the impacts that various projects involving the Stockton Avenue Bridge would have upon the community; and discussed condition reports issued by CalTrans and lack of maintenance conducted on the Bridge.

Motion by Vice Mayor Jensen to:

1. Direct staff to immediately proceed with obtaining bids for CalTrans recommended polyester concrete overlay and related preventative maintenance for the Stockton Avenue Bridge, in an amount not to exceed $150,000, with the goal of completing the work before the winter season. Funding shall come from available remaining funds from the recent Reposa Paving Project. If additional funding is necessary, it shall come from the City’s Emergency Reserve Fund. If the total cost exceeds $150,000, staff shall return to the City Council for additional authorization;

2. Direct staff to proceed with developing a plan to rebuild and preserve the existing Stockton Avenue Bridge, including appropriate debris mitigation efforts;

3. Direct staff to issue a request for proposals for the Stockton Avenue Bridge project, with particular emphasis on soliciting firms with demonstrated expertise in bridge rehabilitation, historic bridge preservation and retrofitting, and successfully working through the CalTrans process, including identifying and securing available funding;

4. Direct staff to continue meaningful community outreach throughout the process and provide the City Council with monthly updates regarding any changes in the Bridge’s condition, maintenance activities, engineering analysis, project progress, and community outreach efforts;

5. Direct staff and/or appropriate consultants to inspect the Soquel Creek corridor within the City’s jurisdiction and coordinate with the appropriate agencies and property owners to identify and address, where legally permissible and environmentally appropriate, any trees, brush, vegetation, or other debris that could obstruct Creek flow or create a potential hazard during the upcoming winter rains. Staff shall provide the City Council with a written follow-up report identifying the findings, recommended actions, and any work completed or still required.

Second: Council Member Clarke
Staff requested clarification on the project scope related to portion 3 of the motion and costs for portion 1 of the motion. Staff clarified the expected timeframe to return to the City Council with the items requested.

Voting Yea: Council Members Clarke, Orbach, Westman, Vice Mayor Jensen, Mayor Morgan
The Council took a recess at 8:07 PM and reconvened at 8:12 PM.

D. Underground Utility District No. 6 and Rule 20A Program Update Recommended Action: Receive information regarding Underground Utility District No. 6 and the Rule 20A utility undergrounding program, including district history, implementation considerations, and utility coordination issues, and provide direction as desired. (Continued from May 28, 2026, City Council Meeting)
Public Works Director Kahn provided the staff report.

Public Comment:
 Keith Cahalen
189
Item 8 A.

City Council Meeting Minutes – August 27, 2026
City of Capitola Page 5
Council thanked Kathy Pace, PG&E’s representative, for attending the meeting and answering Council questions. Council discussed the feasibility and merits of the proposed projects utilizing Rule 20A funding and requested that PG&E provide cost estimates for an undergrounding project on a portion of Monterey Avenue.

Motion to continue the item to September 10, 2026, to allow staff to return with additional information: Council Member Westman
Second: Council Member Orbach
Voting Yea: Council Members Clarke, Orbach, Westman, Vice Mayor Jensen, Mayor Morgan
E. Bay Avenue Corridor Safety Improvements
Recommended Action: Direct staff to proceed with the proposed safety improvements at Bay Avenue/Hill Street and Bay Avenue/Center Street.

Public Works Director Kahn provided the staff report.

Public Comment:
 Cheryl
Council thanked staff for their work on this item.

Motion to direct staff to proceed with the proposed safety improvements at Bay Avenue/Hill Street and Bay Avenue/Center Street: Council Member Orbach Second: Council Member Westman
Voting Yea: Council Members Clarke, Orbach, Westman, Vice Mayor Jensen, Mayor Morgan
F. Discussion Regarding Residency Requirements for Elective Office Recommended Action: Discuss residency requirements for elective office and provide direction to staff.

City Attorney Tran provided the staff report.

Public Comment:
 Heidy Kellison
 Cami Corvin
 TJ Welch
The Council directed the City Attorney to prepare a draft policy outlining a voluntary residency verification program for Council candidates, elected officials, or appointees.

The Council requested that when the item returns for approval, staff includes information about enforcement and an annual verification process.

6. Consent Items Pulled for Discussion
D. Ben Noble Planning Contract
Recommended Action: Adopt a resolution authorizing the City Manager to execute a sole source Professional Services Agreement, in a form acceptable to the City Attorney’s Office, with Ben Noble Planning in an amount not to exceed $80,000 for a two-year term to provide General Plan implementation services for Zoning Code updates. (Pulled for further discussion by Council Member Clarke)
Community and Economic Development Director Herlihy provided an oral report.

Public Comment:
 Peter Wilk
190
Item 8 A.

City Council Meeting Minutes – August 27, 2026
City of Capitola Page 6
The City Council expressed an interest in issuing a one-year agreement with Ben Noble, rather than two, to reduce costs.

Motion to adopt Resolution No. 4505, authorizing a one-year sole-source agreement with Ben Noble Planning: Council Member Westman
Second: Council Member Orbach
Voting Yea: Council Members Clarke, Orbach, Westman, Vice Mayor Jensen, Mayor Morgan

8. Adjournment - The meeting adjourned at 9:30 PM. The next regularly scheduled City Council meeting is on September 10, 2026, at 6:00 PM.
_______________________
Margaux Morgan, Mayor
ATTEST:
______________________
Julia Gautho, City Clerk
191
Item 8 A.

City of Capitola
Joint Special Meeting of the City Council and
Planning Commission Minutes
Wednesday, September 02, 2026 – 5:00 PM
City Hall Community Room
420 Capitola Avenue, Capitola, CA 95010
Mayor: Margaux Morgan
Vice Mayor: Gerry Jensen
Council Members: Joe Clarke, Melinda Orbach, Susan Westman

1. Additional Materials
A. Item 2A – One email received after publication of the agenda packet.

2. General Government / Public Hearings
A. Cliff Drive Resiliency Project Update and IS/MND
Join City staff for a presentation and community discussion about the Cliff Drive Resiliency Project, including the proposed improvements, environmental review, and next steps. Planning Commissioners and City Councilmembers may attend; however, there will be no deliberation or discussion among either body and no action will be taken.

Public Comment:
 TJ Welch
 Jacques Bertrand
 Michael Morrisey
 Leslie Nielsen
 Nels Westman
 Chad Keane
 John Kasunich
 Cami Corvin
 Keith Cahalen
 Elisabeth Bertrand
 Bob Hickman
 Kevin Maguire

3. Adjournment
The meeting adjourned at 6:16 PM. The City Council will hold a regularly scheduled meeting on September 10, 2026, at 6:00 PM.
________________________
Margaux Morgan, Mayor
ATTEST:
______________________
Julia Gautho, City Clerk
192
Item 8 A.

1. Roll Call
The meeting was called to order at 4:00 PM. In attendance: Council Members Clarke, Orbach, Westman, Vice Mayor Jensen, and Mayor Morgan. Absent: Council Member Orbach.

2. Additional Materials
A. Item 3A – Two emails received after publication of the agenda packet.

B. Item 4 – One piece of correspondence received after publication of the agenda packet.

Public Works Director Kahn presented the staff report.

Public Comment:
 Darcy Pruitt, County of Santa Cruz
The Council provided positive feedback on the City’s existing safe disposal program for medications and sharps containers.

Absent: Council Member Orbach

4. Oral Communications by Members of the Public – None
193
Item 8 A.

Special City Council Meeting Minutes – September 03, 2026 City of Capitola Page 2

Capitola City Council
Agenda Report
Meeting: September 10, 2026
From: City Manager Department
Subject: Elections Code Section 21130(f) Report
Recommended Action: Direct City staff and the City’s retained demographer, National Demographics Corporation, to issue and post the Elections Code Section 21130(f) report.

Background: On August 27th, the City of Capitola conducted the fifth duly-noticed public hearing, received public input, closed the public hearing, and then adopted Ordinance No. 1076. This ordinance amends Chapter 2.04 of Title 2 of the Capitola Municipal Code to provide for the election of City Council Members by four districts with an elected mayor; establish district boundaries and election order for each district; and make other amendments to establish “by-district” elections of council members from four electoral districts. The Ordinance further establishes the boundary lines for each of the four districts along with the sequence of elections such that one district and the Mayor will be elected at the regular municipal election to be held in November 2028 (Council District 3) and three districts and the Mayor (Council Districts 1, 2, and 4) will be elected at the regular municipal election to be held in November 2030, pursuant to Government Code Section 34886.

Discussion: In accordance with California Elections Code Section 21130(f), within 21 days of Council adoption of the final election district boundaries, the City Council must direct staff to issue and post a report that explains the basis on which the districting body made its decisions in achieving compliance with the requirements and criteria described in this Elections Code, including, as to each neighborhood, community of interest, city, or census designated place that was split into two or more districts, the reason for that split. The report is included as Attachment 1.

Fiscal Impact: There is no fiscal impact associated with the recommended action.

Attachments:

1. Elections Code Section 21130(f) Report
Alignment with 2025-2029 Strategic Plan Priority: Accountable Government Report Prepared By: Julia Gautho, City Clerk
Reviewed By: Marc Tran, City Attorney
Approved By: Jamie Goldstein, City Manager
195
Item 8 B.

Disclosure:

1. The Jewel Box neighborhood is entirely in one district.

2. The Extended Jewel Box neighborhood is entirely in one district.

3. The Tool Box neighborhood is entirely in one district.

4. The Village neighborhood is entirely in one district.

5. The Depot Hill neighborhood is entirely in one district.

6. The Cliffwood Heights neighborhood is entirely in one district.

7. The Upper Village neighborhood is entirely in one district.

8. The North River neighborhood is entirely in one district.

9. The Riverview Terrace neighborhood is entirely in one district.

10. The Castle Estates neighborhood is entirely in one district.

11. Four of the other five mobile home parks are individually entirely in one district.

12. The West Capitola neighborhood is divided because within the required population counts it is impossible to unite West Capitola, the Extended Jewel Box, the Tool Box and West Capitola in one district.

National Demographics Corporation

Page 2 ends

Capitola City Council
Agenda Report
Meeting: September 10, 2026
From: Police Department
Subject: Alcohol Policing Partnership Grant
Recommended Action: Adopt a resolution accepting a Department of Alcoholic Beverage Control Alcohol Policing Partnership Grant in the amount of $57,881 and amending the FY 2026-27 General Fund operating budget to increase revenues and expenditures by $57,881.

Background: The Department of Alcoholic Beverage Control (ABC), through the Alcohol Policing Partnership Grant Program, has awarded the Capitola Police Department $57,881 to support alcoholrelated enforcement, education, prevention, and training. The grant program provides financial assistance to local law enforcement agencies to develop an effective and comprehensive approach to reducing crime and public nuisance problems associated with problem alcoholic beverage outlets. The grant performance period is July 1, 2026, through June 30, 2027.

Discussion: Grant funding will support the Police Department's alcohol-related enforcement efforts through proactive enforcement, community education, licensee education, officer training, and specialized equipment.

Grant-funded activities include Minor Decoy operations, Shoulder Tap operations, IMPACT operations, general enforcement operations, and special event operations to reduce underage access to alcoholic beverages and alcohol-related crime. Education and training will include Call/TRACE training and coordination of LEAD training. The Department will also provide public awareness through press and social media releases regarding grant-funded enforcement activities.

The grant will also fund personnel overtime, decoy meals, equipment, and travel expenses to support the Department's alcohol enforcement and prevention activities.

The total grant award of $57,881 is allocated as follows:

Personnel Services Total $51,161
Officer Overtime $33,506
Sergeant Overtime $11,204
Analyst $2,516
Benefits $3,935
Operating Expenses Total $720
Equipment Total $3,000
Travel Costs Total $3,000
The Police Department will return with a Council agenda item in the fall to outline all grant funded programs and anticipated outcomes.

Fiscal Impact: Acceptance of the grant will increase General Fund revenues and expenditures by $57,881. The grant fully funds the proposed activities, resulting in no net fiscal impact to the General Fund. Grant funds will reimburse eligible costs incurred during the grant performance period and in accordance with the approved grant budget.
198
Item 8 C.

Attachments:

1. Grant Agreement

2. Resolution

3. Exhibit A Budget Amendment
Report Prepared By: Leo Moreno, Police Captain
Reviewed By: Julia Gautho, City Clerk; Sarah Ryan, Chief of Police; Jim Malberg, Administrative Services Director
Approved By: Jamie Goldstein, City Manager
199
Item 8 C.

STATE OF CALIFORNIA - DEPARTMENT OF GENERAL SERVICES

STANDARD AGREEMENT
STD 213 (Rev. 04/2020)

Page 1 of 1 ends

Reset Form Print Form

AGREEMENT NUMBER
26-APP03
PURCHASING AUTHORITY NUMBER (If Applicable)
ABC-2100
SCO ID: 2100-26APP03

1. This Agreement is entered into between the Contracting Agency and the Contractor named below:

CONTRACTING AGENCY NAME
Department of Alcoholic Beverage Control

CONTRACTOR NAME
City of Capitola through the Capitola Police Department

2. The term of this Agreement is:

START DATE
July 1, 2026

THROUGH END DATE
June 30, 2027

3. The maximum amount of this Agreement is:
$57,881.00 (fifty-seven thousand eight hundred eighty-one dollars and no cents)

4. The parties agree to comply with the terms and conditions of the following exhibits, which are by this reference made a part of the Agreement.

Exhibits Title Pages
Exhibit A Scope of Work 3
Exhibit B Budget Detail and Payment Provisions 3
Exhibit C * General Terms and Conditions (GTC 02/2025) 5 +
- Exhibit D Special Terms and Conditions 1
Itemsshown with an asterisk (*), are hereby incorporated by reference and made part of this agreement asif attached hereto.

These documents can be viewed at https://www.dgs.ca.gov/OLS/Resources IN WITNESS WHEREOF, THIS AGREEMENT HAS BEEN EXECUTED BY THE PARTIES HERETO.

CONTRACTOR
CONTRACTOR NAME (if other than an individual, state whether a corporation, partnership, etc.) City of Capitola through the Capitola Police Department

CONTRACTOR BUSINESS ADDRESS
422 Capitola Avenue
CITY
Capitola
STATE
CA
ZIP
95010

PRINTED NAME OF PERSON SIGNING
Sarah Ryan
TITLE

CONTRACTOR AUTHORIZED SIGNATURE DATE SIGNED
8/18/2026

STATE OF CALIFORNIA

CONTRACTING AGENCY NAME
Department of Alcoholic Beverage Control

CONTRACTING AGENCY ADDRESS
3927 Lennane Drive, Suite 100
CITY
Sacramento
STATE
CA
ZIP
95834

PRINTED NAME OF PERSON SIGNING
Pattye Baker
TITLE

CONTRACTING AGENCY AUTHORIZED SIGNATURE DATE SIGNED
CALIFORNIA DEPARTMENT OF GENERAL SERVICES APPROVAL EXEMPTION (If Applicable) Digitally signed by Sarah Ryan
DN: cn=Sarah Ryan, o, ou, [email protected], c=US Date: 2026.08.18 12:56:35 -07'00'
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EXHIBIT A

SCOPE OF WORK
I. SCOPE OF WORK
• Contractor agrees to implement the Department of Alcoholic Beverage Control (ABC), Alcohol Policing Partnership program. This program is intended to work with law enforcement agencies to develop an effective, comprehensive and strategic approach to eliminate the crime and public nuisance problems associated with problem alcoholic beverage outlets. • Contractor agrees to implement ABC’s Minor Decoy, Shoulder Tap Programs and conduct Informed Merchants Preventing Alcohol-Related Crime Tendencies (IMPACT) Inspections.

These programs target both ABC licensed premises and individuals who furnish alcoholic beverages to the underage operators. The project is targeted to reduce underage drinking and the resultant DUI driving injuries and fatalities, and/or property damages, reduce youth access to alcoholic beverages through the education of licensee(s), enforcement intervention and the impressions of omnipresence of law enforcement. In addition, Contractor agrees to the following goals:

1. The operation period of the grant is July 1, 2026 through June 30, 2027.

2. Contractor agrees to raise public awareness that selling, serving and/or furnishing alcoholic beverages to individuals under twenty-one years old is a criminal violation that will be prosecuted by local city and district attorneys.

3. Minor Decoy operations are designed to educate and deter licensed locations from selling/furnishing alcohol to minors. Contractor agrees to conduct Minor Decoy Operations at both “On-Sale” and “Off-Sale” licensed establishments within the operation period of the grant.

4. Shoulder Tap operations are used to detect and deter adult furnishers outside of a licensed business. Contractor agrees to conduct Shoulder Tap Operations at “Off-Sale” licensed locations to apprehend adults that are unaffiliated with the licensed businesses and who are purchasing alcohol for minors outside of the stores within the operation period of the grant.

5. Informed Merchants Preventing Alcohol-Related Crime Tendencies (IMPACT) primary goal is to educate licensees on alcohol related laws to help reduce alcohol-related crime in and around licensed premises. Contractor agrees to conduct visits and inspections of licensed premises identifying areas of non-compliance at “On-Sale” and “Off-Sale” licensed locations within the operation period of the grant. 201
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II. GOALS AND OBJECTIVES

1. Conduct at least four (4) Minor Decoy operations.

2. Conduct at least four (4) Shoulder tap operations, including the Statewide Shoulder tap operation.

3. Conduct at least two (2) IMPACT operations.

4. Conduct at least five (5) General enforcement operations.

5. Conduct at least four (4) Special Event operations.

6. Provide at least two (2) Roll Call/TRACE trainings.

7. Schedule and coordinate at least one (1) LEAD training.

8. Provide press/social media releases on grant enforcement activities.

A. To announce the start of the program;
B. At the conclusion of each Minor Decoy Operation has been held (to announce the number of licensed premises who sold to the minor decoy) C. At the conclusion of each Shoulder Tap Operation has been held (to announce the number of adults arrested for purchasing alcoholic beverages for the decoy).

9. Contractor will fax (916) 419-2599 or email each press release to the Department’s Public Information Officer ([email protected]) as soon as it is released.

10. Contractor agrees in all press releases, in addition to any credits the agency wishes to give, will include the following statement: “This project is part of the Department of Alcoholic Beverage Control’s Alcohol Policing Partnership.”
Contractor agrees to complete and submit monthly reports on a format designed and provided by the Department of Alcoholic Beverage Control due no later than 15th of the following month.

III. PROJECT REPRESENTATIVES
The project representatives during the term of this agreement will be:

Capitola Police Department
Leo Moreno, Police Captain
422 Capitola Avenue
Capitola, CA 95010
(831) 475-4242 x299
[email protected]
Department of Alcoholic Beverage Control
Jennifer Delarosa, Supervising Agent in Charge
3927 Lennane Drive, Suite 100
Sacramento, CA 95834
[email protected]
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Direct all fiscal inquiries to:

Capitola Police Department
Esmeralda Gonzalez, Analyst
422 Capitola Avenue
Capitola, CA 95010
(831) 475-4242 x223
[email protected]
Department of Alcoholic Beverage Control
Kristine Okino, Grant Coordinator
3927 Lennane Drive, Suite 100
Sacramento, CA 95834
(916) 312-4349
[email protected]
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EXHIBIT B

BUDGET DETAIL AND PAYMENT PROVISIONS
I. INVOICING AND PAYMENT
• For services satisfactorily rendered and upon receipt and approval of the invoice, the Department of Alcoholic Beverage Control agrees to pay a monthly payment of approved reimbursable costs per the Budget Detail of personnel overtime and benefits (actual cost) and/or allowable costs.
• Invoices shall clearly reference this contract number (26-APP03) and must not exceed the contract total authorized amount of $57,881.00. Invoices are to be submitted by the 15th of every month, on the prescribed form designed by the Department of Alcoholic Beverage Control.

Submit to: Department of Alcoholic Beverage Control
Attn: Kristine Okino, Grant Coordinator
3927 Lennane Drive
Sacramento, California 95834
• Payment shall be made in arrears within 30 days from the receipt of an undisputed invoice.

Nothing contained herein shall prohibit advance payments as authorized by Item 2100-101- 3036, Budget Act, Statues of 2026.
• Contractor understands in order to be eligible for reimbursement; cost must be incurred on or after the effective date of the project, July 1, 2026 and on or before the project termination date, June 30, 2027.
• Revisions to the “Scope of Work” and the “Budget Detail” may be requested by a change request letter submitted by the Contractor. If approved, the revised Grant Scope of Work and/or Budget Detail supersedes and replaces the previous grant and will initiate an amendment. No revisions can exceed allotted amount as shown on the Budget Detail. The total amount of the grant must remain unchanged.
• Contractor agrees to refund to the State any amounts claimed for reimbursement and paid to Contractor which are later disallowed by the State after audit or inspection of records maintained by the Contractor.
• Only the costs displayed in the Budget Detail are authorized for reimbursement by the State to Contractor under this agreement. Any other costs incurred by Contractor in the performance of this agreement are the sole responsibility of Contractor. • Prior approval by the State in writing is required for the location, costs, dates, agenda, instructors, instructional materials, and attendees at any reimbursable training seminar, workshop or conference, and over any reimbursable publicity or educational materials to be made available for distribution. Contractors are required to acknowledge the support of the State whenever publicizing the work under this grant in any media. 204
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II. BUDGET DETAIL

COST CATEGORY TOTAL COST
A. Personnel Services
Overtime
Officer
Sergeant
Analyst
Benefits – SDI, Medicare and SSI
TOTAL Personnel
$33,506.00
$11,204.00
$2,516.00
$3,935.00
$51,161.00
B. Operating Expenses (receipts required)
Decoy Meals $720.00
TOTAL Operating $720.00
C. Equipment (receipts required, must be purchased by 12/31) Airpods, Radios, and PAS devices w/straws $3,000.00
TOTAL Equipment $3,000.00
D. Travel Costs
Registration, hotel and per diem $3,000.00
TOTAL Travel $3,000.00
GRANT TOTAL $57,881.00
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III. BUDGET CONTINGENCY CLAUSE
• It is mutually agreed that if the Budget Act of the current year and/or any subsequent years covered under this Agreement does not appropriate sufficient funds for the program, this Agreement shall be of no further force and effect. In this event, the State shall have no liability to pay any funds whatsoever to Contractor or to furnish any other considerations under this Agreement and Contractor shall not be obligated to perform any provisions of this Agreement.

• If funding for any fiscal year is reduced or deleted by the Budget Act for purposes of this program, the State shall have the option to either cancel this Agreement with no liability occurring to the State, or offer an agreement amendment to Contractor to reflect the reduced amount.

IV. PROMPT PAYMENT CLAUSE
• Payment will be made in accordance with, and within the time specified in, Government Code Chapter 4.5, commencing with Section 927.
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General Terms and Conditions (GTC 02/2025)

EXHIBIT C

1. APPROVAL: This Agreement is of no force or effect until signed by both parties and approved by the Department of General Services, if required. Contractor may not commence performance until such approval has been obtained.

2. AMENDMENT: No amendment or variation of the terms of this Agreement shall be valid unless made in writing, signed by the parties and approved as required. No oral understanding or Agreement not incorporated in the Agreement is binding on any of the parties.

3. ASSIGNMENT: This Agreement is not assignable by the Contractor, either in whole or in part, without the consent of the State in the form of a formal written amendment.

4. AUDIT: Contractor agrees that the awarding department, the Department of General Services, the Bureau of State Audits, or their designated representative shall have the right to review and to copy any records and supporting documentation pertaining to the performance of this Agreement. Contractor agrees to maintain such records for possible audit for a minimum of three (3) years after final payment, unless a longer period of records retention is stipulated. Contractor agrees to allow the auditor(s) access to such records during normal business hours and to allow interviews of any employees who might reasonably have information related to such records. Further, Contractor agrees to include a similar right of the State to audit records and interview staff in any subcontract related to performance of this Agreement. (Gov. Code §8546.7, Pub. Contract Code §10115 et seq., CCR Title 2, Section 1896).

5. INDEMNIFICATION: Contractor agrees to indemnify, defend and save harmless the State, its officers, agents and employees from any and all claims and losses accruing or resulting to any and all contractors, subcontractors, suppliers, laborers, and any other person, firm or corporation furnishing or supplying work services, materials, or supplies in connection with the performance of this Agreement, and from any and all claims and losses accruing or resulting to any person, firm or corporation who may be injured or damaged by Contractor in the performance of this Agreement.

6. DISPUTES: Contractor shall continue with the responsibilities under this Agreement during any dispute.

7. TERMINATION FOR CAUSE: The State may terminate this Agreement and be relieved of any payments should the Contractor fail to perform the requirements of this Agreement at the time and in the manner herein provided. In the event of such termination the State may proceed with the work in any manner deemed proper by the State. All costs to the State shall be deducted from any sum due the Contractor under this Agreement and the balance, if any, shall be aid to the Contractor upon demand.

8. INDEPENDENT CONTRACTOR: Contractor, and the agents and employees of Contractor, in the performance of this Agreement, shall act in an independent capacity and not as officers or employees or agents of the State.
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9. RECYCLING CERTIFICATION: The Contractor shall certify in writing under penalty of perjury, the minimum, if not exact, percentage of post-consumer material as defined in the Public Contract Code Section 12200, in products, materials, goods, or supplies offered or sold to the State regardless of whether the product meets the requirements of Public Contract Code Section 12209. With respect to printer or duplication cartridges that comply with the requirements of Section 12156(e), the certification required by this subdivision shall specify that the cartridges so comply (Pub. Contract Code §12205).

10. NON-DISCRIMINATION CLAUSE: During the performance of this Agreement, Contractor and its subcontractors shall not deny the contract’s benefits to any person on the basis of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status, nor shall they discriminate unlawfully against any employee or applicant for employment because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status. Contractor shall insure that the evaluation and treatment of employees and applicants for employment are free of such discrimination. Contractor and subcontractors shall comply with the provisions of the Fair Employment and Housing Act (Gov. Code §12900 et seq.), the regulations promulgated thereunder (Cal. Code Regs., tit. 2, §11000 et seq.), the provisions of Article 9.5, Chapter 1, Part 1, Division 3, Title 2 of the Government Code (Gov. Code §§11135-11139.5), and the regulations or standards adopted by the awarding state agency to implement such article. Contractor shall permit access by representatives of the Department of Fair Employment and Housing and the awarding state agency upon reasonable notice at any time during the normal business hours, but in no case less than 24 hours’ notice, to such of its books, records, accounts, and all other sources of information and its facilities as said Department or Agency shall require to ascertain compliance with this clause. Contractor and its subcontractors shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement. (See Cal. Code Regs., tit. 2, §11105.) Contractor shall include the nondiscrimination and compliance provisions of this clause in all subcontracts to perform work under the Agreement.

11. CERTIFICATION CLAUSES: The CONTRACTOR CERTIFICATION CLAUSES contained in the document CCC 04/2017 are hereby incorporated by reference and made a part of this Agreement by this reference as if attached hereto.

12. TIMELINESS: Time is of the essence in this Agreement.

13. COMPENSATION: The consideration to be paid Contractor, as provided herein, shall be in compensation for all of Contractor's expenses incurred in the performance hereof, including travel, per diem, and taxes, unless otherwise expressly so provided.

14. GOVERNING LAW: This contract is governed by and shall be interpreted in accordance with the laws of the State of California.

15. ANTITRUST CLAIMS: The Contractor by signing this agreement hereby certifies that if these services or goods are obtained by means of a competitive bid, the Contractor shall comply with the requirements of the Government Codes Sections set out below. 208
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a. The Government Code Chapter on Antitrust claims contains the following definitions:
1) "Public purchase" means purchase by means of competitive bids of goods, services, or materials by the State or any of its political subdivisions or public agencies on whose behalf the Attorney General may bring an action pursuant to subdivision (c) of Section 16750 of the Business and Professions Code.
2) "Public purchasing body" means the State or the subdivision or agency making a public purchase. Government Code Section 4550.
b. In submitting a bid to a public purchasing body, the bidder offers and agrees that if the bid is accepted, it will assign to the purchasing body all rights, title, and interest in and to all causes of action it may have under Section 4 of the Clayton Act (15 U.S.C.

Sec.15) or under the Cartwright Act (Chapter 2 (commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code),arising from purchases of goods, materials, or services by the bidder for sale to the purchasing body pursuant to the bid. Such assignment shall be made and become effective at the time the purchasing body tenders final payment to the bidder. Government Code Section4552.
c. If an awarding body or public purchasing body receives, either through judgment or settlement, a monetary recovery for a cause of action assigned under this chapter, the assignor shall be entitled to receive reimbursement for actual legal costs incurred and may, upon demand, recover from the public body any portion of the recovery, including treble damages, attributable to overcharges that were paid by the assign or but were not paid by the public body as part of the bid price, less the expenses incurred in obtaining that portion of the recovery. Government Code Section4553. d. Upon demand in writing by the assignor, the assignee shall, within one year from such demand, reassign the cause of action assigned under this part if the assign or has been or may have been injured by the violation of law for which the cause of action arose and (a)the assignee has not been injured thereby, or (b) the assignee declines to file a court action for the cause of action. See Government Code Section4554.

16. CHILD SUPPORT COMPLIANCE ACT: For any Agreement in excess of $100,000, the contractor acknowledges in accordance with Public Contract Code 7110, that:
a. The contractor recognizes the importance of child and family support obligations and shall fully comply with all applicable state and federal laws relating to child and family support enforcement, including, but not limited to, disclosure of information and compliance with earnings assignment orders, as provided in Chapter 8 (commencing with section 5200) of Part 5 of Division 9 of the Family Code; and b. The contractor, to the best of its knowledge is fully complying with the earnings assignment orders of all employees and is providing the names of all new employees to the New Hire Registry maintained by the California Employment Development Department.
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17. UNENFORCEABLE PROVISION: In the event that any provision of this Agreement is unenforceable or held to be unenforceable, then the parties agree that all other provisions of this Agreement have force and effect and shall not be affected thereby.

18. PRIORITY HIRING CONSIDERATIONS: If this Contract includes services in excess of $200,000, the Contractor shall give priority consideration in filling vacancies in positions funded by the Contract to qualified recipients of aid under Welfare and Institutions Code Section 11200 in accordance with Pub. Contract Code §10353.

19. SMALL BUSINESS PARTICIPATION AND DVBE PARTICIPATION REPORTING REQUIREMENTS:
a. If for this Contract Contractor made a commitment to achieve small business participation, then Contractor must within 60 days of receiving final payment under this Contract (or within such other time period as may be specified elsewhere in this Contract) report to the awarding department the actual percentage of small business participation that was achieved. (Govt. Code § 14841.) b. If for this Contract Contractor made a commitment to achieve disabled veteran business enterprise (DVBE) participation, then Contractor must within 60 days of receiving final payment under this Contract (or within such other time period as may be specified elsewhere in this Contract) certify in a report to the awarding department: (1) the total amount the prime Contractor received under the Contract; (2) the name and address of the DVBE(s) that participated in the performance of the Contract; (3) the amount each DVBE received from the prime Contractor; (4) that all payments under the Contract have been made to the DVBE; and (5) the actual percentage of DVBE participation that was achieved. A person or entity that knowingly provides false information shall be subject to a civil penalty for each violation. (Mil. & Vets. Code § 999.5(d); Govt. Code § 14841.)

20. LOSS LEADER: If this contract involves the furnishing of equipment, materials, or supplies then the following statement is incorporated: It is unlawful for any person engaged in business within this state to sell or use any article or product as a “loss leader” as defined in Section 17030 of the Business and Professions Code. (PCC 10344(e).)

21. GENERATIVE AI DISCLOSURE OBLIGATIONS:
a. The following terms are in addition to the defined terms and shall apply to the Contract:
1) “Generative AI (GenAI)” means an artificial intelligence system that can generate derived synthetic content, including text, images, video, and audio that emulates the structure and characteristics of the system's training data. (Gov. Code § 11549.64.)
b. Contractor shall immediately notify the State in writing if it: (1) intends to provide GenAI as a deliverable to the State; or (2), intends to utilize GenAI, including GenAI from third parties, to complete all or a portion of any deliverable that materially impacts: (i) functionality of a State system, (ii) risk to the State, or (iii) Contract performance. For avoidance of doubt, the term “materially impacts” shall have the meaning set forth in State Administrative Manual (SAM) § 4986.2 Definitions for GenAI. 210
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c. Notification shall be provided to the State designee identified in this Contract. d. At the direction of the State, Contractor shall discontinue the provision to the State of any previously unreported GenAI that results in a material impact to the functionality of the System, risk to the State, or Contract performance, as determined by the State. e. If the use of previously undisclosed GenAI is approved by the State, then Contractor will update the Deliverable description, and the Parties will amend the Contract accordingly, which may include incorporating the GenAI Special Provisions into the Contract, at no additional cost to the State.
f. The State, at its sole discretion, may consider Contractor’s failure to disclose or discontinue the provision or use of GenAI as described above, to constitute a material breach of Contract when such failure results in a material impact to the functionality of the System, risk to the State, or Contract performance. The State is entitled to seek any and all remedies available to it under law as a result of such breach, including but not limited to termination of the contract. 211
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EXHIBIT D

SPECIAL TERMS AND CONDITIONS

1. Disputes: Any disputes concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Director, Department of Alcoholic Beverage Control, or designee, who shall reduce his decision in writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Department shall be final and conclusive unless, within 30 days from the date of receipt of such copy, the Contractor mails or otherwise furnishes to the State a written appeal addressed to the Director of the Department of Alcoholic Beverage Control. The decision of the Director of Alcoholic Beverage Control or his duly authorized representative for the determination of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, capricious, arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any appeal proceeding under this clause, the contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, Contractor shall proceed diligently with the performance of the contract and in accordance with the decision of the State.

2. Cancellation/Termination: This agreement may be cancelled or terminated without cause by either party by giving thirty (30) calendar days advance written notice to the other party. Such notification shall state the effective date of termination or cancellation and include any final performance and/or payment/invoicing instructions/requirements. No penalty shall accrue to either party because of contract termination.

3. Contract Validity: This contract is valid and enforceable only if adequate funds are appropriated in Item 2100-101-3036, Budget Act of 2026, for the purposes of this program.

4. Contractor Certifications: By signing this agreement, Contractor certifies compliance with the provisions of CCC 04/2017, Standard Contractor Certification Clauses. This document may be viewed at: https://www.dgs.ca.gov/OLS/Resources/Page-Content/Office-ofLegal-Services-Resources-List-Folder/Standard-Contract-Language

5. If the State determines that the grant project is not achieving its goals and objectives on schedule, funding may be reduced by the State to reflect this lower level of project activity and/or cancel the agreement.
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RESOLUTION NO. _____

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CAPITOLA ACCEPTING

GRANT FUNDING FROM THE DEPARTMENT OF ALCOHOL BEVERAGE CONTROL ALCOHOL

POLICING PARTNERSHIP GRANT PROGRAM TO SUPPORT ALCOHOL RELATED ENFORCEMENT, EDUCATION, AND EQUIPMENT, AND AMENDING THE FISCAL YEAR 2026-27 BUDGET
WHEREAS, the Department of Alcoholic Beverage Control (ABC) administers the Alcohol Policing Partnership Grant Program to assist local law enforcement agencies in reducing crime and public nuisance problems associated with problem alcoholic beverage outlets; and WHEREAS, the Capitola Police Department has been awarded $57,881.00 through the Department of Alcoholic Beverage Control Alcohol Policing Partnership Grant Program to support alcohol-related enforcement, education, prevention, and training during the Fiscal Year 2026-27 grant performance period; and
WHEREAS, the grant award provides funding for proactive enforcement operations, licensee and community education, officer training, and specialized equipment to reduce underage access to alcoholic beverages and alcohol-related crime; and
WHEREAS, the grant funds will be used for eligible personnel overtime and services, operating expenses, equipment, and travel costs, with no local matching funds required; and WHEREAS, acceptance of the grant funding requires an amendment to the Fiscal Year 2026- 27 Adopted Budget to recognize and appropriate the grant revenues and expenditures in accordance with the grant agreement; and
NOW, THEREFORE, BE IT HEREBY RESOLVED that the City Council of the City of Capitola hereby approves the Fiscal Year 2026-27 Budget Amendment, attached hereto as Exhibit A, and directs the Administrative Services Director to incorporate the budget amendment into the City's accounting records in accordance with generally accepted accounting practices. The City Manager, with assistance from the Administrative Services Director, shall ensure implementation of this Resolution and compliance with the grant requirements.

BE IT FURTHER RESOLVED that the City Council of the City of Capitola hereby amends the Fiscal Year 2026-27 Budget, including Exhibit A (Budget Amendment) to this Resolution, and directs the Administrative Services Director to enter the budget amendment into the City's accounting records in accordance with appropriate accounting practices. The City Manager, with the assistance of the Administrative Services Director, shall ensure compliance with this Resolution.

I HEREBY CERTIFY that the above and foregoing Resolution was passed and adopted by the City Council of the City of Capitola at its regular meeting held on the 10th day of September 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
______________________________
Margaux Morgan, Mayor
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ATTEST:
____________________________
Julia Gautho, City Clerk
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Budget Adjustment Request
Date
09/01/2026
Requesting Department *
Police
Type of Adjustment
Administrative
Council
Item #
Council Date
Sept. 10, 2026
Council Approval
Revenues
Account Number Account Description Increase/Decrease
1000-20-20-000-3320.100 PD - State Grants $57,881.00
Total Revenues
$57,881.00
Expenditures
Account Number Account Description Increase/Decrease
1000-20-20-000-4130.200 PD - Grant Funded OT $51,161.00 1000-20-20-4450.100 PD - Grant Funded Supplies $720.00
1000-20-20-000-4450.100 PD - Grant Funded Train/Travel $3,000.00 1000-20-20-000-4650.400 PD - Capital Outlay Equip $3,000.00 Total Expenditures
$57,881.00
Net Impact
$0.00
Purpose
Accept and appropriate FY 2026-27 Department of Alcoholic Beverage Control partnership grant. 215
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Department Head Approval
Finance Director Approval
City Manager Approval
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Action History (all history times shown in Pacific Standard Time) Submit by Jim Malberg 9/1/2026 1:52:04 pm (Budget Amendment Request Submitted) Approve by Sarah Ryan 9/1/2026 1:55:20 pm (Routed to PD) Sarah Ryan assigned the task to Sarah Ryan
9/1/2026 1:55:11 pm
The task was assigned to Leo Moreno, Pedro Zamora & Sarah Ryan 9/1/2026 1:52:04 pm
Approve (send to CM
for approval)
by Jim Malberg 9/1/2026 1:56:32 pm (Routed to Finance Director) Jim Malberg assigned the task to Jim Malberg
9/1/2026 1:56:20 pm
The task was assigned to Jim Malberg & Luis Ruiz
9/1/2026 1:55:21 pm
Approve (return to
Finance for
processing)
by Jamie Goldstein 9/4/2026 4:12:13 pm (Routed to CM for final approval) The task was assigned to Jamie Goldstein
9/1/2026 1:56:33 pm
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Capitola City Council
Agenda Report
Meeting: September 10, 2026
From: City Manager Department
Subject: Update on Additional Improvements at the Park at Rispin Mansion Recommended Action: Receive an update on progress towards additional improvements at the Park at Rispin Mansion and ongoing efforts to raise funds through an engraved brick program.

Background: The City has advanced the Park at Rispin Mansion as a multi-year project to create a public park and event space on the historic Rispin Mansion property.

On July 28, 2022, the City Council approved plans, specifications, and budget for construction of the Rispin Mansion Park Project and authorized advertising for bids. On March 28, 2024, Council approved a $949,000 contract with Betz Works to complete an amended project scope after the original bid solicitation received no bids.

On August 28, 2025, Council received a project update and provided direction to staff regarding additional hardscaping and landscaping outside the then-current construction scope. At that meeting, Council expressed support for developing a donation-based paver program and directed staff to proceed with a community paver program for dedication. Council also requested that staff reach out to community groups and develop a community fundraising approach for additional park enhancements.

On February 26, 2026, Council approved the updated landscape plan for the Park at Rispin Mansion, directed staff to develop a commemorative paver program, and authorized staff to negotiate a memorandum of understanding with Capitola Cares to coordinate fundraising efforts for additional park elements.

On April 23, 2026, Council authorized the City Manager to execute a memorandum of understanding with Capitola Cares for a fundraising campaign for additional elements at the Park at Rispin Mansion and approved an administrative policy regarding donor recognition at the park. The MOU (Attachment 1) states that Capitola Cares will fundraise to pay for the City’s installation of an eight-pillar arbor and rehabilitation of the Park’s water fountain. Also on April 23, Council directed staff to implement a community brick program to raise money for a full brick project, which is estimated at $80,000; the sale of about 400 engraved bricks at $200 each would cover that cost.

In addition, the City Council has previously allocated $50,000 for a Rispin Reflecting Pool Project from the Public Art Fund. In July 2026 the City received a grant of $30,000 from the National Endowment for the Arts, bringing the total budget for the public art project to $80,000. A “Call to Artist” for the Rispin Reflecting Pool Project was published with a submission deadline of March 9, 2026. The City received more than 20 applications in response to the Call to Artist.

Discussion: In mid-August, Capitola Cares notified staff that the group had raised sufficient funding, based on initial estimates and an earlier bid, for the arbor. Staff prepared an informal bid package, with bids due September 1. The City received one bid with two different building options (tapered versus nontapered columns); both cost estimates exceeded the initially assumed budget by at least $40,000. As of September 4, the City has contacted Capitola Cares to determine if enough funding has been raised to pay the updated bid costs. City staff anticipates construction and installation of the arbor can be completed before the end of 2027, if sufficient funds are available within the next 30 days.

Staff continues to promote the engraved brick fundraiser authorized and discussed in prior Council actions. As previously reported to Council, the engraved brick program is intended to fund historically appropriate brick improvements in the walkways around the reflecting pool and sundial areas that are currently finished with decomposed granite. The program was designed with the goal of selling 218
Item 8 D.
approximately 400 engraved bricks at a cost of $200 per brick. Currently, staff has reached approximately 15% of the sales goal. Staff is increasing outreach efforts to improve participation in the fundraiser and support completion of the brick program. However, based on current fundraising, staff may recommend a new sales goal of 150 bricks and installing bricks around the reflecting pool, not including additional walkway areas, to remain within budget.

Staff will continue fundraising and project coordination consistent with prior Council direction. If needed, staff may return at a future meeting with additional information regarding fundraising results, implementation timing, or any recommended adjustments to project phasing.

The Art and Cultural Commission has reviewed the initial art applications submitted for the Rispin Reflecting Pool Project. The Commission selected four artists to develop and present concept proposals at the upcoming September 8, 2026, Art and Cultural Commission meeting. Staff expects to return to the City Council with an Art and Cultural Commission recommendation in September or October of this year.

Fiscal Impact: None.

Attachments: None
Alignment with 2025-2029 Strategic Plan Priority: Healthy Families, Community, and Environment Report Prepared By: Chloé Woodmansee, Assistant to the City Manager Reviewed By: Jessica Kahn, Public Works Director; Nikki Bryant, Community Services and Recreation Director; Julia Gautho, City Clerk
Approved By: Jamie Goldstein, City Manager
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Item 8 D.

Capitola City Council
Agenda Report
Meeting: September 10, 2026
From: Public Works Department
Subject: Chapter 8.40: Capitola Municipal Code
Recommended Action: Adopt an ordinance amending Chapter 8.40 of the Capitola Municipal Code to remove the expiration language in Section 8.40.150(G).

Background: On September 3, 2026, the City Council held a special meeting to receive a report on the City of Capitola’s participation in a regional program to collect unwanted medications and sharps waste.

The City originally adopted its local program through Ordinance No. 1006 on September 8, 2016.. Staff recommended adoption of an urgency ordinance to ensure that the City’s existing collection program remain in effect, and the introduction of a regular ordinance to supersede the urgency ordinance once the regular ordinance became effective. Both the urgency and regular ordinances remove language referring to an expiration of the program, ensuring that the program remains in effect until the legislative body wishes to end it.

At the September 3, 2026 special meeting, the City Council adopted the urgency ordinance and introduced and waived the first reading of the regular ordinance.

A link to the report provided at the September 3, 2026 meeting is included as Attachment 2.

The adopted code is intended to protect public health, safety, welfare, and the environment by providing for the safe and orderly collection and disposal of drug and sharps waste. The ordinance remains the basis for the City’s approved stewardship program.

MED-Project USA is a non-profit organization that develops, implements, and operates safe, free, and compliant product stewardship programs for the disposal of household medicine and sharps, to help drug and sharps manufacturers comply with state and local legislation regarding product disposal. Since 2017, MED-Project has provided the City and our neighboring jurisdictions with product stewardship plans and receptacles for safe disposal. The Capitola program currently provides medication and sharps disposal services through four participating pharmacies, mail-back options, and a medication collection receptacle at City Hall.

Discussion: At the end of August 2026, City staff was contacted by Santa Cruz County staff reporting the county-wide safe drug and sharps disposal ordinances expired this late summer and fall, and that neighboring cities and the County had experienced seizure of MED-Project collection facilities due to the expiration. Staff from the County encouraged the City to take action to maintain the City’s program and keep drop off facilities available to all residents.

Staff reviewed the ordinance and governing statutes and found no apparent state preemption issue with keeping Chapter 8.40 in place, provided the ordinance remains in continuous effect.

Removing only the 10-year sunset provision in Section 8.40.150(G) would not repeal Chapter 8.40.

Instead, deleting that sentence would keep the same 2016 ordinance continuously in force. Under that approach, the City’s program would remain a pre-2018 local program rather than a new ordinance subject to state preemption.

Fiscal Impact: There is no direct fiscal impact associated with removing the expiration language. Chapter

8.40 requires producers, groups of producers, or stewardship organizations to pay administrative and operational costs associated with the product stewardship program, including City administration and enforcement costs as provided in the chapter.

Attachments:
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Item 8 E.

1. Proposed Ordinance

2. September 3, 2026, Staff Report: https://mccmeetings.blob.core.usgovcloudapi.net/capitolacapubu/MEET-Packet-f68a21b6877d4620a598bbaed2c257fd.pdf Alignment with 2025-2029 Strategic Plan Priority: Accountable Government; Community Safety; Healthy Families, Community, and Environment
Report Prepared By: Jessica Kahn, Public Works Director Reviewed By: Julia Gautho, City Clerk; Marc Tran, City Attorney Approved By: Jamie Goldstein, City Manager
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4899-7445-7036 v2
ORDINANCE NO. ______

AN ORDINANCE OF THE CITY OF CAPITOLA AMENDING SECTION

8.40.150 OF THE CAPITOLA MUNICIPAL CODE TO REMOVE THE
SUNSET PROVISION FROM CHAPTER 8.40 (CAPITOLA SAFE DRUG

AND SHARPS DISPOSAL)
WHEREAS, Article XI, Section 7 of the California Constitution authorizes the City of Capitola (the “City”) to make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws; and WHEREAS, on September 8, 2016, the City Council adopted Ordinance No. 1006, which added Chapter 8.40 (“Capitola Safe Drugs and Sharps Disposal”) to the Capitola Municipal Code, establishing a producer-funded product stewardship program for the safe collection and disposal of unwanted drugs and sharps within the City; and WHEREAS, subsection (G) of Section 8.40.150 of the Capitola Municipal Code provides that “[t]his chapter shall be in effect for a period of ten (10) years following enactment,” and, by operation of that provision, Chapter 8.40 will expire immediately unless the sunset provision is removed; and
WHEREAS, the California Pharmaceutical and Sharps Waste Stewardship program (Senate Bill 212, Stats. 2018, ch. 1004), codified at Public Resources Code section 42036.2, does not apply to a jurisdiction that is subject to a local drug and sharps stewardship program pursuant to an ordinance that took effect before April 18, 2018, and provides that such a pre-existing local program may continue in operation; and WHEREAS, Chapter 8.40 took effect before April 18, 2018, and the City’s local program is therefore exempt from the state program for so long as Chapter 8.40 remains continuously in effect; and
WHEREAS, the amendment made by this Ordinance is narrow, removing only the sunset provision and leaving the remainder of Chapter 8.40 in full force and effect, and is intended to keep the existing pre-2018 local program continuously in effect rather than to enact a new program; and
WHEREAS, a lapse of Chapter 8.40 would result in the removal of manufacturerfunded sharps collection kiosks currently available to City residents, materially reducing safe disposal options and increasing the risk of improper disposal of drugs and sharps, accidental poising, needlestick injury, substance misuse, and environmental contamination, as more fully described in the recitals to Ordinance No. 1006; and WHEREAS, the City Council has concurrently adopted an urgency ordinance removing the same sunset provision effective immediately, and adopts this Ordinance through the ordinary legislative process to provide a permanent amendment of the Capitola Municipal Code; and
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4899-7445-7036 v2
WHEREAS, the City Council finds that adoption of this Ordinance is exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines (Title 14, California Code of Regulations) section 15307 and the common-sense exemption in section 15061(b)(3), consistent with the environmental findings made in connection with Ordinance No. 1006, because it can be seen with certainty that removing the sunset provision to continue an existing regulatory program will not have a significant effect on the environment.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CAPITOLA DOES HEREBY ORDAIN AS FOLLOWS:

Section 1. Findings. The City Council of the City Capitola finds and declares that the Recitals set forth above are true and correct and are incorporated herein by this reference.

Section 2. California Environmental Quality Act. The City Council finds, for the reasons stated in the recitals, that adoption of this Ordinance is exempt from CEQA, and directs staff to file a Notice of Exemption if appropriate.

Section 3. Amendment to Section 8.40.150(G). Subsection G of Section

8.40.150 of the Capitola Municipal Code, which reads in its entirety, “This chapter shall be in effect for a period of ten (10) years following enactment,” is hereby deleted in its entirety. All other provisions of Section 8.40.150 and of Chapter 8.40 of the Capitola Municipal Code remain unchanged and in full force and effect.

Section 4. Severability. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council declares that it would have adopted this Ordinance, and each section, subsection, sentence, clause, and phrase thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases by declared invalid or unconstitutional.

Section 5. Effective Date. This Ordinance shall take effect thirty (30) days after its adoption by a majority vote of the City Council.

Section 6. Publication. The City Clerk shall cause this ordinance, or a summary thereof, to be posted and/or published in the manner required by law.

INTRODUCED at a special meeting of the City Council of the City of Capitola on the __ day of ____, 2026, and PASSED AND ADOPTED at a regular meeting of the City Council on the ___ day of ___, 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
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4899-7445-7036 v2
_________________________________
Margaux Morgan, Mayor
ATTEST: _________________________
Julia Gautho, City Clerk
APPROVED AS TO FORM:
_________________________________
Marc Tran, City Attorney
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Item 8 E.

Capitola City Council
Agenda Report
Meeting: September 10, 2026
From: Community and Economic Development Department
Subject: Capitola Wharf Status Update
Recommended Action: Receive an update regarding the Request for Proposals for a restaurant and commercial marketplace project on the Capitola Wharf and provide direction to staff regarding the next steps for future uses on the Wharf.

Background: In 2024, the Wharf Resiliency and Public Access Project was completed. The project addressed critical infrastructure needs, including reopening and widening the Wharf, replacing failing pilings and decking, and constructing new restroom facilities.

Severe storms in December 2023 caused substantial damage to Wharf structures, resulting in the removal of two commercial structures. In February 2024, the City Council authorized demolition of the damaged buildings and directed staff to initiate a long-term planning effort for the Wharf (Wharf Master Plan).

The City retained Fuse Architecture to assist with outreach, planning, and conceptual design. In spring 2024, seven concepts for the Wharf were developed and presented to the public, stakeholders, and City Council. Public outreach included a survey with more than 1,000 participants, a community meeting, and engagement with local boards, commissions, and stakeholder groups.

On June 26, 2025, the City Council received public input on the concepts and directed staff to proceed with a hybrid approach, combining elements of Option 6 (Fishing Concession and Flexible Market Space) and Option 7 (Permanent Structures including a Restaurant and Fishing Concession).

On April 23, 2026, the City Council received an update on the Wharf Master Plan and directed staff to release a request for proposals (RFP) seeking a qualified private entity to construct and operate the marketplace through a lease agreement with the City. Consistent with City Council direction, staff released an RFP seeking a private partner to design, finance, construct, operate, and maintain a marketplace incorporating restaurant and fishing concession uses on the Wharf. The RFP explained that the Wharf Master Plan is conceptual in nature.

The RFP was initially open through July 31, 2026. Staff contacted restaurants along the California coast to make them aware of the opportunity and encourage participation in the RFP process. The initial deadline generated one letter of interest with a request for more time. Staff extended the RFP deadline through August 31, 2026, and conducted additional outreach to potential restaurant operators.

At the conclusion of the extended RFP period, the City received one letter of interest. That interested party indicated that they are not prepared to move forward with the project at this time but may consider submitting a proposal in approximately one to two years if the opportunity remains available.

Accordingly, the RFP did not result in a proposal from a private partner prepared to undertake the full permanent marketplace and restaurant concept at this time.

Discussion: The lack of a proposal does not necessarily indicate a lack of interest in the Wharf as a commercial destination. Rather, the scope of the RFP requires a private partner to assume the substantial time commitment and costs associated with designing, permitting, financing, constructing, and operating a permanent commercial structure on the Wharf. While one potential developer expressed potential future interest, the City's experience with the RFP suggests that the scale and cost of the permanent 225
Item 9 A.
development envisioned in the Wharf Master Plan may make it difficult to attract a private operator under the current market conditions.

As previously mentioned, extensive public outreach was previously conducted on the future uses on the Wharf including community meetings, a survey, and input from boards and commissions and stakeholders. The results were presented on June 26, 2025, and are available as Attachments 1 and 2.

The results consistently showed support for a food and beverage sales on the Wharf in different formats, including mobile food vendor, flexible market space, and permanent structures.

At this time, staff is seeking direction from Council regarding potential future uses on the Wharf. Amongst the options for Council to consider:

1. Maintain the existing fishing concession and no longer seek proposals for food and beverages on the Wharf.

2. Maintain the existing fishing concession and issue a new RFP to seek one or more smaller scale food and beverage concession(s) in less expensive or temporary structure(s), such as a mobile vendor or prefabricated structure(s).

3. Maintain the existing fishing concession, issue new RFP to seek one or more smaller scale food and beverage concession(s) in less expensive or temporary structure(s) for a limited lease period, and extend the current RFP for one year.

4. Provide other direction regarding the implementation of the Wharf Master Plan.

For options that do not leave open the possibility of a new permanent restaurant, staff suggests that Council direct staff to prepare a site plan for a public restroom/personal rescue watercraft storage on the head of the Wharf for potential future grant funding.

Fiscal Impact: There is no fiscal impact associated with the recommended action.

Attachments:

1. Wharf Master Plan

2. Public Outreach Results
Alignment with 2025-2029 Strategic Plan Priority: Economic Opportunity; Healthy Families, Community, and Environment; Sustainable Infrastructure
Report Prepared By: Katie Herlihy, Community and Economic Development Director Reviewed By: Julia Gautho, City Clerk and Marc Tran, City Attorney Approved By: Jamie Goldstein, City Manager
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CAPITOLA WHARF
M A S T E R P L A N | C I T Y C O U N C I L M E E T I N G : 0 1

S U R V E Y R E S U L T S & D A T A A N A L Y S I S
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I
NTRODUCTIONS:

ProjectTeam:

FuseArchitecture
Daniel Townsend
Daniel Gomez
CourtneyChristiansen
Moffatt&NicholEngineering
BradPorter
CityofCapitolaStaff
KatieHerlihy
JamieGoldstien
ChloeWoodmansee
JessicaKahn
KailashMozumder
RobinWoodman
CapitolaCityCouncil
&

IMAGEREMOVED
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41-60

31.6% 61-80

31.1%
81-100

20.4%
18-40
14%
0-17

2.9%
Capitola
499
S.Crz County
414
Other
147
Once a week
Once a month
Few Times a yea
r
Other
419 302
251
93 FREQUENCY OF WHARF VISITS

84.81%
SURVEY

GENERAL

DEMOGRAPHIC
INFORMATION:
899 (84.81%) Respondents claim
to have visited the Capitola
Wharf since it reopened in 2024.
1067
Survey
Responses
Total number of respondents
gathered over 31 days during the
month of May 2025
“...I am a resident of...”
Age Range:
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vo
42%
ted Option
7 a
s
their favorite
1067
Survey
Responses
SURVEY
OVERALLRESULTS:

Totalnumberofrespondents
gatheredover31daysduringthe
monthofMay2025

NUMBEROFRESPONDENTS
36 130
48 29
127
206
421
Option01
PublicOpenSpace
Option02
PublicOpenSpace&
MobileVendors
Option03
ExistingFishing
Concession
Option04
NewFishing
Concession
Option05
FishingConcession
&MobileVendors
Option06
FishingConcession&
FlexibleMarketSpace
Option07
Permanent
Structures
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Option 01 Survey Results
0 5 10 15 20 25 30
Open space
Wide benches
Picnic tables
Additional bathrooms
Stage
Planters/presence of plants
No commercial uses
Removing fishing facilities
Other
26 13
12 14
13 9
23 12
4 71.43%
...Of respondents would support
keeping the hoist and adding a Marine
Rescue Watercraft Storage area
0 5 10 15 20 25 30
No Commercial space
Cost
Less risk of loss
Reminiscent
The layout
Other
26 13
12 13
8 6
Suggested Additions:

Shade structure
Lifeguard station
Seasonal Lighting
36 TOTAL VOTES / 3.61%
...Out of 1067 total votes, 36 people chose Option 01 as their favorite option.

Option 01 / Public Open Space - Overall Tally:

Most Disliked Feature:

The Stage
The Presence of Plants
Any new benches
Why is this your favorite? Favorite Features
93%
43%
47%
45%
22%
29%
90%
41%
48%
45%
31%
45%
79%
42%
14%
Vo
4%
ted Option 01 as their favorite
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Option 02 Survey Results

79.67%
...Of respondents would support keeping
the hoist and adding a Marine Rescue
Watercraft Storage area.
0 50 100
Mobile Vendors 105
Cost 45
Less risk of loss 43
Reminiscent 21
The layout 51
Other 22
Suggested Additions:

Shade structure
Lifeguard station
Seasonal Lighting
Why is this your favorite?
130 TOTAL VOTES / 13.04%
...Out of 1067 total votes, 130 people chose Option 02 as their favorite option.

Option 02 / Open Space & Mobile Vendors - Overall Tally:

Most Disliked Feature:

Any Fishing Services
The Stage
Any Plants
Coffee / Bakery
Picnic Food
Cocktails
Prepared Hot Food
Water Rentals
Learning K…
Bait Shop
Retail
Other
81 80
80 43 75
27 23 17
11 Desired Vendor Services: Favorite Features
86%
37%
35%
42%
17%
18%
0 50 100
Mobile Vendors 113
Open Space 78
Wide Benches 61
Picnic Tables 85
The Bathrooms 69
The Stage 60
The Planters 56
The Fishing Store 20
Other 14
91%
63%
56%
69%
48%
49%
45%
16%
11%
Vo
13%
ted Option 02 as their favorite
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Option 03 Survey Results

75.0%
...Of respondents would support adding
a Marine Rescue Watercraft Storage
area / Lifeguard Station
Suggested Additions:

Shade structure
Additional Benches
Additional Picnic Tables
48 TOTAL VOTES / 4.81%
...Out of 1067 total votes, 48 people chose Option 03 as their favorite option.

Option 03 - Existing Fishing Concession / Overall Tally:

Most Disliked Feature:

The Bathroom
The Stage
Launching Private Boats
0 10 20
The Existing Use of Space 26
Cost 28
Less Risk During Storm 19
Reminiscent of the Past 22
Existing Layout 10
Other 9
Why is this your favorite? Favorite Features
67%
52%
45%
62%
0 20
The New Bathrooms 20
The Existing Open Space 29
The Existing 40 Benches 28
The Existing 4 Picnic Tables 23
The Existing 3 Bathrooms 22
The Low Cost Metal Structure 22
The Uncovered Rental Boats 15
The Boat Hoist 25
The Ability to Launch Boats 30
Dinghy Sevices 20
49%
68%
61%
71%
54%
56%
54%
49%
49%
Vot
5%
ed Option 03 as their favorite
37%
24%
22%
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Option 04 Survey Results
58%
...Of respondents would support
keeping the hoist and adding a Marine
Rescue Watercraft Storage area
Suggested Additions:

Picnic Tables & Benches
Lifeguard & Jr. Guard Area
More Fishing Areas
29 TOTAL VOTES / 2.91%
...Out of 1067 total votes, 29 people chose Option 04 as their favorite option.

Most Disliked Feature:

The Stage
The Cost
The Enclosed Engine Area
0 10 20
The Proposed Open Space 22
Cost 11
Less Risk During Storm 8
Reminiscent of the Past 10
The Layout 5
Other 7
79%
36%
29%
40%
0 10
The Open Space 14
The Additional Bathrooms 14
The Stage 6
The Larger Fishing Structure 15
The Enclosed Boat Storage 19
The Enclosed Engine Repair Area 13
The Lifeguard Station / Storage 16
Keep Buildings Away From Rail 15
Other 7
68%
56%
57%
50%
56%
50%
Vot
3%
ed Option 04 as their favorite
25%
18%
Why is this your favorite? Favorite Features
Option 04 / New Fishing Concession - Overall Tally:
47%
25%
22%
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Option 05 Survey Results
42%
...Of respondents would support
keeping the hoist and adding a Marine
Rescue Watercraft Storage area
Suggested Additions:

Picnic Tables & Benches / Shade
Exercise Equipment
Evening Cruises on the Water
127 TOTAL VOTES / 12.74%
...Out of 1067 total votes, 127 people chose Option 05 as their favorite option.

Most Disliked Feature:

The Stage
The Larger Structure
The Enclosed Engine Area
0 50
The Proposed Open Space 78
Cost 20
Less Risk During Storm 37
Reminiscent of the Past 30
The Layout 47
Other 23
79%
31%
25%
40%
0 50 100
The Open Space 48
The Additional Bathrooms 62
The Stage 64
The Mobile Vendor Area 106
The Larger Fishing Structure 44
The Enclosed Boat Storage 39
The Enclosed Engine Repair Area 25
The Lifeguard Station / Storage 50
Keep Buildings Away From Rail 67
Other 7
68%
56%
58%
50%
56%
50%
Vot
13%
ed Option 05 as their favorite
19%
17%
Why is this your favorite? Favorite Features:

Option 05 / New Fishing Concession &
Mobile Vendors - Overall Tally:
47%
25%
22%
66%
Picnic Food
Coffee / Bakery
Cocktails
Prepared Hot Food
Water Rentals
Learning Kiosk
Retail
Other
96 87
77 58
50 27
23 15
Desired Vendor Services:
/ 22%
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Option 06 Survey Results
...Of respondents would support a two
story structure on the wharf. 35% would
only support this if it was a rooftop deck
Suggested Additions:

Stage on Roof Only
More Benches / Tables / Shade
Area to Cut Bait / Messy
206 TOTAL VOTES / 20.66%
...Out of 1067 total votes, 206 people chose Option 06 as their favorite option.

Option 06 - Fishing Concession & Flexible
Market Space / Overall Tally:

Most Disliked Feature:

Cost
Bait Shop too big
The Stage
0 100
The Proposed Use of Space 151
Cost 12
Less Risk During Storm 35
Reminiscent of the Past 62
The Layout 74
Other 22
Why is this your favorite? Favorite Features:
80%
33%
19%
39%
0 100
The Open Space 72
The Additional Benches 79
The Stage 96
The Planters / Plants 63
The Additional Bathroom 97
The Lifeguard Station / Storage 60
The Flexible Market Space 176
The Fishing Concession 71
The Enclosed Boat Rental & Repair 54
Structure Away from Rail 148
93%
51%
51%
80%
38%
42%
37%
33%
32%
Vot
21%
ed Option 06 as their favorite
/ 6% 29%
58%
Coffee / Bakery
Cocktails
Picnic Food
Prepared Hot Foo
W
d
ater Rentals
Learning Kiosk
Retail
Other
155 144
138
84 117
66 58
13 Favorite Features:
/ 11%
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Option 07 Survey Results
Suggested Additions:

Shade structures / Seating
Roof Top Stage / Dancing
Living Roof on Structure
421 TOTAL VOTES / 42.23%
...Out of 1067 total votes, 421 people chose Option 07 as their favorite option.

Option 07 - Permanent Structures / Overall Tally:

Most Disliked Feature:

The Stage
The Planters
Electric Bathrooms
0 200
The Proposed Use of Space 293
Cost 10
Less Risk During Storm 32
Reminiscent of the Past 269
Existing Layout 109
Other 36
Why is this your favorite? Favorite Features:
75%
28%
9%
69%
0 200
The Open Space 92
The Additional Benches 136
The Additional Bathroom 216
The Stage 207
The Planters / Plants 110
The Restaurant 376
The Fishing Concession w/Rentals 198
The Lifeguard Station / Storage 147
Structure Away From Rail 291
Other 24
95%
55%
52%
76%
37%
50%
34%
28%
23%
Vot
42%
ed Option 07 as their favorite
6%
8%
/ 3%
...Of respondents would support a two
story structure on the wharf. 37% would 62%
only support this if it was a rooftop deck
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K EY T A K E - AWA YS F R O M P U B L I C O U T R E A C H Survey was taken by over 1,000 people which included a great representation of all age groups except under 18 (2.9%). The majority of participants either lived in Capitola (499) or Santa Cruz County (419).

There is significant support for permanent structures (options 6 / 21% + option 7 / 42% = 627 votes / 63% overall): The main design intention was to create permanent year round structures for either a marketspace (Option 6) or restaurant (Option 7); both with fishing concession. The difference between the costs associated with Options 6 & Option 7, is due to structure type and a restaurant with full kitchen being included in Option 7.

There is support for Mobile Vending (Options 2 / 13% + Option 05 / 13% = 260 votes / 26% overall): Mobile vendors could be incorporated into the overall master plan. If mobile vending options are pursued, the consultant recommends light weight mobile vendors (not food trucks) due to weight limitations and concerns related to competition with existing businesses in Village.

The least popular option was Option 4 (29 votes / 3% overall): This option simply replaces the existing fishing concession with a new enclosed fishing station.

There is support in all options to keep the hoist and add a lifeguard station for personal rescue watercraft vehicles and shade structures.

There was a mix of opinions related to the stage, planters, and enclosed boat area. The stage location was frequently commented on related to the location (interferes with fishing, decreases open space, and being either on the roof or deck).

Biggest concerns were cost and more frequent, destructive storms.

Related to costs; The survey informed the public that Options 1 – 5 may be paid for through grant money or general fund money. Options 6 and 7 will likely require a public/private partnership. For example, new commercial structures on the Santa Cruz Wharf require a private investor to pay for commercial structure and lease the space from the City.

Regarding the structure & storms: Moffat and Nicholl, the wharf engineer team, will assist with final conceptual design to ensure storm mitigation to greatest extent possible.
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Item 9 A.

CAPITOLA WHARF MASTER PLAN

R E C O M M E N D A T I O N B A SE D O N S U R V EY R ES U L T S Given the st rong suppor t for Opt ion Seven and significant interest in Opt ion Six; Fuse Archi tecture recommends a hybr id approach incorporat ing elements f rom both proposed opt ions. The hybr id would be based on the public input received, understanding of the local communi ty, archi tectural exper t ise, and the st ructural integr i ty of the whar f to create the most economically feasible conceptual design. The hybr id opt ion will be developed to provide future flexibili ty for potent ial public/pr ivate par tnerships, aligning the determined design program wi th stated public intent ions and investors' business interests. The Whar f Master Plan would be ut ilized for a future Request For Proposals (RFPs) to generate pr ivate investor interest . 246
Item 9 A.

THANK YOU

S U R V E Y R E S U L T S

C I T Y C O U N C I L

CAPITOLA WHARF
F O R Y O U A T T E N T I O N !
J U N E 2 6 2 0 2 5
247
Item 9 A.

Planning Commission – May 1, 2025

1. Prime real estate that we really need to program. Important to find the balance which creates a great outdoor space and the commercial uses.

2. Historically a fishing Wharf. There is concern about the removal of fishing in Options 1 and 2. Fishing should remain. Keep the hoist for fishing and safety in the final option.

3. If the City Council were to go with mobile vendors, one of the mobile vendors could be a fishing concession that also manages the hoist and sells bate.

4. The City’s Local Coastal Program Land Use Plan identifies the Wharf as a public fishing Wharf. Removing the fishing concession and hoist would conflict with the LCP LUP and require an update certified by the Coastal Commission.

5. Support the additional bathroom at the end of the Wharf in all options.

6. The City should further study the economic viability of the options with new commercial uses. Need to take into consider the cost of the construction, the economic viability of the commercial use, and the seasonality of doing business on the wharf. The economic analysis should help drive the choice made by the City Council. We should look at the data from the previous restaurant and fishing concession, to assist with the analysis.

7. The seasonal nature of the Wharf will be a challenge for business owners. During the winter months, it will be very challenging for the business owner(s) on the wharf.

8. With mobile vendors, the City could just have them there April through October, and close for the winter.

9. The marketspace within Option 6, would provide a warm space during the off-season.

10. Future uses on the Wharf should be an attraction with something special that brings more people to the Village and have a positive economic impact. The attraction could differentiate the Capitola Wharf from other wharfs in the area.

11. Mobile vendors are intriguing. The City should consider starting small (1 or 2) and adding more if successful. Four vendors, as shown, may not be necessary.

12. Lot of great options, but ultimately a hybrid option should be considered. Many good ideas may be best combined.

13. Options 1 and 2 should have more space for vendors to access the Wharf and remain flexible.

14. For the more expensive option, there was concern with the recent storms and the need for the city to consider the impacts of climate change and the fiscal burden on future taxpayers. Ongoing maintenance and replacement costs are expensive and should also be considered. Option 2 is a sustainable option with less risk as it has the ability to move the vendors off the wharf if a storm is expected.

15. Further analysis should be conducted on the proposed land uses and the functional impacts on the Wharf in relation to vehicles, deliveries, and trash.

16. Concern with the height and massing of Options 6 and 7 due to their impact on views.

17. Public comment was received supporting a taller building at the end of the Wharf and advocating for local labor in construction.
248
Item 9 A.

Museum Committee – May 1, 2025

1. Support for lifeguard station. Add a lifeguard station to Options 1 and 2.

2. Consider installing plexiglass at the end of the Wharf to reduce wind.

3. Concern about the location of the stage at the end of the Wharf next to fishing. Consider the impacts of fishing and bait on the stage. May want to relocate the stage and leave the end of the Wharf for fishing.

4. Consider wind exposure in the placement of the stage.

5. Music and entertainment would be great to have back on the Wharf. Music on the Wharf can be enjoyed by all nearby residents.

6. Appreciate that the stage is open for public enjoyment and not restricted to a restaurant.

7. Offer leases to Village vendors for mobile vending.

8. The City should consider a setup similar to the Ferry Building with a farmers market.

9. The Wharf is a great location to share Capitola's history through wall space on conditioned walls. Future buildings should include exhibit space for museum photographs and stories.

10. The exteriors of the buildings could display historic quotes.

11. The Wharf is a special part of Capitola’s Begonia Festival and now Beach Festival, including the fishing contest.

12. Fishing is a big part of the Wharf's history.

13. The Wharf is the only fishing spot in Capitola where no permit is required.

14. The options with enclosed storage for boats are an improvement over what exists today.

15. The full restaurant concept is classy but high-risk. With increasingly destructive storms and a $6.2 million price tag, this is a gamble. Mobile vendors are a smarter and less risky alternative.
249
Item 9 A.

Art and Culture Committee – May 13, 2025

1. Appreciates the open space.

2. Not in favor of too many benches. Need to maintain access to the stage and mobile vendors.

3. Likes open space.

4. A lifeguard station is a good idea.

5. Don’t allow concessions to get too big.

6. Keep the hoist and fishing operations. Fishing should remain on the Wharf.

7. Would like a restaurant as an attraction on the Wharf and in Capitola Village. Concern that vendors could detract from Village businesses.

8. The new bathroom at the end of the Wharf should be more typical and less high-tech than those near the entrance.

9. Support a stage on the restaurant as it aids in licensing.

10. Mobile food vendors could be limited by weather. There is support for a marketplace option.

11. Maximize open space. The Wharf felt very crowded during last year’s events. Need room for people.

12. The restaurant idea is not inclusive—it is limited to paying patrons.

13. Suggestion for Option 3 with a new restaurant and stage. This would preserve fishing in its current form.

14. Suggestion for a hybrid approach with open space and either a mobile vendor or restaurant.

15. A two-level experience is appealing.

16. Decrease the size of fishing concessions.

17. Support for yoga.

18. The former restaurant was often crowded and lacked enough seating.

19. Support for the bathroom.

20. Opportunity for public art. Ideas include climbable art for kids (similar to the seals in Esplanade Park), a kiosk, art that complements the view, room for future art, and pedestals for sculptures.

New Brighton Middle School – Student Council

1. Lifeguard storage should be included in all options.

2. Stage is good, but concerns about its size—it may need to be bigger.

3. Make sure there are electrical outlets for future uses.

4. Don’t place too many seats in front of stage. People will bring their own chairs to events.

5. Option 5 should include tables between the food vendors.

6. The market space in Option 6 takes up too much space. Vendors offer more flexibility.

Consider adding mobile vendors to Option 6.

7. The Village already has food.

8. Like how peaceful the Wharf is. The Village is busy and active. The Wharf offers a quiet retreat. Options 6 and 7 could be too busy and crowded.

9. Support for Options 3, 5, 6, and 7. The group leaned toward Option 5 for its inclusion of fishing concession, mobile vendors, lifeguard storage, bathroom, open space, and quiet atmosphere.
250
Item 9 A.

CVWBIA: Capitola Village and Wharf Business Improvement Area Capitola City Council & Staff,
Thank you for requesting BIA input. We urged our membership to complete the Wharf Survey, which many have done.

The Board of Directors has discussed the Wharf Plan at several board meetings. We offer the following representation of support and partnership.

Preserving the wharf’s legacy as a FISHING pier is essential. The options presented all have merits. The BIA appreciates the opportunity to be involved now and on an ongoing basis in the development of the chosen solution to optimize economic development and limit disruption to the Village and Wharf area business community.

Thank you,
Anthony Guajardo
Chair, Capitola Village and Wharf Business Improvement Area Coastal Commission

1. Like the additional seating, tables, and planters, which increase public access.

2. Like the open space along the Wharf edge for fishing and enjoying the view.

3. In options that remove the hoist, the City should consider the impacts, as this hoist uniquely provides small boat access to the water.

4. Like the stage but are concerned about its location at the end of the Wharf and possible conflicts with fishing.

5. Support integrated art in the project.

6. Mobile vendors should be moved away from the edge to preserve fishing access and views.

7. Consider adding a stage, benches, picnic tables, and planters to Option 3.

8. Support for lifeguard station. The need for a Marine Rescue Water Craft has been raised in the past.

9. Concern about the size of fishing concessions that store boats—they take up too much space and block views.

10. In options with larger structures, ensure final design considers scale and views, using varied materials and breaking up massing.

11. Option 6 includes many LUP-supported elements: fishing, lifeguard, bathrooms, and a local market. It resembles the Embarcadero, with a marketplace and eclectic uses, and allows public access to enclosed seating without requiring restaurant patronage.

12. Option 7 may oversaturate the Wharf with a single restaurant that only patrons can access.

13. A stage on the Wharf provides access for all to public events.

14. Overall support for thoughtful designs among the seven options. 251
Item 9 A.

Commission on the Environment

1. It is important for City Council to consider the very likely risk of additional Wharf damage from extreme storms alongside public preferences.

2. Analyze the likelihood of coastal impacts using data from the Wharf project’s engineers or architects.

3. New Wharf structures would be vulnerable to future extreme storm events.

4. It does not make sense to remove the boat hoist. It serves an important purpose, and removal would generate unnecessary construction waste. It also prevents the community from engaging with the Sanctuary and environment.

5. The City should explore other locations for boat storage and repair. It should determine whether boat repair over the Sanctuary is still a permitted activity.

6. The City should ask Fuse how to make Wharf energy use more sustainable (e.g., solar panels) and assess the related costs.

7. City Council should weigh sustainability and resiliency data alongside public opinion.

8. No strong preference for specific options; open to considering a hybrid approach.

9. City Council should review Wharf vulnerability data and projected storm frequency and intensity to assess risk and costs.

10. City Council should consider new waste streams from vendors, restaurants, or markets and the City’s capacity to manage this waste.

11. How will the City insure new structures?

12. Mobile vendors could be removed seasonally when coastal hazard risks increase.

13. The public survey lacked information on Wharf resiliency and how options may be affected physically and financially by extreme storms. With better information, public responses might have differed.

14. It’s important for City Council to balance public feedback with the Wharf’s climate vulnerability.

15. The Wharf is a vital way for people to connect with the ocean. For many, walking out onto the pier is their only opportunity.

16. The Wharf is mostly used during spring and summer; this should factor into the evaluation of options.

17. Permanent structures should not be placed on the Wharf. Open space and movable structures (e.g., portable stage) allow flexibility. We could design the Wharf for the next 2–3 years rather than for 20 years.

18. The current bait shop location makes sense because it’s close to the boat launch.

19. Motion to recommend that City Council consider the Wharf’s longevity, structural capacity, vulnerability to future climate events, waste impacts, and new structural burdens. The motion was amended to include a recommendation that City Council review vulnerability and storm modeling data in combination with public survey results. 252
Item 9 A.

Capitola Wharf Enhancement Project Recommendations
Thank you for giving us the opportunity to give our input on the new wharf options. After having gathered 1,041 surveys and having talked to hundreds of people and many donors we feel confident that the following are what most of our community would like to see.

1. Fishing is an historical use of this wharf. Please support fishing in all its aspects; keep the boats on the wharf, allow a larger, permanent bait shop, reinstate the fish tank, and if the fish cleaning station is not finished it is important to finish that.

2. Keep the whole wharf open 24 hours a day, as it was before.

3. Keep as much open space on the wharf as possible. People said they appreciate the open space. Maintain flexibility and see how people use the new wharf. Place nothing down the middle. Do not install a stage at wharf level. No planter boxes, they are not needed and will cause the city hours of maintenance. Consider installing fewer benches, there are already 40 benches on the wharf.

4. Install a second bathroom at the end of the wharf. It could be low tec. It really helps the fishermen.

5. We agree that a restaurant with an upstairs music/dancing patio is something most people want to see. CWEP prefers the city not have a large investment in this feature.

6. Require the bait shop to offer seasonal moorings.

7. We encourage the city to install as many of the donated bronze fish as possible now and install the rest when the final wharf plan is solidified. We encourage all educational aspects and hope NOAA’s interpretive kiosks will still be installed.

8. Please find a way to level the wharf planks, they are impossible to walk on. The wharf at Pismo Beach is level so it must be possible.
253
Item 9 A.

City Of Capitola
Wharf Update
City Council
September 10, 2026254
Item 9 A.
 December 2023: Severe storms damage Wharf
 February 2024: Demo structures & initiate long-term planning  Spring 2024: Seven concepts & extensive community outreach  June 2025: Council direction: hybrid approach combining Option 6 & 7
 April 23, 2026: Wharf Master Plan update & release an RFP  RFP open through August 31, 2026
 One letter of Interest. However, not prepared to move forward at this time
Background
255
Item 9 A.

Options
Option 3
Fishing
concession
Small scale
food & bev
concession(s)
Extend current
RFP 1 Year
Option 2
Fishing
concession
Small scale
food & bev
concession(s)
Option 1
Fishing
concession
No food & bev
Considerations
Restroom
MRWS
Food & Bev
- Mobile
- Prefab
- Lease Duration
- How many
Considerations
Food & Bev
- Mobile
- Prefab
- Lease Duration
- How many
Considerations
Restroom
Marine rescue
watercraft
storage
(MRWS)
Option 4
Other
Alternatives
257
Item 9 A.

Provide direction on next steps for future uses on the
Wharf
Recommendation
258
Item 9 A.

Capitola City Council
Agenda Report
Meeting: September 10, 2026
From: Public Works Department
Subject: Stockton Avenue Bridge and Soquel Creek Implementation Update Recommended Action: 1) Receive an update regarding implementation of the City Council’s August 27, 2026, direction, including the bridge preservation and project-development solicitation, continued community outreach, and the annual Soquel Creek inspection and coordination; and 2) provide direction regarding whether staff should continue developing the Caltrans-recommended polyester concrete overlay and return with a revised funding request, or pursue a methacrylate deck treatment as a lowercost interim maintenance measure.

Background: On August 27, 2026, the City Council directed staff to: 1) immediately proceed with obtaining bids for the Caltrans-recommended polyester concrete overlay and related preventative maintenance, with a construction amount not to exceed $150,000 and a goal of completion before winter; 2) develop a plan to rebuild and preserve the existing bridge, including debris mitigation; 3) issue a solicitation emphasizing bridge rehabilitation, historic preservation, retrofitting, Caltrans project development, and funding expertise; 4) continue community outreach and provide monthly updates; and 5) inspect the Soquel Creek corridor, coordinate with appropriate agencies and property owners, and provide a written follow-up report. The complete motion is included in the August 27, 2026, City Council meeting minutes, scheduled for approval on September 10, 2026.

Discussion: Staff is proceeding with components two through five of the motion and has obtained preliminary scope and cost information regarding component one. Because the near-term maintenance work and longer-term bridge planning effort require different technical scopes and procurement schedules, staff is advancing them separately.

At the August 27 meeting, Council discussed completing the near-term maintenance project under an emergency authorization. Given the nature of the directed work and the existing bridge inspections and findings, using an emergency declaration for project bidding may be subject to challenge.

Caltrans-recommended Preventative Maintenance: Before the City can solicit construction bids, a qualified bridge engineer must evaluate the proposed maintenance work and prepare bid-ready plans, specifications, and an estimate. Caltrans' inspection recommendation identifies the general maintenance treatment, but it is not a construction design or complete bid package. City staff can administer the procurement and construction contract, but staff does not have the specialized bridge-engineering expertise necessary to establish the detailed repair limits and technical requirements.

At a minimum, the construction documents must address the limits and depth of deck repairs; removal and surface-preparation requirements; treatment of deteriorated concrete and reinforcing steel encountered during the work; material and installation requirements; traffic control and construction sequencing; access and environmental constraints; quality-control testing; and construction inspection and acceptance criteria. These details are necessary to protect public safety, obtain comparable bids, and give the City an enforceable basis for administering the construction contract and evaluating changed conditions.

Retaining a design professional to develop this limited maintenance project is consistent with the City's standard approach to specialized public works construction. For example, the City retained a consultant to develop the 41st Avenue project design and construction documents for work involving Caltrans rightof-way even after the general improvement concept had been established. The same project259 Item 9 B.
development step is appropriate here because the work will be performed on a bridge and the construction bid package must be prepared correctly.

Staff is seeking an expedited proposal from qualified bridge engineers. As of preparation of this report, staff has received one engineering proposal presenting two potential maintenance approaches and continues to solicit additional proposals. Updated information may be provided at the meeting. Both maintenance approaches include a site review, verification of repair quantities, and preparation of bidready plans, specifications, and an engineer's estimate.  Polyester concrete overlay: This is the treatment recommended in the most recent Caltrans bridge inspection report. It would place a new protective surface over the existing deck, providing greater protection but not fully restoring or replacing the deck. The work would require an updated load rating to evaluate the added weight of the overlay, replacement of the existing joint assemblies, modifications to utility openings in the deck, and approach work to transition to the raised deck surface. The proposal estimates approximately $126,000 for engineering services, including design, bid support, and engineering support during construction. The preliminary construction estimate is approximately $284,000 and does not include traffic control or approach-roadway work. Construction inspection and materials testing are also excluded and would need to be provided separately. Given the additional structural analysis, design coordination, bidding, and construction required, completion before winter appears unlikely.  Methacrylate deck treatment: The engineer identified this as a lower-cost interim alternative if the City intends to pursue a more comprehensive rehabilitation project that may ultimately include replacement of the existing deck in the future. The treatment would seal the deck surface to help slow further deterioration until that larger project can be completed, but it would not restore the deck. The anticipated work generally includes deck treatment, joint-seal work, localized approach repairs, traffic control, and pavement delineation. The proposal estimates approximately $72,000 for engineering services, including design, bid support, and engineering support during construction. The preliminary construction estimate is approximately $100,000 and does not include traffic control or approach-roadway work. Construction inspection and materials testing are also excluded and would need to be provided separately. Because this option requires less extensive design and construction, completion before winter may be possible, although the schedule cannot yet be confirmed.

The Council’s August 27 motion authorized a construction amount not to exceed $150,000. The preliminary project cost estimate for the polyester concrete overlay is approximately $410,000 and excludes traffic control and approach-roadway work.

The preliminary cost estimate for the methacrylate treatment is approximately $172,000, also excluding traffic control and approach-roadway work.

Final construction costs cannot be confirmed until the scope is finalized and competitive bids are received for either project.

The methacrylate treatment would be an interim preservation measure and differs from the Caltransrecommended polyester concrete overlay specifically identified in the Council’s direction. Staff is therefore requesting Council direction regarding whether to continue developing the polyester overlay and return with a revised funding request, or instead proceed with development of the methacrylate treatment as a lower-cost interim measure. Updated proposal information may be presented at the meeting.

Bridge Preservation, Project Development, Outreach, and Reporting: Staff will issue a competitive request for proposals/qualifications (RFP/Q) for a qualified bridge-consulting team to address components two through four of the Council’s August 27th direction. The solicitation will emphasize demonstrated experience in bridge rehabilitation, historic bridge preservation and retrofitting, the Caltrans local-assistance process, and identification and pursuit of state and federal funding. 260
Item 9 B.

Per Council direction, the consultant scope will include development of a plan to retrofit and preserve the existing Stockton Avenue Bridge; evaluation of appropriate debris-mitigation measures; a projectdevelopment and funding strategy; support for meaningful community outreach; and technical information to support the City's monthly updates to the Council. The work will be structured so that future engineering, environmental, funding, and Council decision points are clearly identified.

Staff intends to release the RFP/Q in early September. Following proposal review, consultant interviews (if needed), and scope and fee negotiations, staff anticipates returning to the City Council with a recommended contract in late October or early November 2026.

Soquel Creek Inspection and Pre-Winter Coordination: Public Works staff conducts inspection and maintenance coordination along the Soquel Creek corridor each year in advance of the winter rainy season. Staff will complete this year's inspection during September and coordinate, as appropriate, with other agencies and property owners regarding trees, brush, vegetation, or other debris that could obstruct creek flow or create a potential hazard.

Any work will be limited to actions that are legally permissible, environmentally appropriate, and within the authority of the City or the responsible property owner or agency. Staff will prepare a written followup report for the City Council identifying the inspection findings, recommended actions, work completed, and any remaining work or coordination required.

Fiscal Impact: The August 27th motion authorized up to $150,000 for the bridge maintenance construction work, with funding from available remaining Reposa Paving Project funds and, if necessary, from the Emergency Reserve Fund.

The preliminary project cost estimate for the polyester concrete overlay is approximately $410,000 and excludes traffic control and approach-roadway work.

The preliminary cost estimate for the methacrylate treatment is approximately $172,000, also excluding traffic control and approach-roadway work.

If Council directs staff to continue developing either project, staff will return with the necessary funding request as cost estimates are refined.

The cost of the broader bridge consulting contract will be presented separately following the RFP/Q process. Routine creek inspection activities are included within the adopted Public Works operating budget; any substantial work identified would be separately evaluated for responsibility, permitting, and funding.

Alignment with 2025-2029 Strategic Plan Priority: Community Safety; Sustainable Infrastructure Report Prepared By: Jessica Kahn, P.E., Public Works Director Reviewed By: Julia Gautho, City Clerk; Marc Tran, City Attorney Approved By: Jamie Goldstein, City Manager
261
Item 9 B.

Stockton Avenue Bridge and Soquel
Creek Update
City Council
September 10, 2026
262
Item 9 B.
• Implement near-term bridge deck maintenance
• Develop a plan to preserve and retrofit the
existing bridge
• Issue RFP for bridge engineer
• Expertise in bridge rehabilitation,
• Historic bridge preservation/retrofitting
• CalTrans process
• Funding expertise
• Continue community outreach and monthly
updates
• Inspect Soquel Creek corridor and coordinate
pre-winter work
Council Direction
• Near-term deck maintenance design and
construction
• Long-term bridge preservation and project
development
• Annual Soquel Creek inspection and agency
Implementation
August 27 Council Direction
Stockton Bridge Update
263
Item 9 B.
• Caltrans recommends a treatment, but it is not
a construction design
• Bridge engineer must define the repairs,
prepare PS&E, and establish inspection/testing
requirements
• Staff is soliciting proposals for this work
Engineering Required Before Bidding
Maintenance
• Polyester-overlay construction estimate:
$284,000
• Council authorization: $150,000
• A lower-cost option has been identified by
engineers
Preliminary Cost Exceeds
Authorization
Why Council Direction Is Needed
Stockton Bridge Update
264
Item 9 B.
• Caltrans-recommended treatment
• Adds a protective surface but does not restore
the deck
• Requires recalculation of load rating, joint
replacement, utility modifications, and approach
transitions
• Completion before winter is unlikely
• Bridge retrofit may ultimately require new deck
Polyester Concrete Overlay
• Lower-cost interim treatment
• Seals the deck to help slow further
deterioration
• Does not restore or replace the deck
• Completion before winter may be possible
Methacrylate Deck Treatment
Near-Term Deck Maintenance
Options
Stockton Bridge Update
265
Item 9 B.

Maintenance Options: Cost and
Schedule
Stockton Bridge Update
Polyester
Overlay
Methacrylate
Treatment
Engineering $126,000 $72,000
Construction $284,000 $100,000
Preliminary
total* $410,000 $172,000
Treatment
Greater
protection Interim sealing
Before winter * Preliminary estimates exclude traffic control, Unlikely May be possible approach work, inspection, and materials testing.

Could add $50,000-$100,000
Council authorized up to $150,000 for construction
266
Item 9 B.
• RFP/Q for rehabilitation, preservation,
Caltrans, and funding expertise
• Develop preservation, retrofit, and debrismitigation plan • Support outreach and monthly updates
• Consultant recommendation expected
October/November 2026
Bridge Preservation and Project
Development
• Inspect creek corridor in September
• Identify vegetation and debris hazards
• Coordinate permissible work with agencies and
property owners
• Return with findings and remaining actions
Soquel Creek Pre-Winter Coordination
Additional Council Direction
Stockton Bridge Update
267
Item 9 B.

Council
Direction
Requested

1. Receive implementation update

2. Select the near-term deck
treatment:
• Continue developing polyester
concrete overlay and return
with a revised funding request;
or
• Proceed with methacrylate
treatment as a lower-cost
interim measure 268
Item 9 B.

Capitola City Council
Agenda Report
Meeting: September 10, 2026
From: Public Works Department
Subject: Underground Utility District No. 6 and Rule 20A Program Update Recommended Action: Receive updated information regarding a potential shortened Rule 20A undergrounding project along Monterey Avenue and provide direction as desired. (Continued from the August 27, 2026, City Council meeting)
Background: On August 27, 2026, the City Council received an update regarding Underground Utility District No. 6 and the City’s remaining Rule 20A work credits. A link to the prior agenda report is included as Attachment 1. During the meeting, PG&E confirmed the Rule 20 tariff generally requires a Rule 20A project to encompass at least 600 feet or one block. PG&E also confirmed that a portion of an underground utility district may be selected for a shortened project if the selected limits satisfy that requirement. PG&E noted the primary concern with changing the project limits is whether a newly selected segment could be designed and constructed before the Rule 20A program sunsets at the end of 2033.

Following discussion, the Council requested additional information regarding a smaller undergrounding project along Monterey Avenue in District 6A-2. The Council continued the item to September 10, 2026, to allow staff to obtain additional information from PG&E.

Discussion: At the last meeting, Council requested PG&E prepare a preliminary estimate for undergrounding the overhead utilities along Monterey Avenue from Fanmar Way to Cherry Avenue. That estimate was not available prior to the agenda publication but will be distributed as additional material as soon it is received.

As noted at the last Council meeting by PG&E staff, this type of estimate provides an initial indication of whether the shortened Monterey Avenue segment could potentially be completed using the City’s remaining Rule 20A work credits. However, the estimate should not be viewed as a complete project budget. Rule 20A credits generally apply to eligible PG&E undergrounding work and do not cover all City costs associated with an undergrounding project.

A newly selected segment would require additional project development, including confirmation of the final limits, utility design, joint-trench coordination, confirmation of participation by telecommunications providers, identification and acquisition of any required easements, coordination of private service conversions, and development of street-restoration and traffic-control requirements. The City would be responsible for costs that are not eligible for Rule 20A credits, including some combination of roadway restoration, street lighting, easement acquisition, traffic control, environmental review, project administration, and utility betterments.

Based on the additional information, the Council may provide one of the following directions:

1. Continue evaluating the Monterey Avenue segment. Direct staff to continue coordinating with PG&E and other utility providers to refine the scope, schedule, and estimated City costs before returning to the Council for a commitment to advance the project.

2. Continue advancing District 6A-1. Direct staff to continue the utility coordination, easement, and project-development work previously initiated for the Bay Avenue and Capitola Avenue area.
269
Item 9 C.

3. Take no further action on District No. 6. Discontinue advancement of the undergrounding projects, recognizing that the remaining Rule 20A work credits would expire at the end of 2033.

Fiscal Impact: This item is informational and does not authorize construction or the appropriation of additional funds.

City currently maintains approximately $3 million in Rule 20A work credits associated with District No. 6.

These credits are held and administered by PG&E for eligible undergrounding work and do not cover all project-related costs. The City has not yet received a cost estimate for the directed project on Monterey Ave. PG&E has previously estimated utility undergrounding costs for District 6A-1 at approximately $4.5 million.

If the Council directs staff to continue evaluating or advancing an undergrounding project, additional City funding would likely be required for project costs that are not eligible for Rule 20A work credits.

Attachments:

1. August 27, 2026, Underground Utility District No. 6 and Rule 20A Program Update Agenda Report
a. https://mccmeetingspublic.blob.core.usgovcloudapi.net/capitolaca-meet94d53db7b95e40c088cca9b7d948669a/ITEM-Attachment-008- 986d052ec2ff46258ae86364ffe31f03.pdf
Alignment with 2025-2029 Strategic Plan Priority: Accountable Government; Sustainable Infrastructure Report Prepared By: Jessica Kahn, P.E., Public Works Director Reviewed By: Julia Gautho, City Clerk; Marc Tran, City Attorney Approved By: Jamie Goldstein, City Manager
270
Item 9 C.

Undergroun
d Utility
District
No. 6 and
Rule 20A
Program
Update
City Council
September 10, 2026
271
Item 9 C.
• Underground overhead utilities using utilityfunded credits • Administered through PG&E
• Program expires in 2033
CPUC Underground Utility Program
• Limited to previously established underground
utility districts
• Rule 20A projects must be 600’ or one block
Projects Must Be Within Established
Districts
• Shortened project may be selected in existing
district
• Evaluation of Monterey Avenue from Fanmar Way
to Cherry Ave
• Item continued for PG&E preliminary estimate
August 27 Council Direction
August 27 Council Direction
Utility District No. 6 and
Rule 20A
272
Item 9 C.
• Approximately $3.08 million available
• Approximately $45,000 spent on 6A-1
development (not yet deducted)
• Additional planning and coordination costs
continue to accrue
Current PG&E Rule 20A Credit Balance
• Eligible PG&E engineering and coordination
• Eligible PG&E underground construction
Rule 20A Credits Generally Cover
• Easement acquisition
• Roadway and sidewalk restoration
• Replacement street lighting
• Costs exceeding available work credits
Potential City Costs
Rule 20A Credit Status
Utility District No. 6 and
Rule 20A
273
Item 9 C.
• Within existing District
6A-2
• Project has not entered
design phase
Fanmar Way to Cherry
Ave
Potential Monterey Avenue
Project
Utility District No. 6 and
Rule 20A
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• Based on projected footage, service count, and
costs from similar projects.

PG&E Class 5 Estimate
$2.7 million
• Approximately $45,000 in prior 6A-1 costs has
not yet been deducted.

Available Rule 20A Credits
$3.08 million
• Early planning estimate (not a project budget)
• Retaining wall construction may increase cost
and schedule
• Additional City funding may be required
Limitations
Monterey Avenue Preliminary
Estimate
Utility District No. 6 and
Rule 20A
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• Roadway and sidewalk restoration
• Replacement street lighting
• Easements
• Traffic control and environmental review
• Project administration and cost overruns
Potential City Costs
• Rule 20A funding expires at end of 2033
• PG&E has identified schedule concerns for
6A-1
• Monterey Avenue has not entered design
Schedule Risk
Additional Cost and Schedule
Considerations
Utility District No. 6 and
Rule 20A
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• Select Monterey Avenue as preferred
project and continue coordination with PG&E
Continue Evaluating Monterey
Avenue
• Continue utility coordination, easement,
and project-development work already
underway
Continue Advancing District 6A-1
• Discontinue District No. 6 efforts and
allow credits to expire in 2033
Take No Further Action
Options for Council Direction
Utility District No. 6 and
Rule 20A
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4899-3720-8013 v1
Capitola City Council
Agenda Report
Meeting: September 10, 2026
From: Community and Economic Development Department
Subject: Citywide Municipal Code Amendments
Recommended Action: 1) Introduce for first reading, by title only, waiving further reading, an ordinance amending Capitola Municipal Code Title 17 (Zoning) to repeal and replace Chapter 17.88: Incentives for Community Benefits, relocate existing village hotel incentives to Chapter 17.90: Incentives for a Village Hotel with Community Benefits, amend Chapter 17.74: Accessory Dwelling Units, Repeal Chapter 9.08:

Tattoo Establishments, make related amendments for Body Art Studios to Chapter 17.20: Mixed Use, Chapter 17.24: Commercial and Industrial Zoning Districts, Chapter 17.96: Supplemental Regulations, and Chapter 17.160 Glossary, and finding that adoption of the ordinance is exempt from CEQA; 2) adopt a resolution authorizing submittal of the proposed changes to the California Coastal Commission for the certification of an amendment to the Local Coastal Program; and 3) approve an administrative policy for the selection of body art service providers.

Background: In 2024, the City Council adopted the 2023-2031 Housing Element of the General Plan (Housing Element). The Housing Element establishes goals and policies for housing production in Capitola as required by state law. The Housing Element also contains programs with required City actions to implement Housing Element policies. The City must complete these actions by the dates specified for each program.

Since adopting the 2023-2031 Housing Element, the City has completed a number of Zoning Code amendments required by the Housing Element, including updating the Residential Multifamily (RM) Zone and the Capitola Mall Zoning Code. One remaining Zoning Code amendment required by Housing Element Program 1.4 calls for changes to Chapter 17.88, Incentives for Community Benefits, to facilitate residential development on commercial corridors.

In addition, amendments to the City’s accessory dwelling unit (ADU) regulations are needed to maintain consistency with recent changes in state law. Staff also recommends amendments relating to tattoo establishments (“body art studios”) to address legal considerations associated with the City’s existing prohibition and to establish appropriate zoning, permitting, and operational standards for this use.

During the Planning Commission’s regular meeting on June 4, 2026, the Planning Commission discussed amendments to Chapter 17.88 (Incentives for Community Benefits), Chapter 17.74 (Accessory Dwelling Units), and Chapter 9.08 (Tattoo Establishments) and provided feedback on the topics.

On August 20, 2026, the Planning Commission held a public hearing to consider the proposed amendments and recommended the City Council adopt these amendments. A link to the August 20, 2026, Planning Commission staff report is included as Attachment 4.

Discussion: The proposed municipal code amendments apply to incentives for community benefits, ADU regulations, and body art studios.

Updates to Incentives for Community Benefits: Currently, Capitola Municipal Code Chapter 17.88 (Incentives for Community Benefits) provides incentives for applicants to locate and design development projects in a manner that provides substantial benefits to the community. Eligible projects are limited to 1) projects in the regional commercial (C-R) or community commercial (C-C) zoning districts on a property that fronts 41st Avenue (excluding the Capitola Mall property) or Capitola Road between Clares Street and 42nd Avenue; or 2) a hotel in the former Capitola Theater site in the Mixed-Use Village zoning district.

The Housing Element identifies Chapter 17.88 as a constraint to housing production and calls for the City to establish objective requirements for projects to receive increased height and FAR. In addition, Program 278
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1.4 calls for the City to “expand the incentivized zone for increased FAR and height to facilitate mixeduse development, targeting commercial corridors where key sites are identified for RHNA, in exchange for an expanded list of community benefits that complement mixed use residential development (such as childcare facilities, recreation areas, etc.).”
Redevelopment of the Capitola Mall was previously a community benefit listed in Chapter 17.88 and subject to the incentives of additional height (50 feet) and floor area (2.0). The Housing Element anticipated the Capitola Mall zoning code updates to remain in Chapter 17.88; however, due to the extensiveness of the new incentives and objective standards, redevelopment of the Capitola Mall was removed from Chapter 17.88 and incorporated into Chapter 17.24 (the C-R Zone District), and a new stand-alone chapter was created (Chapter 17.57: Objective Design Standards for Capitola Mall Redevelopment). The updated code allows expanded heights up to 85 feet and excludes parking garages from the FAR on the Capitola Mall property.

At the recommendation of Coastal Commission staff, the proposed Chapter 17.88 amendments (Attachment 1, Exhibit A) move all content pertaining to the Village hotel to a new chapter (Chapter

17.90), with no substantive changes made to this content at this time.

Chapter 17.88, as amended, would apply to the existing “incentivized zone” on 41st Avenue and Capitola Road and includes the following changes:
 Modernizes allowable community benefits to include public open space, land for a transit center, structured public parking, land for a public facility, new commercial space, and a hotel.  Establishes objective standards for qualifying community benefits.  To incentivize hotel development, increases allowed hotel height to 60 feet, reduces minimum onsite parking, excludes meeting space from floor area ratio calculation, and replaces the requirement of a conditional use permit with newly established objective design and operational standards for hotels. Planning Commission approval of a design permit remains a requirement for a hotel.
 Incentivizes affordable housing development by allowing one additional concession or waiver for projects that use state density bonus law and provide a qualifying community benefit.  Replaces subjective approval criteria with reliance on objective findings.  Requires City Council conceptual review only for projects with a community benefit that must be dedicated to the City (e.g., land for a public facility).

Updates to Accessory Dwelling Units: In 2025, the state of California enacted Assembly Bill 1154 and Senate Bill 543, which amend state ADU and junior ADU (JADU) law. A JADU is a type of ADU with 500 square feet or less created entirely within the walls of an existing single-family home.

The proposed ADU amendments (Attachment 1, Exhibit B) maintain City conformance with state law with the following changes to Chapter 17.74 (Accessory Dwelling Units):
 Clarifies the City’s process for reviewing and acting on ADU and JADU applications.  Requires JADU owner-occupancy only if JADU has shared sanitation facilities with primary dwelling.
 Allows combining two ADUs and one JADU (subject to limited standards) on a single-family lot.

Updates Related to Body Art Studios: Capitola Municipal Code Chapter 9.08 (Tattoo Establishments) currently states that “It is unlawful to maintain or conduct a tattoo establishment or to maintain and conduct a tattooing business in the City.” This prohibition was established in 1962.

The proposed body art studio amendments (Attachment 1, Exhibit C) repeals Municipal Code Chapter

9.08 (Tattoo Establishments) and amends the Zoning Code as follows:
 Allows body art studios in the C-C, C-R, and MU-V Zoning Districts with a conditional use permit.  Limits the number of body art studios to two in the C-C and C-R Zoning Districts and one in the MU-V Zoning District, for a total of three studios Citywide. 279
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 Establish an initial 30-day period (after the ordinance becomes effective) for the City to accept applications for a body art studio selection lottery. If the number of applications received exceeds the maximum number of body art studios permitted, the City will hold a lottery to determine which applications may proceed to conditional use permit review. If openings remain after the 30-day period, the City will accept applications on a first-come, first-served basis. The qualification criteria and lottery process are included in a new administrative policy (Attachment 5).  Establishes standards for hours of operation; minimum separation from schools, places of religious assembly, and other body art studios; visibility of procedures; indoor procedures; prohibits alcohol consumption; age restrictions; and temporary/mobile facilities.

The Zoning Code is part of Capitola’s Local Coastal Program (LCP), and as such, Zoning Code Amendments must be certified by the Coastal Commission before they become effective in the Coastal Zone. When adopting LCP amendments, the Coastal Commission requires cities to consider consistency with the LCP Land Use Plan and potential impacts on public access to the coast. This required analysis is provided in Attachment 2. Attachment 3 contains a draft resolution authorizing City staff to submit the Zoning Code Amendments to the Coastal Commission for certification.

Environmental Determination: The Chapter 17.88 amendments are exempt from the California Environmental Quality Act (CEQA) pursuant to Public Resources Code 21080.085, which states that “this division does not apply to a rezoning that implements the schedule of actions contained in an approved housing element pursuant to subdivision (c) of Section 65583 of the Government Code.” Here, the Housing Element’s Program 1.4 calls for the City to update the Zoning Code to facilitate housing production by removing constraints in the City’s community benefits program and establishing new objective standards and approval criteria. Because the proposed Chapter 17.88 amendments implement this action, its adoption is exempt from CEQA. The body art studio amendments restricts zoning and cap a highly specific type of retail/service business to a maximum of three storefronts. Currently, personal service uses are allowed in commercial and mixed use zoning districts, and the proposed amendments add body art establishments as a similar allowed use subject to operational standards. Individual body art establishment projects will be evaluated under CEQA.

The proposed ADU Amendments are exempt from CEQA pursuant to Public Resources Code section 21080.17 and CEQA Guidelines section 15282(h), which exempts adoption of ordinances implementing state law regarding accessory dwelling units. The proposed body art studios amendments are categorically exempt from CEQA because it can be seen with certainty that there is no possibility that the adoption of the proposed amendments will have a significant effect on the environment (CEQA Guidelines, 14 Cal. Code of Regs. Section 15061(b)(3)). Currently, personal service uses are allowed in commercial and mixed-use zoning districts, and the proposed amendments add body art establishments as a similar allowed use subject to operational standards.

Fiscal Impact: There are no fiscal impacts associated with the recommended action.

Attachments:

1. Draft Ordinance
a. Exhibit A: New Chapter 17.88 (Incentives for Community Benefits) and new Chapter 17.90 (Incentives for a Village Hotel with Community Benefits) b. Exhibit B: Amendments to Chapter 17.74 (Accessory Dwelling Units) c. Exhibit C: Repeal of Chapter 9.08 (Tattoo Establishments), New Section 17.96.080 (Body Art Studios), and amendments to 17.20 (Mixed Use Zoning Districts), Chapter 17.24 (Commercial and Industrial Zoning Districts), and define body art studios in Chapter 17.160 (Glossary)

2. LCP Consistency Analysis

3. LCP Amendment Application Resolution

4. August 20, 2026 Planning Commission staff report and attachments may be viewed at:
https://meetings.municode.com/adaHtmlDocument/index?cc=CAPITOLACA&me=175e29389ef74e e09af4226f91a6bda5&ip=True

5. Administrative Policy for Body Art Studio Qualification and Lottery 280
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Alignment with 2025-2029 Strategic Plan Priority: Accountable Government; Attainable Housing; Community Safety; Economic Opportunity; Healthy Families, Community, and Environment Report Prepared By: Katie Herlihy, Community and Economic Development Director Reviewed By: Julia Gautho, City Clerk; Marc Tran, City Attorney Approved By: Jamie Goldstein, City Manager
281
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ORDINANCE NO.

AN ORDINANCE OF THE CITY OF CAPITOLA TO ADOPT AMENDMENTS TO AMEND TITLE 17, ZONING CODE, OF THE CAPITOLA MUNICIPAL CODE TO REPEAL AND REPLACE CHAPTER 17.88: INCENTIVES FOR COMMUNITY BENEFITS; RELOCATE EXISTING VILLAGE HOTEL INCENTIVES TO NEW CHAPTER 17.90: INCENTIVES FOR A VILLAGE HOTEL WITH COMMUNITY BENEFITS; AMEND CHAPTER 17.74:

ACCESSORY DWELLING UNITS; REPEAL CHAPTER 9.08: TATTOO
ESTABLISHMENTS; MAKE RELATED AMENDMENTS FOR BODY ART STUDIOS TO CHAPTER 17.20:MIXED USE AND CHAPTER 17.24 COMMERCIAL AND INDUSTRIAL ZONING DISTRICTS, CHAPTER 17.96: SUPPLEMENTAL REGULATIONS; AND

17.160 GLOSSARY; AND FINDING THAT ADOPTION OF THE ORDINANCE IS

EXEMPT FROM CEQA
WHEREAS, on August 22, 2024, the City Council adopted amendments to the 2023-2031 Housing Element of the General Plan (“Housing Element”) and Addendum to the General Plan Final Environmental Impact Report;
WHEREAS, on August 30, 2025, the California Department of Housing and Community Development (“HCD”) certified the Housing Element; WHEREAS, the Housing Element identifies Zoning Code Chapter 17.88 (Incentives for Community Benefits) as a constraint to housing production and calls for the City to establish objective standards for projects that provide community benefits; WHEREAS, in 2025, the state enacted AB 1154 and SB 543 which revise the process and timeframe for cities to review and act on accessory dwelling units (ADUs) and junior accessory dwelling units (JADUs), modify owner occupancy requirements for JADUs, and clarify ADU provisions which also apply to JADUs; WHEREAS, Municipal Code Chapter 9.08 (Tattoo Establishments), adopted in 1962, states that “It is unlawful to maintain or conduct a tattoo establishment or to maintain and conduct a tattooing business in the city.”;
WHEREAS, on May 7, 2026, staff met with California Coastal Commission staff to review proposed amendments to Chapter 17.88 (Incentives for Community Benefits) related to the Capitola Village Hotel and, based on the information provided Coastal staff provided direction to move the Capitola Village Hotel community benefits into a separate chapter of the code and not make changes to the standards; WHEREAS, on June 4, 2026, the Planning Commission held a study session to provide feedback on proposed amendments to Chapter 17.88 (Incentives for Community Benefits), Chapter 17.74 (Accessory Dwelling Units), and Municipal Code Chapter 9.08 (Tattoo Establishments);
WHEREAS, on July 29, 2026, staff met with the California Department of Housing and Community Development (HCD) to review proposed amendments to Chapter 17.88 282
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and, based on this information, HCD expressed preliminary support for the proposed amendments;
WHEREAS, notice of the amendments availability was mailed and public review drafts were made available on August 14, 2026, in compliance with California Coastal Act public participation requirements and applicable state law; WHEREAS, Chapter 17.88 amendments are exempt from the California Environmental Quality Act (CEQA) pursuant to Public Resources Code 21080.085 which states that CEQA does not apply to a rezoning that implements the schedule of actions contained in an approved housing element, the proposed ADU amendments are exempt from CEQA pursuant to Public Resources Code section 21080.17 and CEQA Guidelines section 15282(h) which exempts adoption of ordinances implementing state law regarding accessory dwelling units, and the proposed body art studios amendments are categorically exempt from CEQA. The body art studio amendments restricts zoning and cap a highly specific type of retail/service business to a maximum of three storefronts.

Currently, personal service uses are allowed in commercial and mixed use zoning districts, and the proposed amendments add body art establishments as a similar allowed use subject to operational standards. Individual body art establishment projects will be evaluated under CEQA; therefore,it can be seen with certainty that there is no possibility that the adoption of the proposed amendments will have a significant effect on the environment. (CEQA Guidelines, 14 Cal. Code of Regs. Section 15061(b)(3)); WHEREAS, at a duly noticed public hearing on August 20, 2026 the Planning Commission recommended the City Council adopt the Municipal Code Amendments.

BE IT ORDAINED by the City of Capitola as follows:

Section 1: The above findings are adopted and incorporated herein.

Section 2: Pursuant to Capitola Municipal Code Section 17.144.040 and 17.144.060 and based on substantial evidence in the record:
a) The proposed Zoning Code Amendments are consistent with the General Plan, including the Housing Element and Land Use Element and any applicable specific plan as provided by Government Code Section 65860.
b) The proposed Amendments will not be detrimental to the public interest, health, safety, convenience, or welfare of the City.
c) The proposed Amendments are internally consistent with other applicable provisions of the Zoning Code.

Section 3: The City Council has considered the Amendments’ consistency with the certified Local Coastal Program (LCP) and finds the Zoning Code Amendments in conformity with and adequate to carry out the certified Land Use Plan.

Section 4: Title 17 (Zoning) and Chapter 9.08 (Tattoo Establishments) of the Capitola 283
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Municipal Code is amended as set forth in the following exhibits attached hereto and incorporated herein:
 Exhibit A: Repealing Chapter 17.88 (Incentives for Community Benefits and Adopting a new Chapter 17.88 (Incentives for Community Benefits) and relocating existing Village Hotel incentives to a new Chapter 17.90 (Incentives for a Village Hotel with Community Benefits)
 Exhibit B: Amendments to Chapter 17.74 (Accessory Dwelling Units)  Exhibit C: Repeal of Chapter 9.08 (Tattoo Establishments), New Section 17.96.080 (Body Art Studios), and amendments to 17.20 (Mixed Use Zoning Districts), Chapter

17.24 (Commercial and Industrial Zoning Districts), and define body art studios in Chapter 17.160 (Glossary)
Section 5: Environmental Review.

The City Council finds that:
 The Chapter 17.88 Amendments are exempt from the California Environmental Quality Act (CEQA) pursuant to Public Resources Code 21080.085, which states that “This division does not apply to a rezoning that implements the schedule of actions contained in an approved housing element pursuant to subdivision (c) of Section 65583 of the Government Code.” Here, the Housing Element’s Program 1.4 calls for the City to update the Zoning Code to facilitate housing production by removing constraints in the City’s community benefits program and establishing new objective standards and approval criteria. Because the proposed Chapter 17.88 amendments implement this action, its adoption is exempt from CEQA.  The ADU Amendments are exempt from CEQA pursuant to Public Resources Code section 21080.17 and CEQA Guidelines section 15282(h), which exempts adoption of ordinances implementing state law regarding accessory dwelling units.  The Body Art Studios Amendments are categorically exempt from CEQA because it can be seen with certainty that there is no possibility that the adoption of the proposed Amendments will have a significant effect on the environment. (CEQA Guidelines, 14 Cal. Code of Regs. Section 15061(b)(3)). Currently, personal service uses are allowed in commercial and mixed use zoning districts, and the proposed amendments add body art establishments as a similar allowed use subject to operational standards.

Section 6: Effective Date.

This Ordinance shall be in full force and effect thirty (30) days from its passage and adoption except that it will not take effect within the coastal zone until certified by the California Coastal Commission. This Ordinance shall be transmitted to the California Coastal Commission and shall take effect in the coastal zone immediately upon certification by the California Coastal Commission or upon the concurrence of the Commission with a determination by the Executive Director that the Ordinance adopted by the City is legally adequate.

Section 7: Severability.

The City Council hereby declares every section, paragraph, sentence, cause, and 284
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phrase of this ordinance is severable. If any section, paragraph, sentence, clause, or phrase of this ordinance is for any reason found to be invalid or unconstitutional, such invalidity or unconstitutionality shall not affect the validity or constitutionality of the remaining sections, paragraphs, sentences, clauses, or phrases.

Section 8: Certification.

The City Clerk shall cause this ordinance to be posted and/or published in the manner required by law.

This Ordinance was introduced at the meeting of the City Council on the 10th day of September, 2026, and was adopted at a regular meeting of the City Council on the __ day of ________, 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Margaux Morgan, Mayor
Attest:

Julia Gautho, City Clerk
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EXHIBIT A

Chapter 17.88

INCENTIVES FOR COMMUNITY BENEFITS
Sections:

17.88.010 Purpose

17.88.020 Incentives restricted to added benefits.

17.88.030 Eligibility

17.88.040 Allowable benefits

17.88.050 Available incentives

17.88.060 Relationship to state density bonus law.

17.88.070 Application submittal and review.

17.88.080 Findings.

17.88.090 Post-decision procedures.

17.88.010 Purpose.

This chapter establishes incentives for applicants to locate and design development projects in a manner that provides substantial benefits to the community. These incentives are intended to facilitate the redevelopment of underutilized properties along 41st Avenue consistent with the vision for the corridor described in the general plan and to encourage the development of a new hotel in the Village as called for by the general plan and the local coastal program (LCP). This chapter does not apply to development on the Capitola Mall property.

17.88.020 Incentives restricted to added benefits.

The city may grant incentives only when the community benefits or amenities offered are not otherwise required by the zoning code or any other provision of local, state, or federal law. Community benefits or amenities must significantly advance general plan and/or LCP goals and/or incorporate a project feature that substantially exceeds the city’s minimum requirements.

17.88.030 Eligibility.

A. Eligibility for Incentive. The city may grant incentives for the following projects:

1. Projects in the regional commercial (C-R) and community commercial (C-C) zoning districts that:
a. Front 41st Avenue, excluding the Capitola Mall property; or b. Front Capitola Road between Clares Street and 42nd Avenue; or

2. A hotel on the former Capitola Theater site (APNs 035-262-04, 035-262-02, 035-262-11, and 035-261-10) in the mixed-use village zoning district.

B. Setback Required – 41st Avenue. Structures on properties fronting the east side of 41st Avenue must be set back a minimum of one hundred feet from the property line abutting a residential property.

17.88.040 Allowable benefits.

A. All Eligible Projects. The city may grant incentives to all eligible projects as identified in Section 17.88.030 (Eligibility) that provide one or more of the following community benefits. The public benefit provided shall be of sufficient value as determined by the planning commission to justify deviation from the standards of the zoning district that currently applies to the property.

1. Public Open Space. Public plazas, courtyards, and other public gathering places that provide opportunities for people to informally meet and gather. Open space must be accessible to the general public at all times.

Provision must be made for ongoing operation and maintenance in perpetuity. The public space must either 286
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EXHIBIT A
exceed the city’s minimum requirement for required open space and/or include quality improvements to the public realm to create an exceptional experience.

2. Public Infrastructure. Improvements to streets, sidewalks, curbs, gutters, sanitary and storm sewers, street trees, lighting, and other public infrastructure beyond the minimum required by the city or other public agency.

3. Pedestrian and Bicycle Facilities. New or improved pedestrian and bicycle pathways that enhance the property and connectivity to the surrounding neighborhood.

4. Low-Cost Visitor Serving Amenities. New or improved low-cost visitor serving recreational opportunities or accommodations within the Central Village area.

5. Transportation Options. Increased transportation options for residents and visitors to walk, bike, and take public transit to destinations and reduce greenhouse gas emissions.

6. Historic Resources. Preservation, restoration, or rehabilitation of a historic resource.

7. Public Parking. A public parking structure that provides parking spaces in excess of the required number of parking spaces for use by the surrounding commercial district. Excess parking provided as part of a Village hotel may not be located on the hotel site and must be located outside of the mixed-use village zoning district.

8. Green Building. Green building and sustainable development features that exceed the city’s green building award status.

9. Public Art. Public art that exceeds the city’s minimum public art requirement and is placed in a prominent and publicly accessible location.

10. Child Care Facilities. Child care centers and other facilities providing daytime care and supervision to children.

11. Other Community Benefits. Other community benefits not listed above, such as entertainment destinations, as proposed by the applicant that are significant and substantially beyond normal requirements.

B. 41st Avenue/Capitola Road Projects. In addition to the community benefits in subsection A of this section, the city may grant incentives to eligible projects fronting 41st Avenue or Capitola Road between Clares Street and 42nd Avenue (excluding the Capitola Mall property) that provide one or more of the following community benefits:

1. Surface Parking Lot Redevelopment. Redevelopment of existing surface parking lots fronting 41st Avenue and Capitola Road while introducing new sidewalk-oriented commercial buildings that place commercial uses along the street frontage.

17.88.050 Available incentives.

A. 41st Avenue/Capitola Road Projects. The city may grant the following incentives to an eligible project fronting 41st Avenue, Capitola Road between Clares Street and 42nd Avenue (excluding the Capitola Mall property):

1. An increase in the maximum permitted floor area ratio (FAR) to 2.0.

2. An increase in the maximum permitted building height to fifty feet.

B. Village Hotel. The city may grant the following incentives to a proposed hotel on the former Capitola Theater site (APNs 035-262-04, 035-262-02, 035-262-11, and 035-261-10):

1. An increase in the maximum permitted floor area ratio (FAR) to 3.0.

2. An increase to the maximum permitted building height; provided, that:
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EXHIBIT A
a. The maximum height of the hotel (including all rooftop architectural elements such as chimneys, cupolas, etc., and all mechanical appurtenances such as elevator shafts, HVAC units, etc.) remains below the elevation of the bluff behind the hotel;
b. The bluff behind the hotel remains visible as a green edge (i.e., the upper bluff (i.e., below the blufftop edge) and upper bluff vegetation shall remain substantially visible across the length of the project site) when viewed from the southern parking area along the bluff of Cliff Drive (i.e., the parking area seaward of Cliff Drive and closest to Opal Cliff Drive) and from the Capitola wharf; c. Existing mature trees shall be maintained on the site, except that trees that are unhealthy or unsafe may be removed; and
d. The rooftop shall be aesthetically pleasing and shall not significantly adversely affect public views from Cliff Avenue on Depot Hill. In addition to modifications to avoid structural incursions into this view, this can be accomplished through design features on top of the roof as well (e.g., use of a living roof, roof colors and materials that reduce its visual impacts, etc.). Rooftop appurtenances (e.g., elevator shafts, HVAC units, vents, solar panels, etc.) shall be screened from public view and integrated into/within the above-referenced rooftop design features to the greatest extent feasible.

17.88.060 Relationship to state density bonus law.

The incentives allowed by this section are in addition to any development incentive required by Section 65915 of the California Government Code.

17.88.070 Application submittal and review.

A. Request Submittal. A request for an incentive in exchange for benefits shall be submitted concurrently with an application for the discretionary permits required for the project by the zoning code. Applications shall be accompanied by the following information:

1. A description of the proposed amenities and how they will benefit the community.

2. All information needed by the city council to make the required findings described in Section 17.88.080 (Findings), including a pro forma analysis demonstrating that the benefit of the proposed amenities to the community is commensurate with the economic value of the requested incentives.

B. Conceptual Review. Prior to city action on a request for an incentive, the request shall be considered by the planning commission and city council through the conceptual review process as described in Chapter 17.114 (Conceptual Review). Conceptual review provides the applicant with nonbinding input from the city council and planning commission as to whether the request for incentives is worthy of consideration.

C. Theater Site Story Poles. Prior to city action on a proposed hotel on the former Capitola Theater site the planning commission or city council may require the applicant to install poles and flagging on the site to demonstrate the height and mass of the proposed project.

D. Planning Commission Recommendation. Following conceptual review, the planning commission shall provide a recommendation to the city council on the proposed project and requested incentives at a noticed public hearing in compliance with Chapter 17.148 (Public Notice and Hearings).

E. City Council Action. After receiving the planning commission’s recommendation, the city council shall review and act on the requested incentives at a noticed public hearing in compliance with Chapter 17.148 (Public Notice and Hearings). The city council shall also review and act on other permits required for the project requesting incentives.

17.88.080 Findings.

A. All Eligible Projects. The city council may approve the requested incentives for all eligible projects only if all of the following findings can be made in addition to the findings required for any other discretionary permit required by the zoning code:
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EXHIBIT A

1. The proposed amenities will provide a substantial benefit to the community and advance the goals of the general plan.

2. There are adequate public services and infrastructure to accommodate the increased development potential provided by the incentive.

3. The public benefit exceeds the minimum requirements of the zoning code or any other provisions of local, state, or federal law.

4. The project minimizes adverse impacts to neighboring properties to the greatest extent possible.

5. If in the coastal zone and subject to a coastal development permit, the project enhances coastal resources.

B. Village Hotel. In addition to the findings in subsection A of this section, the city council may approve the requested incentives for a proposed hotel on the former Capitola Theater site only if the following findings can be made:

1. The design of the hotel respects the scale and character of neighboring structures and enhances Capitola’s unique sense of place.

2. The hotel will contribute to the economic vitality of the Village and support an active, attractive, and engaging pedestrian environment.

3. Hotel siting and design will (a) minimize impacts to public views, including views of the beach and Village from vantage points outside of the Village and from Cliff Avenue and Depot Hill behind the hotel; and (b) does not adversely impact any significant public views of the coastline as identified in the LCP’s land use plan.

4. Parking for the hotel is provided in a way that minimizes vehicle traffic in the Village, strengthens the Village as a pedestrian-oriented destination, and protects public parking options.

17.88.090 Post-decision procedures.

Post-decision procedures and requirements in Chapter 17.156 (Post-Decision Procedures) shall apply to decisions on incentives for community benefits.
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EXHIBIT A
Chapter 17.88

INCENTIVES FOR COMMUNITY BENEFITS
Sections:

17.88.010 Purpose.

17.88.020 Incentives restricted to added benefits.

17.88.030 Eligibility.

17.88.040 Allowable community benefits.

17.88.050 Available incentives.

17.88.060 Residential transition standards.

17.88.070 Hotel standards.

17.88.080 Application submittal and review.

17.88.090 Findings.

17.88.100 Post-decision procedures.

17.88.010 Purpose.

This chapter establishes incentives for applicants to locate and design development projects in a manner that provides substantial benefits to the community. These incentives are intended to facilitate the redevelopment of underutilized properties along 41st Avenue and Capitola Road consistent with the vision for the corridors described in the general plan. This chapter does not apply to development on the Capitola Mall property bound by 41st Avenue, Capitola Road and Clares Street.

17.88.020 Incentives restricted to added benefits.

17.88.030 Eligibility.

Eligibility for the incentives described in this chapter is limited to projects in the regional commercial (C-R) and community commercial (C-C) zoning districts that:

A. Front 41st Avenue, excluding the Capitola Mall property; or B. Front Capitola Road between Clares Street and 42nd Avenue, excluding the Capitola Mall property.

17.88.040 Allowable community benefits.

The city may grant incentives to projects located on eligible properties as identified in Section 17.88.030 (Eligibility) that provide one or more of the following community benefits.

A. Public Open Space. Public plazas, courtyards, and other public gathering places that provide opportunities for people to informally meet and gather, that satisfy all of the following:

1. A minimum of 5 percent of the project site area, or 3,000 square feet, whichever is greater, shall be provided as additional open space as a community benefit. The open space shall be provided in addition to any minimum open space required by the applicable zoning district.

2. A minimum of 25 percent of the open space area shall be planted with ground cover and/or shrubs.

3. A minimum of one tree shall be planted per 400 square feet of open space.

4. The open space shall be publicly accessible for a minimum of 12 consecutive hours per day or during daylight hours, whichever is longer.
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5. The open space shall be directly accessible and visible from a publicly accessible street or pathway.

6. The open space shall have a minimum dimension of 20 feet in any direction.

7. The open space shall have permanent seating (e.g., seat walls, planter ledges, benches, picnic tables, and seating steps).

8. The open space shall include lighting for nighttime use.

9. The open space must be either dedicated to the city or privately owned and maintained with dedication of a public access easement.

B. Transit Center. Land dedication or public easements for a public transit facility that satisfies all of the following:

1. The site accommodates a permanent public transit facility consistent with Santa Cruz METRO plans and requirements.

2. The site is of sufficient size, configuration, location, and condition to accommodate the intended transit facilities and associated passenger amenities.

3. The site provides direct and convenient access from a public street and is located where it can effectively serve the surrounding commercial district.

4. The site is accessible to pedestrians and bicyclists and provides safe connections to existing or planned pedestrian and bicycle facilities.

5. The site will accommodate a transit center with passenger loading and unloading areas, shelters, seating, lighting, wayfinding, and other amenities required by Santa Cruz METRO.

C. Public Parking. Construction of a parking structure that provides parking spaces in excess of the number of parking spaces required for the project, that satisfies all of the following:

1. The structure provides a minimum of 25 parking spaces in excess of the spaces required for the project, or additional spaces equal to 20 percent of the project's required parking, whichever is greater.

2. The additional parking spaces shall be available for use by the general public and shall not be reserved exclusively for the project's tenants, employees, customers, or residents.

3. The additional parking spaces shall be located and designed to serve the surrounding commercial district and shall be reasonably accessible from a public street or publicly accessible pedestrian connection.

4. The additional public parking shall be maintained and available for public use for the life of the development, unless the city council approves an alternative arrangement that provides an equivalent or greater public benefit.

5. The parking structure shall include safe and convenient pedestrian connections between the parking facility and surrounding public streets, sidewalks, and commercial uses.

6. The applicant shall be responsible for the construction, maintenance, operation, and other costs associated with the additional public parking spaces, unless otherwise agreed to by the city.

D. Land for Public Facility. Dedication of land to the city for a public facility that satisfies all of the following:

1. The property is accepted by the city for the specific public facility.

2. The property is of sufficient size and configuration to accommodate the intended facility.

3. The property has direct access from a public street.

4. The property is legally developable and does not have constraints that substantially limit its use. 291
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5. The property is conveyed free and clear of liens, encumbrances, hazardous materials, and other conditions that would prevent the city's use, or require the applicant to address them.

6. The property has utilities reasonably available or is capable of being served.

7. The property is permanently dedicated to, or secured for the benefit of, the city for the life of the public facility. The dedication may be accomplished through fee title conveyance or through a long-term lease or other legally binding agreement acceptable to the city, provided that the agreement has a term sufficient to ensure the continued availability and operation of the public facility for its useful life and provides the city with rights sufficient to develop, operate, maintain, and, if necessary, replace the facility.

E. New Commercial Space. New commercial space that satisfies all of the following:

1. Minimum net increase. The project provides net new commercial floor area equal to at least 10 percent of the project’s total gross floor area, with a minimum of 5,000 square feet and a maximum requirement of 30,000 square feet. A project may provide more than 30,000 square feet of net new commercial floor area; however, no more than 30,000 square feet shall be required to satisfy this section.For purposes of this section, “net new commercial floor area” means commercial floor area proposed as part of the project that exceeds the amount of existing commercial floor area removed or replaced by the project.

2. No net loss. There is no net loss of existing commercial space on the site. Only commercial space provided in excess of the amount replaced shall count as net new commercial floor area. For purposes of calculating the required net new commercial floor area, the amount of existing commercial floor area on the site shall be established based on legally established floor area existing at the time of application.

Commercial floor area that is demolished or converted to another use shall be counted as existing commercial floor area for purposes of determining the required replacement area.

3. Qualifying new uses. The minimum required commercial space shall be occupied by active, publicly accessible commercial, cultural, or entertainment uses open to the general public, including retail sales, restaurants, food and beverage establishments, and similar visitor-serving uses. Medical offices and clinics and uses that are membership-based personal service uses, including gyms, fitness centers, and yoga studios, shall not count toward the minimum required commercial floor area.

4. Phased development. Where a project is developed in phases, the required net new commercial floor area shall be provided proportionately with the development phases, unless an alternative phasing plan is approved by the City.

F. Hotel. A new hotel that satisfies all of the following:

1. Hotel Use Requirements.
a. The hotel shall be maintained and operated for transient occupancy for a minimum of 30 years from the date of issuance of the certificate of occupancy. During the required operating period, the hotel use shall not be discontinued, converted, or redeveloped for residential, office, or other non-transient use except as provided in subsection c below.
b. Prior to issuance of a building permit, the property owner shall execute and record a covenant, in a form approved by the City Attorney, requiring compliance with this subsection. The covenant shall run with the land and be binding upon all owners, successors, and assigns for the duration of the required operating period. The covenant shall not be amended, released, or terminated without approval of the City Council.
c. During the minimum 30-year operating period, the city council may approve the discontinuation, conversion, or redevelopment of the hotel for a non-transient use only if the applicant demonstrates, based on substantial evidence, that continued operation as a hotel is no longer economically feasible despite reasonable efforts to maintain and operate the hotel as a transient lodging facility. Any approved conversion shall be subject to such conditions as the city council determines necessary to protect the city's community and economic development goals and objectives. 292
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2. Hotel Amenities. The project shall provide all required hotel-related amenities, parking, loading, and other facilities necessary to support hotel operations, and shall comply with all requirements in Section

17.88.070 (Hotel Standards).

17.88.050 Available incentives.

The city may grant incentives to eligible projects as identified in Section 17.88.030 (Eligibility) that provide one or more of the benefits identified in Section 17.88.040 (Allowable Community Benefits).

A. Project Categories. For purposes of determining available incentives, eligible projects that provide community benefits are classified as follows:

1. “General projects” are all projects that:
a. Do not include a qualifying hotel; and
b. Do not use state density bonus law (Government Code Sections 65915 through 65918).

2. “Hotel projects” are projects that include a qualifying hotel and do not use state density bonus law.

3. “Density bonus projects” are projects providing affordable and/or senior housing using state density bonus law.

B. General Projects. The city may grant the following incentives to qualifying general projects:

1. An increase in the maximum permitted floor area ratio (FAR) to 2.0.

2. An increase in the permitted building height to a maximum of 50 feet.

C. Hotel Projects. The city may grant the following incentives to qualifying hotel projects:

1. An increase in the maximum permitted floor area ratio (FAR) to 2.0.

2. An increase in the permitted building height to a maximum of 60 feet.

3. Reduced minimum on-site parking spaces as follows:
a. Minimum of 0.75 parking spaces per guest room plus 1 parking space per 500 square feet of office area.
b. Meeting space and conference facilities shall not require additional on-site parking spaces, provided the facilities are operated as part of the hotel and are not independently leased or operated as a primary assembly or event venue.

4. Meeting space and conference facilities are excluded from the floor area used to calculate a project’s floor area ratio (FAR).

5. The hotel is required to obtain approval of a design permit and must conform with all design standards and operational standards in Section 17.88.070 (Hotel Standards). The hotel is allowed as a permitted use without the requirement to obtain a conditional use permit.

D. Density Bonus Projects.

1. For a qualifying density bonus project that provides a community benefit under this chapter, the city may grant one additional density bonus concession or incentive beyond the number specified in Government Code Section 65915(d)(2).

2. The additional density bonus concession or incentive available for providing a community benefit is supplemental and in addition to the benefits available to the project under state density bonus law.

3. A density bonus project shall not receive increased FAR or height as an incentive for providing a community benefit under this chapter. The project may request increased FAR or height as a concession, 293
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incentive, or waiver under state density bonus law.

4. For a project that uses state density bonus law, the project’s base density shall be calculated solely from the objective development standards applicable to the zoning of the site before application of any incentives available under this chapter or any concession, incentive, waiver, or density increase available under state density bonus law.

5. Nothing in this chapter shall be construed to limit or interfere with an applicant's rights under Government Code Sections 65915 through 65918.

17.88.060 Residential transition standards.

A. All Projects. All projects receiving incentives for community benefits under this chapter shall comply with the setback, daylight plane, landscaping, and loading standards in Section 17.24.030.E (Residential Transition Standards).

B. East Side of 41st Avenue. In addition to complying with Section 17.24.030.E (Residential Transition Standards), structures on properties fronting the east side of 41st Avenue must be set back a minimum of 100 feet from the property line abutting a residential property.

17.88.070 Hotel standards.

The following standards apply to a hotel approved pursuant to this chapter.

A. Design Standards.

1. Street Presence. A minimum of one hotel building facade shall front a street in compliance with the following:
a. Surface parking lots are prohibited between the building facade and the street-adjacent sidewalk. b. Street parking and porte-cocheres drop-off areas are permitted between the building facade and the street.
c. A building entrance accessed from the sidewalk shall provide access to the hotel lobby. d. Loading docks and service areas may not be located on a street frontage.

2. Parking Location. Existing and new surface parking is permitted along all other building facades that do not provide the street presence as required by paragraph (1) of this subsection.

3. Windows and Doors. All windows above the ground floor shall include trim, reveals, recesses, or other detailing to define window openings.

4. Rooftop Mechanical Equipment. Rooftop mechanical equipment, including vents and stacks, shall be fully screened from view by an architectural feature, such as a parapet wall.

5. Materials. The following exterior facade materials are prohibited on any building elevation facing a street or publicly accessible open space:
a. Vinyl siding.
b. T-111 plywood siding.
c. Plastic or PVC-based siding systems.
d. Exterior insulation and finish systems (EIFS) used for architectural decoration, trim or accent materials.
e. Simulated stone within the first 20 feet above the adjacent grade. f. Veneer products that are not rated for impact resistance within the first thirty inches above the 294
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adjacent grade.
g. Corrugated metal used as a primary facade material (roof and facade accents allowed).

B. Operational Standards.

1. Site Operations.
a. Site Access. The hotel shall maintain unobstructed access, consistent with the minimum widths and clearances required by the California Fire Code and Chapter 17.76 (Parking and Loading), for pedestrians, bicycles, passenger vehicles, deliveries, emergency vehicles, and solid waste collection vehicles.
b. Guest Loading and Queuing. Guest loading, passenger drop-off, valet operations, and queuing shall be accommodated entirely on-site and shall not obstruct public streets, sidewalks, drive aisles, fire lanes, or required parking spaces.
c. Delivery and Service Operations.
i. Loading and service areas shall be physically separated from guest entrances and required guest parking areas by a building wall, fencing, landscaping, or a minimum horizontal separation of 15 feet, and shall not share a common driveway or drive aisle with the primary guest entrance during hotel operating hours.
ii. All routine commercial deliveries, linen services, food and beverage deliveries, and service vehicles shall load and unload entirely on-site within designated loading areas or off-street parking spaces. Delivery vehicles shall not idle on public streets or block public rights-of-way. d. Emergency Access. Fire lanes, emergency access routes, hydrants, and fire department connections shall remain unobstructed at all times.
e. Public Utilities. The hotel shall maintain connections to all required public utilities and infrastructure necessary to serve the development.

2. Neighborhood Compatibility.
a. Hours for Outdoor Amenities. Outdoor guest amenities, including pools, spas, patios, courtyards, rooftop gathering areas, and similar common areas, shall not be used between the hours of 10:00 p.m. and 7:00 a.m., except for pedestrian access.
b. Exterior Lighting. Exterior lighting fixtures shall be full cutoff or fully shielded, directed downward, and shall not exceed 0.5 foot-candles measured at any adjoining property line or public right-of-way.
c. Mechanical Equipment. Mechanical equipment shall comply with the noise standards of Chapter

9.12 (Noises) and Capitola General Plan Noise Element and shall be fully screened from view from adjoining properties and public rights-of-way.
d. Loading and Service Hours. Loading activities, refuse collection, and routine service deliveries using vehicles exceeding two axles shall occur only between 7:00 a.m. and 10:00 p.m. when the loading area is located within 100 feet of a residential zoning district, school, park, or another hotel or lodging use.
e. Environmental Impacts. Hotel operations shall comply with all applicable city standards regulating noise, lighting, smoke, odor, dust, vibration, and other environmental impacts.

3. Maintenance and Safety.
a. Property Maintenance. Buildings, parking areas, driveways, landscaping, fencing, lighting, and other site improvements shall be maintained free of broken, missing, or structurally damaged 295
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materials; peeling or faded paint visible from adjoining properties or public rights-of-way; and holes, cracks, or other surface deterioration beyond normal wear. b. Graffiti Removal. Graffiti shall be removed within 72 hours of discovery. c. Landscape Maintenance. Dead, diseased, or damaged landscaping shall be replaced within 60 days, weather permitting.
d. Waste Collection Areas.
i. Trash, recycling, and organic waste containers shall be maintained within required enclosures except during collection.
ii. Waste storage areas shall be sized to accommodate all anticipated trash, recyclable materials, and organic waste generated by the hotel, guest rooms, and accessory uses without overflow. e. Outdoor Storage. Outdoor storage of equipment, furniture, supplies, or materials shall be prohibited except where specifically authorized by this code. f. Community Contact. The hotel shall designate an on-site or on-call manager available 24 hours a day to respond to operational concerns from guests, neighbors, and the public, and shall post the manager’s contact telephone number at the primary guest entrance and provide it to the city’s Community and Economic Development Department.

4. Municipal and Tax Compliance.
a. Business License and Taxes. The hotel shall maintain an active, valid city business license at all times and shall remain fully compliant with all applicable provisions of the Municipal Code regarding the collection, reporting, and remittance of Transient Occupancy Tax (TOT) and any applicable Tourism Marketing District (TMD) assessments. Operational noncompliance with tax reporting or remittance obligations shall constitute a violation of this zoning standard.

17.88.080 Application submittal and review.

A. Request Submittal. A request for an incentive in exchange for community benefits shall be submitted concurrently with an application for the discretionary permits required for the project by the zoning code.

Applications shall be accompanied by the following information:

1. A description of the proposed amenities and how they will benefit the community.

2. All information needed by the city council to make the required findings described in Section 17.88.090 (Findings).

B. Conceptual Review. For a projects with a community benefit that must be dedicated to the city (e.g., land for a public facility), the project shall be considered by the city council through the conceptual review process as described in Chapter 17.114 (Conceptual Review).

C. Planning Commission Recommendation. Following conceptual review, the planning commission shall provide a recommendation to the city council on the proposed project and requested incentives at a noticed public hearing in compliance with Chapter 17.148 (Public Notice and Hearings).

D. City Council Action. After receiving the planning commission’s recommendation, the city council shall review and act on the requested incentives at a noticed public hearing in compliance with Chapter 17.148 (Public Notice and Hearings). The city council shall also review and act on other permits required for the project requesting incentives.

17.88.090 Findings.

The city council may approve the requested incentives for an eligible project only if all of the following findings can be made in addition to the findings required for any other discretionary permit required by the zoning code:
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A. The community benefits conform with all applicable objective standards.

B. The community benefits exceeds the minimum requirements of the zoning code or any other provision of local, state, or federal law.

17.88.100 Post-decision procedures.

Post-decision procedures and requirements in Chapter 17.156 (Post-Decision Procedures) shall apply to decisions on incentives for community benefits.
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Chapter 17.90

INCENTIVES FOR A VILLAGE HOTEL WITH COMMUNITY BENEFITS
Sections:

17.90.010 Purpose.

17.90.020 Incentives restricted to added benefits.

17.90.030 Eligibility.

17.90.040 Allowable benefits.

17.90.050 Available incentives.

17.90.060 Application submittal and review.

17.90.070 Findings.

17.90.080 Post-decision procedures.

17.90.010 Purpose.

This chapter establishes incentives for the development of a new hotel in the Village in a manner that provides substantial benefits to the community. These incentives are intended to encourage the development of a new Village hotel as called for by the general plan and the local coastal program (LCP).

17.90.020 Incentives restricted to added benefits.

The city may grant incentives for a Village hotel only when the community benefits or amenities offered are not otherwise required by the zoning code or any other provision of local, state, or federal law. Community benefits or amenities must significantly advance general plan and/or LCP goals and/or incorporate a project feature that substantially exceeds the city’s minimum requirements.

17.90.030 Eligibility.

The city may grant incentives provided in this chapter for a hotel on the former Capitola Theater site (APNs 035- 262-04, 035-262-02, 035-262-11, and 035-261-10) in the Mixed Use Village (MU-V) zoning district.

17.90.040 Allowable benefits.

The city may grant incentives to a Village hotel project that provides one or more of the following community benefits. The public benefits provided shall be of sufficient value as determined by the planning commission to justify deviation from the standards of the zoning district that currently applies to the property.

A. Public Open Space. Public plazas, courtyards, and other public gathering places that provide opportunities for people to informally meet and gather. Open space must be accessible to the general public at all times. Provision must be made for ongoing operation and maintenance in perpetuity. The public space must either exceed the city’s minimum requirement for required open space and/or include quality improvements to the public realm to create an exceptional experience.

B. Public Infrastructure. Improvements to streets, sidewalks, curbs, gutters, sanitary and storm sewers, street trees, lighting, and other public infrastructure beyond the minimum required by the city or other public agency.

C. Pedestrian and Bicycle Facilities. New or improved pedestrian and bicycle pathways that enhance the property and connectivity to the surrounding neighborhood.

D. Low-Cost Visitor Serving Amenities. New or improved low-cost visitor serving recreational opportunities or accommodations within the Central Village area.

E. Transportation Options. Increased transportation options for residents and visitors to walk, bike, and take public transit to destinations and reduce greenhouse gas emissions.

F. Historic Resources. Preservation, restoration, or rehabilitation of a historic resource. 298
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G. Public Parking. A public parking structure that provides parking spaces in excess of the required number of parking spaces for use by the surrounding commercial district. Excess parking provided as part of a Village hotel may not be located on the hotel site and must be located outside of the mixed use village zoning district.

H. Green Building. Green building and sustainable development features that exceed the city’s green building award status.

I. Public Art. Public art that exceeds the city’s minimum public art requirement and is placed in a prominent and publicly accessible location.

J. Child Care Facilities. Child care centers and other facilities providing daytime care and supervision to children.

K. Other Community Benefits. Other community benefits not listed above, such as entertainment destinations, as proposed by the applicant that are significant and substantially beyond normal requirements.

17.90.050 Available incentives.

The city may grant the following incentives to an eligible Village hotel project:

A. An increase in the maximum permitted floor area ratio (FAR) to 3.0.

B. An increase to the maximum permitted building height; provided, that:

1. The maximum height of the hotel (including all rooftop architectural elements such as chimneys, cupolas, etc., and all mechanical appurtenances such as elevator shafts, HVAC units, etc.) remains below the elevation of the bluff behind the hotel;

2. The bluff behind the hotel remains visible as a green edge (i.e., the upper bluff (i.e., below the blufftop edge) and upper bluff vegetation shall remain substantially visible across the length of the project site) when viewed from the southern parking area along the bluff of Cliff Drive (i.e., the parking area seaward of Cliff Drive and closest to Opal Cliff Drive) and from the Capitola wharf;

3. Existing mature trees shall be maintained on the site, except that trees that are unhealthy or unsafe may be removed; and

4. The rooftop shall be aesthetically pleasing and shall not significantly adversely affect public views from Cliff Avenue on Depot Hill. In addition to modifications to avoid structural incursions into this view, this can be accomplished through design features on top of the roof as well (e.g., use of a living roof, roof colors and materials that reduce its visual impacts, etc.). Rooftop appurtenances (e.g., elevator shafts, HVAC units, vents, solar panels, etc.) shall be screened from public view and integrated into/within the above-referenced rooftop design features to the greatest extent feasible.

17.90.060 Application submittal and review.

1. A description of the proposed amenities and how they will benefit the community.

2. All information needed by the city council to make the required findings described in Section 17.90.080 (Findings), including a pro forma analysis demonstrating that the benefit of the proposed amenities to the community is commensurate with the economic value of the requested incentives.

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C. Theater Site Story Poles. Prior to city action on a proposed hotel on the former Capitola Theater site, the planning commission or city council may require the applicant to install poles and flagging on the site to demonstrate the height and mass of the proposed project.

17.90.070 Findings.

The city council may approve the requested incentives for a proposed Village hotel project only if all of the following findings can be made in addition to the findings required for any other discretionary permit required by the zoning code:

A. The proposed amenities will provide a substantial benefit to the community and advance the goals of the general plan.

B. There are adequate public services and infrastructure to accommodate the increased development potential provided by the incentive.

C. The public benefit exceeds the minimum requirements of the zoning code or any other provisions of local, state, or federal law.

D. The project minimizes adverse impacts to neighboring properties to the greatest extent possible.

E. If in the coastal zone and subject to a coastal development permit, the project enhances coastal resources.

F. The design of the hotel respects the scale and character of neighboring structures and enhances Capitola’s unique sense of place.

G. The hotel will contribute to the economic vitality of the Village and support an active, attractive, and engaging pedestrian environment.

H. Hotel siting and design will (a) minimize impacts to public views, including views of the beach and Village from vantage points outside of the Village and from Cliff Avenue and Depot Hill behind the hotel; and (b) not adversely impact any significant public views of the coastline as identified in the LCP’s land use plan.

I. Parking for the hotel is provided in a way that minimizes vehicle traffic in the Village, strengthens the Village as a pedestrian-oriented destination, and protects public parking options.

17.90.080 Post-decision procedures.

Post-decision procedures and requirements in Chapter 17.156 (Post-Decision Procedures) shall apply to decisions on incentives for a Village hotel with community benefits. 300
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Chapter 17.74

ACCESSORY DWELLING UNITS

17.74.010 Purpose.

A. This chapter establishes standards for the location and construction of accessory dwelling units (ADUs) consistent with Government Code Sections 66310 through 66342. These standards are intended to allow accessory dwelling units as a form of affordable housing in Capitola while maintaining the character and quality of life of residential neighborhoods.

B. It is the city’s intent for this chapter to be consistent with state law as it is amended from time to time. In case of conflict between this chapter and state law, state law governs unless local variation is permitted. (Ord. 1057 § 2 (Att. 1), 2022; Ord. 1043 § 2 (Att. 2), 2020)

17.74.020 Definitions.

Terms used in this chapter are defined as follows. If a definition below conflicts with a definition in Chapter 17.160 (Glossary), the definition below controls.

A. “Accessory dwelling unit” means an attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family or multifamily dwelling is or will be situated. An accessory dwelling unit also includes an efficiency unit and a manufactured home, as defined in Section 18007 of the Health and Safety Code.

B. “Attached accessory dwelling unit” means an accessory dwelling unit that:

1. Shares at least one common wall with the primary dwelling unit; and

2. Is not fully contained within the existing space of the primary dwelling unit.

C. “Detached accessory dwelling unit” means an accessory dwelling unit that does not share a common wall with the primary dwelling unit and is not an internal accessory dwelling unit.

D. “Internal accessory dwelling unit” means an accessory dwelling unit that is fully contained within the existing space of the primary dwelling unit or an accessory structure.

E. “Junior accessory dwelling unit” means an accessory dwelling unit no more than five hundred square feet of interior livable space in size and contained entirely within a single-family residence. A junior accessory dwelling unit may include separate sanitation facilities, or may share sanitation facilities with the existing structure. For purposes of this definition, attached garages and other enclosed uses within the residence are considered a part of a single-family residence.

F. “Livable space” means a space in a dwelling intended for human habitation, including living, sleeping, eating, cooking, or sanitation.

GF. “Multifamily dwelling” means a structure on a single lot with two or more attached dwelling units.

FH. “Two-story attached accessory dwelling unit” means an attached accessory dwelling unit that is configured as either:
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1. Two stories of living space attached to an existing primary dwelling unit; or

2. Second-story living space above a ground-floor garage or living space in an existing primary dwelling unit.

IG. “Two-story detached accessory dwelling unit” means a detached accessory dwelling unit that is configured as either:

1. Two stories of living space in a single accessory dwelling unit; or

2. Second-story living space above a ground-floor garage or other accessory structure. (Ord. 1057 § 2 (Att. 1), 2022; Ord. 1043 § 2 (Att. 2), 2020)

17.74.030 Permitting process.

A. When Consistent with Standards.

1. Ministerial Approval.
a. Except when a design permit is specifically required by this chapter, an accessory dwelling unit that complies with all standards in this chapter shall be approved ministerially with an administrative permit.

No discretionary review or public hearing is required.
b. A building permit application may be submitted concurrently with the administrative permit application.

2. Time Period for City Action.
a. The city shall determine whether an application to create or serve an accessory dwelling unit is complete and provide written notice of this determination to the applicant not later than 15 business days after receiving the application.
b. If the city determines an application is incomplete, the city shall provide the applicant with a list of incomplete items and a description of how the application can be made complete. The list and description shall be provided with the written notice required by Paragraph (a) above. c. After receiving a notice that the application was incomplete, an applicant may submit to the city additional application materials to cure and address the items that are deemed to be incomplete by the city. d. In the review of additional application materials submitted pursuant to Paragraph (c) above, the city shall not require the application to include an item that was not included in the list required by paragraph (b) above.
e. If an applicant submits additional application materials pursuant to Paragraph (cd) above, the city shall determine whether the additional materials remedied all incomplete items listed in the determination issued pursuant to Subsection (b) above. The city shall provide written notice of this determination to the applicant not later than 15 business days after receiving the additional materials. f. If the city does not make a timely determination as required by this subsection, the application shall be deemed to be complete.
g2. If an existing single-family or multifamily dwelling exists on the parcel upon which an accessory dwelling unit is proposed, the city shall either approve or deny an application to create an accessory dwelling unit within sixty days from the date the city receives a completed application. If the applicant requests a delay in writing, the sixty-day time period shall be tolled for the period of the delay. h4. If the accessory dwelling unit application is submitted with a permit application to create a new singlefamily or multifamily dwelling on the parcel, the city may delay approving or denying the accessory dwelling unit application until the city approves or denies the permit application for the new single-family 302
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or multifamily dwelling. The accessory dwelling unit shall be considered without discretionary review or hearing.
i. If the city has not approved or denied the completed application within 60 days, the application shall be deemed approved.

3. Comments for Denied Applications.
a3. If the city denies an application for an accessory dwelling unit, the city shall return in writing a full set of comments to the applicant with a list of items that are defective or deficient and a description of how the application can be remedied by the applicant.
b. Written comments required by Paragraph (a) above shall be provided to the applicant not later than 15 business days after the city denies the application.
c. If the city determines an application is incomplete or denies the application, the applicant may appeal the decision to the Planning Commission and may appeal the Planning Commission decision to the City Council. The city shall make a final decision on the appeal not later than 60 business days after receiving the applicant’s written appeal.

45. Garage Demolition.
a. A demolition permit for a detached garage that is to be replaced with an accessory dwelling unit shall be reviewed with the application for the accessory dwelling unit and issued at the same time. b. The applicant shall not be otherwise required to provide written notice or post a placard for the demolition of a detached garage that is to be replaced with an accessory dwelling unit, unless the property is located within an architecturally and historically significant historic district.

B. Two-Story Units.

1. Planning commission approval of a design permit is required for a two-story accessory dwelling unit (attached or detached) with a height greater than the maximum permitted one-story accessory dwelling unit heights in Table 17.74-1.

2. To approve the design permit, the planning commission must make the findings in Section 17.74.110. A two-story accessory dwelling unit must comply with the standards in Sections 17.74.080 (Development standards) and 17.74.090 (Objective design standards) unless the planning commission allows a deviation through the design permit process.

C. When Deviating from Standards. An accessory unit that deviates from any standard in Section 17.74.080 (Development standards) or 17.74.090 (Objective design standards) may be allowed with planning commission approval of a design permit. See Section 17.74.100 (Deviation from standards).

D. When Dependent on Separate Construction. When a proposed attached or detached accessory dwelling unit is dependent on the construction of a new building or new portion of a building which is not a part of the accessory dwelling unit (“separate construction”) and is not proposed as part of a permit application to create a new singlefamily dwelling on the parcel, the city shall either:

1. Accept and begin processing the accessory dwelling unit application only after acting on an application for the proposed separate construction; or

2. Upon written request from the applicant, review and act on the accessory dwelling unit together with the separate construction as part of a single application. In this case, the accessory dwelling unit is subject to the same review procedures as the separate construction.
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E. Within Coastal Zone.

1. A proposed accessory dwelling unit 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).

2. The City may issue a CDP waiver pursuant to Section 17.44.090 (De minimis waiver of a CDP) for a proposed accessory dwelling unit in the coastal zone. The City may issue a CDP waiver for an accessory dwelling unit both within and outside of locations where City decisions are appealable to the Coastal Commission. To be eligible for a CDP waiver, the proposed accessory dwelling unit must comply with all of the following:
a. The accessory dwelling unit complies with all standards in this chapter and may be approved with no public hearing required. b. The accessory dwelling is not located:
i. In an area subject to coastal hazards as defined by Section 17.44.040(F); ii. Within 200 feet of a cliff edge; or
iii In an environmentally sensitive habitat area (ESHA) as defined by Section 17.44.040(J), including categorical ESHA areas identified in Section 17.64.020 (Applicability). c. The accessory dwelling unit would not negatively impact coastal resources, public access, or views consistent with the City’s certified Local Coastal Program.

3. A CDP waiver for an accessory dwelling unit shall comply with all requirements in Section 17.44.090 that apply to other types of development with the exception that the City may issue a CDP waiver for an accessory dwelling unit both within and outside of locations where City decisions are appealable to the Coastal Commission.

4. Nothing in this chapter shall be construed to supersede or in any way alter or lessen the effect of application of the California Coastal Act of 1976 (Division 20, commencing with Section 30000, of the Public Resources Code), except that:
a. A public hearing for a CDP application for an accessory dwelling unit is not required as provided in Section 17.74.030(A)(1); and
b. The City may issue a CDP waiver for an accessory dwelling unit as provided in Section

17.74.030(E)(2)
F. Historic Resources.

1. A proposed accessory dwelling unit is subject to the requirements in Chapter 17.84 (Historic Preservation) if all of the following apply:
a. The property is in the coastal zone;
b. The accessory dwelling unit requires a design permit; and c. The property contains a designated historic resource or potential historic resource as defined in Section

17.84.020 (Types of historic resources).

2. Compliance with Chapter 17.84 is not required for accessory dwelling unit applications that do not meet all criteria in Paragraph 1 above.

G. Correction of Violations. The city shall not deny an application for a permit to create an accessory dwelling unit due to the correction of nonconforming zoning conditions, building code violations, or unpermitted structures that 304
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do not present a threat to public health and safety and are not affected by the construction of the accessory dwelling unit.

H. Unpermitted Accessory Dwelling Units. The following provisions apply to a building permit application for a previously unpermitted accessory dwelling unit or junior accessory dwelling unit that was constructed before January 1, 2020.

1. The city shall not deny a building permit due to the accessory dwelling unit or junior accessory dwelling’s violation of building standards or its noncompliance with this section unless the building official or their designee deems the unit substandard pursuant to Section 17920.3 of the Health and Safety Code.

2. The city shall provide the applicant a checklist of the conditions specified in Section 17920.3 of the Health and Safety Code that would deem the unit substandard.

3. Prior to submission of a building permit application, the city shall inform the homeowner that they may obtain a confidential third-party code inspection from a licensed contractor to determine the unit’s existing condition or potential scope of building improvements before submitting a permit application.

4. A homeowner applying for a building permit is not required to pay impact fees or connection or capacity charges except when utility infrastructure is required to comply with Section 17920.3 of the Health and Safety Code.

5. Upon receiving a building permit application, the building inspector may inspect the unit for compliance with health and safety standards and provide recommendations to comply with the standards necessary to obtain a building permit. If the building inspector finds noncompliance with health and safety standards, the city shall not penalize the applicant and shall approve necessary permits to correct noncompliance with health and safety standards.

1. Except as provided in subsection (H)(2) of this section, the city shall not deny a permit for an unpermitted accessory dwelling unit or junior accessory dwelling unit that was constructed before January 1, 2020, due to either of the following:
a. The accessory dwelling unit or junior accessory dwelling unit is in violation of building standards pursuant to Article 1 (commencing with Section 17960) of Chapter 5 of Part 1.5 of Division 13 of the Health and Safety Code.
b. The accessory dwelling unit or junior accessory dwelling unit does not comply with Government Code Sections 66314 through 66332 or this chapter.

2. The city may deny a permit for an unpermitted accessory dwelling unit or junior accessory dwelling unit that was constructed before January 1, 2020, if the city makes a finding that correcting the violation is necessary to comply with the standards specified in Section 17920.3 of the Health and Safety Code.

3. This subsection shall not apply to a building that is deemed substandard pursuant to Section 17920.3 of the Health and Safety Code. (Ord. 1057 § 2 (Att. 1), 2022; Ord. 1043 § 2 (Att. 2), 2020)

17.74.040 General requirements.

The following requirements apply to all accessory dwelling units:

A. Where Allowed. An accessory dwelling unit is permitted:

1. In any zoning district where single-family or multifamily dwellings are a permitted use; and

2. On any parcel with an existing or proposed single-family or multifamily dwelling.

B. Maximum Number per Parcel. Not more than one accessory dwelling unit is allowed per parcel except as allowed by Sections 17.74.050 (Units subject to limited standards). 305
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C. Residential Mixed Use. If an existing or proposed dwelling unit is on a parcel with a nonresidential use, the dwelling unit is considered a single-family dwelling for the purpose of determining the applicable requirements in this chapter. If two or more existing or proposed attached dwelling units are on a parcel with a nonresidential use, the dwelling units are considered a multifamily dwelling.

D. Utility Connections. Utility connection requirements shall be subject to state law and the serving utility district.

Establishing an accessory dwelling unit in conformance with this chapter does not require placing existing overhead utility lines underground.

E. Fire Sprinklers. The city shall not require accessory dwelling units to provide fire sprinklers if sprinklers are not required for the primary residence. Establishing an accessory dwelling unit does not require installing fire sprinklers in the existing primary dwelling.

F. Vacation Rentals Prohibited. Accessory dwelling units may not be used for vacation rentals as defined in Chapter

17.160 (Glossary), and notwithstanding any other provision to the contrary, rental of an accessory dwelling unit shall be for a term longer than 30 days.

G. Separate Sale from Primary Dwelling. An accessory dwelling unit shall not be sold or conveyed separately from the primary dwelling except as provided in Government Code Section 66341.

H. Guaranteed Allowance.

1. Maximum building coverage, floor area ratio, front setbacks, private open space standards in Section

17.74.080 (Development standards) and privacy impact standards in 17.74.090.B (Privacy Impacts) shall not prohibit an accessory dwelling unit with up to eight hundred square feet of floor areainterior livable space, and four-foot side and rear yard setbacks, provided the accessory dwelling unit complies with all other applicable standards. The guaranteed allowance of eight hundred square feet of floor area is in addition to the maximum floor area of a property.

2. An accessory dwelling unit may deviate from a building coverage, floor area ratio, front setbacks, or private open space standard no more than the minimum necessary to allow for eight hundred square feet of floor area.

I. Converting and Replacing Existing Structures.

1. An internal accessory dwelling unit may be constructed regardless of whether it conforms to the current zoning requirement for building separation or setbacks.

2. If an existing structure is demolished and replaced with an accessory dwelling unit, an accessory dwelling unit may be constructed in the same location and to the same dimensions as the demolished structure.

3. If any portion of an existing structure crosses a property line (excluding attached dwelling units bisected by a property line along the common wall), the structure may not be converted to or replaced with an accessory dwelling unit. For an existing structure within four feet of a property line, the applicant must submit a survey demonstrating that the structure does not cross the property line.

J. Manufactured Homes and Mobile Units.

1. A manufactured home, as defined in California Health and Safety Code Section 18007, is allowed as an accessory dwelling unit. Pursuant to California Health and Safety Code Section 18007, as may be amended from time to time, a manufactured home must:
a. Be built on a permanent chassis;
b. Be designed for use as a single-family dwelling with or without a foundation when connected to the required utilities; and
c. Include the plumbing, heating, air conditioning, and electrical systems contained within the home. 306
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2. Vehicles and trailers, with or without wheels, which do not meet the definition of a manufactured home, are prohibited as accessory dwelling units.

3. A prefabricated or modular home is allowed as an accessory dwelling unit.

K. Junior Accessory Dwelling Units.

1. General. Junior accessory dwelling units shall comply with allbe subject to the same standards and permitting requirementsprocedures as accessory dwelling units described in this chapter unless otherwise indicated.

2. Occupancy.
a. If the JADU has shared sanitation facilities with the existing structure, tThe property owner must occupy either the primary dwelling unit or the junior accessory dwelling unit on the property b. Owner-occupancy is not required if the JADU has separate sanitation facilities or unless if the property is owned by a governmental agency, land trust, or housing organization, in which case owner-occupancy is not required.

3. Sanitation Facilities.
a. A junior accessory dwelling unit may include sanitation facilities, or may share sanitation facilities with the primary dwelling.
b. If a junior accessory dwelling unit does not include a separate bathroom, the junior accessory dwelling unit shall include a separate entrance from the main entrance to the structure, with an interior entry to the main living area.

4. Kitchen. A junior accessory dwelling unit must include, at a minimum:
a. A cooking facility with appliances; and
b. At least three linear feet of food preparation counter space and three linear feet of cabinet space.

L. Pursuant to the authority provided by Section 65852.21(f) of the Government Code, no accessory dwelling unit or junior accessory dwelling unit shall be permitted on any lot in a single-family zoning district if: (1) an urban lot split has been approved pursuant to Chapter 16.78 of this code; and (2) an SB 9 residential development with two units on each lot has been approved for construction pursuant to Chapter 17.75 of this code. (Ord. 1057 § 2 (Att. 1), 2022; Ord. 1052 § 4, 2022; Ord. 1043 § 2 (Att. 2), 2020)

17.74.050 Units subject to limited standards.

The city shall ministerially approve an application for a building permit within a residential or mixed use zoning district to create any of the following types of accessory dwelling units. For each type of accessory dwelling unit, the city shall require compliance only with the development standards in this subsection. Standards in Sections

17.74.080 (Development standards) and 17.74.090 (Objective design standards) do not apply to these types of accessory dwelling units. Accessory dwelling units subject to limited standards may be combined on a single parcel as allowed by the site and lot conditions.

A. Internal Accessory Dwelling Units. One internal accessory dwelling unit and one junior accessory dwelling unit per parcel with a proposed or existing single-family dwelling if all of the following apply:

1. The internal accessory dwelling unit or junior accessory dwelling unit is within the proposed space of a single-family dwelling or existing space of a single-family dwelling or accessory structure and may include an expansion of not more than one hundred fifty square feet beyond the same physical dimensions as the existing 307
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accessory structure. An expansion beyond the physical dimensions of the second story of an existing accessory structure shall be limited to accommodating ingress and egress.

2. The unit has exterior access from the proposed or existing single-family dwelling.

3. The side and rear setbacks are sufficient for fire and safety.

4. The junior accessory dwelling unit complies with Government Code Sections 66333 through 66339.

B. Detached Accessory Dwelling Units Eight Hundred Square Feet or Less. One detached accessory dwelling unit for a parcel with a proposed or existing single-family dwelling. The detached accessory dwelling unit may be combined with a junior accessory dwelling unit described in subsection A of this section (Internal Accessory Dwelling Units). The accessory dwelling unit must comply with the following:

1. Minimum rear and side setbacks: four feet.

2. Maximum floor area: eight hundred square feet of livable space.

3. Maximum height: sixteen feet or as allowed by Government Code Section 66321(b)(4).

C. Nonlivable Multifamily Space. One or more internal accessory dwelling units within the portions of existing multifamily dwelling structures that are not used as livable space, including, but not limited to, storage rooms, boiler rooms, passageways, attics, basements, or garages, subject to the following:

1. At least one accessory dwelling unit is allowed within an existing multifamily dwelling up to a maximum of twenty-five percent of the existing multifamily dwelling units; and

2. Each unit shall comply with state building standards for dwellings.

D. Detached Accessory Dwelling Units on Multifamily Parcels.

1. Up to two detached accessory dwelling units are allowed on a lot with a proposed multifamily dwelling. On a lot with an existing multifamily dwelling, up to eight detached accessory dwelling units are allowed, not to exceed the number of existing units on the lot. The accessory dwelling units must comply with the following:
a. Maximum height: sixteen feet or as allowed by Government Code Section 66321(b)(4). b. Minimum rear and side setbacks: four feet.

2. If the existing multifamily dwelling has a rear or side setback of less than four feet, the city shall not require any modification of the existing multifamily dwelling as a condition of approving the application to construct an accessory dwelling unit that satisfies the requirements of this subsection. (Ord. 1057 § 2 (Att. 1), 2022; Ord. 1043 § 2 (Att. 2), 2020)

17.74.060 Units subject to full review standards.

The city shall ministerially approve an application for a building permit to create the following types of accessory dwelling units:

A. Attached Accessory Dwelling Units. An attached accessory dwelling unit in compliance with standards in Sections 17.74.080 (Development standards) and 17.74.090 (Objective design standards) with a height eligible for ministerial approval as specified in Table 17.74-1.

B. Detached Accessory Dwelling Units Between Eight Hundred and One Thousand Two Hundred Square Feet. A detached accessory dwelling unit with a floor area between eight hundred and one thousand two hundred square feet in compliance with standards in Sections 17.74.080 (Development standards) and 17.74.090 (Objective design standards) with a height eligible for ministerial approval as specified in Table 17.74-1. (Ord. 1043 § 2 (Att. 2), 2020) 308
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17.74.070 Units requiring a design permit.

The following types of accessory dwelling units require planning commission approval of a design permit:

A. Accessory Dwelling Units – Additional Height Allowance. A detached accessory dwelling unit in compliance with standards in Sections 17.74.080 (Development standards) and 17.74.090 (Objective design standards) with a height that requires design review as specified in Table 17.74-1.

B. Accessory Dwelling Units Deviating from Standards. Any accessory dwelling unit that deviates from one or more standards in Sections 17.74.080 (Development standards) and 17.74.090 (Objective design standards), except for accessory dwelling units approved pursuant to Section 17.74.050 (Units subject to limited standards). (Ord. 1043 § 2 (Att. 2), 2020)

17.74.080 Development standards.

The standards in this section apply to all accessory dwelling units not approved pursuant to Section 17.74.050 (Units subject to limited standards).

A. General. Table 17.74-1 shows development standards that apply to accessory dwelling units.

Table 17.74-1: Development Standards
ADU Type/Location Standard
Unit Size, Maximum [1]
Attached ADU, one bedroom or less 50 percent of the existing primary dwelling or 850 sq. ft., whichever is greater
Attached ADU, more than one bedroom 50 percent of the existing primary dwelling or 1,000 sq. ft., whichever is greater
Detached ADU 1,200 sq. ft.

Internal ADU No maximum
Junior ADU 500 sq. ft.

Floor Area Ratio, Maximum [21] As required by zoning district [32] Setbacks, Minimum [43,54]
Front Same as primary dwelling [65]
Interior Side, 1st and 2nd Story 4 ft.

Exterior Side, 1st and 2nd Story 4 ft.

Rear, 1st and 2nd Story 4 ft.

Building Coverage, Maximum
R-M zoning district 40% [32]
All other zoning districts No maximum
Height, Maximum [43]
Attached ADU 25 ft. or maximum permitted in zoning district, whichever is less Detached ADU – Ministerial Approval 16 ft. [98] [109]
Detached ADU – With Design Permit 22 ft.
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ADU Type/Location Standard
Private Open Space, Minimum [87] 48 sq. ft. [32]
Notes:
[1] Calculated as interior livable space.
[21] Calculated as the total floor area ratio on the site, including both the primary dwelling and accessory dwelling unit. An applicant may request simultaneous approval of a new internal accessory dwelling unit and an addition to the primary residence as part of a single application. [32] Standard may not prohibit an accessory dwelling unit with at least eight hundred square feet of floor area. See Section 17.74.040(H) (Guaranteed Allowance).
[43] Setback and height standards apply only to attached and detached accessory dwelling units. Standards do not apply to internal or junior accessory dwelling units.
[54] See also Section 17.74.040(I) (Converting and Replacing Existing Structures) for setback exceptions that apply to an accessory dwelling unit created by converting or replacing an existing structure. [65] See also subsection B of this section (Front Setbacks) and Section 17.74.040.H. [76] A two-story detached accessory dwelling unit greater than sixteen feet in height requires a design permit. [87] Private open space may include screened terraces, decks, balconies, and other similar areas. [98] A maximum height of 18 feet is allowed for a detached accessory dwelling unit on a lot with an existing or proposed single family dwelling unit that is within one-half of one mile walking distance of a major transit stop or a high-quality transit corridor, as those terms are defined in Section 21155 of the Public Resources Code. An additional 2 feet in height is allowed to accommodate a roof pitch on the accessory dwelling unit that is aligned with the roof pitch of the primary dwelling unit. [109] A maximum height of 18 feet is allowed for a detached accessory dwelling unit on a lot with an existing or proposed multifamily, multistory dwelling.

B. Front Setbacks.

1. Any increased front setback requirement that applies to a garage associated with a primary dwelling unit also applies to a garage that serves an accessory dwelling unit, except that increased front setback requirements do not apply to an accessory dwelling unit created by converting or replacing an existing structure.

2. In the R-1 zoning district, front setback exceptions in Riverview Terrace and on Wharf Road as allowed in Section 17.16.030(B) apply to accessory dwelling units.

3. In the mixed use zoning districts, minimum front setbacks in Chapter 17.20 (Mixed Use Zoning Districts) apply to accessory dwelling units. Maximum setbacks or build-to requirements do not apply.

C. Parking.

1. All Areas. The following parking provisions apply to accessory dwelling units in all areas in Capitola:
a. Required Parking in Addition to Primary Residence. Parking spaces required for an accessory dwelling unit are in addition to parking required for the primary residence. b. Tandem Spaces. Required off-street parking may be provided as tandem parking on an existing driveway.
c. Within Setback Areas.
i. Required off-street parking may be located within minimum required setback areas from front, side, and rear property lines.
ii. A parking space in a required front setback area shall be a “ribbon” or “Hollywood” design with two parallel strips of pavement. The paving strips shall be no wider than two and one-half feet each and shall utilize permeable paving such as porous concrete/asphalt, open-jointed pavers, and turf grids.

Unpaved areas between the strips shall be landscaped with turf or low-growing ground cover. d. Alley-Accessed Parking. Parking accessed from an alley shall maintain a twenty-four-foot back-out area, which may include the alley.
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2. Outside of Coastal Zone or in Cliffwood Heights. The following parking provisions apply only to accessory dwelling units outside of the coastal zone and in the Cliffwood Heights neighborhood as shown in Figure

17.74-1.
a. No additional parking is required for an internal or junior accessory dwelling unit. The floor area of an internal or junior accessory dwelling unit shall not be included in the parking calculation for the primary residence.
b. One off-street parking space is required for an attached or detached accessory dwelling unit, except as provided in subsection (C)(2)(c) of this section.
c. No off-street parking is required for an accessory dwelling unit in the following cases:
i. The accessory dwelling unit is located within one-half mile walking distance of public transit, as defined in Government Code Section 66313(m).
ii. The accessory dwelling unit is located within a National Register Historic District or other historic district officially designated by the city council.
iii. The accessory dwelling unit is part of the proposed or existing primary residence or an accessory structure.
iv. When on-street parking permits are required but not offered to the occupant of the accessory dwelling unit.
v. When there is a car share vehicle pick-up/drop-off location within one block of the accessory dwelling unit.
vi. When a permit application for an accessory dwelling unit is submitted with a permit application to create a new single-family dwelling or a new multifamily dwelling on the same lot, provided that the accessory dwelling unit or the parcel satisfies any other criteria listed above. d. When a garage, carport, covered parking structure, or uncovered parking space is demolished in conjunction with the construction of an accessory dwelling unit or converted to an accessory dwelling unit, replacement parking stalls are not required for the demolished or converted parking structure.

3. Within Coastal Zone and Outside Cliffwood Heights. The following parking provisions apply only to accessory dwelling units in the coastal zone and outside of the Cliffwood Heights neighborhood as shown in Figure 17.74-1 in accordance with the city’s adopted local coastal program. a. One off-street parking space is required for any type of accessory dwelling unit except as provided in subsection (C)(3)(b) of this section.
b. Where the primary residence is served by three or more existing off-street parking spaces, including spaces in a tandem configuration, no off-street parking is required for the accessory dwelling unit. c. When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit or converted to an accessory dwelling unit, replacement parking stalls are required for the demolished or converted parking structure. Replacement parking space(s) may be covered or uncovered. Replacement parking does not satisfy the one off-street parking requirement for the accessory dwelling unit in subsection (C)(3)(a) of this section. 311
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Figure 17.74-1: Cliffwood Heights ADU Parking Exclusion Area (Ord. 1057 § 2 (Att. 1), 2022; Ord. 1043 § 2 (Att. 2), 2020)

17.74.090 Objective design standards.

The standards in this section apply to all accessory dwelling units not approved pursuant to Section 17.74.050 (Units subject to limited standards).

A. Entrance Orientation – Detached ADU. The primary entrance to a detached accessory dwelling unit shall face the front or interior of the parcel unless the accessory dwelling unit is directly accessible from an alley or a public street.

B. Privacy Impacts. To minimize privacy impacts on adjacent properties, the following requirements apply to walls with windows within eight feet of an interior side or rear property line abutting a residential use:

1. For a single-story wall or the first story of a two-story wall, privacy impacts shall be minimized by either:
a. A six-foot solid fence on the property line; or
b. Clerestory or opaque windows for all windows facing the adjacent property.

2. For a second-story wall, all windows facing the adjacent property shall be clerestory or opaque.

C. Second-Story Decks and Balconies. Second-story decks and balconies proposed as part of an accessory dwelling unit that requires a design permit shall be located and designed to minimize privacy impacts on adjacent residential properties, as determined by the planning commission through the design permit approval process.

D. Architectural Details. Table 17.74-2 shows architectural detail standards for accessory dwelling units. 312
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Table 17.74-2: Architectural Detail Standards

Non-historic property in the coastal zones and all
properties outside the coastal zone [1] Historic property in the coastal zone [1] Attached ADU Detached ADU Attached ADU Detached ADU
Primary Exterior
Materials [2]
Same as primary dwelling
[3]
No requirement Same as primary dwelling; or
horizontal wood, fiber
cement, or board and batten
siding or shingles [3]
Horizontal wood, fiber
cement, or board and batten
siding, or shingles [4]
Window and Door
Materials
No requirement Wood, composite, pre-finished metal with a nonreflective finish
Window Proportions No requirement Windows must be taller than they are wide or match the proportions of the primary dwelling window [5]
Window Pane
Divisions
No requirement True or simulated divided lights
Roof Material Same as primary dwelling
[3]
No requirement Same as primary dwelling
[3]
Same as primary dwelling;
or architectural composition
shingles, clay tile, slate, or
nonreflective standing seam
metal [3]
Roof Pitch No requirement 4:12 or greater [6] No requirement 4:12 or greater [6] Exterior Preservation No requirement No requirement See 17.74.090.E.1 No requirement Notes:
[1] “Historic property” means a designated historic resource or potential historic resource as defined in Section 17.84.020 (Types of historic resources).
[2] Standard does not apply to secondary and accent materials. [3] “Same as primary dwelling” means the type of material must be the same as the primary dwelling. The size, shape, dimensions, and configuration of individual pieces or elements of the material may differ from the primary dwelling. [4] If primary dwelling is predominantly stucco, stucco is allowed for the accessory dwelling unit. [5] Bathroom windows may be horizontally oriented.
[6] If the primary dwelling has a roof pitch shallower than 4:12, the accessory dwelling unit roof pitch may match the primary dwelling.

E. Building Additions to Historic Structures. The following standards apply in the coastal zone to an ADU attached to a designated historic resource or potential historic resource as defined in Section 17.84.020 (Types of historic resources).

1. The attached ADU may not obscure, damage, or destroy the exterior of a historic structure on its historically significant building face(s), including associated roofline(s).

2. Historically significant building face means any character-defining building elevation which abuts a street or public access easement. A structure may have more than one historically significant face.

3. Preservation requirements extend to all associated elements of a character-defining building face including, but not limited to, porches, windows, doors, trim, and cladding.

17.74.100 Deviation from standards.

A. When Allowed. The planning commission may approve an accessory dwelling unit that deviates from one or more standards in Sections 17.74.080 (Development standards) and 17.74.090 (Objective design standards).

B. Permit Required. Deviations allowed under this section require planning commission approval of a design permit.

A variance is not required. To approve the design permit, the planning commission must make the findings in Section 17.74.110 (Findings). (Ord. 1043 § 2 (Att. 2), 2020)

17.74.110 Findings.

A. When Required. The planning commission must make the findings in this section to approve a design permit for:
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1. Detached accessory dwelling units with a height that requires design review as specified in Table 17.74-1.; and

2. Accessory dwelling units that deviate from one or more standards in Sections 17.74.080 (Development standards) and 17.74.090 (Objective design standards), except for accessory dwelling units approved pursuant to Section 17.74.050 (Units subject to limited standards).

B. Findings. To approve the design permit, the planning commission shall find that:

1. The exterior design of the accessory dwelling unit is compatible with the primary dwelling on the parcel through architectural use of building forms, height, construction materials, colors, landscaping, and other methods that conform to acceptable construction practices.

2. The exterior design is in harmony with, and maintains the scale of, the neighborhood.

3. The accessory dwelling unit will not create excessive noise, traffic, or parking congestion.

4. The accessory dwelling unit has or will have access to adequate water and sewer service as determined by the applicable service provider.

5. Adequate open space and landscaping have been provided that are usable for both the accessory dwelling unit and the primary residence. Open space and landscaping provide for privacy and screening of adjacent properties.

6. The location and design of the accessory dwelling unit maintain a compatible relationship to adjacent properties and do not significantly impact the privacy, light, air, solar access, or parking of adjacent properties.

7. The accessory dwelling unit generally limits the major access stairs, decks, entry doors, and major windows to the walls facing the primary residence, or to the alley if applicable. Windows that impact the privacy of the neighboring side or rear yard have been minimized. The design of the accessory dwelling unit complements the design of the primary residence and does not visually dominate it or the surrounding properties.

8. The site plan is consistent with physical development policies of the general plan, any area plan or specific plan, or other city policy for physical development. If located in the coastal zone, the site plan is consistent with policies of the local coastal plan. If located in the coastal zone and subject to a coastal development permit, the proposed development will not have adverse impacts on coastal resources.

9. The project would not impair public views along the ocean and of scenic coastal areas. Where appropriate and feasible, the site plan restores and enhances the visual quality of visually degraded areas.

10. The project deviation (if applicable) is necessary due to special circumstances applicable to subject property, including size, shape, topography, location, existing structures, or surroundings, and the strict application of this chapter would deprive subject property of privileges enjoyed by other properties in the vicinity and under identical zoning classification. (Ord. 1043 § 2 (Att. 2), 2020)

17.74.120 Deed restrictions.

A. Prior to issuing a certificate of occupancy for a junior accessory dwelling unit, the property owner shall file with the county recorder a declaration of restrictions containing a reference to the deed under which the property was acquired by the current owner. The deed restriction shall state that:

1. The junior accessory dwelling unit may not be used for vacation rentals as defined in Chapter 17.160 (Glossary).

2. The junior accessory dwelling unit may not be sold separately from the primary dwelling.

3. Restrictions on size, owner occupancy requirement, and attributes in conformance with this chapter. 314
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B. The above declarations are binding upon any successor in ownership of the property. Lack of compliance shall be cause for code enforcement and/or revoking the city’s approval of the junior accessory dwelling unit.

C. The deed restriction shall lapse upon removal of the junior accessory dwelling unit. (Ord. 1043 § 2 (Att. 2), 2020)

17.74.130 Incentives.

A. Fee Waivers for Affordable Units.

1. The city may waive development fees for accessory dwelling units that will be rented at levels affordable to low- or very low-income households.

2. Applicants of affordable accessory dwelling units shall record a deed restriction limiting the rent to low- or very low-income levels prior to issuance of a building permit.

3. Landlords of accessory dwelling units shall be relieved of any affordability condition upon payment of fees in the amount previously waived as a result of affordability requirements, subject to an annual Consumer Price Index increase commencing with the date of application for building permit.

B. Historic Properties. The planning commission may allow exceptions to design and development standards for accessory dwelling units proposed on a property that contains a historic resource as defined in Chapter 17.84 (Historic Preservation). To allow such an exception, the planning commission shall approve a design permit and find that the exception is necessary to preserve the architectural character of the primary residence. (Ord. 1043 § 2 (Att. 2), 2020)
315
Item 9 D.

EXHIBIT C
Chapter 9.08

TATTOO ESTABLISHMENTS
Sections:

9.08.010 Prohibited.

9.08.020 Definitions.

9.08.030 Exception.

9.08.040 Penalty for violation.

9.08.010 Prohibited.

It is unlawful to maintain or conduct a tattoo establishment or to maintain and conduct a tattooing business in the city. (Ord. 174 § 1, 1962)

9.08.020 Definitions.

A. “Tattoo establishment” is defined as an establishment or business located on any premises in the city in which the business of tattooing is undertaken by any person, firm or corporation.

B. As used in this chapter, to “tattoo” means to insert pigment under the surface of the skin of a human being, by pricking with a needle or otherwise, so as to produce an indelible mark or figure visible through the skin. (Ord. 174 § 2, 1962)

9.08.030 Exception.

This chapter is not intended to apply to any act of a licensed practitioner of the healing arts performed in the court of his or her practice. (Ord. 174 § 3, 1962)

9.08.040 Penalty for violation.

The violation of any provision of this chapter shall constitute a misdemeanor punishable by a fine of five hundred dollars or six months in jail, or both; and in addition, all such violations shall constitute and be deemed a public nuisance subject to abatement pursuant to the provisions of the California Code of Civil Procedure. (Ord. 174 § 4, 1962)

17.20.020 Land use regulations.

A. Permitted Land Uses. Table 17.20-1 identifies land uses permitted in the mixed use zoning districts.

Table 17.20-1: Permitted Land Uses in the Mixed Use Zoning Districts Key Zoning District
P Permitted Use
MU-V MU-N Additional Regulations
A Administrative Permit
required
M Minor Use Permit required
C Conditional Use Permit
required
– Use not allowed
316
Item 9 D.

EXHIBIT C
Residential Uses [7] Section 17.20.020(B), (C) and (E)
Duplex Homes –/P [1] P
Elderly and Long-Term Care C [2] [6] C
Group Housing C [2] [6] C
Multifamily Dwellings –/P [1] [6] C
Residential Care Facilities, Small and Large See Section 17.20.020(F) Residential Care Facilities, Large P [2] [6] C Section 17.96.080 Residential Mixed Use See Sections

17.20.020(D) and (E)
[6]
C
Accessory Dwelling Units A A Chapter 17.74
Single-Family Dwellings –/P [1] P
Public and Quasi-Public Uses
Community Assembly C C
Cultural Institutions C C
Day Care Centers M M
Government Offices P/C [4] M [5]
Home Day Care P P
Medical Offices and Clinics – M [5]
Parks and Recreational Facilities C C
Public Pathways and Coastal Accessways C C
Public Safety Facilities C C
Schools, Public or Private – C
Commercial Uses Section 17.20.020(E)
Alcoholic Beverage Sales C C
Banks and Financial Institutions C P/C [3] [5]
Body Art Studios C - Section 17.96.080
Commercial Entertainment and Recreation C C
Eating and Drinking Places
Bars and Lounges C C
Restaurants and Cafes C C
317
Item 9 D.

EXHIBIT C
Take-Out Food and Beverage M M
Gas and Service Stations – –
Lodging
Bed and Breakfast C C
Hotels and Motels C C
Personal Services P P/C [3] [5]
Professional Offices P/C [4] M [5]
Retail P P/C [3] [5]
Vacation Rental See Section 17.40.030
Transportation, Communication, and Utility Uses
Utilities, Major C C
Utilities, Minor P P
Wireless Communications Facilities See Chapter 17.104
Other Uses
Accessory Uses and Structures See Chapter 17.52 Chapter 17.52 Home Occupations P P Section 17.96.040
Permanent Outdoor Display (Accessory Use) – C Section 17.96.100 Temporary Uses and Structures See Section 17.96.180
Urban Agriculture
Home Gardens P P
Community Gardens M M

17.24.020 Land use regulations (effective outside coastal zone).

A. Permitted Land Uses. Table 17.24-1 identifies land uses permitted in the commercial and industrial zoning districts. The city council may approve a use not listed in Table 17.24-1 after receiving a recommendation from the planning commission and finding the use to be consistent with the general plan and the purpose of the zoning district.

Table 17.24-1: Permitted Land Uses in Commercial and Industrial Zoning Districts 318
Item 9 D.

EXHIBIT C
Key Zoning District
P Permitted Use
C-C C-R I Additional Requirements
A Administrative Permit
required
M Minor Use Permit required
C Conditional Use Permit
required
– Use not allowed
Residential Uses [12]
Single-Family Dwellings – – –
Multifamily Dwellings C [9] C [9] –
Residential Mixed Use C C [7] – Section 17.24.040
Large Residential Care Facilities C [9] C [9] –
Accessory Dwelling Unit A A Chapter 17.74
Public and Quasi-Public Uses
Colleges and Trade Schools C C C
Community Assembly C C –
Cultural Institutions C C –
Day Care Centers M M –
Emergency Shelters P – P Section 17.96.030
Government Offices See 17.24.020(C) C
Home Day Care P P P
Medical Offices and Clinics See 17.24.020(C) –
Public Paths and Coastal Accessways C C C
Public Safety Facilities C C C
Commercial Uses
Alcoholic Beverage Sales C C C
Banks P [2] P [2] –
Body Art Studios C C - Section 17.96.080
Car Wash C C
Financial Institutions See 17.24.020(C) –
319
Item 9 D.

EXHIBIT C
Business Services P [2] P [2] P
Commercial Entertainment and Recreation M M –
Drive-Through Facilities – C [4] –
Eating and Drinking Establishments
Bars and Lounges C C C
Mobile Food Vendors – A [6]/C A [6]/C
Restaurants and Cafes M [2] M [2] C
Take-Out Food and Beverage M [2] M [2] –
Food Preparation M [2] – P
Gas and Service Stations C C –
Liquor Stores C C –
Lodging
Bed and Breakfast C – –
Hotel C C –
Maintenance and Repair Services M C P
Personal Services P [1] P [1] –
Professional Offices See 17.24.020(C) P
Salvage and Wrecking – – P
Self-Storage C – C Section 17.96.140
Retail P [11] P [11] –
Retail Cannabis Establishment C [10] C [10] Section 17.24.020(D) Vehicle Repair C C P
Vehicle Sales and Rental C [5] C [5] –
Vehicle Sales Display Room [8] P P –
Wholesaling – M [3] P
Heavy Commercial and Industrial Uses
Construction and Material Yards – – P
Custom Manufacturing M M P
Light Manufacturing – – P
320
Item 9 D.

EXHIBIT C
Warehousing and Distribution – – P
Transportation, Communication, and Utility Uses
Utilities, Major – C C
Utilities, Minor P P P
Recycling Collection Facilities C C C Section 17.96.130 Wireless Communications Facilities See Chapter 17.104
Other Uses
Accessory Uses See Chapter 17.52
Home Occupations P P – Section 17.96.040
Permanent Outdoor Display C C C Section 17.96.100
Temporary Uses See Section 17.96.180
Urban Agriculture
Home Garden P P –
Community Garden M M –

17.96.080 Body art studios.

A. Where Permitted. Body art studios are permitted in the C-C, C-R, and MU-V zoning districts, subject to approval of a conditional use permit and compliance with the standards in this section.

B. Maximum Number.

1. The maximum number of body art studios permitted in each zoning district at any given time is:
a. Two total in the C-C and C-R zoning districts; and
b. One in the MU-V zoning district.

2. A body art studio counts toward the maximum number allowed when the City receives a conditional use permit application with the materials required by subsection (C)(2) of this section. The City will not accept additional body art studio applications for processing if the application would exceed the maximum number allowed by this subsection.

3. Applications that are withdrawn, denied, or expire prior to permit approval shall no longer count toward the maximum number allowed.

C. City Permit.

1. A body art studio requires planning commission approval of a conditional use permit.

2. Applications shall include all information and materials required for a conditional use permit and the City’s administrative policy for body art studios:

3. During the first 30 days following the effective date of the ordinance establishing this section, the City will accept body art studio applications during an initial application period.

4. If the number of complete applications received during the initial application period exceeds the maximum number allowed in a zoning district pursuant to subsection B of this section, the City will conduct a random lottery, consistent with the City’s administrative policy for body art studios, to determine which applications may proceed to conditional use permit review. 321
Item 9 D.

EXHIBIT C

5. Following the initial application period, the City will accept applications on a first-submitted basis, subject to the maximum number allowed by subsection B of this section.

D. County Permits and Registrations. A body art studio operator shall obtain and maintain all permits and registrations required by the California Safe Body Art Act and Santa Cruz County Environmental Health Division.

E. Commencement of Operations.

1. Notwithstanding Section 17.156.080, a body art studio conditional use permit shall expire and become void if the body art studio has not obtained a City business license and commenced operations within twelve months of permit approval.

2. Upon expiration, revocation, or abandonment of a body art studio conditional use permit, the body art studio shall no longer count toward the maximum number allowed by subsection B.

F. Standards.

1. Hours of Operation. No body art procedures shall occur between 10:00 p.m. and 6:00 a.m.

2. Minimum Separation.
a. Body art studios shall not be located within a path of travel of 1,000 feet from a public or private K-12 school or a place of religious assembly, measured following the shortest path of travel along a public right-of-way from the property line of the parcel containing the body art studio parcel to the parcel containing the school or religious assembly use.
b. Body art studios shall not be located within a path of travel of 500 feet of another body art studio, measured from the body art studio tenant space on a multi-tenant property or the structure for a singletenant property.

3. Visibility of Procedures.
a. Body art procedures shall not be conducted in a manner visible from a public street, sidewalk, park, or other public area.
b. Screening shall be accomplished through interior partitions or other methods that maintain compliance with applicable ground-floor building transparency requirements.

4. Indoor Procedures. All body art procedures shall occur within an enclosed building.

5. Alcohol. Alcohol consumption shall be prohibited within the facility.

6. Age Restrictions. Persons under 18 years of age are prohibited on the premises unless accompanied by a parent or legal guardian.

7. Temporary/Mobile Facilities. Temporary or mobile body art facilities and body art events are prohibited.

17.160 Glossary
Body art studio. A facility, as defined by the California Safe Body Art Act (California Health and Safety Code Section 119300 et seq.), where one or more persons engage in the business of performing body art, including tattooing, body piercing, branding, or other body art practices regulated by the Act.

Temporary or Mobile Body Art Facility. A body art facility that is operated on a temporary basis, including at fairs, festivals, conventions, special events, or similar venues, or that is operated from a vehicle, trailer, portable structure, or other movable location rather than a permanently established body art studio. 322
Item 9 D.
4911-0181-2830 v1
Municipal Code Amendments
Consistency with LCP Land Use Plan
Incentivized Zone Amendments
The proposed amendments to the incentivized zone (Chapter 17.88) implement Program 1.4 in Capitola’s 2023-2031 Housing Element. Capitola committed to completing these amendments to comply with state housing laws.

The proposed incentivized zone amendments add objective standards for available benefits, increase the allowed height for qualifying hotels, and clarify rules for projects that provide community benefits and receive incentives for affordable or senior housing under state density bonus law. The incentivized zone is an existing urban area located along a transportation corridor and seeks to direct new development into areas that do not contain sensitive coastal resources.

Table 1 identifies the basis of finding the proposed incentivized zone amendments consistent with applicable LCP policies.

Table 1: Incentivized Zone Amendment Consistency Determination LCP Policies Basis for Consistency Finding
Coastal Act Policy 30250: New residential,
commercial or industrial development, except as
otherwise provided in this division, shall be located
within, contiguous with, or in close proximity to, existing developed areas able to accommodate it, or, where
such areas are not able to accommodate it, in other
areas with adequate public services, and where it will
not have significant adverse effects, either individually or cumulatively, on coastal resources.

The incentivized zone area is surrounded on all
sides be existing development and does not contain
known environmental sensitive habitat areas or
sensitive coastal resources as defined in Coastal
Action Section 30116.

Coastal Act Policy 30253: New development shall: 1)
Minimize risks to life and property in areas of high
geologic, flood and fire hazard …
The incentivized zone area is located outside of
active fault zones, high and very high liquefaction
potential zones, 100 year flood zones, areas with
potential hazards from bluff and sand beach
erosion, tsunami inundation risk areas and fire
hazard areas as identified in the City’s Local Hazard
Mitigation Plan.

Coastal Act Policy 30240: a) Environmentally
sensitive habitat areas shall be protected against any
significant disruption of habitat values, and only uses dependent on such resources shall be allowed within
such areas …
None of the following categorical ESHA areas, as
identified in the certified LCP, are located the
incentivized zone area: Soquel Creek, Lagoon, and
Riparian Corridor; Noble Gulch Riparian Corridor;
Tannery Gulch Riparian Corridor; and Monarch
butterfly habitat – Rispin-Soquel Creek and
Escalona Gulch.

Policy VII-1: It shall be the policy of the City of
Capitola to adequately plan for natural hazards in new
development, reduce risks to life and property, and
revise all plans and Zoning Ordinances to be in
conformance with all the policies of the Coastal Act
relating to hazards and shoreline structures.

See basis for Coastal Act Policy 30253 above.
323
Item 9 D.
4911-0181-2830 v1
ADU Amendments
The proposed amendments to Capitola’s accessory dwelling unit (ADU) regulations are required to comply with recent changes to state ADU law. These changes revised the process and timeframe for cities to review and act on ADUs and JADUs, modified owner occupancy requirements for JADUs, and clarified ADU provisions which also apply to JADUs. None of the proposed ADU amendments create conflicts with the City’s LCP policies.

Body Art Studios (Tattoo Establishments) Amendments
The proposed body art studio amendments allow body art studios in the C-C, C-R, and MU-V zoning districts with a CUP, limit the number of body art studios in each district, and establish standard for minimum separation, visibility of procedures, alcohol consumption, age restrictions, and other issues as appropriate. Currently, personal service uses are allowed in commercial and mixed use zoning districts, and the proposed amendments add body art establishments as a similar allowed use subject to operational standards. This change create conflicts with the City’s LCP policies. Furthermore, the Coastal Act calls for accommodating visitor-serving commercial uses in appropriate locations in the coastal zone. Because body art studios are frequently patronized by visitors, allowing them in the coastal zone is consistent with this Coastal Act objective.
324
Item 9 D.

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CAPITOLA

AUTHORIZING SUBMITTAL TO THE CALIFORNIA COASTAL COMMISSION

FOR THE CERTIFICATION OF AN AMENDMENT TO THE LOCAL COASTAL PROGRAM AMENDING MUNICIPAL CODE TITLE 17 (ZONING) PERTAINING

TO INCENTIVES FOR COMMUNITY BENEFITS, ACCESSORY DWELLING

UNITS, AND BODY ART STUDIOS
WHEREAS, on August 22, 2024, the City Council adopted amendments to the 2023- 2031 Housing Element of the General Plan (“Housing Element”) and Addendum to the General Plan Final Environmental Impact Report;
Whereas, on August 30, 2025, the California Department of Housing and Community Development (“HCD”) certified the Housing Element;
WHEREAS, the Housing Element identifies Zoning Code Chapter 17.88 (Incentives for Community Benefits) as a constraint to housing production and calls for the City to establish objective standards for projects that provide community benefits; WHEREAS, in 2025, the state enacted AB 1154 and SB 543 which, revise the process and timeframe for cities to review and act on accessory dwelling units (ADUs) and junior accessory dwelling units (JADUs), modify owner occupancy requirements for JADUs, and clarify ADU provisions which also apply to JADUs;
WHEREAS, Municipal Code Chapter 9.08 (Tattoo Establishments), adopted in 1962, states that “It is unlawful to maintain or conduct a tattoo establishment or to maintain and conduct a tattooing business in the city.”;
WHEREAS, on May 7, 2026, staff met with California Coastal Commission staff to review proposed amendments to Chapter 17.88 (Incentives for Community Benefits) related to the Capitola Village Hotel and, based on the information provided Coastal staff provided direction to move the Capitola Village Hotel community benefits into a separate chapter of the code and not make changes to the standards;
WHEREAS, at a duly noticed public hearing on August 20, 2026 the Planning Commission recommended the City Council adopt the Municipal Code Amendments pertaining to incentives for community benefits, accessory dwelling units, and body art studios WHEREAS, notice of the Amendments’ availability was mailed and public review drafts were made available on August 14, 2026, in compliance with California Coastal Act public participation requirements and applicable state law; WHEREAS, the Capitola City Council conducted duly noticed public hearings on September 10 2026, at which the City Council introduced and performed a first reading of an ordinance to adopted the proposed Zoning Code Amendments. On September 24, 2026 the City Council adopted the ordinance, with the Zoning Code Amendments; and WHEREAS, the City Council determined that the Zoning Code Amendments are consistent with the General Plan and that the revisions would be internally consistent with all 325
Item 9 D.
other provisions of the Municipal Code.

WHEREAS, the Zoning Code Amendments would become a component of Implementation Plan of the City’s Local Coastal Program and is intended to be implemented in a manner that is in full conformance with the California Coastal Act.

WHEREAS, the Local Coastal Program Implementation Plan establishes specific land use and development regulations to implement the Local Coastal Program Land Use Plan, and Title 17 (Zoning) and the Zoning Map are part of Capitola’s Local Coastal Program Implementation Plan; and
WHEREAS, the City provided Public Notice, as required under Coastal Act 30514 et seq., for Certification of the LCP Implementation Plan and Corresponding Maps.

NOW, THEREFORE, BE IT HEREBY RESOLVED, by the City Council of the City of Capitola, that this Resolution declares and reflects the City’s intent to amend the LCP Implementation Plan as it pertains to Chapter 17 (Zoning), as drafted, if certified by the California Coastal Commission, in full conformity with the City of Capitola LCP and provisions of the California Coastal Act.

BE IT FURTHER RESOLVED, that the City Manager or his designee is directed to submit the said Coastal Commission LCP Amendments to the California Coastal Commission for its review and certification. If the Coastal Commission approves the amendment package, it will take effect automatically upon Coastal Commission approval. If the Coastal Commission modifies the amendment package, only the modifications will require formal action by the City of Capitola.

I HEREBY CERTIFY that the foregoing resolution was passed and adopted by the City Council of the City of Capitola on the 10th day of September, 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Margaux Morgan, Mayor
ATTEST:

Julia Gautho, City Clerk
326
Item 9 D.

CITY OF CAPITOLA

ADMINISTRATIVE POLICY

BODY ART STUDIO LOTTERY
Effective Date: __________
Adopted By: __________

1. Purpose
This policy establishes the process for selecting body art studios when more applications are received than the number of studios allowed by the Capitola Municipal Code. This policy is intended to implement Capitola Municipal Code Section 17.96.080, Body Art Studios, and does not replace or modify the requirements of the Municipal Code.

2. Number of Body Art Studios
A maximum of three body art studios may operate in the City at any given time:
 One in the Mixed Use Village (MU-V) zoning district; and  Two in the Regional Commercial (C-R) and Community Commercial (C-C) zoning districts combined.

3. Application to Participate in the Lottery
During the initial application period established by Municipal Code Section 17.96.080, an applicant wishing to participate in the lottery must submit:

1. A completed City lottery application on the form approved by the Community Development Director;

2. A $3,000 deposit; and

3. The applicant's preference for:
o MU-V, or
o C-R/C-C.

An applicant may identify only one zoning district preference. If not selected for the preferred location, the applicant will be added to the pool for the third lottery.

The deposit is required to participate in the lottery. If selected, the deposit will be applied toward the future conditional use permit. If not selected, the deposit, will be refunded to the applicant, less $250 for cost associated with administering the lottery. If a lottery is not held due to lack of applications, the $250 will not be charged.

4. Lottery Process
If more complete applications are received than the number of available body art studio locations, the City will conduct a random lottery.

The lottery will be conducted in the following order:

First Lottery – MU-V

1. All applicants requesting an MU-V location will be entered into the first lottery.

2. The first selected applicant will receive the opportunity to proceed with a body art studio in the MU-V zoning district.

3. If there are no MU-V applicants, the MU-V location will be open to all applicants in the Fourth lottery.

Second Lottery – C-R/C-C

1. All applicants requesting a C-R/C-C location will be entered into the second lottery. 327
Item 9 D.

CITY OF CAPITOLA

ADMINISTRATIVE POLICY

BODY ART STUDIO LOTTERY
Effective Date: __________
Adopted By: __________

2. The first two selected applicants will receive the opportunity to proceed with body art studios in the C-R/C-C zoning districts.

Third Lottery – Remaining C-R/C-C Opportunity

1. All remaining applicant not previously selected will be included in a third lottery for any remaining C-R/C-C opportunity.

2. The second two selected applicants will receive the opportunity to proceed with body art studios in the C-R/C-C zoning districts.

Fourth Lottery – Remaining MU-V Opportunity

1. If there were no applicants having a preference for the MU-V District, the MU-V lottery will open to all remaining applicants not previously selected.

5. Selection Does Not Guarantee a Location
Being selected in the lottery does not approve a particular location or guarantee approval of a conditional use permit.

A selected applicant must identify a proposed location that meets all applicable City requirements, including the zoning requirements for body art studios.

The applicant remains responsible for obtaining all required City and County approvals.

6. One Year Requirement
A selected applicant will have one year from the date of lottery selection to complete the following:

1. Obtain a signed lease or other proof of site control for a location within the zoning district for which the applicant was selected.

2. Conditional Use Permit. A selected applicant must obtain a conditional use permit as required by Capitola Municipal Code Section 17.96.080. Lottery selection does not constitute approval of a conditional use permit. The conditional use permit process will address the proposed location and the applicable requirements of the Municipal Code.

The one-year period is intended to give the selected applicant time to secure a location and obtain a conditional use permit.

7. Construction and Permitting Period
After satisfying the one-year requirements, the selected applicant will have an additional 12 months to complete all required permits, registration, construction, and licensing required to open and operate the body art studio for business.

8. Failure to Meet Deadlines
If a selected applicant:
 Does not provide the required Conditional Use Permit and lease/site control within the initial one-year period; or
 Does not complete all required permits, registration, construction, and licensing required to open and operate the body art studio for business within the additional one-year period; the applicant's opportunity to operate a body art studio under the lottery selection will expire. 328
Item 9 D.

CITY OF CAPITOLA

ADMINISTRATIVE POLICY

BODY ART STUDIO LOTTERY
Effective Date: __________
Adopted By: __________
The available body art studio opportunity will then be made available to another applicant pursuant to the Municipal Code and this administrative policy.

9. Withdrawal
An applicant may withdraw from the lottery or from the process at any time by notifying the City in writing. A withdrawn applicant will no longer be eligible for the body art studio opportunity for a period of one year.

10. City Discretion
The City Manager or designee may establish reasonable administrative procedures necessary to conduct the lottery and implement this policy, provided those procedures are consistent with Capitola Municipal Code Section 17.96.080. If there is a conflict between this policy and the Capitola Municipal Code, the Municipal Code shall control.

11. Policy Expiration
This policy shall expire after the application period for the initial lottery has closed. Once expired, body art studio permits shall be issued on a first come first served basis and this policy will automatically be rescinded.
329
Item 9 D.

City Of Capitola
Zoning Code Amendments
City Council Hearing
September 10, 2026 Ben Noble Planning
330
Item 9 D.

ZONING CODE AMENDMENTS
 Updated Housing Element adopted 2024
 Housing Element programs require Zoning Code
Amendments
 One remaining amendment required
 Program 1.4 calls for changes to “incentivized
zone” which allows increase FAR and height for
projects that provide community benefits
 Other clean-up amendments (ADUs, tattoo
establishments) needed at this time
Background
331
Item 9 D.

ZONING CODE AMENDMENTS
 Planning Commission study session June 4, 2026
 Incentivized Zone, Body Art Studios (Tattoo
Establishments), Accessory Dwelling Units
 Reviewed with State HCD
 Planning Commission Meeting August 20, 2026
– Recommended Adoption
Background
332
Item 9 D.

ZONING CODE AMENDMENTS
General Plan: Increased height and FAR for projects
that provide “substantial community benefit” in
specified locations
Zoning Code:
 Chapter 17.88: Incentives for Community Benefits
 Additional details on:
– Allowable benefits
– Application submittal and review
– Findings
Incentivized Zone
333
Item 9 D.

Existing Eligible Locations
 41st Avenue
 Capitola Road between
Clares Street and 42nd
Avenue
 Former Capitola Theater
site
(hotel only)
Capitola Beach
Esplanade
Park
Former
Theater
Site
Mall removed
in 2026
334
Item 9 D.

ZONING CODE AMENDMENTS
Chapter 17.88
 Properties along 41st and Capitola Road near mall
 Amendments to implement Housing Element
New Chapter 17.90
 Only for Village hotel
 No substantive changes
Proposed Amendments
335
Item 9 D.

ZONING CODE AMENDMENTS

1. General Projects:
 Public Open Space
 Transit Center
 Public Parking
 Land For Public Facility
 New Commercial Space

2. Hotel Projects

3. Density Bonus Projects: State
density bonus law project with
Community Benefit
Community Benefit Categories
Removed:
• Child Care
• Bike/Pedestrian
Connection
Incentive should be
proportional to the benefit
City's ability to secure the
promised benefit
2020 Childcare incentives
336
Item 9 D.

ZONING CODE AMENDMENTS
Available Incentives
Category Incentive
General Project 2.0 FAR and 50 ft. height
Hotel Project

2.0 FAR and 60 ft. height
Reduced parking
Meeting space excluded from FAR
Density Bonus
Project
One additional density bonus
concession or incentive
337
Item 9 D.

ZONING CODE AMENDMENTS
Three step process:
 City Council conceptual review for projects
dedicating land to City (public open space,
transit center, public parking, and land for
public facility).
 Planning Commission recommendation
 City Council final action
Application Submittal and Review
338
Item 9 D.

ZONING CODE AMENDMENTS
Minimum 10% of the project's total gross floor area,
with minimum of 5,000 sf and maximum of 30,000 sf.

New Commercial Space
Project Gross Floor Area 10% Requirement Required Commercial 30,000 sq. ft. 3,000 sq. ft. 5,000 sq. ft. minimum
50,000 sq. ft. 5,000 sq. ft. 5,000 sq. ft.
75,000 sq. ft. 7,500 sq. ft. 7,500 sq. ft.
100,000 sq. ft. 10,000 sq. ft. 10,000 sq. ft.
200,000 sq. ft. 20,000 sq. ft. 20,000 sq. ft.
300,000 sq. ft. 30,000 sq. ft. 30,000 sq. ft. maximum
500,000 sq. ft. 50,000 sq. ft. 30,000 sq. ft. maximum
339
Item 9 D.

ZONING CODE AMENDMENTS
 Street presence
 Parking location
 Windows and doors
 Rooftop mechanical
equipment
 Materials
Hotel Design
 Site operations
 Neighborhood
compatibility
 Maintenance and safety
 Municipal tax compliance
Hotel Operational
Standards
340
Item 9 D.

ZONING CODE AMENDMENTS
Recently built or under construction
 Marea Sol Hotel, Santa Cruz
 Lido House, Newport Beach
Hotel Examples
341
Item 9 D.

ZONING CODE AMENDMENTS
Marea Sol Hotel,
Santa Cruz
55 ft, 4 stories, 49 guest rooms and
suites
342
Item 9 D.

ZONING CODE AMENDMENTS
Lido House, Newport Beach
59 ft roof ridge, 4 stories, 130 rooms and suites
343
Item 9 D.

ZONING CODE AMENDMENTS
New state ADU laws (2025):
 Revise process and timeframe for cities to review
and act on ADUs and JADUs
 Modify owner occupancy requirements for JADUs,
 Clarify ADU provisions which also apply to JADUs
Accessory Dwelling Units
344
Item 9 D.

ZONING CODE AMENDMENTS
 Municipal Code Chapter 9.08 Prohibits tattoo
establishments
 Zoning Code silent on this use
 Legal concerns: tattoo businesses considered
protected First Amendments expression
Body Art Studios
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Item 9 D.

ZONING CODE AMENDMENTS
 Limited: 2 in C-C & C-R and 1 in MU-V
 Conditional use permit required
 Initial 30-day application period: If applications
exceeds maximum number, City will hold lottery
 After 30-day period: Applications accepted on
first-submitted basis
 Repeals Chapter 9.08 (Tattoo Establishments)
New 17.96.080 (Body Art Studios)
346
Item 9 D.

ZONING CODE AMENDMENTS
Standards:
 Hours of Operation
 Minimum Separation
 Visibility of Procedures
 Indoor Procedures
 No alcohol
 Age limits
 Temporary/Mobile Facilities
New 17.96.080 (Body Art Studios)
347
Item 9 D.

ZONING CODE AMENDMENTS
Daycare 2020 Code Updates
Significant Updates
Rescinded: 17.96.070 – Large Home Day Care
A. Care Provider Owner Occupancy
B. License
C. 500 feet Separation
D. Yard Requirements
E. Screening - fence or wall shall on all property lines or around all outdoor activity areas.

F. Noise
G. Parking.

H. Garage – used for property owner’s vehicles
I. Safety Compliance & Inspections (Building Division, Fire Marshal) J. Pick-Up and Drop-Off Plan
348
Item 9 D.

ZONING CODE AMENDMENTS
Daycare 2020 Code Updates
Type of Day Care Residential
Zones
R-1
Multifamily
Mobile Home
Mixed Use
Zones
Mixed Use
Village
Mixed Use
Neighborhood
Commercial
Zones
Community
Commercial
Regional
Commercial
Home Day Care
• In home
• Up to 14 Children
Permitted
MUP
Permitted
MUP
Permitted
Not Allowed
Day Care Centers
Nursery schools,
childcare centers,
infant day care
centers, cooperative
day care centers

CUP MUP MUP
CUP
349
Item 9 D.

ZONING CODE AMENDMENTS
Consider and adopt resolutions recommending the
City Council adopt amendments to Capitola
Municipal Code pertaining to repeal and replace
Chapter 17.88 (Incentives for Community Benefits),
relocate existing village hotel incentives to a new
Chapter 17.90 (Incentives for a Village Hotel with
Community Benefits); amend Chapter 17.74
(Accessory Dwelling Units), 17.20 (Mixed Use Zoning
Districts), Chapter 17.24 (Commercial and Industrial
Zoning Districts), and Chapter 17.160 (Glossary); and
Repeal of Municipal Code Chapter 9.08 (Tattoo
Establishments).

Recommendation
350
Item 9 D.

Capitola City Council
Agenda Report
Meeting: September 10, 2026
From: Administrative Services Department
Subject: Fiscal Year 2025-26 Revenue and Expenditure Update Recommended Action: Receive the Fiscal Year 2025-26 revenue and expenditure update and provide direction regarding the use of the $1 million insurance settlement received for repairs associated with the 2023 Wharf storm damage.

Background: Staff has completed their review of major General Fund revenues and expenditures for Fiscal Year 2025-26. Overall, the City's financial performance was favorable, with revenues exceeding the adopted budget and expenditures finishing modestly above budget.

The year-end results warrant discussion and a recommendation regarding the $1 million insurance settlement received in connection with repairs to Capitola’s Wharf in 2023, caused by winter storm damage. The settlement provides an opportunity to replenish City reserves, which currently remain approximately $900,000 below established target balance levels.

General Fund Revenue: Total General Fund revenues for Fiscal Year 2025-26 were $21,601,965, compared to the adopted budget of $21,011,349, resulting in a favorable variance of approximately $590,616 or 2.8%.

The favorable revenue performance was driven primarily by stronger-than-budgeted sales tax, property tax, transient occupancy tax (TOT), building permit revenue, and parking citation revenue.

Sales Tax Revenue: Actual sales tax revenue was $9,975,936, which was $260,058 above budget.

Bradley Burns sales tax accounted for the majority of the favorable variance, exceeding budget by $220,786. Measure O exceeded budget by $12,999, while Measure Y exceeded budget by $26,273.

Property Tax Revenue: Property tax revenue totaled $3,708,437, exceeding the adopted budget by $117,437.

Transient Occupancy Tax (TOT) Revenue: TOT revenue totaled $2,320,910, which was $98,910 above the adopted budget of $2,222,000. Approximately $45,000 of the favorable variance resulted from late payments of prior-year TOT obligations.

Building Permit Revenue: Building permit revenue totaled $534,852, compared to the adopted budget of $410,000, resulting in a favorable variance of $124,852, or approximately 30.5%. The stronger-thanbudgeted permitting activity is a positive indicator of continued development and construction activity within the City.

Parking Citation Revenue: Parking citation revenue totaled $506,748.51, compared to the amended budget of $450,000, resulting in a favorable variance of $56,748.51, or approximately 12.6%. The higherthan-budgeted revenue reflects stronger parking citation activity during the fiscal year.

Other revenue categories finished modestly below budget, including Cannabis Retail Tax, which was $3,463 below budget; Franchise Tax, which was $3,922 below budget; and Parking Meter revenue, which was $7,059 below budget.
351
Item 9 E.

Overall, the favorable performance of the City's major revenue sources more than offset the modest unfavorable variances in other revenue categories and resulted in General Fund revenues exceeding the adopted budget by approximately $591,000.

Insurance Settlement: The City received a $1 million insurance settlement in connection with repairs to Capitola’s Wharf in 2023, caused by winter storm damage. Because this is a one-time payment, staff does not recommend using the proceeds to fund ongoing operating expenditures.

Instead, the settlement provides an opportunity to restore reserves that were utilized or otherwise impacted by the 2023 Winter storms and associated repair costs.

Expenditures: Overall, expenditure performance was generally favorable at the department level, although several departments experienced unfavorable variances. Total General Fund expenditures exceeded the adopted budget by approximately $104,784.

The primary reason for the overall expenditure overage was higher-than-budgeted legal expenditures in the City Attorney's Office. City Attorney expenditures totaled $629,625, compared to a budget of $325,000, resulting in an unfavorable variance of approximately $304,625. This variance was driven in part by redistricting, Housing Element-mandated Mall rezoning, higher levels of public records act costs, and litigation associated with the flume. Prior to the annual audit, staff will evaluate these costs and allocate appropriate expenditures to special revenue funds, reducing the overall General Fund impact.

This overage was substantially offset by approximately $200,000 in combined departmental operating savings.

Despite the overall expenditure overage, the City maintained a positive operating result for the fiscal year.

When the favorable revenue performance is combined with the expenditure results, General Fund revenues exceeded expenditures by approximately $486,000. This positive operating result improves the projected June 30, 2027, General Fund balance from approximately $95,000 to $581,000, slightly exceeding the City's $500,000 target balance.

Reserves: The City's reserve position remains an important consideration in evaluating the year-end financial results. Current reserve balances are approximately $900,000 below established target balance levels. Given the City's existing reserve position, staff recommends the $1 million insurance settlement associated with the 2023 Wharf damage repairs be directed toward replenishing reserves.

Applying the settlement to reserves would eliminate the current reserve shortfall and provide greater financial stability heading into Fiscal Year 2026-27. It would also preserve the City's ongoing operating revenues for recurring expenditures rather than using a one-time insurance payment to support ongoing operations.

Staff further recommends the approximately $100,000 in reserves above the established target balance be retained in the Emergency Reserve. At the August 27th City Council meeting, Council authorized the use of up to $150,000 of funds from the City’s Emergency Reserve for work on the Stockton Bridge.

In addition to the potential use of funds for the Stockton Bridge, additional costs for the recently completed districting effort are estimated at approximately $40,000, emergency street repairs on Laurence Ave are estimated at $50,000, and forecasted super El Nino storms this winter are other items staff is currently monitoring.
352
Item 9 E.

The Finance Advisory Committee (FAC) met on Tuesday, September 1st , and concurred with staff’s
recommendation. Additionally, the FAC requested to review the current Financial Management Policy that includes the reserve policies.

During the FY 2026-27 mid-year budget review, the City Council will have the opportunity to conduct a more comprehensive review of the City's financial position and budget performance after several months of FY 2026-27 operations. This review will also provide an opportunity to evaluate any financial impacts associated with the upcoming winter storm season.

Conclusion: Fiscal Year 2025-26 financial performance was generally favorable. General Fund revenues exceeded the adopted budget by approximately $486,000, driven primarily by stronger-than-budgeted sales tax, property tax, TOT, building permit, and parking citation revenues.

Expenditure performance was generally favorable at the department level, with significant savings in the City Manager, Police, Public Works, and Community and Economic Development Departments helping to offset higher expenditures in the City Attorney's Office.

The resulting positive operating balance is expected to increase the projected June 30, 2027, General Fund balance from approximately $95,000 to $581,000, slightly above the City's $500,000 target balance.

The separate $1 million insurance settlement provides an opportunity to address the City's broader reserve shortfall. Staff recommends directing the settlement to reserves rather than using the one-time proceeds for ongoing operating expenditures.

Fiscal Impact: FY 2025-26 General Fund revenues exceeded the adopted budget by approximately $591,000, before consideration of the separate $1 million insurance settlement associated with the 2023 Wharf damage/repairs.

The estimated ending FY 2026-27 General Fund balance was initially projected at approximately $95,000, significantly below the City's $500,000 target balance. Based on the FY 2025-26 results, including approximately $486,000 in revenues exceeding expenditures, the updated estimated June 30, 2027, General Fund balance is approximately $581,000.

Separately, the City's reserves remain approximately $900,000 below established target balance levels.

Directing the $1 million insurance settlement to reserves would restore the City's reserve position and result in approximately $100,000 in reserves being above the established target balance.

Staff recommends retaining the additional $100,000 above the target balance following Council's direction utilizing emergency reserve funds for the Stockton Bridge. The FY 2026-27 mid-year budget review will allow the Council to conduct a comprehensive evaluation of the FY 2026-27 budget and financial position, including any impacts that may result from the upcoming winter storm season.

Final fund balance and year-end financial results will be determined following completion of the City's year-end financial audit. Auditors will be site for year-end fieldwork the week of September 8 and anticipate completing the financial statements by late October/early November. Any required year-end budget adjustments will be brought forward separately, as appropriate.

Alignment with 2025-2029 Strategic Plan Priority: Accountable Government Report Prepared By: Jim Malberg, Administrative Services Director Reviewed By: Julia Gautho, City Clerk
Approved By: Jamie Goldstein, City Manager
353
Item 9 E.

Fiscal Year 2025-26
Revenue & Expenditure
Update
City Council• September 10, 2026
354
Item 9 E.

FY 2025-26 Financial Overview
Overall financial performance was favorable.

General Fund revenues exceeded amended budget by approximately $591,000 (2.8%).

General Fund expenditures exceeded amended budget by
approximately $105,000 (0.5%)
Positive operating result: approximately $486,000
Projected June 30, 2027, General Fund balance improves from approximately $95,000 to $581,000.

Updated projection slightly exceeds the City's $500,000 target balance. 355
Item 9 E.

Revenue Performance
• Total General Fund revenues: $21.60
million
• Amended budget: $21.01 million
• Favorable variance: approximately
$591,000 (2.8%).
• Largest contributors:
– Sales tax
– Property tax
– Transient Occupancy Tax (TOT)
– Building permit revenue
• Several smaller revenue categories
finished modestly below budget.
356
Item 9 E.

Key
Revenue
Results
• Sales Tax: $9,975,936
– $260,058 above budget
• Bradley Burns: $220,786 above budget
• Measure Y: $26,273 above budget
• Measure O: $12,999 above budget
• Property Tax: $3,708,437
– $117,437 above budget
• TOT: $2,320,910
– $98,910 above budget
• Approximately $45,000 of TOT variance
due to late payment of prior-year
obligations
357
Item 9 E.

Additional Revenue Results
• Building Permit Revenue: $534,852 vs. $410,000 budget. – Favorable building permit variance: $124,852 (30.5%). • Parking Citation Revenue: 506,749 vs. $450,000 amended budget. – Parking citation variance: $56,749 above budget (12.6%). • Unfavorable variances:
– Cannabis Retail Tax: $3,463 below budget
– Franchise Tax: $3,922 below budget
– Parking Pay Station Revenue: $7,059 below budget
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Item 9 E.

Expenditure Performance
• Total General Fund expenditures exceeded adopted budget by approximately $105,000.
– Primary unfavorable variance: City Attorney.
– City Attorney expenditures: $629,625 vs. $325,000 budget. – Unfavorable City Attorney variance: approximately $304,625. – Contributing items include: Districting, Housing Elementmandated mall rezoning, higher levels of PRA’s, and litigation associated with the flume
– Staff will evaluate appropriate allocation of qualifying costs to special revenue funds during the annual audit.
– Substantially offset by approximately $200,000 in combined departmental operating savings
359
Item 9 E.

General Fund Balance
FY 2025-26 revenues exceeded expenditures by approximately $486,000.

Initial estimated June 30, 2027, General Fund balance:
approximately $95,000.

Updated estimated June 30, 2027, balance: approximately $581,000.

City target balance: $500,000.
360
Item 9 E.

Insurance
Settlement
$1 million insurance settlement received
for repairs associated with the 2023
Wharf damage.

Settlement is a one-time revenue
source.

Staff does not recommend using
proceeds for ongoing operating
expenditures
Staff recommends directing settlement
to reserves impacted by 2023 winter
storms and associated repair costs.
361
Item 9 E.

Reserve
Position
Current reserves are approximately
$900,000 below established target
balance levels.

Applying $1 million settlement to
reserves would eliminate current
shortfall.

Resulting reserve position would be
approximately $100,000 above
established target levels.

Staff recommends retaining additional
$100,000 in Emergency Reserve.
362
Item 9 E.

Emergency
Reserve &
FY 2026-27
Non-Budgeted Items currently monitoring
• Council authorized use of up to $150,000 from
Emergency Reserve for Stockton Bridge work.
• Recently completed districting effort:
approximately $40,000 in additional costs.
• Emergency street repairs on Laurence Avenue:
approximately $50,000.
• Staff is also monitoring potential impacts from
forecasted Super El Niño winter storms.
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Item 9 E.

Emergency
Reserve &
FY 2026-27
FY 2026-27 mid-year budget review will
provide an opportunity to:
• Review financial performance after several
months of operations
• Evaluate budget and fund balance projections
• Assess potential impacts from upcoming
winter storm season
364
Item 9 E.

Finance Advisory Committee
Recommendation
• Finance Advisory Committee met September 1, 2026.
– FAC concurred with staff's recommendation to direct $1 million settlement to reserves.
– FAC also requested review of the City's Financial Management Policy, including reserve policies.
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Item 9 E.

Next Steps / Audit
Year-end financial results remain subject to completion of the City's financial audit.

Auditors will be on site for year-end field work the week of September 8.

Financial statements are anticipated to be completed by late October / early November.

Any required year-end budget adjustments will be brought forward separately, as appropriate.
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Item 9 E.

Recommended Action
RECEIVE FY 2025-26 REVENUE
AND EXPENDITURE UPDATE.

PROVIDE DIRECTION
REGARDING USE OF $1

MILLION INSURANCE

SETTLEMENT
367
Item 9 E.

Capitola City CouncilSeptember 10, 2026

Capitola City Council
September 10, 2026