What’s Up With the Capitola Mall?

By Molly Ording, CVRA Member

Both before, during and after the City Council’s decision not to pursue the development of a new City Hall, park and parking structure on the current City Hall property and adjacent parking lots, many Capitola residents and members of the Capitola Village Residents’ Association have been asking …”why doesn’t the City concentrate its efforts on developing the Mall to its full potential and pursue locating a hotel and housing on 41st Avenue adjacent to a newer, smaller, renovated and vibrant Mall?”

I have heard this question so many times of late and listened for years to disparaging comments and complaints about “our Mall” … so I decided it was time to find some answers and some truths out about what really are the factors that have combined to make the Mall an increasingly aged and, for some, irrelevant place to visit and shop and who are the players involved who might be preventing a mall make-over and why?

The mall, including the large central connected core and the outer buildings, is actually owned by 5 different corporate entities: Macerich Corp., which owns the bulk of the interior space, Sears, Target and two other Real Property Corporations who each own the former Marie Callender’s site and the Ross/Chipotle buildings on the west side of the Mall. Each corporate entity has their own financial goals, management and business plans for their properties and, while they share in the overall mall maintenance, security and parking stock, what they also share in is potential veto power over the others’ future plans and proposals.

One can understand that getting 5 different corporations with 5 different budgets, financial constraints and business plans to come together and agree on an over-all plan to improve or to liquidate a portion or the entire property has proven to be impossible thus far – not that the City of Capitola has not tried and continues to try!

With the understanding the City’s leverage only begins when a project is brought forth, the City cannot dictate or mandate what private property and business owners can do with their property prior to the submission of project plans if they are operating consistent with their use permits. In 2009, the City had approved zoning changes to allow and encourage part of the parking areas for some redevelopment.

Prior the dissolution of the Redevelopment Agency in 2011, the City of Capitola went to the Macerich Corporation with a plan, tenaciously worked out with the Metro Board, to move the Metro bus station to a location between Kohl’s and Macy’s in exchange for the City ear-marking $1 million in redevelopment funds for public improvements toward that move. The intent of moving the transit center was to enable Macerich to upgrade and vastly improve the entrance and access to the Mall.

Finally, in 2014, Macerich came back to the City and the Metro Board saying that, even with the $1 million in the City’s Redevelopment Funds, it did not make financial sense for them to make those improvements and implement the beginnings of a mall renovation at that time. From the demise of the Redevelopment Agency in 2011, to the present day, the multiple owners have not been able to reach any consensus about any possible improvements or a potential change in use for any or all of the property.

Now, City leaders do reach out to Macerich regularly and encourage them to pursue improvements with the City’s blessings but, as yet, they have not seen fit to make any moves.

A few developers have also approached the Mall property owners with a vision for a portion of the Mall to be replaced with housing as well as a hotel but, again, they have made no move in any direction, nor are they showing any inclination to do so! Additionally, when completing the City’s General Plan Update in 2014, the City laid out a “Mall Envisioning” Plan signaling to the Mall owners the City’s goals of a Mall renovation, renewal and rebirth! Again, no action on the part of the owners!

Meanwhile, the viability for profitable retail within many current aging malls, such as ours, is looking increasingly dire. Roughly 50% of the City’s revenues come from sales taxes. The City has a huge incentive and imperative to encourage retail growth. The majority of the City’s revenues come from property taxes and TOT (Transient Occupancy) taxes from hotels.

Locating a hotel within a smaller retail Mall footprint along with enhanced pedestrian spaces, dining options, as well as housing, would be the City’s ideal scenario for this valuable and accessible piece of property. However, without consensus from the various owners and seemingly huge financial incentives, the sad reality is that nothing much may change in the near future for “our Mall.” Pity… as there is such opportunity there for the City and County in terms of additional housing space and a hotel and for our residents who are weary of heading over the hill or to Marina and Monterey to browse, shop and dine in more modern, beautiful and energetic surroundings!

Next month … stay tuned! I was hoping for a chat and “mall walk” with the Macerich Mall Manager who would hopefully offer their perspectives and plans for “our Mall.” I may do a “Mall Pall — Part 2” to learn a little more about the extent of the City’s ability to move the Mall owners forward and the results of a hoped for meeting with Macerich!

In the meantime, to end on a positive note, “5 Guys Burgers and Fries” will be opening in the next few weeks in the Former Carl’s Jr. site in the front of the Mall. This is a very popular burger restaurant that has expanded rapidly to over 1,000 locations in 47 states — handcrafted burgers and fries! Hooray! A new and very popular addition to brighten your Capitola Mall experience!