Final vote on zoning changes covering community benefit incentives, ADUs and body art studios

In plain English

This is the final vote (second reading) on a package of zoning code changes the Council introduced earlier in September 2026. It rewrites Chapter 17.88, the rules that let developers on 41st Avenue and Capitola Road between Clares Street and 42nd Avenue build taller and bigger in exchange for "community benefits," and moves the separate Capitola Village hotel incentives (for the former Capitola Theater site) into a new Chapter 17.90 with no changes to those standards. It also updates the city's accessory dwelling unit rules to match two 2025 state laws, and repeals the city's 1962 ban on tattoo businesses, replacing it with zoning rules that would allow up to three "body art studios" citywide. A yes vote adopts the ordinance; it takes effect 30 days later outside the coastal zone, and inside the coastal zone only after the California Coastal Commission certifies it.

Property owners and neighbors along the 41st Avenue and Capitola Road commercial corridors would see new rules on building height, floor area and hotel review; homeowners gain more flexibility to add accessory units; and tattoo artists could legally open in Capitola for the first time since 1962, though only three storefronts would be allowed.

Key facts

• On the eligible 41st Avenue and Capitola Road properties (excluding the Capitola Mall), qualifying projects could get floor area ratio up to 2.0 and height up to 50 feet; a qualifying hotel could reach 60 feet, park at 0.75 spaces per guest room, and exclude meeting and conference space from floor area calculations.
• A hotel receiving these incentives must be operated for transient occupancy for a minimum of 30 years, secured by a recorded covenant that cannot be changed without City Council approval.
• Hotels would no longer need a conditional use permit; instead they must meet new objective design and operational standards (for example, outdoor pools, patios and rooftop areas closed 10:00 p.m. to 7:00 a.m., and a 24-hour on-call manager) and still obtain Planning Commission design permit approval.
• Body art studios would be allowed with a conditional use permit in the C-C, C-R and MU-V districts, capped at two in C-C and C-R and one in MU-V, for three citywide; the city would take applications for 30 days after the ordinance is effective and hold a lottery if applications exceed the cap, then first-come, first-served.
• Accessory dwelling unit changes follow 2025 state laws AB 1154 and SB 543: two accessory dwelling units plus one junior accessory dwelling unit would be allowed on a single-family lot, and owner-occupancy would be required for a junior unit only when it shares bathroom facilities with the main house. Staff reports no fiscal impacts.