Why did the nazis try to germanize Kraków during WW2 and why didn't the city get destroyed like most others when they retreated?

Part I

Of these two questions, the second is the easiest to answer. Kraków escaped the fate of other Polish cities largely because the Red Army outmanuevered the local German forces in the region and there were few Germans available to resist or destroy the city. Cities like Breslau, which had troops to defend it, did resist, and the result was destruction. Moreover, there was no equivalent of a Warsaw Rising in Kraków, which further meant there was no urban combat. The city was too remote for sustained Western Allied bombing either. So no urban warfare led to no mass destruction and the speed of the Soviet advance prevented any demolition.

The Germanization of Kraków is a slightly more complicated matter, but was emblematic of how the German approach to the Polish cities during the occupation. In many ways, the Third Reich's attitude towards Poland was an interlinked process of genocide and expropriation of land that served as a laboratory for what as Generalplan Ost, launched under the SS's Rasse- und Siedlungshauptamt (RuSHA/Race and Resettlement Bureau) and the RSHA. Although Generalplan Ost is largely affiliated with colonizing Eastern territories for agricultural settlements of a National Socialist neo-peasantry, cities had an important role in this schema. In 1942 Konrad Meyer, the prominent agricultural scientist, SS lieutenant general, and Humboldt University chair for agricultural and farming policy, edited the book Landvolk im Werden. Published under the auspices of RuSHA, this massive anthology was an instruction manual for the Germanization of Poland. Meyer makes it clear that Germany was embarking upon a thorough reorganization of the Polish land for the exclusive benefit of its future German settlers. Within this vision, the newly Germanized cities had an unambiguous role according to Meyer. According to Meyer:

What must therefore be sought in this planning is by no means a separation of the rural and urban, but the clear alliance with one another. {emphasis original}

He further reassures his readers that this new space will not see massive industrial conglomeration or an absurd "imitation of aimless Württemburgers’ 'disorganized microregionalism'," but it will instead create a decentralized industrial and agricultural region inside the new German empire. Large, existing cities would be modernized, cleared of undesirable racial elements, and serve as nodal points of state power in the fertile Neue Osten, as a quaint fold-out map in Landvolk im Werden indicates. The urban-town-agrarian schema of Generalplan Ost envisioned a living space rather like a Russian nesting doll in which modern living areas congruent with the precepts of National Socialism lived in harmony.

Generalplan Ost's grandiose visions were in line with the new Gauleiters' own projects for Germanizing and strengthening their territories. Wartheland's Gau leader, Arthur Greiser, took a heightened personal interest in the simultaneous modernization and cultural embellishment of his capital city of Posen, and commissioned public works projects such as an expanded zoo and around 40,000 additional apartments.

These satraps also drew active commissions from Germany's urban architects and architectural magazines for submissions to remake the East. Such entreaties often fell on receptive ears as the Polish experiment allowed urban landscape designers and planners to indulge in fantasies of radically remaking the German city. Deutsche Bauzeitung’s editor H. F. Geiler ran a series of editorials in the early war years that expressed the belief that the Eastern cities were following a clearly delineated path towards an organic city. For example, a November 1941 column admired the General Government’s structured system of tax incentives, housing fund, and low-interest loans to rebuild the cityscape. Any German or Volksdeutsche was eligible to receive such a loan so long as they agree to an inspection from the local authorities and an agreement to make timely progress on rehabilitation of the property. Furthermore, he also noted with pleasure that both Wartheland and the General Government were collaborating with the Beamten-Heimstättenwerk (Civil Servant’s Homestead Society) cooperative bank to ensure that a cadre of professional civil servants would establish "in the East a new and enduring Heimat for him and his children.” The advance guard of these civil servants would restore both the landscape and ensure that the new German cities would be an example of a properly run organization. Deutsche Bauzeitung also ran a series of special articles and pictorials highlighting the preexisting Germanic character of these cities which would be preserved. In Germany's architectural and landscape planning departments, there were several dissertations and proposals generated for the radical reconstruction of the East, such as the 1943 dissertation by Max Fischer. zur Grünplanung von Auschwitz (there is no direct English equivalent for Grünplanung other than "green planning," it basically means an urban planning with nature integral to urban design similar to the Garden City movement in the UK).

The building and reconstruction craze in the new Gaus left the General Government in an anomalous position. Nominally a racial dumping ground for undesirables, the General Government's vain head Hans Frank had greater ambitions for his charge than being a guard over Untermenschen. Like Greiser, he too wanted to modernize and Germanize his fiefdom. At considerable expense, the General Government commissioned a Baedeker guide to the General Government in 1943 which highlighted the Germanic influence of the region's cities and towns. The Baedeker's introduction noted to would-be tourists in the General Government that, "countless, often submerged traces of old German cultural and pioneering work," would be apparent to the German visitor as the General Government's administration restored the land to its proper ownership.

As Frank's capital, Kraków was naturally drawn into these schemes to Germanize the city. As with cities like Posen, historic preservation of allegedly Germanic sites worked in tandem with the radical redevelopment. Modernist architect Hubert Ritter’s article "Krakau, Die Stadt des General-Gouvernments" exemplified many of these trends. In July 1940, Hans Frank, head of the General Government, contracted Ritter to produce a plan for the general reconstruction of Kraków in a manner suitable for the administrative capital. Although this Munich architect was estranged from the regime prewar, connections within architectural educational establishment led to this prestigious appointment. Ritter proceeded to draw up a plan for the expansion of Kraków and produced a wooden model of the planned reconstruction, all of which he reproduced in the April 1941 issue of Monatshefte für Baukunst und Städtebau.