CC 07-16-2024 Item No. 10 Waiver of BMR Housing Mitigation Fees_Written CommunicationsCC 7-16-2024
#10
Waiver of BMR
Housing
Mitigation Fees
Written Comments
From:Jean Bedord
To:City Council; City Clerk; Cupertino City Manager"s Office
Subject:Agenda Item #10: Waiver of BMR and Planning Fees for Vallco/Rise SB35 Project, July 16
Date:Monday, July 15, 2024 3:06:43 PM
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Mayor Sheila Mohan, Vice-Mayor J.R. Fruen, Councilmembers Hung Wei, Liang Chao and
Kitty Moore,
I commend the council for your unanimous decision in closed session to move the
Vallco/Rise project forward with a win-win negotiated agreement between the City and Vallco
Property Owner LLC. Vallco could have continued this lawsuit for $77 million which the city
would have most likely lost due to the recent Sheetz court decision. The city would also have
incurred additional legal costs. Instead, the city receives $42.8 million in fees, a compromise
which now clears the way for Vallco to move forward without the obstacles of the past. CBS
News provided an informative video summary of the delays over the past ten years of
attempted development: Development at Cupertino's old Vallco Shopping Mall site
finally moves ahead
I urge you to reaffirm this commitment to the community by unanimously approving
these fee waivers, thereby ensuring progress in finally developing this vacant 50 acre site
which has been an eyesore for so many years.
Warm regards,
Jean Bedord
Cupertino resident and City Council Observer
From:Connie-Comcast Swim5am
To:City Clerk; City Council; Pamela Wu
Subject:Agenda item Fee Agreement with Vallco (Rise) July 16, 2024
Date:Monday, July 15, 2024 12:06:52 PM
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Dear Mayor Mohan, Vice Mayor Fruen
Councilmember, Wei, Councilmember Ciao, Councilmember Moore, and City Manager and City Staff,
Thank you to the staff for reaching a resolution to the fee negotiations with the rise. This will bring benefits to
Cupertino and a good resolution for the Rise.
Please approve this agreement unanimously on Tuesday July 16, 2024.
Sincerely,
Connie Cunningham, Chair, Housing Commission (self only)
From Connie's iPhone
From:Rhoda Fry
To:City Clerk; City Council
Subject:Item 10 Vallco Fees - question
Date:Monday, July 15, 2024 10:20:08 AM
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And another question regarding item 10 on vallco fees.
The agenda shows that the reports were created way back in May.
Why did it take so long for this to get on the agenda?
Thanks.
Virus-free.www.avg.com
From:Rhoda Fry
To:City Clerk; City Council
Subject:#10 7/16 Vallco Fees
Date:Monday, July 15, 2024 10:02:41 AM
Attachments:A Detailed Status Report .pdf
Staff Report 64.pdf
20210921 Letter to VPO Re .pdf
Response to Fee Protest Le.pdf
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Dear City Council,
I would like to get some clarity around giving away $77M in impact fees to a developer.
This number comes from the newspaper – why not coming from the staff report.
We need more transparency.
1. For the fees to be paid, please itemize. Are these fees based on the old fees or the
current fee structure. If it is based on the old fees, please also list how much the fee
would have been based on current fee structures for the sake of transparency.
2. Please refer to the attached documents that are unequivocal about the City’s past stance
on paying impact fees.
3. Please explain why Planning Fees are being waived. What are the Planning Fee costs of
this project?
4. With respect to BMR, it seems to me like the developer is getting development bonuses
on the one-hand and waiving fees on the other. In my opinion, this is double dipping.
The BMR is not true BMR housing. The BMR housing is not integrated with the
market-rate housing, it is smaller, and of lower quality. Consequently it will rent for
less. Is that true BMR housing? In my mind, it looks like the developer is building
market-rate substandard housing on the true BMR housing, while reaping many other
benefits.
5. Why was the City adamant about charging for BMR housing in the past but not now?
Please explain.
6. Please see the attachment referring to the fact that the project will create a housing
deficit - - - that also demonstrates why we need a BMR mitigation fee.
7. This is setting a bad precedent for other projects that will use Vallco as an example to
waive impact fees.
8. In the past, the City had measures in place that would guarantee that the BMR housing
would be built – this is no longer the case. We need to collect those fees (and get
interest on them) until such time that the BMR is built. And although I think we should
keep them, the City could rebate the fees minus the interest after the BMR is built.
9. We are also losing out on retail – sales-tax is our best revenue-generator.
10. Why is the City subsidizing fees to Vallco and who will pay for the impacts in the end?
Sorry, this email is rather rushed. Please do read the attachments.
Thanks,
Rhoda Fry
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CITY MANAGER’S OFFICE
CITY HALL
10300 TORRE AVENUE• CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3195 • FAX: (408) 777- 3366
CUPERTINO.ORG
September 21, 2021
Via Electronic Mail
Reed Moulds Katharine Van Dusen
Managing Director Coblentz Patch Duffy & Bass LLP
Vallco Property Owner LLC One Montgomery Street, Suite 3000
965 Page Mill Road San Francisco, CA 94104
Palo Alto, CA 94304
Re: Vallco Town Center Project
Dear Mr. Moulds and Ms. Van Dusen:
I write in response to Vallco Property Owner LLC’s (“Developer’s”) request for an
extension of the project approval for the Vallco Town Center Project (“Project”)
pursuant to Government Code section 65913.4(f)(3), or Senate Bill 35 (“SB 35”), and to
your letter dated September 17, 2021 objecting to the City of Cupertino’s (“City’s”)
meeting with the Santa Clara County Department of Environmental Health
(“SCCDEH”). As explained in detail below, your extension request is moot in light of
the passage of Assembly Bill 1174, and your objection to public participation in matters
that directly impact the health and safety of City residents is deeply concerning and
wholly unwarranted.
1.Mootness of Extension Request
On September 14, 2021, Ms. Van Dusen sent a letter to the City requesting an extension
of the Project’s entitlement under Government Code section 65913.4 (SB 35). Under the
version of section 65913.4(f)(3) in effect at that time, the September 21, 2018 Project
approval expired on September 21, 2021. That version of section 65913.4(f)(3) also
provided that “the development proponent may request, and the local government
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shall have discretion to grant, an additional one-year extension to the original three-
year period.” You argued that the Developer was not required to comply with this
statutory requirement because the Project approval was tolled while litigation
challenging the Project was pending.
As you are aware, no provision tolling the expiration of the Project approval appeared
in section 65913.4(f)(3). The Department of Housing and Community Development
(“HCD’s”) strained attempt to rewrite the statute through administrative fiat was
wholly unconvincing, as was explained in detail in the City Attorney’s September 7,
2021 letter enclosed herewith.
You also argued that one sentence in a lengthy May 26, 2021 letter to the City’s outside
counsel, which references a prior oral request for an extension of the Project approval,
was sufficient to request an extension. That argument ignored the Developer’s burden
of documenting sufficient progress toward construction. The City requested that the
Developer submit a procedurally and substantively adequate request to the Community
Development Department. While your letter to the City Attorney did not comply with
this request, we were prepared to overlook your unwillingness to follow regular
procedures and to review your extension request on the merits.
That review is no longer necessary, however. On September 16, 2021, the Governor
signed Assembly Bill 1174 (“AB 1174”). AB 1174 retroactively amends Government
Code section 65913.4(f) to provide that a project approval “shall remain valid for three
years from the date of the final action establishing that approval, or if litigation is filed
challenging that approval, from the date of the final judgment upholding that
approval.” (Gov. Code, § 65913.4(f)(2).) The statute became effective immediately upon
adoption and has the effect of conforming the statute to the interpretation that HCD
erroneously and illegally attempted to implement through administrative fiat.1
Under the amended version of section 65913.4(f), the Legislature has relieved the
Developer of its obligation to demonstrate progress toward construction and
completion of the project by September 21, 2021. The Legislature has also provided the
Developer almost two more years to address the numerous challenges facing the
project, including (i) completion of necessary, long-delayed environmental investigation
and remediation; (ii) design of the green roof, which impacts many aspects of the
Project; (iii) addressing Project modifications that have not yet been approved by the
1 You also complain that the City did not inform HCD of its error when the
Department’s SB 35 Guidelines were published. The City was under no obligation to
correct HCD’s misreading of the statute during the administrative process, and both
HCD and the Developer could have identified the error by simply reading the statute.
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City; and (iv) the Developer’s objections to paying the full amount of legislatively
adopted impact fees due for development of the Project. While it is regrettable that the
Legislature has decided to retroactively change the rules under which this Project was
approved, apparently for the benefit of a single property owner, we are compelled by
the newly adopted statute to conclude that the Developer’s request for an extension of
its entitlement is now moot.
2.Project Review and Implementation
Despite the challenges outlined above, and despite the Developer’s argumentative,
irrelevant, and factually incorrect efforts to shift blame for what it perceives to be
Project delays onto the City, the City continues to diligently process necessary Project
approvals. The Developer chose to phase the Project in a manner that deferred path-
critical site preparation work, including necessary environmental investigation work,
and it has now only barely begun necessary site characterization work on the west side
of Wolfe Road. (No substantial work has been performed east of Wolfe Road.) The
Developer also chose to pursue ministerial approval of a large, complex mixed use
project, leaving many critical details to be resolved following Project approval (as
opposed to through a development agreement or conditions of approval). It is
disingenuous to blame the City for these decisions.
The Developer also appears to take issue with the City’s decision to engage in specific
plan and zoning amendment processes that do not directly impact the current Project
approval and with City staff’s efforts to engage in post-approval discussions to achieve
specific policy goals. With respect to the former, nothing in SB 35 restricts the City
Council’s right to adopt prospective legislation, and in any case these purported
concerns are irrelevant to the current Project. As for the City’s interest in pursuing
policy goals such as transit improvements and greenhouse gas reductions, it would be
an abdication of our responsibility to the residents of Cupertino to ignore those goals in
ongoing discussions regarding the Project. Your characterization of advocacy that seeks
improvements to the Project as delay is telling, and unfortunate.
This framing also ignores the fact that these good-faith discussions were initiated in
large part because the Developer has argued that it should not be subject to objective,
legislatively adopted impact fees to address the Project’s impacts on transportation,
housing, and recreational facilities. SB 35’s commitment to comply with objective
standards applies equally to the Developer and the City. To date, the Developer has not
been willing to honor that commitment.
Notwithstanding these challenges, the City remains committed to processing
subsequent approvals for the Project in compliance with SB 35. Rather than engaging in
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finger-pointing as to the causes of any delays—which are in any event not unexpected
for a Project of this scale and complexity—the City instead provides the attached Project
Review and Implementation Schedule for review and acceptance by the Developer. We
look forward to continuing to work with you on Project implementation issues and will
continue to commit significant City resources to the review and implementation of the
Project in accordance with the law.
3.Your Unwarranted Objections to Routine Public Participation in the Site
Cleanup Process
Ms. Van Dusen chose to write separately to object to City staff’s meeting with SCCDEH
and to a request for a public record made to SCCDEH by the City’s consultant. To be
clear, City staff have the right and responsibility to coordinate with partner agencies
that share responsibility for protecting the health and safety of Cupertino residents. It
would be a dereliction of our duty to those residents to refuse to engage with the
regulator who is overseeing the investigation and remediation of the Project site.
Nor is there anything unusual or untoward about such a meeting. Environmental
regulators routinely meet with stakeholders to discuss the investigation and
remediation of contaminated properties. Indeed, many agencies have extensive
guidelines for public participation in the site cleanup process. (See, e.g., DTSC Public
Participation Policies & Procedures.) The City’s interest in ensuring that the site is
thoroughly investigated and remediated is wholly appropriate, and we have confidence
that SCCDEH’s oversight will ensure that thorough and prompt measures to address
environmental contamination are implemented. The City will continue to work with
SCCDCEH and other partner agencies to ensure the Project meets applicable health and
safety requirements.
Your citation to Government Code section 65913.4(h)(2) is also misguided. Section
65913.4(h)(2) prohibits local jurisdictions from imposing procedures on processing
permits for SB 35 projects that “inhibit, chill, or preclude the development.” This
provision is irrelevant because SCCDEH is not a permitting agency subject to SB 35.
Moreover, the purpose of the City’s meeting was to ensure that its processing of
building permit and other applications is aligned with SCCDEH’s restrictions on soil
disturbing activities. Rather than casting unwarranted and ill-informed aspersions on
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the City’s motives, you should welcome this type of coordination among partner
agencies.2
Finally, you grossly mischaracterize a routine request for a public record made by a
consultant the City has retained to provide advice regarding the site cleanup process.
Like any other person, the City’s consultant has the right to request and obtain public
records from SCCDEH. The request was a natural outgrowth of a meeting with
SCCDEH, and we are under no obligation to seek your permission to make a public
records request from a partner agency. For you to suggest otherwise is absurd and
counterproductive.
A far more productive approach would be to work in partnership with SCCDEH, with
appropriate City involvement, to move toward an understanding of the full extent of
contamination at the site—which remains poorly characterized three years after the
Project approval—and to take all necessary steps to remediate that contamination. To
advance that goal, the enclosed Review and Implementation Schedule describes
ongoing SCCDEH oversight of the Project site west of Wolfe Road and outlines a
process for extending that oversight east of Wolfe Road. We hope that you share our
goal of promptly completing the investigation and remediation of the site, and we are
confident that the process we have outlined is the best path forward for doing so.
Sincerely,
Greg Larson Christopher D. Jensen
City Manager City Attorney
Enclosures:
Letter to HCD from Cupertino City Attorney (Sept. 7, 2021) (w/o enclosure)
Project Review and Implementation Schedule
2 For example, when the City reached out to California Water Service Company (“Cal
Water”) regarding the lack of progress in completing water plans, the City found out
that Cal Water had stopped working on the Project due to unpaid fees. The Developer
was able to correct this problem after the City pointed it out.
CITY ATTORNEY’S OFFICE
CITY HALL
10300 TORRE AVENUE• CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3195 • FAX: (408) 777- 3366
EMAIL: CITYATTORNEY@CUPERTINO.ORG
September 7, 2021
Via Email (shannan.west@hcd.ca.gov)
Shannan West
Department of Housing and Community Development
Division of Housing Policy Development
2020 W. El Camino Avenue, Suite 500
Sacramento, CA 95833
Re: Vallco Town Center Project
Dear Shannan West:
I write in response to your “Letter of Technical Assistance” dated September 1, 2021,
concerning the anticipated application for an extension of Vallco Property Owner LLC’s
(“Developer’s”) entitlement to construct a 6.9 million square foot mixed-use project
under Senate Bill 35 (“SB 35”) at the former Vallco Mall site.
As an initial matter, your letter states the requests arises from a conversation with the
former City Manager and the project applicant. Neither our current Interim City
Manager Greg Larson nor I was aware of that conversation. In the future, please direct
any inquiries regarding technical assistance to Mr. Larson.
Setting that aside, we understand the challenges the Department of Housing and
Community Development (“HCD”) faces in interpreting complex and evolving state
housing legislation, including SB 35. You argue that a requirement to toll the expiration
of the Developer’s project approval while legal challenges to the approval are pending,
which does not exist in the applicable provision of the statute, should be added to the
law by administrative fiat. As you may be aware, the Developer has raised a similar
Re: Vallco Town Center Project
September 7, 2021
Page 2
argument in conversations with the City. They are aware, as you must be, that we
disagree with this interpretation of the statute.
The residential component of the Vallco project includes 2,402 units, 1,201 which will be
deed-restricted affordable units. The applicable provision governing the term of the
entitlement of the project is Government Code section 65913.4(f)(3), which states:
If a local government approves a development pursuant to this section, that
approval shall remain valid for three years from the date of the final action
establishing that approval and shall remain valid thereafter for a project so
long as vertical construction of the development has begun and is in
progress. Additionally, the development proponent may request, and the
local government shall have discretion to grant, an additional one -year
extension to the original three-year period. The local government’s action
and discretion in determining whether to grant the foregoing extension
shall be limited to considerations and processes set forth in this section.
Your argument that Government Code section 65913.4(f)(2) determines the term of the
Developer’s entitlement is wrong. As an initial matter, you completely fail to address
the fact that subdivision (f)(2) applies only “[i]f a local government approves a
development pursuant to this section and the project does not include 50 percent of the
units affordable to households making at or below 80 percent of the area median
income.” (Gov. Code, § 65913.4(f)(2) (emphasis added).) When at least 50 percent of the
units in the project are affordable, subdivision (f)(2) does not apply. Your argument to
the contrary ignores the text of the statute.
Given that subdivision (f)(2) does not apply to the Vallco project, your contention that
subdivision (f)(3) merely “informs the interpretation of subdivision (f)(2), rather than as
one creating a separate, third timeline for the expiration of entitlements,” is irrelevant,
as well as being incorrect. And in any case, subdivision (f)(3) does create a separate
timeline for entitlements for projects that fall within its scope (i.e., SB 35 projects that do
not fall within the scope of subdivision (f)(1) or (f)(2)). Just like subdivisions (f)(1) and
(f)(2), subdivision (f)(3) sets the term of the entitlement, and like subdivision (f)(2),
subdivision (f)(3) provides for a one-year extension of that term. The terms of
subdivision (f)(3) are parallel to those of subdivision (f)(2), not an interpretation of its
provisions, and any contrary reading of the statute would render subdivision (f)(3)
redundant and the remaining extension provisions nonsensical where a project falls
outside the scope of both subdivisions (f)(1) and (f)(2).
Re: Vallco Town Center Project
September 7, 2021
Page 3
Indeed, to the extent the terms of one of these paragraphs “informs the interpretation”
of the other, your interpretation of the statute gets it backward: subdivision (f)(3)’s
standard for reviewing an extension request incorporates the “considerations and
processes set forth in this section,” which presumably include the standards set forth in
subdivision (f)(2) (i.e., “significant progress toward getting the development
construction ready”). The quoted language in subdivision (f)(3) is meaningless unless
that subdivision is interpreted as an independent provision that controls the term of SB
35 entitlements for projects that fall outside the scope of subdivisions (f)(1) and (f)(2)—
as this project does.
In sum, the City’s interpretation of the extension provisions of SB 35 is dictated by the
statutory language. This interpretation is also consistent with the conditions of the
project’s approval. The City’s September 21, 2018 approval letter states:
As mandated by Government Code Section 65913. 4( e)( 3) [now (f)(3)], this
Approval shall remain valid for three years from the date of this letter
(September 21, 2021) and shall remain valid so long as vertical construction
of the Project has begun and is in progress as determined in Municipal Code
Sections 19. 12. 180, 15. 02.150 and the California Building Code Section 105.
The Project proponent may request, and the City has discretion to grant, an
additional one-year extension to the original three-year period. The City' s
action and discretion in determining whether to grant the extension shall
be limited to considerations and process set forth in Government Code
Section 65913. 4.
Neither HCD nor the Developer disputed the validity of this condition at the time of
approval, and they are barred from doing so now. The permit condition is controlling.
Thus, the City will process an application for an extension received based on the
requirements of the permit condition stated above, which are entirely consistent with
the requirements of SB 35. The City will exercise its discretion to review that application
based on the criteria set forth in SB 35, including evidence that the project has made
significant progress toward construction.
In anticipation of receiving a timely extension request, the City has devoted significant
resources to processing subsequent approvals for the Vallco project. These approvals
include building permits, public right-of-way improvements, a final subdivision map,
Re: Vallco Town Center Project
September 7, 2021
Page 4
and affordable housing agreements. The scope, extent, and complexity of those
approvals and other issues arising from the project is reflected in the recently prepared
City Manager’s report to the City Council, which is enclosed with this letter for your
review. The report demonstrates that the City is fully engaged in work to allow the
project to move forward.
That being the case, the Developer, and not the City, ultimately has the responsibility to
obtain all necessary approvals and commence vertical construction within in the
timeframe contemplated by SB 35. In particular, the Developer inexplicably delayed
taking the necessary steps to investigate, manage, and remediate environmental
contamination onsite. The City is not responsible for any delays resulting from the Developer’s
mismanagement of the environmental investigation, although of course we will continue to
diligently process applications for subsequent approvals, consistent with all legal
requirement and the requirements of SB 35.
Again, please feel free to contact me directly at chrisj@cupertino.org if you have any
questions about this letter or if you believe further technical assistance is necessary.
Sincerely,
Christopher D. Jensen
City Attorney
cc: Greg Larson, Interim City Manager
Melinda Coy, Land Use and Planning Manager, HCD
Fidel Herrera, Senior Housing Policy Specialist, HCD
Ryan Seeley, General Counsel, HCD
Enclosure:
City Council Staff Report (Sept. 7, 2021)
VALLCO TOWN CENTER SB 35 PROJECT
PROJECT REVIEW AND IMPLEMENTATION SCHEDULE
1.Site Investigation and Remediation
Vallco Property Owner LLC (“Developer”) has entered into an oversight agreement
with the Santa Clara County Department of Environmental Health (“SCCDEH”)
covering the portion of the Vallco Town Center site (“Site”) west of Wolfe Road.
Excavation and shoring can only be carried out west of Wolfe Road with authorization
from SCCDEH, after the property has been assessed and/or remediated to the
satisfaction of SCCDEH. The City of Cupertino (“City”) will require written
confirmation from SCCDEH prior to developer being able to perform any work west of
Wolfe Road under any excavation and shoring permit, or any other soil disturbing work
west of Wolfe Road.
The Developer will request to enter an oversight agreement with SCCDEH for the
portion of the site east of Wolfe Road before commencing significant soil disturbing
activity on that portion of the Site.
2.Fire Station Construction
Subject to negotiating a final agreement and approval of the Santa Clara County Fire
District Board, the Developer will, at its cost, construct a fire station on the Site to assure
that current emergency times can be maintained in light of increased traffic volumes.
The fire station will be developed in accordance with the requirements of the Santa
Clara County Fire District (“Fire District”). These requirements include:
•A scope of development will be prepared in sufficient detail to be incorporated
as an exhibit in legal agreements.
•A concept plan must show fire station with Central Plant.
•The Developer and the Fire District will enter into a 30-year no-cost lease
agreement, with the Developer responsible for maintenance of building exterior
and core systems.
•The Fire District will review and provide input on developing design and
construction plans.
•The fire station will be constructed in Project first phase and completed prior to
first phase occupancy.
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•The Developer will consult with the Fire District regarding building standards
employed for construction of the fire station.
The agreement will be fully executed prior to the approval of the first phase building
permit.
3.Fire Station Access Issues/New Intersection at Wolfe Road and Street 7
The Fire District has requested the City’s assistance in ensuring that emergency vehicles
can turn northbound on Wolfe Road from the Project Site. At the Developer’s request,
the City is considering allowing an intersection at Wolfe Road and Road 7 to help
accommodate this movement only for emergency vehicles. The City will require the
Developer to prepare plans, including traffic signal preemption and median
modifications, to accommodate the District’s access request. The improvements will be
completed prior to first occupancy.
4.Green Roof Emergency Access
The Fire District determined that the green roof amenity will require direct access fire
lanes from the street level for fire vehicles The Fire Code requires that fire roads
support aerial equipment weighing 75,000 lbs. In lieu of this weight requirement, the
Fire District will authorize alternative means and methods for fire access, as permitted
under the Fire Code. The green roof must support emergency response vehicles
weighing up to a 10,000 pounds.
5.Green Roof Design Issues
The City Building Official will convene a working group consisting of the Developer’s
design team, the District and their consultant, and the City’s plan checking consultant to
address emergency access and structural issues related to the green roof. The City will
require information to determine if the key design, green roof superstructure, supports,
and foundations can resist potential sliding forces. The City will require that the access
and fire lane issues be resolved prior to the issuance of the parking garage and podium
building permits.
6.Transit Hub/Transportation
The Mobility Element of the General Plan required that the Vallco Developer “work
with VTA [Valley Transportation Authority] / and or other transportation organizations
to study and develop a transit transfer station that incorporates a hub for alternative
services, such as car sharing, bike sharing and/or other services.” The Developer’s
plans recognize the importance of such a transit hub. The Developer and the City agree
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to cooperatively work with VTA to develop transportation connection and to review
proposed transportation system management (“TSM”) and traffic demand management
(“TDM”) programs. The Developer and the City will reach an agreement on the transit
hub design and other transportation issues before issuance of the first building permit
for vertical construction of the first phase of the Project, based on a phasing plan
approved by the Developer and the City.
7.Cal Water
Before issuance of the building permit for vertical construction of the first phase of the
Project, California Water Service Company (“Cal Water”) will provide the City with a
letter confirming that the agency can provide sufficient water for all uses, including
residential, office, retail, landscape irrigation, and cooling towers. The Project’s water
supply, including landscaping water, is based in part on an innovative cistern recapture
system. The Developer will provide proof that the cistern system is viable and will be
adequate to provide year-round irrigation needs, or that water will be provided by
other means such as reclaimed water. This letter will be provided to the City before
issuance of the building permit for vertical construction of the first parking garage or
podium building permit.
8.Final Map
The Developer proposes to record phased final maps, and the City will permit phasing
provided all map conditions are satisfied. Prior to approval of the final map, the City
will require clearance letters from all agencies and property owners with easements
within the property and letters from agencies certifying that they will provide services
to the development. All required planning and inspection fees must be paid prior to
recording any map, as well as any required impact fees. The Subdivision Improvement
Agreement and CC&Rs must also be recorded concurrently with recordation of the final
map.
9.Below Market Rate Housing Manual
The Developer is required to implement the City’s Below Market Rate Housing
(“BMR”) Procedural Manual. The BMR Manual will provide covenants for 840 of the
affordable housing units. The template BMR Manual has been provided to the
Developer. The City must approve a BMR Manual, template regulatory agreement, and
a BMR program administrator prior to the issuance of building permits for the first
housing units. A list of affordable units must be recorded before occupancy of any
housing unit.
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10.Project Modification
The development will require modifications to the approved SB 35 plans. State law
contemplates a 60-day approval process for substantial changes in plans. Minor changes
that are in substantial compliance with the approved plans will be addressed at the
building permit stage.
11.Impact Fees
City impact fees include parkland dedication in-lieu, transportation (TIF) and housing
(BMR) fees. The fees are validated through nexus studies demonstrating the connection
between the amount of the fee and development project impacts. The Developer has
contested the reasonableness of these fees as applied to the Project. The parties will
continue to negotiate in good faith until agreement is reached and approved by the City
Council, or the City imposes legislatively adopted fees in accordance with applicable
requirements of the Municipal Code. The Developer agrees that the City Council has
the discretion to impose or modify its impact fees. The Developer retains its right to
challenge any decision made by City Council in accordance with law. Nothing in this
paragraph waives any claim or defense either party may have in any action seeking a
refund of or challenging the validity of any impact fees.
The parties agree any impact fees due are payable as follows:
•Parkland Dedication Fees: Parkland fees must be paid at the time of the issuance
of the core and shell building permit for each building.
•Transportation Impact Fees (TIF): TIF fees must be paid prior to issuance of
building permit. (CMC § 14.02.040.) The Developer will pay TIF fees at the time
of the issuance of the core and shell building permit for each building.
•BMR Fees: BMR fees must be paid prior to or by date of issuance of construction
permits. (Resolution 20-055, BMR Manual, § 2.2.1.) The Developer will pay BMR
fees at the time of the issuance of the core and shell building permit for each
building.
This Project Review and Implementation Schedule is intended to provide a road map
for review and processing of subsequent permits and other work necessary to complete
construction of the Project. By providing this Schedule, the City does not waive or
modify any requirement of the September 21, 2018 approval letter or any requirements
that have been or may lawfully be imposed by any subsequent approval. Additionally,
nothing in this Schedule limits the City’s obligations to process subsequent permits for
the Project under Government Code section 65913.4 and other applicable law. Both
5
parties recognize that additional issues may arise in the course of development of the
Project, and by agreeing to the procedures outlined above, neither party waives its right
to raise additional issues or require compliance with any state or federal law or any City
ordinance, resolution, or policy applicable to the Project under state law.
ACKNOWLEDGEMENT
On behalf of Vallco Property Owner LLC, I acknowledge receipt of the foregoing Project
Review and Implementation Schedule for the Vallco Town Center SB 35 Project and
consent to the process for resolution of outstanding issues set forth herein.
__________________
Reed Moulds Date
Managing Director, Vallco Property Owner LLC
Attachment A
Detailed Status Report on the Vallco SB 35 Development Project
(prepared for the September 7, 2021 City Council meeting)
Summary
The old Vallco Town Center, a traditional retail mall with some unique elements, was
historically the City of Cupertino’s retail hub. Like other urban and regional malls, it
faced the need for redevelopment with aging and vacant retail spaces. The
redevelopment process has faced various strategic planning options, referendums, and
litigation, eventually leading to the current project as proposed by the property owners.
The owners and developers of the Vallco Town Center (“Developer”) applied for a
mixed-use affordable housing project (the Project) in 2018 under a Government Code
Section 65913.4 (approved under Senate Bill 35, or SB 35), a State housing law that allows
affordable housing projects to bypass traditional city planning processes as only a
“ministerial” approval (i.e., not subject to typical discretionary municipal approvals).
Specifically, to increase the supply of affordable housing in California, SB 35 requires
cities to approve qualifying housing projects without a public hearing or otherwise
required environmental review. Under SB 35, the Project in Cupertino was approved with
specific conditions based on previously established “objective” City rules and regulations
not involving City discretion, and without a vote of the City Council or any public
hearings.
Under SB 35, the Vallco Town Center project’s initial approval is due to expire on
September 21, 2021, subject to certain conditions as described below. The statute allows
for a one-year time extension for a developer to begin vertical construction upon a
showing that substantial progress is being made.
The initial three-year period has proven insufficient to begin vertical construction. Issues
have arisen including (i) contamination found on the site, and the development and
oversight of a remediation plan; (ii) the construction of a fire station; (iii) the development
of a 30 acre “green roof” as part of the Project; (iv) traffic impacts and off-site
transportation improvements; (v) the development of a transit hub as part of the Project;
and (vi) the payment of certain impact fees, among other issues.
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In recent months a great deal of progress has been made on some of the above subjects,
though difficult issues remain. This report outlines agreements which have been reached
and those areas still under discussion.
Staff has been working with the Developer on an implementation plan to be contained
in an extension letter (the “Extension Letter”). One of the goals of this report is to
provide transparency to the community and the City Council on the Vallco Town
Center project.
DISCUSSION
A. Background
1. The Project
Vallco Property Owner LLC (“Developer”) submitted a planning application to
redevelop the former Vallco Mall on March 27, 2018. The Developer proposed a mixed
use, residential, commercial and office project known as the Vallco Town Center under
SB 35. This was one of the earliest applications submitted under SB 35 Statewide, and the
first one submitted in Cupertino.
The project is located on North Wolfe Road, between Interstate 280 and Steven’s Creek
Boulevard (the “Site”). The application and permits are more fully described in the
project approval letter dated September 21, 2018, including a discussion of the residential
density bonuses granted under State and City statutes. Copies of the approval letter,
plans, reports and other materials can be found on the City’s website at
Cupertino.org/vallcosb35.
The Site is approximately 50 acres and had been the location of the former 1.12 million
square foot Vallco Mall originally constructed between 1974 and 1979. The Vallco Mall
had approximately 100 tenant spaces and was anchored by Macy’s, Sears, and JCPenney.
Former underground storage tanks at the Sears Automotive Center and JCPenney
Automotive Center were removed under regulatory oversight in 1994 and 1999,
respectively.
Prior to submission of the SB 35 project, the Developer had worked for a number of years
on a prior redevelopment plan for the Mall, which became controversial within the
community. The original Vallco Specific Plan was adopted in September 2018. However,
due to three separate voter-initiated referenda petitions challenging those approvals, the
City Council repealed the Vallco Specific Plan in May 2019.
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Due to the uncertainly of the Specific Plan, the Developer concurrently proceeded with
an application under SB 35 for the current mixed-used affordable housing project known
as the Vallco Town Center as an alternative development1. That SB 35 Project was
approved administratively by the City on September 21, 2018.
When completed, the Vallco Town Center will consist of 2,402 residential units, with
1,201 of these being affordable units. The remainder of the Project will consist of 485,912
square feet of retail use and 1,981,447 square feet of office use.
While the Project was administratively approved under SB 35’s simplified and
streamlined requirements for the provision of additional affordable housing, the total
provision of affordable and market rate housing is less than would otherwise be needed
to support the office development provided in the approved project. Specifically, the
project as approved under SB 35 increases the jobs-housing imbalance in Cupertino rather
than reducing it, without allowing the City to impose conditions that would mitigate the
full extent of the project’s impacts.
2. SB 35 Eliminates Discretion; Bypasses CEQA
The intent of SB 35 is to improve the State’s housing supply and to streamline the local
development review process for affordable housing projects. Normally, development
projects above a certain size are required to undergo an environmental review process
under the California Environmental Quality Act (CEQA) to determine the project’s
impacts on air quality, traffic, noise, recreation, land uses, biol ogical resources, geology
and soils, water resources, and greenhouse gas emissions, among several other
categories. If impacts are determined to be significant, they must be mitigated to an
acceptable level. This environmental review process can take several years.
Affordable housing projects that meet the requirements of SB 35, however, are not
required to go through the environmental review process under CEQA. Thus, various
noise, air quality, and traffic studies are not completed for such projects, and mitigation
measures are not identified or implemented.
SB 35 also bypasses the traditional land-use approval processes that involve public
hearings before a city’s planning commission and/or city council prior to approving a
discretionary project. Under SB 35, approval of a qualified affordable housing project is
delegated to city staff in what is known as a “ministerial” or “administrative” review of
1 The Project certainly illustrates the problem of “one size fits all” inherent in legislating solutions from Sacramento.
Arguing that the retail space is reduced by 60% allowing development of 2,400 residential units, yet 1.9 million square
feet of office is being built, creating a possible shortfall of 3,400 residential units from what is needed by the office
workers, thus actually burdening the transportation and other infrastructure of the City.
4
the project, to determine whether the project meets the objective zoning and development
standards in effect at the time the project application is submitted to the city. Ministerial
review and approval involves no discretionary or subjective judgment by city staff and
is limited to evaluating whether the project meets certain city standards that are
knowable, available and/or quantifiable. Projects with more than 150 housing units that
meet all objective standards must be approved within 180 days of submitting the
application.
Projects approved under SB 35 must comply with all city ordinances, general plan, and
policies that are “objective” and which were in effect when the development application
was submitted (in this case, March 27, 2018). The State law assumes that city ordinances,
plans, and policies can adequately address the impacts from a proposed SB 35 project.
The Vallco Town Center was one of the first developments Statewide approved under SB
35 and has resulted in City staff relying on ordinances and general planning documents
that did not envision a development of this scale and impact.
Once a project is approved under SB 35, the developer is required by State law to
commence vertical construction within three years. If physical construction of a vertical
structure does not begin within that three-year period, the approval may expire.
However, according to SB 35, a project approval may be extended for a one-time, one-
year extension if the developer “can provide documentation that there has been
significant progress toward getting the development construction-ready, such as filing a
building permit application.” (Gov. Code § 65913.4(f)(2) and (f)(3).) City staff are required
to apply the criteria in SB 35 in reviewing an extension request.
3. Permit Applications
The Developer has applied for initial building permits that would authorize construction
of certain parts of the Project. As is typical for a project of this scale, the building permit
application is phased for different parts of the construction process and different areas of
the Site. The plan review following submission of these permits resulted in a series of
meetings and discussions involving the City staff, the Developer and responsible
agencies, such as the Santa Clara County Fire District, the Santa Clara County
Department of Environmental Health, the California Water Company, Valley Transit and
others. The plan review has resulted in the identification of issues related to soil
remediation, fire and life safety, structural design, traffic, transit, the provision of water
to the development, affordable housing, development impact fees, parcel map processing
and other issues which are discussed in this report.
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Staff and the Developer have made substantial progress in resolving many issues.
However, other issues remain unresolved. Staff and the Developer are working to agree
on a process for addressing the outstanding issues.
This report is intended to make the public aware of the Project status and will discuss
where substantial progress has been made and where issues remain.
B. Major Issues
The following issues were identified during the review of the current permit applications
submitted by the Developer as compared to the approved SB 35 plans. The City intends
to develop remedies for inconsistencies and an implementation plan through ongoing
work with the Developer.
1. Soil Remediation
In conjunction with the building permit review process that commenced at the end of
2018 when the Developer submitted certain building permit applications, the City
required the Developer to conduct soil testing and provide associated reports.
As a result, the Developer submitted its initial Soil Characterization Report (SCR) and
Environmental Site Management Plan (ESMP) for the Site in April 2019. Contained in the
April 2019 SCR as an appendix was a 2016 Geosphere report showing soil testing samples
at the Site that exceeded State residential screening levels for polychlorinated biphenyls
(PCBs). However, the text of the April 2019 SCR contradicted its own documentation by
stating that PCB levels were not detected above laboratory reporting limits in the t esting
samples. Upon receipt of the April 2019 SCR and all appendices, the City hired a third -
party consultant (Baseline) to peer-review the SCR. In June 2019, Baseline submitted draft
comments to City staff informing the City of the elevated PCB levels. T his was the first
time the City became aware that soil test results exceeded PCB screening levels.
Following receipt of the SCR and being informed of the elevated PCB levels in the
samples, the City required the Developer to prepare a PCB work plan, to be reviewed
and approved by the City, to determine the extent of some PCB contamination identified
in the SCR and associated reports. The work plan needed to be submitted and reviewed
prior to issuance of certain demolition permits. Furthermore, the City req uired the
Developer to present the results of the investigation conducted per the PCB work plan
and to submit a soil vapor investigation report. The Developer submitted a PCB
investigative report in August 2020 and a soil vapor investigation report in January 2021.
6
Upon discovery of contaminated soils above threshold levels, the project’s approved
permit condition required the Developer to conduct further testing and remediate the
contaminated soils if necessary, in accordance with applicable environmental laws.
The Developer originally proposed to “self-monitor” the remediation of the
contaminated soils on the Site and believed that the Santa Clara County Department of
Environmental Health (SCCDEH) had an “informal” program. After lengthy discussions
with the City, the Developer recently entered the Voluntary Clean-up Program with
SCCDEH to develop and implement a soil remediation plan. Known or potential soil
contamination is being investigated on both parcels on either side of Wolfe Road at or
near the locations of the former Sears Automotive Center, the JCPenney Automotive
Center, and elsewhere on site. SCCDEH is responsible to ensure that these properties do
not present a human health hazard to workers on the Site during excavation and
construction, as well as to prevent long-term health hazards to the eventual residents and
users of the properties. SCCDEH has jurisdiction over the Site under their Voluntary
Clean-Up Program and will ensure that the groundwater is not impacted by the
contaminated soils.
SCCDEH is in the process of reviewing soil contamination reports submitted by the
Developer and will determine if additional soil characterization is required, which may
require additional soil borings and laboratory analysis. The results of the soil studies will
inform soil clean-up and management planning. SCCDEH has made the decision to
process each side of Wolfe Road as one soil remediation plan and permit. The Developer
has designated the west side of Wolfe Road as their priority parcel. The east side of Wolfe
Road will be processed as a separate plan and permit at a later date when development
plans are prepared, and further SCCDEH review may be required at that time for that
parcel.
The SCCDEH’s review will address PCB contamination identified in 2016 as well as any
additional environmental issues that are identified in the Developer’s recently
commenced site investigation. These additional issues include undelineated PCE
contamination in soil vapor that was documented by the Developer’s consultant in a July
30, 2021 site investigation report. The consultant recommended additional site
investigation to delineate the horizontal and vertical extent of PCE contamination on the
Site.
At this point the Site is under the control of the SCCDEH. Excavation, shoring, or other
soil-disturbing activities can only proceed with their authorization. The Developer has
cooperated with the City by posting Proposition 65 warning notices around the Site.
SCCDEH will allow above ground demolition, as long as soil is not disturbed. Demolition
7
permits have been issued for the above ground portions of the former Macy’s and mall
parking structures, with the condition that the demolition work does not disturb the soil.
The Developer applied for building permits in December of 2018, as follows:
1. Shoring and Excavation Zone A -#B-2018-2107
2. Foundations and Podium Garage – #B-2018-2171
3. Core and Shell Superstructure - #B-2018-2172
There are a series of other project permits, including Demolition Zone B-1 (JC Penny
garage) – BLD-2020-1628; Shoring and Excavation Zone B – BLD-2021-0433; and Site
Utilities – BLD-2019-1422 which are pending. The excavation and shoring permits were
amended in January of 2021 to cover only the west side of Wolfe Road. This permit was
issued subject to a condition that work shall not commence until environmental clearance
is given by the Santa Clara County Department of Health (See the expanded discussion
of the soil remediation in the section below.)
2. Fire Station
Fire suppression and emergency medical services are provided in Cupertino by the Santa
Clara County Fire District (District). The closest fire station to the Vallco Project is located
at 20215 Steven’s Creek Boulevard. The SB 35 plan calls for an “optional auxiliary fire
station,” as part of the Vallco Project. The station was depicted on plans located on the
northeast side of Wolfe Road and the Project’s perimeter road, adjacent to the
development’s central utilities plant (see Exhibits - Master Plan, Street Level, P-0202, Site
Diagram, P-0509 and Building Plan Parking Level, P-0880.B1).
The City met with the Fire District in order to determine if the station was optional and
auxiliary. The District indicated that they do not staff auxiliary fire stations, and that a
full-time fire station was needed to serve the development and to preserve existing
emergency response times in Cupertino. The District was concerned that the increases in
vehicles and pedestrian traffic from the development would slow response times to a
level outside of their standards for emergency response, as well as impact fire
suppression response. The District reports an average response time to urban fires and
medical incidents of five minutes, thirty seconds, as established in their strategic plan and
policies. Developing an on-site fire station should allow the District to maintain their
current response standards.
The District views the Vallco Project as “a city within a city” in terms of its fire and
emergency medical services demand. Population projections submitted by the Developer
with the SB 35 application forecast 6,005 residents, 11,000 office workers and 1,500
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employees (See Luk and Associates, Project Report – Vallco Town Center Project 50%
BMR, March 22, 2018, Page 2). The proposed green roof/park/open space presents
additional emergency response challenges. The Vallco station would provide 24 hour, 7
days per week staffing, with four full-time fire fighters. The District would provide the
equipment, while the developer would construct the station.
The District met with the Developer and has discussed a 7,000 to 8,000 square foot
building footprint adjacent to the Project’s central utility plant. The District reported to
the City that the draft plans they reviewed illustrated a structure two-stories in height,
with living quarters upstairs and apparatus bays located on the ground floor. The station
would include space for three engines and equipment, office space, housing in dorm
rooms, three gender-neutral pod-style restrooms, two of which would include a shower.
The station would include a day/living room, kitchen, workout area, and three offices,
with at least one office that would have a public-facing ADA accessible entrance. The
station will need to provide co-located parking for the firefighters and the public.
The station would be planned in collaboration with the District , the City and the
Developer. The Developer would be responsible for constructing the station. As the Fire
Station was not detailed in the approved SB 35 Plans, it will need to comply with the
California Codes in effect at the time of submission. The City would be involved in the
review of the construction plans, permit issuance, and inspections. The estimated costs
of the new station range from $9 to $10 million.
The station’s location on the northwest section of Perimeter Road presents circulation
challenges. Emergency vehicles will require special access to Wolfe Road for northbound
emergency equipment. Staff and the District explored alternative sites for the station;
however, due to a number of constraints, including high land costs, the District
determined that the location on Perimeter Road is satisfactory. The District has requested
that the traffic signals be programmed to allow emergency equipment to “preempt” the
normal intersection cycle in order to access Wolfe Road and other public streets. The City
has installed signal preemption systems citywide and believes it can accommodate a new
traffic signal on Wolfe Road that will help to serve the new station.
3. Green Roof
The Project envisions the construction of a sizable green roof/park/open space that would
include both public and privately accessible space. While much of the green roof is
inaccessible to people and is primarily unusable open space, the plans depict private
swimming pools, a children’s playground, two turf play areas, gardens, picnic areas, and
a system of interconnected walkways and pathways. The applicant has also indicated
9
that portions of the accessible portions of the green roof could be blocked off to
accommodate the needs of their office tenants. The green roof is a complex structure and
can be better described as a series of green roofs constructed atop several buildings, and
free standing in some locations. Portions of the green roof(s) span from building to
building, and span Wolfe Road. The City currently has not seen plans for the green
roof(s). It is assumed that the structures will need to be constructed in phases, since the
various green roofs cover a large area (30 acres of the 50-acre development site).
The Building Official will require separate plans, permits and inspections for the green
roof(s). The plans will need to address how the phases relate to one another and how
temporary access will be provided. The project will also require a construction
management plan to address construction safety issues. Adding to the complexity, t he
green roof(s) are also intended to capture and treat rainfall to assist the Project in
complying with Federal and State stormwater quality regulations. The Building Official
will be convening a working group to discuss and resolve emergency access and
structural issues which will include the participation of the Fire District and their fire
code consultant, the developer and their design team, and the City’s consultant plan
checker, as discussed below.
(a) Green Roof Emergency Access
A large portion of the green roof is elevated appr oximately 100 feet above the ground.
This height is beyond the reach of the Fire District’s aerial equipment (ladder and snorkel
trucks) in an emergency.
The SB 35 plans illustrate two pedestrian walkways from Perimeter Road and Stevens
Creek Boulevard accessing the green roof, one elevator each from the west and east sides
of Wolfe Road to the green roof, and one ten-story stairwell from Steven’s Creek
Boulevard (see Exhibit P-0502) to the green roof. The SB 35 plans also illustrate areas on
the surface streets where aerial equipment would be staged to reach buildings under the
green roof; however, these staging areas are insufficient for dealing with emergencies on
the green roof (see Exhibits P-0408, P-0409 and P-0409.01).
The exact occupancy limit of the green roof will be determined a later stage; however, the
green roof could be used by hundreds of people at any one time. The Fire District notified
the Developer that the green roof did not meet the California Fire Code emergency access
requirements (see the City’s September 21, 2018, Project approval letter). The District’s
correspondence references the “green roof amenity” and states that the roof does not
provide fire vehicle access. California Fire Code Section 503.2.2 and District policies
10
require access roads for buildings over thirty feet in height. The access roads must be of
the size and construction to support aerial equipment weighing 75,000 lbs.
The District has determined that the green roof will require direct access fire lanes from
the street level for fire vehicles. However, the District is recommending that the green
roof be capable of supporting the weight of their lightest vehicle (Type 6 vehicle with a
20,000 lb. weight limit) to respond to public safety incidents on the green roof. These are
smaller fire trucks and EMS ambulances. The District and the Santa Clara County Sheriff
often respond together to incidents. This weight allowance will accommodate sheriff
patrol vehicles. The Developer will also need maintenance vehicles on the green roof. The
City will require that the access and fire lane issues be resolved prior to the issuance of
the phased foundation permits. The City will also require an enforceable commitment to
construct and ensure public and emergency access to the green roof and other private
open space.
(b) Green Roof Structural Design
Few cities have extensive experience with green roof construction of this magnitude. The
planning, permitting, construction, and inspection of the green roof requires careful
consideration. Special care will need to be taken to ensure worker and public safety
during construction. The Development has not submitted any plans for the green roof at
this time. The geotechnical reports submitted with the SB 35 plans describes the green
roof as an “approximately 30-acre, base-isolated green roof, over the majority of the
proposed buildings” (See Langan, Geotechnical Investigation, October 27, 2016, Page 36.)
The geotechnical reports indicate that the green roof would be comprised of polystyrene
expanded foam blocks, covered with approximately 20 inches of soil to reduce the overall
weight. The park and open space amenities, including the walkways, gardens, turf areas,
trees, lighting, water mains, irrigation system, and picnic areas, would be constructed
atop the polystyrene blocks and soil. Portions of the 30-acre green roof would contain
slopes ranging from 20% to 25% in gradient. The report describes the roof construction
consisting of interlocking “sheer keys.”
The geotechnical report prepared by Langan in 2020 omits a discussion of the green roof
foundation systems. (See Geotechnical Investigation Vallco Town Center, October 29,
2020, Pages 35-36.) It is unknown if the green roof will be supported by separate base
isolated columns or constructed as part of the foundation, podium and superstructure
systems for the buildings or a combination of both construction types. The geotechnical
engineer has cautioned that the green roof needs to able to withstand sliding forces,
should a landslide occur in the steeper manufactured slope areas.
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The City will require clarification of the green roof foundation and support structures in
the working group. This includes determining if the key design, green roof
superstructure, supports and foundations can resist potential sliding forces. The working
group will also need to determine if the expanded polystyrene blocks and soil can
support the weight of multiple 20,000 lb. emergency vehicles. The developer has
indicated that they have designed their foundations, structural supports and super
structure to support a 10,000 lb. weight limit for the emergency vehicles, which is
inconsistent with the Fire Department specification provided above. The working group
will need to resolve these structural issues prior to the issuance of the parking garage
foundation and podium permits.
4. Traffic
SB 35 restricted the ability of the City to conduct the standard environmental review. The
housing statute prevented the preparation of a project specific traffic study. The standard
environmental review would have required that the City contact Caltrans and
surrounding jurisdictions to understand the development’s impacts on their roadways.
Due to the SB 35 requirements, Caltrans and the cities were not consulted.
During the 2018 SB 35 review, the City was required to rely on the existing Mobility
Element of the General Plan to review the impacts from the development. The City also
had information on traffic impacts from the 2017 Impact Fee Nexus Study. However,
these studies never anticipated that the Vallco Town Center would be constructed in the
first five years of their planning horizons. General plans typically study ten- to twenty-
year planning horizon and the Nexus Study examined the same period as the General
Plan. Baseline conditions can change, so good planning typically entails project specific
traffic studies, which was not permitted under SB 35 as part of the project review and
approval.
As part of the SB 35 Project, the Developer proposed improving two intersections
immediately adjacent to the development. However, developments of this size can have
major impacts to the local and regional traffic network . Staff has reviewed the General
Plan, the Nexus Study and prior traffic studies for the property to estimate traffic impacts
from the Vallco Town Center. This review revealed that twenty-one intersections could
be impacted, both locally and in the region. Ten of the impacted intersections are in
Cupertino. Staff prepared a map of the impacted intersections and the approximate costs
to improve the Cupertino intersections only. If the Vallco Project had been subject to the
City’s normal environmental review, the Developer would have been required to pay
their “fair share contribution” for the eleven intersections located outside of Cupertino,
and would still have been subject to the City’s Traffic Impact Fees.
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Four of the regional intersections are in the unincorporated areas of Santa Clara County,
three intersections are in Santa Clara, one intersection is in San Jose, and three
intersections are in Sunnyvale. The Nexus study did not include cost estimates for the
intersection improvements needed outside of the City.
Cupertino Impacted Intersections
# Street Names Estimated Cost
1 DeAnza Blvd/Homestead Rd $1,721,914
2 DeAnza Blvd/McClellan Rd $6,810,066
3 DeAnza Blvd/Stevens Creek Blvd $ 107,010
4 Homestead Rd/Tantau Ave $ 56,405
5 Stevens Creek Blvd/SR 85 $ 268,809
6 Stevens Creek Blvd/Stelling Rd $1,283,415
7 Stevens Creek Blvd/Tantau Ave $ 129,305
8 Wolfe Rd/Homestead Rd $3,216,112
9 Wolfe Rd/Stevens Creek Blvd $ 135,742 (Developer Provided)
10 Wolfe Rd/Vallco Pkwy N/A (Developer Provided)
Potential New Intersection – Fire Department Access
Wolfe Road & Road 7 N/A (Developer Provided)
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Level of Service Impacts
Intersection # Current LOS LOS after Project Included in the TIF
1 D- E+ Yes
2 D E- Yes
3 D- E- Yes
4 D- E+ Yes
5 D- E+ Yes
6 D- E Yes
7 D E+ Yes
8 D- E Yes
9 D E Yes
10 D+ E No
Nine of the ten intersections in Cupertino were included in the Nexus Study used to
determine the Traffic Impact Fee.
The improvements to intersections #9 and #10 will be funded and constructed by the
Developer. Staff recommends prioritizing intersections #6 and #8 because they are the
most congested intersections of this group. The improvement costs for #6 are $1,318,000
and the costs for #8 are $7,131,000. Intersection #2 is currently planned for improvement
in the City’s CIP ($9,707,000). Intersection #3 is one of the most heavily trafficked
intersections in the City ($145,000) and it would benefit from improvement. Intersections
#4 ($145,000), #5 ($536,000), and #7 ($145,000) would also benefit from improvement.
The Traffic Impact Fee may provide the estimated $22.5 million in improvement costs;
however, these costs will increase over time as projects are scheduled in the City’s capital
improvement program (see Development Impact Fee discussion below).
Finally, the Developer is proposing a new traffic signal at the intersection of Wolfe Road
and “Street 7.” In March 2021, the City Transportation Manager requested additional
analysis of the impacts of the proposed design on traffic and emergency response times.
City staff repeated that request in July 2021 and again in August 2021 and are awaiting a
response from the Developer.
5. Transit and Transportation
The Vallco Project at completion will generate significant vehicular traffic. The Mobility
Element of the General Plan adopted goals and policies to address the community’s
traffic and transit concerns. The Mobility Element includes policies that encourage
planning and coordination of regional and local transit services “both public and private,
14
to accommodate diverse community needs and to make transit a safe, comfortable and
efficient option” (Page M-14). A specific policy requires developers to work with the
Valley Transit Authority (VTA) to “ensure that all new development projects include
amenities to support public transit, including bus stop shelters, space for transit vehicles
as appropriate and attractive amenities such as trash receptacles, signage, seating and
lighting” (Page M-18).
The Mobility Element includes the following specific Vallco condition:
Policy M-4-7: Vallco Shopping District Transfer Station – Work with
VTA/and or other transportation organizations to study and develop a
transit transfer station that incorporates a hub for alternative services, such
as car sharing, bike sharing and/or other services.”
The Mobility Element also requires that projects reduce greenhouse gas emissions
through implementation of Transportation Demand Management (TDM) – specific
programs that a developer would implement to encourage a project’s residents and
visitors to use alternative transportation modes, rather than automobiles, to reduce
congestion in and around the development (e.g., walking, biking, transit, car or van
pooling, bus pass subsidies and other programs). Policy M-8-3 states that the City should
“[e]mploy TDM strategies to improve efficiency of the transportation infrastructure
including strategic right-of-way improvements, intelligent transportation systems and
optimization of signal timing to coordinate traffic flow.” The City is to require TDM
programs for all existing and new developments.
The approved SB 35 project plans show that the developer is planning a Vallco Bike
Hub/Shared Facility and both public and private transit routes, including a proposed
private shuttle bus stop and relocated VTA bus stops. These issues have been discussed
with Developer and the Developer has indicated that they are developing those plans.
Staff is looking at transit and transportation options and alternatives. Staff will be
working with the Developer and VTA to implement the General Plan requirement for the
Transit Hub and incorporate them in an implementation plan.
6. Cal Water
The Vallco Town Center is located in the service territory of California Water Company
(Cal Water). Cal Water is responsible for ensuring that sufficient water supply exists for
the development. The Developer provided a Water Demand Summary (See Project
Report – Vallco Town Center Project 50% BMR, March 22, 2018, Page 7). The summary
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indicated that the development would require 364 acre-feet of water annually. The
analysis examined both potable water and reclaimed water sources.
The developer is proposing a cistern system to capture storm water. This captured water
would be reused for irrigation. Staff is concerned that the cistern system will not provide
sufficient water from rainfall for the Project’s annual irrigation needs. Staff also notes that
the current regional reclaimed water system may bypass Cupertino (see Need for
Reclaimed Water discussion below). Since rainfall is subject to climate variability, Cal
Water will need to provide evidence that they can supply potable water for all uses –
residential, office, retail, landscape irrigation, and cooling towers – until reclaimed water
is available. Cal Water will also need to estimate the amount of water and the time period
for the establishment of the Project’s landscaping, since landscape establishment requires
additional water. Calwater has indicated verbally that sufficient water exists, but a formal
water supply assessment for the Vallco Town Center project has not been completed.
7. Reclaimed Water
The Vallco Town Center consists of over thirty acres of landscape areas in the green
roof(s) alone. There are also landscape medians and plaza areas that require irrigation.
The Project will also utilize centralized cooling towers that require water.
California is in the third year of a prolonged drought, with another dry year forecast for
the 2021-2022 season. The Vallco Town Center would be served by California Water
Company with potable water, which would be used not only for drinking water
purposes, but for landscape irrigation, water tower cooling and toilet flushing. The
developer indicated that they would be open to constructing a dual plumbing system if
recycled water is available for Project use. (See Project Report, Vallco Town Center Project
50% BMR – Water Demand Assessment, Page 3.) The Developer will install a landscape
irrigation system that can accept reclaimed water if a reclaimed water main is extended
to the Project. The approved development permit also requires the Developer to install a
gray water system for toilet flushing.
The Infrastructure Element of the Cupertino General Plan (Chapter 8) anticipated in 2014
that reclaimed water could offset the need for potable water, specifically in the North
Vallco Park Special Area. The Element foresaw the potential extension of the regional
reclaimed water system from the Apple Campus on Wolfe Road and a reclaimed water
main was installed to serve the Apple Campus. That twenty-four-inch reclaimed water
main terminates at Wolfe Road and Homestead Avenue.
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Policy INF-1-3 of the City of Cupertino Infrastructure Element requires the City to
coordinate with utility providers to ensure that their planning meet s the City’s future
growth. Policy INF-1.4 requires that the City explore opportunities to fund infrastructure
needs. Policy INF-3.2 requires that the City coordinate with the State and regional
agencies to meet City goals. A regional framework exists for Cupertino to work
cooperatively in obtaining the funding needed to construct a reclaimed water main to the
Vallco Town Center and other areas of the community. However, Cupertino has not
previously participated in the Bay Area Integrated Water Management Plan, which might
provide funding for reclaimed water projects.
The Developer also prepared a water demand summary based on a dual system with
both potable water and recycled water (see Project Report – Vallco Town Center Project
50% BMR, Luk and Associations, March 22, 2018, Page 7). As discussed above, the Project
includes a cistern system to harvest rainwater; however, it is anticipated this supply will
be inadequate for the annual irrigation and cooling tower needs. Vallco’s engineers
estimated in March of 2018 that 45-acre feet of water would be necessary to meet the
Project’s annual irrigation needs. The engineers also estimated 19 acre-feet of water
would be needed for the cooling towers. Another 36 acre-feet was estimated for toilet
flushing needs.
The Developer studied extending the reclaimed water main from the Apple Campus on
Wolfe Road, concluding that 5,700 linear feet of 24-inch pipeline would be needed. Staff
has identified four phases to the design, funding and construction of the reclaimed water
main:
Phase I – Homestead to the I-280 (northside) 2,000 lineal feet $4.2 million
Phase II – I-280 Bridge 1,500 lineal feet $3.2 million
Phase III – I-280 south to Vallco Parkway 1,100 lineal feet $2.3 million
The City could also extend the reclaimed water main to Steven’s Creek Boulevard to
serve other projects in the community.
Phase IV – Vallco Parkway to Steven’s Creek 950 lineal feet $2 million
The total costs of the Wolfe Road Reclaimed Water Main Project are estimated at $11.7
million. The Project would be more cost effective if it is completed with the public
improvements for the Project, including improvements to the I-280 bridge.
Cupertino is served by the Santa Clara County Water District (Valley Water), which also
covers all of Santa Clara County. The City is located in District 5, along with the cities of
Saratoga and Sunnyvale. The extension of the reclaimed water main to the Apple Campus
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involved a partnership between Valley Water, Sunnyvale (which operates a water
reclamation plant), California Water Company and Apple.
Staff notes that the current regional reclaimed water plan wo uld largely bypass
Cupertino, foreclosing the opportunity to extend reclaimed water into the community for
decades into the future. The City could explore with Valley Water the opportunity to
form a similar partnership, including the Developer, Sunnyvale, California Water
Company, and Caltrans, to draft a reclaimed water main plan and to advocate for State
funding for the extension. The Developer has indicated that they are in favor of
developing this plan, but that the City would need to provide the leadership to create the
necessary partnership.
8. Stormwater Management
The Developer will be required to prepare and submit a comprehensive Stormwater
Pollution Prevention Plan for City and regional regulatory review, to address stormwater
management during construction operations. The project will also need to prepare a
stormwater management plan to address ongoing treatment for stormwater runoff from
all permeable and impermeable surfaces including the green roof(s), parking, streets, and
structures for the completed project.
9. Below Market Rate Housing Manual/ Affordability Covenant
The Developer proposed 1,201 affordable residential units as part of the Project. The
development is subject to the City’s affordable housing program (City of Cupertino BMR
Housing Mitigation Program Procedural Manual) regulating the affordability of 361 units
(217 as Very Low Income units and 144 as Low Income Units). The City’s BMR Procedural
Manual requires that the affordability of these units be protected for a period not less
than 99 years. The remaining 840 affordable units are subject to a Developer -prepared
housing manual, similar to the City’s manual (144 Very Low Income units and 696 Low
Income units). These 840 affordable units will remain affordable for a period of 55 years
for rental housing and 45 years for owner-occupied housing, as required by SB 35.
Municipal Code Section 19.56.050(F) requires that affordable units be constructed for each
phase of the Project. They also shall be constructed concurrent with, or prior to, the
construction of the market rate units. The Developer has not provided a phasin g plan for
the Project. The Developer is also required to prepare an affordability covenant for review
by the City Attorney. The affordability covenant must be recorded prior to the issuance
of the first building permit (See Condition 4, Attachment C, September 21, 2018 Project
approval letter).
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10. Final Parcel Map/Sequencing
The Developer notified the City with the SB 35 application that they will be phasing the
final map for the development. The prior shopping mall was divided into several parcels
to facilitate orderly development. Multiple parcels are common to shopping mall
development, as major anchor retailers, who owned their own parcels, typically required
parcels tied to sufficient parking. The existing recorded parcel map contains easements
that are no longer needed, such as joint parking easements. The proposed parcel map
would consolidate the existing parcels in order to facilitate the orderly development of
the Vallco Town Center Project.
The Developer requested that they be allowed to phase the final parcel map, which is
permitted by State law (See Government Code Section 66456.1). Staff is currently
reviewing the final map submittals and the developer has been responding to staff
comments. There are a series of ministerial conditions that the Developer must comply
with to record the final map. The City will need clearance letters from agencies and
property owners with any easement deeds (Cal Water, PG&E, Cupertino Sanitary
District, Comcast, AT&T, Hyatt House and Simian Properties). The City will require
letters from the utilities certifying that they can provide service to the development and
that all planning and inspection fees have been paid by the Developer.
The Developer has been working with staff to complete the public improvement plans
for City facilities (streets, intersection improvement, landscape medians, sewers, storm
drains, etc.). The Developer will be required to execute a Subdivision Improvement
Agreement and provide sureties or guarantees to cover the costs to construct the public
improvements. The Developer will be required to provide a faithful performance bond
and labor and materials bond for the public improvements. The City will require a
quitclaim deed of the underground water rights. There are also other ministerial
requirements, including obtaining a certification of tax clearance and arranging for the
recordation of the final map.
11. Development Impact Fees
The Developer has raised numerous arguments that it should be entitled to a reduction
in or elimination of the amount of parkland, transportation, and affordable housing
impact fees to be paid to the City. The City disagrees with these arguments and had
calculated that the Project owes impact fees in excess of $125 million to the City alone.
Discussions between the City and the Developer to attempt to reach a resolution
regarding this disputed issue are ongoing. Any agreement to modify the amount of
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impact fees due would require the City Council’s approval at an open and noticed
Council meeting.
Required or negotiated impact fees must be paid prior to approval and issuance of the
final maps and building permits for the Project.
C. Project Extension
Under SB 35, a project may be extended for “a one-time, one-year" extension of the
project’s entitlement (Gov. Code § 65913.4((f)(3).) The Developer may apply to extend the
expiration of the entitlement for one year, until September 21, 2022.2 The City’s discretion
in determining whether to grant the extension is limited to considerations and processes
set forth in Government Code Section 65913.4. Although the criteria for granting an
extension are not clearly defined in the statute, the legislative history and related
legislative provisions suggest that an extension should be granted if the proponent can
demonstrate that there has been significant progress toward getting the development
construction-ready.
Generally, the filing of a building permit may be considered as evidence of “significant
progress” toward construction of a project. In order for a building permit application to
be accepted by a city, the project applicant would generally need to submit detailed
building plans and pay all applicable building, traffic, and other fees. There are other
ways a project applicant could show “significant progress toward getting the
development construction ready,” such as remediation of environmental contamination,
demolition of existing buildings, grading, and excavation work.
For this Project, the existing buildings on the west side of Wolfe Road have been
demolished, and the Developer is seeking to demolish one above -ground parking
structure on the east side of Wolfe Road. The Developer has also entered into the
voluntary clean-up program with SCCDEH for soil remediation and provided relevant
documents to SCCDEH for their review and creation of a remediation workplan.
Although no substantial grading has commenced (due to remediation work that must be
completed), the Developer has submitted permit applications for shoring and mass
excavation, site utilities, foundations and podium garage, and a superstructure. Site
utility relocation is already underway. Detailed plans have been submitted for the
shoring/excavation and structural permits, and after several rounds of comments from
2 The Developer, with assistance from state Department of Housing and Community Development (“HCD”), has
attempted to avoid its obligation to apply for an extension through a strained and highly implausible interpretation of
applicable requirements of SB 35. On September 1, 2021, the City re ceived a “technical assistance” letter from HCD
that repeats these deeply flawed arguments, The City intends to follow the law as written.
20
the City for additional details and clarification, the Developer has re -submitted detailed
plans with more complete information.
Overall, evidence that substantial progress has been demonstrated includes the
following: (i) the Developer has entered into an agreement with SCCDEH for
investigation and remediation of the soil contamination; (ii) the Developer has orally
committed to construct a fire station at the Site; (iii) the Developer has submitted plans
for shoring/excavation and structural permits, and resubmitted plans where more
information was needed; (iv) certain offsite public improvements for the Project are
agreed upon; (v) the Developer has submitted a Final Map for approval and various other
draft agreements; and (vi) significant negotiations are ongoing with the Developer over
the appropriate level of development impact fees to be paid.
Accordingly, the City Attorney has advised that it would be appropriate to grant a one-
time, one-year extension upon receipt of a timely application. As noted above, any
extension would be issued by the City Manager under the requirements in SB 35.
Despite this determination, the outstanding issues are substantial. Prior to issuing an
extension, the City plans to seek written commitments from the developer on a timeline
for addressing outstanding issues, consistent with the City’s obligation under SB 35 to
process subsequent permits associated with construction of the approved Project without
unreasonable delay.
March 15, 2019
Miles Imwalle
Coblentz Patch Duffy & Bass LLP
One Montgomery Street, Suite 3000
San Francisco, CA 94104-5500
mimwalle@coblentzlaw.com
Re: Vallco Town Center Project Fee Protest Letter
Dear Mr. Imwalle,
The City has received your December 21, 2018 letter protesting the Below Market Rate
Housing Mitigation Fee and other development impact fees for the Vallco Town Center
SB 35 Project. In response, the City reiterates that, as required by the City’s Project
Approval Letter, Vallco Property Owner LLC shall pay the required housing mitigation
fees and all other applicable development impact fees pursuant to the City’s Municipal
Code, Fee Schedule, and Housing Mitigation Manual. As further specified in the
Approval Letter, the City will not issue building permits for the Project unless and until
these fees have been paid, as applicable to each permit. See Approval Letter – Vallco
Town Center SB 35 Project Application (Sept. 21, 2018), Attachment C, Standard Project
Requirements and Project Implementation Requirements, Requirement 5 and 6.
Sincerely,
Heather M. Minner
City Attorney
cc: Mayor Scharf and City Councilmembers
Timm Borden, Interim City Manager
Roger Lee, Acting Director of Public Works
Benjamin Fu, Interim Director of Community Development
1095394.1
CITY COUNCIL STAFF REPORT
September 7, 2021
Subject
Status Report on the Vallco Town Center SB 35 Development Project
Recommended Action
Accept report.
Background
The original Vallco Mall, constructed during the late 1970s, was located on both sides of
N. Wolfe Road between Stevens Creek Boulevard and Interstate 280. The mall occupied
approximately 50 acres and had over 1 million square feet of retail space with
approximately 100 tenant spaces anchored by Macy’s, Sears and JCPenny, including two
automotive centers. Approximately 13 acres of the original mall property was divested
between 2007 and 2012, including the Hyatt House Hotel, the 19800 (Rosebowl)
development, and an unused parking lot. The mall was acquired by the current owners
in 2014.
Several proposals for redeveloping the Vallco Mall site have been created and
considered since 2015. A Vallco Specific Plan was adopted by the City Council in
September 2018, which was then subject to three separate voter-initiated referenda
petitions, ultimately leading to City Council repeal of the Specific Plan in May 2019.
California State Senate Bill (SB) 35 went into effect on January 1, 2018. The State law
provides for a streamlined, ministerial local review process for certain residential and
mixed-use developments that meet certain conditions. The intent of the legislation is to
increase California’s housing supply and to accelerate the development of affordable
housing projects. SB 35 eligible projects are not required to go through the California
Environmental Quality Act (CEQA) review process typically used for other
developments to assess and mitigate impacts to air quality, traffic, noise, land uses,
water resources, recreation, greenhouse gas emissions and other elements. Further, SB
35 projects require ministerial review to be completed within no more than 180 days. A
decision to approve or deny a project under SB 35 must be based on objective standards
only, without the usual public hearings conducted for other developments before
Planning Commissions and City Councils.
Even though there was a pending Vallco Specific Plan for the site, the Vallco property
owner submitted an SB 35 project proposal on March 27, 2018. The application was
among the first and largest SB 35 project applications submitted state-wide and was
administratively approved by the City on September 21, 2018.
As approved under SB 35, the Vallco Project (Project) will consist of up to 2,402
residential units (half of them affordable), up to 485,912 square feet of retail uses, and up
to 1,981,447 square feet of office. While the Project was approved under the State’s SB 35
process intended to increase housing supply and affordable housing, this massive
mixed-use project results in far greater housing demand than the number of housing
units being provided within the project. Specifically, Vallco’s own estimates predict that
the Project would bring over 8,700 new jobs to the City of Cupertino, thereby creating a
need for nearly 6,000 more housing units, while only providing 2,402 of those new
housing units. As a result, the Project results in the need for 3,410 more housing units
than it provides, further exacerbating the Bay Area housing crisis, and seemingly in
opposition to the goals of SB 35
The purpose of this report is not to revisit the City’s decision to approve the project—a
process that would be time-consuming, distracting from other issues at hand, and
extremely unlikely to have any tangible impacts on the approved project—but rather, to
provide the City Council and community with an update on the progress the project has
made to date, as well as ongoing challenges arising from application of SB 35 to a project
of this scale.
Additional information on prior Vallco development proposals, SB 35, and the approved
Vallco SB 35 Development Project can be found on the City’s website at
Cupertino.org/vallco.
Discussion
Attachment A provides extensive documentation and information regarding the current
status of the Vallco SB 35 Development Project. Key highlights are summarized below.
Extensive Progress to Date
Soil Investigation/Remediation Underway – Due to additional review and
requirements by the City, contaminated soils and soil vapor have been identified
on the project site. The Project developer has entered into a voluntary clean-up
agreement with the Santa Clara County Department of Environmental Health
(SCCDEH). SCCDEH now has regulatory jurisdiction over continuing site
investigation and remediation, and is prohibiting soil disturbance until it can
validate that it is safe to do so. The Vallco Project anticipates that SCCDEH’s
oversight will continue until Spring 2022, although recent testing has revealed
even greater contamination issues than previously identified, including some
measures beyond permissible residential thresholds.
Fire Station Location Identified - The City, in consultation with the Santa Clara
County Fire Department, has reached conceptual agreement with the Vallco
Project on the location, size and egress for the new fire station required to
maintain response times and health and safety with the new Vallco
development. The agreement between the County and the Vallco project
regarding the fire station is being prepared and will be presented to the County
Board of Supervisors for approval.
Building Permit Application Review– As is typical with large development
projects, phased building permits are being submitted for regulatory review as
the detailed designs progress. These permits are reviewed by both partner
agencies (e.g., Fire Department, utilities), consulting experts (e.g., traffic
engineers), and City staff in Planning, Building, Engineering, and Housing, with
legal and management support and oversight. No discretionary review is
allowed by any appointed or elected body for these permits. To date, two
building permits have been issued. One building permit is for site utility work
which is underway primarily within the public right-of-way, and the other is an
excavation/shoring permit. The commencement of the excavation/shoring scope
is on hold pending DEH approval. Three other building permits are also in the
iterative review and comment process, but at least two of those will also likely be
held pending DEH approval. Status on building permits has been available
online since December 2018 at https://www.cupertino.org/our-
city/departments/community-development/building/faqs-permit-activity-vallco-
town-center.
CalWater – City communications with the water utility service provider and the
Vallco Project has eliminated a hold on required progress for the documentation
of water supply and a service delivery system for the Project.
Agreements – As noted in Attachment A, several agreements will be required for
continued progress on the Vallco Project, including a Subdivision Improvement
Agreement for improvements to City facilities within and adjacent to the project
and a Below Market Rate (BMR) Housing Agreement to ensure the ongoing
preservation of the required affordable units. These draft agreements are still
under review.
Challenging Issues Remain
Green Roof – Relatively little is known about the 30-acre “green roof” proposed
on top of most of the buildings, spanning Wolfe Road, and connecting to the
ground. This public and private accessible space as described in the approved
project will directly impact structural considerations, emergency services, water
supply, and stormwater management, and may also impact the amount of
impact fees due. The City has requested an all-hands meeting with the Vallco
Project to better understand the plans and design for this facility to facilitate
current and subsequent permit review and processing.
Project Modifications – As part of the City’s review of all permit submissions,
staff is working to ensure conformance with the previously approved SB 35
Project. Potential modifications in the submitted plans have already been
identified. The City will need to review any modifications to the Project for
conformance with the approved permit, applicable objective standards, and SB
35.
Impact Fees – The City has calculated using the City’s standard impact fees that
the Vallco Project would be required to pay over $125 million in Traffic, Parkland
and Housing Impact Fees. However, the applicant for the Vallco Project believes
most of these fees should be waived or significantly reduced. Payment of the
fees in full or City Council approval of any reduction or waiver of these fees will
be required before certain permitting and other approvals are possible, prior to
the commencement of construction.
SB 35 Development Project Extension
SB 35 stipulates that the approval of a project lasts for three years, by which time
“vertical construction” must commence.
SB 35 also provides that a one-year extension of the approval be granted if there
is evidence of substantial progress on the project. This approval must be
processed at the staff level, without a public hearing.
The three-year project approval expires on September 21, 2021, and a one-year
extension of the approval would expire September 21, 2022. However, the Vallco
Project applicant and the California Housing and Community Development
Department have argued that the three-year deadline has been “tolled,” or
extended, due to prior litigation. This argument is based on a misreading of the
statutory provisions governing the term of SB 35 project approvals and is
incorrect.
Regardless, the Vallco Project’s work to date (e.g., soil remediation, demolition,
preliminary utility work) and submission of permits and draft agreements will
likely constitute substantial progress on the project as required for approval of a
one-year extension.
Recommendation
Accept the report.
Sustainability Impact
The acceptance of this report will have no sustainability impact. The City is actively
seeking measures such as transit improvements that will improve the sustainability of
the Vallco Project, but as previously indicated, the City was prohibited from conducting
a full environmental review of that project under SB 35.
Fiscal Impact
Direct City costs for plan review and inspections will be covered by fees collected from
the Project. City required impact fees will be collected related to parkland, traffic, and
housing, although the developer contends that it should not pay those impact fees.
General municipal revenues and expenditures likely to result from the Project are
unknown given the limited scope of the City’s review of the Project under SB 35.
_____________________________________
Prepared by: Greg Larson, Interim City Manager
Approved for Submission by: Greg Larson, Interim City Manager
Attachments:
A - Detailed Status Report on the Vallco SB 35 Development Project
From:Rhoda Fry
To:City Clerk; City Council
Subject:Agenda Item #10 - waiving BMR fees
Date:Friday, July 12, 2024 9:52:08 AM
CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you
recognize the sender and know the content is safe.
Dear City Council,
Can you please ask staff to reveal how much money the City will be giving up in BMR fees
for the Vallco project?
We know that the Vallco project will create a demand for more housing – this was even in a
staff report – so why would we give up BMR fees?
If Vallco is successful in waiving its BMR fees, then what does that mean for other projects in
the City? I think it is setting a bad precedent.
Cupertino needs assurance that the BMR housing will be built timely – we have already
experienced a bait and switch at Main St. with Senior Housing - please be smart and get the
BMR housing built first.
If you really feel the need kowtow to Vallco owners, then please hold the BMR funds in
escrow until such time that t he BMR housing is built.
Thanks,
Rhoda
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