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Director's Report CITY OF CUPERTINO 10300 TORRE AVENUE, CUPERTINO, CALIFORNIA 95014 DEPARTMENT OF COMMUNITY DEVELOPMENT Subject: Report of the Community Development Director~ Planning Commission Agenda Date: Tuesday, April 10, 2007 The City Council met on April 3, 2007, and discussed the following items of interest to the Planning Commission: 1. 2007-08 Community Development Block Grant (CDBG) funds and the 2007 Annual Action Plan: The City Council adopted the resolution (see attached staff report). 2. Municipal Code Amendment of Chapter 14.18 (Heritage and Specimen Trees): Continued to May 1. 3. 2007-08 Fee Schedule: The Council adopted the 2007-08 Fee Schedule and Continued the Housing Mitigation Fees to May 1 (see attached staff report). 4. Municipal Code Amendment of Chapter 19.28 Single-Family Residential (R1) Zones. The City Council conducted first reading and amended body of ordinance to add, "which are located west of the 10% hillside slope line as defined in the Cupertino General Plan" and directed staff to remand matter back to Planning Commission to consider possible specific treatment, including properties zoned A- 1, and develop plan with input from neighbors, and report back to City Council at second meeting in August. (see attached staff report) Miscellaneous 1. American Planning Association National Conference: Ciddy and I will be at the American Planning Association National Conference in Philadelphia from April 12th through April 18th. 2. North VaIlco Community Workshop: The third and final North Vallco Community Workshop was held on April 2, 2007, in the Community Hall. Approximately 50 persons attended including 10+- persons who attended for the first time. The meeting was facilitated by North Valko Committee Chairperson Debbie Stauffer. Commissioners can view the meeting online at www.cupertino.org, see North Valko Master Plan under In The Spotlight on the home page. Enclosures: Staff Reports Newspaper Articles G:\ Planning \ SteveP\ Director's Report\2007\pd04-10-07.doc Die-I f~ CITY OF CUPEIQ"INO Summary Agenda Item No. _ City of Cupertino 10300 Torre Avenue Cupertino, CA 95014 (408) 777-3308 FAX (408) 777-3333 Community Development Department Housing Services Agenda Date: April 3.2007 Subject: Consider adopting a resolution adopting the 2007-08 Annual Action Plan and the use of fifth program year (2007-08) Community Development Block Grant (CDBG) Funds. Recommendations: The CDBG Steering Committee recommends that the City Council approve the following allocations for the use of the 2007-2008 CDBG program funds and the FY 2007-08 Annual Action Plan as required by the federal department of Housing and Urban Development (HUD). 2007-08 CDBG Allocation: Public Service Grants: CCS - Comprehensive Assistance Program CCS- Rotating Shelter Program Live Oak Adult Day Services - Senior Adult Day Care Second Harvest Food Bank - Operation Brown Bag Senior Adults Legal Assistance - Legal Assistance Construction! AcquisitionlRehab Unallocated Program Administration: Administration Eden Council for Hope and Opportunity - Fair Housing Services 2007-08 Affordable Housing Fund Allocation: CCS- Affordable Placement Program TOTAL: $66,024 $16,435 $21,409 $14,720 $3,512 $9,948 $243,404 $243,404 $88,742 $79,919 $8,823 $65,000 $65,000 $463,170 2007-08 Human Service Allocation: Catholic Charities - Long Term Care Ombudsman Community Technology Alliance CCS - Comprehensive Assistance Program Emergency Housing Consortium Outreach and Escort - Special Needs Transportation Support Network for Battered Women -Domestic Violence United Way 2-1-1 Santa Clara County Information and Referral Service TOTAL: Background: $3,187 $2,000 $17,601 $4,000 $7,115 $4,202 $2,000 $40,105 t:>1r2-2 Consider adopting a resolution adopting the 2007-08 Annual Action Plan and the use of fifth program year (2007-08) Community _!2~y'_~!~p~~~~~!_~!~~~_~~~!(g_Q~Ql!.':~!?-~~~__________m_______________________________________________________________________ April 3, 2007 Page 2 of2 Background: The City of Cupertino will receive a CDBG entitlement of approximately $400,312 for fiscal year 2007-08, plus a reallocation of $43,400 in projected program income from rehabilitation loan payoffs for a total of $443,712. On March 20,2007, the City Council held the first public hearing for both the allocation ofCDBG funds and the Annual Plan. Since the Annual Plan has been in distribution since March 2, 2007 (30 days) and no comments have been received, it is recommended that the City Council adopt both the Annual Plan and the allocations as recommended by the CDBG Steering Committee. Below arc summaries of the CDBC Steering Committee actions and basic information regarding the cUlltenl and purpose of the' Annual Actual Plan. For further reference, staff can make the March 20, 2007 staff report with attachments available upon request. CDBG Steerin2 Committee: On April 4, 2006, the City Council approved a Citizen Participation Plan as part of its 2006-2009 Consolidated Plan. Prior to expending CDBG dollars, the City is required to have a Citizen Participation Plan, Consolidated Plan and an Annual Plan in place. As part of the original Citizen Participation Plan, adopted in February 2003, the City fonned a CDBG Steering Committee. The Steering Committee is comprised of the Cupertino Housing Commission and the four appointed citizens. The CDBG Steering Committee's responsibility is to evaluate the proposals received and forward funding recommendations to the City Council. On March 8, 2007 the CDBG Steering Committee met and conducted a public hearing on the FY 2006-07 CDBG funding allocation. The Committee heard presentations from all but two of the applicants and recommended the staff recommendation be forwarded to the City Council. Live Oak Adult Day Care and Community Technology Alliance were not present for the presentations. FY 2007-08 Annual Action Plan: Federal regulations require that each entitlement jurisdiction prepare an Annual Action Plan and submit the plan no later than May 15th of each year. The Annual Action Plan is a one-year plan which describes the eligible programs, projects and activities to be undertaken with funds expected during the program year (Fiscal Year 2007-2008) and their relationship to the priority housing, homeless and community development needs outlined in the approved Consolidated Plan. Furthermore, Federal regulations require the plan be made available for 30 days for public review and comment. The FY 2007-2008 Annual Action Plan was released for public review on March 3, 2007 for the 30-day review period. In addition, the CDBG Steering Committee reviewed the Annual Plan on March 8, 2007. A notice was placed in the local paper informing the public of its availability. The April 3, 2007 City Council meeting will be the final public hearing to approve the Annual Action Plan for submittal to HUD. Steve Piasecki, Director of Community Development. Attachments: Resolution No. 07- Fiscal Year 2007-08 Annual Action Plan APPROVED FOR SUBMITTAL: ~~~~-- David W. Knapp V- - City Manager 1) Ie -3 .m..~. .......'1.............1t},., .~ CITY OF CU PEIQ"INO City of Cupertino 10300 Torre Avenue Cupertino, CA 95014 (408) 777-3308 FAX (408) 777-3333 Community Development Department Housing Services Summary Agen.da ~tem No" iTa Agem:iJa Date: !~.QJH 3-'.9 2:~JrL SUBJECT: Consider the 2007-08 Fee Schedule: a) Review and approve housing mitigation fees (continued from March 6) BACKGROUND: Housing Mitigation Fees On February 27, 2006, Council adopted Resolution 06-045 approving a fee study and directing staff to assess retail and hotel developments a housing mitigation in-lieu fee at the same rate as office and industrial projects and to raise the fee to $4.75 per square foot. The resolution exempted redevelopment projects and certain mixed-use projects from the impact fee, but required them to provide Below Market Rate (BMR) housing units instead. The new fee was to be implemented with the entire fee schedule adopted at the April 4, 2006 Council meeting. However, the approved fee schedule, in error, raised the fee only by the cost of living percentage, to $2.32 per square foot and it did not add-in the retail and hotel elements. In April 2006, Council directed staff to further study the mitigation fee for residential projects. That study was completed and approved by the Housing Commission on January 11, 2007. The commission and the study recommend that the residential development fee be raised from the current $1.19 per square foot to $2.50 per square foot. At the March 6, 2007 City Council meeting, the City Council requested that staff conduct further research on the fee calculations for the residential component. Council members expressed interest in charging a fee for fractional units and reviewing a sliding scale approach to the residential fee for developments of six units or less. Furthermore, Council directed staff to research making the fee at the sixth unit high enough to discourage a developer from deliberately reducing their unit count from seven to six units to avoid building a BMR unit. Fractional Unit Fee: Council members were concerned that developers may be proposing fewer units in order to provide one less BMR because of current rounding practices. Currently, the city has the practice of rounding up at.5 or greater and rounding down at less than .5. For example, if a developer is proposing 24 units, the BMR requirement is 3.6 units, which is rounded up to four BMR units. However, if the developer proposes 23 units, then the BMR requirement would be 3.45 units, which is rounded down to three units. In both cases, the developer will net 20 market rate units, f7c. I ~"D l t<. - L.\- Consider the 2007-08 Fee Schedule: ~..B:.~':i..7~_ and_~p..EE_~~.!:..)1ol,ls.~~g, .JCI:li~iJ\.a.:.t.i.2!!J!'.~.s...(con0.J:1.,:!ed f~()E.I.Mar~~..'<:>'L_.__________ April 3, 2007 Page 2 of3 which is rounded down to three units. In both cases, the developer will net 20 market rate units, but in the latter example, the developer would only be required to construct three BMR units as opposed to the four. Staff reviewed tentative map applications from 2000 through the present to study how many subdivisions have proposed a number of units that would allow for rounding down. Of the 60 applications, eight applications proposed a number of parcels, which could be rounded down. Of these eight applications, site constraints were the reason five of the developers proposed fewer units. The remaining three deveJoprnents were Saron Gardens, TolJ Brothers and a new 21-unij development on Stelling Road. After the analysis, staff believes that with the exception of the Toll Brothers development, site constraints and density and not avoiding the BMR program are the driving forces behind the developer proposing fewer units on sites. Attached is information provided by the City's consultant Keyser Marston and Associates on how to apply a fractional fee for Council review. At this time, Staff does not recommend charging a fee for fractional units since it will increase administration costs for the program with limited projected income. Staff does believe the bigger issue would be developers that propose a unit count just under the requirement to build a BMR unit although this has only occurred in three cases. Examples of a sliding scale approach to the residential fee are included for review as well. The sliding scale would need to be amended to reflect Cupertino land prices and construction costs. Keyser Marston and Associates is still working on determining those costs, but a conservative maximum fee would be the $49 per square foot for condominiums. Small lot single-family homes actually generate a higher fee because of the land cost associated with less dense development. Staff recommends that if the City Council chooses the sliding scale approach, the $49 per square foot fee be adopted as the maximum since it is a conservative figure. FISCAL IMPACT Housing mitigation fee revenues are dependent on the mix and volume of projects, but the near doubling of the fee rates and expansion of fee basis should double the revenues per project. Nearly $344,000 was collected last year. With the new Regional Housing Needs Allocation (RHNA) requiring cities with lower concentrations of low and very low income to show they can provide a greater percentage of housing for these income leve~s. Consequently, the City of Cupertino will need greater resources to address affordable housing needs for the low and very- low income. The Housing Mitigation fees are the City of Cupertino's primary resource for affordable housing development. RECOMMENDATION: Adopt a resolution amending the 2006-07 City fee schedule as follows: . As described in previously adopted Resolution 06-045, replace the current $2.32 per square foot office/industrial/research and development housing mitigation in-lieu fee with a new $4.75 per square foot housing mitigation in-lieu charge for office, industrial, hotel, retail, and research and development projects. While redevelopment area projects and 1)\12 - 5 17 ~ r {1 Consider the 2007-08 Fee Schedule: ~Ll3:t:.Y-0~_~!!~_~p:l:>~?~~llgl,l~il_l~_J!1_itig~!ignJ.e_esJc;g.J1.!iI!_lJ.t:~f~()p_f:>i~~(;!!_~)_____ ApIi! 3, 2007 Page 3 of 3 mixed use projects of at least two-thirds residential and one-third retail/office will be exempt from the fee, they must instead provide Below Market Rate Housing as part of a residential development; and . Raise the residential housing in-lieu fee from $1.19 per square foot to either a sliding scale fee with the fee for a six unit development being set at a maximum of $49 per square foot with an exemption for existing single family parcels or set a fee of $2.50 per square foot for developments of six units or less as recommended by the Cupertino HOllsing Commission. D BYj--'kra Gil, Senior Plamler APPROVED FOR SUB MITT AL: ~L David W. Knapp City Manager Attachments: Exhibit A: Fractional Unit Calculation Overview Exhibit B: Graduated In-Lieu Fee Program Overview Exhibit C: In-Lieu Fee Analysis 1)/Q -(p ;' 7(2 3 _ml .~ CITY OF CUPEIQ"INO City of Cupertino 10300 Torre Avenue Cupertino, CA 95014 (408) 777-3308 Fax: (408) 777-3333 Community Development Department Summary ~ q Agenda Item No. Lu Agenda Date: April 3, 2007 SUBJECT Consider a Municipal Code Amendment of Chapter 19.28 Single-Family Residential (Rl) Zones regarding buildings proposed on properties with an average slope equal to or greater than fifteen percent, Application Nos. MCA-2006-01 and EA-2006-01 City of Cupertino RECOMMENDATION The Planning Commission recommends that the City Council: 1. Conduct first reading to delete the 15% threshold of residential hillside standards overlay and revert to the Rl hillside standards prior to the 2005 Rl Ordinance where only developments on slopes of 30% or greater will be subjected to the hillside standards regardless of geographical locations. Environmental Assessment: Categorically Exempt BACKGROUND The following is a brief summary of the background: . Prior to 1993, the City had limited policies and guidelines regulating properties located in the hillside area. . The General Plan of 1993 incorporated more extensive development standards intended to minimize negative impacts on hillside resources. In that same year, the Residential Hillside (RHS) Zoning District was revised with a set of comprehensive hillside development regulations. . On January 18, 2005, the City Council approved amendments to the Rl Ordinance applying hillside standards to Rllots with an average slope of 15% or greater. The Council voted unanimously to approve the amendments to the Rl hillside development standards. The Council consensus at the time was that more hillside '"' . iCy _/ -1 f t~' r< -1 MCA-2006-01 EA-2006-01 April 3, 2007 Page 2 protection measures are consistent with the Council's general plan policies and goals. Please refer to the online video recordings from the November 16, 2004 public hearing for a re-cap of the Council's sentiments on the issue at the following URL: http://www.cupertino.org/ city government/city channel/webcasting archives 2 004/ index.asp :;pccific relevant clip positions and speakers: 58:06 (R. Lowethal) 1:00:43 -1:04:15 (P. Kwok) 1:11:05 -1:11:25 (R. Lowethal) 1:30:15 -1:30:42 (D. Sandoval) 1:37:26 -1:37:50 (5. James) 1:38:30-1:39:23 (P. Kwok) 1:40:25 -1:45:14 (Motion to approve 5-0) . Due to the concerns expressed from the affected property owners, the Council directed staff in January of 2006 as part of its work program to re-open the R1 hillside standards for discussion and public input. . The major issue affected by this discussion is house size. Under the R1 rules, an applicant can build a house up to 45% of floor area ratio on slopes up to 30%. The RHS development standards reduce the allowable house size as the slope increases. For example, under the R1 rules, a 20,000 square foot lot with an 'average 15 % slope would allow a 9,000 square foot home. Under the RHS ordinance, the same lot would only be permit a 4,714 square foot home. Please refer to the attached Planning COnuilission staff reports for the complete background of the R1 hillside standards and detailed information on the geographical and slope applicability of the 15% R1 threshold for hillside standards. DISCUSSION Planning Commission The Planning Commission reviewed the R1 hillside standards and took public testimony on January 23, 2007 and March 13,2007. The Planning Commission on a 3-1- 1 vote (Miller, Wong and Chien voted aye; Giefer voted no; Kaneda abstained) to recommend the following: . Revert the R1 hillside standards prior to the 2005 R1 Ordinance where only developments on slopes of 30% or greater will be subjected to the hillside standards regardless of geographical locations The Planning Commission comments included: DIR-6 .If L MCA-2006-01 EA - 2006-01 April 3, 2007 Page 3 . The 15% R1 hillside standard should not be applied to the Stevens Creek watercourse and floodplain area. However, the majority of the Commission felt that the R1 hillside standards should be repealed due to the concerns expressed by some of the residents with regards to infringement of their property rights, the unfairness/ confusion of the new R1 hillside standards and the potential negative impacts on the value of the affected properties. . One Commissioner felt that the hillside protection should be emphasized and 'cbat the % hillside standards overlay ou Ie! be on that the hillside properties with the same characteristics should be equally h'eated with the same hillside protection standards. The same Commissioner supports the idea of further curtailing the geographical applicability of the new R1 hillside standards to not include properties located on the flatter valley floor since the Council's intent was to protect hillside properties. . One Commissioner elected to abstain from making a recommendation due to lack of background information. . Sentiments were expressed that more data is required in order to fully evaluate further protecting some of the R1 hillside areas and that if the Council is serious about preserving the hillside then it should consider rezoning the R1 hillside properties to RHS instead of a 15% overlay. Public Testimony The comments expressed by the residences at the Planning Commission meetings are summarized as follows: Opponents of the new Rl hillside standards . The applicability of both the RHS and R1 Ordinance on lots with average slope over 15% is confusing, misleading and unfair. . The 15% threshold of hillside standards is not an effective way of protecting the hillside. Applying the limitations to the building pad would be more appropriate. . The new R1 hillside standards will lower property values of the affected properties. . The 15% hillside standards threshold was approved without public input and the process did not have proper notifications to the residents in the area. Appropriate. In addition, the Council had voted unanimously to take out the 15% rule on October 4, 2005 Council public hearing but was not able to due to a noticing issue. . Retaining walls are functionally needed. Building homes on hillsides are beneficial in that the homes will help stabilize the hill from sliding therefore any further restriction of home sites or intensities should be reverted. Proponents of the new Rl hillside standards ~jq 3 f DltC-l1 MCA-2006-01 EA-2006-01 April 3, 2007 Page 4 . Unprotected hillside properties with large homes will ruin views of the natural hillside and negatively impact the property value of the adjacent homes. . The 15% threshold of hillside standards should be retained to protect the City's hillsides. . Protecting the hillsides is consistent with the City's General Plan Policies and the Council's goals. OJ Large retaining walls, large homes and intensive subdivisions have ne'gatively impacted the Lindy Lane area; without any hillside standards, the R1 OrdinanCl~ will not be able to sufficiently protect the hillsides, . The property rights of the adjacent property owners that are for preservation of hillsides and that have been negatively affected by intensive or large developments on hillsides should also be considered. . The R1 hillside properties, in particular the Lindy Lane area, should have been zoned Residential Hillside Standards. Staff Staff provides the following responses (in'blue) to clarify some of the technical comments and/ or questions raised at the Planning Commission hearings: With the new Rl hillside standards, will property owners be allowed to rebuild existing non- conforming homes iflost in a natural disaster? Regardless of the zoning district, the City's non-conforming building ordinance allows legal non-conforIiung homes in the event of naturally caused destruction to be rebuilt to . its original form and size. There are exceptions and the additional details of the non- conforming ordinance are described in the Municipal Code Chapter 19.112.080 (Exhibit B). Why pockets of the R1 hillside properties north of Lindy Lane are zoned R1 and not RHS? The Lindy Lane area was annexed from the County of Santa Clara in the 1960s where most of the property took on the prior Single-Family Residential (R1) zoning designation from the County jurisdiction. In 1993, the General Plan amendment authorized staff to evaluate a rezoning process where the majority of the existing Single-Family Residential (R1) hillside properties in the area were rezoned to Residential Hillside (RHS). The City initiated a rezoning process in 1995 (10-Z-95) to rezone the Lindy Lane area to RHS in order to be consistent with the General Plan Amendment of 1993. At the time, staff was only authorized to rezone properties with a General Plan land use designation of very low intensity. Therefore, a pocket of the R1 hillside properties (upslope and north of Lindy Lane) were left out of the rez01ung process. In addition, some of the existing R1 properties at the foothill along the south side of the Lindy Lane kept their R1 z01ung designation because it was determined that their development potentials have been maximized (i.e., foothill properties along the south side of Lindy Lane). ~ Il'~ i D,Q-II.) MCA-2006-01 EA-2006-0l April 3, 2007 Page 5 On October 4,2005, the City Council considered a staff initiated proposal to rezone the Rl hillside properties north of Lindy Lane to RHS. The Council elected not to rezone these properties due to their concerns of the potential property values impacts to the affected properties. The statement that the Council's decision to implement new Rl hillside standards was done \AJithout public input and appropriate public noticing As mentioned previously, the Council's decision to change the Rl hillside standards was part of the 2005 R1 Ordinance Amendment, which was noticed City wide and all of decisions were made at public hearings and televised to the entire City. Most of the opponents of the 15 % threshold for the additional hillside standards attended the Planning Commission meetings relating to the R1 Ordinance Amendment and were informed that the COlmnission served only as advisory body to the City Council and that the Council had the final decision. The statement that the Council, on October 4,2005, desired to take out the its previously approved 15% threshold for the RHS overlay for hillside R1 properties, but was unable to due to lack of proper notification. On October 4,2005, the City Council discussed its 2005 General Plan Amendment. Part of the scope of General Plan changes was to consider revising the land use designation of the Lindy Lane area from low intensity (1 to 5 D.U.j Ac.) to hillside slope density formula. The Council did not consider or vote to change the land use designation for the area during that meeting. The Council did vote to retain the low intensity land use designation of the Lindy Lane area. This decision was separate from the Council's prior decision of increasing the R1 hillside standards by adjusting the threshold from 30 % slope to an average 15% slope. The video records of the Council's October 4,2005 (Item #10) public meeting may be downloaded at the following URL: http:// www.cupertino.org! city government! citv channell webcasting archives 2005 ! index.asp Relevant discussion began at the 1:13:07 mark. ENCLOSURES Exhibit A: Model Ordinance Exhibit B: N on-conforming Building Ordinance Exhibit C: Planning Commission Staff Reports (March 13,2007 & January 23, 2007) With Attachments Exhibit D: Planning Commission Meeting Minutes January 23, 2007, the minutes of March 13, 2007 will be available at the Council meeting 1 e ,-- ~ / ) DI12- /, C, TUESDAY SAN JOSE MERCURY NEWS MARCH 20, 2007 i[EIfJERG~{ !EffiCIENCY reener goal set for S.J. buildings SPACES AND PLACES I(ATHERINE CONRAD Reed pushes city council to raise bar to next level To show how "green" city buildings can be, San Jose is go- ing for gold. HSilver is the new minllnLUn," said Mmy Tllckel; m'Ulager of the city's green building energy and climate change project. "The mayor told us to go for the gold" At San Jose Mayor Chuck Reed's w'ging earlier this month, the city COW1Ci! unanimously agreed to raise the lowest envi- rohmentaJly friendly construc- tion benchmarks set in 2001 up to the gold or even platimun level outlined by the U.S. Green Build- ing COW1cil. As ofNovembel; all new mu- nicipal constlUction projects larger thrul10,OOO square feet are required to meet "silver" standards laid out in critel'ia es- tablished by Leadership in Ener- gy and Environmental Design, also known as LEED. The six categories include enel-gy- and water-efficiency factors that re- See GREEN. Page 3C GOING FOR A RANIUNG In order to achieve certification outlined by Leadership in Energy and Environmental Design, known as LEED, environmental features of buildings are awarded points. To be LEED certified at the lowest level, buildings must earn 26 to 32 points out of a total of 69. The following lists the levels of certification - the highest is platinulll - and how features rank by points: Silver. 33 to 38 points Gold: 39 to 51 points Platinum: 52 points HOW POINTS ARE EARNm II Water and water efficiency: 5 points II Innovation and design process: 5 points II Conservation of materials and resources: 13 points II Sustainable site planning: 14 points .. Indoor environmental quality: 15 points ill Energy efficiency and renewable energy: 17 points Source: u.s. Green Building Council ~ AN IEXISTING BUIlDING: San .Jose's City Hall already uses recycled water to irrigate landscaping and flush toilets. It also was oriented to use sunlight rather than electl"ic light. Now city staff has been asked to determine whether City Hall meets LEED standards for existing buildings, a new category f!'Om the U.S. Green Building Council. If not, the staff will determine the cost to the city to be more environmentally friendly. - I I I p p , ,. ,. ,. "~,: "'t-;$1-:';:;.~. ~<~_l~-t' ....-',1/;""'. ,. p- ,. ,.' ',.,' ~ " p- , . 'l:~!f,i;' -,.' =~.f ,. ,. ,. ,. p- p- Jl' p- ;,;~ '''\'ii!~ &1", r p- p-' p- ,. I"iJ f' f~ ? ~;fj i:,. ,. ,. p- i1~ f~ r "",, p- ,. p- ,. ,. ~, '~,,';>'~:\<". 4Y-........~ MARTIN GEE - ME.RCURY HEWS NEW CONSTRUCTION: Expansion ofthe San Jose McEnery Convention Center being supervised by the I'edevelopment agency, Wllich beJieves the 125,OOO-square- foot PI'oject already meets the requirements to earn a silver rating and may even achieve Clold. The project will use energy-efficient heating and ail' conditioning systems, lighting systems to reduce operating costs and use of natural resources. DIR-13 .y~~ :~ ~~~ ~t.~ a oJ. ~!~~ l2 MERCURYNEWS.COM f SAN JOSE MERCURY NEWS TUESDAY, MARCH 20, 2007 3C GREEN I S.J. aims for gold status Continued from Page 1 C duce the amount of resom'ces required to run a building and make it cheaper to operate. The mayor was clear, howev- er, that San Jose has no plans to impose green-building re- quirements on developers. "No, I'm not looking to dic- tate to the private sector re- garding green building. The private sector will figure it out when it makes economic sense," he said. "We need to demonstrate that it does." But for city buildings, the move to a higher certification will come at a cost - and the council must decide if it's worth the investment. City projects Seven projects in San Jose already in the construction pipeline are being studied by the city staff to determine if they can meet the silver or even gold level of enviromnental cer- tification. The projects, ap- proved by voters in bond elec- tions in 2000 and 2002, include the expansion of the San Jose McEnery Convention Center, several libraries and a fire sta- tion. They were not required to meet more than the lowest LEED certification. Bill Ekern, director of project management for the city's re- development agency, said he's fairly confident that two oCthe projects under his supervision already meet the silver stan- dard. They are the 125,000- square-foot expansion of the convention center, roughly esti- mated to cost $120' million, and the Edenvale/Great Oal(S Com- mWlity Center; a 20,000- square-foot project estimated to cost $22 million. "The direction to the archi- tects is silver. . . but we think we've hit gold," Ekern said. As such, those two buildings would not require more money to make them silver or gold. Whether the city's other five projects meet silver LEED-cer- tified levels is not yet known. Ekern said efforts to meet green guidelines can raise the upfront cost of a project by about by 2 percent to 3 percent, but lower the long-term main- tenance costs by reducing the amount of water and energy CITY BUILDINGS TURNING GREEN The total cost to build or expand these seven city buildings already in the pipeline is $242.2 million. An additional $2.7 million - 01' 2-3 percent of the construction costs - is needed to make five ofthel11 LEED-certified silver. Any proposed changes to the budgets will be brought forth as part of the 2007-08 budget BUILDING Edenvale/Great Oaks Community Center McEnery Convention Center expansion Solari Community Center, Seventrees Branch Library Educational Park Branch Library Southeast Branch Library Bascom Bianch Liblary, Community Center Fire Station 36 Silver Creek/Yerba Buena area SIZE 20,000 sq. ft. 125,000 sq. ft. 58,000 sq. ft. 18,000 sq. ft. 12,000 sq. ft. 40,000 sq. ft. "',.<> l's/illlalrei ~'(w tll b"ild (.'V1J11111",Uyct.."t(!r f/lld ('1)51 to expand ("111'(01100" C'r!1Itt.,. U500 sq. ft. COST $25 million* $120 million* ~ $391million $12.7 million $8.8 million $30.2 million $6.4 million LEEO COST No cost alreadv silver No cost, alreadv silver $990,000 $425,000 $300,000 $675,000 $280,000 MERCURY NEWS es - a measure that so far has helped save $190,000 a year in the city's $1 million aJIDUal en- ergy bill. "If we can get this building, which has been refen-ed to as an icon, LEED-certified, it will help us demonstrate to the pri- vate sector what CaJl be done," said Reed. Mer City Hall is certified, Tlu"ner plaJ1S to look at the city's other 200 buildings to de- termine whether they, too, CaJ1 be made LEED-certified. Reed noted that retrofitting existing buildings to meet green guidelines is far more significant than imposing green guidelines on new construction. "Retrofitting is the most un- portant because most of our city has already been built," he said. "[t's the Lu'gest ,mea of op- pOltmllty." Contact Katheline Conrad at kCOTlrad@me/'clll)lnews.com a/' (408) 920-5073. Source: San Jose Oepl of Public Works; Sail Jose Redevelopl11ent Agency green-building policies for fear that the cost would exceed bud- get limit set by the bond mea- sure to construct the $382 mil- lion building. Retrofitting it to meet silver certification could cost $500,000, said city offi- cials, who say the only way the city can expect others to follow green guidelines is to lead the way. "It's important for us as an organization to be a leader in LEED," said Randal 'furner, deputy director of general sel'- vices for the city. "Not only for new construction, but for exist- ing buildings as well." City Hall certification Since the IS-story City Hall was built with an eye toward green-bllilcling practices, 'I\Wll- er Sllspects the tower may be able to earn certification fairly easily. Among the energy-effi- cient factors in the building are the use of daylight instead of electric light to illuminate offic- Online Extra Log on to www. mercurynews.com Inews to read the text of San Jose Mayor Chuck Reed's State of 111e City address. usage. The total cost to build the seven buildings is $242.2 million; to make five of them sil- ver-certified would be $2.7 mil- lion. Reed explained that the staff's cost-to-benefit analysis, to be released in June, will de- termine if it's worth it for the five buildings. "It's about using capital dollaJ's to save operating dollars," he explained. Cities, counties and states across the cOLmtry have adopt- ed green-building stanclm'ds since the U.S. Green Building Council, now a coalition of more than 8,000 building lead- ers, was fowlded in 1993. The cowlcil seeks to educate the in- dustry about constructing buildings that are environmen- tally responsible, profitable and healthy places to live and work. To date, nearly 900 million sqUaJ-e feet of building space nationwide has been involved with the LEED program. The effort to go green also will focus on the city's existing municipal buildings - even the recently completed San Jose City Hall, finished in 2005. It was exempted from the city's DlR -/1" ~ Q c:::==:: =LIJ ~3: =s~ (/) ...... ~i:i z: ~~ (.) = 9!S >..: OJ o;~ '<:0; +'- -""Vl u:S: 0;0; .<: <= u_ +-' . ra gE E~~ 5':150 ~~~ 'iij ~ II) fi'g.3: 0; <= LI.I ~~~ >'". 0::: Ol 0 :;) .~.8 (.) -""VlO::: ~:s: LI.I t5~:!: ~. OJ vi ;< "'..... H~~~ QE5d II)",N LI.I135 :;) ~.!1P I-~::i VI ~ ~ '5 ~ y on 3: <:lJ = i.::' :::;$ y "- <'J,I E ;;;; ~ ~ A VISION OF S.J.'S FUTURE Civic leaders, dreaming of a revitalized downtown, propose changes big, SInall to council. Next up? Figuring out financing By Joshua MoIiua A1crcluy Ncrc,'; Dreaming of changes both sinlple and sublime, :1 handfl11 of San Jose's heavyVl'eight political players ga.thel'ed at City Hall on Monday to con- tinue crafting a blockbuster revitalization of the city's downtown. But the meeting by IstACT Silicon Valley, a network of business, cultural and entertainment luminaries, had a more practical purpose: get- ting the city council to back its "vision" - a busy, bustling central city and even a vastly expanded San Jose McEnery Convention Centel~ There was just" one big question. W1IO'S going to pay for sLlch a gnmd cndeavOl.'1 The plans also include wider sidewall,s I.hat encourage wallcing, public art that dazzles, t11l'iv- ing restam'ants, new and expanded museums, a See SAN JOSE, Page 2B s ). ;, 'e- i- 28 WV MERCURYNEWS.COM SAN JOSE MERCURY NEWS TUESDAY, MARCH 20, 2007 Local News The plans include wider sidewalks that encourage walking, public art that dazzles, thriving restaurants, new and expanded museums, a performing arts complex and dozens of other transformations. SAN JOSE I Group offers dream for downtown \J Continuedfrom Page IB performing arts complex and dozens of other transforma- tions. "Great cities are not built overnight," said Ken Kay, a lstACT consultant. "You have an incredible opportunity to look at what your city is and what it can become." Although the idea was met with big smiles and childlike optimism, a larger problem loomed inside the council chambers. When Councilwoman Madi- son Nguyen asked about. fl- nan~ all of the ideas pre- sented by the group, there was a brief silence, with members of lstACT quickly turning heads to see who would answer the question. ''We didn't come forward with a financial plan," said Con- nie Martinez, one of the found- ers of lstACT. ''We came for- ward with a vision." Ultimately, the council and lstACT agreed that the plans will require a major public and private partnership. Business- es and developers, they agreed, will be more likely to invest in a new downtown if they believe city leaders will embrace their ideas and be willing to spend public money. Finances Still, at least two council members expressed some in- terest in getting a better han- dle on the financial situation. ''When push comes to shove, it is always money that drives the car," Councilwoman Judy Chirco said. On the whole, cotmcil mem- bers were thrilled with the group's ideas. "I am excited," Councilman Forrest Williams said. "I have been trying to get here for a long time, and I am glad to see it coming together." . Councilwoman Nora Cam- pos 'appreciated that private entities were stepping up to help government. "I see your vision, and it is so refreshing to see a vision that is so much bigger than all of you," Campos said. ?t) -l.. s- SAN JOSE TODAY: First Street in downtown San Jose is relatively empty on a recent day. A NEW LOOI< FOR DOWNTOWN: Members of IstACT Silicon Valley picture a thriving area along the same patch of First Street. Among the groups involved in lstACT's leadership council are Adobe Systems, the San Jose Sharks and Cisco Sys- tems. Monday's meeting was the latest bite of the apple in the city's ongoing attempt to shake up downtown. City lead- ers are trying to promote the area as a place to work and live. After an exodus of busi- nesses and residents in the 1960s and '70s, downtown has long been seen as an area lack- ing energy and vitality. "The old joke was that down- town was the hole in the dough- nut," said Harry Mavrogenes, San Jose's executive redevelop- ment director. The city in recent years, however, has approved high- rise housing and moved to re- cmit major companies, such as Adobe Systems and BEA Sys- tems, to downtown. Housing they say, is key because people who live downtown will eat and shop there. "A 24-hour downtown is the goal," said Joe Horwedel, the city's planning director. Convention center Council members also talked about a plan to expand the downtown convention center dming the ~e-hour after- noon meeting. The convention center was built in the late 1980s, with no major renovations since, and business leaders say it badly needs an expansion. liller a bond measure to ex- pand the center failed in 2002, the city council last year gave direction to create a Hotel Fi- nancing District to help pay for an overhaul. The city, hotels and the Convention and VIsi- tors Bureau are working out how such a pian would work. Officials say San Jose is los- ing millions of dollars as busi- nesses take their conventions outside of the city because its center lacks adequate meeting space. "Our existing center is aging, and it is smaller than it needs to be for a city of this size," said Paul Krutko, economic devel- opment director for San Jose. Like the downtown plan, the finances for the proposed con- vention center also are a mys- tery. Center officiais expect to raise $120 million through a 4 percent increase in the hotel bed tax - provided hotels agree to tax themselves. Public funding also will be necessary. Backers of the pian say tjley hope to hammer out a prelimi- nary budget this spring, ask ho- tels to vote next year and, if all goes well, complete the expan- sion by 2010. "If we do not expand the center," said Cyril Isnard, gen- eral manager of San Jose's Fairmont hotel, "we will lose business to other cities. II And that's not hyperbole. City officials estinlate that they have lost $26 million in re- cent years because companies such as Google, Adobe and Ap- ple took their conventions else- where. Contact Joshua Molina at jmolina@merr:urynews.com or (408) 275-2002. nUIIIt: UUIIUtfl. doesn't see fast recovery As profit plunges, CEO predicts bumpy year for housing sector By Gary Gentile ASSOCIATED PRESS LOS ANGELES - KB Home, one of the nation's largest home builders, said yesterday that it expected the sector's problems to contin- ue at least through 2007, re- .................... sulting in lower sales and profits for the year. Barnes &: Noble, The company, which has ~order~ r~port nine developments selling in dlsa~pOlntlng San Diego County, said first- earnings. C3 quarter profit plunged amid Palm reports a 61 pressure from a slowing percent drop in its - housing market and rising de- third-quarter faults of subprime mortgages. . profits. C4 Still, executives sounded upbeat, saying steps the com- .................... pany had taken to reduce inventory and expo- sure to subprime loans would help it weather the housing downturn. The company said it was controlling risk by waiting to start construction on the vast .majority of its homes until buyers had qualified for SEE Housing, C4' ?0 -J Despi~e a big drop in first-quarter profits" KB---- Home's chief sounded upbeat yesterday, saying steps had been taken to reduce Inventory\and exposure to subprime loans. Associated Press__. I 'f ~ HOUSINt; CONTINUED FROM PAGE Cl Sector has been hampered by its excess inventory i1!. Ii mortgages. The company was also increasing its custom- home program, allowing quali- fied buyers to participate in the design process before con- struction begins. "We continue to maintain that our choice value approach and build-to-order business dis- cipline is far better than build- . ing .spec homes and then forc- .ing a value on the customer through discounts and incen- tives in order to sell those homes," KB Home Chief Exec- utive Jeffrey Mezger said dur- ing a conference call with ana- lysts. . The company said it could take impairment charges if home prices continued to erode, but was taking steps to reduce the risk by lowering the number of building lots it owns. . The U1icertain housing mar- ket would pose significant chal- lenges in the year ahead, Mez- ger said. Mezger sees a potential slowdown in housing demand from buyers not being able to quwuy under stricter unde~ writing standards or the possi- bility of an increased supply of ullsold · homes from a rise. in . foreclosures as the primary risk from the shakeout in sub- prime lending. Orders were off 12 percent to 7,?77 in the most recent quar- . to., . , 1"'1 \ ~\ ter. The cancellation rate was 31 percent, a sharp improve- .ment from the 48 percent in the fourth quarter of fiscal 2006. The housing sector has been. plagued by excess supply accu- mulated during the five-year boom that ended 18 months ago. 'We believe these conditions will likely continue for at least the remainder of 2007, reduc- ing our quarterly and full-year revenues . and-- earnings com- pared to 2006 results," Mezger said in a statement KB's San Diego County de- velopments are mostly in North County and Chula Vista. It also has 26 developments in River- side County. For The quarter that ended Feb. 28, the company reported net income of $27.5 million, or 34 cents a share, down from $173.3 million, or $2.01 a share, a year ago. Staff writer Mike Freeman contributed to this rep,~rt. I GOLD (N.Y.) ... +$4.40 $663.40 FRIDAY March23, 2007 G THE SAN DIEGO UNION-TRIBUNE \ MARCH 23, 2007 sanjose.bizjournals.com The News 'i:fJ - \ ~ - 6 THE BUSINESS JOURNAL 5 Anti-planning group bringing its convention to San Jose BY TIMOTHY ROBERTS troberts@bizjournals.com With its reasonably priced housing, wide freeways and cultural amenities, Houston is the place you oughta be. Or so says a national group of libertarian- leaning anti-planning advocates who say urban growth boundaries, transit- oriented development and the generally over-managed development scene in the Bay Area are responsible for the high cost of housing here. Zoning-less Houston is the paragon of anti-planning. From this perspective, San Jose stands out like a socialist at a West Texas tent revival. And so it is that the American Dream Coalition, darling of the conservative Heritage Foundation and the libertar- ian Reason Foundation, is coming here to the Valley of the Heart's Delight to hold its annual conference. The Nov. 10-12 gathering at the Wind- ham Hotel will provide activists, econo- mists and gadflies with a tour of San Jose, the VTA Lightrail and Santana Row. The conventioneers will see both sides of the urban growth boundary. They may tour Coyote Valley. Speakers on both sides of the bound- ary issue will be asked to appear. May- or Chuck Reed has been invited, but has not yet replied. The clear message of this group is that planning as in planning depart- ments and transit-oriented development is a bad thing. "I would like to think that they are shaking in their boots because I want to put them out of business," says Randal O'Toole, the executive director of the coalition and the author of "The Van- ishing Automobile." "I don't think you can have good land- use planning," O'Toole continues. "If any planners are listening to me, they will not hear answers on how to do their jobs better. They should get honest work somewhere else." Strong stuff, and politically incorrect 'I don't think you can have good land-use planning.' Randal O'Toole American Dream Coalition here in the land ofthe long development review process. And what could be more sacred than the requirement that developers in- clude affordable housing when they build condos? Sacred maybe, but a bad idea, says Ed- ward Stringham, associate professor of economics at San Jose State University. He spoke to the coalition's convention last year in Atlanta and is expected to speak at this fall's meeting. The Economics Department at SJSU has begun to develop a libertarian fac- tion in recent years, led by Chairman Lydia Ortega. That's a welcome devel- opment to the coalition. "Housing prices are high here because of controls," Stringham says. "Height controls, density restrictions - all things that add to the cost of housing." The increased cost means fewer homes get built, he says. "We should be advocating policies that increase the supply of housing rather than decreasing the supply," Stringham says. In a study written with co-author Benjamin Powell, a San Jose State fac- ulty member, and published by the Rea:- son Foundation, Stringham notes that San Jose ranks second in the nation for housing unaffordability. Only about 20 percent of homes here were afford- able to someone earning the median income, according to the 2002 figures used in the study. San Francisco was even less affordable with 9 percent of its homes in reach of a median-income earner. San Diego, Oakland and Los Angles were third, fourth and fifth. According to the coalition's paper "The Planning Penalty," home buyers pay a penalty for planning when they buy a house, whose value has shot up because of land-use restrictions. No- where is that a larger penalty than it is in California: $316,000 in Los Angeles, $400,000 in Oakland, $513,000 in San Jose and $850,000 in San Francisco. Houston? The Texas city shows no planning penalty, according to the co- alition. Urban growth boundaries, transit- oriented development and affordable housing requirements - "These are all things that the Silicon Valley Leader- ship Group supports," says Shiloh Bal- lard, that group's director of housing and community development. "There are a lot ofthings that drive up the cost of development and the demand keeps increasing," she says. "We could continue to build homes on the outskirts of cities and widen the highways and built a layer on top of that. But is that re- ally the community we want to build?" What exactly would the anti-planners have San Jose do? O'Toole would unplug the Planning Department. Could it be that housing is costly here because so many people like the climate and want to live by the mountains, the sea, tech jobs and a cultural capital? "You can talk about climate and moun- tains, but the prices are still out of pro- portion," says the former forrestry econ- omist who grew up in Portland, Ore., and now lives in a small community on the Oregon coast. "All these other things don't really enter into it very much." O'Toole hopes to convince us to "Re- cover from Smart Growth," he says, citing a planning mantra. "People there will have to recover from the damage they have done to themselves." How's that coming along? "Somebody in San Jose must be wor- ried about this," he says. TIMOTHY ROBERTS covers public policy, corporate governance and Internet security for the Business Journal. Reach him at (408) 299-1821. -.'----- ------~........ "- Hay Area home sales lowest since 1996, prices still flat Bay Area homes continued selling at an 11-year low in February as the re- gion logged its seventh month without significant price appreciation, a real estate information service reported. A total of 6,305 new and resale houses and condos sold in the nine-county Bay Area last month. That was up 2.2 percent from 6,168 in January of this year, but down 7.9 percent from 6,844 in February last year, according to DataQuick In- formation Systems. February has averaged 6,600 sales since 1988. Last month's sales were the lowest for February since 1996, when 5,940 homes sold. January sales were also at an 11-year low. Real estate digest . On a year-over-year basis, Bay Area sales have fallen for 25 consecutive months. The declines have generally eased each month since sales fell 32.4 percent last July. In Santa Clara County, homes sales were down 6.9 percent year-over-year, with 1,654 selling in February com- pared to 1,776 a year earlier. The me- dian price was $677,000, up 1.5 percent from last year's $667,000. In January, 1,606 homes were sold for a median price of $660,000. In the Bay Area as a whole, the me- dian price paid for a home was $620,000 last month, up 3.2 percent from $601,000 in January, and up 0.3 percent from $618,000 in February last year. The Bay Area median peaked last June at $648,000. Since August the year-over- year change in the median has hovered near zero, ranging from a decline of 1.5 percent to a gain of 1.6 percent. New property database online Joint Venture: Silicon Valley Network has introduced an interactive online da- tabase of commercial property listings. The Web site (www.siliconvalley- prospector. com) is designed to help companies that are looking to locate or expand in Silicon Valley. The tool allows a highly detailed de- mographic analysis of properties in the valley, the developers say. It was developed by city and broker- age partners from the Association of Silicon Valley Brokers and the Silicon Valley Economic Development Alli- ance, which represents 20 cities spread over three counties. Sunnyvale building sold for $llM A 56,720 square foot R&D building in Sunnyvale which is fully leased to Infinera Corp. has changed hands, ac- cording to NAI BT Commercial which represented both parties in the $11 mil- ... I\) ....... :::r CD Z CD ~ lion investment sale. AMB Property Corp. sold the single- story property at 1320-1322 Bordeaux Drive in the Moffett Park area to Lega- cy Partners for $195.13 per square foot. Jim Kovaleski and Kalil Jenab with NAI BT Commercial's San Jose office --l represent both parties. ~ Inf"mera, which provides digital opti- ~ cal networking systems to telecommu- (fl nications carriers, on Feb. 26 disclosed ~ its intention to do an initial public i5l stock offering. o c Former hotel site sold for $6.3M ~ The former Best Western site on North ~ First Street has been sold by Security Pacific for about $6.3 million, according to NAI BT Commercial. Menara Corp. paid $80.93 per square foot for the 1.78 acre parcel at 1440 North First Street in San Jose that has been fenced in for more than a year. The site had initially been consid- ered as a housing redevelopment loca- tion, but a deal could not be completed which enabled Menara to step in and acquire the site. Menara also owns the adjacent prop- ~ erty at 41 to 43. E Gish Road, where a -5' Mediterranean restaurant and an of- ~ fice building are located. K Next door to the hotel at the corner g of Gish and North First St. is a new ~ mixed-use project combining afford- ~ able housing and retail is nearing ~ completion. Directly across the street, construction is moving on a handful of new homes. Douglas Sharpe, with NAI BT Com- mercial San Jose, brokered the user sale. Creekside Business Park sold The Creekside Business Park, a 92,818-square-foot office bUilding on Paragon Drive in San Jose, has been sold to the Realty Associates Fund III LP for an undisclosed price, according to CB Richard Ellis Brokerage in San Francisco. The seller was Arden Eagle Associates Ltd. Frank Friedrich, Don- ald Lonsinger and Doug Yoder, all of CB Richard Ellis, represented both the buyer and seller. Santa Clara business park sold The 227,600-square-foot Coronado Stender Business Park in Santa Clara has been sold, aC'cording to CB Rich- ard Ellis Brokerage in San Francisco. Adler Realty Investments purchased the property at Coronado Drive and Stender Way in Santa Clara from Col- orado Stender Associates LLC. The price was not disclosed. Representing the seller were Kirst- en Grado and Alan Guterman, both of CPS/CORFAC International, and Kalil Jenab of NAI BT Commercial. Douglas Yoder, Paul Lyles, and Chip Sutherland, all of CB Richard Ellis, represented the buyer. s:: :> ::0 () J: tv _U> tv o o ..., ,w , ,=. ""v J',*;*':;;';&:':::;:'11.~=ill""'">>>>''''~~d..m.w<<>~<;::~:::;,,,,,~::>:::;:::~:,~lf.y''''''''' ".~:::.::,,,,.,..:.,,._,,_:_::.,_:. ,.""_':~"'^._ -,.-.".;.".,_._:J. Dtk?-I~