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01-19-16 Amended Searchable packetCITY OF CUPERTINO AGENDA Tuesday, January 19, 2016 10300 Torre Avenue and 10350 Torre Avenue CITY COUNCIL 4:30 PM AMENDED Special Non-televised Closed Session (4:30) Immediately Followed by a Televised Study Session; Followed by the Televised Regular Meeting (6:45); Special Public Facilities Corporation Meeting (Immediately Following Regular Meeting) Amended on 1/14/16 to correct Special Study Session numbering to Nos. 4 and 5 NOTICE AND CALL FOR A SPECIAL MEETING (CLOSED SESSION AND STUDY SESSION) AND REGULAR MEETING OF THE CUPERTINO CITY COUNCIL, AND SPECIAL MEETING OF THE CUPERTINO PUBLIC FACILITIES CORPORATION NOTICE IS HEREBY GIVEN that a special meeting of the Cupertino City Council is hereby called for Tuesday, January 19, 2016, commencing at 4:30 p.m. for a closed session in City Hall Conference Room A, 10300 Torre Avenue, Cupertino, California 95014 and immediately followed by a study session in Community Hall Council Chamber, 10350 Torre Avenue, Cupertino, CA 95014. Said special meeting shall be for the purpose of conducting business on the subject matters listed below under the heading, “Special Meeting." The regular meeting items will be heard at 6:45 p.m. in Community Hall Council Chamber, 10350 Torre Avenue, Cupertino, California. The special meeting of the Cupertino Public Facilities Corporation will immediately follow the regular meeting in Community Hall Council Chamber, 10350 Torre Avenue, Cupertino, California 95014 for the purpose of conducting business on the subject matters listed below under the heading, “Special Meeting.” SPECIAL MEETING CLOSED SESSION - 4:30 PM City Hall Conference Room A, 10300 Torre Avenue 1.Subject: Conference with Legal Counsel-Anticipated Litigation: Significant exposure to litigation pursuant to paragraph (2) of subdivision (d) of Government Code Section 54956.9. One case. 2.Subject: Conference with Legal Counsel-Anticipated Litigation: Initiation of Page 1 CITY OF CUPERTINO 1 January 19, 2016City Council AGENDA litigation pursuant to paragraph (4) of subdivision (d) of Government Code Section 54956.9. Two cases. 3.Subject: Conference with Real Property Negotiators (Government Code Section 54956.8); Property: Cupertino Municipal Water System; Agency Negotiator: Timm Borden; Negotiating Parties: City of Cupertino and San Jose Water Company; Under Negotiation: Terms for City Leased Asset. STUDY SESSION - immediately following closed session Community Hall Council Chamber, 10350 Torre Avenue 4.Subject: Study session regarding Economic Development Strategic Plan (EDSP) draft background report Recommended Action: Conduct study session and provide direction to staff A - Draft Report 5.Subject: Study Session to consider entering into a Memorandum of Understanding with the Rotary Club of Cupertino to renovate the Stocklmeir home and surrounding property to utilize as a non-profit center for Cupertino Recommended Action: Conduct a study session to consider the Rotary’s proposal and direct staff to: 1.Put this item on a future Council agenda; 2.Provide additional information for Council consideration; or 3.Not pursue this proposal. Staff Report A - Proposal Agreement between Rotary and City B - Letters of Support C - Pictures of Site ADJOURNMENT REGULAR MEETING PLEDGE OF ALLEGIANCE - 6:45 PM Community Hall Council Chamber, 10350 Torre Avenue ROLL CALL CEREMONIAL MATTERS AND PRESENTATIONS 1.Subject: Update from the Technology, Information, and Communications Commission Recommended Action: Receive the update Page 2 CITY OF CUPERTINO 2 January 19, 2016City Council AGENDA POSTPONEMENTS ORAL COMMUNICATIONS This portion of the meeting is reserved for persons wishing to address the council on any matter not on the agenda. Speakers are limited to three (3) minutes. In most cases, State law will prohibit the council from making any decisions with respect to a matter not listed on the agenda. CONSENT CALENDAR Unless there are separate discussions and/or actions requested by council, staff or a member of the public, it is requested that items under the Consent Calendar be acted on simultaneously. 2.Subject: Approve the December 1 City Council minutes Recommended Action: Approve the minutes A - Draft Minutes 3.Subject: Accept Accounts Payable for the period ending November 13, 2015 Recommended Action: Adopt Resolution No. 16-001 accepting Accounts Payable for the period ending November 13, 2015 A - Draft Resolution B - AP Report 4.Subject: Accept Accounts Payable for the period ending November 20, 2015 Recommended Action: Adopt Resolution No. 16-002 accepting Accounts Payable for the period ending November 20, 2015 A - Draft Resolution B - AP Report 5.Subject: Accept Accounts Payable for the period ending November 25, 2015 Recommended Action: Adopt Resolution No. 16-003 accepting Accounts Payable for the period ending November 25, 2015 A - Draft Resolution B - AP Report 6.Subject: Accept Accounts Payable for the period ending December 4, 2015 Recommended Action: Adopt Resolution No. 16-004 accepting Accounts Payable for the period ending December 4, 2015 A - Draft Resolution B - AP Report Page 3 CITY OF CUPERTINO 3 January 19, 2016City Council AGENDA 7.Subject: Accept Accounts Payable for the period ending December 11, 2015 Recommended Action: Adopt Resolution No. 16-005 accepting Accounts Payable for the period ending December 11, 2015 A - Draft Resolution B - AP Report 8.Subject: Application for Alcoholic Beverage License for Deep Cliff Golf Course, 10700 Clubhouse Lane Recommended Action: Recommend approval to the California Department of Alcoholic Beverage Control of the Application for Alcoholic Beverage License for Deep Cliff Golf Course, 10700 Clubhouse Lane Staff Report A - Application 9.Subject: Summary Vacation of a Wire Clearance Easement within the Civic Center property at 10300 Torre Avenue Recommended Action: Adopt Resolution No. 16-006 summarily vacating a wire clearance easement within the Civic Center property at 10300 Torre Avenue Staff Report A - Legal Description for Vacation of Wire Clearance Easement B - Plat Map for Vacation of Wire Clearance Easement C - Draft Resolution D - PG&E No Objection Letter E - AT&T No Objection Letter F - Comcast No Objection Letter 10.Subject: Update on Permanent Program for Early Morning Collection of Solid Waste Containers on Select Streets in the Tri-School Area. Recommended Action: Receive report with no changes recommended to permanent program. Staff Report A – Table of Containers Removed from Select Streets Prior to and During Implementation B – Resident Comments Post Permanent Implementation SECOND READING OF ORDINANCES 11.Subject: Second reading of ordinance directing actions related to the formation of, and Cupertino’s membership in, the Silicon Valley Clean Energy Authority (SVEA), an independent joint powers authority, which will provide a Community Choice Aggregation Program to offer clean energy alternatives for Cupertino residents and businesses Page 4 CITY OF CUPERTINO 4 January 19, 2016City Council AGENDA Recommended Action: 1. Conduct the second reading of the Ordinance No. 15-2138: “An Ordinance of the City Council of the City of Cupertino Authorizing the Implementation of a Community Choice Aggregation Program” to create and participate in the Silicon Valley Clean Energy Authority; and 2. Appoint a regular Director and alternate Director to the Authority’s Board of Directors and direct staff to add Council’s appointment to the Authority to the future Council committee assignments calendar Staff Report A - Draft Ordinance PUBLIC HEARINGS 12.Subject: Enact an Urgency Ordinance and conduct the first reading of an ordinance amending the Cupertino Municipal Code to prohibit marijuana cultivation, dispensaries, and deliveries and commercial cannabis activities within the City of Cupertino. (Application No. MCA-2015-01; Location: City-wide; Applicant: City of Cupertino) Recommended Action: 1. Find that the proposed actions are exempt from CEQA; and 2. Enact Urgency Ordinance No. 16-2139: “An Interim Urgency Ordinance of the City Council of the City of Cupertino establishing a moratorium on Medical Marijuana Dispensaries, Marijuana Cultivation Facilities, Commercial Cannabis Activities and Medical Marijuana deliveries within the City of Cupertino pending completion of an update to the City’s Zoning Code”; and 3. Conduct the first reading of Ordinance No. 16-2140: “An Ordinance of the City Council of the City of Cupertino amending Section 19.08.030 and adding Chapter 19.98 of Title 19 of the Cupertino Municipal Code regarding Medical Marijuana Dispensaries, Marijuana Cultivation Facilities, Commercial Cannabis Activities, and Medical Marijuana Deliveries” Staff Report A - Draft Ordinance No. 16-2139 Urgency Ordinance B - Draft Ordinance No. 16-2140 Marijuana Ordinance C - White Paper on Medical Marijuana Dispensaries D - Santa Clara District Attorney E - PC Resolution F - PSC MJ recommendation ORDINANCES AND ACTION ITEMS 13.Subject: Order the abatement of a public nuisance (weeds) pursuant to provisions of Ordinance No. 724 and Resolution No. 15-112 Page 5 CITY OF CUPERTINO 5 January 19, 2016City Council AGENDA Recommended Action: Note objections and adopt Resolution No. 16-007 ordering abatement of a public nuisance (weeds) Staff Report A - Draft Resolution B - 2016 Weed Abatement Program Commencement Report C - Notice to Destroy Weeds and Program Schedule D - Letter to Property Owners E - Approved Resolution No. 15-112 14.Subject: Consideration of Proposed Lease with Verizon Wireless for a cell tower to be located on the Civic Center Property (Torre Avenue), subject to the terms of any City-issued permits Recommended Action: Adopt Resolution No. 16-008 to: 1. Authorize the City Manager to execute an Antenna Ground Lease between the City of Cupertino and GTE Mobilnet dba Verizon for a term of up to 5 years, for a cell tower to be located on the Civic Center Property, in substantially the form as presented to Council, and subject to the terms of any City-issued permits; and 2. Authorize the City Manager to negotiate and execute up to two five year (5-year) options consistent with the terms of the Lease Staff Report A - Draft Proposed Lease B - Draft Resolution - Verizon Lease.docx C - Letter from AT&T 15.Subject: An ordinance amending sections 14.04.100 and 18.56.040 of the Cupertino municipal code to provide for a limited waiver of reimbursement requirements when a property owner dedicates right-of-way for a city street improvement or facility project. Recommended Action: Conduct the first reading of Ordinance No. 16-2141: “An Ordinance of the City Council of the City of Cupertino amending Sections 14.04.100 and 18.56.040 of the Cupertino Municipal Code to provide for a limited waiver of reimbursement requirements when a property owner dedicates right-of-way for a city street improvement or facility project,” to facilitate the provision of sidewalks and street widening in certain areas where pedestrians and bicyclists are prevalent. Staff Report A - Draft Ordinance B - Redline Version of Draft Ordinance 16.Subject: Proposed Initiative submitted by Cupertino Residents for Sensible Zoning Action Committee Recommended Action: Adopt Resolution No. 16-009 directing City staff to prepare a report on the effects of the Initiative pursuant to Elections Code Section 9212 Page 6 CITY OF CUPERTINO 6 January 19, 2016City Council AGENDA Staff Report A - Notice of Intent and Proposed Initiative B - City Attorney’s Official Title and Summary C - Draft Resolution 17.Subject: Council committee assignments Recommended Action: Approve assignments REPORTS BY COUNCIL AND STAFF 18.Subject: Report on Committee assignments and general comments Recommended Action: Report on Committee assignments and general comments ADJOURNMENT NOTICE AND CALL FOR A SPECIAL MEETING OF THE CUPERTINO PUBLIC FACILITIES CORPORATION NOTICE IS HEREBY GIVEN that a special meeting of the Cupertino Public Facilities Corporation is hereby called for Tuesday, January 19, 2016, commencing immediately following the Cupertino City Council Regular meeting (which starts at 6:45 p.m.) in the Community Hall Council Chamber, 10350 Torre Avenue, Cupertino, California 95014. Said special meeting shall be for the purpose of conducting business on the subject matters listed below under the heading, “Special Meeting." SPECIAL MEETING OF THE CUPERTINO PUBLIC FACILITIES CORPORATION ROLL CALL Community Hall Council Chamber, 10350 Torre Avenue ORAL COMMUNICATIONS This portion of the meeting is reserved for persons wishing to address the council on any matter not on the agenda. Speakers are limited to three (3) minutes. In most cases, State law will prohibit the council from making any decisions with respect to a matter not listed on the agenda. ORDINANCES AND ACTION ITEMS 1. Subject: Approval of the City of Cupertino entering into an Antenna Ground Lease between the City and GTE Mobilnet of California Limited Partnership, a California Limited Partnership, d/b/a Verizon Wireless and Receive and File the Page 7 CITY OF CUPERTINO 7 January 19, 2016City Council AGENDA Letter from Independent Bond Counsel, Brian Quint Finding no Tax Implications from the Lease Recommended Action: a. Receive and File the Letter from Independent Bond Counsel, Brian Quint Finding no Tax Implications from the Lease; and b. Provide consent to the City of Cupertino to permit the City to enter into an Antenna Ground Lease between the City and GTE Mobilnet of California Limited Partnership, a California Limited Partnership, d/b/a Verizon Wireless Staff Report A - Opinion Letter Thimmig Brian Cupertino Public Facilities Corporation ADJOURNMENT Page 8 CITY OF CUPERTINO 8 January 19, 2016City Council AGENDA The City of Cupertino has adopted the provisions of Code of Civil Procedure §1094.6; litigation challenging a final decision of the City Council must be brought within 90 days after a decision is announced unless a shorter time is required by State or Federal law. Prior to seeking judicial review of any adjudicatory (quasi-judicial) decision, interested persons must file a petition for reconsideration within ten calendar days of the date the City Clerk mails notice of the City’s decision. Reconsideration petitions must comply with the requirements of Cupertino Municipal Code §2.08.096. Contact the City Clerk’s office for more information or go to http://www.cupertino.org/index.aspx?page=125 for a reconsideration petition form. In compliance with the Americans with Disabilities Act (ADA), anyone who is planning to attend the next City Council meeting who is visually or hearing impaired or has any disability that needs special assistance should call the City Clerk's Office at 408-777-3223, 48 hours in advance of the Council meeting to arrange for assistance. Upon request, in advance, by a person with a disability, City Council meeting agendas and writings distributed for the meeting that are public records will be made available in the appropriate alternative format. Also upon request, in advance, an assistive listening device can be made available for use during the meeting. Any writings or documents provided to a majority of the Cupertino City Council after publication of the packet will be made available for public inspection in the City Clerk’s Office located at City Hall, 10300 Torre Avenue, during normal business hours and in Council packet archives linked from the agenda/minutes page on the Cupertino web site. Members of the public are entitled to address the City Council concerning any item that is described in the notice or agenda for this meeting, before or during consideration of that item. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located in front of the Council, and deliver it to the Clerk prior to discussion of the item. When you are called, proceed to the podium and the Mayor will recognize you. If you wish to address the City Council on any other item not on the agenda, you may do so by during the public comment portion of the meeting following the same procedure described above. Please limit your comments to three (3) minutes or less. Page 9 CITY OF CUPERTINO 9 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:116-1347 Name: Status:Type:Closed Session Agenda Ready File created:In control:1/11/2016 City Council On agenda:Final action:1/19/2016 Title:Subject: Conference with Legal Counsel-Anticipated Litigation: Significant exposure to litigation pursuant to paragraph (2) of subdivision (d) of Government Code Section 54956.9. One case. Sponsors: Indexes: Code sections: Attachments: Action ByDate Action ResultVer. City Council1/19/20161 Subject:ConferencewithLegalCounsel-AnticipatedLitigation:Significantexposureto litigationpursuanttoparagraph(2)ofsubdivision(d)ofGovernmentCodeSection54956.9. One case. CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™10 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:116-1348 Name: Status:Type:Closed Session Agenda Ready File created:In control:1/11/2016 City Council On agenda:Final action:1/19/2016 Title:Subject: Conference with Legal Counsel-Anticipated Litigation: Initiation of litigation pursuant to paragraph (4) of subdivision (d) of Government Code Section 54956.9. Two cases. Sponsors: Indexes: Code sections: Attachments: Action ByDate Action ResultVer. City Council1/19/20161 Subject:ConferencewithLegalCounsel-AnticipatedLitigation:Initiationoflitigation pursuant to paragraph (4) of subdivision (d) of Government Code Section 54956.9. Two cases. CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™11 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:116-1349 Name: Status:Type:Closed Session Agenda Ready File created:In control:1/11/2016 City Council On agenda:Final action:1/19/2016 Title:Subject: Conference with Real Property Negotiators (Government Code Section 54956.8); Property: Cupertino Municipal Water System; Agency Negotiator: Timm Borden; Negotiating Parties: City of Cupertino and San Jose Water Company; Under Negotiation: Terms for City Leased Asset. Sponsors: Indexes: Code sections: Attachments: Action ByDate Action ResultVer. City Council1/19/20161 Subject:ConferencewithRealPropertyNegotiators(GovernmentCodeSection54956.8); Property:CupertinoMunicipalWaterSystem;AgencyNegotiator:TimmBorden;Negotiating Parties:CityofCupertinoandSanJoseWaterCompany;UnderNegotiation:TermsforCity Leased Asset. CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™12 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1282 Name: Status:Type:Study Session Agenda Ready File created:In control:12/15/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Study session regarding Economic Development Strategic Plan (EDSP) draft background report Sponsors: Indexes: Code sections: Attachments:A - Draft Report Action ByDate Action ResultVer. City Council1/19/20161 Subject:StudysessionregardingEconomicDevelopmentStrategicPlan(EDSP)draft background report Conduct study session and provide direction to staff CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™13 Economic Development Strategic Plan Background Report Revised Draft Report January 2016 prepared for: City of Cupertino 14 Economic Development Strategic Plan Background Report - Revised Draft -1- Table of Contents EXECUTIVE SUMMARY ........................................................................................................... 2 I. INTRODUCTION ............................................................................................................ 9 II. ISSUES AND OPPORTUNITIES FOR ECONOMIC DEVELOPMENT ..........................10 Cupertino’s Economic Assets and Opportunities ........................................................................... 10 Key Issues for Economic Development ......................................................................................... 13 Conclusion ..................................................................................................................................... 14 III. INDUSTRY AND EMPLOYMENT TRENDS ..................................................................15 Economic Trends ........................................................................................................................... 15 Businesses and Industries in Cupertino......................................................................................... 17 Conclusion: Cupertino’s Competitive Position ............................................................................... 26 IV. OFFICE SECTOR .........................................................................................................27 Office Market Overview .................................................................................................................. 27 Key Employment Locations within Cupertino ................................................................................ 29 Conclusion: Cupertino’s Competitive Position ............................................................................... 33 V. RETAIL AND HOTEL USES .........................................................................................34 Retail .............................................................................................................................................. 34 Hotel ............................................................................................................................................... 54 Conclusion: Cupertino’s Competitive Position ............................................................................... 55 APPENDIX: FORUM AND ROUND TABLE ON LOCAL BUSINESSES ..................................56 15 Economic Development Strategic Plan Background Report - Revised Draft -2- This background report presents the economic data and analysis that will inform Cupertino’s Economic Development Strategic Plan. The report describes employment and market trends, identifies local assets, and presents the opportunities and challenges for attracting and retaining businesses in Cupertino. This executive summary provides an overview of major findings discussed in the report. ISSUES AND OPPORTUNITIES FOR ECONOMIC DEVELOPMENT In August 2015, the City of Cupertino hosted a Community Forum to engage community members about the Economic Development Strategic Plan. At the Forum, residents, business owners, City staff, and elected officials identified assets, opportunities, and potential challenges related to economic development in Cupertino. As discussed at the Forum, Cupertino has many economic assets that position the city well to attract and retain businesses. These include:  Location at the heart of Silicon Valley. Cupertino is located in western Santa Clara County, bordered by Sunnyvale, Santa Clara, San Jose, and Saratoga. The city’s location provides excellent access to Interstate 280, a freeway that is relatively less congested compared to other of the region’s freeways such as Highway 101. I-280 connects the city to highly skilled workers throughout the South Bay and to the Sand Hill Road Area, the hub of venture capital activity in the region.  Highly competitive technology sector. Cupertino has a large concentration of high-wage jobs, centered on the technology industry. Many technology firms seek to locate in Cupertino in order to do business with Apple – the city’s single largest employer and the second largest tech employer in Silicon Valley – and take advantage of the city’s location in the region and other assets.  Highly educated workforce. Nearly 80 percent of adults aged 25 and above in Cupertino have a college degree, with 40 percent holding advanced degrees. Most residents are also employed in professional occupations. The city’s significant employment base attracts a net weekday inflow of 26,700 workers, who tend to be highly educated workers in professional occupations.  Excellent quality of life and first-rate school district. Cupertino’s public schools have been recognized for their excellent quality both by the State of California and in the national media. The excellent public school system and overall quality of life are very attractive for new households, especially families with children. Key issues identified at the Community Forum include:  Limited shopping opportunities for clothing and other specialty goods. Cupertino has many neighborhood shopping centers where residents can shop for groceries and other daily needs. However, residents must look outside the community – for example, to Westfield Valley Fair and Santana Row in San Jose, or the Stanford Shopping Center in Palo Alto – for destination retail centers where they can access dining and entertainment opportunities and shop for clothing and other “specialty” goods (i.e., goods and services that are purchased on a more infrequent, discretionary basis). While Vallco Shopping Mall used to provide this type of shopping environment, the mall is now largely vacant.  Challenges for independent retailers and other small and midsize businesses. Cupertino’s strong economy has driven significant demand for retail and office space, resulting in low vacancies and high rents. As a result, small and midsize businesses of all types struggle to find affordable EXECUTIVE SUMMARY 16 Economic Development Strategic Plan Background Report - Revised Draft -3- space in the city. There is also a concern that traditional retailers selling goods are being replaced with services (e.g., tutoring centers, day cares) that require more parking than some existing shopping centers can provide and may not generate the same level of sales tax revenues.  Protecting Cupertino’s quality of life. According to residents polled for the 2014 community survey, the most important issues facing Cupertino were affordable housing (33 percent), traffic (21 percent), and controlling growth (17 percent).1 Many residents are also concerned about preserving the quality of the public school system as the community continues to grow and change. KEY FINDINGS FROM THE ANALYSIS In order to provide a nuanced understanding of the economic trends that currently shape the city’s economy, Strategic Economics analyzed local and regional trends in employment and businesses; Cupertino’s fiscal position; the office sector; the retail sector; and the hotel sector. Key findings from this analysis are described below. Business and Employment Trends Cupertino’s employment base has grown quickly relative to the South Bay as a whole. The number of private jobs in Cupertino grew by nearly 20 percent over the last decade and a half, from 27,700 jobs in 1998 to 33,000 jobs in 2013. Cupertino’s economy is driven by a number of major technology employers. Cupertino has nine employers with 250 or more workers, of which five are in technology or biotechnology. These include Apple, Seagate, Pegasystems, and Trend Micro. Other firms seek to locate in Cupertino in order to do business with Apple and the city’s other major employers as a vendor, partner, or consultant. Cupertino also has a high concentration of small and midsize technology firms. Cupertino’s strength in technology is not limited to large employers. Approximately 20 percent of the city’s small and midsized businesses (defined as those with fewer than 250 employees) are in the technology industry.2 Most of Cupertino’s small and midsize businesses are in the professional and technical services sector. In 2012, professional and technical services accounted for 44 percent of Cupertino’s firms with fewer than 250 workers, compared to 32 percent of small and midsize firms in the South Bay. Many of the small and midsize professional services firms – such as legal offices and consulting firms – support the technology sector, providing services to Apple and other technology firms. Cupertino is highly attractive for small firms and start-ups. Businesses with one to four employees accounted for 62 percent of all small and midsize businesses in Cupertino in 2012, compared to 55 percent of businesses in the South Bay as a whole. More than half of Cupertino’s businesses with one to four employees are in the professional and technical services sector. Cupertino is attractive for small start -ups because of the highly skilled, entrepreneurial workforce that lives in the city and in neighboring communities. Cupertino has relatively few small and midsize industrial businesses. The city has relatively few small and midsize businesses in traditional manufacturing, transportation, distribution, or construction.3 This may 1 City of Cupertino – 2014 Community Satisfaction Survey, Godbe Research, 2014. 2 The technology industry includes businesses from several different sectors, including professional and technical services, transportation and distribution, and manufacturing. 3 While Cupertino’s largest employer, Apple, is often categorized as a manufacturing business, this report categorizes Apple as a technology firm. 17 Economic Development Strategic Plan Background Report - Revised Draft -4- reflect the lack of low-cost industrial space in the city, as well as the competition from professional and technical firms for office and R&D space in Cupertino. Limited space availability and high real estate costs create a challenging environment for midsize firms. Compared to the South Bay, Cupertino has fewer businesses and employees in firms employing between 10 and 250 workers, and the number of businesses in this size range is declining. Limited space availability may be one contributing factor. Commercial real estate brokers in Cupertino report that many midsize businesses cannot find or afford space in Cupertino, and that growing businesses often leave the city because they cannot find sufficient space for their workers. Cupertino’s Fiscal Position The City’s General Fund revenues have grown steadily over the past several years as a result of economic growth and new real estate investments. Revenue sources that are directly tied to economic growth – including sales taxes, property taxes, and transient occupancy (hotel) taxes – account for more than 60 percent Cupertino’s General Fund revenues. These revenue sources have grown steadily over the past several years as the economy has recovered and Cupertino has attracted new investment. Major development projects, such as Main Street and Apple Campus 2, have also generated significant one-time revenues from planning, zoning, engineering, permit processing fees, and other sources. Cupertino’s strong General Fund supports a high level of service for residents. The City has been able to maintain service levels at 2.80 to 3.01 full time equivalent (FTE) staff per thousand residents over the past ten years, even as Cupertino’s population grew significantly during that time period. The City depends on a single employer for a significant share of its revenues. In FY 2012-13, Apple contributed total revenues of $9.2 million, or approximately 18 percent of Cupertino’s General Fund budget.4 Most of the revenues that Apple generates come from sales, property, and utility user taxes, including approximately 45 percent of Cupertino’s sales and use tax revenues in FY 2012-13. Overall, the opening of Apple Campus 2 is expected to increase Apple’s share of tax revenue. In addition to the revenues that Apple contributes directly, suppliers, consultants, and other vendors dependent on Apple also add indirectly to the company’s impact on the City budget. Office Sector Cupertino’s Competitive Position Cupertino is known as a premier office location for businesses in high tech and other professional and technical services. Businesses and real estate brokers in the region recognize Cupertino as a highly prestigious address for corporations locating in the South Bay. The city’s office market outperforms most other communities, with the exception of Palo Alto, Mountain View, and Menlo Park. Compared to other neighboring communities, Cupertino has an unusually high share of Class A office space. Three-fourths of Cupertino’s office space is Class A – a higher share than in any other city in Silicon Valley except for Sunnyvale. Moreover, much of the Class B and C stock in Cupertino has been upgraded over time by Apple, the city’s largest employer. According to local brokers, Apple occupies 80 percent or more of the city’s office inventory. Cupertino’s location provides excellent access to a highly skilled labor pool. Cupertino and surrounding communities in the West Valley, including Campbell, Los Gatos, and Saratoga, enjoy a particularly high 4 This does not include one-time revenues from the construction of Apple Campus 2. The fiscal analysis related to Apple and presented here is from Keyser Marston Associates, “Economic and Fiscal Impacts Generated by Apple in Cupertino—Current Facilities and Apple Campus 2”, prepared for Apple Inc., 2013. 18 Economic Development Strategic Plan Background Report - Revised Draft -5- concentration of highly educated workers. Moreover, commute times on I-280 tend to be shorter than on other, more congested highways such as Highway 101. Cupertino also has excellent access to venture capital. I-280 provides easy access to the Sand Hill Road area, the hub of venture capital activity in the region, as well as other venture capital firms and high-net- worth individuals funding new startup businesses around the Valley. Limited supply, as well as competition from Apple, may constrain the city’s ability to attract and retain growing companies. A very tight market for office space, combined with the high share of office space occupied by Apple, results in scarce leasing opportunities in the 20,000 to 100,000 square foot range. Although larger spaces are also in short supply, 20,000 to 100,000 square feet spaces are in particularly high demand for growing companies such as midsize technology startups. As a result, many expanding midsize firms have opted to relocate in other nearby communities. Key Locations within Cupertino Within Cupertino, office uses are concentrated in three subareas: Stevens Creek Boulevard, North De Anza Boulevard, and Bubb Road (Figure 1). For the purposes of this analysis, the existing Apple Campus was excluded from the North De Anza subarea. The subarea analysis also excluded projects that are planned or under construction, including Apple Campus 2, Main Street, and Vallco. The Stevens Creek Boulevard subarea contains the most office space, including a mix of Class A, B, and C product. Nearly one-third of Cupertino’s office inventory is located in the Stevens Creek Boulevard subarea. This includes the approximately 300,000 square foot, Class A Cupertino City Center office complex at the corner of Stevens Creek and North De Anza Boulevard, as well as a mix of smaller Class B and C buildings that have not received significant upgrades. Within the North De Anza subarea, there is a significant concentration of Class A space and most of the older space has been significantly upgraded. In particular, Bandley Road has seen upgrades of R&D spaces to conventional office spaces. While these upgrades were largely undertaken by Apple for the company’s own use, these buildings would be very desirable for other tenants, should they become available. Currently, the premier location for office space in Cupertino is at the intersection of Stevens Creek and North De Anza Boulevards, and north along North De Anza. Cupertino City Center and the Apple Campus have historically anchored the prime North De Anza office corridor, which benefits from excellent access to Interstate 280. In the future, brokers expect that the most desirable location for office space will shift eastwards as major new office projects at Main Street and Apple 2 are completed. Bubb Road is smaller than Stevens Creek or North De Anza and characterized by a mix of R&D uses and older buildings. Bubb Road contains a number of older industrial buildings, some of which have been upgraded to office or research and development (R&D) space by Apple. 19 Economic Development Strategic Plan Background Report - Revised Draft -6- Figure 1. Key Employment Locations within Cupertino Retail Uses Cupertino’s Competitive Position Cupertino is located in a trade area that is highly desirable to retailers. High household spending power, excellent freeway accessibility, growing employment, and the significant inflow of daily commuters create significant demand for retail in Cupertino and surrounding communities. Reflecting these factors, western Santa Clara County has some of the highest retail rents and lowest vacancies in the country. The city is located in a highly competitive trade area. In addition to Vallco, Cupertino’s trade area contains several large retail shopping centers, including Westfield Valley Fair and Santana Row. The proximity of these competing centers, which feature many regional and national anchor tenants, restaurants, and entertainment options, limits the potential to locate the same types of tenants in Cupertino. Many Cupertino residents regularly shop and dine at these other retail centers, creating a significant amount o f retail “sales leakage” that results in lower sales tax revenues for the City. Cupertino has many neighborhood- and business-serving retailers that serve residents’ and workers’ daily needs. The city is well-served by grocery stores, mid-priced restaurants, personal services, and other retailers that serve residents’ daily needs. Cupertino’s restaurants and personal services also serve the city’s workforce. The city’s highest performing retail categories are food and beverage stores, and food services and drinking places. 20 Economic Development Strategic Plan Background Report - Revised Draft -7- Retail sales in Cupertino have declined over time, making the City’s revenue sources less diverse Between 2005 and 2014, total retail sales in Cupertino declined by 17 percent after adjusting for inflation. This reflects the gradual decline of the Vallco Shopping Mall, as well as the rise of online shopping and other industry trends that have weakened in-store sales. The loss of major business-to-business sales tax producers (including Hewlett-Packard), has also reduced taxable sales in Cupertino. Although the City has partially offset the decline in sales tax by renegotiating an existing sales t ax rebate agreement with Apple, these trends have decreased the diversity of revenue sources for the City’s General Fund. The city has many older strip retail shopping centers that do not meet the needs of modern retailers, but may provide relatively affordable space for independent retailers. The majority of Cupertino’s retail was built between 1960 and 1980. Some of the city’s older strip retail shopping centers do not provide the wide storefronts, visibility, and parking that modern retailers typically require. These strip centers also tend to be located on relatively small, shallow parcels that also create challenges for redevelopment. At the same time, however, older shopping centers provide lower cost retail spaces that may work well for smaller, independent retail and services. Cupertino is attracting newer retail investments that are likely to result in increased sales. The Main Street project is slated to add 130,500 additional square feet of retail in its lifestyle center. In addition, some existing retail centers, such as Homestead Square and Cupertino Village, have received recent renovations. The renovations at Homestead Square resulted in a significant increase in sales and sales tax revenues after the first phase of the project opened in 2014. Key Locations within Cupertino Retail in Cupertino is concentrated along two corridors: Stevens Creek Boulevard and Homestead Road. Stevens Creek Boulevard serves as Cupertino’s main commercial corridor, accounting for 63 percent of total retail sales in 2014.5 The retail mix in the Stevens Creek subarea is highly diversified, and serves both local residents and workers from businesses throughout Cupertino. In contrast to Stevens Creek Boulevard, the Homestead Road corridor is primarily neighborhood- serving. Homestead Road runs along Cupertino’s northern border with Sunnyvale, and the shopping centers on this corridor serve residents in both cities. The corridor accounted for six percent of Cupertino’s retail sales in 2014. Homestead Road contains mostly restaurants, grocery stores, and other food and food service establishments. Cupertino’s highest-performing retail nodes are on Stevens Creek Boulevard, between North Stelling Road and North De Anza Boulevard. The highest sales ($250-$350 per square foot per year) are found in centers anchored by the national retailers Whole Foods and Target. While the smaller, strip shopping centers on Stevens Creek Boulevard have generally been successful at attracting new tenants, many have not been upgraded in years. The eastern segment of Stevens Creek Boulevard – extending from North De Anza Boulevard to the city border – is characterized by relatively small, shallow lots with limited visibility and parking. These centers are relatively underperforming, typically achieving less than $100 a square foot in annual sales. 5 Excluding Vallco Shopping Mall. 21 Economic Development Strategic Plan Background Report - Revised Draft -8- Hotel Uses As in other South Bay communities, demand for hotels in Cupertino is driven by business travel. Cupertino currently has 785 hotel rooms across five properties. Approximately 70 to 75 percent of demand is from business travelers. Strong job growth in Cupertino, along with Apple’s expansion, suggests that business traveler demand for hotel rooms in Cupertino will remain strong for the foreseeable future. Cupertino currently has two hotels under construction and two more proposed. The Marriott Residence Inn at Main Street and the Hyatt House Hotel, north of Vallco, are currently under construction and together will add 328 rooms to Cupertino’s hotel inventory. Two mixed-use development proposals, at Marina Plaza and The Oaks shopping centers, both contain hotel components together comprising an additional 322 rooms. Together, these four hotel developments would nearly double Cupertino’s current hotel inventory. CONCLUSION Cupertino’s economy is shaped by the community’s location at the heart of the South Bay’s innovation economy. Moreover, the city benefits from a strong employment base, a family-friendly environment, high- quality municipal services, and a well-educated, highly skilled workforce. These assets position the city well to continue to attract and retain businesses, especially in the region’s fast -growing technology sector. At the same time, the Economic Development Strategic Plan will need to consider the issues raised by residents, business owners, and other stakeholders. These include retaining small and local businesses, maintaining a healthy City budget that relies on a diverse range of revenue sources, providing access to a range of goods and services, and protecting the city’s excellent quality of life. 22 Economic Development Strategic Plan Background Report - Revised Draft -9- The City of Cupertino is creating an Economic Development Strategic Plan (EDSP) that will guide the City’s efforts to support Cupertino’s economic prosperity. The EDSP will focus on strengthening existing businesses, fostering a healthy economy, and maintaining a healthy fiscal position, rather than on new development or land use changes.6 This background report presents the economic data and analysis that will inform Cupertino’s Economic Development Strategic Plan. The report describes employment and market trends, identifies local assets, and presents the opportunities and challenges for attracting and retaining businesses in Cupertino. Following this introduction, this report is organized into five sections:  Summary of findings.  Issues and opportunities for economic development.  Industry and employment trends, focused on understanding Cupertino’s small and midsize businesses.  Office sector, including a review of the market for existing office space in Cupertino, and a discussion of the relative competitiveness of employment locations within Cupertino.  Retail and hotel uses, including discussions of national and regional retail trends, mobile services, the strength of existing retail and hotel uses in Cupertino, and the competitive position of different retail subareas within the city. As part of the preparation of this background report, the City of Cupertino hosted a Community Forum in August 2014 that was facilitated by MIG. This analysis draws on the community input provided at the Forum (summarized in the appendix) as well as additional interviews with Cupertino business leaders and local real estate experts, and a variety of other data and information sources that are described throughout the report. The report also builds on existing economic studies including the 2014 Market Study prepared by BAE Urban Economics, and the 2014 Retail Strategy Report prepared by Greensfelder Commercial Real Estate. 6 The City is addressing development allocations and land use changes separately, through the General Plan Amendment process and specific plans. I. INTRODUCTION 23 Economic Development Strategic Plan Background Report - Revised Draft -10- II. ISSUES AND OPPORTUNI TIES FOR ECONOMIC DEVELOPMENT Cupertino has many economic assets that position the city well to attract and retain businesses. At the same time, residents, business owners, City staff, and elected officials have concerns related to Cupertino’s ability to recruit and retain an appropriate mix of businesses over time while also maintaining the city’s excellent quality of life. This section provides an overview of the key opportunities and issues that inform Cupertino’s economic competitiveness. The section incorporates assets, opportunities, and potential challenges related to economic development as identified from the Community Forum, additional stakeholder interviews, and a review of existing reports. See the appendix for a complete summary of community comments from the Forum. CUPERTINO’S ECONOMIC ASSETS AND OPPORTUNITIES Cupertino is located at the heart of Silicon Valley. Cupertino is located in western Santa Clara County, bordered by Sunnyvale, Santa Clara, San Jose, and Saratoga. The city’s location provides excellent access to Interstate 280, a freeway that is relatively less congested compared to other freeways such as Highway 101. I-280 connects the city to highly skilled workers throughout the South Bay and to the Sand Hill Road Area, the hub of venture capital activity in the region. The city is home to a highly competitive technology sector. Cupertino has a large concentration of high- wage jobs, centered on the technology industry. Many technology firms seek to locate in Cupertino in order to do business with Apple – the city’s single largest employer and the second largest tech employer in Silicon Valley – and take advantage of the city’s location in the region and other assets. Residents in Cupertino and surrounding communities in the West Valley are highly educated. Nearly 80 percent of adults aged 25 and above in Cupertino have a college degree, with 40 percent holding advanced degrees (Figure II-1). Most residents are also employed in professional occupations. Seventy- eight percent of Cupertino residents are employed in management, business, science, or arts, compared with 50 percent of workers who live in Santa Clara County (Figure II-2). The city’s significant employment base also attracts a net weekday inflow of 26,700 workers, who tend to be highly educated workers in professional occupations.7 Cupertino also benefits from a high quality of life and first-rate school district. Cupertino’s public schools have been recognized for their excellent quality both by the State of California and in the national media. In a 2014 community survey, the school system was the most commonly cited reason that residents chose to live in Cupertino.8 The excellent public school system and overall quality of life are very attractive for new households, especially families with children. Average household size in Cupertino increased from 2.75 persons in 2000 to 2.87 in 2010, and the share of households with children increased from 43 percent to 47 percent.9 7 BAE Urban Economics, “City of Cupertino General Plan Amendment Market Study,” February 2014. 8 Godbe Research, “City of Cupertino – 2014 Community Satisfaction Survey,” 2014. 9 BAE Urban Economics, “City of Cupertino General Plan Amendment Market Study,” February 2014. 24 Economic Development Strategic Plan Background Report - Revised Draft -11- Figure II-1. Educational Attainment for Population 25+ and Older: Cupertino and Santa Clara County , 2011 Sources: U.S. Census Bureau, American Community Survey, 2007-2011; BAE, Market Study, 2014. Figure II-2. Employed Residents by Occupation: Cupertino and Santa Clara County, 2011 Sources: U.S. Census Bureau, American Community Survey, 2007-2011; BAE, Market Study, 2014. 0% 10% 20% 30% 40% 50% Le s s T h a n H i g h S c h o o l Hi g h S c h o o l G r a d u a t e So m e C o l l e g e , N o D e g r e e As s o c i a t e s D e g r e e Ba c h e l o r ' s D e g r e e Gr a d u a t e / P r o f e s s i o n a l De g r e e Pe r c e n t o f P o p u l a t i o n (2 5 + Y e a r s o f A g e ) Cupertino Santa Clara County 0% 10% 20% 30% 40% 50% 60% 70% 80% Management, Business, Science, Art Service Sales and Office Natural Resources, Construction, Maintenance Production, Transportation, Material Moving Pe r c e n t o f E m p l o y e d R e s i d e n t s Cupertino Santa Clara County 25 Economic Development Strategic Plan Background Report - Revised Draft -12- The City’s General Fund revenues have grown steadily over the past several years as a result of new real estate investments and other economic activity. Figure II-3 shows revenue sources for Cupertino’s General Fund, the City’s primary operating fund, for fiscal year (FY) 2015-16. Revenue sources that are directly tied to economic activity – including sales, property, and transient occupancy (hotel) taxes – account for the majority of Cupertino’s General Fund revenues. These revenue sources have grown steadily over the past several years as the economy has recovered and Cupertino has attracted new investment. “Other” revenue sources have experienced fluctuations due to one-time revenues associated with major development projects, such as Main Street and Apple Campus 2. For example, in FY 2015-16, the City received 15 percent of its General Fund budget from charges for services, a category that includes planning, zoning, engineering, and permit processing fees associated with new development. Charges from service revenues are expected to decline significantly in the next several years as the new development projects are completed. Cupertino’s strong General Fund supports a high level of service for residents. Figure II-4 shows the Cupertino’s General Fund expenditures in FY 2015-16. The General Fund pays for basic services such as public works, law enforcement, recreation, and planning and community development.10 The City has been able to maintain service levels at 2.80 to 3.01 full time equivalent (FTE) staff per thousand residents over the past ten years, even as the population grew significantly during that time period. Figure II-3. Cupertino General Fund Revenues, FY 2015-16 (Budgeted) 10 Note that General Fund resources are used only to fund operations that do not have other dedicated (restricted) funding sources. Operations that rely heavily on non -General Fund resources, such as street maintenance, solid waste collection, and recreation are accounted for in other funds. The General Fund also does not include funding for schools or other services that are provided by agencies other than the City. Sales Tax 30% Property Tax 24% Other Taxes* 2% Transient Occupancy 7% Charges for Services 15% Utility Tax 5% Other** 17% *Includes business license taxes, construction taxes, and property transfer taxes. **Includes franichse fees, licenses and permits, use of money and property, fines and forfeitures, intergovernmental, and miscellaneous revenues. Source: City of Cupertino 2014-15 Adopted Budget 26 Economic Development Strategic Plan Background Report - Revised Draft -13- Figure II-4. Cupertino General Fund Expenditures, FY 2015-16 (Budgeted) KEY ISSUES FOR ECONOMIC DEVELOPMENT Key issues identified in the Community Forum and stakeholder interviews are discussed below. Cupertino has limited shopping opportunities for clothing and other specialty goods. Cupertino has many neighborhood shopping centers where residents can shop for groceries and other daily needs. However, residents must look outside the community – for example, to Westfield Valley Fair and Santana Row in San Jose, or the Stanford Shopping Center in Palo Alto – for destination retail centers where they can access dining and entertainment opportunities and shop for clothing and other “specialty” goods (i.e., goods and services that are purchased on a more infrequent, discretionary basis). While Vallco Shopping Mall used to provide this type of shopping environment, the mall is now largely vacant. Mom-and-pop retailers and other small and midsize businesses may struggle to find or maintain affordable locations in Cupertino. Cupertino’s strong economy has driven significant demand for retail and office space, resulting in low vacancies and high rents. As a result, small and midsize businesses of all types struggle to find affordable space in the city, especially given the competition with larger or better established businesses. For example, small independent retailers may not be able to compete with chain retailers, which typically have better credit and are in a position to sign longer -term leases. There is also a concern that traditional retailers selling goods are being replaced with services (e.g., tutoring centers, day cares) that require more parking than some existing shopping centers can provide and may not generate the same level of sales tax revenues. The City depends on a single employer for a significant share of its revenues. In FY 2012-13, Apple contributed total revenues of $9.2 million, or approximately 18 percent of Cupertino’s General Fund Public Works 25% Planning and Community Development 21% Law Enforcement 17% Non Departmental* 13% Recreation Community Services 10% Other** 14% *Includes debt service and transfers to other funds, primarily to fund capital project costs. **Includes Administration, Administrative Services, City Council and Commissions, and Public Affairs. Source: City of Cupertino 2015-16 Adopted Budget. 27 Economic Development Strategic Plan Background Report - Revised Draft -14- budget.11 Most of the revenues that Apple generates come from sales, property, and utility user taxes, including approximately 45 percent Cupertino’s sales and use tax revenues in FY 2012-13. Overall, the opening of Apple Campus 2 is expected to increase Apple’s share of tax revenue. In addition to the revenues that Apple contributes directly, suppliers, consultants, and other vendors dependent on Apple also add indirectly to the company’s impact on the City budget. Protecting Cupertino’s quality of life is an overriding concern for residents . According to residents polled for the 2014 community survey, the most important issues facing Cupertino were affordable housing (33 percent), traffic (21 percent), and controlling growth (17 percent).12 Many residents are also concerned about preserving the quality of the public school system as the community continues to grow and change. CONCLUSION Cupertino’s economy is shaped by the community’s location at the heart of the South Bay’s innovation economy, family-friendly environment, high-quality services, and well-educated, highly skilled workforce. These assets position the city well to continue to attract and retain businesses, especially in the region’s fast-growing technology sector. At the same time, the Economic Development Strategic Plan will also need to consider the issues raised by residents, business owners, and other stakeholders, including the need to maintain a healthy fiscal position in the long-term while retaining small and local businesses, providing access to a range of goods and services, and protecting quality of life. 11 This does not include one-time revenues from the construction of Apple Campus 2. The fiscal analysis related to Apple and presented here is from Keyser Marston Associates, “Economic and Fiscal Impacts Generated by Apple in Cupertino—Current Facilities and Apple Campus 2”, prepared for Apple Inc., 2013. 12 City of Cupertino – 2014 Community Satisfaction Survey, Godbe Research, 2014. 28 Economic Development Strategic Plan Background Report - Revised Draft -15- This section discusses trends in Cupertino’s employment base in the context of the South Bay’s evolving economy. The section builds on the 2014 Market Study, which provided an overview of economic activity in Cupertino. However, this analysis includes a more detailed analysis of businesses by industry and firm size, in order to provide a more nuanced understanding of the economic trends that currently shape the city’s economy, the industries that are likely to drive future economic growth, and the types of businesses and industries may require additional support from the city in order to thrive. The section begins with a discussion of recent economic trends in the South Bay, followed by a more detailed analysis of Cupertino’s businesses and employment base. ECONOMIC TRENDS South Bay Region The South Bay region (San Mateo County and Santa Clara County) is experiencing rapid economic growth. In 2014, employment reached its highest level since 2000, approximately nine percent higher than the pre-recession peak in 2008 (Figure III-1). The South Bay’s strong job growth has driven a steep decline in the unemployment rate, from a high of 9.9 percent in 2009 to 4.9 percent in 2014. According to Joint Venture Silicon Valley, employment growth in the South Bay counties has outpaced all other counties in the nine-county Bay Area region except San Francisco since at least 2007. Average wages in the South Bay and San Francisco have also risen to pre-recession levels, while wages in the rest of the Bay Area region remain below 2010 levels.13 The South Bay’s growth in employment and income has been driven primarily by the technology sector and other jobs in the professional, technical, and financial services. Professional and technical services jobs represent one-third of employment in the South Bay (Figure III-2). Software now accounts for over 50 percent of venture capital funding in Silicon Valley, the highest share ever for this industry.14 However, employment in other sectors has not kept up with growth in technology and the professional services. While employment in technology firms has recovered from the recession of 2008- 2009, employment in other sectors such as traditional manufacturing, arts and entertainment, and local government administration have fallen in recent years. Consistent with this trend, the region has seen the most job and income growth in higher skill job sectors, while middle and lower skill employment growth has been more sluggish.15 13 Joint Venture Silicon Valley Index, 2015. 14 Ibid. 15 Ibid. III. INDUSTRY AND EMPLOYMENT TRENDS 29 Economic Development Strategic Plan Background Report - Revised Draft -16- Figure III-1. South Bay Employment Trends, 1990-2014 Source: State of California Employment Development Department, 2015; Strategic Economics, 2015. Figure III-2. South Bay Employment by Industry Category, 2014 Category Employment % of Total Professional and Technical Services (a) 423,847 33% Manufacturing 180,593 14% Other Industrial (b) 153,040 12% Health 143,924 11% Retail 119,298 9% Restaurants 97,814 8% Other (c) 87,545 7% Education 46,071 4% Accommodation & Entertainment 34,701 3% Total 1,286,833 100% (a) Includes Information, Finance and Insurance, Real Estate, Rental, Leasing, Professional, Scientific, Technical Services, and Management of Companies and Enterprises (b) Includes Construction, Wholesale Trade, and Transportation and Warehousing (c) Includes Natural Resources, Utilities, Administrative and Support, Waste Management and Remediation, Other Services (exce pt Public Administration) and Unclassified Source: Quarterly Census of Employment and Wages, 2014; Strategic Economics, 2015. Cupertino Reflecting the recent trends in the South Bay, Cupertino has experienced a strong recovery from the recession of 2008-2009. As of 2013, employment had exceeded 2007 levels (Figure III-3). Over time, the city has become an increasingly competitive location for employment. In 2013, Cupertino accounted for 2.6 percent of all jobs in the South Bay, up from 2.2 percent in 1998. 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 19 9 0 19 9 1 19 9 2 19 9 3 19 9 4 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 20 0 0 20 0 1 20 0 2 20 0 3 20 0 4 20 0 5 20 0 6 20 0 7 20 0 8 20 0 9 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 Un e m p l o y m e n t R a t e Em p l o y m e n t Employment Unemployment Rate 30 Economic Development Strategic Plan Background Report - Revised Draft -17- Figure III-3: Total Private Employment in Cupertino and as a Percent of South Bay Employment Excludes self-employed and government workers. Source: US Census ZIP Code and County Business Patterns, 2013; Strategic Economics, 2015. BUSINESSES AND INDUSTRIES IN CUPERTINO This section describes the types of businesses and industries in Cupertino. Because the city is home to Apple and other large companies, the data on employment by industries tends to reflect the dominance of these employers. In order to provide a more complete portrait of all businesses in Cupertino, this analysis begins with an overview of the city’s major employers (those with 250 or more workers) and then provides more detail on the characteristics of small and midsize businesses. Large Businesses Almost all of the city’s major employers are in the technology or education sectors. Figure III-4 lists businesses in Cupertino that employ 250 or more workers. Almost all of the privately owned large employers are in the high tech or biotech industries. The city’s largest employers also include the local school and community college districts and a private health care center that serves a local retirement community. Apple Inc. is Cupertino’s single largest employer and the second largest technology employer in Silicon Valley. Apple employs approximately 15,000 workers in office and research and development buildings across the city, representing approximately 47 percent of its workforce. Following the completion of Apple’s second campus in 2016, the company’s total employment in Cupertino is projected to increase to 23,400.16 16 Keyser Marston Associates, “Economic and Fiscal Impacts Generated by Apple in Cupertino —Current Facilities and Apple Campus 2”, prepared for Apple Inc., 2013. 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 1998 2004 2007 2010 2012 2013 Pe r c e n t o f S o u t h B a y Em p l o y m e n t Total Cupertino Employment Cupertino % of South Bay 31 Economic Development Strategic Plan Background Report - Revised Draft -18- Figure III-4: Businesses in Cupertino with more than 250 Employees, 2013 Employer Sector Employees Apple Technology 15,000 Cupertino Union School District Education 1,597 Foothill/DeAnza Community College District Education 1,183 Fremont Union High School District Education 961 Seagate Technology LLC Technology 500 Affymax Inc Biotechnology 304 Pegasystems (formerly Chordiant) Technology 285 Trend Micro Inc Technology 250 Health Care Center at the Forum Health Services 250 Total 20,330 Source: Cupertino 2012-2013 Comprehensive Annual Financial Report, 2013; Strategic Economics, 2015. Small and Midsize Businesses Cupertino’s major employers are well known, but the city’s smaller employers are less well understood. This section focuses on small and midsize firms, defined here as those with fewer than 250 employees, including trends by 1) industry and 2) business size. The findings in this section are based on data from the US Census County and ZIP Code Business Patterns for the years 1998 and 2012 (the most recent year available at the time of the analysis). 17 Industry Trends Most of Cupertino’s small and midsize businesses are in the professional and technical services. In 2012, professional and technical services accounted for 44 percent of Cupertino’s small and midsize firms, compared to 32 percent of small and midsize firms in the South Bay (Figure III-5). These professional and technical services firms employed 32 percent of workers employed in firms with fewer than 250 workers in Cupertino, compared to 27 percent of South Bay workers employed in businesses of this size (Figure III- 6). Cupertino has relatively few small and midsize firms in the manufacturing and transportation and distribution sectors. As shown in Figure III-5, the manufacturing sector accounted for 2 percent of total small and midsize businesses in Cupertino in 2012, compared with 5 percent for the South Bay. The transportation and distribution sector made up 9 percent of total small and midsize businesses in the city, compared with 15 percent for the South Bay. Compared to the South Bay, Cupertino generally has a similar concentration of small and midsize firms in service sectors such as health, education, retail, and accommodation. As shown in Figure III- 5, Cupertino has a similar share of small and midsize businesses in the restaurant, health, and accommodation (hotel) sectors compared to the South Bay. The city also has a relatively high share of educational establishments, even excluding the school and community college districts (which all employ 250 or more workers). This may reflect the tutoring and after-school centers that serve Cupertino’s many families with children. However, compared to the South Bay, Cupertino has a relatively low share of retail businesses, in part reflecting significant vacancies at Vallco. 17 Note that the County and Zip Code Business Patterns data exclude self-employed workers, as well as employees of private households, railroad employees, agricultural production employees, and most government employees. 32 Economic Development Strategic Plan Background Report - Revised Draft -19- Figure III-5: Small and Midsize Businesses by Sector: Cupertino and the South Bay, 2012 (Businesses with Fewer than 250 Employees) (a) Includes Information, Finance and Insurance, Real Estate, Rental, Leasing, Professional, Scientific, Technical Services, and Management of Companies and Enterprises (b) Includes Natural Resources, Utilities, Administrative and Support, Waste Management and Remediation, Other Services (except Public Administration) and Unclassified (c) Includes Construction, Wholesale Trade, and Transportation and Warehousing Source: US Census ZIP Code and County Business Patterns, 2012; Strategic Economics, 2015. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Pr o f e s s i o n a l & T e c h n i c a l Se r v i c e s ( a ) He a l t h Ot h e r ( b ) Re s t a u r a n t s Tr a n s p o r t a t i o n & Di s t r i b u t i o n ( c ) Re t a i l Ed u c a t i o n Ma n u f a c t u r i n g Ac c o m m o d a t i o n & En t e r t a i n m e n t Pe r c e n t o f S m a l l a n d M i d s i z e B u s i n e s s e s Cupertino South Bay 33 Economic Development Strategic Plan Background Report - Revised Draft -20- Figure III-6. Jobs in Small and Midsize Businesses by Sector: Cupertino and the South Bay, 2012 (Businesses with Fewer than 250 Employees) (a) Includes Information, Finance and Insurance, Real Estate, Rental, Leasing, Professional, Scientific, Technical Services, and Management of Companies and Enterprises (b) Includes Construction, Wholesale Trade, and Transportation and Warehousing (c) Includes Natural Resources, Utilities, Administrative and Support, Waste Management and Remediation, Other Services (exce pt Public Administration) and Unclassified Source: US Census ZIP Code and County Business Patterns, 2012; Strategic Economics, 2015. Between 1998 and 2012, the number of small and midsized businesses in the professional and technical services, health, restaurant, accommodation, and education sectors grew, while the number of businesses in the industrial and retail sectors declined. As shown in Figure III-7, 115 new professional and technical businesses were added between 1998 and 2012, with smaller gains in education, health care, accommodation (hotels), and restaurants. During this same period, Cupertino lost nearly half of its retail businesses and one-quarter of its businesses in manufacturing, transportation, warehousing, and construction. Competition with technology and professional services firms for industrial space may be contributing to the decline in manufacturing, transportation distribution, and warehousing businesses. The decrease in retail establishments reflects the declining occupancy rates in Vallco mall over this time period. 0% 5% 10% 15% 20% 25% 30% 35% Pr o f e s s i o n a l & T e c h n i c a l Se r v i c e s ( a ) He a l t h Tr a n s p o r t a t i o n & Di s t r i b u t i o n ( b ) Re s t a u r a n t s Ot h e r ( c ) Re t a i l Ed u c a t i o n Ma n u f a c t u r i n g Ac c o m m o d a t i o n & En t e r t a i n m e n t Pe r c e n t o f J o b s i n S m a l l a n d M i d s i z e B u s i n e s s e s Cupertino South Bay 34 Economic Development Strategic Plan Background Report - Revised Draft -21- Figure III-7: Change in Number of Small and Midsize Businesses by Sector: Cupertino, 1998 to 2012 (Establishments with 250 or Fewer Employees) (a) Includes Information, Finance and Insurance, Real Estate, Rental, Leasing, Professional, Scientific, Technical Services, and Management of Companies and Enterprises (b) Includes Natural Resources, Utilities, Administrative and Support, Waste Management and Remediation, Other Services (except Public Administration) and Unclassified (c) Includes Construction, Wholesale Trade, and Transportation and Warehousing Source: US Census ZIP Code and County Business Patterns, 2013; Strategic Economics, 2015. Technology-based industries accounted for 21 percent of Cupertino’s small to midsize businesses. The technology industry includes businesses from several of the sectors discussed above, including professional and technical services, transportation and distribution, and manufacturing. In total, technology firms account for 21 percent of Cupertino’s small to midsize businesses (Figure III-8). In comparison, only ten percent of small and midsize businesses in the South Bay as a whole are in technology. The majority of technology businesses are in software development, including custom computer programming services and computer systems design services. According to local real estate brokers, many small and midsize companies locate in Cupertino to do business with Apple or the city’s other large technology companies. The industries shown in Figure III- 8 do not capture the full magnitude of Cupertino’s technology economy, as many of the city’s businesses in other industries – such as legal offices and consulting firms – provide services to Apple or other technology firms. 0 100 200 300 400 500 600 700 800 Pr o f e s s i o n a l & T e c h n i c a l Se r v i c e s ( a ) He a l t h Ot h e r ( b ) Re s t a u r a n t s Tr a n s p o r t a t i o n & Di s t r i b u t i o n ( c ) Re t a i l Ed u c a t i o n Ma n u f a c t u r i n g Ac c o m m o d a t i o n & En t e r t a i n m e n t Ch a n g e i n N u m b e r o f B u s i n e s s e s 1998 2012 35 Economic Development Strategic Plan Background Report - Revised Draft -22- Figure III-8: Top Technology-Related Industries: Cupertino, 2012 (Businesses with Fewer than 250 Employees) Industry Firms % of Total Firms Estimated Jobs % of Total Jobs Custom Computer Programming Services 156 10% 1,606 9% Computer Systems Design Services 76 5% 263 1% Other Electronic Parts and Equipment Merchant Wholesalers 22 1% 164 1% Computer, Computer Peripheral Equipment, Software Wholesalers 15 1% 282 2% Other Computer Related Services 13 1% 217 1% Software Publishers 13 1% 557 3% Data Processing, Hosting, and Related Services 12 1% 124 1% Electronic Shopping 10 1% 39 0% All Others* 19 1% 537 3% Total Technology-Related 336 21% 3,786 21% Total Small and Midsize Firms 1,611 100% 17,724 100% *Includes Computer Facilities Management Services, Internet Publishing and Broadcasting and Web Search Portals, Software and Other Prerecorded Compact Disc, Tape, and Record Reproducing, Bare Printed Circuit Board Manufacturing, Instruments and Relat ed Products Manufacturing for Measuring, Displaying, and Controlling Industrial Process Variables, Semiconductor and Related Device Manufacturing, Printed Circuit Assembly (Electronic Assembly) Manufacturing, Semiconductor Machinery Manufacturing Computer Storage Device Manufacturing. Source: US Census ZIP Code and County Business Patterns, 2013; Strategic Economics, 2015. Business Size Cupertino has a high concentration of very small businesses with between one and four employees. Businesses with one to four employees accounted for 62 percent of all businesses in Cupertino in 2012, compared to 55 percent of businesses in the South Bay as a whole (Figure I II-9). These very small firms accounted for 14 percent of workers employed in small and midsize firms in Cupertino, compared to just over 10 percent of workers in the south Bay (Figure III-10). Very small businesses were also the only firm size category that experienced a net increase in number of businesses between 1998 and 2012 (Figure III- 11). Most of Cupertino’s very small businesses are in the professional services sector. Figure III-12 shows businesses by size and industry. More than half of businesses with one to four employees are in the professional and technical services sector. According to local brokers and business leaders, Cupertino is attractive for small entrepreneurs and start-ups because of the highly-skilled workforce that lives in the city and in neighboring communities. Compared to the South Bay, Cupertino has relatively few midsize businesses. Compared to the South Bay, Cupertino has fewer businesses and employees in firms employing between 10 and 250 workers (Figures III-9 and III-10). Between 1998 and 2012, the number of these midsize firms in the city declined (Figure III-11). Limited space availability may be one factor contributing in the weaker performance of midsize businesses as compared to very small establishments. Commercial real estate brokers in Cupertino report that many midsize businesses cannot find space in Cupertino, and that expanding businesses are often forced to leave the city because they cannot find suitably large offices for their growing businesses. 36 Economic Development Strategic Plan Background Report - Revised Draft -23- Figure III-9: Businesses by Size: Cupertino and the South Bay, 2012 (Businesses with 250 Employees or Fewer) Source: US Census ZIP Code and County Business Patterns, 2012; Strategic Economics, 2015. Figure III-10: Jobs by Business Size: Cupertino and the South Bay, 2012 (Businesses with 250 Employees or Fewer) Source: US Census ZIP Code and County Business Patterns, 2012; Strategic Economics, 2015. 0% 10% 20% 30% 40% 50% 60% 70% 1 to 4 5 to 9 10 to 19 20 to 49 50 to 99 100 to 249 Pe r c e n t o f S m a l l a n d M i d s i z e B u s i n e s s e s Number of Employees Cupertino South Bay 0% 5% 10% 15% 20% 25% 1 to 4 5 to 9 10 to 19 20 to 49 50 to 99 100 to 249 Pe r c e n t o f J o b s i n S m a l l a n d M i d i s z e Bu s i n e s s e s Number of Employees Cupertino South Bay 37 Economic Development Strategic Plan Background Report - Revised Draft -24- Figure III-11: Change in Number of Businesses by Size: Cupertino, 1998 to 2012 (Businesses with 250 Employees or Fewer) Source: US Census ZIP Code Business Patterns, 1998, 2012; Strategic Economics, 2015. 0 200 400 600 800 1,000 1,200 1 to 4 5 to 9 10 to 19 20 to 49 50 to 99 100 to 249 Ch a n g e i n N u m b e r o f B u s i n e s s e s Number of Employees 1998 2012 38 Economic Development Strategic Plan Background Report - Revised Draft -25- Figure III-12: Businesses by Sector and Size: Cupertino and South Bay, 2012 (Businesses with Fewer than 250 Employees) Business Size (Number of Employees) Percent of Firms of Each Size Sector 1 to 4 5 to 19 20 to 49 50 to 99 100 to 249 Total 1 to 4 5 to 19 20 to 49 50 to 99 100 to 249 Total Cupertino Professional & Technical Services (a) 513 146 29 9 8 705 52% 33% 28% 22% 33% 44% Manufacturing 20 10 0 5 1 36 2% 2% 0% 12% 4% 2% Transportation & Distribution (b) 99 28 9 5 0 141 10% 6% 9% 12% 0% 9% Retail 62 44 10 2 6 124 6% 10% 10% 5% 25% 8% Accommodation & Entertainment 9 5 6 3 2 25 1% 1% 6% 7% 8% 2% Restaurants 42 71 24 10 1 148 4% 16% 23% 24% 4% 9% Health 104 77 12 2 5 200 10% 17% 12% 5% 21% 12% Education 24 24 8 2 1 59 2% 5% 8% 5% 4% 4% Other (c) 123 43 6 3 0 175 12% 10% 6% 7% 0% 11% Total 996 448 104 41 24 1,613 100% 100% 100% 100% 100% 100% South Bay Professional & Technical Services (a) 13,726 4,922 1,362 539 336 20,885 38% 24% 24% 25% 29% 32% Manufacturing 1,157 1,070 432 171 110 2,940 3% 5% 7% 8% 10% 5% Transportation & Distribution (b) 5,681 2,934 791 284 161 9,851 16% 14% 14% 13% 14% 15% Retail 2,980 2,753 761 303 173 6,970 8% 14% 13% 14% 15% 11% Accommodation & Entertainment 484 375 196 81 51 1,187 1% 2% 3% 4% 4% 2% Restaurants 1,773 2,734 1,036 285 50 5,878 5% 13% 18% 13% 4% 9% Health 4,163 2,756 479 170 108 7,676 12% 14% 8% 8% 9% 12% Education 555 383 158 67 35 1,198 2% 2% 3% 3% 3% 2% Other (c) 5,269 2,398 568 234 131 8,600 15% 12% 10% 11% 11% 13% Total 35,788 20,325 5,783 2,134 1,155 65,185 100% 100% 100% 100% 100% 100% Note: excludes businesses with more than 250 employees (which are primarily in the professional & technical services and education sectors). a) Includes Information, Finance and Insurance, Real Estate, Rental, Leasing, Professional, Scientific, Technical Services, and Management of Companies and Enterprises (b) Includes Construction, Wholesale Trade, and Transportation and Warehousing (c) Includes Natural Resources, Utilities, Administrative and Support, Waste Management and Remediation, Other Services (except Public Administration) and Unclassified Source: US ZIP Code and County Business Patterns, 2012; Strategic Economics, 2015. 39 Economic Development Strategic Plan Background Report - Revised Draft -26- CONCLUSION: CUPERTINO’S COMPETITIVE POSITION The business and industry trends discussed in this section suggest many opportunities and several challenges for economic development in Cupertino. Opportunities Key opportunities for economic development include:  Growing job base: The number of private jobs in Cupertino grew by nearly 20 percent over the last decade and a half, from 27,700 jobs in 1998 to 33,000 jobs in 2013. Cupertino’s employment base also grew more quickly than employment in the South Bay as a whole during this time period.  Major employers: Cupertino’s economy is driven by a number of major technology employers, including Apple, Seagate, Pegasystems, and Trend Micro. Other firms seek to locate in Cupertino in order to do business with Apple and the city’s other major employers as a vendor, partner, or consultant.  Concentration of small and midsize technology firms: Cupertino’s strength in technology is not limited to large employers. Approximately 20 percent of the city’s small and midsized businesses (defined as those with fewer than 250 employees) are in technology firms. Moreover, many of the small and midsize businesses in other industries – such as legal offices and consulting firms – cater directly to Apple or other technology firms.  Attractive business climate for small entrepreneurs and start -ups: Cupertino is attractive for small entrepreneurs and start-ups because of the highly skilled workforce that lives in the city and in neighboring communities. This is reflected in the city’s strong concentration of professional and technical firms with one to four employees. Potential Challenges However, the industry trends also reveal several potential challenges for the city’s long-term economic growth, including:  Few small and midsize manufacturing businesses: While Cupertino’s largest employer, Apple, is often categorized as a manufacturing business, the city has relatively few small and midsize businesses in manufacturing or other industrial industries such as transportation, distribution, or construction. This may reflect the challenges that small and midsize manufacturing firms face in competing with professional and technical firms for office and R&D space in Cupertino.  Challenging environment for midsize firms: Compared to the South Bay, Cupertino has fewer businesses and employees in firms employing between 10 and 250 workers, and the number of businesses in this size range is declining. Limited space availability may be one contributing factor. Commercial real estate brokers in Cupertino report that many midsize businesses cannot find space in Cupertino, and that expanding businesses are often forced to leave the city because they cannot find sufficient space for their growing businesses. 40 Economic Development Strategic Plan Background Report - Revised Draft -27- The rapid job growth in Silicon Valley and Cupertino has fueled strong demand for existing office space. This section reviews recent office market trends in Silicon Valley and Cupertino, focusing on trends in the key employment locations within the City of Cupertino.18 OFFICE MARKET OVERVIEW Figure IV-1 provides an overview of the office inventory, vacancies, and rents in Cupertino compared to other markets in Silicon Valley as of the first quarter of 2015. Figure IV-2 summarizes the office development that is entitled, proposed, or under construction in Cupertino and surrounding communities. The Silicon Valley office market contains 85.6 million square feet of space, with an overall vacancy rate of 8.7 percent and an average monthly rental rate of $3.67 per square foot. Overall, Class A office space accounts for slightly less than 60 percent of the region’s office inventory (Figure IV-1). Cupertino outperforms most nearby communities, with the exception of Mountain View, Menlo Park, and Palo Alto. As shown in Figure IV-1, the average rent for available office space in Cupertino was $4.65 per square foot ($4.94 for Class A) in the first quarter of 2015, with vacancy at a very low 2.3 percent (2.4 percent for Class A). Three-fourths of Cupertino’s office space is Class A. Class A office space represents a higher share of Cupertino’s office inventory than in any other Santa Clara county market except Sunnyvale (Figure IV-1). Cupertino’s high rents and low vacancy rates reflect the city’s many competitive advantages. As discussed in previous sections, Cupertino has excellent access to Highway 85 and I-280, enabling companies to draw from the highly educated labor force throughout Silicon Valley and providing easy access to venture capital. Moreover, many firms seek to locate in Cupertino to do business with Apple and the city’s other major employers, and to take advantage of what is considered a prestigious business address second only to the North Valley cities of Palo Alto, Mountain View, and Menlo Park. Low vacancy rates and limited turnover may constrain the city’s ability to accommodate expanding companies. Brokers indicate that larger spaces, particularly in the range of 20,000 to 100,000 square feet, are in high demand for expanding companies seeking space in Silicon Valley. However, space of this size is extremely limited in Cupertino, and companies often compete with Apple – which typically offers to pay for significant tenant improvements – for available vacancies. According to market research by Newmark Cornish & Carey, Cupertino saw only three lease transactions of more than 10,000 square feet in 2014, while 14 deals were closed for spaces between 3,000 and 9,999 square feet, and 51 deals were closed for spaces of less than 3,000 square feet. As a result of the limited space availability, some companies that would prefer to locate in Cupertino instead sign leases elsewhere. Blue Coat and Amazon Lab 126 are two recent examples of Cupertino companies that moved to Sunnyvale in order to find sufficient space after expanding. 18 Cupertino also has a small light industrial and research and developme nt (R&D) building stock, mostly in the Bubb Road area. However, most of the industrial/R&D buildings in Cupertino have been converted to office uses or a mix of office and R&D, and are therefore considered in this section as part of the overall office mark et. IV. OFFICE SECTOR 41 Economic Development Strategic Plan Background Report - Revised Draft -28- Figure IV-1: Office Inventory, Vacancies, and Rents: Cupertino and Market Area Cities, Q1 2015 Rentable Building Area (Sq. Ft.) Vacancy Rate Average Asking Monthly Rents (Per Sq. Ft., Full Service) Market All Office Class A Class A as a % of Total All Office Class A All Office Class A Cupertino 4,341,133 3,264,642 75% 2.3% 2.4% $4.65 $4.94 Other West Valley 4,535,137 1,591,191 35% 6.2% 8.5% $3.46 $4.09 Campbell 2,300,372 885,460 38% 8.9% 13.9% $3.48 $4.03 Los Gatos 1,873,492 605,356 32% 4.0% 2.1% $3.46 $4.64 Saratoga 361,273 100,375 28% 1.1% 0.0% $2.76 - North Valley 34,850,862 21,876,263 63% 4.5% 4.5% $5.77 $5.53 Menlo Park 5,659,752 1,872,466 33% 4.5% 7.6% $8.10 $9.17 Mountain View 7,165,496 5,001,436 70% 2.1% 1.5% $5.53 $5.55 Palo Alto 10,126,183 4,570,974 45% 4.3% 2.0% $6.85 $7.63 Sunnyvale 11,899,431 10,431,387 88% 6.3% 6.5% $4.41 $4.48 East Valley 41,953,983 23,723,874 57% 13.1% 12.6% $3.06 $3.49 Santa Clara 13,031,174 8,523,307 65% 13.1% 13.9% $3.69 $4.04 San Jose 27,789,874 14,807,910 53% 13.1% 11.7% $2.79 $3.17 Milpitas 1,132,935 392,657 35% 11.1% 18.3% $2.15 $2.07 Total Silicon Valley 85,681,115 50,455,970 59% 8.7% 8.3% $3.67 $4.02 Source: Silicon Valley 1Q15 Office Market, Newmark Cornish & Carey, 2015; Colliers International, Q1 2015; Strategic Economics, 2015. 42 Economic Development Strategic Plan Background Report - Revised Draft -29- There are approximately 36 million square feet of new office development planned, proposed, or under construction in Santa Clara County. As shown in Figure IV-2, cities with significant office development in the pipeline include Mountain View (10.2 million square feet), San Jose (9.2 million square feet), Santa Clara (5.8 million), Cupertino (up to 5.6 million), and Sunnyvale (4.8 million). Major office projects planned or under construction in Cupertino include Apple Campus II, Main Street, and Vallco. If Vallco proceeds with its allocation of two million square feet of office space, the total amount of pipeline office construction totals 5.6 million square feet in Cupertino – or approximately 16 percent of the total new office development planned in Santa Clara County. It should be noted that in addition to the new Apple Campus, Apple will occupy the 260,000 square feet of office under construction at Main Street Cupertino. Figure IV-2. Summary of Office Development Planned, Proposed, and Under Construction: Cupertino, West Valley, and Other Selected Santa Clara County Cities Market Square Feet Percent of Total Cupertino Apple Campus II 3,400,000 9% Main Street 260,000 1% Vallco* 2,000,000 5% Total 5,660,000 16% Other West Valley Campbell 170,000 0% Los Gatos 433,000 1% Saratoga 0 0% Total 603,000 2% Other Silicon Valley Cities Mountain View 10,230,000 28% Sunnyvale 4,828,000 13% Santa Clara** 5,870,000 16% San Jose 9,264,000 25% Total 30,192,000 83% Total 36,455,000 100% * The Cupertino General Plan allows for up to 2 million square feet of office to be built at Vallco; the amount of office area that included in the final development plan may change. ** Excludes the 3,000,000 square feet Yahoo campus proposal, which has stalled. Source: City of Cupertino, 2015; New Development Report Q1 2015, Newmark Cornish & Carey, 2015; Strategic Economics 2015. KEY EMPLOYMENT LOCATIONS WITHIN CUPERTINO Within Cupertino, office uses are concentrated in several key locations. These are shown below in Figure IV-4 and include: 43 Economic Development Strategic Plan Background Report - Revised Draft -30-  Stevens Creek: Stevens Creek Boulevard between Highway 85 and the City of Cupertino’s eastern boundary and South De Anza Boulevard between Stevens Creek Boulevard and the city’s southern boundary  North De Anza: North De Anza Boulevard between Stevens Creek Boulevard and Interstate 280.  Bubb Road: Bubb Road west of Highway 85. Figure IV-3 summarizes the total existing office inventory in each subarea. For the purposes of this analysis, the existing Apple Campus was excluded from the North De Anza subarea (although it is included in the total citywide inventory). Figure IV-3 also excludes projects that are planned or under construction, including Apple Campus 2, Main Street, and Vallco. Accurate data on rents and vacancies in each subarea are not available. However, according to local real estate brokers, vacancies for each subarea are near zero, and rents tend to be very high throughout the city. Other key characteristics of the subareas are described below. The Stevens Creek Boulevard subarea contains the most office space, including Cupertino City Center and a variety of smaller office buildings. As shown in Figure IV-3, 30 percent of Cupertino’s office inventory is located in the Stevens Creek Boulevard subarea. This includes the approximately 300,000 square foot City Center, Class A office complex at the corner of Stevens Creek and North De Anza Boulevard. With the exception of City Center, the office spaces in the Stevens Creek subarea are a decentralized mixture of smaller Class B and C buildings with a variety of tenants. Much of this space has not been upgraded in recent years. Currently, the premier location for office space in Cupertino is at the intersection of Stevens Creek and North De Anza Boulevards, and north along North De Anza. Cupertino City Center and the Apple Campus have historically anchored the prime North De Anza office corridor, which benefits from excellent access to Interstate 280. Within the North De Anza subarea, there is a significant concentration of Class A space and most of the older space has been significantly upgraded. In particular, Bandley Road has seen upgrades of R&D spaces to conventional office spaces. While these upgrades were largely undertaken by Apple for its own use, these buildings would be very desirable for prospective tenants should they come on the market. As a result of the Main Street and Apple Campus II projects, the most desirable location for office space is shifting eastward. Local brokers expect these developments to shift the premier location for office space in Cupertino to the east. Future redevelopment of Vallco could also contribute to this trend. Bubb Road is a significant employment center, though smaller than Stevens Creek or North De Anza and characterized by a mix of R&D uses and older buildings. Bubb Road contains a number of older industrial buildings, some of which have been upgraded to office or R&D space by Apple. The western section of the subarea is developed with residential-style offices with smaller spaces and floor plates. 44 Economic Development Strategic Plan Background Report - Revised Draft -31- Figure IV-3: Existing Office* Inventory by Subarea Total Buildings Total Rentable Building Area Subarea Square Feet % of Total Stevens Creek Blvd 88 2,111,500 30% North De Anza Blvd 25 1,261,400 18% Bubb Road 54 848,600 12% Other** 65 2,757,900 40% Total Cupertino 232 6,979,400 100% *Includes R&D and light industrial space as well as office inventory (as defined by CoStar); in Cupertino, R&D/light industrial space function similarly to traditional office space. **Includes the 856,000 square foot existing Apple Campus Source: CoStar, 2015; Strategic Economics, 2015. 45 Economic Development Strategic Plan Background Report - Revised Draft -32- Figure IV-4. Key Employment Locations within Cupertino 46 Economic Development Strategic Plan Background Report - Revised Draft -33- CONCLUSION: CUPERTINO’S COMPETITIVE POSITION Opportunities Cupertino’s price premium and low vacancy rates reflect several advantages that the city has in attracting and retaining office-based businesses:  Premier office location. Cupertino is known as a premier location for businesses in high tech and other professional and technical services. Businesses and real estate brokers in the region recognize Cupertino as a highly prestigious address for corporations locating in the South Bay.  High-quality office stock. Compared to other neighboring communities, Cupertino has an unusually high share of Class A office space. Moreover, much of the Class B and C stock has been upgraded over time by Apple, the city’s largest employer.  Access to skilled labor. Cupertino and surrounding communities in the West Valley, including Campbell, Los Gatos, and Saratoga, enjoy a particularly high concentration of high-income households and highly educated workers. Cupertino’s location along Interstate 280 provides excellent access to a highly skilled labor pool in the Peninsula and the South Bay. Commute times on I-280 also tend to be shorter than on other, more congested highways such as Highway 101, making Cupertino a more attractive location for many employers.  Access to venture capital. I-280 also provides excellent access to the Sand Hill Road area, the hub of venture capital activity in the region, as well as other venture capital firms and high -net-worth individuals funding new startup businesses around the Valley. Potential Challenges However, the city’s exceptionally competitive office market also creates some challenges for economic development:  Predominance of a single tenant. According to local brokers, Apple occupies 80 percent or more of the city’s office inventory, creating challenges for other tenants trying to find space in Cupertino.  Limited availability and turnover of midsize spaces. A very tight market for office space, combined with the high share of office space occupied by Apple, results in scarce leasing opportunities in the 20,000 to 100,000 square foot range. Although larger spaces are also in short supply, 20,000 to 100,000 square feet spaces are in high demand for growing, mid-size companies such as technology startups. As these firms mature and expand, they are often forced to find office space in other cities. 47 Economic Development Strategic Plan Background Report - Revised Draft -34- Cupertino’s high household incomes and strong employment base are driving significant demand for retail and hotel in the community. This section describes recent trends in the retail and hotel markets in Cupertino, in the context of national and regional trends.19 RETAIL National and Regional Retail Trends Due to a variety of factors, the national and regional retail environment is shifting, influencing the types of retailers that local communities can expect. Some of these wider industry trends are described below.  Online shopping has put pressure on conventional retail businesses. As more retail sales shift online, demand for certain types of brick-and-mortar retail stores – for example, book, music, and video rental, and electronics stores – has declined significantly. In shopping centers and retail corridors across the region, demand for new retail space is increasingly driven by stores that face little or no competition from online sales, such as restaurants, groceries, hair and nail salons, and other personal services.  Preferences for retail space have evolved. Some of the aging strip retail centers in the South Bay no longer meet the space needs of national and regional chains. These types of tenants tend to favor wide storefronts with high ceilings and highly visible signage, located in concentrated nodes with high traffic, good visibility, and easy vehicle and pedestrian access. Older retail buildings that do not meet those criteria may struggle to attract tenants, although in some instances they may also provide more affordable space for smaller, independent businesses.  In the Bay Area, new retail development is generally limited to expansions or redevelopment of existing malls and shopping centers, often as part of a mixed-use project. The San Francisco Bay Area region has added very little new inventory in recent years, ranking 17th out of 19 primary markets for retail construction in 2015 despite having the lowest vacancy rate in the country.20 There are many factors that have reduced the amount of new retail construction, including shrinking store sales, rising land costs, and rising construction costs. Generally, retail development projects generate lower financial returns than office or residential projects, making it difficult for retail development to compete for costly land unless it is part of a mixed-use project.  Mobile services are another source of competition for retailers. Another small but growing retail trend affecting many cities is the rise of mobile services, including food trucks and convenience services such as dry cleaning or oil changes that travel to customers. National sales in food trucks alone are expected to rise from $650 million in 2012 to $2.7 billion in 2017.21 (Note that while several studies have attempted to quantify food trucks’ market share, no data exist on the prevalence of other types of mobile services, such as dry cleaning, pet grooming, oil changing, etc.) The rising popularity of mobile services reflects the national and regional trend of increasing demand for specialty food, restaurants, and services. In the entrepreneurial South Bay in particular, more and more workers are accessing daily goods and services at work, and seeking temporary or event-like urban experiences after work and on the weekends. The spread of mobile services 19 Note that the retail portion of this section is primarily focused on the neighborhood -serving retail in Cupertino. Because Vallco is slated for redevelopment and the subject of its own Specific Plan, the shopping mall is not a focus in this analysis. 20 JLL, United States Retail Outlook, Q2 2015. 21 Intuit Network, “Food Trucks Motor into the Mainstream,” December 2012, http://network.intuit.com/wp- content/uploads/2012/12/Intuit-Food-Trucks-Report.pdf. V. RETAIL AND HOTEL USES 48 Economic Development Strategic Plan Background Report - Revised Draft -35- presents a mixture of challenges and opportunities for municipal government that requires specific planning and regulatory responses, as discussed below. 49 Economic Development Strategic Plan Background Report - Revised Draft -36- Best Practices for Mobile Services Policies Mobile services include food trucks, mobile auto care services, mobile dry cleaning, and any other goods and services offered from a vehicle. These services create an opportunity to fill existing gaps in services, stimulate economic activity, and activate underutilized spaces with events and programming. However, the increasing popularity of mobile services has also raised concerns in many communities about public safety, sanitation, traffic, and competition with existing brick-and-mortar businesses. Many California cities are revisiting their regulatory framework to ensure that mobile services can continue to provide needed goods and services without detracting from local businesses or the community’s quality of life. While any city developing a mobile services program or policy will need to tailor local laws to respond to that community’s particular circumstances, a set of best practices is emerging as cities in the Bay Area and elsewhere in the country gain increasing experience with food trucks and other mobile services. In general, best practice policies generally include some combination of the following components:  Efficient permitting processes that protect public safety and minimize congestion : Many cities are adjusting the permitting process for mobile services to help address concerns about impacts on traffic, parking, health, and safety. For example, permits for mobile vendors are often particular to specific geographic areas within the city, times of day, or special events. Spatial regulation (minimum distance from schools, bus intersections, other vendors, etc.) and time regulations (maximum time of operation on a single site) also help limit the density of vendors on a single property or in a particular area. Creating a more transparent, efficient permitting system can also help streamline the process for mobile vendors. In cases where separate permits are required from separate jurisdictions, some municipalities have created educational materials to help vendors understand the steps in the process.  Stakeholder involvement and education: Brick-and-mortar business owners may perceive mobile vendors as having an unfair advantage because they do not pay rent or property taxes, and in some instances may avoid paying sales tax as well. No rigorous studies have attempted to measure the competitive effects of mobile services on brick-and- mortar businesses. However, anecdotal evidence suggests that food trucks may actually enhance retail shopping districts by diversifying and complementing existing retail o fferings, thus attracting more pedestrian traffic to the district. Involving and educating concerned business owners and residents throughout the process of enacting new regulations can help get all stakeholders on board with a new policy. Regulating the n umber of food trucks that can gather in a particular site or district can also help address retailers’ concerns about impacts on local businesses, in addition to addressing traffic and safety issues. Economic development programs that seek to activate underutilized areas or attract more street activity (discussed below) can also help brick -and-mortar retailers recognize an advantage to allowing food trucks or other mobile services to locate nearby.  Space activation and programming: In addition to addressing traffic and safety concerns, regulations on where mobile vendors can locate can also help achieve economic development goals by directing vendors to underutilized areas, or to areas that will benefit from additional street activity. Food trucks have be en used successfully to activate underutilized areas in various locales around the Bay Area (see Fremont case study, below). Food trucks can also enhance downtown environments, for example by attracting more foot traffic or serving as a complement to drink ing establishments. 50 Economic Development Strategic Plan Background Report - Revised Draft -37- Best Practices for Mobile Services Policies, Continued Case Study: Mountain View’s Permitting Process In 2013, the City of Mountain View passed an ordinance to address concerns about traffic flow and public safety arising from the increased presence of mobile vendors in that community. The ordinance also streamlined street vendor permitting to account for mobile services operating on both public and private property, rather than on designated sites. Mountain View’s rules address safety and congestion by requiring mobile vendors to maintain a minimum distance of 100 feet from schools, and by limiting vending on private property to a maximum of four hours on a particular site per day, with no more than three vendors on a property si multaneously. A separate Temporary Use permitting process was created to allow for longer hours and larger clusters of vendors at food truck rallies and other special events. In Mountain View’s downtown area, vendors are prohibited from operating on the most centralized streets. This restriction is an additional safety measure that also mitigates some of the competitive concerns of brick -and- mortar stores in that area. Case Study: Fremont Street Eats Beginning in 2013, the City of Fremont began working with the Fremont Chamber of Commerce to establish a weekly food truck event in Downtown Fremont. Fremont Street Eats is now a weekly event in its third season, sponsored by the Chamber. Street Eats was intended as an economic development program intended to help activate the Downtown. Many existing businesses, including small retailers and restaurants, consider the program a successful economic development effort because it helps bring pedestrian traffic to an area that was historically underused. Fremont Street Eats Image: Fremont Chamber of Commerce Key Sources: Interviews with Chris Costanzo, Code Enforcement, City of Mountain View and Jessica von Borck, Deputy City Manager, City of Fremont; Intuit Network, “Food Trucks Motor Into the Mainstream,” December 2012, http://network.intuit.com/wp-content/uploads/2012/12/Intuit-Food-Trucks-Report.pdf; Silicon Valley Economic Development Alliance, Unpublished White Paper. 51 Economic Development Strategic Plan Background Report - Revised Draft -38- Cupertino Household Spending Patterns The household spending patterns of Cupertino residents help shape the type of retailers that are attracted to the city, as well as the performance of the city’s overall retail sector. This section describes some of the key characteristics of Cupertino consumers, drawing on data about average spending patterns and the city’s socio-demographic composition. Reflecting the city’s high income levels, Cupertino households spend significantly more than the average U.S. household. Cupertino households spent an average of $85,999 in 2015 on all goods and services (including housing, transportation, food, etc.). In comparison, the average U.S. household spent $56,056 in 2015. Cupertino households’ spending reflects their high income levels. As shown in Figure V- 1, nearly 30 percent of Cupertino households make $200,000 or more a year; nearly two -thirds make at least $100,000 a year. The median household income in Cupertino ($134,870 in 2014) is more than two and a half times higher than the median U.S. household income ($53,480). Compared to the U.S. average, Cupertino households spend a slightly lower share of income on necessities such as housing, transportation, and food, and a relatively high share of income on day care and education, sports and entertainment, and apparel. Figure V-2 compares average Cupertino and U.S. household expenditures by category; Figure V-3 shows spending in each category as a percent of total expenditures. Cupertino household spending is higher than the U.S. average across all categories (Figures V-2). Similar to other U.S. households, Cupertino residents spend the most on transportation and auto expenses, housing and housing-related services and furnishings, and food and alcohol. However, these three categories account for just over half of total Cupertino household expenditures, compared to nearly 60 percent for the U.S. overall. At the same time, Cupertino residents devote a relatively high share of expenditures to day care and education, sports and entertainment, and apparel (Figure V-3). Affluent families with children account for a high share of Cupertino households, but the city is also home to many singles and couples with distinct spending patterns. Figure V-4 shows the top ten PRIZM social groups in Cupertino.22 Most of the top social groups in Cupertino are characterized by married couples with children with high levels of education and income, and a preference for single-family homes. However, sizeable segments of the city’s households – including the Young Digerati (accounting for 21 percent of Cupertino households), Movers and Shakers (6 percent), and Bohemian Mix (6 percent) – have few if any children, and prioritize living in close proximity to the office and/or to amenities such as movie theaters, nightclubs, fitness clubs, clothing boutiques, casual restaurants, microbreweries, and coffee shops. 22 The Nielsen Company’s PRIZM system defines every U.S. household in terms of 66 demographically and behaviorally distinct types, or "segments," to help marketers discern those consumers' likes, dislikes, lifestyles and purchase behaviors. 52 Economic Development Strategic Plan Background Report - Revised Draft -39- Figure V-1. Households by Income Level: Cupertino and the U.S., 2014\ Figure V-2. Average Household Expenditures by Category: Cupertino and the U.S., 2015 0% 5% 10% 15% 20% 25% 30% 35% Pe r c e n t o f H o u s e h o l d s Cupertino U.S. Sources: U.S. Census Bureau, American Community Survey 2010-2014 (5-Year Estimates), Social Explorer; Strategic Economics, 2015. $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 An n u a l A v e r a g e S p e n d i n g pe r H o u s h e o l d Cupertino U.S. © 2015 The Nielsen Company. All rights reserved. 53 Economic Development Strategic Plan Background Report - Revised Draft -40- Figure V-3. Percent of Average Household Expenditures by Category: Cupertino and the U.S., 2015 0% 5% 10% 15% 20% 25% Pe r c e n t o f T o t a l H o u s e h o l d Ex p e n d i t u r e s Cupertino U.S. © 2015 The Nielsen Company. All rights reserved. 54 Economic Development Strategic Plan Background Report - Revised Draft -41- Figure V-4. Top 10 Social Groups* in Cupertino, 2015 Social Group* Household Type Description % of Households Cupertino U.S. 1. Money & Brains Wealthy Older Family Mix The residents of Money & Brains seem to have it all: high incomes, advanced degrees, and sophisticated tastes to match their credentials. Many of these city dwellers are married couples with few children who live in fashionable homes on small, manicured lots. 40.3% 2.1% 2. Young Digerati Wealthy Younger Family Mix Young Digerati are tech-savvy and live in fashionable neighborhoods on the urban fringe. Affluent, highly educated, and ethnically mixed, Young Digerati communities are typically filled with trendy apartments and condos, fitness clubs and clothing boutiques, casual restaurants and all types of bars--from juice to coffee to microbrew. 21.1% 1.3% 3. Blue Blood Estates Wealthy Older w/ Kids Blue Blood Estates is a family portrait of suburban wealth, a place of million-dollar homes and manicured lawns, high-end cars and exclusive private clubs. The nation's second-wealthiest lifestyle is characterized by married couples with children, graduate degrees, a significant percentage of Asian Americans, and six- figure incomes earned by business executives, managers, and professionals. 8.5% 0.9% 4. Movers & Shakers Wealthy Older w/o Kids Movers & Shakers is home to America's up-and- coming business class: a wealthy suburban world of dual-income couples who are highly educated, typically between the ages of 45 and 64, and without children. Given its high percentage of executives and white-collar professionals, there's a decided business bent to this segment: members of Movers & Shakers rank near the top for owning a small business and having a home office. 6.2% 1.6% 5. Bohemian Mix Upper Mid Middle Age Family Mix A collection of mobile urbanites, Bohemian Mix represents the nation's most liberal lifestyles. Its residents are an ethnically diverse, progressive mix of young singles, couples, and families ranging from students to professionals. In their funky row houses and apartments, Bohemian Mixers are the early adopters who are quick to check out the latest movie, nightclub, laptop, and microbrew. 6.2% 1.9% 6. Upper Crust Wealthy Older w/o Kids The nation's most exclusive address, Upper Crust is the wealthiest lifestyle in America--a haven for empty- nesting couples over the age of 55. No segment has a higher concentration of residents earning over $100,000 a year and possessing a postgraduate degree. And none has a more opulent standard of living. 5.8% 1.5% 55 Economic Development Strategic Plan Background Report - Revised Draft -42- Social Group* Household Type Description % of Households Cupertino U.S. 7. Winner's Circle Wealthy Middle Age w/ Kids Among the wealthy suburban lifestyles, Winner's Circle is the youngest, a collection of mostly 35- to 54- year-old couples with large families in new-money subdivisions. Surrounding their homes are the signs of upscale living: recreational parks, golf courses, and upscale malls. With a median income over $100,000, Winner's Circle residents are big spenders who like to travel, ski, go out to eat, shop at clothing boutiques, and take in a show. 4.8% 1.1% 8. Executive Suites Upper Mid Middle Age w/o Kids Executive Suites consists of upper-middle-class singles and couples typically living just beyond the nation's beltways. Filled with significant numbers of Asian-Americans and college graduates--both groups are represented at nearly twice the national average-- this segment is a haven for white-collar professionals drawn to comfortable homes and apartments within a manageable commute to downtown jobs, restaurants, and entertainment. 1.2% 0.9% 9. Big Fish, Small Pond Upscale Older w/o Kids Older, upper-class, college-educated professionals, the members of Big Fish, Small Pond are often among the leading citizens of their small-town communities. These upscale, empty-nesting couples enjoy the trappings of success, including belonging to country clubs, maintaining large investment portfolios, and spending freely on computer technology. 0.8% 2.2% 10. Country Squires Upscale Middle Age w/ Kids The wealthiest residents in exurban America live in Country Squires, an oasis for affluent Baby Boomers who've fled the city for the charms of small-town living. In their bucolic communities noted for their recently built homes on sprawling properties, the families of executives live in six-figure comfort. Country Squires enjoy country club sports like golf, tennis, and swimming, as well as skiing, boating, and biking. 0.7% 1.8% *PRIZM Social Groups, as defined by The Nielsen Company. © 2015 The Nielsen Company. All rights reserved. 56 Economic Development Strategic Plan Background Report - Revised Draft -43- Retail Performance This section discusses retail sales and market trends in Santa Clara County and the City of Cupertino. Silicon Valley’s rapid employment growth and strong demographics are attracting significant interest from retailers. Reflecting this demand, Santa Clara County has some of the highest rents and lowest vacancies in the country. As shown in Figure V-5, the average monthly rent in Santa Clara County was $2.32 per square foot in the first quarter of 2015, with an average vacancy of 5.0 percent. The Sunnyvale/Cupertino submarket had the highest average rent in the county ($2.97 per square foot) and one of the lowest vacancy rates (3.6 percent). Most of the submarkets in the vicinity of Cupertino, including Palo Alto/Mountain View/Los Altos and Santa Clara, also had vacancies well below 5.0 percent. Figure V-5. Retail Inventory, Rents, and Vacancies: Santa Clara County Markets, Q1 2015 Inventory Vacancies Market Rentable Building Area (SF) Rentable Building Area (SF) % of Total Average Monthly Rents (NNN)* Cupertino/Sunnyvale 4,612,272 164,318 3.6% $2.97 Santa Clara 2,530,509 110,900 4.4% $2.68 Palo Alto/Mountain View/Los Altos 2,713,079 89,255 3.3% $2.63 San Jose (DT/South)/Campbell/Los Gatos 18,527,673 908,405 4.9% $2.50 Milpitas/North San Jose 4,876,107 263,591 5.4% $2.30 Morgan Hill/Gilroy 4,718,147 375,370 8.0% $1.56 Total Santa Clara County 37,977,787 1,911,839 5.0% $2.32 * NNN: Triple net (tenants responsible for taxes, insurance, maintenance, and other costs). Source: Retail Market Summary First Quarter 2015, DTZ Retail, 2015; Strategic Economics, 2015 Cupertino is located in a highly competitive trade area for retail, and experiences net sales leakage. Figure V-6 shows retail sales concentrations in and around Cupertino. In addition to Vallco, Cupertino’s trade area contains several large retail shopping centers, including Westfield Valley Fair and Santana Row. The proximity of these competing centers, which feature many regional and national anchor tenants, restaurants, and entertainment options, limits the potential to locate the same types of tenants in Cupertino. Many Cupertino residents regularly shop and dine at these other retail centers, creating a significant amount of retail “sales leakage” – meaning that the city attracts fewer sales than would be expected based on local household and worker spending. The 2014 Market Report found that despite Cupertino’s high household income and expenditure levels, retail sales within the city averaged $10,480 per resident in 2013, compared to $15,800 per capita for the surrounding regional trade area (defined as the zip codes located within a ten- minute drive time of Cupertino) and $13,400 for Santa Clara County. Cupertino experienced net sales injections – meaning that the city attracted more sales than would be expected based on local household and worker spending alone – in only two categories: food and beverage stores and general merchandise stores. 57 Economic Development Strategic Plan Background Report - Revised Draft -44- Figure V-6. Retail Sales in Santa Clara County Used with permission from Christine Firstenberg, JLL. 58 Economic Development Strategic Plan Background Report - Revised Draft -45- Excluding Vallco, Cupertino has a similar amount of retail compared to other West Valley communities. Including the now largely vacant Vallco, there are about 3.6 million square feet of retail space in Cupertino, more than its neighboring communities (see Figure V-7). Vallco represents approximately one-third of this total. Figure V-7: Retail Inventory by City: West Valley, 2015 Source: CoStar, 2015; Strategic Economics, 2015. Most of Cupertino’s retail space was built between 1960 and 1980. Figure V-8 shows the percentage of Cupertino’s retail stock built in each decade (excluding Vallco, built in the 1970s), compared with the West Valley sub region (which includes Campbell, Los Altos, Los Gatos, and Saratoga as well as Cupertino). Approximately 75 percent of Cupertino’s retail space was built before 1980, with the majority built between 1960 and 1980. Similarly, approximately 75 percent of retail in the West Valley was also built before 1980, but more of the space in the West Valley dates from before 1960. Cupertino’s retail stock includes a mixture of community, neighborhood, and strip shopping centers. - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 Campbell Cupertino Los Altos Los Gatos Saratoga Re n t a b l e B u i l d i n g A r e a ( S F ) Vallco Other Retail 59 Economic Development Strategic Plan Background Report - Revised Draft -46- Figure V-8: Percentage of Retail Building Area, Cupertino* and West Valley**, by Year Built * Excludes Vallco ** West Valley includes Cupertino, Campbell, Los Altos, Los Gatos, and Saratoga. Source: CoStar, 2015; Strategic Economics, 2015. Between 2005 and 2014, total retail sales in Cupertino declined by 17 percent after adjusting for inflation. As mentioned above, national and regional industry trends have weakened key categories of retail sales, especially general merchandise, electronics, and specialty retail, as consumers are buying many of these items online. Furthermore, many of the tenants that had formerly anchored Vallco have left Cupertino. As a result, sales in general merchandise stores dropped by 39 percent and sales in electronics and appliances decreased by 93 percent from 2005 to 2014 (Figure V-9). Cupertino has many neighborhood- and business-serving retailers that serve residents’ and workers’ daily needs. The city is well-served by grocery stores, mid-priced restaurants, personal services, and other retailers that serve residents’ daily needs. Cupertino’s restaurants and personal services also serve the many commuters who flow into the city every day. The strongest retail categories include food and beverage stores and food services and drinking places. As shown on Figure V-9, food services and drinking places grew 28 percent between 2005 and 2014, while food and beverage stores grew by 27 percent. The large spike in sales of building materials may reflect temporary construction activity in Cupertino. 0% 5% 10% 15% 20% 25% 30% 35% 40% Before 1960 1960-1969 1970-1979 1980-1989 1990-1999 2000-2009 2010-present Cupertino (excluding Vallco) West Valley Total 60 Economic Development Strategic Plan Background Report - Revised Draft -47- Figure V-9: Estimated Retail Sales in Cupertino by Category, 2005 and 2014 (in 2014 Dollars) Category 2005 Sales 2014 Sales Real % Change from 2005 Food Services and Drinking Places $119,080,940 $152,650,400 28% General Merchandise Stores $217,136,275 $131,609,733 -39% Miscellaneous Store Retailers $117,106,099 $114,142,800 -3% Food and Beverage Stores $86,496,850 $110,189,250 27% Clothing and Clothing Accessories Stores $44,903,584 $47,538,600 6% Health and Personal Care Services $30,359,707 $22,095,067 -27% Bldg. Matrl. and Garden Equip. and Supplies $2,779,612 $20,583,400 641% Furniture and Home Furnishing Stores $15,267,054 $10,464,700 -31% Motor Vehicle and Parts Dealers $13,011,977 $9,432,700 -28% Electronics and Appliances Stores $107,448,484 $7,069,600 -93% Sporting Goods, Hobby, Book, and Music Stores $9,664,512 $6,359,000 -34% Retail Sales Total $763,255,093 $632,135,250 -17% * 2005 Sales are adjusted to 2014 dollars and represent sales from Q4 2004 through Q3 2005. 2014 Sales represent sales from Q 4 2013 through Q3 2014 (most recent period available). Source: MuniServices, 2015; Strategic Economics, 2015. Cupertino is attracting newer retail investments, including mixed-use development projects and renovation of existing centers, that have resulted in increased sales. The Main Street project is slated to add 130,500 additional square feet of retail in its lifestyle center. In addition, some existing retail centers, such as Homestead Square and Cupertino Village, have received recent renovations. As shown in Figure V-10, the renovations at Homestead Square resulted in a significant increase in sales and sales tax revenues after the first phase of the project opened in the second quarter of 2014. Figure V-10. Homestead Square Shopping Center: Estimated Quarterly Sales and Sales Tax Revenues, 2013-2014 Note: Not adjusted for inflation. Source: MuniServices, 2015; Strategic Economics, 2015. $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 Sa l e s T a x R e v e n u e s Es t i m a t e d S a l e s Estimated Sales Sales Tax Revenues 61 Economic Development Strategic Plan Background Report - Revised Draft -48- Preservation of smaller, independent retail may become increasingly challenging as rents continue to rise and construction of new spaces remains limited. Cupertino has a significant inventory of lower cost retail spaces in older shopping centers. Residents have expressed concerns that as some of these centers redevelop over time, it may become more difficult for these tenants to remain in the city. Stakeholders have also identified the need for additional technical assistance and outreach to small businesses in Cupertino. Key Retail Locations within Cupertino Cupertino’s retail is concentrated along two major corridors within the city: Stevens Creek Boulevard and Homestead Road (shown below in Figure V-12). This section discusses the performance and other key characteristics of these two corridors. (Note that while Vallco Mall is contiguous with the Stevens Creek Boulevard Subarea, it will be addressed in a separate process and is not included as part of this subarea analysis.) Stevens Creek Boulevard serves as Cupertino’s main commercial corridor, accounting for 63 percent of total retail sales in 2014. The Stevens Creek subarea – including most of Stevens Creek and South De Anza Boulevards – is Cupertino’s longest commercial corridor and accounts for the majority of retail sales in the city (Figure V-11). Although there is significant variation in the performance, trade area, and overall condition of the retail spaces in Stevens Creek, local brokers report that some of the highest rents in the city are found along Stevens Creek Boulevard. Figure V-11. Estimated Retail Sales* by Subarea: Cupertino, 2014 * Total estimated retail sales for the City of Cupertino is $610 million. This figure includes the estimated non-taxable retail sales but does not include business-to-business, professional services, or other non-retail sales. Source: MuniServices, 2015; Strategic Economics, 2015. Stevens Creek 63%Homestead 6% Remainder of Cupertino 31% 62 Economic Development Strategic Plan Background Report - Revised Draft -49- Figure V-12: Stevens Creek Boulevard and Homestead Road Subareas 63 Economic Development Strategic Plan Background Report - Revised Draft -50- Figure V-13. Estimated Retail Sales by Category and Subarea: Cupertino, 2014 Source: MuniServices, 2015; Strategic Economics, 2015. The retail mix in the Stevens Creek subarea serves day-time employees and local residents. Like Cupertino as a whole, retail in the Stevens Creek subarea is largely composed of food and beverage stores (22 percent of retail sales in the subarea), miscellaneous store retailers (21 percent) and food services and drinking places (21 percent). A significant portion of the sales in miscellaneous store retailers is from auto service stations. These categories of retail are generally both resident- and employee-serving. For example, many of the restaurants and some of the retailers (e.g., Sta ples) are oriented towards serving business customers. At the same time the corridor has many grocery stores (including Whole Foods, 99 Ranch, Marina Food) and other resident-serving businesses such as Target, TJ Maxx, and Pier One. In contrast to Stevens Creek Boulevard, the Homestead Road corridor is primarily neighborhood- serving. Homestead Road runs along Cupertino’s northern border with Sunnyvale, and the shopping centers on this corridor serve residents in both cities. The corridor accounted for 6 percent of Cupertino’s retail sales in 2014. Homestead Road is diversified than the Stevens Creek corridor, containing mostly restaurants, grocery stores, and other food and food service establishments. Within the Homestead Road subarea, food services and drinking places accounted for an estimated 53 percent of sales, followed by food and beverage stores (30 percent). Cupertino’s highest-performing retail nodes are on Stevens Creek Boulevard, between North Stelling Road and North De Anza Boulevard. Figure V-14 shows sales performance per square foot in 2014 for shopping centers within the Stevens Creek Boulevard. The highest sales ($250-$350 per square foot) were in centers anchored by the national retailers Whole Foods and Target. The Oaks Shopping Center, along $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 Fo o d a n d B e v e r a g e S t o r e s Mi s c e l l a n e o u s S t o r e R e t a i l e r s Fo o d S e r v i c e s a n d D r i n k i n g Pl a c e s Ge n e r a l M e r c h a n d i s e S t o r e s Cl o t h i n g a n d C l o t h i n g Ac c e s s o r i e s S t o r e s Ho m e , G a r d e n , a n d Co m p a r i s o n G o o d s He a l t h a n d P e r s o n a l C a r e Se r v i c e s Es t i m a t e d R e t a i l S a l e s ( M i l l i o n s ) Remainder of Cupertino Homestead Stevens Creek 64 Economic Development Strategic Plan Background Report - Revised Draft -51- with centers along North and South De Anza Boulevard had sales in the range of $100-$200 per square foot, while the collection of mostly older properties along the eastern section of Stevens Creek Boulevard typically achieve less than $100 a square foot. While the smaller, strip shopping centers on Stevens Creek Boulevard have generally been successful at attracting new tenants, many have not been upgraded in years. Figure V-15 shows the parcel sizes and ownership patterns in the study area. The older, lower performing properties located along the eastern section of Stevens Creek are located on relatively small, shallow lots. This type of lot configurations can pose an impediment both for attracting new users to existing buildings, and for the development of new buildings. Small shallow parcels often do not meet the needs of modern retailers, who are often looking for greater storefront width, ceiling height, street visibility, and parking than these lots can provide. Moreover, in order to build new retail space, developers may have to coordinate with multiple property owners to assemble an appropriately sized parcel. 65 Economic Development Strategic Plan Background Report - Revised Draft -52- Figure V-14. Performance of Shopping Centers in the Stevens Creek Boulevard Corridor, 2014 Source: MuniServices, 2015; Strategic Economics, 2015. 66 Economic Development Strategic Plan Background Report - Revised Draft -53- Figure V-15. Parcel Sizes in the Stevens Creek Boulevard Corridor 67 Economic Development Strategic Plan Background Report - Revised Draft -54- HOTEL This section reviews hotel market trends in Silicon Valley and Cupertino. For a more detailed hotel market analysis, see the 2014 Market Study. Regional Hotel Trends Silicon Valley’s expanding technology sector, and especially major tech companies such as Apple, Google, and Facebook, are generating significant weekday demand for hotel rooms. Hotel occupancy rates and room rates have increased sharply as a result of the region’s growing economy. In Santa Clara County, occupancy rates climbed 32 percent between 2009 and 2014, and most hotels in the county are now at or near full capacity on weeknights. Average daily room rates rose 50 percent over the same period.23 As a result of this rising demand, the South Bay has become a national hot spot for new hotel development. In 2014 alone, 11 new hotels accounting for 1,370 new hotel rooms opened in Santa Clara County. An additional 408 rooms were under construction as of July 2015, while nearly 6,000 hotel rooms have been proposed throughout the county.24 In addition to building new rooms, hotel operators are increasingly looking to enter the market by acquiring and rebranding existing properties. In Cupertino, for example, Hilton recently purchased Kimpton’s Cypress Hotel and converted it to a Juniper Hotel Curio Collection by Hilton. Cupertino’s Hotel Market As in other South Bay communities, demand for hotels in Cupertino is driven by business travel. Cupertino currently has 785 hotel rooms across five properties. The 2014 Market Study, based on data from 2012 and 2013, found that mid-week occupancy rates approached 90 percent for Cupertino hotels but were significantly lower on weekends. That study estimated that between 70 and 75 percent of demand was generated by business travelers. The strong office market, along with Apple’s expansion, suggests that business traveler demand for hotel rooms in Cupertino will remain strong for the foreseeable future. To help meet this demand, Cupertino currently has two hotels under construction and two more proposed. The Marriott Residence Inn at Main Street and the Hyatt House Hotel, north of Vallco, are currently under construction and together will add 328 rooms to Cupertino’s hotel inventory. Two mixed- use development proposals, at Marina Plaza and The Oaks shopping centers, both contain hotel components together comprising an additional 322 rooms. Together, these four hotel developments would nearly double Cupertino’s current hotel inventory (Figure V-16). Figure V-16. Hotel Rooms Proposed and Under Construction, Cupertino Rooms Status Marriot Residence Inn (Main Street) 180 Under Construction Hyatt House Hotel at VallCo Park 148 Under Construction Marina Plaza 122 Proposed The Oaks Redevelopment 200 Proposed Source: BAE, 2014; City of Cupertino, 2015; Strategic Economics, 2015 23 Nathan Donato-Weinstein, “Record room prices tempt developers into hotel construction,” Silicon Valley Business Journal, March 27, 2015, http://www.bizjournals.com/sanjose/print-edition/2015/03/27/record-room-prices-tempt-developers-into-hotel.html. 24 Hari Jun, “In Focus: Silicon Valley Hotel Market Update,” HVS San Francisco, July 2015. 68 Economic Development Strategic Plan Background Report - Revised Draft -55- CONCLUSION: CUPERTINO’S COMPETITIVE POSITION Based on the retail and hotel analysis described above, this section summarizes Cupertino’s competitive position. Opportunities  Strong local buying power: Reflecting their incomes, Cupertino residents spend more on all types of retail than the average U.S. household. Combined with the inflow of daily commuters, this creates significant local demand for retail. Cupertino’s many tech companies also generate strong demand for hotel uses.  Many neighborhood- and business-serving retailers: The city is well-served by grocery stores, mid-priced restaurants, personal services, and other retailers that serve residents’ and workers’ daily needs.  New investment: Cupertino is attracting newer retail and hotel investments, including mixed-use development projects and renovation of existing shopping centers. New retail investments can result in increased sales and higher sales tax revenues, while new hotels can generate increased transient occupancy (hotel) tax revenues. Potential Challenges  Declining sales and stagnating sales tax revenues: Between 2005 and 2014, total retail sales in Cupertino declined by 17 percent after adjusting for inflation. This reflects the gradual decline of the Vallco shopping mall, as well as national and regional industry trends that have weakened key categories of retail sales. At the same time, Cupertino experienced a loss in business-to-business sales tax producers (including Hewlett-Packard, which relocated when Apple acquired its campus in 2010), resulting in declining overall sales tax revenues. The City has partially offset this decline by renegotiating an existing sales tax rebate agreement with Apple. In the long run, however, these trends have decreased the diversity of revenue sources for the City’s General Fund.  Highly competitive retail trade area and significant sales leakage: While the city supports many neighborhood-serving establishments, specialty retailers must compete with a number of very successful shopping centers a short distance away, including Westfield Valley Fair and Santana Row. Cupertino is experiencing sales leakage in most retail categories, indicating that many residents and workers are traveling outside the city to shop.  Older strip retail centers: Some of the city’s older strip retail shopping centers, including many located on Stevens Creek Boulevard east of De Anza Boulevard, do not provide the wide storefronts, visibility, and parking that modern retailers typically require. These strip centers also tend to be located on relatively small, shallow parcels that also create challenges for redevelopment. At the same time, however, older shopping centers provide lower cost retail spaces that may work well for smaller, independent retailers. 69 Economic Development Strategic Plan Background Report - Revised Draft -56- FORUM OVERVIEW On August 19, 2015, the City of Cupertino hosted a forum to engage community members about the City’s Economic Development Strategic Plan. Approximately 20 community members attended. The purpose of the workshop was to: (1) educate the community about the Economic Development Strategic Plan process and why the City is doing the project, (2) solicit community input on initial ideas and options, and (3) provide an opportunity for the community to ask questions regarding the project. INTRODUCTION AND PRESENTATION To kick off the meeting, City Manager David Brandt welcomed the workshop participants and thanked them for being a part of the project. He introduced the elected officials in attendance as well as City staff and MIG staff. Next, Angela Tsui, Cupertino Economic Development Manager, told participants that this effort is focused on supporting and growing businesses in Cupertino. Ms. Tsui emphasized that community input will help guide the strategies and programs the City pursues. She also reminded participants the evening’s discussions will focus on local businesses issues, not land use issues. Sujata Srivastava, Principal of Strategic Economics, gave a brief presentation about the Economic Development Strategic Plan project and schedule, highlighting why the City is developing the project, why it is important to the community, and what the opportunities are for public input. The presentation also included pertinent facts about employment and industry trends, fiscal health, and the retail sector in the City of Cupertino. Christine Firstenberg of JLL Retail gave a presentation on retail activity in Cupertino and throughout the region. She identified challenges and opportunities for retailers in the current market, reviewed site selection factors and described the regional retail market. The full presentation can be viewed on the City’s Economic Development webpage, as well as in HD on YouTube: http://youtu.be/5ZirQ6U8Kz4 SMALL GROUP DISCUSSIONS Noé Noyola, a facilitator with MIG, provided an overview of the workshop structure and initiated the small group discussions. Mr. Noyola introduced the question cards on each table inviting participants to fill out APPENDIX : FORUM AND ROUND TAB LE ON LOCAL BUSINESSES Sujata Srivastava, Principal of Strategic Economics, presents the Economic Development Strategic Plan schedule 70 Economic Development Strategic Plan Background Report - Revised Draft -57- if they had specific questions during the discussions. These cards were then reviewed and collected by City staff for follow-up. During the small group discussion, City staff facilitated small group discussions guided by five questions. The exercise questions were as follows: 1. What do you think are Cupertino’s top strengths and community assets? How do those strengths and assets benefit businesses? 2. What do you think are the major challenges for retaining and recruiting businesses? 3. What types of businesses should the City focus on recruiting and/or expanding? 4. What can the City and community partners do to better support businesses in Cupertino? 5. Are there particular locations in Cupertino that require upgrades or revitalization? At the end of the group discussions, the facilitators asked for one of the table members to volunteer to be the reporter. Each group had ten minutes to summarize the main points that were discussed at their table. COMMUNITY INPUT Each table of participants engaged in a robust conversation guided by the five discussion questions. Community members identified the following ideas, suggestions, questions and concerns in response to the guided facilitation. These responses are organized by theme below. Top Strengths and Community Assets  Cupertino is centrally located within Silicon Valley.  City residents are active, engaged, and tech-savvy.  Cupertino is home to one of the best school systems in the world.  Those that work in Cupertino often support Cupertino’s small businesses by shopping locally.  Cupertino has a strong City Hall and Civic Center Area.  The City has good infrastructure with new bike lanes, accessible highways, and many employee ride share programs. Constraints and Recommendations for Retaining Existing Businesses  Cupertino should look to adjust their permitting process to support existing businesses.  Small independent retailers have been closing in Cupertino because they cannot compete with chain retailers.  The City should cultivate a stronger relationship with the Cupertino Chamber of Commerce.  The current cost of living, rent, and mortgage rates within Cupertino are prohibitive for retaining existing businesses.  It is possible that the proximity of Cupertino stores to neighboring cities creates a hyper- competitive environment. Community members engage in conversation around the five questions 71 Economic Development Strategic Plan Background Report - Revised Draft -58-  Under current market conditions, small businesses are competing with large companies.  Many locally-owned “mom and pop” businesses are closing. There are a limited variety of uses in one place Constraints and Recommendations for Recruiting New Businesses  Cupertino should increase “supply” by providing more spaces for new businesses.  The City should follow market trends for allowed business uses (e.g., entertainment uses for teens).  Afterschool services should be located close to food/retail services.  The City could support businesses that create late night uses.  The City should identify office space available for small businesses.  Cupertino should consider strategies to develop or protect spaces with affordable rent. Types of Businesses City should focus on recruiting  Services for youth and seniors.  Businesses that cater to kids and young adults.  Five star hotels and full service hotels.  Large event spaces.  Small, locally-owned and independent businesses.  Alcohol serving and higher end restaurants.  Small restaurants that have a small- town feel.  “Driveby” dining opportunities, such as pre-order and pickup.  Stores with home goods, pottery, arts and crafts.  An independent movie theater.  Programmed public spaces.  “Mainstream” grocery stores and grocery store at Vallco.  A centralized pharmacy.  Policies to keep variety of stores instead of just restaurants (e.g, Main Street is 30% restaurants). City and community partners to better support businesses  They should encourage the “silent majority” to attend hearings.  They should encourage youth to work with school district.  City should support projects that serve and provide benefit to the community.  City and community partners should create innovative programs and economic incentives that can aid smaller businesses (e.g., below market rate rent). Locations in Cupertino that would benefit from upgrades or revitalization  Vallco  Oaks A workshop participant summarizes her group’s discussion to all participants and staff present. 72 Economic Development Strategic Plan Background Report - Revised Draft -59-  Cupertino Inn  Loree Center  Homestead Lanes  Downtown  Apple store  Murphy Street Additional Comments  With Smart Growth principles in mind, accept change and be prepared for it (such as increased traffic and a larger aging population).  Youth are attracted to: Campbell, Mt. View/Castro, Los Gatos  Fostering economic diversity is important.  Mountain views are an asset that should not be blocked by new development.  Cupertino does not have a real downtown, could benefit from more of an “authentic” downtown or city center such as in the cities of Campbell and Sunnyvale.  Development could reflect local history and culture, such as Mariani Cannery.  Creating programmed public spaces would attract families and young people and support nearby businesses  City should promote open space (San Antonio Park).  City should improve City Services (Blackberry Farms).  Work with developers to provide below market rate space for high-priority businesses (as a community benefit). Questions and Comments on Comment Cards  What is the percent of people who reside and work in the City of Cupertino?  Local groceries have online ordering and delivery system to deliver groceries to employees before they head home.  Child daycare services for employees who work in Cupertino.  How many of the 1-4 [person] businesses in Cupertino occupy buildings other than ‘home offices’?  What resources are available to non-Nordstrom retailers/small retailers?  Do they have a way for businesses to get a low interest loan for expensive rent area?  Definition of retail: not just restaurants and “boutique” shops.  We deserve Real Goods retail; tired of going outside of Cupertino and it’s going to be worse when Sears and Penny’s will be gone. Keep our money in Cupertino.  Took all history of Cupertino and didn’t leave any old buildings (Cali Bros). NEXT STEPS To close the community forum, MIG staff thanked attendees’ participation and reiterated how this community input will be used in the process. For attendees that were interested in keeping abreast of the project, staff showed participants where they can download the summary of the results on the website and submit additional comments to Economic Development staff. 73 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1270 Name: Status:Type:Study Session Agenda Ready File created:In control:12/7/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Study Session to consider entering into a Memorandum of Understanding with the Rotary Club of Cupertino to renovate the Stocklmeir home and surrounding property to utilize as a non-profit center for Cupertino Sponsors: Indexes: Code sections: Attachments:Staff Report A - Proposal Agreement between Rotary and City B - Letters of Support C - Pictures of Site Action ByDate Action ResultVer. City Council1/19/20161 Subject:StudySessiontoconsiderenteringintoaMemorandumofUnderstandingwiththe RotaryClubofCupertinotorenovatetheStocklmeirhomeandsurroundingpropertytoutilize as a non-profit center for Cupertino Conduct a study session to consider the Rotary’s proposal and direct staff to: 1.Put this item on a future Council agenda; 2.Provide additional information for Council consideration; or 3.Not pursue this proposal. CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™74 RECREATION AND COMMUNITY SERVICES DEPARTMENT 10 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3110 www.cupertino.org CITY COUNCIL STAFF REPORT Study Session Meeting: January 19, 2016 Subject Consider entering into a Memorandum of Understanding with the Rotary Club of Cupertino to renovate the Stocklmeir home and surrounding property to utilize as a non-profit center for Cupertino. Recommended Action Conduct a study session to consider the Rotary’s proposal and direct staff to: 1. Put this item on a future Council agenda; 2. Provide additional information for Council consideration; or 3. Not pursue this proposal. Description On December 2, 2015 the Rotary Club of Cupertino submitted a formal request to renovate the Stocklmeir home and surrounding property. Rotary plans on renovating the property, estimated between $80,000-$100,000 in materials plus labor, paying ongoing costs for utilities and maintenance, and a sharing the property with various non-profit organizations. In return, the City would lease the property to Rotary for a period of 50 years at no cost, upgrade the sewer system, and permit the Club to use the parking lot at the golf course, access the adjacent garages and sign the property as the Cupertino Rotary Non-Profit Center. Attachment A denotes proposed responsibilities for both parties. Discussion The Stocklmeir house and immediately surrounding property have fallen into disrepair. The home has long been abandoned and is boarded up and fenced off. There is termite, water and fire damage to the house. The wiring and plumbing are not code compliant and are not in safe operating condition and the sewer system is not connected. Finally, the buildings are in the flood plain. FEMA regulations will dictate a limit on the future investment in the house remodel without hitting a threshold that requires that the entire structure be elevated or floodproofed. Because the City owns the property without any 75 federally-backed loans, flood insurance is not required; however the property is at risk of sustaining flood damage. Options for the property are currently being considered in conjunction with the Stevens Creek Boulevard to McClellan Ranch Master Plan, which is due back to the Council in spring of 2016. There was not unanimous direction from Council as to a preferred renovation goal for the house and the immediate adjacent grounds in the February 2015 master plan study session. There was majority sentiment for creating a “legacy farm” on the site. Fiscal and Other Impacts Staff is currently exploring: 1. Options for upgrading to a functional sewer system. Preliminary assessment suggests the need for a pump and a new sewer line which could cost in the range of $30,000 to $50,000; 2. Any renovation limitations imposed under the City’s substantial improvement policy; 3. FEMA requirements given that the property is in a flood zone; and 4. Grant deed restrictions which may require signoff by the State of California. ____________________________________ Prepared by: Carol A. Atwood, Director of Recreation & Community Services Reviewed by: Timm Borden, Director of Public Works Approved for Submission by: David Brandt, City Manager Attachment: A –Proposal – Agreement between Cupertino Rotary and the City of Cupertino B – Letters of Support from the Cupertino Historical Society, Quota International of Cupertino, Silicon Valley Bicycle Coalition, Kim Stocklmeir Mercer, and the Friends of Stevens Creek Trail C – Pictures of the Site 76 77 78 79 80 81 82 83 84 85 86 87 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1210 Name: Status:Type:Ceremonial Matters & Presentations Agenda Ready File created:In control:11/4/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Update from the Technology, Information, and Communications Commission Sponsors: Indexes: Code sections: Attachments: Action ByDate Action ResultVer. City Council1/19/20161 Subject: Update from the Technology, Information, and Communications Commission Receive the update CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™88 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-0701 Name: Status:Type:Consent Calendar Agenda Ready File created:In control:2/18/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Approve the December 1 City Council minutes Sponsors: Indexes: Code sections: Attachments:A - Draft Minutes Action ByDate Action ResultVer. City Council1/19/20161 Subject: Approve the December 1 City Council minutes Approve the minutes CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™89 DRAFT MINUTES CUPERTINO CITY COUNCIL Tuesday, December 1, 2015 REGULAR CITY COUNCIL MEETING PLEDGE OF ALLEGIANCE At 6:45 p.m. Mayor Rod Sinks called the Regular City Council meeting to order in Cupertino Community Hall Council Chambers, 10350 Torre Avenue and led the Pledge of Allegiance. ROLL CALL Present: Mayor Rod Sinks, Vice Mayor Barry Chang and Council members Savita Vaidhyanathan, Darcy Paul and Gilbert Wong. Absent: None. CEREMONIAL MATTERS AND PRESENTATION 1. Subject: Update from Teen Commission Recommended Action: Receive update Written communications for this item included a PowerPoint presentation. Teen Commissioners Annabelle Chan and Anooj Vadodkar gave an update via a PowerPoint presentation. Council received the update. 2. Subject: Update from Fine Arts Commission Recommended Action: Receive update Written communications for this item included a PowerPoint presentation. Fine Arts Commissioner Mike Sanchez gave an update via a PowerPoint presentation. Council received the update. POSTPONEMENTS - None 90 City Council Minutes December 1, 2015 2 ORAL COMMUNICATIONS Assembly member Evan Low presented a Certificate of Recognition to outgoing Mayor Sinks. Wendell Stephens on behalf of Cupertino Rotary talked about urging Council to set a study session regarding the potential lease of the Stocklmeir property. Ro Khanna, lecturer of economics at Stanford University and Congressional candidate congratulated Sinks and Chang on their service to the community and offered support for Community Choice Energy. Eric Schaefer talked about the poll he created on nextdoor.com regarding the Hills at Vallco project. Manny Cappello, Vice Mayor of Saratoga talked about collaboration with the neighboring cities and looking forward to next year. CONSENT CALENDAR Wong moved and Vaidhyanathan seconded to approve the items on the Consent Calendar as presented. Ayes: Sinks, Chang, Paul, Vaidhyanathan and Wong. Noes: None. Abstain: None. Absent: None. 3. Subject: Approve the November 17 City Council minutes Recommended Action: Approve the minutes 4. Subject: Accept Accounts Payable for the period ending October 23, 2015 Recommended Action: Adopt Resolution No. 15-105 accepting Accounts Payable for the period ending October 23, 2015 5. Subject: Accept Accounts Payable for the period ending October 30, 2015 Recommended Action: Adopt Resolution No. 15-106 accepting Accounts Payable for the period ending October 30, 2015 6. Subject: Accept Accounts Payable for the period ending November 6, 2015 Recommended Action: Adopt Resolution No. 15-107 accepting Accounts Payable for the period ending November 6, 2015 91 City Council Minutes December 1, 2015 3 7. Subject: California State Law AB1717, Local Prepaid Mobile Telephony Services Collection Act effective January 1, 2016 Recommended Action: a.) Adopt Resolution No. 15-108 authorizing the City Manager to Execute the Agreement with the State Board of Equalization; and b.) Adopt Resolution No. 15-109 authorizing the Examination for the Prepaid Mobile Telephony Services Surcharge and Local Charge Records 8. Subject: Letter to President Obama expressing support for the Clean Power Plan and transitioning U.S. energy consumption to 100% renewable by 2050 Recommended Action: Authorize the Mayor to sign a letter to President Obama in support of the Clean Power Plan and transitioning the nation’s energy consumption to be 100% renewable by 2050 9. Subject: Participate in the Compact of Mayors by sending a letter of commitment to the Compact of Mayors Secretariat. Recommended Action: Authorize the Mayor to sign the letter of commitment to the Compact of Mayors, joining coalitions of mayors and city officials worldwide committing to reduce local greenhouse gas emissions and enhance resilience to climate change. 10. Subject: Participation in the Institute for Local Government’s Beacon Award: Local Leadership toward Solving Climate Change Recognition Program Recommended Action: Adopt Resolution 15-110 supporting the City’s participation in the Institute for Local Government’s Beacon Award: Local Leadership toward Solving Climate Change Recognition Program. 11. Subject: Declare weeds a nuisance and set hearing date of January 19 for objections to proposed removal Recommended Action: Adopt Resolution No. 15-112 declaring weeds a nuisance and setting hearing date of January 19 for objections to proposed removal 12. Subject: Blackberry Farm Golf Course Maintenance Agreement, Contract Award Recommended Action: Authorize the City Manager to award, negotiate and execute a contract with Professional Turf Management of San Jose, California in the amount of $99,600, as selected through a Request for Qualification process, and further authorize the City Manager to execute annual extensions to the contract for up to five years based upon the pricing in the bid documents, subject to appropriation 92 City Council Minutes December 1, 2015 4 13. Subject: Application for Alcoholic Beverage License for Yayoi, 20682 & 20684 Homestead Road Recommended Action: Recommend approval of the Alcoholic Beverage License to the California Department of Alcoholic Beverage Control for Yayoi, 20682 & 20684 Homestead Road 14. Subject: Application for Alcoholic Beverage License for Pieology Pizzeria, 19409 Stevens Creek Boulevard, Suite 140 Recommended Action: Recommend approval of the Alcoholic Beverage License to the California Department of Alcoholic Beverage Control for Pieology Pizzeria, 19409 Stevens Creek Boulevard, Suite 140 15. Subject: Application for Alcoholic Beverage License for Tofu Plus, 10971 North Wolfe Road Recommended Action: Recommend approval of the Alcoholic Beverage License to the California Department of Alcoholic Beverage Control for Tofu Plus, 10971 North Wolfe Road 16. Subject: Application for Alcoholic Beverage License for Starbucks #5217, 20520 Stevens Creek Boulevard Recommended Action: Recommend approval of the Alcoholic Beverage Control License to the California Department of Alcoholic Beverage Control for Starbucks #5217, 20520 Stevens Creek Boulevard 17. Subject: Application for Alcoholic Beverage License for Yoshida Restaurant, 10700 South De Anza Boulevard Recommended Action: Recommend approval of the Alcoholic Beverage License to the California Department of Alcoholic Beverage Control for Yoshida Restaurant, 10700 South De Anza Boulevard SECOND READING OF ORDINANCES 18. Subject: Second reading of an Ordinance amending Section 2.04.010 of the Cupertino Municipal Code regarding regular City Council meetings that fall on any Election Tuesday in a regular Cupertino election year Recommended Action: Conduct the second reading and enact Ordinance No. 15-2137: "An Ordinance of the City Council of the City of Cupertino amending Section 2.04.010 of Chapter 2.04 of Title 2 of the Cupertino Municipal Code regarding regular City 93 City Council Minutes December 1, 2015 5 Council meetings that fall on any Election Tuesday in a regular Cupertino election year" City Clerk Grace Schmidt read the title of the ordinance. Wong moved and Chang seconded to read Ordinance No. 15-2137 by title only and that the City Clerk’s reading would constitute the second reading thereof. Ayes: Sinks, Chang, Paul, Vaidhyanathan and Wong. Noes: None. Abstain: None. Absent: None. Wong moved and Chang seconded to enact Ordinance No. 15-2137. Ayes: Sinks, Chang, Paul, Vaidhyanathan and Wong. Noes: None. Abstain: None. Absent: None. PUBLIC HEARINGS - None ORDINANCES AND ACTION ITEMS 19. Subject: Approve actions related to the formation of, and Cupertino’s membership in, the Silicon Valley Clean Energy Authority, an independent joint powers authority, which will provide a Community Choice Aggregation Program to offer clean energy alternatives for Cupertino residents and businesses; and related CEQA action Recommended Action: 1. Accept the Silicon Valley Community Choice Energy Technical Study Draft Report, and find that the proposed actions are exempt from CEQA; and 2. Conduct the first reading of the Ordinance No. 15-2138: “An Ordinance of the City Council of the City of Cupertino Authorizing the Implementation of a Community Choice Aggregation Program” to create and participate in the Silicon Valley Clean Energy Authority; and 3. Adopt Resolution No. 15-111 of the City Council of the City of Cupertino Approving the Joint Powers Agreement Establishing the Silicon Valley Clean Energy Authority; and 4. Authorize the City Manager to remit up to $450,000, as previously budgeted, to the Silicon Valley Clean Energy Authority to support the initial costs of the Authority; and 5. Approve an increase to the Fiscal Year 2015-16 Sustainability Division Special Project Budget of $100,000 for project contingency as outlined in the JPA; and 6. Direct staff to return to Council with an update and potential action regarding bridge financing for the Authority; and 7. Direct staff to return to Council with a proposal to provide interim project and/or staffing support to the Authority via a separate services agreement; and 8. Direct staff to return to Council for appointment of a regular Director and alternate Director to the Authority’s Board of Directors 94 City Council Minutes December 1, 2015 6 Written communications for this item included emails to Council, copy of Appendix A from Attachment A, and a staff PowerPoint presentation. Assistant to the City Manager Erin Cooke reviewed the staff report via a PowerPoint presentation. Staff and Kirby Dusel of Pacific Energy Advisors answered questions from Council. The following individuals spoke in support of this item: Tim Brand John Scarboro on behalf of Carbon Free Mountain View Jan Butts on behalf of the Sierra Club Bruce Karney, Board President Carbon Free Mountain View Mike Balma on behalf of Carbon Free Mountain View Rose Friedland John Bartas Richard Adler Rhoda Fry Paula Wallis Gary Latshaw on behalf of Sierra Club Wong moved and Chang seconded to accept the Silicon Valley Community Choice Energy Technical Study Draft Report and find that the proposed actions are exempt from CEQA; adopt Resolution No. 15-111 approving the Joint Powers Agreement (JPA) establishing the Silicon Valley Clean Energy Authority; authorize the City Manager to remit up to $450,000, as previously budgeted, to the Silicon Valley Clean Energy Authority to support the initial costs of the Authority; approve an increase to the Fiscal Year 2015-16 Sustainability Division Special Project Budget of $100,000 for project contingency as outlined in the JPA; direct staff to return to Council with an update and potential action regarding bridge financing for the Authority; direct staff to return to Council with a proposal to provide interim project and/or staffing support to the Authority via a separate services agreement; direct staff to return to Council for appointment of a regular Director and alternate Director to the Authority’s Board of Directors. The motion carried unanimously. City Clerk Grace Schmidt read the title of the ordinance. 95 City Council Minutes December 1, 2015 7 Wong moved and Paul seconded to read Ordinance No. 15-2138 by title only and that the City Clerk’s reading would constitute the first reading thereof. Ayes: Sinks, Chang, Paul, Vaidhyanathan and Wong. Noes: None. Abstain: None. Absent: None. REPORTS BY COUNCIL AND STAFF Council members highlighted the activities of their committees and various community events. ELECTION OF MAYOR AND VICE MAYOR 20. Subject: Council members elect Mayor Recommended Action: Make nominations and elect Mayor Vaidhyanathan moved and Wong seconded to nominate Barry Chang as Mayor. The motion carried unanimously. 21. Subject: Council members elect Vice Mayor Recommended Action: Make nominations and elect Vice Mayor Chang moved and Paul seconded to nominate Savita Vaidhyanathan as Vice Mayor. The motion carried unanimously. OATH OF OFFICE 22. Subject: Mayor takes Oath of Office Recommended Action: Mayor takes Oath of Office District Attorney Jeff Rosen gave the Oath of Office to Mayor Barry Chang. 23. Subject: Vice Mayor takes Oath of Office Recommended Action: Vice Mayor takes Oath of Office District Attorney Jeff Rosen gave the Oath of Office to Vice Mayor Savita Vaidhyanathan. COMMENTS BY NEW MAYOR 24. Subject: Comments by new Mayor and presentation of gifts 96 City Council Minutes December 1, 2015 8 Recommended Action: Comments by new Mayor and presentation of gifts New Mayor Barry Chang presented a gavel plaque to outgoing Mayor Rod Sinks. City Manager David Brandt noted that a gift on behalf of staff would be given to outgoing Mayor Rod Sinks. New Mayor Barry Chang made comments. COMMENTS BY COUNCIL MEMBERS AND PUBLIC 25. Subject: Comments by Council members Recommended Action: Comments by Council members Council members made comments. 26. Subject: Members of the audience are invited to speak Recommended Action: Members of the audience are invited to speak Members of the audience made comments. RECEPTION 27. Subject: The public is invited to attend a reception in the lobby Recommended Action: The public is invited to attend a reception in the lobby Mayor Chang invited the public to attend a reception in the lobby. ADJOURNMENT At 9:42 p.m., Mayor Chang adjourned the meeting to Tuesday, January 19. Note: December 15 and January 5 Council meetings have been cancelled. _______________________________ Grace Schmidt, City Clerk 97 City Council Minutes December 1, 2015 9 Staff reports, backup materials, and items distributed at the City Council meeting are available for review at the City Clerk’s Office, 777-3223, and also on the Internet at www.cupertino.org. Click on Agendas & Minutes, then click on the appropriate Packet. Most Council meetings are shown live on Comcast Channel 26 and AT&T U-verse Channel 99 and are available at your convenience at www.cupertino.org. Click on Agendas & Minutes, and then click Archived Webcast. Videotapes are available at the Cupertino Library, or may be purchased from the Cupertino City Channel, 777-2364. 98 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1295 Name: Status:Type:Consent Calendar Agenda Ready File created:In control:12/21/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Accept Accounts Payable for the period ending November 13, 2015 Sponsors: Indexes: Code sections: Attachments:A - Draft Resolution B - AP Report Action ByDate Action ResultVer. City Council1/19/20161 Subject: Accept Accounts Payable for the period ending November 13, 2015 AdoptResolutionNo.16-001acceptingAccountsPayablefortheperiodendingNovember13, 2015 CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™99 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO ALLOWING CERTAIN CLAIMS AND DEMANDS PAYABLE IN THE AMOUNTS AND FROM THE FUNDS AS HEREINAFTER DESCRIBED FOR GENERAL AND MISCELLANEOUS EXPENDITURES FOR THE PERIOD ENDING November 13, 2015 WHEREAS, the Director of Administrative Services or her designated representative has certified to accuracy of the following claims and demands and to the availability of funds for payment hereof; and WHEREAS, the said claims and demands have been audited as required by law. NOW, THEREFORE, BE IT RESOLVED, that the City Council hereby allows the following claims and demands in the amounts and from the funds as hereinafter set forth in the attached Payment Register. CERTIFIED: _____________________________ Lisa Taitano, Finance Manager PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th day of January, 2016, by the following vote: Vote Members of the City Council AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: _________________________ ________________________ Grace Schmidt, City Clerk Barry Chang, Mayor, City of Cupertino 100 101 102 103 104 105 106 107 108 109 110 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1296 Name: Status:Type:Consent Calendar Agenda Ready File created:In control:12/21/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Accept Accounts Payable for the period ending November 20, 2015 Sponsors: Indexes: Code sections: Attachments:A - Draft Resolution B - AP Report Action ByDate Action ResultVer. City Council1/19/20161 Subject: Accept Accounts Payable for the period ending November 20, 2015 AdoptResolutionNo.16-002acceptingAccountsPayablefortheperiodendingNovember20, 2015 CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™111 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO ALLOWING CERTAIN CLAIMS AND DEMANDS PAYABLE IN THE AMOUNTS AND FROM THE FUNDS AS HEREINAFTER DESCRIBED FOR GENERAL AND MISCELLANEOUS EXPENDITURES FOR THE PERIOD ENDING November 20, 2015 WHEREAS, the Director of Administrative Services or her designated representative has certified to accuracy of the following claims and demands and to the availability of funds for payment hereof; and WHEREAS, the said claims and demands have been audited as required by law. NOW, THEREFORE, BE IT RESOLVED, that the City Council hereby allows the following claims and demands in the amounts and from the funds as hereinafter set forth in the attached Payment Register. CERTIFIED: _____________________________ Lisa Taitano, Finance Manager PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th day of January, 2016, by the following vote: Vote Members of the City Council AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: _________________________ ________________________ Grace Schmidt, City Clerk Barry Chang, Mayor, City of Cupertino 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1300 Name: Status:Type:Consent Calendar Agenda Ready File created:In control:12/22/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Accept Accounts Payable for the period ending November 25, 2015 Sponsors: Indexes: Code sections: Attachments:A - Draft Resolution B - AP Report Action ByDate Action ResultVer. City Council1/19/20161 Subject: Accept Accounts Payable for the period ending November 25, 2015 AdoptResolutionNo.16-003acceptingAccountsPayablefortheperiodendingNovember25, 2015 CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™129 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO ALLOWING CERTAIN CLAIMS AND DEMANDS PAYABLE IN THE AMOUNTS AND FROM THE FUNDS AS HEREINAFTER DESCRIBED FOR GENERAL AND MISCELLANEOUS EXPENDITURES FOR THE PERIOD ENDING November 25 , 2015 WHEREAS, the Director of Administrative Services or her designated representative has certified to accuracy of the following claims and demands and to the availability of funds for payment hereof; and WHEREAS, the said claims and demands have been audited as required by law. NOW, THEREFORE, BE IT RESOLVED, that the City Council hereby allows the following claims and demands in the amounts and from the funds as hereinafter set forth in the attached Payment Register. CERTIFIED: _____________________________ Lisa Taitano, Finance Manager PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th day of January, 2016, by the following vote: Vote Members of the City Council AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: _________________________ ________________________ Grace Schmidt, City Clerk Barry Chang, Mayor, City of Cupertino 130 131 132 133 134 135 136 137 138 139 140 141 142 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1301 Name: Status:Type:Consent Calendar Agenda Ready File created:In control:12/22/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Accept Accounts Payable for the period ending December 4, 2015 Sponsors: Indexes: Code sections: Attachments:A - Draft Resolution B - AP Report Action ByDate Action ResultVer. City Council1/19/20161 Subject: Accept Accounts Payable for the period ending December 4, 2015 AdoptResolutionNo.16-004acceptingAccountsPayablefortheperiodendingDecember4, 2015 CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™143 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO ALLOWING CERTAIN CLAIMS AND DEMANDS PAYABLE IN THE AMOUNTS AND FROM THE FUNDS AS HEREINAFTER DESCRIBED FOR GENERAL AND MISCELLANEOUS EXPENDITURES FOR THE PERIOD ENDING December 4, 2015 WHEREAS, the Director of Administrative Services or her designated representative has certified to accuracy of the following claims and demands and to the availability of funds for payment hereof; and WHEREAS, the said claims and demands have been audited as required by law. NOW, THEREFORE, BE IT RESOLVED, that the City Council hereby allows the following claims and demands in the amounts and from the funds as hereinafter set forth in the attached Payment Register. CERTIFIED: _____________________________ Lisa Taitano, Finance Manager PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th day of January, 2016, by the following vote: Vote Members of the City Council AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: _________________________ ________________________ Grace Schmidt, City Clerk Barry Chang, Mayor, City of Cupertino 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1302 Name: Status:Type:Consent Calendar Agenda Ready File created:In control:12/22/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Accept Accounts Payable for the period ending December 11, 2015 Sponsors: Indexes: Code sections: Attachments:A - Draft Resolution B - AP Report Action ByDate Action ResultVer. City Council1/19/20161 Subject: Accept Accounts Payable for the period ending December 11, 2015 AdoptResolutionNo.16-005acceptingAccountsPayablefortheperiodendingDecember11, 2015 CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™165 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO ALLOWING CERTAIN CLAIMS AND DEMANDS PAYABLE IN THE AMOUNTS AND FROM THE FUNDS AS HEREINAFTER DESCRIBED FOR GENERAL AND MISCELLANEOUS EXPENDITURES FOR THE PERIOD ENDING December 11, 2015 WHEREAS, the Director of Administrative Services or her designated representative has certified to accuracy of the following claims and demands and to the availability of funds for payment hereof; and WHEREAS, the said claims and demands have been audited as required by law. NOW, THEREFORE, BE IT RESOLVED, that the City Council hereby allows the following claims and demands in the amounts and from the funds as hereinafter set forth in the attached Payment Register. CERTIFIED: _____________________________ Lisa Taitano, Finance Manager PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th day of January, 2016, by the following vote: Vote Members of the City Council AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: _________________________ ________________________ Grace Schmidt, City Clerk Barry Chang, Mayor, City of Cupertino 166 167 168 169 170 171 172 173 174 175 176 177 178 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:116-1309 Name: Status:Type:Consent Calendar Agenda Ready File created:In control:1/7/2016 City Council On agenda:Final action:1/19/2016 Title:Subject: Application for Alcoholic Beverage License for Deep Cliff Golf Course, 10700 Clubhouse Lane Sponsors: Indexes: Code sections: Attachments:Staff Report A - Application Action ByDate Action ResultVer. City Council1/19/20161 Subject:ApplicationforAlcoholicBeverageLicenseforDeepCliffGolfCourse,10700 Clubhouse Lane Recommend approval to the California Department of Alcoholic Beverage Control of the Application for Alcoholic Beverage License for Deep Cliff Golf Course, 10700 Clubhouse Lane CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™179 CITY COUNCIL STAFF REPORT Meeting: January 19, 2016 Subject Application for Alcoholic Beverage License for Deep Cliff Golf Course, 10700 Clubhouse Lane Recommended Action Recommend approval to the California Department of Alcoholic Beverage Control of the Application for Alcoholic Beverage License for Deep Cliff Golf Course, 10700 Clubhouse Lane Description Name of Business: Deep Cliff Golf Course Location: 10700 Clubhouse Lane Type of Business: Restaurant Type of License: 47 – On-Sale General – Eating Place (Restaurant) Reason for Application: Original Fees, Annual Fee Discussion There are no zoning or use permit restrictions which would prohibit the sale of alcohol as proposed and staff has no objection to the issuance of this license. License Type 47 authorizes the sale of beer, wine and distilled spirits for consumption on the licenses premises and authorizes the sale of beer and wine for consumption off the licenses premises. Sustainability Impact None Fiscal Impact None _____________________________________ Prepared by: Julia Kinst, Planning Department Reviewed by: Piu Ghosh, Principal Planner; Aarti Shrivastava, Assistant City Manager - Community Development and Strategic Planning Approved for Submission by: David Brandt, City Manager Attachment: A - Application COMMUNITY DEVELOPMENT DEPARTMENT CITY HALL 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3308 www.cupertino.org 180 181 182 183 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:116-1345 Name: Status:Type:Consent Calendar Agenda Ready File created:In control:1/11/2016 City Council On agenda:Final action:1/19/2016 Title:Subject: Summary Vacation of a Wire Clearance Easement within the Civic Center property at 10300 Torre Avenue Sponsors: Indexes: Code sections: Attachments:Staff Report A - Legal Description for Vacation of Wire Clearance Easement B - Plat Map for Vacation of Wire Clearance Easement C - Draft Resolution D - PG&E No Objection Letter E - AT&T No Objection Letter F - Comcast No Objection Letter Action ByDate Action ResultVer. City Council1/19/20161 Subject:SummaryVacationofaWireClearanceEasementwithintheCivicCenterpropertyat 10300 Torre Avenue AdoptResolutionNo.16-006summarilyvacatingawireclearanceeasementwithintheCivic Center property at 10300 Torre Avenue CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™184 PUBLIC WORKS DEPARTMENT CITY HALL 10 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3354 www.cupertino.org CITY COUNCIL STAFF REPORT Meeting: January 19, 2016 Subject Summary Vacation of a Wire Clearance Easement within the Civic Center property at 10300 Torre Avenue. Recommended Action Adopt Draft Resolution No. 16-____, summarily vacating a wire clearance easement within the Civic Center property at 10300 Torre Avenue. Discussion On August 25th, 2015, the Planning Commission approved (on a 5-0 vote) the installation of a new cell tower located at 10300 Torre Avenue, near City Hall. The Commission decision to approve was subsequently appealed by a resident and the City Council heard the appeal and lease agreement at its meeting of October 6, 2015. Then Vice Mayor Chang was absent and Councilmember Vaidhyanathan recused herself, leaving the remaining three council members to decide the appeal. No resolution was adopted as the Council vote was 2-1 in favor of denying the appeal and a majority of the Council (three votes) was needed to make a Council decision. As a result of the motion failing, the Planning Commission decision to approve was upheld. During the review process, staff determined that the proposed location of the new cell tower is currently encumbered by an unused wire clearance easement held by the City. The easement runs north to south and is located approximately 10-feet west of the easterly Civic Center property line (refer to Attachment A & B – Wire Clearance Easement Vacation Exhibit). Staff has contacted the various overhead utility providers (Pacific Gas and Electric, AT&T and Comcast) to verify if there are any current or proposed plans to utilize the easement, and if the utility companies have any objections to the City vacating the easement. Letters were received from each utility company (refer to Attachments D, E & F) and there are no objections to the vacation. Staff has determined that there are currently no overhead wires within the easement, and that the Wire Clearance Easement is not needed for public purposes. The easement may be summarily vacated per the Streets and Highway Code, Section 8333(a). 185 Adoption of this resolution will allow the City to summarily vacate the existing Wire Clearance Easement on the subject property. Upon recordation of this vacation, the Wire Clearance Easement will be removed from the property and no further action regarding the vacation will need to be taken by the City Council. Fiscal Impact No fiscal impact incurred by approving the summary vacation of the Wire Clearance Easement. Sustainability Impact None. ___________________________________ Prepared by: Chad Mosley, Senior Civil Engineer Reviewed by: Timm Borden, Director of Public Works Approved for Submission by: David Brandt, City Manager Attachments: A – Legal Description for Vacation of Wire Clearance Easement B - Plat Map for Vacation of Wire Clearance Easement C – Draft Resolution D – PG&E No Objection Letter E – AT&T No Objection Letter F – Comcast No Objection Letter 186 187 188 ATTACHMENT C RESOLUTION NO. 16 –XXX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO SUMMARILY VACATING A WIRE CLEARANCE EASEMENT WITHIN THE CIVIC CENTER PROPERTY LOCATED AT 10300 TORRE AVENUE, APN 369-31-033 WHEREAS, subdivision (a) of Section 8333 of the Streets and Highways Code of the State of California authorizes the City Council to summarily vacate a portion of a public utility easement if the easement has been superseded by relocation, or determined to be excess by the easement holder, and there are no other public facilities located within the easement; and WHEREAS, the City Council intends to summarily vacate a Wire Clearance Easement (hereinafter the “Easement”) constituting all that real property situated in the City of Cupertino, County of Santa Clara, State of California, more particularly described in Exhibit “A”. WHEREAS, on __________, the Director of the Department of Public Works approved that certain plat entitled “Wire Clearance Easement Vacation Exhibit“ attached herewith as Exhibit “B”, showing the Easement that the City Council intends to summarily vacate; and WHEREAS, attached to this Resolution as Exhibit “C” is a copy of the report, dated ___________, that the Director of the department of Public Works submitted to the City Council setting forth the reasons justifying the summary vacation of the Easement (hereinafter “Report”). NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Cupertino that: SECTION 1. The City Council hereby adopts the Report and, based upon the Report and all other evidence submitted, makes the following findings: 1.The easement has not been used for the purpose for which it was dedicated or acquired for five consecutive years immediately preceding the proposed vacation; and 2.The easement has been determined to be excess, and there are no other public facilities located within the easement. SECTION 2. Based upon the findings made in Section 1 of this Resolution and the provisions of Section 8333 of the Streets and Highways Code, the City Council does hereby order that the Easement shall be and hereby summarily vacated. SECTION 3. The City Clerk is hereby directed to record at Santa Clara County Records this Resolution, including Exhibits “A”, “B”, and “C” hereto. SECTION 4. The Easement will no longer constitute a Wire Clearance Easement from and after the date of recordation of the documents identified in Section 3 of this Resolution. 189 PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th day of January, 2016, by the following vote: Vote Members of the City Council AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: ________________________________ Grace Schmidt, City Clerk Barry Chang, Mayor, City of Cupertino 190 191 192 193 ATTACHMENT E 870 N. McCarthy Blvd, Suite 100 Milpitas, CA 95035 UTILITY ENDORSEMENT APPROVAL December 17, 2015 Chad Mosley, PE Public Works Department City of Cupertino. 10300 Torre Avenue Cupertino, California 95014 Subject: Proposed 5’ W.C.E. City of Cupertino Vacation, Described as Easterly most portion of lot’s 4 & 7 of Tract Map 3743 Titled “Cupertino Town Center” Cupertino, CA Dear Mr. Mosley, This letter is in response to your inquiry of December 16, 2015, concerning AT&T-California facilities in the area of the proposed City of Cupertino W.C.E. Vacation, described above:  No objection to the City of Cupertino Wire Clearance Easement Vacation  AT&T has no current plans to utilize the Wire Clearance Easement  There are no existing AT&T facilities in the Wire Clearance Easement  A plat map is attached for your information Phil Reynolds, Jr. Right of Way Manager Public Works Coordinator AT&T California cc: Ed Beyer- AT&T Right of Way 194 195 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1098 Name: Status:Type:Consent Calendar Agenda Ready File created:In control:9/17/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Update on Permanent Program for Early Morning Collection of Solid Waste Containers on Select Streets in the Tri-School Area. Sponsors: Indexes: Code sections: Attachments:Staff Report A – Table of Containers Removed from Select Streets Prior to and During Implementation B – Resident Comments Post Permanent Implementation Action ByDate Action ResultVer. City Council1/19/20161 Subject:UpdateonPermanentProgramforEarlyMorningCollectionofSolidWaste Containers on Select Streets in the Tri-School Area. Receive report with no changes recommended to permanent program. CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™196 1 PUBLIC WORKS DEPARTMENT CITY HALL 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3354 www.cupertino.org CITY COUNCIL STAFF REPORT Meeting: January 19, 2016 Subject Update on Permanent Program for Early Morning Collection of Solid Waste Containers on Select Streets in the Tri-School Area. Recommended Action Receive report with no changes recommended to permanent program. Discussion At the Council meeting of March 3, 2015, Council authorized a pilot program for the early collection of solid waste containers on select streets in the Tri-School area. Prior to the program, containers were generally collected by Recology between 10:00 A.M. and 1:00 P.M. By implementing the pilot, residents were provided an opportunity to collect their containers off the street prior to the morning school commute (before 7:15 A.M.) The pilot ran from the week of April 6th through the week of June 8, 2015. The number of residents that voluntarily removed their containers prior to the morning commute ranged up to 40%. The number of containers removed prior to the afternoon commute was also positively impacted by the pilot program. With participation this high, the pilot was effective in allowing many residents to voluntarily remove solid waste containers off the street, thereby improving conditions by removing potential obstacles to both cyclists and pedestrians. A variety of comments were provided by Council and the public when staff recommended the pilot to become permanent at the Council meeting of September 15, 2015. Comments included collecting containers on Saturdays instead of weekdays, collecting containers on more streets on Wednesdays (late scheduled school start) that are currently on Monday/Tuesday, and having residents place containers on driveways and having Recology staff manually relocate empty containers out of the street right of 197 2 way. As part of the authorization, Council directed staff to report back on these issues in January 2016 and what effect, if any, daylight saving time and El Nino may have had on participation. With the advantage of three additional months of program experience and additional cost data received from Recology, staff is able to now update Council on these issues with the following information:  Collection of containers on weekends is problematic due to recycling and organic processing facilities being closed. Aside from the additional costs to open these facilities, Recology has estimated that an additional $186,000 annually would be required to accommodate a Saturday collection schedule.  Staff and Recology did look into changing current Monday/Tuesday collection days to a more robust Wednesday collection day route. As this was reviewed, it was ultimately determined that the current Wednesday route was already optimized for the number of collection trucks available. Recology estimated the cost to add additional trucks to be $368,000 annually. If this were authorized, all streets in the program area would be collected on Wednesday between 7am – 8am.  Recology discouraged the placement of containers in driveways at the Council meeting of September 15th due to safety concerns. The cost to have Recology manually place containers outside the street right of way and not on the driveway is estimated at $179,000 annually.  No adverse comments have been received from residents or Recology regarding the start of daylight savings time in November or from winter rain events experienced to date. Similar to how resident participation was quantified in the previous pilot program, staff again quantified participation in the permanent program. The results of this latest survey (Attachment A) continue to show significant voluntary participation among our residents. In early December, staff reached out to residents utilizing an online forum to solicit comments and to advise residents that an update on this program would be on the January 19, 2016 Council agenda. At the writing of this report, Staff has received nine comments (Attachment B). Additional outreach to residents advising them of the program goals, to park their cars off the street if possible and to assist each other in removing containers will be mailed 198 3 out within the month. Due to the continued participation in the program and the costs and unknown benefits to change Recology collection time or method, no changes are being recommended at this time. Fiscal Impact None. Sustainability Impact None. _____________________________________ Prepared by: Roger Lee, Assistant Director of Public Works Reviewed by: Timm Borden, Director of Public Works Approved for Submission by: David Brandt, City Manager Attachments: A – Table of Containers Removed from Select Streets Prior to and During Implementation B – Resident Comments Post Permanent Implementation 199 Recology Early Collection Pilot Program: Council Update Rev. 6/9/15 Date Day Time AM Time PM Location Houses w/ Bins Removed AM Houses w/ Bins Removed PM 12/9/2015 W 8:36 2:12 Bubb (Rainbow to McClellan)23 of 62 = 37%48 of 62 = 77% 12/16/2015 W 8:29 2:25 Bubb (Rainbow to McClellan)20 of 62 = 32%44 of 62 = 71% 12/9/2015 W 9:13 2:39 Byrne (McClellan to Granada)18 of 59 = 31%27 of 59 = 46% 12/16/2015 W 9:08 2:47 Byrne (McClellan to Granada)21 of 59 = 36%38 of 59 = 64% 12/7/2015 M 7:24 2:14 Columbus (Bubb to Wilkinson)4 of 32 = 13%28 of 32 = 87% 12/14/2015 M 7:34 2:16 Columbus (Bubb to Wilkinson)7 of 32 = 22%27 of 32 = 84% 12/8/2015 T 7:40 2:08 Ft. Baker (Presidio to Hyannisport)4 of 7 = 57%7 of 7 = 100% 12/15/2015 T 7:19 2:10 Ft. Baker (Presidio to Hyannisport)5 of 7 = 71% 6 of 7 = 86% 12/9/2015 W 9:08 2:36 Granada (Orange to Byrne)3 of 13 = 23%6 of 13 = 46% 12/16/2015 W 9:03 2:44 Granada (Orange to Byrne)2 of 13 = 15%6 of 13 = 46% 12/8/2015 T 7:42 2:18 Hyannisport (Bubb to Linda Vista)14 of 46 = 30%34 of 46 = 74% 12/15/2015 T 7:37 2:20 Hyannisport (Bubb to Linda Vista)13 of 46 = 28% 32 of 46 = 70% 12/8/2015 T 7:31 2:21 Linda Vista (Hyannisport to McClellan)3 of 18 = 17%14 of 18 = 78% 12/15/2015 T 7:43 2:22 Linda Vista (Hyannisport to McClellan)4 of 18 = 22%15 of 18 = 83% 12/9/2015 W 9:01 2:30 McClellan (Bubb to Foothill)22 of 74 = 30%40 of 74 = 54% 12/16/2015 W 8:54 2:30 McClellan (Bubb to Foothill)28 of 74 = 38%46 of 74 = 62% 12/9/2015 W 9:05 2:33 Orange (McClellan to Granada)16 of 52 = 31%34 of 52 =65% 12/16/2015 W 9:01 2:41 Orange (McClellan to Granada)13 of 52 = 25%29 of 52 = 56% 12/8/2015 T 7:18 2:04 Presidio (Bubb to Ft. Baker)4 of 21 = 19%20 of 21 = 95 % 12/15/2015 T 7:22 2:07 Presidio (Bubb to Ft. Baker)5 of 21 = 24%20 of 21 = 95% 12/9/2015 W 8:31 2:05 Rainbow (Stelling to Bubb)18 of 41 = 44%32 of 41 = 78% 12/16/2015 W 8:24 2:18 Rainbow (Stelling to Bubb)17 of 41 = 41%36 of 41 = 88% 12/8/2015 T 7:23 2:11 Santa Teresa (Columbus to Hyannisport)3 of 21 = 14%17 of 21 = 81% 12/15/2015 T 7:25 2:11 Santa Teresa (Columbus to Hyannisport)2 of 21 = 10%19 of 21 = 90% 12/7/2015 M 7:20 2:10 Santa Teresa (Terrace to Columbus)3 of 26 = 12%18 of 26 = 69% 12/14/2015 M 7:29 2:06 Santa Teresa (Terrace to Columbus)4 of 26 =15%22 of 26 = 85% 12/7/2015 M 7:17 2:04 Terrace (Bubb to Santa Teresa)6 of 25 = 24%23 of 25 = 92% 12/14/2015 M 7:23 2:04 Terrace (Bubb to Santa Teresa)5 of 25 = 20%21 of 25 = 84% 12/8/2015 T 7:27 2:15 Wilkinson (Columbus to Hyannisport)3 of 30 = 10%29 of 30 = 97% 12/15/2015 T 7:29 2:15 Wilkinson (Columbus to Hyannisport)4 of 30 = 13%14 of 30 = 47% 200 201 202 203 204 205 206 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1198 Name: Status:Type:Second Reading of Ordinances Agenda Ready File created:In control:10/27/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Second reading of ordinance directing actions related to the formation of, and Cupertino’s membership in, the Silicon Valley Clean Energy Authority (SVEA), an independent joint powers authority, which will provide a Community Choice Aggregation Program to offer clean energy alternatives for Cupertino residents and businesses Sponsors: Indexes: Code sections: Attachments:Staff Report A - Draft Ordinance Action ByDate Action ResultVer. City Council1/19/20161 Subject:Secondreadingofordinancedirectingactionsrelatedtotheformationof,and Cupertino’smembershipin,theSiliconValleyCleanEnergyAuthority(SVEA),an independentjointpowersauthority,whichwillprovideaCommunityChoiceAggregation Program to offer clean energy alternatives for Cupertino residents and businesses 1.ConductthesecondreadingoftheOrdinanceNo.15-2138:“AnOrdinanceoftheCity CounciloftheCityofCupertinoAuthorizingtheImplementationofaCommunityChoice AggregationProgram”tocreateandparticipateintheSiliconValleyCleanEnergyAuthority; and2.AppointaregularDirectorandalternateDirectortotheAuthority’sBoardofDirectors anddirectstafftoaddCouncil’sappointmenttotheAuthoritytothefutureCouncilcommittee assignments calendar CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™207 1 OFFICE OF THE CITY MANAGER SUSTAINABILITY DIVISION CITY HALL 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-7603 www.cupertino.org CITY COUNCIL STAFF REPORT Meeting: January 19, 2016 Subject Ordinance directing actions related to the formation of, and Cupertino’s membership in, the Silicon Valley Clean Energy Authority (SVEA), an independent joint powers authority, which will provide a Community Choice Aggregation Program to offer clean energy alternatives for Cupertino residents and businesses. Recommended Actions 1. Conduct the second reading of the Ordinance No. 15-2138: “An Ordinance of the City Council of the City of Cupertino Authorizing the Implementation of a Community Choice Aggregation Program” to create and participate in the Silicon Valley Clean Energy Authority; and 2. Appoint a regular Director and alternate Director to the Authority’s Board of Directors and direct staff to add Council’s appointment to the Authority to the future Council committee assignments calendar. Description On December 1, 2015, Cupertino’s City Council was the first, of now three cities, to unanimously approve the actions required to form and participate in the Silicon Valley Clean Energy Authority. The Authority, once established through Agreements executed by at least three agencies, will operate a Community Choice Energy (CCE) program to pool the electricity demand within participating Santa Clara jurisdictions to directly procure or generate electrical power supplies on behalf of their residents and businesses. While electric supply is handled by the CCE program, the electricity grid and customer service remain with the incumbent utility, or PG&E in Santa Clara County. To finalize Cupertino’s actions related to formation of and membership in the Authority, the City must conduct a second reading of Ordinance No. 15-2138. Discussion On December 1, 2015 the City Council introduced and made no amendments to the draft ordinance during its deliberations. Following the discussion, Council conducted the first 208 2 reading of Ordinance No. 15-2138. The California Government Code requires that prior to adoption of an ordinance, a second reading be conducted at a regular meeting or at an adjourned regular meeting, held not earlier than five days of introduction and first reading of the ordinance. Attached is Ordinance No. 15-2138 for adoption and second reading thereof. Sustainability Impact Cupertino’s Climate Action Plan specifically points to Community Choice Energy as the most impactful and cost-effective measure to achieve established emissions targets for our community. Fiscal Impact The December 1, 2015 staff report detailed costs associated with the Authority’s formation. No additional costs are associated with the adoption of the ordinance or appointment of a regular and alternate Director to the Authority. _____________________________________ Prepared by: Erin Cooke, Assistant to the City Manager & Sustainability Manager Approved for Submission by: David Brandt, City Manager Attachments: A. Community Choice Energy Draft Ordinance 209 ORDINANCE NO. 15-2138 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CUPERTINO AUTHORIZING THE IMPLEMENTATION OF A COMMUNITY CHOICE AGGREGATION (CCA) PROGRAM The City Council of the City of Cupertino does ordain as follows: SECTION 1. FINDINGS. The City Council finds as follows: 1. The Cities of Cupertino, Mountain View and Sunnyvale and the County of Santa Clara formed and sponsored the Silicon Valley Community Choice Energy Partnership (SVCCEP) to investigate options to provide electric service to customers within the City of Cupertino and surrounding municipalities with the intent of achieving greater local control and involvement over the provision of electric services, competitive electric rates, the development of local renewable energy projects, reduced greenhouse gas emissions, and the implementation of energy conservation and efficiency projects and programs. 2. The City of Cupertino, through its participation in SVCCEP, has prepared a Technical Feasibility Study for a Community Choice Aggregation (“CCA”) program under the provisions of Public Utilities Code Section 366.2. The Technical Feasibility Study shows that implementing a community choice aggregation program would likely provide multiple benefits, including the following: a. Providing customers a choice of power providers; b. Increasing local control over energy rates and other energy-related matters; c. Providing electric rates that are competitive with those provided by the incumbent utility; d. Reducing greenhouse gas emissions arising from electricity use in the City; e. Increasing local and regional renewable generation capacity; f. Increasing energy conservation and efficiency projects and programs; g. Increasing regional energy self-sufficiency; and h. Improving the local economy by implementing new local renewable and energy conservation and efficiency projects. 3. The Joint Powers Agreement creating the Silicon Valley Clean Energy Authority (“Authority”) will govern and operate the CCA program on behalf of its member jurisdictions. The Initial Participants within the County of Santa Clara, as defined by the Joint Powers Agreement, may participate in the Authority by adoption of 210 Ordinance No. 15-2138 Page 2 a resolution approving the execution of the Joint Powers Agreement and adoption of the CCA ordinance required by Public Utilities Code Section 366.2(c)(12) by March 31, 2016. Municipalities choosing to participate in the Authority will have membership on the Board of Directors of the Authority as provided in the Joint Powers Agreement. 4. The Authority will enter into agreements with electric power suppliers and other service providers and, based upon those agreements, the Authority plans to provide electrical power to residents and businesses at rates that are competitive with those of the incumbent utility. Once the California Public Utilities Commission approves the implementation plan prepared by the Authority, the Authority may provide service to customers within the City of Cupertino and those cities that choose to participate in the Silicon Valley Clean Energy Authority; and 5. Under Public Utilities Code Section 366.2, customers have the right to opt-out of a CCA program and continue to receive service from the incumbent utility. Customers who wish to continue to receive service from the incumbent utility will be able to do so at any time; and 6. On December 1, 2016, the Cupertino City Council held a public hearing at which time interested persons had an opportunity to testify either in support or in opposition to implementation of the Silicon Valley Clean Energy CCA program in the City of Cupertino; and 7. This ordinance is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, as it is not a “project” and has no potential to result in a direct or reasonably foreseeable indirect physical change to the environment. (14 Cal. Code Regs. § 15378(a).) Further, the ordinance is exempt from CEQA as there is no possibility that the ordinance or its implementation would have a significant negative effect on the environment. (14 Cal. Code Regs.§ 15061(b)(3).) The ordinance is also categorically exempt because it is an action taken by a regulatory agency to assure the maintenance, restoration, enhancement or protection of the environment. (14 Cal. Code Regs. § 15308.) A Notice of Exemption to be filed as authorized by CEQA and the State CEQA Guidelines; and 8. The City Council is the decision-making body for the contemplated actions, including enactment of this Ordinance; and 211 Ordinance No. 15-2138 Page 3 9. The City Council has reviewed and considered the CEQA exemptions before taking any approval actions on this Ordinance and finds such exemptions are applicable. SECTION 2. The above findings are true and correct. SECTION 3. AUTHORIZATION TO IMPLEMENT A COMMUNITY CHOICE AGGREGATION PROGRAM. Based upon the foregoing, and in order to provide businesses and residents within the City of Cupertino with a choice of power providers, the City of Cupertino hereby elects to implement a community choice aggregation program within the jurisdiction of the City by participating in the Community Choice Aggregation program of the Silicon Valley Clean Energy Authority, as described in its Joint Powers Agreement. SECTION 4. This Ordinance shall be in full force and effect thirty (30) days after its adoption, and the City Clerk shall certify the adoption of this Ordinance and shall give notice of its adoption as required by law. Pursuant to Government Code Section 36933, a summary of this Ordinance may be published and posted in lieu of publication and posting of the entire text. INTRODUCED at a regular meeting of the City Council of the City of Cupertino the 1st day of December, 2015 and ENACTED at a regular meeting of the City Council of the City of Cupertino the ____ of _______ 2015, by the following vote: Vote: Members of the City Council Ayes: Noes: Absent: Abstain: ATTEST: APPROVED: ______________________ __________________________________ Grace Schmidt, City Clerk Mayor, City of Cupertino 212 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1216 Name: Status:Type:Public Hearings Agenda Ready File created:In control:11/9/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Enact an Urgency Ordinance and conduct the first reading of an ordinance amending the Cupertino Municipal Code to prohibit marijuana cultivation, dispensaries, and deliveries and commercial cannabis activities within the City of Cupertino. (Application No. MCA-2015-01; Location: City-wide; Applicant: City of Cupertino) Sponsors: Indexes: Code sections: Attachments:Staff Report A - Draft Ordinance No. 16-2139 Urgency Ordinance B - Draft Ordinance No. 16-2140 Marijuana Ordinance C - White Paper on Medical Marijuana Dispensaries D - Santa Clara District Attorney E - PC Resolution F - PSC MJ recommendation Action ByDate Action ResultVer. City Council1/19/20161 Subject:EnactanUrgencyOrdinanceandconductthefirstreadingofanordinanceamending theCupertinoMunicipalCodetoprohibitmarijuanacultivation,dispensaries,anddeliveries andcommercialcannabisactivitieswithintheCityofCupertino.(ApplicationNo.MCA-2015- 01; Location: City-wide; Applicant: City of Cupertino) 1. Find that the proposed actions are exempt from CEQA; and 2.EnactUrgencyOrdinanceNo.16-2139:“AnInterimUrgencyOrdinanceoftheCityCouncil oftheCityofCupertinoestablishingamoratoriumonMedicalMarijuanaDispensaries, MarijuanaCultivationFacilities,CommercialCannabisActivitiesandMedicalMarijuana deliverieswithintheCityofCupertinopendingcompletionofanupdatetotheCity’s Zoning Code”; and 3.ConductthefirstreadingofOrdinanceNo.16-2140:“AnOrdinanceoftheCityCouncilof theCityofCupertinoamendingSection19.08.030andaddingChapter19.98ofTitle19of theCupertinoMunicipalCoderegardingMedicalMarijuanaDispensaries,Marijuana Cultivation Facilities, Commercial Cannabis Activities, and Medical Marijuana Deliveries” CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™213 COMMUNITY DEVELOPMENT DEPARTMENT CITY HALL 10 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3308 www.cupertino.org CITY COUNCIL STAFF REPORT Meeting: January 19, 2016 Subject Enact an Urgency Ordinance and conduct the first reading of an ordinance amending the Cupertino Municipal Code to prohibit marijuana cultivation, dispensaries, and deliveries and commercial cannabis activities within the City of Cupertino. (Application No. MCA-2015-01; Location: City-wide; Applicant: City of Cupertino) Recommended Action That the City Council: 1. Find that the proposed actions are exempt from CEQA; and 2. Enact Urgency Ordinance No. 16-2139 “An Interim Urgency Ordinance of the City Council of the City of Cupertino Establishing a Moratorium on Medical Marijuana Dispensaries, Marijuana Cultivation Facilities, Commercial Cannabis Activities and Medical Marijuana Deliveries within the City of Cupertino Pending Completion of an Update to the City’s Zoning Code” (Attachment A); and 3. Conduct the first reading of Ordinance No. 16-2140, “An Ordinance of the City Council of the City of Cupertino Amending Section 19.08.030 and Adding Chapter 19.98 of Title 19 of the Cupertino Municipal Code Regarding Medical Marijuana Dispensaries, Marijuana Cultivation Facilities, Commercial Cannabis Activities, and Medical Marijuana Deliveries” (Attachment B) Discussion Background On October 9 2015, Governor Brown signed three new laws relating to medical marijuana, Assembly Bills 243 and 266 and Senate Bill 643. These bills create a broad state regulatory and licensing system governing the cultivation, testing, and distribution of medical marijuana, the manufacturing of marijuana products, and physician recommendations for medical marijuana. 214 Under the new legislation, state licenses and local permits will be required for all facets of the medical marijuana industry:  AB 243 establishes the Department of Food and Agriculture (DFA) as the licensing and regulatory authority for medical marijuana cultivation. Any person who wishes to engage in commercial cultivation of medical marijuana must obtain a state license from the DFA. AB 243 also requires (1) the DFA to work with other state agencies to develop environmental protection standards, (2) the Department of Pesticide Regulation to establish medical marijuana pesticide standards, and (3) the Department of Public Health to create standards for labeling of marijuana edibles.  AB 266 creates the Bureau of Medical Marijuana Regulation within the Department of Consumer Affairs (DCA) to develop regulations and issue state licenses for medical marijuana dispensaries, distributors, and transporters. AB 266 designates the Department of Public Health as the licensing and regulatory authority for manufacturers of marijuana products and medical marijuana testing laboratories. Like AB 243, AB 266 requires all state marijuana license applicants to comply with local permitting requirements.  SB 643 establishes standards for physicians that recommend medical marijuana, including discipline for physicians who recommend excessive amounts. SB 643 also creates standards for state license applications and enforcement. Taken together, the new legislation creates the Medical Marijuana Safety and Regulation Act, which commences at Business and Professions Code section 19300. The new legislation preserves local control over marijuana facilities and land uses, including the authority to prohibit dispensaries and other medical marijuana businesses completely. There are, however, two provisions in the new legislation that require consideration by cities. 1. If a city or county does not have a land use ordinance or regulation prohibiting medical marijuana cultivation, either expressly or otherwise under principles of permissive zoning chooses not to implement a regulatory scheme, then commencing March 1, 2016, the state Department of Food and Agriculture will become the sole licensing authority for cultivation applicants in that jurisdiction (Health and Safety Code section 11362.777(c)(4), part of AB 243.) Under that scenario, a city may not be able to regulate or control cultivation sites operating with a state license. 2. Medical marijuana deliveries can only be made by a state-licensed dispensary in a city, county, or city and county that does not explicitly prohibit it by local ordinance (Business and Professions Code section 19340(a), part of AB 266.) Therefore, in 215 order for a city or county to prohibit medical marijuana delivery services by a dispensary, it will need to enact an express ban. Once AB 243, AB 266, and SB 643 are fully implemented, it is anticipated that the City will receive more inquiries regarding medical marijuana businesses. The Cupertino Municipal Code does not list medical marijuana dispensaries, cultivation sites, and other marijuana establishments as either permitted or conditionally-permitted land uses. Such activities, therefore, are prohibited under the principles of permissive zoning (any use not enumerated is deemed prohibited). In City of Riverside v. Inland Empire Patients Health and Wellness Center, Inc. (2013) 56 Cal.4th 729, the California Supreme Court ruled unanimously that the Compassionate Use Act (Proposition 215) (“CUA”) and the Medical Marijuana Program Act of 2004 (“MMPA”) do not preempt local zoning regulations that completely and permanently ban medical marijuana dispensaries, collectives, and cooperatives, nor do they require cities to accommodate medical marijuana facilities in any way. Discussion Staff recommends that the City Council consider adoption of both an Urgency Ordinance and a regular ordinance which prohibit activities related to the cultivation, delivery, and other commercial cannabis activities. The Urgency Ordinance is effective immediately in order to ensure that the City has an ordinance by March 1, 2016 to preserve Cupertino’s local control over this important topic. The regular ordinance will proceed under the usual path, and is effective thirty days after the ordinance enactment. The urgency ordinance and proposed code amendments reiterate the City’s existing ban on medical marijuana and ensure that the City does not lose the ability to regulate or prohibit cultivation sites and delivery services in the future. Urgency Ordinance The proposed Urgency Ordinance is effective immediately upon Council approval. It contains findings stating the basis for the urgency as well as the facts to justify the preservation of the public health, safety, and welfare. In this case, the State’s law effective January 1, 2016, requires the City to have an ordinance by March 1, 2016 in order to preserve local control. Regular Ordinance The proposed Municipal Code amendments would go into effect on March 3, 2016, which is thirty days after the second reading on February 2, 2016. 216 The proposed code amendments would expressly prohibit the following: 1. Medical marijuana dispensaries and deliveries, except a “qualified patient” or a “primary caregiver” transporting medical marijuana under limited circumstances and in compliance with state law, and certain facilities such as hospices, residential care facilities as those facilities can provide medical care or supportive services for “qualified patients” under state law; primary caregiver transporting medical marijuana in compliance with state law, 2. Marijuana cultivation facilities, except a qualified patient cultivating medical marijuana for his or her personal use at his or her primary residence, and 3. “Commercial cannabis activities,” which is a term introduced by the new state legislation and includes marijuana cultivation, manufacturing of marijuana edibles and related products, distributors, transporters, marijuana testing facilities, and dispensaries. AB 243 expressly permits cities to enact a ban on cultivation activities and in addition, the Court of Appeal in Maral v. City of Live Oak (2012) 221 Cal.App.4th 975, upheld a complete ban on cultivation activities. The proposed code amendments include all of the potential marijuana business that could possibly operate under the new law in order to avoid a piecemeal regulatory approach in which certain marijuana businesses are banned expressly while others are prohibited under permissive zoning principles. Furthermore, express land use prohibitions will benefit the public by providing clear guidelines regarding the scope of prohibited conduct and minimize the potential for confusion regarding the City’s policies. Many California cities have experienced negative secondary effects from medical marijuana businesses, including dispensaries, cultivation facilities, and delivery services, as demonstrated by the attached 2009 white paper from the California Police Chiefs Association (Attachment C), the 2014 memorandum from the Santa Clara County District Attorney (Attachments D), and various news stories from throughout the state.i These negative impacts have included unsafe construction and electrical wiring, noxious fumes and odors, and increased crime in and around marijuana establishments. Many communities have also had problems with medical marijuana being diverted to minors for recreational use. The proposed code amendments are intended to address these issues and protect the public health, safety, and welfare. In addition, the proposed code amendments would not prevent the City from allowing medical marijuana businesses in the future. 217 Commission Review and Recommendation Planning Commission: On November 24, 2015, the Planning Commission reviewed the proposed Ordinance and recommended approval to the City Council on a 4-0 vote (Sun absent) (See Attachment E). The Planning Commission discussed the proposed ordinance, exclusions related to personal cultivation and delivery of medical marijuana and enforcement of the Ordinance. One member of the public expressed concerns related to excessive water use for marijuana cultivation and suggested public disclosure requirements for person excluded from the ordinance. Staff clarified that water use would be monitored by water providers and the City’s landscape ordinance and that requiring disclosures/notices for cultivation of medical marijuana for personal use would violate confidentiality laws. The City can revisit these ordinances in the future if it decides to exempt certain marijuana businesses from local prosecution under certain conditions, such as with permits. Public Safety Commission: On December 10, 2015, the Public Safety Commission made recommendations as follows (see Attachment F). Staff comments, where applicable, follow in italics: 1. Require medical marijuana commercial businesses to have State licenses. The proposed ordinance prohibits any marijuana commercial businesses and/or dispensaries to locate within the city limits. 2. Prohibit Marijuana dispensaries, commercial Cultivation or cultivation by primary caregivers. The proposed ordinance prohibits these activities. 3. Allow cultivation of medical marijuana by qualified patients in a secured growing area. The proposed ordinance allows the cultivation of medical marijuana for personal use by a qualified patient at his or her primary residence. 4. Permit commercial delivery/transport subject certain conditions. The proposed ordinance does not allow the commercial delivery of medical marijuana but does allow a primary caregiver to deliver and transport medical marijuana to a qualified patient as allowed by state law. In light of the tight timelines on adoption of an ordinance to retain local control on these issues, staff recommends adoption of the proposed ordinance. Should the Council feel the need to amend any provisions of the proposed ordinance, staf f can bring back additional licensing/permitting options for the Council’s consideration. 218 Noticing and Public Comment The following noticing has been conducted for this application: Notice of Public Hearing, Site Notice & Legal Ad Agenda  Legal and display ad placed in newspaper (at least 10 days prior to the hearing)  Site Notice not needed  Posted on the City's official notice bulletin board (at least five days prior to the hearing)  Posted on the City of Cupertino’s Web site (at least five days prior to the hearing) No public comments have been received on this subject as of December 18, 2015. Environmental Impact (CEQA) The proposed Ordinances are not a project within the meaning of section 15378 of the California Environmental Quality Act (“CEQA”) Guidelines because it has no potential for resulting in physical change in the environment, either directly or ultimately. In the event that these Ordinances are found to be a project under CEQA, they are exempt CEQA Guidelines section 15061(b)(3) because they can be seen with certainty to have no possibility of a significant effect on the environment, as such uses are already prohibited under the Municipal Code. Sustainability Impact No impacts Fiscal Impact No impacts _____________________________________ Prepared by: Adam Petersen, Senior Planner Reviewed by: Piu Ghosh, Principal Planner Aarti Shrivastava, Assistant City Manager Approved for Submission by: David Brandt, City Manager Attachments: A. Draft Urgency Ordinance No. 16-2139 “An Interim Urgency Ordinance of the City Council of the City of Cupertino Establishing a Moratorium on Medical Marijuana Dispensaries, Marijuana Cultivation Facilities, Commercial Cannabis Activities and Medical Marijuana Deliveries within the City of Cupertino Pending Completion of an Update to the City’s Zoning Code” 219 B. Draft Ordinance No. 16-2140 adopting “An Ordinance of the City Council of the City of Cupertino Amending Section 19.08.030 and Adding Chapter 19.98 of Title 19 of the Cupertino Municipal Code Regarding Medical Marijuana Dispensaries, Marijuana Cultivation Facilities, Commercial Cannabis Activities, And Medical Marijuana Deliveries” C. 2009 California Police Chiefs Association White Paper Report D. 2014 Santa Clara County District Attorney’s Office Memorandum E. Resolution No. 6793 of the Planning Commission recommending adoption of the draft ordinance F. Recommendations of the Public Safety Commission from December 10, 2015 meeting i See, for example, UCLA Medical Marijuana Research (August 10, 2015), Places with More Marijuana Dispensaries have more Marijuana-Related Hospitalizations; CBS News, Monterey (September 28, 2015) Police Arrest Suspect in Armed Robbery of Medical Marijuana Delivery Driver. 220 Urgency Ordinance Council Date: January 19, 2016 URGENCY ORDINANCE NO. 16- AN INTERIM URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CUPERTINO ESTABLISHING A MORATORIUM ON MEDICAL MARIJUANA DISPENSARIES, MARIJUANA CULTIVATION FACILITIES, COMMERCIAL CANNABIS ACTIVITIES, AND MEDICAL MARIJUANA DELIVERIES WITHIN THE CITY OF CUPERTINO PENDING COMPLETION OF AN UPDATE TO THE CITY’S ZONING CODE. The City Council of the City of Cupertino does hereby ordain as follows: SECTION 1. Authority. This Ordinance is adopted pursuant to the provisions set forth in Government Code sections 36937(b) and 65858(a) (b) and pursuant to other applicable law. SECTION 2. Findings. In adopting this Ordinance, the City Council finds: A. In 1970, Congress enacted the Controlled Substances Act (CSA) which, among other things, makes it illegal to import, manufacture, distribute, possess or use marijuana in the United States. B. In 1972, California added Chapter 6 to the state Uniform Controlled Substances Act, commencing at Health and Safety Code section 11350, which established the state’s prohibition, penalties, and punishments for the possession, cultivation, transportation, and distribution of marijuana. C. In 1996, the voters of the State of California approved Proposition 215 (the "Act;" Health and Safety (H&S) Code Section 11362.5). D. California courts have held that the Act creates a limited exception from criminal liability under the state Uniform Controlled Substances Act for seriously ill persons who are in need of medical marijuana for specified medical purposes and who obtain and use medical marijuana under limited, specified circumstances. E. On January 1, 2004, the "Medical Marijuana Program" (MMP), codified as H&S Code Sections 11362.7 to 11362.83, was enacted by the state Legislature to clarify the scope of the Act, establish a voluntary program for identification cards issued by counties for qualified patients and primary caregivers, and provide criminal immunity to qualified patients and primary caregivers for certain activities involving 221 Urgency Ordinance Council Date: January 19, 2016 medical marijuana, including the collective or cooperative cultivation of medical marijuana. F. The California Supreme Court ruled unanimously in City of Riverside v. Inland Empire Patients Health and Wellness Center, Inc. (2013) 56 Cal.4th 729, that the Act and the MMP do not preempt local ordinances that completely and permanently ban medical marijuana dispensaries, collectives, and cooperatives. G. In Maral v. City of Live Oak (2013) 221 Cal.App.4th 975, the Third District Court of Appeal held, based on Inland Empire, that there was no right to cultivate medical marijuana and that a city could implement and enforce a complete ban on this activity, including a ban on personal cultivation. H. On October 9, 2015, Assembly Bills 243 and 266 and Senate Bill 643 (collectively, the “Medical Marijuana Regulation and Safety Act” or “MMRSA”) were enacted to create a state regulatory and licensing system governing the cultivation, testing, and distribution of medical marijuana, the manufacturing of medical marijuana products, and physician recommendations for medical marijuana. The new law also recognizes a range of medical marijuana businesses referred to as “commercial cannabis activities,” including cultivation businesses, marijuana product manufacturers, marijuana distributors and transporters, marijuana testing laboratories, and dispensaries, and provides immunity to marijuana businesses operating with both a state license and a local permit. I. While the new legislation expressly preserves local control over medical marijuana facilities and land uses, including the authority to prohibit all medical marijuana businesses and cultivation completely, newly-added Health & Safety Code section 11362.777(c)(4) provides that if a city does not have a land use regulation or ordinance regulating or prohibiting marijuana cultivation, either expressly or otherwise under principles of permissive zoning, or chooses not to administer a conditional permit program under that section, then commencing March 1, 2016, the state Department of Food and Agriculture will become the sole licensing authority for marijuana cultivation in that jurisdiction. J. The author of AB 243, which added Health & Safety Code section 11362.777(c)(4), has stated that this preemption provision was left inadvertently in the final version of AB 243 and introduced legislation to delete subdivision (c)(4). K. The clean-up legislation is pending, but it is not certain whether it will become effective prior to the March 1, 2016 deadline regarding marijuana 222 Urgency Ordinance Council Date: January 19, 2016 cultivation, nor is it certain what the ramifications would be for a city that does not have a marijuana cultivation regulation or ordinance in place by that deadline. L. In addition, AB 266 provides that medical marijuana deliveries can only be made by a state-licensed dispensary in a city, county, or city and county that does not explicitly prohibit it by local ordinance (Business and Professions Code section 19340(a), part of AB 266.) Therefore, in order for a city or county to prohibit medical marijuana delivery services by a dispensary, it will need to enact an express ban. M. The Municipal Code does not have express provisions regarding medical marijuana dispensaries, marijuana cultivation facilities, commercial cannabis activities, and marijuana deliveries. These uses are not listed as a permitted or conditionally permitted land uses in the Zoning Code and are therefore prohibited in Cupertino under principles of permissive zoning (City of Corona v. Naulls (2008) 166 Cal.App.4th 418, 431-433). Moreover, the Municipal Code requires compliance with the the most restrictive law, which in this case is federal law, which prohibits all marijuana activity. (Cupertino Municipal Code §§1.04.010(5), 19.04.030.0 N. However, based on the ambiguous language of Health and Safety Code section 11362.777(c)(4), the City Council has determined that an express Municipal Code regulation regarding marijuana cultivation is necessary in order to ensure that the state does not become the sole licensing authority for marijuana cultivation within Cupertino after March 1, 2016, and to avoid unnecessary litigation with regard to the City’s compliance with Health and Safety Code section 11362.777(c)(4). Cupertino intends to preserve its rights to and full ability to prohibit marijuana cultivation or impose regulations upon such a land use. The new state law does not define what “sole licensing authority” means in this context, so it is imperative that the City provide clarity. O. In City of Corona v. Naulls, the issue of whether Corona’s zoning code was permissive was disputed. Although the trial court and appellate court resolved the matter in favor of Corona, the city was required to present evidence on the issue. The City intends to avoid any uncertainty. P. It is imperative that the City retain local land use control over marijuana cultivation. Several California cities and counties have experienced serious adverse impacts associated with and resulting from medical marijuana dispensaries and cultivation sites. According to these communities and according to news stories widely reported, medical marijuana activities have resulted in and/or caused an increase in crime, including burglaries, robberies, violence, and illegal sales of marijuana to, and 223 Urgency Ordinance Council Date: January 19, 2016 use of marijuana by, minors and other persons without medical need in the areas immediately surrounding such medical marijuana activities. There have also been large numbers of complaints of odors related to the cultivation and storage of marijuana. Q. A California Police Chiefs Association compilation of police reports, news stories, and statistical research regarding crimes involving medical marijuana businesses and their secondary impacts on the community is contained in a 2009 white paper report which is attached to the staff report presented to the City Council with this ordinance and on file with the City Clerk. R. The Santa Clara County District Attorney’s Office issued a May 2014 memorandum entitled “Issues Surrounding Marijuana in Santa Clara County,” which outlined many of the negative secondary effects resulting from marijuana cultivation; a copy of this memorandum is attached to the staff report presented to the City Council with this ordinance and on file with the City Clerk. S. The Santa Clara County Public Defender issued a May 2014 memorandum entitled “Substance-Related Suspensions in the East Side Union High School District,” describing a correlation between substance abuse -related suspensions in local high schools and a proliferation of medical marijuana dispensaries in the area; a copy of this memorandum is attached to the staff report presented to the City Council with this ordinance and on file with the City Clerk T. News stories regarding adverse impacts of medical marijuana businesses, including dispensaries, cultivation sites, and delivery services, are attached to the staff report presented to the City Council with this ordinance and on file with the City Clerk. U. It is reasonable to conclude that medical marijuana dispensaries, marijuana cultivation facilities, commercial cannabis activities, and medical marijuana deliveries would cause similar adverse impacts on the public health, safety, and welfare in Cupertino. V. In order to protect the public health, safety, and welfare, the City Council desires to amend the Municipal Code to address, in express terms, medical marijuana dispensaries, marijuana cultivation facilities, commercial cannabis activities, and medical marijuana deliveries. The City Council hereby determines that the Municipal Code is in need of further review and revision to protect the public against potential negative health, safety, and welfare impacts and to address the new marijuana business models recognized under MMRSA. 224 Urgency Ordinance Council Date: January 19, 2016 W. The compacted time frame in Health and Safety Code section 11362.777(c)(4) for adopting a marijuana cultivation regulation or ordinance does not provide sufficient time to consider and adopt a regular zoning code amendment, which includes public notice, consideration by the Planning Commission, and first and second reading before the City Council. As a result of the impending March 1, 2016 deadline regarding marijuana cultivation, the potential public health, safety, and welfare consequences of not having a marijuana cultivation regulation or ordinance in place by March 1st, and the potential for unnecessary and costly litigation involving the interpretation of Health and Safety Code section 11362.777(c)(4) and its application to the City, an interim prohibition on marijuana cultivation and the issuance of any permits and/or entitlements relating to marijuana cultivation is necessary for a period of 45 days. The loss of local land use control over marijuana cultivation would result in a current and immediate threat to the public health, safety, and welfare. X. On November 24, 2015, the Cupertino Planning Commission voted unanimously to recommend that the City Council adopt an Ordinance amending Municipal Code section 19.08.030 and adding Municipal Code Chapter 19.98 regarding medical marijuana dispensaries, marijuana cultivation facilities, commercial cannabis activities, and medical marijuana deliveries. Y. The initial period of 45 days provided by this interim urgency ordinance will permit the City Council to carefully consider and act upon the Planning Commission’s recommend course of action regarding medical marijuana businesses and activities. Z. Government Code sections 36937 and 65858 authorize the adoption of an interim urgency ordinance to protect the public health, safety, and welfare, and to prohibit land uses that may conflict with land use regulations that a city’s legislative bodies are considering, studying, or intending to study within a reasonable time. AA. Failure to adopt this moratorium could impair the orderly and effective implementation of contemplated amendments to the Municipal Code. BB. The City Council further finds that this moratorium is a matter of local and City-wide importance and is not directed towards any particular person or entity that seeks to cultivate marijuana in Cupertino. CC. The proposed Ordinance conforms with the latest adopted general plan for the City in that a prohibition against marijuana cultivation facilities, medical 225 Urgency Ordinance Council Date: January 19, 2016 marijuana dispensaries, commercial cannabis activities, and medical marijuana delivery services does not conflict with any allowable uses in the land use element and does not conflict with any policies or programs in any other element of the general plan. DD. The proposed Ordinance will protect the public health, safety, and welfare and promote the orderly development of the City in that prohibiting marijuana cultivation facilities, medical marijuana dispensaries, commercial cannabis activities, and medical marijuana delivery services will protect the City from the adverse impacts and negative secondary effects connected with these activities. EE. The proposed Ordinance is consistent with Municipal Code Title 19, which currently bans marijuana cultivation facilities, medical marijuana dispensaries, commercial cannabis activities, and medical marijuana delivery services under principles of permissive zoning. FF. The proposed Ordinance is not a project within the meaning of section 15378 of the California Environmental Quality Act (“CEQA”) Guidelines because it has no potential for resulting in physical change in the environment, either directly or ultimately. In the event that this Ordinance is found to be a project under CEQA, it is subject to the CEQA exemption contained in CEQA Guidelines section 15061(b)(3) because it can be seen with certainty to have no possibility of a significant effect on the environment. SECTION 3. Imposition of Temporary Moratorium. In accordance with the authority granted the City under Government Code sections 36937(b) and 65858 (a), (b), and pursuant to the findings stated herein, the City Council hereby finds that: (1) the foregoing findings are true and correct; and (2) there exists a current and immediate threat to the public health, safety, and welfare from unregulated marijuana businesses, especially marijuana cultivation facilities, operating in Cupertino; and (3) this Ordinance is necessary for the immediate preservation of the public peace, health, and safety as set forth herein; and (4) hereby declares and imposes a temporary moratorium for the immediate preservation of the public health, safety and welfare as set forth below: A. Medical marijuana dispensaries are prohibited in all zones in the city and shall not be established or operated anywhere in the city. B. Marijuana cultivation facilities are prohibited in all zones in the city and shall not be established or operated anywhere in the city. 226 Urgency Ordinance Council Date: January 19, 2016 C. Commercial cannabis activities are prohibited in all zones in the city and shall not be established or operated anywhere in the city. D. No person shall own, establish, open, operate, conduct, or manage a medical marijuana dispensary, marijuana cultivation facility, or commercial cannabis activity in the city, or be the lessor of property where a medical marijuana dispensary, marijuana cultivation facility, or commercial cannabis activity is located. No person shall participate as an employee, contractor, agent, volunteer, or in any manner or capacity in any medical marijuana dispensary, marijuana cultivation facility, or commercial cannabis activity in the city. E. No Permits, grading permit, building permit, building plans, zone change, business license, certificate of occupancy or other applicable approval will be accepted, reviewed, approved or issued for the establishment or operation of a marijuana cultivation facility, medical marijuana dispensary, or commercial cannabis activity. F. As used in this Ordinance, the following definitions apply: 1. “Commercial cannabis activity” shall have the meaning set forth in Business and Professions Code section 19300.5(k). 2. “Cultivation” means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of marijuana. 3. "Marijuana" means all parts of the plant Cannabis, whether growing or not; the seeds thereof; the resin extracted from any part of the plant; and every compound manufacture, salt, derivative, mixture, or preparation of the plant, its seeds or resin. It includes marijuana infused in foodstuff, and concentrated cannabis and the separated resin, whether crude or petrified, obtained from marijuana. It does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except resin extracted therefrom), fiber, oil, or cake, or the sterilized seeds of the plant that are incapable of germination. 4. “Marijuana cultivation facility” means any business, facility, use, establishment, property, or location where the cultivation of marijuana occurs. A marijuana cultivation facility does not include cultivation by a qualified patient at his or her primary residence provided that the qualified patient cultivates marijuana solely fo r his or her personal use and does not provide, donate, sell, or distribute such marijuana 227 Urgency Ordinance Council Date: January 19, 2016 to any other person. Qualified patient shall have the same meaning as defined in California Health and Safety Code § 11362.5 and following. 5. "Medical marijuana" is marijuana used for medical purposes where that medical use is deemed appropriate and has been recommended by a physician who has determined that the person's health would benefit from the use of marijuana in the treatment of acquired immune deficiency syndrome ("AIDS"), anorexia, arthritis, cancer, chronic pain, glaucoma, migraine, spasticity, or any other serious medical condition for which marijuana is deemed to provide relief as defined in subsection (h) of California Health and Safety Code § 11362.7. 6. "Medical marijuana dispensary" means any business, facility, use, establishment, property, or location, whether fixed or mobile, where medical marijuana is sold, made available, delivered and/or distributed. A "medical marijuana dispensary" does not include the following uses: a. A “qualified patient” transporting “medical marijuana” exclusively for his or her personal medical use and he or she does not provide, donate, sell, or distribute marijuana to any other person; b. A “primary caregiver” delivering or transporting “medical marijuana” for the personal medical purposes of no more than five specified “qualified patients” for whom he or she is the primary caregiver within the meaning of Section 11362.7 of the California Health and Safety Code, but who does not receive remuneration for these activities except for compensation in full compliance with subdivision (c) of Section 11362.765 of the California Health and Safety Code. c. A clinic licensed pursuant to Chapter 1 of Division 2 of the California Health and Safety Code; d. A health care facility licensed pursuant to Chapter 2 of Division 2 of the California Health and Safety Code; e. A residential care facility for persons with chronic life- threatening illness licensed pursuant to Chapter 3.01 of Division 2 of the California Health and Safety Code; f. A residential care facility for the elderly licensed pursuant to Chapter 3.2 of California Division 2 of the Health and Safety Code; or 228 Urgency Ordinance Council Date: January 19, 2016 g. A residential hospice, or a home health agency licensed pursuant to Chapter 8 of Division 2 of the California Health and Safety Code. 7. “Primary caregiver” shall have the same meaning as set forth in California Health and Safety Code Sections 11362.5, 11362.7, and following, or as may be amended. 8. “Qualified patient” shall have the same meaning as set forth in California Health and Safety Code Sections 11362.5, 11362.7, and following, or as may be amended. G. Any use or condition caused or permitted to exist in violation of any of the provisions of this Ordinance shall be and is hereby declared a public nuisance and may be abated by the City pursuant to the procedures set forth in Article 50 of this Code. SECTION 4. Effective Date and Duration. Pursuant to Government Code section 65858(a), (b), this Ordinance shall take effect immediately but shall be of no further force and effect 45 days from its date of adoption unless the City Council, after notice and public hearing as provided under Government Code section 65858(a), (b) and adoption of the findings required by Government Code section 65858(c), subsequently extends this Ordinance. SECTION 5. Report of Interim Moratorium. Pursuant to Government Code section 65858(d), 10 days prior to the expiration or any extension of this Interim Ordinance, the City Council will issue a written report describing the measures taken to alleviate the conditions which led to the adoption of this Interim Ordinance. SECTION 6. Compliance with CEQA. The City Council hereby finds that this Ordinance is exempt from the provisions of the California Environmental Quality Act (Public Resources Code Section 21000, et seq.) (CEQA) because the City Council hereby finds that it can be seen with certainty that there is no possibility the adoption and implementation of this Ordinance may have a significant effect on the environment, and the Ordinance is exempt from CEQA pursuant to CEQA Guidelines Sections 15061(b)(1), 15061(b)(2), and 15061(b)(3). Moreover, the adoption of this Ordinance is further exempt from CEQA because the Ordinance does not change existing City law and practice. SECTION 7. Severability. The City Council hereby declares every section, paragraph, sentence, cause and phrase is severable. If any section, paragraph, sentence, clause or 229 Urgency Ordinance Council Date: January 19, 2016 phrase of this ordinance is for any reason found to be invalid or unconstitutional, such invalidity, or unconstitutionality shall not affect the validity or constitutionality of the remaining sections, paragraphs, sentences, clauses or phrases. SECTION 8: Publication. The City Clerk is directed to cause this ordinance to be published in the manner required by law. THE FOREGOING URGENCY ORDINANCE was introduced and adopted at a regular meeting of the City Council of the City of Cupertino the 19th day of January, 2016 by the following vote: Vote: Members of the City Council: Ayes: Noes: Absent: Abstain: ATTEST: APPROVED: _______________________ ___________________________________ Grace Schmidt, City Clerk Barry Chang, Mayor, City of Cupertino 230 Revision date November 18, 2015 ORDINANCE NO. ______________ AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CUPERTINO AMENDING SECTION 19.08.030 AND ADDING CHAPTER 19.98 OF TITLE 19 OF THE CUPERTINO MUNICIPAL CODE REGARDING MEDICAL MARIJUANA DISPENSARIES, MARIJUANA CULTIVATION FACILITIES, COMMERCIAL CANNABIS ACTIVITIES, AND MEDICAL MARIJUANA DELIVERIES WHEREAS, in 1970, Congress enacted the Controlled Substances Act (CSA ) which, among other things, makes it illegal to import, manufacture, distribute, possess or use marijuana in the United States.; and WHEREAS, in 1972, California added Chapter 6 to the state Uniform Controlled Substances Act, commencing at Health and Safety Code section 11350, which established the state’s prohibition, penalties, and punishments for the possession, cultivation, transportation, and distribution of marijuana; and WHEREAS, in 1996, the voters of the State of California approved Proposition 215 (the "CUA;" Health and Safety (H&S) Code Section 11362.5 et seq.); and WHEREAS, California courts have held that the CUA created a limited exception from criminal liability for seriously ill persons who are in need of medical marijuana for specified medical purposes and who obtain and use medical marijuana under limited, specified circumstances; and WHEREAS, On January 1, 2004, the state Legislature enacted "Medical Marijuana Program" (MMP), codified as Health and Safety Code sections 11362.7 to 11362.83, to clarify the scope of the CUA, establish a voluntary program for identification cards issued by counties for qualified patients and primary caregivers, and provide criminal immunity to qualified patients and primary caregivers for certain activities involving medical marijuana, including the collective or cooperative cultivation of medical marijuana; and WHEREAS, the California Supreme Court ruled unanimously in City of Riverside v. Inland Empire Patients Health and Wellness Center, Inc. (2013) 56 Cal.4th 729, that the CUA and the MMP do not preempt local ordinances that completely and permanently ban medical marijuana dispensaries, collectives, and cooperatives; and 231 Ordinance No. Page 2 WHEREAS, in Maral v. City of Live Oak (2013) 221 Cal.App.4th 975, the Third District Court of Appeal held, based on Inland Empire, that there was no right to cultivate medical marijuana and that a city could implement and enforce a complete ban on this activity, including a ban on personal cultivation; and WHEREAS, on October 9, 2015, Governor Brown signed Assembly Bills 243 and 266 and Senate Bill 643, which taken together create a broad state regulatory and licensing system governing the cultivation, testing, and distribution of medical marijuana, the manufacturing of marijuana products, and physician recommendations for medical marijuana, and provide immunity to marijuana businesses operating with both a state license and a local permit; and WHEREAS, while the new legislation expressly preserves local control over medical marijuana facilities and land uses, including the authority to prohibit all medical marijuana businesses and cultivation completely, newly-added Health & Safety Code section 11362.777(c)(4) provides that if a city does not have a land use regulation or ordinance regulating or prohibiting marijuana cultivation, either expressly or otherwise under principles of permissive zoning, or chooses not to administer a conditional permit program under that section, then commencing March 1, 2016, the state Department of Food and Agriculture will become the sole licensing authority for marijuana cultivation in that jurisdiction; and WHEREAS, under newly-added Business and Professions Code section 19340(a), if a city wants to prevent medical marijuana deliveries within its jurisdiction, it must adopt an ordinance expressly prohibiting them; and WHEREAS, medical marijuana businesses, dispensaries, cultivation activities, and deliveries are not listed in the Zoning Code as either permitted or conditionally- permitted land uses and are, therefore, prohibited under the City’s permissive zoning provisions, as set forth in Municipal Code sections 19.04.030 and 19.04.050 (City of Corona v. Naulls (2008) 166 Cal.App.4th 418, 431-433); and WHEREAS, the City Council has determined that express Municipal Code provision regarding medical marijuana dispensaries, marijuana cultivation facilities, commercial cannabis activities, and medical marijuana deliveries will benefit the public by providing clear guidelines regarding the scope of prohibited conduct and minimize the potential for confusion regarding the City’s policies, and WHEREAS, many California communities have experienced adverse impacts and negative secondary effects from medical marijuana establishments and cultivation 232 Ordinance No. Page 3 sites, including hazardous construction, unsafe electrical wiring, noxious odors and fumes affecting neighboring properties and businesses, increased crime in and around such land uses, and the diversion of medical marijuana to minors; and WHEREAS, there is significant evidence that medical marijuana delivery services are also targets of violent crime and pose a danger to the public; and, WHEREAS, a California Police Chiefs Association compilation of police reports, news stories, and statistical research regarding crimes involving medical marijuana businesses and their secondary impacts on the community is contained in a 2009 white paper report which is attached to the staff report presented to the City Council for purposes of its analysis of crime and secondary impacts and on file with the City Clerk; and WHEREAS, the Santa Clara County District Attorney’s Office issued a May 2014 memorandum entitled “Issues Surrounding Marijuana in Santa Clara County,” which outlined many of the negative secondary effects resulting from marijuana cultivation; a copy of this memorandum is attached to the staff report presented to the City Council with this ordinance and on file with the City Clerk; and WHEREAS, the staff report presented to the City Council identifies other negative impacts from unregulated marijuana which are incorporated herein; and WHEREAS, it is reasonable to conclude that medical marijuana dispensaries, marijuana cultivation facilities, commercial cannabis activities, and medical marijuana deliveries could cause similar adverse impacts on the public health, safety, and welfare in Cupertino; and WHEREAS, in order to protect the public health, safety, and welfare, the City Council desires to add Cupertino Municipal Code Chapter 19.98 to prohibit, in express terms, medical marijuana dispensaries, marijuana cultivation facilities, commercial cannabis activities, and medical marijuana deliveries; and WHEREAS, the State regulation and licensing as contemplated in Assembly Bills 243 and 266 and Senate Bill 643 have not yet taken effect nor been implemented, and the City Council desires to preserve local control over these uses; and WHEREAS, the City Council of the City of Cupertino is the decision-making body for this Ordinance; and 233 Ordinance No. Page 4 WHEREAS, the proposed Ordinance is not a project within the meaning of section 15378 of the California Environmental Quality Act (“CEQA”) Guidelines because it has no potential for resulting in physical change in the environment, either directly or ultimately. In the event that this Ordinance is found to be a project under CEQA, it is subject to the CEQA exemption contained in CEQA Guidelines section 15061(b)(3) because it can be seen with certainty to have no possibility of a significan t effect on the environment. WHEREAS, the City Council has reviewed and considered the not a project and exemption determination under the California Environmental Quality Act prior to taking any approval actions on this Ordinance and approves such determinations; and NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CUPERTINO DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Cupertino Municipal Code section 19.08.030C of Chapter 19.08 of Title 19 is amended by adding the following definitions placed into alphabetical order: “Commercial cannabis activity” shall have the meaning set forth in California Business and Professions Code section 19300.5(k). “Cultivation” means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of marijuana. SECTION 2. Cupertino Municipal Code section 19.08.030I of Chapter 19.08 of Title 19 is amended by adding the following definition placed into alphabetical order: “Identification Card” shall have the same meaning as set forth in state law, including Health and Safety Code Sections 11352.5, 11362.7, and following, or as may be amended. SECTION 3. Cupertino Municipal Code section 19.08.030M of Chapter 19.08 of Title 19 is amended by adding the following definitions placed into alphabetical order: "Marijuana" means all parts of the plant Cannabis, whether growing or not; the seeds thereof; the resin extracted from any part of the plant; and every compound manufacture, salt, derivative, mixture, or preparation of the plant, its seeds or resin. It includes marijuana infused in foodstuff, and concentrated cannabis and the separated resin, whether crude or petrified, obtained from marijuana. It does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the 234 Ordinance No. Page 5 seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except resin extracted therefrom), fiber, oil, or cake, or the sterilized seeds of the plant that are incapable of germination. "Medical marijuana" is marijuana used for medical purposes where that medical use is deemed appropriate and has been recommended by a physician who has determined that the person's health would benefit from the use of marijuana in the treatment of acquired immune deficiency syndrome ("AIDS"), anorexia, arthritis, cancer, chronic pain, glaucoma, migraine, spasticity, or any other serious medical condition for which marijuana is deemed to provide relief as defined in subsection (h) of Health and Safety Code § 11362.7. “Marijuana cultivation facility” means any business, facility, use, establishment, property, or location where the cultivation of marijuana occurs. A “marijuana cultivation facility” does not include a “qualified patient’s” primary residence provided such cultivation of medical marijuana is for his or her personal use. "Medical marijuana dispensary" means any business, facility, use, establishment, property, or location, whether fixed or mobile, where medical marijuana is sold, made available, delivered, transported, and/or distributed. A "medical marijuana dispensary" does not include the following uses: a. A “qualified patient” transporting “medical marijuana” for his or her personal use; b. A “primary caregiver” delivering or transporting “medical marijuana” to a “qualified patient;” c. A clinic licensed pursuant to Chapter 1 of Division 2 of the Health and Safety Code; d. A health care facility licensed pursuant to Chapter 2 of Division 2 of the Health and Safety Code; e. A residential care facility for persons with chronic life-threatening illness licensed pursuant to Chapter 3.01 of Division 2 of the Health and Safety Code; f. A residential care facility for the elderly licensed pursuant to Chapter 3.2 of Division 2 of the Health and Safety Code; or g. A residential hospice, or a home health agency licensed pursuant to Chapter 8 of Division 2 of the Health and Safety Code. SECTION 4. Cupertino Municipal Code section 19.08.030P of Chapter 19.08 of Title 19 is amended by adding the following definition placed into alphabetical order: 235 Ordinance No. Page 6 “Primary caregiver” shall have the same meaning as set forth in state law, including Health and Safety Code Sections 11352.5, 11362.7, and following, or as may be amended. SECTION 5. Cupertino Municipal Code section 19.08.030Q of Chapter 19.08 of Title 19 is amended by adding the following definition placed into alphabetical order: “Qualified patient” shall have the same meaning as set forth in state law, including Health and Safety Code Sections 11352.5, 11362.7, and following, or as may be amended. SECTION 6. Title 19 of the Cupertino Municipal Code is hereby amended to add Chapter 19.98 to be numbered, entitled, and to read as follows: CHAPTER 19.98 Medical Marijuana 19.98.010 Purpose 19.98.020 Prohibitions 19.98.030 Enforcement 19.98.010 Purpose. The purpose and intent of this section is to prohibit medical marijuana dispensaries, marijuana cultivation facilities, medical marijuana deliveries, and commercial cannabis activities, as defined in Chapter 19.08, Definitions, within the city limits. It is recognized that it is a Federal violation under the Controlled Substances Act to possess or distribute marijuana even if for medical purposes. Additionally, there is evidence of an increased incidence of crime-related secondary impacts in locations associated with marijuana cultivation facilities and medical marijuana dispensaries and in connection with medical marijuana deliveries, which is detrimental to the public’s health, safety, and welfare. The State of California’s licensing and regulation as contemplated by Assembly Bills 243 and 266 and Senate Bill 643 have not yet taken effect nor been implemented, and the City Council desires to preserve local control over these uses and activities. Nothing in this Chapter is intended to circumvent compliance with state law. 19.98.020 Prohibitions. (a) The following are prohibited: (1) Medical marijuana dispensaries in all zones in the city and shall not be established or operated anywhere in the city. 236 Ordinance No. Page 7 (2) Marijuana cultivation facilities in all zones in the city and shall not be established or operated anywhere in the city. (3) Commercial cannabis activities in all zones in the city and shall not be established or operated anywhere in the city. (b) No person shall own, establish, open, operate, conduct, or manage a medical marijuana dispensary, marijuana cultivation facility, or commercial cannabis activity in the city, or be the lessor of property where a medical marijuana dispensary, marijuana cultivation facility, or commercial cannabis activity is located. No person shall participate as an employee, contractor, agent, volunteer, or in any manner or capacity in any medical marijuana dispensary, marijuana cultivation facility, or commercial cannabis activity in the city. (c) No Permits, grading permit, building permit, building plans, zone change, business license, certificate of occupancy or other applicable approval will be accepted, reviewed, approved or issued for the establishment or operation of a marijuana cultivation facility, medical marijuana dispensary, or commercial cannabis activity. (d) Nothing contained in this section shall be deemed to permit or authorize any use or activity which is otherwise prohibited by any state or federal law. 19.98.030 Enforcement. The city may enforce this section in any manner permitted by law. The violation of this Chapter shall be and is hereby declared to be a public nuisance and shall, at the discretion of the city, create a cause of action for injunctive relief. SECTION 7. FINDINGS. The following findings are made under Cupertino Municipal Code section 19.152.030(D): (1) The proposed Ordinance conforms with the latest adopted general plan for the City in that a prohibition against marijuana cultivation facilities, medical marijuana dispensaries, commercial cannabis activities, and medical marijuana delivery services does not conflict with any allowable uses in the land use element and does not conflict with any policies or programs in any other element of the general plan. (2) The proposed Ordinance will protect the public health, safety, and welfare and promote the orderly development of the City in that prohibiting marijuana 237 Ordinance No. Page 8 cultivation facilities, medical marijuana dispensaries, commercial cannabis activities, and medical marijuana delivery services will protect the City from the adverse impacts and negative secondary effects connected with these activities. (3) The proposed Ordinance is consistent with Municipal Code Title 19, which currently bans marijuana cultivation facilities, medical marijuana dispensaries, commercial cannabis activities, and medical marijuana delivery services under principles of permissive zoning. (4) The proposed Ordinance is not a project within the meaning of section 15378 of the California Environmental Quality Act (“CEQA”) Guidelines because it has no potential for resulting in physical change in the environment, either directly or ultimately. In the event that this Ordinance is found to be a project under CEQA, it is subject to the CEQA exemption contained in CEQA Guidelines section 15061(b)(3) because it can be seen with certainty to have no possibility of a significant effect on the environment. SECTION 8. SEVERABILITY. If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance is, for any reason, held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions thereof be declared invalid or unconstitutional. SECTION 9. The City Clerk shall certify the adoption of this Ordinance and shall give notice of its adoption as required by law. Pursuant to Government Code Section 36933, a summary of this Ordinance may be published and posted in lieu of publication and posting of the entire text. 238 Ordinance No. Page 9 INTRODUCED at a regular meeting of the City Council of the City of Cupertino the 19th day of January, 2016 and ENACTED at a regular meeting of the City Council of the City of Cupertino the ____ of _______ 2016, by the following vote: Vote: Members of the City Council Ayes: Noes: Absent: Abstain: ATTEST: APPROVED: _______________________ ___________________________________ Grace Schmidt, City Clerk Barry Chang, Mayor, City of Cupertino 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 Medical Marijuana Regulation and Safety Act •All medical marijuana commercial businesses must have State license –This is Public Safety Commission’s recommended framework for Commercial, pending recommendation/modification from the City, PSC will adopt final recommendation. •Commercial Cultivation –Prohibit 5-0 •Prohibit Caregiver Cultivation 3-2 •Secured growing area for patient 3-2 •Personal Cultivation allowed 5-0 •Commercial Dispensary –Prohibit 4-1 •Commercial Delivery/Transport –Permit subject to the conditions below –License: Need license by City 4 -1 –Zone: only patient residence (no commercial office, no school property) 5-0 –Time: 8am –5pm 5-0 –Signature: signature of recipient required 3-2 –Delivery with a State delivery license meeting State Uniform Security Requirements 8/1/2013 Andy Huang, Public Safety Commissioner 2 314 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1211 Name: Status:Type:Ordinances and Action Items Agenda Ready File created:In control:11/6/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Order the abatement of a public nuisance (weeds) pursuant to provisions of Ordinance No. 724 and Resolution No. 15-112 Sponsors: Indexes: Code sections: Attachments:Staff Report A - Draft Resolution B - 2016 Weed Abatement Program Commencement Report C - Notice to Destroy Weeds and Program Schedule D - Letter to Property Owners E - Approved Resolution No. 15-112 Action ByDate Action ResultVer. City Council1/19/20161 Subject:Ordertheabatementofapublicnuisance(weeds)pursuanttoprovisionsofOrdinance No. 724 and Resolution No. 15-112 NoteobjectionsandadoptResolutionNo.16-007orderingabatementofapublicnuisance (weeds) CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™315 OFFICE OF THE CITY CLERK CITY HALL 10 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3223 www.cupertino.org CITY COUNCIL STAFF REPORT Meeting: January 19, 2016 Subject Order the abatement of a public nuisance (weeds) pursuant to provisions of Ordinance No. 724 and Resolution No. 15-112. Recommended Action Note objections and adopt the draft resolution ordering abatement of a public nuisance (weeds). Discussion Chapter 9.08 of the Cupertino Municipal Code requires property owners to remove or destroy weeds on their property for fire protection. The weed abatement process is in place to notify the property owners of this responsibility, authorize the County to remove the weeds if the property owner doesn’t, and allow the County to recover the costs of abatement. The process consists of eight steps that begin in November and go through August of each year. At this time, the process is at Step 4. 1. County prepares a list of all properties that have been non-compliant in removing weeds in the last three years and provides that list to the City (Nov). 2. City Council adopts a resolution declaring weeds a nuisance and setting a hearing date to hear objections by property owners to having their name on the list (Nov-Dec). 3. County sends notice to the property owners on the list notifying them of the hearing date and explaining that they must remove weeds by the abatement deadline of April 30 or it will be done for them, and the cost of the abatement plus administrative costs assessed to their property (Dec). 4. City Council holds the hearing to consider objections by property owners and adopts a resolution ordering abatement (Jan). 316 5. County sends a courtesy letter to property owners on the list notifying them again of the abatement deadline and noting that they will work with the property owner to be sure the weeds are removed (Jan). 6. After April 30, the properties are inspected by the County to verify that weeds were removed and proceeds with abatement if the inspection fails. County makes a list of all costs associated with the abatement and provides that list to the City (June-July). 7. City notifies the property owners on the assessment list notifying them of the hearing date. (July-Aug). 8. City Council holds a hearing, notes any disputes, and adopts a resolution putting a lien assessment on the properties to allow the County to recover the cost of weed abatement (July-Aug). Fiscal Impact Any fees waived by the Council will be billed to the City by the County to cover their cost of servicing the property. _____________________________________ Prepared by: Grace Schmidt, City Clerk Approved for Submission by: David Brandt, City Manager Attachments: A - Draft Resolution B - 2016 Weed Abatement Program C - Notice to Destroy Weeds and Program Schedule D - Letter to Property Owners E - Approved Resolution No. 15-___ 317 RESOLUTION NO. 16- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO ORDERING ABATEMENT OF PUBLIC NUISANCE PURSUANT TO PROVISIONS OF CUPERTINO MUNICIPAL CODE CHAPTER 9.08 AND RESOLUTION NO. 15-112 WHEREAS, the City Council has declared that the growth of weeds, the accumulation of garden refuse, cuttings and other combustible trash upon the private properties as described in Resolution No. 15-112 adopted December 1, 2015, to be a public nuisance; and WHEREAS, after due notice, a hearing thereon was held at the regular meeting of the City Council on January 19, 2016; and WHEREAS, from the evidence presented, both oral and written, it appears to be in the best interests of the City to acquire jurisdiction over and abate said nuisance. NOW, THEREFORE, BE IT RESOLVED: 1. That the Agricultural Commissioner is hereby ordered to abate such nuisance or cause the same to be abated by having the weeds referred to destroyed or removed by cutting, discing, chemical spraying or any other method determined by him; that all debris, whether in piles or scattered, be hauled away; 2. That the Agricultural Commissioner and his deputies, assistants, employees, contracting agents or other representatives shall have express authorization to enter upon said private properties for the purpose of causing said public nuisance to be abated; and 3. That any affected property owners shall have the right to destroy or remove such weeds or debris himself or herself or have the same destroyed or removed at his/her own expense provided that such destruction or removal shall have been completed prior to the arrival of the Agricultural Commissioner or his authorized representative to destroy or remove them by the Parcel Abatement Deadline of April 30, 2016. BE IT FURTHER RESOLVED: 318 Resolution No. 16- Page 2 1. That the Agricultural Commissioner shall keep account of abating said nuisance and embody such account in a report and assessment list to the City Council, which shall be filed with the City Clerk. 2. Said reports of costs, hearing and collection procedures involved shall be provided as stated in Chapter 9.08. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino on the 19th day of January 2016, by the following vote: Vote Members of the City Council AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: _______________________ ________________________________ Grace Schmidt, City Clerk Barry Chang, Mayor, City of Cupertino 319 2016 WEED ABATEMENT PROGRAM COMMENCEMENT REPORT CITY OF CUPERTINO :2itns APIS: EXHIBIT A CITY/STATE 20206 FOREST AV 316-24-021 LEONARDI DIANA M 2044 BLUEJACKET WAY SANJOSE CA 95133-1102 NO SITUS 326-07-035 PACIFIC GAS AND ELECTRJC CO 111 ALMADEN BL SAN JOSE CA 95113-2002 21115 GARDENA DR 326-08-058 BRO\\'N MAURICE F AND MONAT 1506 OBURN CT CAMPBELL CA 95008-6418 21127 GARDENA DR 326-08-059 BROWN MAURICE F AND MONAT 1506 OBURN CT CAMPBELL CA 95008-6418 21139 GARDENA DR 326-08-060 YU YUK YET AL 440 BODEGA ST FOSTER CITY CA 94404-3506 21151 GARDENA DR 326-08-061 PADTE YOGESH V AND PATKAR 21151 GARDENA DR CUPERTINO CA 95014-1617 21163 GARDENA DR 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95035-3427 STEVENS RD 342-19-003 VIRAY PROPERTIES LLC 1100 ZAMORA CT MILPITAS CA 95035-3427 22767 SANJUAN RD 342-22-030 CHEN DON AND XU JUANJUAN 22767 SAN JUAN RD CUPERTINO CA 95014-3934 22765 SANJUAN RD 342-22-031 HASHEMI SIAMAK AND 22765 SAN JUAN RD CUPERTINO CA 95014-3934 10645 CORDOVA RD 342-22-099 O'GRADY, BRIAN J 853 CAMPBELL AV LOS ALTOS CA 94024-4838 10655 CORDOVA RD 342-22-100 OOI, LI LYNN 1457 KOCHLN SANJOSE CA 95125-4849 10625 CORDOVA RD 342-22-103 BREINBERG STEVEN A AND DANNA 10625 CORDOVA RD CUPERTINO CA 95014-3911 22744 ALCALDE RD 342-44-026 LETTIRE JAMES MAND ALISON M 22744 ALCALDE RD CUPERTINO CA 95014-3905 22772 ALCALDE RD 342-44-047 DHAMDHERE, NEEL 22772 ALCALDE RD CUPERTINO CA 95014-0000 23026 VOSS AV 342-50-016 TSAI VICKY TSAY-HSAI TRUSTEE & 23026 VOSS A VE CUPERTINO CA 95014-2663 46 records of 187 Santa Clara County Weed Abatement Program Page2 321 2016 WEED ABATEMENT PROGRAM COMMENCEMENT REPORT CITY OF CUPERTINO Situs APN EXHIBIT A !;;;JTY/~TATE (LAND ONLY) 342-50-019 CHAMBERLAIN JACK T TRUSTEE 655 SKYWAY UNIT 230 SAN CARLOS CA 94070 NO SITUS 342-62-003 UNION PACIFIC CORPORATION 10031 FOOTHILLS BL VD ROSEVILLE CA 95030-0000 22620 RICARDO RD 356-01-055 SCHIE DAVID C AND LOUISE M 22620 RICARDO RD CUPERTINO CA 95014-5447 MCCLELLAN RD 356-05-005 POOL FROG INVESTMENTS LLC 19357 ZINFANDEL CT SARATOGA CA 95070-6116 RAE LN 356-07 -077 CHANG CHRIS ET AL 580 ALBERTA AVE SUNNYVALE CA 94087-0000 21622 REGNART RD 356-23-002 MCCARTY ARTHURRJRAND 21622 REGNART RD CUPERTINO CA 95014-4821 21542 REGNART RD 356-23-040 LI XUESONG AND TU YITSEN 21542 REGNART RD CUPERTINO CA 95014-4819 21710 REGNART RD 356-23-057 ANDERSON CAROLIN-:E E ET AL 22760 SAN JUAN RD CUPERTINO CA 95014-3935 21925 LINDY LN 356-25-014 KANTHAPPAN MOHAN AND 21925 LINDY LN CUPERTINO CA 95014-4810 NO SITUS 356-25-031 KANG PING QI AND LIANG YU JUAN 2408 CLEMENT ST SAN FRANCISCO CA 94121 21989 LINDY LN 356-25-032 SUN XI HUA AND ZHU SHAN 21989 LINDY LN CUPERTINO CA 95014-0000 22041 LINDY LN 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LIN JASON C 20940 STEVENS CREEK BLVD CUPERTINO CA 95014-2170 69 records of 187 Santa Clara County Weed Abatement Program Page3 322 2016 WEED ABATEMENT PROGRAM COMMENCEMENT REPORT CITY OF CUPERTINO ~itus APN EXHIBIT A ~ITV/STATE 20592 MCCLELLAN RD 359-18-010 CHANG LANCE C AND Iv!ELODY F 20592 MC CLELLAN RD CUPERTINO CA 95014-2955 20616 MCCLELLAN RD 359-18-048 HARDEMAN l\tlELODY FETAL 20616 MCCLELLAN RD CUPERTINO CA 95014-2955 10615 JOHNTEFLER WA 359-19-008 HO HOSAN"'NA SHAN AND CHU 10615 JOHN WAY CUPERTINO CA 95014-4345 1102 STEEPLECHAS LN 359-31-038 RAJU KARTHIK AND KARTHIK 1102 STEEPLECHASE LN CUPERTINO CA 95014-5817 CRANBERRY DR 362-02-048 UNION PACIFIC CORPORATION 10031 FOOTHILLS BL VD ROSEVILLE CA 95030-0000 CRANBERRY DR 362-04-058 UNION PACIFIC CORPORATION 10031 FOOTHILLS BLVD ROSEVILLE CA 95030-0000 NO SITUS 362-09-026 UNION PACIFIC CORPORATION 10031 FOOTHILLS BLVD ROSEVILLE CA 95030-0000 7855 FESTIVAL DR 362-14-001 WANG JUNE WAI CHU AND AU 7855 FESTIVAL DR CUPERTINO CA 95014-4116 NO SITUS 362-16-037 UNION PACIFIC CORPORATION 10031 FOOTHILLS BL VD ROSEVILLE CA 95030-0000 NO SITUS 362-19-033 UNION PACIFIC CORPORATION 10031 FOOTHILLS BLVD ROSEVILLE CA 95030-0000 20652 CLEO AV 362-31-002 BURROW BRADLEY J AND JUANITA S 20652 CLEO AVE CUPERTINO CA 95014-5033 NO SITUS 362-31-030 ALMASI, AZIT A TRUSTEE & ET AL 965 LAUREL GLEN DR PALO ALTO CA 94304-1323 11800 UPLAND WA 366-03-016 LEE BENJAMIN LOW ET AL 11800 UPLAND WAY CUPERTINO CA 95014-5106 11830 UPLAND WA 366-03-055 KHO DI KA THY TRUSTEE 11830 UPLAND WAY CUPERTINO CA 95014-5106 11835 UPLAND WA 366-03-056 VENKA TESH BHIMACHAR 11835 UPLAND WAY CUPERTINO CA 95014-5106 11841 UPLAND WA 366-03-062 VIRAY PROPERTIES LLC 1100 ZAMORA CT MILPITAS CA 95035-3427 11845 UPLAND WA 366-03-067 CZISCH XENlA 4047 TRANSPORT ST PALO ALTO CA 94303-4914 21730 RAINBOW DR 366-37-007 YAO JONATHON YI AND LI HONG YU l 029 WHITEOAK DR SAN JOSE CA 95129-3157 19982 PRICE AV 369-04-012 SHEN HSIAO MING TRUSTEE 19982 PRICE A VE CUPERTINO CA 95014-3339 10375 LINDSAY AV 369-12-012. TUNG CHARLES C 10375 LINDSAY AVE CUPERTINO CA 95014-4517 10839 BROOK WELL DR 369-21-031 TIAN TOMMY AND YE DAN 10839 BROOKWELL DR CUPERTINO CA 95014-4650 855 BRENT DR 369-24-038 DONAHUE PAUL P ESTATE OF & ET 855 BRENT DR CUPERTINO CA 95014-4552 862 BETTE AV 369-24-048 LUBOMIRSKY DMITRY AND LILLA 862 BETTE A VE CUPERTINO CA 95014-4549 92 records of 187 Santa Clara County Weed Abatement Program Page4 323 2016 WEED ABATEMENT PROGRAM COMMENCEMENT REPORT CITY OF CUPERTINO Situs APN EXHIBIT A rffY/STATE 879 BETI'E AV 369-27-050 NORGA LOUIS HAND JEA1\1NINE L 879 BETTE A VE CUPERTINO CA 95014-4548 10369 NORMANDY CT 369-29-018 PEZARKAR ESTHER TRUSTEE 10369 NORMANDY CT CUPERTINO CA 95014-3109 BOLLINGER RD 369-37-022 LAMONICO CHRISTINA B TRUSTEE 6672 HAMPTON DR SANJOSE CA 95120-5535 10450 CORTE DE 375-05-005 BRCNO STANLEY RAND HILDEGARD 11220 LA JOLLA CT CUPERTINO CA 95014-4738 19160 s STEVENS BL V3 7 5-07-001 GREEN VALLEY CORP 777 N FIRST ST 5TH FLOOR SAN JOSE CA 95112 10293 s TANT AU AV 375-08-007 NAITO ANDREW HAND JERRJCA 10293 S TANTAU AVE CUPERTINO CA 95014-0000 10311 s TANT AU AV 375-08-014 WIJONO MARIKA TRUSTEE PO BOX 700665 SAN JOSE CA 95170 10351 s TANT AU AV 375-08-017 HAN CHUNHUA AND WU JIE 10351 S TANTAU AVE CUPERTINO CA 95014-0000 10250 TANT AU AV 375-08-041 KANG ANDY S AND JULIE S 10250 S TANTAU AVE CUPERTINO CA 95014-0000 10377 s JUDY PAR375-08-051 PENG JAMES P AND ANNA K 20674 ACADIA CT CUPERTINO CA 95014-1756 10418 TANT AU AV 375-08-057 MUKKA VILLI LAKSHMANKUMAR 915 ALMADEN AVE SUNNYVALE CA 94085-3426 19014 TILSOK AV 375-09-008 GAU GEORGE AND WU MA-LI 13231 MONTEBELLO RD CUPERTINO CA 95014-5408 19031 BARNHART AV 375-09-034 CHANG DAVID T AND HELEN A 1530 WALNUT DR PALO ALTO CA 94303-2917 19071 BARNHART AV 375-09-038 SHEN HSIAO-MIN AND JOAN-SHU · 19071 BARNHART AVE CUPERTINO CA 95014-3501 10362 BRET AV 375-10-034 LOWYJANETM l 0362 BRET A VE CUPERTINO -CA 95014-3521 10080 JUDY AV 375-11-011 ELLIS JACK R TRUSTEE 4510 POWDER MILL RD CHAPEL HILL NC 27514-9545 10218 BRET AV 375-11-033 HSIEH KUEI-FA AND HSIEH-FU MEI-10218 BRET AVE CUPERTINO CA 95014-3558 10200 STERN AV 375-12-002 MCGRATH PATRICK W POBOX2422 PALO ALTO CA 94309-2422 18811 ARATA WA 375-12-030 XUHONGFEI 18811 ARATA WAY CUPERTINO CA 95014-3670 18821 LOREE AV 375-13-022 WONG PETER AND WANG ELLIE 740 LONDONDERRY DR SUNNYVALE CA 94087-4738 10335 MORETTI DR 375-14-008 PANCHAL SNEHAL RAND HETAL 10335 MORETTI DR CUPERTINO CA 95014-3638 10365 MORETTI DR 375-14-011 LOK JAMES S AND JANE F TRUSTEE 3926 KINGRIDGE DR SAN MATEO CA 94403 18824 LOREE AV 375-15-020 RANGASWAMY GOPI KA.ND 18824 LOREE A VE CUPERTINO CA 95014-3635 115 records of 187 Santa Clara County Weed Abatement Program Page5 324 2016 WEED ABATEMENT PROGRAM COMMENCEMENT REPORT CITY OF CUPERTINO ~itus APN EXHIBIT A CITY/SI~IE 18770 LOREE AV 375-15-025 KANG CHING PING AND CHU ·yu CHI 18770 LOREE AVE CUPERTINO CA 95014-3635 18760 LOREE AV 375-15-026 LUONG NGHIEM T ET AL 18760 LOREE AVE CUPERTINO CA 95014-3677 10337 MENHART LN 375-15-039 HORIO LELAND S ET AL-5878 MACADAM CT SAN JOSE CA 95123-4332 10382 MENHART LN 375-16-010 MUSUGU MANJUSHA AND 10382 MENHART LN CUPERTINO CA 95014-3631 10415 WUNDERLICH DR 375-16-031 GUPTA ANURAG AND RADHIKA 10415 w1JNDERLICH DR CUPERTINO CA 95014-3664 10464 MORETTI DR 375-16-042 PENTA-LOURDUSAMY LEEMA J 375 MINUTE ARMS RD UNION NJ 07083-9125 18851 BARNRt\RT AV 375-16-055 WONG CHING-PING AND LIM 18851 BARNHART AVE CUPERTINO CA 95014-3601 10410 WUNDERLICH DR 375-17-003 KULKARNI SUDHIR 10410 \VUNDERLICH DR CUPERTINO CA 95014-3665 18770 TILSON AV 375-17-039 MARTINEZ RICHARD D AND 18831 BARNHART AVE CUPERTINO CA 95014-3601 18771 BARNHART AV 375-17-056 CHOY CHUNG CHA 18771 BARNHART AVE CUPERTINO CA 95014-3803 10370 CALVERT DR 375-18-009 BI SHAOQIANG 10370 CALVERT DR CUPERTINO CA 95014-3872 10270 CALVERT DR 375-18-019 LEUNG HOI S.'\N 10270 CALVERT DR CUPERTINO CA 95014-3808 10250 CALVERT DR 375-18-021 RAJADAS JA YAKUMAR AND 10250 CAL VERT DR CUPERTINO CA 95014-3808 10240 CALVERT DR 375-18-022 WANG NADIA J AND XING PEI 10240 CAL VERT DR CUPERTINO CA 95014-3808 10230 CALVERT DR 375-18-023 KOCH ALFRED LAND DOWNS-10230 CAL VERT DR CUPERTINO CA 95014-3808 18734 LOREE AV 375-18-025 XINGYUET AL 18734 LOREE AVE CUPERTINO CA 95014-3839 10321 JOHNSON AV 375-18-035 LI JIA YI AND QIAO Y ANLI 10321 JOHNSON A VE CUPERTINO CA 95014-3870 10361 JOHNSON AV 375-18-039 MC GR.A.TH PATRICK W PO BOX2422 PALO ALTO CA 94309-2422 10381 JOHNSON AV 375-18-041 ZHANG BENHAI AND ZHAO XIA 10381 JOHNSON AVE CUPERTINO CA 95014-3870 10391 JOHNSON AV 375-18-042 l,UYING-WUET AL 1066 SARATOGA A VE UNIT SAN JOSE CA 95129 10425 JOHNSON AV 375-18-046 SHIMKHADA RUPESH AND THAPA 10425 JOHNSON AVE CUPERTINO CA 95014-3813 18675 LOREE AV 375-19-010 NG JENNY YU ZHEN 18675 LOREE A VE CUPERTINO CA 95014-3837 18735 LOREE AV 375-19-016 SZU CLIFFORD 16300 SKYLINE BL VD REDWOOD CITY CA 94062 138 records of 187 Santa Clara County Weed Abatement Program Pages 325 2016 WEED ABATEMENT PROGRAM COMMENCEMENT REPORT CITY OF CUPERTINO Situ~ APN EXHIBIT A ~!TY/STATE 10170 CALVERT DR 375-19-020 TENG YONG-GUANG AND CHEN LIYU 10170 CALVERT DR CUPERTINO CA 95014-3806 10160 CALVERT DR 375-19-021 JAIN ALOKKAND SHVETA 10160 CALVERT DR CUPERTINO CA 95014-3806 10150 CALVERT DR 375-19-022 LI CHESTER 6146 BOLLINGER RD UNIT SAN JOSE CA 95129 10606 GASCOIGNE DR 375-22-026 LIN JON RAND REN C 280 TONOPAH DR FREMONT CA 94539-7745 10558 GASCOIGNE DR 375-23-006 HSIANG CHING YUN AND LIU 10558 GASCOIGNE DR CUPERTINO CA 95014-3842 18600 BARNRt\RT AV 375-23-014 GOLDSIL VERlSLAND HOtvIB LLC 1525 MCCARTHY BLVD STE MILPITAS CA 95035 10598 STERLING BLV375-23-025 YE FEI AND ZHANG ZISHAN l 0598 STERLING BL VD CUPERTINO CA 95014-3834 10550 STERLING BL V375-23-031 · BIS WAS AMIT AVA AND MOUSUMI M 10550 STERLING BL VD CUPERTINO CA 95014-3834 10442 STERLING BL V375-23-044 CHEN I-1 E AND SHUI-CHAN ET AL 10442 STERLING BLVD CUPERTINO CA 95014-3832 10424 STERLING BL V375-24-003 KRAEMER LINDA TRUSTEE 10424 STERLING BL VD CUPERTINO CA 95014-3832 10170 STERLING BL V375-24-031 DEL ROSARIO RODUARDO A AND 10170 STERLING BLVD CUPERTINO CA 95014-3884 18615 RALYA CT 375-25-004 CHEN JING 18615 RALYA CT CUPERTINO CA 95014-3823 18620 RALYA CT 375-25-014 BIANCHI JANE W TRUSTEE & ET AL 1458 DETRACEY ST SAN JOSE CA 95128-4442 18661 CRABTREE AV 375-25-047 SUBAINA TI MOHAMAD KAND JULIE 18661 CRABTREE AVE CUPERTINO CA 95014-3864 10260 JOHNSON AV 375-25-060 SAHA BRA TIN AND MULLICK l 0260 JOHNSON A VE CUPERTINO CA 95014-3812 18640 tvIBDICUS CT 375-26-010 DESHPANDE MANOJ AND NEHA 18640 MEDICUS CT CUPERTINO CA 95014-3821 18630 MEDICUS CT 375-26-011 LAN HSUEH BAN 10360 FARALLONE DR CUPERTINO CA 95014-3105 18601 STARRETT CT 375-26-016 HUANG KAITUO 18601 STARRETT CT CUPERTINO CA 95014-3863 10424 JOHNSON AV 375-26-049 WONG DAMON AND IRENE LAI 10424 JOHNSON AVE ClJPERTINO CA 95014-3814 10560 WUNDERLICH DR 375-27-027 MANVI RAJENDRA AND SlJl'v1A 10560 WUNDERLICH DR CUPERTINO CA 95014-3659 10613 GASCOIGNE DR 375-28-014 ZHU tvIBIDUO AND HU HONGQI 10613 GASCOIGNE DR CUPERTINO CA 95014-3843 10650 JOHNSON AV 375-28-023 LEECURTISF 10650 JOHNSON A VE CUPERTINO CA 95014-3817 10616 JOHNSON AV 375-28-027 UYCHINCO ISABEL 10616 JOHNSON AVE CUPERTINO CA 95014-3817 161 records of 187 Santa Clara County Weed Abatement Program Page7 326 2016 WEED ABATEMENT PROGRAM COMMENCEMENT REPORT CITY OF CUPERTINO Situs APN EXHIBIT A C!IY/~TATE 10544 JOHNSON AV 375-28-036 ZENG GANG ET AL 5255·STEVENS CK BLVD UNIT SANTA CLARA CA 95051 10740 GASCOIGNE DR 375-29-016 FAULKNER BARBARA JEANNE ET AL 10740 GASCOIGNE DR CTJPERTINO CA 95014-3846 18840 NEWSOM AV 375-30-019 SINGAMREDDY KARUNAKAR R 22228 HAMMOND WAY CUPERTINO CA 95014-0000 10784 JOHNSON LN 375-31-003 WANGYINAN 10270 TULA LN CUPERTINO CA 95014 10671 JOHNSON AV 375-31-049 \\TESOLOWSKI STEVEN M TRUSTEE 10338 BONNY DR CUPERTINO CA 95014-2908 10630 CARVER DR 375-32-020 MC GRATHPATRICK W PO BOX2422 PALO ALTO CA 94309-2422 18870 TUGGLE AV 375-32-024 DELA CRUZ SHERWIN PL 18870 TUGGLE AVE CUPERTINO CA 95014-3626 18832 TUGGLE AV 375-32-028 ZHILI 18832 TUGGLE AVE CUPERTINO CA 95014-3626 18941 PENDERGAST AV 375-33-034 TUNG DAVID AND SHIH WAN YU 290 FLORENCE ST SUNNYVALE CA 94086-6005 10590 CARVER DR 375-33-065 PARK JEONGHO AND KANG 10590 CARVER DR CUPERTINO CA 95014-3605 10660 CULBERTSON DR 375-34-027 LIAO WEI XIONG AND SIAO WEI 496 W CHARLESTON RD UNIT PALO AL TO CA 94306-0000 10574 CULBERTSON DR 375-34-036 LEE CHANGHWA AND LEEYEH 10100 ADRIANA AVE CUPERTINO CA 95014-1126 18871 HUNTER HIL 375-34-057 CHODONGCHULANDOKBUN 18871 HUNTER WAY CUPERTINO CA 95014-3610 18830 HUNTER WA 375-35-001 THOMPSON LARRY LAND SHIRLEY 40133 CANYON HEIGHTS DR FREMONT CA 94539-3008 19120 MEIGGS LN 375-35-046 AZAR STEVEN N AND MARYL G 19120 MEIGGS LN CUPERTINO CA 95014-3562 19060 MEIGGS LN 375-35-052 CHUNG SIMON LOONG AND CHU 19060 MEIGGS LN CUPERTINO CA 95014-3511 10732 MOREKGO DR 375-35-059 ZHANG JIANYONG ANTI XIAO YAN 10732 MORENGO DR CUPERTINO CA 95014-3515 10561 CULBERTSON DR 375-36-019 AMCHISLA VSKY MIKHAIL 10561 CULBERTSON DR CUPERTINO CA 95014-3505 10627 CULBERTSON DR 375-36-027 MCGRATH PATRICK W 1184 V ALELAKE CT SUNNYVALE CA 94089-2032 19141 MEIGGS LN 375-37-001 PAYNE DAVID HAND ZIE ANNA 21175 LAURETTA DR CUPERTINO CA 95014-1662 19015 PENDERGAST AV 375-37-042 LEE STEPHEN T AND YU YVONNE Y 19015 PENDERGAST AVE CUPERTINO CA 95014-3516 10561 JOHANSEN DR 375-37-049 DESHPANDE SUDHINDRA V AND 10561 JOHANSEN DR CUPERTINO CA 95014-3527 10623 JOHANSEN DR 375-37-058 WANG LIEH C AND VIRGINIA S 6808 LEYLAND PARK DR SAN JOSE CA 95120-5616 184 records of 187 Santa Clara County Weed Abatement Program Page8 327 2016 WEED ABATEMENT PROGRAM COMMENCEMENT REPORT CITY OF CUPERTINO _Situs _ ____AP_l'l_ EXHIBIT A ___ CTTY!STAIE ~- 19240 TILSON AV 375-40-057 TINGBENG-TAKANDCHIEWSAR-19240TILSONAVE CUPERTINO 19200 19160 TILSON TILSON 187 records of 187 AV 375-40-061 LEE JOHN C AND NGUYEN NGOC AV 375-40-065 VAN PAT AND DANG NGOC ET AL 19200 TILSON A VE 19160 TILSON AVE Santa Clara County Weed Abatement Program CUPERTINO CUPERTINO CA 95014-3529 CA 95014-3529 CA 95014-3565 Page9 328 TRA 13 NOTICE IS HEREBY GIVEN that on December 1, 2015 pursuant to the provisions of Section 9.08 of the Cupertino Municipal Code, the City Council passed a resolution declaring that all weeds growing upon any private property or in any public street or alley, as defined in Section 9.08.010 of the Cupertino Municipal Code constitute a public nuisance, which nuisance must be abated by the destruction or removal thereof. NOTICE IS FURTHER GIVEN that property owners shall without delay, remove all such weeds from their property and the abutting half of the street in front and alleys, if any, behind such property and between the lot lines thereof as extended, or such weeds will be destroyed or removed and such nuisance abated by the County Agricultural Commissioner, in which case the cost of such destruction or removal will, including but not limited to administration costs, be assessed upon the lots and lands from which, or from the front or rear of which, such weeds shall have been destroyed or removed and such cost will constitute a lien upon such lots or lands until paid and will be collected upon the next tax roll upon which general municipal taxes are collected. All property owners having any objections to the proposed destruction or removal of such weeds are hereby notified to attend a meeting of said City to be held in the Council Chambers of City Hall, located at 10300 Torre Ave., Cupertino, California, on Tuesday, January 19, 2016 at 6:45 p.m., or as soon thereafter as the matter can be heard, when their objections will be heard and given due consideration. The language and format for this notice is required by California Health and Safety Code Sections 14891 Et. Seq. (over) 329 CITY OF CUPERTINO WEED ABATEMENT PROGRAM SCHEDULE January 19, 2016 April 30, 2016 July/August 2016 Public hearing to consider objections to Abatement List. PARCEL ABATEMENT DEADLINE Parcel must be free from hazardous vegetation by this date or Inspector will order abatement. Assessment Hearing date to be scheduled by City Council. 2016 COUNTY WEED ABATEMENT FEES Properties in the Weed Abatement Program, you will be responsible for an annual inspection fee of $55.00 per parcel. Please be advised that the property owner of any parcel found to be non-compliant on or after the April 30th deadline will be charged an inspection fee of $440.00 and the property will be scheduled for abatement by the County contractor. If you complete the abatement work before the County contractor performs the abatement, you will not incur further charges. Should the abatement work be performed by a County contractor, you will be assessed the contractor's charges plus a County administrative fee of $335.00 per parcel. 2016 COUNTY CONTRACTOR'S WEED ABATEMENT PRICE LIST A) Disc Work** PARCEL SIZE: 0-12,500 sq.ft. 12,501 sq.ft.-43 ,560sq.ft. Larger than 1 Acre 1st Disc + $202.86 $235.72 $100.87 2nd Disc $136.00 $170.00 $89.53 =Total Discs $338.86 $405.72 $190.40 (PER ACRE) * * It is required that parcels be disced twice a year. The cost for the first discing is higher due to additional work normally required during the first discing. B) HANDWORK $3.28 PER 100 sqft C) FLAIL 6 Foot Mower $2.28 PER 1000 sqft MOWING 12 Foot Mower $2.05 PER 1000 sqft D) LOADER WORK $110.50 PER HOUR E) DUMP TRUCK $102.00 PER HOUR F) BRUSH WORK $3.28 PER 100 sqft G) Debris removal $38.86 PER 1 OOOsqft G)DUMPFEE 100% Added to orders with debris removal at 100% of the dump site charge. *Please note this program does not offer herbicide application as a method of abatement. (over) 330 jurisdiction. Notice of the date of that meeting will be posted at a location prescribed by your jurisdiction (typically at the Civic Center) at least three days prior to the meeting. You can avoid all costs, other than the Annual fee, by completing the abatement work yourself according to Minimum Fire Safety Standards (see enclosed brochure) prior to the abatement deadline for your jurisdiction and maintaining the Minimum Fire Safety Standards for the duration of fire season, which typically runs through October. Parcels will be removed from the program after three (3) consecutive years of voluntary compliance (work completed prior to the deadline). In preparation for this program, please complete and return the enclosed Reply Form so that we are aware of your intentions regarding the maintenance of your property. If you designate in your reply that you intend to abate the weeds yourself, you are expected to complete the abatement before the deadline listed on the abatement schedule and maintain fire safe conditions for the duration of the fire season. Responding that you intend to provide maintenance yourself does not release you from this responsibility to have the maintenance completed before your deadline and repeated as necessary to maintain Minimum Fire Safe Standards. County contractors will proceed to abate hazardous vegetation as necessary after the deadline for your jurisdiction. Enclosed you will find the following information: --J A Reply Form specific to your property. Please complete and return promptly. --J A Notice to Destroy Weeds informing you of an upcoming public meeting that you must attend if you have any objections to the proposed removal of hazardous vegetation or debris from your property. --J A Weed Abatement Program Schedule for your city and a current County price list. --J A Brochure about the Santa Clara County Weed Abatement Program. Please be aware that any abatement performed by the County contractor must be in compliance with all applicable environmental protection regulations. If your property falls within an area designated as possible habitat for burrowing owls or any other protected species of bird or animal, the methods used to remove vegetation may be regulated by specific laws or local ordinances. If you are no longer the owner of the property identified by this mailing, please notify the County immediately. If you sell your property after the date of this letter, it is your responsibility to notify the new owner and to include the obligation to pay any abatement costs in your agreement of sale. Without taking this action, you will be responsible for all hazard abatement charges assessed to the property. Our goal is voluntary compliance with the Minimum Fire Safety Standards, and it is our objective to ensure that all properties remain safe from fire. If you have any questions about your property or need on-site advice to help you achieve compliance with the Minimum Fire Standards, please call the Santa Clara County Weed Abatement Program at ( 408) 282-3145. Sincerely, /'\ · 11? h~1~~~~ Amy Brown, Director Department of Agriculture and Environmental Management 332 RESOLUTION NO. 15-112 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO DECLARING WEEDS ON CERTAIN DESCRIBED PROPERTY TO BE A PUBLIC NUISANCE AND SETTING A HEARING FOR OBJECTIONS TO PROPOSED REMOVAL WHEREAS, weeds are growing in the City of Cupertino upon certain streets, sidewalks, highways, roads and private property; and WHEREAS, said weeds may attain such growth as to become a fire menace or which are otherwise noxious or dangerous; and WHEREAS, said weeds constitute a public nuisance; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Cupertino as follows: 1. That said weeds do now constitute a public nuisance; 2. That said nuisance exists upon all of the streets, sidewalks, highways, roads and private property more particularly described by common names or by reference to the tract, block, lot, code area, and parcel number on the report prepared by the Agricultural Commissioner and attached hereto; 3. That the 19th day of January, 2016, at the hour of 6:45 p.m., or as soon thereafter as the matter can be heard, in the Council Chamber in the Community Hall, City of Cupertino, is hereby set as the time and place where all property owners having any objections to the proposed removal of such weeds may be heard; 4. That the Agricultural Commissioner is hereby designated and ordered as the person to cause notice of the adoption of this resolution to be given in the manner and form provided in Sections 9.08.040 of the Cupertino Municipal Code. 333 Resolution No. 15-112 Page2 PASSED AND ADOPTED at a Regular Meeting of the City Council of the City of Cupertino the 1st day of December 2015, by the following vote: Vote Members of the City Council A YES: Sinks, Chang, Paul, Vaidhyanathan, Wong NOES: None ABSENT: None ABSTAIN: None ATTEST: brru~.'J;f- Grace Schmidt, City Clerk ~~ S2:4--- Rod Sinks, Mayor, City of Cupertino 334 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1261 Name: Status:Type:Ordinances and Action Items Agenda Ready File created:In control:11/24/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Consideration of Proposed Lease with Verizon Wireless for a cell tower to be located on the Civic Center Property (Torre Avenue), subject to the terms of any City-issued permits Sponsors: Indexes: Code sections: Attachments:Staff Report A - Draft Proposed Lease B - Draft Resolution - Verizon Lease.pdf C - Letter from AT&T Action ByDate Action ResultVer. City Council1/19/20161 Subject: Consideration of Proposed Lease with Verizon Wireless for a cell tower to be located on the Civic Center Property (Torre Avenue), subject to the terms of any City-issued permits Adopt Resolution No. 16-008 to: 1. Authorize the City Manager to execute an Antenna Ground Lease between the City of Cupertino and GTE Mobilnet dba Verizon for a term of up to 5 years, for a cell tower to be located on the Civic Center Property, in substantially the form as presented to Council, and subject to the terms of any City-issued permits; and 2. Authorize the City Manager to negotiate and execute up to two five year (5-year) options consistent with the terms of the Lease CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™335 OFFICE OF THE CITY MANAGER CITY HALL 10 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3212 www.cupertino.org CITY COUNCIL STAFF REPORT Meeting: January 19, 2016 Subject Consideration of Proposed Lease with Verizon Wireless for a cell tower to be located on the Civic Center Property (Torre Avenue), subject to the terms of any City-issued permits Recommended Action Adopt the Draft Resolution to: 1. Authorize the City Manager to execute an Antenna Ground Lease between the City of Cupertino and GTE Mobilnet dba Verizon for a term of up to 5 years, for a cell tower to be located on the Civic Center Property, in substantially the form as presented to Council, and subject to the terms of any City-issued permits; and 2. Authorize the City Manager to negotiate and execute up to two five year (5-year) options consistent with the terms of the Lease Description At its meeting of October 6, 2015, the City Council its meeting of October 6, 2015, a Planning Commission approval for a treepole at the Civic Center was upheld. At the same meeting, a proposed lease with Verizon was continued by the City Council with additional direction to staff and the applicant to: 1) The applicant to run field tests at a pole height of 55 feet and up to 66 feet in order to determine the actual minimum height requirement for the antenna array. 2) Staff to contact AT&T Wireless to see if it continues to be interested in the joint project and obtain its input on two potential solutions: a) what antenna height was needed if it collocated above the Verizon antenna array on the same treepole, and b) what was the minimum antenna height needed if it built its own treepole in the same area. 3) Staff to bring back the following design options for Council review: a) Construct the Verizon treepole at the minimum height requirement with the flexibility to extend the height for another wireless provider; or b) construct another treepole for the second provider at the minimum height required (Attachment A). Verizon is proceeding as the lead on the permitting and construction of the Civic Center cell tower. The cell tower and the lease are designed for and will accommodate colocation of a second telecommunications firm, whether it is AT&T or another carrier in the future. AT&T continues to indicate its interest in locating on the tower. 336 Discussion The lease will commence on the date of approval of the building permit or 90 days after the Council approves the Use Permit. Verizon is required to diligently pursue the building permit. This will protect the City as Verizon will need to start paying under the lease within 90 days of Council approval even if there is a delay in Verizon’s installation plans. The ground lease portion is 743 square feet. The proposed lease is for a pole 55’ in height. The height limit under the zoning code for a pole at this location is 55’ so no zoning exception is required. Additional tenants on the proposed treepole will require a separate lease with the City that will come before the City Council for approval. Verizon has agreed to one initial 5 year term with two subsequent terms of 5 years each for a total of 15 years. The City has the right of relocation at its own expense in the event that City Hall redesign dramatically changes (see Section 2.4). Base rent is set at $3120.00 per month. This sum is consistent with other leases in Silicon Valley or just above current market level. The annual increase is set at 4% per year; it is calculated at a compound rate. This is a favorable term for the City. As long as the antennas serve a public purpose and do not interfere with Verizon the City may install additional antennas. Verizon agreed to “preapprove” one co-locator. Subsequent co-locators would need Verizon approval. The lease contains an indemnification provision that protects the City. Verizon has to pay any additional taxes that the City may incur as a result of this installation. Sustainability Impact No sustainability impact Fiscal Impact The agreement will generate at least $3120.00 per month for the next five years _____________________________________ Prepared by: Rick Kitson, Public Affairs Director Reviewed by: Timm Borden, Director Public Works Approved for Submission by: David Brandt, City Manager Attachments: A - Draft proposed lease with Verizon B - Draft Resolution - Verizon Lease C - Letter from AT&T Re: Proposed Colocation Cell Site Near City Hall, November 17, 2015 337 74211405.1 ANTENNA GROUND LEASE Between THE CITY OF CUPERTINO and GTE Mobilnet of California Limited Partnership, a California limited partnership, d/b/a Verizon Wireless 338 TABLE OF CONTENTS Page -i- 74211405.1 ARTICLE 1 PREMISES AND IMPROVEMENTS ..............................................................1 1.1 Lease of Premises ....................................................................................................1 1.2 Improvements ..........................................................................................................1 ARTICLE 2 TERM ................................................................................................................2 2.1 Initial Term ..............................................................................................................2 2.2 Option to Extend ......................................................................................................2 2.3 Commencement Date ...............................................................................................2 2.4 Relocation of Mono-Eucalyptus and Adjacent structures .......................................2 ARTICLE 3 RENTAL ............................................................................................................2 3.1 Base Rent .................................................................................................................2 3.2 Annual Increase .......................................................................................................3 3.3 Transactional Costs ..................................................................................................3 3.4 Late Charge ..............................................................................................................3 3.5 Additional Consideration .........................................................................................3 ARTICLE 4 USE ....................................................................................................................3 4.1 Permitted Uses .........................................................................................................3 4.2 Access ......................................................................................................................4 4.3 Prohibited Uses ........................................................................................................4 4.4 Approval by the City and Other Agencies ...............................................................4 4.5 Additional Antenna(s) to be added by City .............................................................4 4.6 Compliance with Laws ............................................................................................5 4.7 Condition, Use of Premises......................................................................................5 4.8 Hazardous Materials ................................................................................................5 ARTICLE 5 MAINTENANCE, REPAIRS AND ALTERATIONS......................................8 5.1 General .....................................................................................................................8 5.2 Surrender ..................................................................................................................8 5.3 City’s Rights ............................................................................................................8 5.4 City Repair Obligations ...........................................................................................8 5.5 Security Measures ....................................................................................................8 5.6 Improvements ..........................................................................................................9 5.7 City Access ............................................................................................................10 5.8 Lessee Access ........................................................................................................10 5.9 Lessee Access During Security Alert ....................................................................10 ARTICLE 6 INDEMNITY AND INSURANCE .................................................................10 6.1 Indemnity ...............................................................................................................10 6.2 Waiver of Claims ...................................................................................................10 6.3 Insurance ................................................................................................................10 339 TABLE OF CONTENTS (continued) Page -ii- 74211405.1 ARTICLE 7 DAMAGE, DESTRUCTION AND TERMINATION ....................................11 7.1 Nontermination and Nonabatement .......................................................................11 7.2 Force Majeure ........................................................................................................11 7.3 Waiver ....................................................................................................................11 ARTICLE 8 TAXES .............................................................................................................11 8.1 Personal Property ...................................................................................................11 8.2 Real Property .........................................................................................................11 8.3 Definition ...............................................................................................................12 ARTICLE 9 UTILITIES .......................................................................................................12 ARTICLE 10 SIGNS ..............................................................................................................12 ARTICLE 11 ASSIGNMENT AND SUBLETTING ............................................................12 11.1 City’s Consent Required ........................................................................................12 11.2 Net Worth Requirements .......................................................................................13 11.3 No Release of Lessee .............................................................................................13 11.4 Right of First Refusal .............................................................................................13 ARTICLE 12 DEFAULTS; REMEDIES ...............................................................................13 12.1 Defaults ..................................................................................................................13 12.2 Remedies ................................................................................................................14 12.3 No Relief from Forfeiture After Default ................................................................14 ARTICLE 13 TERMINATION OF LEASE ..........................................................................14 13.1 Termination by Lessee ...........................................................................................14 13.2 Termination by City ...............................................................................................15 13.3 Condemnation of Leased Premises ........................................................................15 ARTICLE 14 CITY’S LIABILITY ........................................................................................15 ARTICLE 15 INTEREST ON PAST-DUE OBLIGATIONS ................................................16 ARTICLE 16 HOLDING OVER ...........................................................................................16 ARTICLE 17 CITY’S ACCESS.............................................................................................16 ARTICLE 18 QUIET POSSESSION .....................................................................................16 ARTICLE 19 EASEMENTS ..................................................................................................16 ARTICLE 20 GENERAL PROVISIONS ..............................................................................16 20.1 Severability ............................................................................................................16 20.2 Time of Essence .....................................................................................................16 20.3 Additional Rent ......................................................................................................17 20.4 Entire Agreement, Modification ............................................................................17 20.5 No Warranty...........................................................................................................17 340 TABLE OF CONTENTS (continued) Page -iii- 74211405.1 20.6 Notices ...................................................................................................................17 20.7 Waivers ..................................................................................................................17 20.8 Cumulative Remedies ............................................................................................18 20.9 Choice of Law ........................................................................................................18 20.10 Condition to Effectiveness of Lease ......................................................................18 20.11 Attorneys’ Fees ......................................................................................................18 20.12 Brokers ...................................................................................................................18 20.13 Authority ................................................................................................................18 20.14 Non-Liability of Officials and Employees of the City ...........................................18 20.15 Non-Discrimination ...............................................................................................18 20.16 Independent Contractor ..........................................................................................18 20.17 Conflict of Interest .................................................................................................18 20.18 Memorandum of Lease ..........................................................................................18 20.19 Estoppel Certificate ................................................................................................18 341 1 74211405.1 ANTENNA GROUND LEASE This Lease (“Lease”) is made and entered into as of ______________ __, 2015, by and between the City of Cupertino, California, (“City” or “Lessor”), and GTE Mobilnet of California Limited Partnership, a California limited partnership, d/b/a Verizon Wireless (“Lessee”). RECITALS The following recitals are a substantive portion of this Lease: A. City is the owner of certain real property situated in Santa Clara County, State of California, as more particularly described in Exhibit “A” attached and incorporated by this reference. B. Lessee is a limited partnership organized under the laws of the State of California whose principal business is telecommunications. C. Lessee requests the lease of certain real property owned by the City for the construction, installation and operation of a cellular telephone communication facility. D. City is willing to permit Lessee to lease the property in accordance with the terms, conditions and covenants of this Lease. E. Lessee acknowledges that this project will require a use permit from the City before this Lease will be effective. NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS: ARTICLE 1 Premises and Improvements 1.1 Lease of Premises. City hereby leases to Lessee and Lessee leases from City for the term, at the rental and upon all of the terms and conditions set forth, a portion of the real property located at 10800 Torre Avenue, Cupertino, CA APN# 369-31-033, commonly known as Cupertino Civic Center (“City Property”). Lessee shall lease approximately 743.0 square feet, with an aerial easement of approximately 112.1 square feet, as described in Exhibit “B” attached and incorporated herein (the “Premises”). 1.2 Improvements. The Premises shall be used by Lessee only to locate multiple equipment cabinets, landscaping, underground cable and conduit, and a mono-eucalyptus tower (alternately, the “Mono-Eucalyptus” or “antenna structure”) for the location of Lessee’s antennas (“Improvements”). The Improvements are more particularly shown on plans, which have been submitted for site development and use permit approvals, as required by the City. A copy of the plans is attached and incorporated by this reference as Exhibit “C”. The plans shall reflect, among other things, the height of Lessee’s antennas on the antenna structure at 55 feet. The plans shall also identify the trees surrounding the antenna structure which Lessee may trim as it deems necessary, at its expense and in accordance with applicable local, state or federal law, to a height of 44 feet. It is understood and agreed that the final plan for the 342 2 74211405.1 Improvements will be the plans approved by the City through its site development and use permit process(es). ARTICLE 2 Term 2.1 Initial Term. The term of this Lease shall be for a period of approximately five (5) years beginning on the Commencement Date and terminating on the fifth anniversary of the Commencement Date, unless terminated earlier (“Term”). 2.2 Option to Extend. Provided Lessee is not in default, either at the time of exercise or at the time the extended Term commences, Lessee shall have the option to extend the initial Term of this Lease for two (2) additional periods of five (5) years (“Option Period”) on the same terms, covenants and conditions provided. City shall not unreasonable deny this extension. Lessee shall exercise its option by giving City written notice (“Option Notice”) at least sixty (60) days, but not more than one hundred twenty (120) days, prior to the expiration of the initial Term of this Lease, or the successive term. 2.3 Commencement Date. The Commencement Date of this Lease shall be the first of the month during which the latter of the two dates listed occurs, which are: (i) the date of final approval of any Building Permit, if required, provided that Lessee is diligently pursuing this Building Permit after obtaining the necessary Use Permit; or (ii) the date of the vacation of the wire clearance easement encumbering the City Property by the City (which easement imposes a height limitation of 15 feet on Improvements located within the easement area). 2.4 Relocation of Mono-Eucalyptus and Adjacent structures. City, on one (1) occasion, may relocate the Premises to another location on City Property (herein referred to as the “Alternate Property”), provided: 2.4.1 the Alternate Property is similar to the Premises in size and is compatible for Lessee’s use in Lessee’s sole discretion; 2.4.2 City shall pay all costs incurred by Lessee for relocating Lessee’s equipment from the Premises to a mutually agreeable site and improving the Alternate Property so that the Alternate Property is substantially similar to the Premises, including all costs incurred to obtain all of the certificates, permits and other approvals that may be required by any Federal, State or Local authorities as well as any satisfactory soil boring tests which will permit Lessee use of the Alternate Property as set forth in Section 1.2 above; 2.4.3 City shall give Lessee at least twelve (12) months written notice before requiring Lessee to relocate; 2.4.4 Lessee must be provided advanced notice of the redevelopment process and layout of City’s intended expansion; and 2.4.5 Lessee’s service will not be interrupted and Lessee shall be allowed if necessary to place a temporary cell site and antenna structure on the City Property during relocation. 343 3 74211405.1 ARTICLE 3 Rental 3.1 Base Rent. Commencing on the Commencement Date, Lessee shall pay to City as rent for the Premises in advance on the first day of each calendar month of this Lease without deduction, offset, prior notice or demand, in lawful money of the United States, the sum of Three Thousand One Hundred Twenty Dollars ($3,120.00) (“Base Rent”). Rent shall be provided to: City of Cupertino, Finance Department, 10300 Torre Avenue, Cupertino, CA 95014-3202. Lessor and Lessee agree and acknowledge that the initial rental payment(s) may not actually be sent until forty-five (45) days after the Commencement Date. 3.2 Annual Increase. During the Term of this Lease, including the Option Periods, the Base Rent shall be increased annually by 4%, beginning on January 1, 2016 and effective each January 1st thereafter throughout the Term and any Option Period. The sum shall be adjusted annually resulting in a compound rate of increase. For example, the Base Rent for December 1, 2015 would be Three Thousand One Hundred Twenty Dollars ($3120.00) per month and the rate on January 1, 2016 would be Three Thousand Two Hundred Forty Four Dollars and 80 cents ($3244.80.). 3.3 Transactional Costs. Lessee shall pay to City, as additional rent, any reasonable transactional costs, which shall include any reasonable attorneys’ fees incurred by City as a result of the negotiation, preparation, execution and delivery of this Lease, any amendment, any future consent of City required and the preparation and negotiation of an amendment to this Lease (“Transactional Costs”) not to exceed Seven Thousand Five Hundred Dollars ($7,500.00) without prior written approval of Lessee. Lessee has provided a deposit to City to cover any transactional costs. City shall furnish Lessee with an invoice reflecting the Transactional Costs deducted from the deposit. In the event that the deposit is exceeded or costs are incurred without a deposit than City shall provide an invoice to Lessee and Lessee shall make full payment to City of these costs within forty-five (45) days from the date of receipt of City’s invoice. 3.4 Late Charge. Lessee acknowledges late payment by Lessee to City of rent will cause City to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impracticable to fix. Such costs include, without limitation, processing, accounting and late charges that may be imposed on City. If any installment of rent due from Lessee is not received by City within ten (10) days after the date rent is due, Lessee shall pay to City an additional sum of ten percent (10%) of the overdue rent as a late charge. This penalty shall not be imposed for the first two payments under the Lease in order to permit Lessee to enroll the Lease in its payment system. The parties agree this late charge represents a fair and reasonable estimate of the costs City will incur by reason of late payment by Lessee. Acceptance of any late charge shall not constitute a waiver of Lessee’s default with respect to the overdue amount, nor prevent City from exercising any of the other rights and remedies available to City. 3.5 Additional Consideration. As additional consideration for City’s entering into this Lease, Lessee agrees to pay to City the sum of Two Thousand Five Hundred Dollars ($2,500.00) upon the earlier of: (a) sixty (60) days after full execution of this Lease by the City; or (b) issuance of a certificate of occupancy. This amount shall be in addition to all other sums payable by Lessee to City under this Lease, and shall be nonrefundable to Lessee unless the City Council fails to approve the Lease or any requisite use permit. 344 4 74211405.1 ARTICLE 4 Use 4.1 Permitted Uses. Lessee shall use the Premises for installation, operation, maintenance and use of a wireless communications facility, consisting of the equipment, improvements and facilities and the utilities, cables and wires reasonably needed to support the operation of a communications facility. The installation of the Improvements shall be subject to the reviews and approvals set forth in Section 4.4. Lessee shall be solely responsible for all costs associated with the construction, installation, maintenance and use of the Improvements. 4.2 Access. City grants Lessee reasonable non-exclusive vehicular and foot access to the Premises. Access shall be available to Lessee, Lessee’s employees and invitees during normal business hours, except if an emergency occurs. It is anticipated, after installation of the Improvements is completed, that reasonable access shall occur once every two (2) weeks for the purpose of ordinary tuning of the Lessee’s equipment, appropriate maintenance of the Improvements and the repair and replacement of communication equipment located on the Premises. City acknowledges that off peak maintenance (non-business hours) of the site is required approximately once per month. Lessee shall provide 24-hours’ notice to City prior to off peak maintenance except in cases of emergency. 4.3 Prohibited Uses. Lessee shall not use Premises for any purpose not expressly permitted. Lessee shall not: (a) create, cause, or permit any nuisance or waste in, on or about the Premises or permit the Premises to be used for any unlawful; (b) do or permit anything which unreasonably disturbs the users of the City Property or the occupants of neighboring property; provided, however, that Lessee’s use of the Property pursuant to this Lease shall not be deemed an unreasonable interference; specifically, and without limiting the above, Lessee agrees not to cause any unreasonable odors, noise, vibration, power emissions or other item to emanate from the Premises; and Lessee shall not store any materials or articles of any nature outside upon any portion of the Premises. 4.4 Approval by the City and Other Agencies. Lessee, at its sole cost and expense, may install the Improvements, subject to Lessee’s obtaining all required permits, licenses and approvals from the City of Cupertino as the permitting authority and not as lessor hereunder, and any other governmental agencies having jurisdiction. Lessee shall maintain permits, licenses and approvals in force through the term of this Lease, as may be extended. Should Lessee wish to subsequently change the Improvements (excluding any minor modification which would not require an amendment to the site development permit or a building permit, and which would not materially expand or increase the Improvements or are wholly contained in Lessee’s equipment cabinets), it shall not do so without the prior approval of City and amendment of this lease and without obtaining all required permits, licenses and approvals from the City of Cupertino as the permitting authority and not as lessor hereunder, and any other governmental agencies with jurisdiction. City’s approval of these modifications shall not be unreasonably withheld. If a change in the Improvements is approved, Lessee and City shall amend Exhibit “C” to reflect the change. Should Lessee change or expand any Improvements without the prior approval of City, City may require that Lessee remove the expansion at Lessee’s sole cost and expense. Lessee shall be solely responsible for conducting any environmental review required in association with Lessee’s use of the Premises and for all costs associated, as well as all fees, charges or other expenses imposed by 345 5 74211405.1 the City as the regulatory agency or other regulatory agencies arising directly out of Lessee’s use of the Premises prior to the Lease commencement or at any time during the term of the Lease. 4.5 Additional Antenna(s) to be added by City. Subject to the conditions set forth in Section 4.8.8 herein, City shall have the right to install additional antennas at its sole cost and expense on the Mono-Eucalyptus provided these antennas may only be utilized for a public purpose. The location of the antenna(s) shall be approved by Lessee. The antennas shall not interfere with any activity or use by Lessee. In the event that City’s antenna(s) interfere with Lessee’s use, City’s antenna(s) shall be adjusted or removed to ameliorate this interference. 4.6 Compliance with Laws. Lessee shall not do or permit anything to be done in, on the Premises, or bring or keep anything in, on the Premises which will conflict with any law, statute, ordinance or governmental rule or regulation now in force or which may hereafter be enacted. 4.7 Condition, Use of Premises. Except for any warranties and representations expressly set forth herein, City makes no warranty or representation concerning the condition of the Premises, or the fitness of the Premises for the use intended by Lessee, and disclaims any personal knowledge, it being expressly understood by the parties that Lessee has personally inspected the Premises, knows its condition, finds it fit for Lessee’s intended use, accepts it as is and has ascertained that it can be used for the limited purposes specified in Section 4.1. 4.8 Hazardous Materials. 4.8.1 Hazardous Materials on Premises. City and Lessee shall not introduce any Hazardous Materials (as defined below) to the Premises or the Property excluding any Hazardous Materials that are components of commercially available products or are typically used, stored, or handled in Lessee’s industry or are typically stored or handled by the City, provided that Hazardous Materials are transported, obtained, handled, stored and/or disposed of in accordance with all federal, state and local laws, ordinances, rules, regulations or policies. 4.8.2 Hazardous Materials Defined. The term “Hazardous Material(s)” shall mean any toxic or hazardous substance, material or waste or any pollutant or contaminant or infectious or radioactive material, including but not limited to, those substances, materials or wastes regulated now or in the future within the definitions of “hazardous substances,” “hazardous waste,” “hazardous chemical substance or mixture,” “imminently hazardous chemical substance or mixture,” “toxic substances,” “hazardous air pollutant,” “toxic pollutant” or “solid waste” in the following statutes and regulations: (a) “CERCLA” or “Superfund” as amended by SARA, 42 U.S.C. Secs. 9601 et seq.; (b) RCRA, 42 U.S.C. Secs. 6901 et seq.; (c) CWA, 33 U.S.C. Secs. 1251 et seq.; (d) CAA, 42 U.S.C. Secs. 7401 et seq.; (e) TSCA, 15 U.S.C. Secs. 2601 et seq.; (f) The Refuse Act of 1899, 33 U.S.C. Secs. 407; (g) OSHA, 29 U.S.C. Secs. 651 et seq.; (h) Hazardous Materials Transportation Act, 49 U.S.C. Secs. 5101 et seq.; (i) USDOT Table (49 CFR Sec. 172.101 App. A and amendments) or the EPA Table (40 CFR Part 302 and amendments); (j) Carpenter-Presley-Tanner Hazardous Substance Account Act, Cal. Health & Safety Code Secs. 25300 et seq.; (k) California Hazardous Waste Control Act, Cal. Health & Safety Code Secs. 25100 et seq.; (l) Porter-Cologne Act, Cal. Water Code Secs. 13000 et seq.; (m) Hazardous Waste Disposal Land Use Law, Cal. Health & Safety Code Sec. 25220 et seq.; (n) “Proposition 65,” Cal. Health and Safety Code Sec. 25249.5 et seq.; (o) Hazardous Substances Underground 346 6 74211405.1 Storage Tank Law, Cal. Health & Safety Code Sec. 25280 et seq.; (p) California Hazardous Substance Act, Cal. Health & Safety Code Secs. 108100 et seq.; (q) Air Resources Law, Cal. Health & Safety Code Secs. 39000 et seq.; (r) Hazardous Materials Release Response Plans and Inventory, Cal. Health & Safety Code Secs. 25500 et seq.; (s) TPCA, Cal. Health and Safety Code Secs. 25208 et seq.; and (t) regulations promulgated pursuant to said laws or any replacement thereof, or as similar terms are defined in the federal, state and local laws, statutes, regulations, orders or rules. Hazardous Materials shall also mean any and all other substances, materials and wastes which are, or in the future become regulated under applicable local, state or federal law for the protection of health or the environment, or which are classified as hazardous or toxic substances, materials or wastes, pollutants or contaminants, as defined, listed or regulated by any federal, state or local law, regulation or order or by common law decision, including, without limitation: (i) trichloroethylene, tetracholoethylene, perchloroethylene and other chlorinated solvents; (ii) any petroleum products or fractions thereof; (iii) asbestos; (iv) polychlorinated biphenyls; (v) flammable explosives; (vi) urea formaldehyde; and (vii) radioactive materials and waste. 4.8.3 Hazardous Materials Indemnity. Lessee shall indemnify, defend (by counsel reasonably acceptable to City), protect and hold Lessor harmless from and against any and all claims, liabilities, penalties, forfeitures, losses and/or expenses, including, without limitation, diminution in value of the Premises, damages for the loss or restriction on use of the rentable or usable space or of any amenity of the Premises, damages arising from any adverse impact or marketing of the Premises and sums paid in settlement of claims, response costs, cleanup costs, site assessment costs, attorney’s fees, consultant and expert fees, judgments, administrative rulings or orders, fines, costs of death of or injury to any person or damage to any property whatsoever (including, without limitation, groundwater, sewer systems and atmosphere), to the extent arising from, or caused or resulting, during the Lease Term, in whole or in part, directly or indirectly, by the presence or discharge in, on, under or about the Premises by Lessee, Lessee’s agents, employees, licensees or invitees acting on Lessee’s behalf or at Lessee’s direction, of Hazardous Material, or by Lessee’s failure to comply with any laws pertaining to any Hazardous Materials Law, whether knowingly or by strict liability. Lessee’s indemnification obligations shall include, without limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary Hazardous Materials management plan, investigation, repairs, cleanup or detoxification or decontamination of the Premises, and the presence and implementation of any closure, remedial action or other required plans for the Premises, and shall survive the expiration of or early termination of the Term. For purposes of the indemnity, any acts or omissions of Lessee or its employees, agents, customers, sublessees, assignees, contractors or subcontractors of Lessee while acting on behalf of Lessee (whether or not they are negligent, intentional, willful or unlawful) shall be strictly attributable to Lessee. Lessee’s indemnity obligations shall not include claims, liabilities, losses, damages, costs, or other expenses arising from the negligence or misconduct of City or City’s employees, agents, sublessees, assignees, invitees, subcontractors or contractors. 4.8.4 City’s Right to Perform Tests. At any time prior to the expiration of the Term, City shall have the right to enter upon the Premises in order to conduct tests of water and soil, which tests shall not disrupt or interfere with Lessee’s operations, and to deliver to Lessee the results of such tests to demonstrate that levels of any Hazardous Materials in excess of permissible levels has occurred as a result of Lessee’s use of the Premises. Lessee shall be solely responsible for and shall indemnify, protect, defend and hold City harmless from and against all claims, costs and liabilities 347 7 74211405.1 including actual attorney’s fees and costs arising out of or in connection with any removal, remediation, clean up, restoration and materials required hereunder to return the Premises and any other property of whatever nature to their condition existing prior to the appearance of the Hazardous Materials to the extent such presence arises out of Lessee’s use of the Premises. The testing shall be at Lessee’s expense if City has a reasonable basis for suspecting and confirms the presence of Hazardous Materials in the soil or surface or groundwater in on, under, or about the Premises, which has been caused by or resulted from the activities of Lessee, its agents, employees, contractors or invitees acting on Lessee’s behalf or at Lessee’s direction. 4.8.5 Survival. This entire Section 4.8 of this Lease shall survive termination of the Lease, as to any activities during the term of this Lease. 4.8.6 Termination of Lease. City shall have the right to terminate the Lease in City’s sole and absolute discretion in the event that: (i) any use of the Premises by Lessee involves the generation or storage, use, treatment, disposal or release of Hazardous Material in a manner or for a purpose prohibited or regulated by any governmental agency, authority or Hazardous Materials Laws; (ii) Lessee has been required to take remedial action in connection with Hazardous Material contaminating the Premises, if the contamination resulted from Lessee’s action or use of the Premises; or (iii) Lessee is subject to an enforcement order issued by any governmental authority in connection with the release, use, disposal or storage of a Hazardous Material on the Premises. Lessee shall have thirty (30) days after receipt of notice from City to cure or commence cure, prior to City’s ability to exercise its rights under this Section. 4.8.7 Covenant of Non-Interference. Lessee shall be responsible for inspecting City Property and finding adequate space at the site without moving or relocating any of City’s facilities or equipment, or any other facility, or utility located at the City Property at the time Lessee’s facilities are installed. Lessee’s equipment shall not cause incurable interference with any other existing facility or antenna on the City Property as of the date of this Agreement. In the event that Lessee’s equipment does cause incurable interference with other facilities, Lessee shall be required to install, at its own expense, frequency filters or take other reasonable measures to correct the problem. Lessee shall be required to coordinate with other existing utilities located at the City Property, to ensure that Lessee’s equipment does not interfere with the existing frequency utilized by existing utilities. Lessor shall not permit the installation or subsequent equipment on the City Property by Lessor or a third party which interferes with Lessee’s operations. 4.8.8 Co-location. Lessee acknowledges that it has given City prior approval that it will lease one (1) position on Lessee’s antenna structure on the Premises to one (1) other communications provider (the “First Other User”), subject to the First Other User’s compliance with the conditions below. Lessee further acknowledges and approves that City shall be entitled to require Lessee to lease additional positions on Lessee’s antenna structure on the Premises, subject to the conditions below. The City may also require that the antenna structure be extendable to a height of up to 80 feet, following the grant of a height exception. If Lessor wishes to require Lessee to lease space on Lessee’s antenna structure on the Premises to allow a second other communications provider (the “Second Other User”) to attach its communications equipment on the antenna structure, Lessor shall submit a written request to Lessee listing the proposed equipment to be placed on the antenna structure. The terms “First Other User” and “Second Other User” are collectively referred to hereinafter as the “Other User.” Lessee shall review such request 348 8 74211405.1 and determine the following, including without limitation (1) whether the Other User’s proposed installation interferes or conflicts with Lessee’s or other users’ use of the antenna structure or the Premises; (2) whether the antenna structure can withstand the structural load of Other User’s proposed equipment; or (3) if Other User’s proposed equipment jeopardizes Lessee’s permits or any approval for use of the Premises. If testing or analysis, including without limitation a structural analysis, intermodulation study, construction or zoning drawings, or any environmental testing is required, Other User shall be responsible for the costs of such testing or analysis. Upon approval, Lessee and Other User shall enter into a separate agreement permitting Other User to attach its approved equipment to the antenna structure. Lessee shall have no liability of any nature to Lessor for failure to allow Other User(s) to use Lessee’ antenna structure. Lessee shall receive 100% of the rental for any Other Users’ use of Lessee’s antenna structure, and City shall receive 100% of the rental, negotiated by City and such Other User for the portion of the Other User’s lease of any City Property. All operations by Lessee shall be in compliance with all Federal Communications Commission (“FCC”) requirements. Should City add new facilities on the City Property in the future, Lessee will not cause measurable electronic or physical interference with City owned and operated equipment that is related to public health and safety and is located on the City Property. Lessee shall reasonably cooperate with current and future users of the City Property. Lessor will not grant a lease to any party for use of the City Property if the new use would interfere with Lessee’s operation of its communications facility. Any future lease of the Site which permits installation of communication equipment shall be conditioned upon not interfering with Lessee’s operation of the Premises. 4.8.9 Electromagnetic Emissions. Lessee’s operations on the Premises shall comply with all applicable federal laws and regulations regarding electromagnetic emissions. After its Improvements are constructed on the Premises, Lessee shall conduct all necessary tests to ensure that its facilities are in compliance with those laws and regulations. The tests shall be conducted by a licensed engineer, and the results shall be provided to the City. ARTICLE 5 Maintenance, Repairs and Alterations 5.1 General. Lessee shall keep in good order, condition and repair the Premises, and the Improvements placed on the Premises. Lessee shall keep the Premises clean and free of debris. 5.2 Surrender. Within ninety (90) days after the last day of the Term, or any Option Term if so extended, Lessee shall surrender the Premises to City in the same condition as when received, clean and free of debris, reasonable wear and tear. Lessee shall also remove all Improvements and cables and wires located above ground or below ground that Lessee placed upon the Premises, and repair any damage to the Premises by the installation, maintenance or removal of Lessee’s Improvements and any related cables, wires or other equipment, and shall restore the Premises to the same conditions as when Lessee received the Premises from City, reasonable wear and tear. 5.3 City’s Rights. If Lessee is in default, subject to City mailing or delivering notice in accordance with Section 20.6 herein and the expiration of any applicable cure periods, City may (but shall not be required to) enter upon the Premises, (except in the case of an emergency, in which case no notice shall be required), to perform obligations on Lessee’s behalf and put the Premises and/or Improvements in good order, condition and repair, and the cost, together with 349 9 74211405.1 interest at the maximum rate then allowable by law, shall become due and payable as additional rent to City with Lessee’s next rental installment, provided, however, in the case of a non- emergency, City shall notify Lessee of City’s intention to perform Lessee’s obligations ten (10) days prior to performing any work on Lessee’s behalf. If no rental installment is due to City, these costs shall become due and payable within thirty (30) days from the date of City’s invoice accompanied by supporting documentation for such costs. 5.4 City Repair Obligations. City shall have no obligation to repair and maintain the Premises nor the Improvements and facilities. Lessee expressly waives the benefit of any statute now or hereinafter in effect which would afford Lessee the right to make repairs at City’s expense or to terminate this Lease because of City’s failure to keep Premises in good order, condition and repair. 5.5 Security Measures. City shall have the right to require a reasonable security system, device, operation or plan be installed and implemented to protect the Premises or the Improvements. Should City, in its sole discretion, require Lessee to install a security system, Lessee agrees to bear the sole cost of any security system, device, operation or plan and the installation and implementation. Lessee shall obtain City’s prior approval before installing or implementing any security system, device, operation or plan. Any security and fencing depicted in the exhibits attached hereto have been approved by City. 5.6 Improvements. 5.6.1 Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic or material lien against the Premises or any interest therein. Lessee shall give City not less than ten (10) days’ notice prior to the commencement of any work on the Premises, and City shall have the right to post notices of non-responsibility in or on the Premises. If Lessee, in good faith, contests the validity of any lien, claim or demand, then Lessee shall, at its sole expense, defend itself and City against it and shall pay any adverse judgment that may be rendered before enforcement against the City. If City shall require, Lessee shall furnish to City a surety bond satisfactory to City in an amount equal to the contested lien, claim indemnifying City against liability for and holding the Premises free from the lien or claim. In addition, City may require Lessee to pay City’s attorneys’ fees and costs in participating in the action if City decides to participate. 5.6.2 Lessor shall submit to the City for the City’s approval the plans prior to submitting the Lease to the City for the City’s approval. Before construction of any subsequent Improvements are commenced on the Premises, and before any building materials have been delivered to the Premises by Lessee or agents, Lessee shall comply with the following conditions or procure City’s written waiver of the conditions specified: 5.6.2.1 Construction Schedule. A construction schedule approved by Lessee and the City setting forth in detail a description of the Improvements and all steps for construction of the Improvements, and Lessee’s best estimate of the date upon which each step shall be substantially completed is attached and incorporated herein as Exhibit “D”. A construction schedule shall not be required for like kind replacement following after initial installation. 350 10 74211405.1 5.6.2.2 Protection of Adjacent Property, Indemnity of the City. Lessee shall protect the City Property and adjacent property against damage resulting from the performance of work undertaken by Lessee or Lessee’s agents, employees, contractors excluding any damage caused by gross negligence or the willful act of City, and shall indemnify the City against all liens or liability arising out of the performance of the work or the furnishing of labor, services, materials, supplies, equipment or power on behalf of Lessee. 5.6.2.3 Insurance. In addition to the insurance coverage otherwise required under this Lease, Lessee shall maintain workers’ compensation insurance covering all persons employed in connection with the construction of any Improvements, repair or maintenance activities with respect to whom death or injury claims could be asserted against the City, Lessee or the Premises. City may require any third party(ies) performing work at the Premises to maintain workers’ compensation insurance as contractor’s sole cost and expense at all times when any work is in process and shall otherwise conform to the requirements of this Lease for insurance. 5.6.2.4 Final Inspection. Lessee shall not provide service to its customers from the Improvements in any way without receiving a final inspection of the Improvements from the City. 5.6.2.5 Notice of Changes in Plans. Upon completion of any Improvement, Lessee shall give City notice of all changes in the plans and specifications made during the course of the work and at the same time deliver to City “as built” drawings accurately reflecting all changes, provided that no change that substantially alters the final plans last approved by the City shall be made without the City’s prior written approval. 5.7 City Access. The City or its agents, may enter into the Project at all reasonable times during the term of this Lease Agreement for the purpose of determining whether or not Lessee is complying with the terms and conditions or for any other purpose incidental to rights of the City. City shall provide Lessee with at least two (2) business days’ prior notice and shall have the ability but not the obligation to accompany City during any such inspection. 5.8 Lessee Access. Lessee may enter into or upon the Premises during normal business hours, Monday thru Friday from 8 a.m. to 5 p.m. upon reasonable notice to the City. In the event of an emergency, Lessee’s access shall be 24/7. Lessee acknowledges that other lessees and licensees also have rights to access the Premises, and that if multiple lessees or licensees request simultaneous access, the City may have to delay Lessee’s access to the Premises to accommodate all parties. City acknowledges that off peak maintenance (non-business hours) is required approximately once per month. Lessee shall provide 24-hours’ notice to City prior to off peak maintenance except in cases of emergency. 5.9 Lessee Access During Security Alert. During times of high security alert by the Homeland Security Advisory System, Lessee must obtain City’s consent to access the Project. ARTICLE 6 Indemnity and Insurance 6.1 Indemnity. This Lease is made upon the express condition that Lessee shall indemnify and hold harmless the City and its officers, agents and employees against any suits, claims or actions to 351 11 74211405.1 the extent arising out of Lessee’s use of the Premises or from any act permitted, or any omission to act, in or about the Premises or the City Property by Lessee or its agents, employees, contractors or invitees, including, but not limited to, any injury or injuries to, or death or deaths of, persons or property that may occur, or that may be alleged to have occurred from any cause or causes whatsoever, while in, upon, about or in any way connected with the Premises during the term of this Lease, or during any holdover tenancy thereof (except where caused solely by the active negligence or willful misconduct of City, its employees or agents). Lessee agrees to defend any actions, suits or claims and pay all reasonable charges of attorneys and all other costs and expenses arising therefrom; and, if any judgment be rendered against the City or any of the other individuals enumerated above in any action, except to the extent the judgment arises from the negligence or willful misconduct of the City, its employees or agents, Lessee shall, at its sole cost and expense, satisfy and discharge same. 6.2 Waiver of Claims. Lessee waives any claims against City for injury to Lessee’s business or any loss of income, for damage to Lessee’s property, or for injury or death of any person in or about the Premises or the City Property, from any cause whatsoever, except to the extent caused by City’s negligence or willful misconduct. 6.3 Insurance. During the term of this Lease, Lessee shall maintain in full force and affect the following insurance policies: 6.3.1 Commercial general liability policy (bodily injury and property damage); and 6.3.2 Comprehensive automobile liability insurance policy. These policies shall be maintained with respect to employees and vehicles using the Property with coverage amounts and including the required endorsements, certificates of insurance and coverage verifications as defined in Exhibit “E” attached and incorporated by this reference. ARTICLE 7 Damage, Destruction and Termination 7.1 Nontermination and Nonabatement. Except as provided herein, no destruction or damage to the Premises by fire, windstorm or other casualty, whether insured or uninsured, shall entitle Lessee to terminate this Lease, unless Premises are rendered unusable as a cell site. 7.2 Force Majeure. Prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain labor, materials or reasonable substitutes, governmental restrictions, governmental regulation, governmental controls, judicial orders, enemy, or hostile governmental actions, civil commotion, fire or other casualty, and other causes beyond the reasonable control of Lessee, shall excuse the performance by Lessee for a period equal to the prevention, delay or stoppage, except the obligations imposed with regard to rent to be paid by Lessee pursuant to this Lease. In the event any work performed by Lessee or Lessee’s contractor’s results in a strike, lockout, and/or labor dispute, the strike, lockout, and/or labor dispute shall not excuse the performance by Lessee of the provisions of this Lease. 352 12 74211405.1 7.3 Waiver. City and Lessee waive the provisions of any statutes which relate to termination of leases when leased property is destroyed and agree that such event shall be governed by the terms of this Lease. ARTICLE 8 Taxes 8.1 Personal Property. Lessee shall pay prior to delinquency all taxes, license fees and public charges assessed or levied against Lessee or Lessee’s estate in this Lease or Lessee’s Improvements, trade fixtures, furnishings, equipment and other personal property. 8.2 Real Property. Lessee shall pay Lessee’s share of any increased real property taxes (as defined in Section 8.3 below) which become due and payable by Lessee. Should these taxes become due and payable by the City then on or before the later of ten (10) days prior to the delinquency, or three (3)days after the date on which Lessee receives a copy of the tax bill and notice of City’s determination including documentation reasonably supporting of the determination hereunder that the tax has increased due to this Lease and installation of Lessee’s antenna. Lessee’s liability to pay real property taxes shall be prorated on the basis of a three hundred sixty-five (365) day year to account for any fraction or portion of a tax year included in the Lease term at the commencement or expiration or earlier termination of this Lease. Lessee is not responsible for taxes related to rental income to City under this Lease. Lessee specifically acknowledges it is familiar with Section 107.6 of the California Revenue and Taxation Code, realizes that a possessory interest subject to property taxes may be created, agrees to pay any tax, and waives any rights Lessee may have under Revenue and Taxation Code 107.6. 8.3 Definition. The term “real property taxes” as used herein shall mean: 8.3.1 All increased taxes, assessments, levies and other charges, general and special, foreseen and unforeseen, now or hereafter imposed by any governmental or quasi-governmental authority or special district having the direct or indirect power to tax or levy assessments, which are levied or assessed against or with respect to (i) value, occupancy, use or possession of the Improvements, (ii) any improvements, fixtures, equipment and other real or personal property of Lessee that are an integral part of the Premises, (iii) use of the Improvements public utilities or energy within the Premises; 8.3.2 All increased charges, levies or fees imposed by reason of environmental regulation or other governmental control of the premises and/or the Improvements, imposed due to the Improvements installed by Lessee; 8.3.3 Intentionally omitted; and, 8.3.4 All costs and fees (including reasonable attorneys’ fees) incurred by City in contesting any increase in real property taxes at Lessee’s written request and in negotiating with public authorities as to any real property taxes affecting the Premises as a result of this Lease. If at any time during the Term, the taxation or assessment of the Improvements prevailing as of the commencement of this Lease shall be altered, then any tax or charge, however designated, shall be included within the meaning of the term “real property taxes.” If any real property taxes are based upon the Improvements, then only that part of such tax that is fairly allocable to the 353 13 74211405.1 Improvements, as determined by City, on the basis of the assessor’s worksheets or other available information, shall be included within the meaning of the term “real property taxes.” ARTICLE 9 Utilities Lessee shall pay for all water, gas, heat, light, power, telephone and other utilities and services supplied to the Premises, together with any taxes. ARTICLE 10 Signs Lessee shall not place any signs upon the Premises without prior written consent of City except as required by law. ARTICLE 11 Assignment and Subletting 11.1 City’s Consent Required. Lessee shall not voluntarily or by operation of law assign, transfer, mortgage, sublet or otherwise transfer or encumber all or any part of Lessee’s interest in this Lease or in the Premises, without City’s prior written consent, which consent shall not be unreasonably withheld. City shall respond to Lessee’s request for consent in a timely manner and any attempted assignment, transfer, mortgage, encumbrance or subletting without consent shall be void and shall constitute a breach of this Lease. 11.2 Net Worth Requirements. Notwithstanding the foregoing, Lessee may assign or sublet the Premises, or any portion thereof, without the City’s consent, to any entity which controls, is controlled by, or is under the common control with Lessee, or to any entity resulting from any merger or consolidation with Lessee, or to any partner of Lessee or to any partnership in which Lessee is a general partner, or to any person or entity which acquires all of the assets of Lessee on the City Property, or to any entity which obtains a security interest in a substantial portion of Lessee’s assets Any entity listed in this paragraph or its general partner, affiliate, or parent company shall have a net worth of not less than Ten Million Dollars ($10,000,000) as evidenced by publicly available financial or investor related statements or documentation, or by a net worth letter from an officer of a publicly-traded affiliate of Lessee. 11.3 No Release of Lessee. No subletting or assignment as approved by City shall release Lessee of Lessee’s obligation or alter the primary liability of Lessee to pay the rent and to perform all other obligations to be performed by Lessee hereunder. The acceptance of rent by City from any other person shall not be deemed to be a waiver by City of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting. In the event of default by any assignee of Lessee or any successor of Lessee in the performance of any of the terms hereof, City may proceed directly against Lessee without the necessity of exhausting remedies against said assignee. 11.4 Right of First Refusal. If Lessor elects, during the Term to grant to a third party by easement or other legal instrument an interest in and to that portion of the Property occupied by Lessee, or a larger portion thereof, for the purpose of operating and maintaining communications 354 14 74211405.1 facilities or the management thereof, with or without an assignment of this Agreement to such third party, Lessee shall have the right of first refusal to meet any bona fide offer of transfer on the same terms and conditions of such offer. If Lessee fails to meet such bona fide offer within thirty (30) days after written notice thereof from Lessor, Lessor may grant the easement or interest in the Property or portion thereof to such third person in accordance with the terms and conditions of such third party offer. ARTICLE 12 Defaults; Remedies 12.1 Defaults. The occurrence of any one or more of the following events shall constitute a material default or breach of this Lease by Lessee: 12.1.1 The abandonment of the Premises by Lessee as defined by Civil Code §1951.3. 12.1.2 The failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due, where the failure shall continue for a period of ten (10) business days after receipt of written notice from City to Lessee. 12.1.3 The failure by Lessee to observe or perform any of the covenants, conditions or provisions of this Lease in any material respect to be observed or performed by Lessee, other than those described in Section 12.1(B) above, where the failure shall continue for a period of thirty (30) days after receipt of written notice from City to Lessee; provided, however, that if the nature of Lessee’s default is that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default, if Lessee commenced cure within the thirty (30) day period and thereafter diligently prosecutes the cure to completion. 12.1.4 The making by Lessee of any general arrangement or assignment for the benefit of creditors; Lessee’s becoming a “debtor” as defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, it is dismissed within sixty (60) days); the appointment of a bankruptcy trustee or receiver to take possession of all or substantially all of Lessee’s assets located at or on the Premises or of Lessee’s interest in this Lease where possession is not restored to Lessee within thirty (30) days; or the attachment, execution or other judicial seizure of all or substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where seizure is not discharged within thirty (30) days. 12.2 Remedies. In the event of any material default or breach by Lessee, City may at any time thereafter, following any notice required by statute, and without limiting City in the exercise of any right or remedy which City may have by reason of default or breach: 12.2.1 Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises and Improvements to City. In that event, City shall be entitled to recover from Lessee all damages incurred by City by reason of Lessee’s default including, but not limited to, the cost of recovering possession of the Premises, expenses of reletting, including if necessary, removal of Improvements and restoration of the Premises, reasonable attorneys’ fees, the worth at the time of the award of the unpaid rent that had been earned at the time of termination of this Lease and the worth at the time of award of the amount by which the unpaid rent for the balance of the term after 355 15 74211405.1 the time of such award exceeds the amount of rental loss for the same period that Lessee proves could be reasonabl y avoided. 12.2.2 Maintain Lessee’s right to possession, in which case this Lease shall continue in effect whether or not Lessee shall have abandoned the Premises. In that event, City shall be entitled to enforce all of City’s rights and remedies under this Lease, including the right to recover rent as it becomes due. 12.2.3 Pursue any other remedy now or hereafter available to City under the laws or judicial decisions of the State of California. 12.3 No Relief from Forfeiture After Default. Lessee waives all rights of redemption or relief from forfeiture under California Code of Civil Procedure §§1174 and 1179, and any other present or future law, in the event Lessee is evicted or City otherwise lawfully takes possession of the Premises by reason of any default or breach of this Lease by Lessee. ARTICLE 13 Termination of Lease 13.1 Termination by Lessee. Except as provided otherwise herein or by applicable law, Lessee may terminate this Lease for cause upon the giving of not less than thirty (30) days written notice to City if any of the following occur: 13.1.1 The failure by City to observe or perform any of the covenants, conditions or provisions of this Lease in any material respect to be observed or performed by City, where the failure shall continue for a period of thirty (30) days after written notice from Lessee to City; provided, however, that if the nature of the City’s default is such that more than thirty (30) days are reasonably required for its cure, then City shall not be deemed to be in default, if City commenced to cure within a thirty (30) day period and thereafter diligently prosecutes such cure to completion; 13.1.2 Lessee fails to obtain or loses any permits necessary for operation of the Premises as a cellular telephone communications facility. 13.1.3 Lessee determines that the site is inappropriate for technological reasons, beyond its control; including but not limited to signal interference. 13.2 Termination by City. Except as otherwise provided or by applicable law, City may terminate this Lease for cause upon giving thirty (30) days written notice if any of the following occur: 13.2.1 The City Council of the City of Cupertino determines through credible scientific evidence collected with regard to the cellular telecommunications facility operated at the Premises, that the facility is a threat to public health or safety. The City shall provide at least 30-days’ prior written notice to Lessee of the intent to revoke the permit and Lessee shall have a full and fair opportunity to provide contradictory scientific data prior to City Council action; or 13.2.2 Lessee loses or fails to satisfy any condition of any permit required by City necessary for operation of the Premises as a cellular telephone communication facility. 356 16 74211405.1 13.3 Condemnation of Leased Premises. Should all or part of the Premises be taken by any public or quasi-public agency or entity under the power of eminent domain under the term of this lease: 13.3.1 Either City or Lessee may terminate this Lease by giving the other thirty (30) days’ prior written notice of termination; and 13.3.2 Any damages and compensation awarded or paid because of the taking shall belong to the City, except for amounts paid Lessee for relocation expenses or for damage to property owned by Lessee and the value of the unexpired term of this Lease. ARTICLE 14 City’s Liability The term “City” as used herein, shall mean the City only while the City is the owner of the fee title of the Premises. In the event of any transfer of title or interest, the City (and in case of any subsequent transfer, then the grantor) shall, after the date of such transfer, be relieved from all liability with respect to its obligations hereunder occurring after the transfer date, provided that any funds in the hands of City at the time of transfer, in which Lessee has an interest, shall be delivered to the City’s grantee. ARTICLE 15 Interest on Past-Due Obligations Except as expressly provided, any amount due City when not paid when due shall bear interest at the lesser of ten percent (10%) per year or the maximum rate allowable by law from the date due. ARTICLE 16 Holding Over If Lessee remains in possession of the Premises or any part after the expiration of the term or option term the occupancy shall be a tenancy from month to month with all the obligations of this Lease applicable to Lessee and at a monthly rental obligation of 150% of the Base Rent in effect at the time of expiration. ARTICLE 17 City’s Access City and City’s agents shall have the right to enter the Premises for the purpose of showing to prospective purchasers, lenders or lessees, and making alterations, repairs, improvements or additions to the Premises as City may deem necessary. City shall provide Lessee with at least five (5) business days’ prior written notice and Lessee shall have the ability but not the obligation to accompany City during any such inspection. 357 17 74211405.1 ARTICLE 18 Quiet Possession Upon Lessee’s paying rent for the Premises and observing and performing all of the covenants, conditions and provisions on Lessee’s part to be observed and performed, Lessee shall have quiet possession of the Premises for the entire term subject to all of the provisions of this Lease. ARTICLE 19 Easements City reserves to itself, the right, from time to time, to grant such easements, rights and dedications outside of the Premises and subject to the terms of this Lease, that City deems necessary or desirable, and to cause the recordation of parcel maps and restrictions, so long as the easements, rights, dedications, maps and restrictions do not materially interfere with the use of the Premises by Lessee. Lessee shall sign any of the aforementioned documents upon request of City and failure to do so shall constitute a material breach of this Lease. ARTICLE 20 General Provisions 20.1 Severability. The invalidity of any provision of this Lease as determined by a court of competent jurisdiction shall in no way affect the validity of any other provision. 20.2 Time of Essence. Time is of the essence under this Lease. 20.3 Additional Rent. Any monetary obligations of Lessee to City under the terms of this Lease shall be deemed to be rent and all references herein to “rent” shall be deemed to include the Base Rent and all other sums paid or payable by Lessee to City. 20.4 Entire Agreement, Modification. This Lease contains all agreements of the parties with respect to any matter mentioned herein. No prior agreement or understanding shall be effective. This Lease may be modified in writing only. 20.5 No Warranty. Except as otherwise stated in this Lease, Lessee hereby acknowledges that neither the City nor any employees or agents of the City has made any oral or written warranties or representations to Lessee relative to the condition or use by Lessee of the Premises and Lessee acknowledges that Lessee assumes all responsibility regarding the Occupational Safety and Health Act, the legal use and adaptability of the Premises and compliance with all applicable laws and regulations in effect during the term of this Lease. 20.6 Notices. Any notice required or permitted to be given, shall be in writing and may be given by personal delivery or by first class mail, and if given personally or by mail, shall be deemed sufficiently given if addressed to Lessee or to City at the address noted below: 358 18 74211405.1 Lessee: GTE Mobilnet of California Limited Partnership, d/b/a Verizon Wireless 180 Washington Valley Road Bedminster, New Jersey 07921 Attention: Network Real Estate Re: DeAnza Stevens Creek City: David Brandt City Manager, City of Cupertino 10300 Torre Avenue Cupertino, CA 95014-3202 With Copy to: Randolph Stevenson Hom, City Attorney 20410 Town Center Lane, Suite 210 Cupertino, CA 95014-3255 Each notice shall specify the provision pursuant to which it is given. Either party may specify a different address or contact person. A copy of all notices required or permitted to be given to City hereunder shall be concurrently transmitted to the party at the address as City designated by notice to Lessee. Notice given under this section shall be deemed in compliance with applicable statutory notice requirements, including Code of Civil Procedure §1162. 20.7 Waivers. No waiver by City or Lessee of any provision shall be deemed a waiver of any other provision or of any subsequent breach by City or Lessee of the same or any other provision. City’s or Lessee’s approval of any act shall not be deemed to render unnecessary obtaining of their consent of any subsequent act. The acceptance of rent by City shall not be a waiver of any preceding breach by Lessee of a provision, other than the failure of Lessee to pay the particular rent so accepted, regardless of City’s knowledge of the breach at the time of acceptance of rent. 20.8 Cumulative Remedies. No remedy or election under this Lease shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 20.9 Choice of Law. This Lease shall be governed by the laws of the State of California. The language of all parts of this Lease shall be construed with its fair meaning and not strictly for or against the City or Lessee. 20.10 Condition to Effectiveness of Lease. The approval of the City Council of City constitutes an express condition precedent to the effectiveness of this Lease. 20.11 Attorneys’ Fees. If either party brings an action to enforce the terms or declare rights hereunder, the prevailing party in any such action, shall be entitled to its reasonable attorneys’ fees and court costs to be paid by the other party. 359 19 74211405.1 20.12 Brokers. Each party represents that it is has not had dealings with any real estate broker or finder, with respect to this lease in any manner. Each Party shall hold harmless the other party from all damages resulting from any claims that may be asserted against the other party by any broker, finder, or other person with whom the Indemnifying Party has or purportedly has dealt. 20.13 Authority. Each individual executing this Lease on behalf of Lessee and City represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of said party. 20.14 Non-Liability of Officials and Employees of the City. No official or employee of City shall be personally liable for any default or liability under this agreement. 20.15 Non-Discrimination. Lessee covenants it shall not discriminate based upon race, color, creed, religion, sex, marital status, age, handicap, national origin or ancestry in any activity under this lease. 20.16 Independent Contractor. It is agreed that Lessee shall act and be an independent contractor and not an agent nor employee of City. 20.17 Conflict of Interest. Lessee shall at all times avoid conflict of interest or appearance of conflict of interest in performance of this agreement. 20.18 Memorandum of Lease. Following execution of this Lease, either party, at its sole expense shall be entitled to record a Memorandum of Lease in the official records of Santa Clara County. Upon termination or expiration of this Lease, Lessee shall execute and record a quitclaim deed. 20.19 Estoppel Certificate. Lessee shall, from time to time, upon at least thirty (30) days receipt of prior written notice from City, execute, acknowledge and deliver to City a statement in writing: (a) certifying this Lease is unmodified and in full force and effect, or, if modified, stating the nature of the modification and certifying that the Lease, as modified, is in full force and effect, and the date to which the rental and other charges, if any, have been paid; and, (b) acknowledging that there are not to Lessee’s knowledge, any defaults, or stating if any defaults are claimed, any statement may be relied upon by any prospective purchaser or encumbrancer of the City Property. [Signature page follows] 360 20 74211405.1 CITY OF CUPERTINO, CALIFORNIA APPROVED AS TO FORM: David Brandt Randolph Stevenson Hom City Attorney City Manager ATTEST: City Clerk “City” GTE Mobilnet of California Limited Partnership, d/b/a Verizon Wireless By: Cellco Partnership Its: General Partner By:______________________________ Phillip French, Executive Director – Network Date: ___________________________ “Lessee” 361 21 74211405.1 Exhibit A Property [See attached] 362 Exhibit A Property 363 22 74211405.1 Exhibit B Premises [See attached] 364 36 5 36 6 23 74211405.1 Exhibit C Site Plans [See attached] 367 1520 River Park Drive, Sacramento, CA 95815 916-567-9630 www.MSTArchitects.com 36 8 1520 River Park Drive, Sacramento, CA 95815 916-567-9630 www.MSTArchitects.com 36 9 24 74211405.1 Exhibit D Construction Schedule [See attached] 370 Si t e N a m e : Ge n e r a l C o n t r a c t o r : We e k 1 We e k 2 We e k 3 We e k 4 We e k 5 Week 6Week 7 AC T I V I T Y S M T W T F S S M T W T F S S M T W T F S S M T W T F S S M T W T F S S M TWTFSSMTWTFS Pr e C o n M e e t i n g Co m p l e t e d P r e v i o u s W e e k Di g A l e r t / U t i l i t y M a r k s C o m p l e t e d P r e v i o u s W e e k Te l c o C o n d u i t s X X X X X X X X X El e c t r i c a l C o n d u i t s X X X X X X X X X To w e r F o u n d a t i o n X X Eq u i p m e n t F o u n d a t i o n X X X X Ge n e r a t o r P a d X X Te w e r S e t x x x x x Eq u i p m e n t S e t x Co a x C a b l e T r a y / C o n d u i t s x x x x An t e n n a s & C o a x x x x x x Si t e E l e c t r i c a l X X X X Si t e G r o u n d i n g X X x x x x X X La n d s c a p e & I r r i g a t i o n X X Bu i l d i n g F i n a l x NO T E S : De A n z a S t e v e n s C r e e k Su p e r v i s o r ' s N a m e a n d C o n t a c t N u m b e r : VZ W C o n s t r u c t i o n S c h e d u l e R e v . 0 9 / 3 / 0 5 37 1 25 74211405.1 Exhibit E Insurance Requirements Lessee shall purchase and maintain the insurance policies set forth below at its sole cost and expense. Such policies shall be maintained for the full term of this Lease. The term “City” shall include the duly elected or appointed council members, commissioners, officers, agents, employees and volunteers of the City of Cupertino, California, individually or collectively. 1. MINIMUM SCOPE AND LIMITS OF REQUIRED INSURANCE POLICIES . On or before the commencement of the terms of this Lease, Lessee shall furnish City with certificates showing the type, amount, class of operations covered, effective dates and dates of expiration of insurance coverage in compliance with this Exhibit. These certificates, which do not limit Lessee’s indemnification, shall also contain substantially the following statement: “Should any of the above insurance covered by this certificate be canceled or coverage reduced before the expiration date thereof, Lessee affording coverage shall provide thirty (30) days’ advance written notice to the City of Cupertino, “Attention: City Manager.” Endorsements including the City as additional insured shall be submitted with the insurance certificates. The following policies shall be maintained with insurers authorized to do business in the State of California and shall be issued under forms of policies satisfactory to the City: (1) Workers’ Compensation: Statutory coverage as required by the State of California. (2) Liability: Commercial general liability coverage in the following minimum limits: Bodily Injury: $1,000,000 each occurrence $2,000,000 aggregate - all other Property Damage: $500,000 each occurrence $1,000,000 aggregate If submitted, combined single limit policy with aggregate limits in the amounts of $2,000,000 will be considered equivalent to the required minimum limits shown above. (3) Automotive: Comprehensive automobile liability coverage in the following minimum limits: Bodily injury: $500,000 each occurrence Property Damage: $500,000 each occurrence or 372 26 74211405.1 Combined Single Limit: $1,000,000 each occurrence 2. SUBROGATION WAIVER: Lessee agrees that in the event of loss due to any of the perils for which it has agreed to provide comprehensive general and automotive liability insurance, Lessee shall look solely to its insurance for recovery. Lessee hereby grants to City, on behalf of any insurer providing comprehensive general and automotive liability insurance to either Contractor or City with respect to the services of Contractor herein, a waiver of any right to subrogation which any insurer of Lessee may acquire against City by virtue of the payment of any loss under the insurance. 3. ABSENCE OF INSURANCE COVERAGE. City may direct Lessee to immediately cease all activities with respect to this Lease if it determines that Lessee fails to carry, in full force and effect, all insurance policies with coverages at or above the limits specified in this Lease. Any delays or expense caused due to stopping of work and change of insurance shall be considered Lessee’s delay and expense. At the City’s discretion, under conditions of lapse, City may purchase appropriate insurance and charge all costs related to such policy to Lessee. 4. PROOF OF INSURANCE COVERAGE AND COVERAGE VERIFICATION . A Certificate of Insurance, on an Accord form, and completed coverage verification shall be provided to City by each of Lessee’s insurance companies as evidence of the stipulated coverages prior to commencement of this Lease, and annually thereafter for the term of this Agreement. All of the insurance companies providing insurance for Lessee shall have, and provide evidence of, a Best Rating Service rate of A VI or above. The Certificate of Insurance and coverage verification and all other notices related to cancellation or non-renewal shall be mailed to: City Clerk City of Cupertino 10300 Torre Avenue Cupertino, CA 95014-3202 373 RESOLUTION NO. 16- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO AUTHORIZING THE CITY MANAGER TO EXECUTE A FIVE-YEAR ANTENNA GROUND LEASE AGREEMENT WITH UP TO TWO FIVE-YEAR OPTIONS BETWEEN THE CITY OF CUPERTINO AND GTE MOBILENET OF CALIFORNIA LIMITED PARTNERSHIP, A CALIFORNIA LIMITED PARTNERSHIP D/B/A VERIZON WIRELESS FOR A PORTION OF THE CUPERTINO CIVIC CENTER WHEREAS, the City Council has considered a request for an Antenna Ground Lease Agreement between the City of Cupertino and GTE Mobilnet of California Limited Partnership, a California Limited Partnership d/b/a Verizon Wireless., for the lease of facilities located at the Cupertino Civic Center, 10800 Torre Avenue; and WHEREAS, the provisions, terms, and conditions of th e Antenna Ground Lease Agreement have been reviewed and approved by the City Attorney and City Manager. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Cupertino hereby authorizes the City Manager to execute the five-year Antenna Ground Lease in the substantially similar form as set forth in the draft Lease as presented to Council and further and authorize the City Manager to negotiate and execute up to two five-year options consistent with the terms of the Lease on behalf of the City of Cupertino. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th day of January 2016, by the following vote: Vote Members of the City Council AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: _________________________ ________________________ Grace Schmidt, City Clerk Barry Chang, Mayor, City of Cupertino 374 375 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1279 Name: Status:Type:Ordinances and Action Items Agenda Ready File created:In control:12/15/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: An ordinance amending sections 14.04.100 and 18.56.040 of the Cupertino municipal code to provide for a limited waiver of reimbursement requirements when a property owner dedicates right- of-way for a city street improvement or facility project. Sponsors: Indexes: Code sections: Attachments:Staff Report A - Draft Ordinance B - Redline Version of Draft Ordinance Action ByDate Action ResultVer. City Council1/19/20161 Subject:Anordinanceamendingsections14.04.100and18.56.040oftheCupertinomunicipal codetoprovideforalimitedwaiverofreimbursementrequirementswhenapropertyowner dedicates right-of-way for a city street improvement or facility project. ConductthefirstreadingofOrdinanceNo.16-2141:“AnOrdinanceoftheCityCouncilofthe CityofCupertinoamendingSections14.04.100and18.56.040oftheCupertinoMunicipal Codetoprovideforalimitedwaiverofreimbursementrequirementswhenapropertyowner dedicatesright-of-wayforacitystreetimprovementorfacilityproject,”tofacilitatethe provisionofsidewalksandstreetwideningincertainareaswherepedestriansandbicyclistsare prevalent. CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™376 1 PUBLIC WORKS DEPARTMENT CITY HALL 10 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3354 www.cupertino.org CITY COUNCIL STAFF REPORT Meeting: January 19, 2016 Subject An ordinance amending sections 14.04.100 and 18.56.040 of the Cupertino municipal code to provide for a limited waiver of reimbursement requirements when a property owner dedicates right-of-way for a city street improvement or facility project. Recommended Action Conduct the first reading of the draft ordinance: “An ordinance of the City Council of the City of Cupertino amending sections 14.04.100 and 18.56.040 of the Cupertino municipal code to provide for a limited waiver of reimbursement requirements when a property owner dedicates right-of-way for a city street improvement or facility project,” to facilitate the provision of sidewalks and street widening in certain areas where pedestrians and bicyclists are prevalent. Discussion Currently, almost all construction of new curb, gutter and sidewalk is achieved as standard requirements of new development. Especially in residential neighborhoods, this typically results in a slow, piecemeal buildout of the sidewalk network, leaving gaps where pedestrians walk from a short piece of sidewalk back into the street or dirt, and then back on another short piece of sidewalk. Bicyclists are also more constricted in the locations where the street widening has not occurred. While this situation exists in several areas of the City, it is very clearly illustrated in the school walking routes in the Monta Vista neighborhood just north of McClellan Road. The subject sections of the municipal code provide that if the City or another property owner installs street improvements that benefit a property, the owner of the benefitted property is required to reimburse the City or the property owner for its reasonable share of the costs of such improvements when they seek a land use permit from the City. Section 18.56.040 of the City of Cupertino Municipal Code imposes a similar reimbursement requirement for street facilities in connection with subdivision maps. There has been a strong desire to improve the walkability of routes to schools; particularly those areas lacking curb, gutter and sidewalk. Because the subject municipal code sections require property owners developing a property through subdivision, or increasing their residential square footage by over 25% reimburse the 377 2 City for any costs advanced for these improvements, property owners are typically hesitant to dedicate the necessary right-of-way for the widening. In order to incent the dedication of land necessary to improve such routes, prior to an owner’s application for a land use permit or subdivision map, this code amendment would provide a limited waiver of future reimbursement charges in exchange for an owner’s dedication of land, at no cost, in connection with the City’s commencement of a street improvement project. Sustainability Impact There is no sustainability impact resulting from this amendment. Fiscal Impact There is no fiscal impact resulting from this amendment. If, in the future, the City budgets a capital improvement project to improve certain streets with curb, gutter and sidewalk, there would be no future reimbursement expected from property owners if in advance of the project they enter into a limited waiver agreement with the City and dedicate their street frontage property at no cost to the City. _____________________________________ Prepared by: Timm Borden, Director of Public Works Approved for Submission by: David Brandt, City Manager Attachments: A – Draft Ordinance B – Redline Version of Draft Ordinance 378 1 ORDINANCE NO. 16-___ AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CUPERTINO AMENDING SECTIONS 14.04.100 AND 18.56.040 OF THE CUPERTINO MUNICIPAL CODE TO PROVIDE FOR A LIMITED WAIVER OF REIMBURSEMENT REQUIREMENTS WHEN A PROPERTY OWNER DEDICATES RIGHT-OF-WAY FOR A CITY STREET IMPROVEMENT OR FACILITY PROJECT WHEREAS, Section 14.04.110 of the City of Cupertino Municipal Code provides that if the City or another property owner installs street improvements that benefit a property, the owner of the benefitted property is required to reimburse the City or the property owner for its reasonable share of the costs of such improvements when the benefitted property owner seeks a land use permit from City; and WHEREAS, Section 18.56.040 of the City of Cupertino Municipal Code imposes a similar reimbursement requirement for street facilities in connection with subdivision maps; and WHEREAS, City would like to improve the walkability of routes to schools, particularly those areas lacking curb, gutter and sidewalk; and WHEREAS, in order to incentivize the dedication of land necessary to improve such routes, prior to an owner’s application for a land use permit or subdivision map, the City desires to provide a limited waiver of future reimbursement charges in exchange for an owner’s dedication of land to City , at no cost, in connection with the City’s commencement of a street improvement project; and WHEREAS, The City Council is the decision making body for this Ordinance and, before taking action on this Ordinance, hereby finds that the amendments are exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3): General Rule Exemption, since it can be seen with certainty that there is no possibility that the activity would have a significant effect on the environment. The amendments, which allow the dedication of right-of-way by property owners in certain circumstances in consideration of a limited waiver of future reimbursement charges, address only the procedures by which the dedication and waiver would be allowed. Any proposed street improvement or facilities project would be subject to subsequent project-specific CEQA review. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CUPERTINO DOES HEREBY ORDAIN AS FOLLOWS: 379 2 Section 1. Section 14.04.110 of Chapter 14.04 of Title 14 of the Cupertino Municipal Code, Improvements Installed Prior to Permit-Imposition of Street Improvement Reimbursement Charges, Cost of Land and Interest, is hereby amended by adding subsection (D) to read as follows: 14.04.110 Improvements Installed Prior to Permit–Imposition of Street Improvement Reimbursement Charges, Cost of Land and Interest. A. In some instances, the public welfare, safety and economy can be best served by the installation of improvements on unimproved streets prior to the time that an adjoining property owner seeks a permit. Since such adjoining property benefits from the street improvements, the owners of such property are required to contribute their share of the cost of those street improvements (just as permittees who seek a permit prior to the installation of improvements are required to do) when they seek a building permit unless it is exempt pursuant to Section 14.04.230(D) of this chapter, a planned development permit, use permit, or a site and architectural approval. B. Where street improvements have been installed by the City, or by another property owner, without cost to the adjoining property owner, the adjoining property owner, as a condition precedent to obtaining a permit or any entitlement to use for his/her property, shall pay the City for the cost of the land at the cost to the City, or another property owner, and shall pay a street improvement reimbursement charge for the improvements which the City, or another property owner, installed on the streets abutting or included in the benefitted property, in an amount equal to the total improvement costs for each particular benefitted property as set forth in the reimbursement agreement. Payments for both land and improvements shall include simple interest in the amount of seven percent per year, to be calculated in the following manner: 1. Land Cost. Interest to accrue from the date the street improvements are accepted by the City to the date the street improvement reimbursement charge is paid, or if the land is purchased by the City for a City project, from the date of purchase to the date the charge is paid; 2. Improvement Cost. Interest to accrue from the date the street improvements are accepted by the City to the date the street improvement reimbursement charge is paid, or if installed by the City, from the date installation commenced to the date the charge is paid. C. Provided, however, that the interest shall be waived if the adjoining property owner dedicates or has dedicated to the City land necessary for the street improvements, or where no such dedication is necessary. 380 3 D. Notwithstanding any other provision of this Code, if, upon request by the City in connection with the City’s commencement of a street improvement project, a property owner dedicates to the City land necessary for such street improvement project at no cost to City, the City’s Director of Public Works, on behalf of the City, may provide a limited waiver of future reimbursement charges for the cost of the street improvements. The waiver shall be signed by the City Manager or his or her designee and shall be in a form as approved by the City Attorney. SECTION 2 . Section 18.56.040 of Chapter 18.56 of Title 18 of the Cupertino Municipal Code, Imposition of Street Facility Reimbursement Charges, Cost of Land and Interest upon Benefitted Properties, is hereby amended by adding subsection (C) to read as follows: 18.56.040 Imposition of Street Facility Reimbursement Charges, Cost of Land and Interest upon Benefitted Properties A. Where street facilities have been installed by the City or the initial developer without cost to the benefitted property owner, the benefitted property owner, as a condition precedent to obtaining a final map, a final parcel map or a conditional certificate of compliance, shall pay the City for the cost of the land at the cost to the City or to the initial developer, and shall pay a street facility reimbursement charge for the facilities which the City or the initial developer installed on the streets abutting or on the benefitted property in an amount equal to such benefitted property owner's share of the total cost of the street facilities as set forth in the reimbursement agreement. Payment for both land and facilities shall include simple interest in the amount of seven percent per year, to be calculated in the following manner: 1. Land Cost. Interest to accrue from the date the street facilities are accepted by the City to the date the street facility reimbursement charge is paid, or if the land is purchased by the City for a City project, from the date of purchase to the date the charge is paid. 2. Street Facility Cost. Interest to accrue from the date the street facilities are accepted by the City to the date the street facility reimbursement charge is paid, or if installed by the City, from the date installation commenced to the date the charge is paid. B. Provided, however, that the interest shall be waived if the benefitted property owner dedicates or has dedicated to the City land necessary for the street facilities, or where no such dedication is necessary. 381 4 C. Notwithstanding any other provision of this Code, if, upon request by the City in connection with the City’s commencement of a street improvement project, a property owner dedicates to the City land necessary for such street improvement project at no cost to City, the City’s Director of Public Works, on behalf of the City, may provide a limited waiver of future reimbursement charges for the cost of the street improvements. The waiver shall be signed by the City Manager or his or her designee and shall be in a form as approved by the City Attorney. SECTION 3. The City Clerk shall certify the adoption of this Ordinance and shall give notice of its adoption as required by law. Pursuant to Government Code Section 36933, a summary of this Ordinance may be published and posted in lieu of publication and posting of the entire text. SECTION 4. This Ordinance shall be effective thirty (30) days following its adoption. INTRODUCED at a meeting of the Cupertino City Council the 19th day of January, 2016, and ENACTED at a regular meeting of the Cupertino City Council on this ___ day of , 2016, by the following vote: AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: Grace Schmidt, City Clerk Barry Chang Mayor, City of Cupertino 382 1 ORDINANCE NO. 16-___ AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CUPERTINO AMENDING SECTIONS 14.04.100 AND 18.56.040 OF THE CUPERTINO MUNICIPAL CODE TO PROVIDE FOR A LIMITED WAIVER OF REIMBURSEMENT REQUIREMENTS WHEN A PROPERTY OWNER DEDICATES RIGHT-OF-WAY FOR A CITY STREET IMPROVEMENT OR FACILITY PROJECT WHEREAS, Section 14.04.110 of the City of Cupertino Municipal Code provides that if the City or another property owner installs street improvements that benefit a property, the owner of the benefitted property is required to reimburse the City or the property owner for its reasonable share of the costs of such improvements when the benefitted property owner seeks a land use permit from City; and WHEREAS, Section 18.56.040 of the City of Cupertino Municipal Code imposes a similar reimbursement requirement for street facilities in connection with subdivision maps; and WHEREAS, City would like to improve the walkability of routes to schools, particularly those areas lacking curb, gutter and sidewalk; and WHEREAS, in order to incentivize the dedication of land necessary to improve such routes, prior to an owner’s application for a land use permit or subdivision map, the City desires to provide a limited waiver of future reimbursement charges in exchange for an owner’s dedication of land to City , at no cost, in connection with the City’s commencement of a street improvement project; and WHEREAS, The City Council is the decision making body for this Ordinance and, before taking action on this Ordinance, hereby finds that the amendments are exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3): General Rule Exemption, since it can be seen with certainty that there is no possibility that the activity would have a significant effect on the environment. The amendments, which allow the dedication of right-of-way by property owners in certain circumstances in consideration of a limited waiver of future reimbursement charges, address only the procedures by which the dedication and waiver would be allowed. Any proposed street improvement or facilities project would be subject to subsequent project-specific CEQA review; and NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CUPERTINO DOES HEREBY ORDAIN AS FOLLOWS: 383 2 Section 1. Section 14.04.110 of Chapter 14.04 of Title 14 of the Cupertino Municipal Code, Improvements Installed Prior to Permit-Imposition of Street Improvement Reimbursement Charges, Cost of Land and Interest, is hereby amended by adding subsection (D) to read as follows: 14.04.110 Improvements Installed Prior to Permit–Imposition of Street Improvement Reimbursement Charges, Cost of Land and Interest. A. In some instances, the public welfare, safety and economy can be best served by the installation of improvements on unimproved streets prior to the time that an adjoining property owner seeks a permit. Since such adjoining property benefits from the street improvements, the owners of such property are required to contribute their share of the cost of those street improvements (just as permittees who seek a permit prior to the installation of improvements are required to do) when they seek a building permit unless it is exempt pursuant to Section 14.04.230(D) of this chapter, a planned development permit, use permit, or a site and architectural approval. B. Where street improvements have been installed by the City, or by another property owner, without cost to the adjoining property owner, the adjoining property owner, as a condition precedent to obtaining a permit or any entitlement to use for his/her property, shall pay the City for the cost of the land at the cost to the City, or another property owner, and shall pay a street improvement reimbursement charge for the improvements which the City, or another property owner, installed on the streets abutting or included in the benefitted property, in an amount equal to the total improvement costs for each particular benefitted property as set forth in the reimbursement agreement. Payments for both land and improvements shall include simple interest in the amount of seven percent per year, to be calculated in the following manner: 1. Land Cost. Interest to accrue from the date the street improvements are accepted by the City to the date the street improvement reimbursement charge is paid, or if the land is purchased by the City for a City project, from the date of purchase to the date the charge is paid; 2. Improvement Cost. Interest to accrue from the date the street improvements are accepted by the City to the date the street improvement reimbursement charge is paid, or if installed by the City, from the date installation commenced to the date the charge is paid. C. Provided, however, that the interest shall be waived if the adjoining property owner dedicates or has dedicated to the City land necessary for the street improvements, or where no such dedication is necessary. 384 3 D. Notwithstanding any other provision of this Code, if, upon request by the City in connection with the City’s commencement of a street improvement project, a property owner dedicates to the City land necessary for such street improvement project at no cost to City, the City’s Director of Public Works, on behalf of the City, may provide a limited waiver of future reimbursement charges for the cost of the street improvements. The waiver shall be signed by the City Manager or his or her designee and shall be in a form as approved by the City Attorney. SECTION 2 . Section 18.56.040 of Chapter 18.56 of Title 18 of the Cupertino Municipal Code, Imposition of Street Facility Reimbursement Charges, Cost of Land and Interest upon Benefitted Properties, is hereby amended by adding subsection (C) to read as follows: 18.56.040 Imposition of Street Facility Reimbursement Charges, Cost of Land and Interest upon Benefitted Properties A. Where street facilities have been installed by the City or the initial developer without cost to the benefitted property owner, the benefitted property owner, as a condition precedent to obtaining a final map, a final parcel map or a conditional certificate of compliance, shall pay the City for the cost of the land at the cost to the City or to the initial developer, and shall pay a street facility reimbursement charge for the facilities which the City or the initial developer installed on the streets abutting or on the benefitted property in an amount equal to such benefitted property owner's share of the total cost of the street facilities as set forth in the reimbursement agreement. Payment for both land and facilities shall include simple interest in the amount of seven percent per year, to be calculated in the following manner: 1. Land Cost. Interest to accrue from the date the street facilities are accepted by the City to the date the street facility reimbursement charge is paid, or if the land is purchased by the City for a City project, from the date of purchase to the date the charge is paid. 2. Street Facility Cost. Interest to accrue from the date the street facilities are accepted by the City to the date the street facility reimbursement charge is paid, or if installed by the City, from the date installation commenced to the date the charge is paid. B. Provided, however, that the interest shall be waived if the benefitted property 385 4 owner dedicates or has dedicated to the City land necessary for the street facilities, or where no such dedication is necessary.“ C. Notwithstanding any other provision of this Code, if, upon request by the City in connection with the City’s commencement of a street improvement project, a property owner dedicates to the City land necessary for such street improvement project at no cost to City, the City’s Director of Public Works, on behalf of the City, may provide a limited waiver of future reimbursement charges for the cost of the street improvements. The waiver shall be signed by the City Manager or his or her designee and shall be in a form as approved by the City Attorney. SECTION 3. The City Clerk shall certify the adoption of this Ordinance and shall give notice of its adoption as required by law. Pursuant to Government Code Section 36933, a summary of this Ordinance may be published and posted in lieu of publication and posting of the entire text. SECTION 4. This Ordinance shall be effective thirty (30) days following its adoption. INTRODUCED at a meeting of the Cupertino City Council the 19th day of January, 2016, and ENACTED at a regular meeting of the Cupertino City Council on this ___ day of , 2016, by the following vote: AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: Grace Schmidt, City Clerk Barry Chang Mayor, City of Cupertino 386 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1281 Name: Status:Type:Ordinances and Action Items Agenda Ready File created:In control:12/15/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Proposed Initiative submitted by Cupertino Residents for Sensible Zoning Action Committee Sponsors: Indexes: Code sections: Attachments:Staff Report A - Notice of Intent and Proposed Initiative B - City Attorney’s Official Title and Summary C - Draft Resolution Action ByDate Action ResultVer. City Council1/19/20161 Subject: Proposed Initiative submitted by Cupertino Residents for Sensible Zoning Action Committee Adopt Resolution No. 16-009 directing City staff to prepare a report on the effects of the Initiative pursuant to Elections Code Section 9212 CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™387 OFFICE OF THE CITY MANAGER CITY HALL 10 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3212 www.cupertino.org CITY COUNCIL STAFF REPORT Meeting: January 19, 2016 Subject Proposed Initiative submitted by Cupertino Residents for Sensible Zoning Action Committee. Recommended Action Adopt a resolution directing City staff to prepare a report on the effects of the Initiative pursuant to Elections Code Section 9212. Background On November 24, 2015, the Cupertino Residents for Sensible Zoning Action Committee submitted to the City Clerk a Notice of Intent to circulate an initiative petition and a request for the City Attorney to prepare the official ballot title and summary. A copy of the Notice of Intent and the proposed initiative measure (“Initiative”) are attached to this report as Attachment 1. Pursuant to the Elections Code, the City Attorney subsequently prepared the official title and summary for the Initiative, a copy of which is attached as Attachment 2. The official title for the measure is: “Initiative amending Cupertino’s General Plan to limit redevelopment of the Vallco Shopping District, limit building heights and lot coverages in areas throughout the City, establish new setbacks and building planes on major thoroughfares, and require voter approval for any changes to these provisions.” The Initiative proponents have until June 6, 2016—which is 180 days from the time they received the official title and summary—to gather and submit the requisite number of signatures to qualify the measure for placement on the ballot. Under state law, the City Council now has the option, if it so chooses, to direct staff to prepare a report on the effects of the Initiative. Such reports are authorized by Elections Code section 9212 and are frequently referred to as “9212 Reports.” The purpose of 9212 Reports is to enable elected officials and the community to obtain a thorough understanding of the potential fiscal, legal, and other impacts of proposed initiatives. A 9212 Report may be ordered at any time during the period that the Initiative is being circulated for signatures, or alternatively, at any time up until the City Council is presented 388 with the City Clerk’s certification that the proponents have submitted sufficient signatures to qualify the measure for placement on the ballot. Discussion The Elections Code grants city councils broad discretion whether to order preparation of a 9212 Report and what topics to cover in such a report. Specifically, section 9212 provides that the City Council “may refer the proposed initiative measure to any city agency or agencies for a report on any or all of the following: (1) Its fiscal impact. (2) Its effect on the internal consistency of the city’s general and specific plans, including the housing element, the consistency between planning and zoning, and the limitations on city actions under [certain affordable housing and anti-discrimination in housing statutes]. (3) Its effect on the use of land, the impact on the availability and location of housing, and the ability of the city to meet its regional housing needs. (4) Its impact on funding for infrastructure of all types, including, but not limited to, transportation, schools, parks, and open space. The report may also discuss whether the measure would be likely to result in increased infrastructure costs or savings, including the costs of infrastructure maintenance, to current residents and businesses. (5) Its impact on the community’s ability to attract and retain business and employment. (6) Its impact on the uses of vacant parcels of land. (7) Its impact on agricultural lands, open space, traffic congestion, existing business districts, and developed areas designated for revitalization; [and] (8) Any other matters the legislative body requests to be in the report.” Elections Code § 9212(a) (emphasis added). The Elections Code also gives the Council broad discretion when to order such a report. It may do so now, or at any time during the circulation of the Initiative. Alternatively, the Council could wait to see if the Initiative qualifies for the ballot and then order preparation of the report , or decide not to proceed with this analysis. However, any such report must be presented to the Council no later than 30 days after the City Council meeting at which the City Clerk certifies the Initiative has qualified for the ballot. Elections Code § 9212(b). After receiving the report, and in the event that the Initiative qualifies for the ballot, the Council would then have the option of either adopting the Initiative exactly as proposed, or ordering it placed on the ballot. Staff recommends that the Council order preparation of a Section 9212 Report and that it do so now in order to ensure that staff has the maximum amount of time to retain any necessary consultants and prepare a thorough analysis of the Initiative’s impacts. 389 Staff further recommends that the Council direct that the report address each of the specific items identified in Elections Code section 9212, to the extent applicable, and any other specific matters the Council desires to be discussed. In addition, in order assist with the timely preparation of the report and to perform certain types of analyses that require additional expertise, staff recommends that the Council authorize the City Manager to retain appropriate consultants. Based on its preliminary review of the Initiative, staff presently envisions that the primary consultant would be one that specializes in economic impacts analysis. Staff has solicited proposals from two such consultants, both of whom have previously done work for the City. Fiscal Impact Staff recommends that the Council authorize the City Manager to spend up to $155,000 to retain the necessary economic, environmental, and legal consultants to help prepare the Report and appropriate these funds. Sustainability Impact: There is no sustainability impact for the preparation of the report. _____________________________________ Submission by: David Brandt, City Manager Attachments: A - Notice of Intent and Proposed Initiative B - City Attorney’s Official Title and Summary C - Draft Resolution Ordering Preparation of an Elections Code Section 9212 Report 390 CUPERTINO CITIZENS' SENSIBLE GROWTH INITIATIVE A MEASURE AMENDING THE CUPERTINO GENERAL PLAN TO ENSURE BALANCED AND SENSIBLE GROWTH BY MAINTAINING CITYWIDE LIMITS ON THE INTENSITY OF NEW DEVELOPMENT, PRESERVING AND ENHANCING THE VALLCO SHOPPING DISTRICT FOR RETAIL, HOTEL , DINING AND ENTERTAINMENT COMMERCIAL USES ONLY AND REQUIRING A VOTE OF THE PEOPLE TO MODIFY THOSE LIMITS AND USES. THE PEOPLE OF THE CITY OF CUPERTINO DO ORDAIN AS FOLLOWS : PART I. TITLE This measure shall be called the CUPERTINO CITIZENS' SENSIBLE GROWTH INITIATIVE PART II. FINDINGS The people of Cupertino hereby find that: A The City of Cupertino needs binding standards to guide new development within the City. B . Cupertino's citizens wish to maintain control over the long-term direction of that development. C. The City needs to develop in a moderate and controlled way that provides the housing, shopping, jobs, infrastructure, and amenities that will serve the best interests of City residents while avoiding overdevelopment and its associated traffic and other impacts. D. The long-term direction provided by the City's General Plan must be implemented through its specific plans and zoning ordinance without being subject to change due to pressure from the profit-driven proponents of specific projects. E. The City must protect the development density and intensity standards set by the General Plan through limits on heights, setbacks and building planes to prevent distortion of the desirable characteristics of the City through the influence of developers and other outside interests . F . The availability of sufficient retail commercial space is essential to the wellbeing of the City, its current and future residents, and its workers . PART III. PURPOSE This initiative measure (the "Initiative") has three purposes . If approved by the voters of Cupertino and enacted, it will ( 1) control the intensity of new development by setting general citywide limits on building heights, setbacks, building planes and lot coverage in Cupertino that will provide long-term direction, (2) preserve and enhance the Vallco Shopping District for 1 393 retail, hotel, dining and entertainment commercial uses and (3) require that changes or exceptions to those limits and uses be presented to and approved by the voters of Cupertino. Under this Initiative, the General Plan (Community Vision 2015-2040)-hereinafter referred to as "General Plan," specific plans and conceptual plans , and zoning ordinance would be enforced and not amended on an ad hoc basis to suit individual development projects. The standards in this Initiative are intended to strengthen these plans to protect Cupertino's vibrant mixed use atmosphere, schools, and streetscapes, to limit traffic and congestion, and to promote public safety. PART IV. GENERAL PLAN AMENDMENT The General Plan is hereby amended by enacting or reenacting segments of that general plan as follows: Note: All numbering of sections, policies, strategies, tables, and figures herein follows that of the General Plan as amended on October 20, 2015. Following the adoption of the Initiative, the General Plan's sections, policies, strategies, tables, and figures, and all internal references thereto, shall be renumbered in a logical order, and tables and figures shall be modified to conform to the Initiative's changes to the General Plan's text, as specified herein. Section 1. Chapter 1 -Introduction a. The last paragraph of the Section entitled "Purpose of Community Vision 2040" as of October 20, 2015, is amended as follows: Due to the breadth of topics covered in Community Vision 2040, conflicts between mutually- desirable goals are inevitable. For instance, increased automobile mobility may conflict with a safe, walkable community. This document reconciles these conflicts in the interest of building a cohesive community by placing a priority upon maintaining the well-being of Cupertino residents. Per State law, every goal and policy in this plan has equal weight. The City recognizes that the interests of residents of a particular street or neighborhood may need to be balanced ·.vith the overall needs and potentially greater goal of building a community. These are Harmonization of possible conflicts between goals and policies in this plan shall be guided by an understanding that the General Plan reflects conscious choices that the City makes in the interest of building community and protecting its residents . That harmonization shall also recognize that changes made through this Initiative are intended to modify and supersede any section, policy, strategy, table, or diagram that might otherwise conflict with the amendments being made by this Initiative, and the General Plan shall be conformed accordingly. b. A new paragraph is added to the Section entitled "Purpose of Community Vision 2040" as of October 20, 2015 as follows: Portions of the General Plan were enacted or reenacted in 2016 by a voter initiative. A copy of that initiative shall be appended to the General Plan as an appendix unless or until that 2 394 requirement is changed or rescinded by the voters. It is the intent of the voters of Cupertino that, in interpreting and harmonizing the provisions of the General Plan, priority be given to ensuring that the provisions enacted or reenacted by the 2016 voter initiative be followed and implemented to the fullest extent possible. Section 2. Chapter 2-Planning Areas a. The Section "Vision" for the Valko Shopping District Special Area is amended as follows: The Vallco Shopping District will continue to function as a major regional and community destination. The City envisions this area as a new mixed use "tovm center" and gateway for Cupertino providing a unique and memorable shopping, dining and entertainment experience with appropriate bicycle and pedestrian-friendly access. It Vfill include an interconnected street grid network of bicycle and pedestrian friendly streets, mMore pedestrian-oriented buildings with active uses may line lining Stevens Creek Boulevard and Wolfe Road,--and with publicly- accessible parks and plazas that support the pedestrian-oriented feel of the revitalized area. New development in the Vallco Shopping District should must be required to provide buffers between to protect adjacent single-family neighborhoods in the form of boundary walls , setbacks, landscaping or building transitions. Section 3. Chapter 3 -Land Use and Community Design Element a. The Section "Context" is amended as follows: The first paragraph of the subsection "Economic Vitality" is amended as follows: Cupertino is fortunate in its location in the heart of Silicon Valley . Despite its mostly suburban characteristics to the west and south, the city is home to a number of small , medium and large software, technology and biomedical companies. The General Plan includes more office gro'.vth recognizes the need to retain balanced growth to support &-strong fiscal revenues and a stable tax base. In particular, policies focus on retaining and increasing the number of small, medium and major businesses in key sectors and provide flexible space for innovative startups that need non- traditional office environment. Policies for commercial areas seek to revitalize the Vallco Shopping District, and enhance commercial centers and neighborhood centers, which contribute to the City's tax base and serve community needs. Table LU-1: "CITYWIDE DEVELOPMENT ALLOCATION BETWEEN 2014-2040" is amended by the additions and strikeouts shown below. 3 395 The subsection "Site and Building Design" is amended as follows: Policy LU-3.0: Community Form The maximum heights and densities for the special areas shown in the Community Form Diagram (Figure LU-1) shall not be exceeded. Outside of the Special Areas shown in Figure LU- I, building heights may not exceed 45 feet. Building height shall be measured to the highest point of the building, excluding light poles, antennae, minor mechanical boxes or roof vent protrusions which are not easily visible. A below-grade structure is not counted towards building height. For any project of over 50,000 sg. ft. of building area, maximum lot coverage shall not exceed 70%. No provision allowing additional height or density, modifying maximum lot coverage, building plane, or minimum setback to relax the standards set in this General Plan, other than those mandated by state law, shall be allowed: Figure LU-1 "Community Form Diagram" and the Land Use Map (shown below in their current form) shall be conformed to the requirements set by Policy LU-3.0, Policy LU-3.2, Policy LU-19.2 and the density changes identified in Footnotes (a) through (c) in the new Table HE 5.5 [previously Appendix B Table 5.5] as shown in Section 3 of this Part IV. 5 397 In order to assure the retention and enforcement of City guidelines not currently included in the General Plan, the following policies are amended as shown Policy LU-3.2: Building Heights1 ftBd Setback Ratios, Stepbacks and Building Planes : Maximum heights and setback ratios are specified in the Community Form Diagram (Figure LU- I) and as described below. As indicated in the figure , taller heights are focused on major corridors , gateways and nodes . Setback ratios are established to ensure that the desired relationship of buildings to the street is achieved. Policy LU-3.2.1: Additional Floor Area. In any area where an increase in the maximum building height is granted in exchange for ground floor retail, no more than 1 square foot of additional floor area above the otherwise-applicable height limit may be allowed for every 1 square foot of ground floor retail. In any such exchange, all ground floor retail must be fully accessible to the public during operating hours . Policy LU-3.2.2: Rooftop Height Extensions. Rooftop mechanical equipment and utility structures other than cell phone transmission antennae, but no other structures or building features , may exceed stipulated height limitations shown in Figure LU-1 if they are enclosed, centrally located on the roof and not visible from adjacent streets. Policy LU-3.2.3: North De Anza Boulevard. For the area from I-280 south to Alves Drive on the west and from I-280 south to St. Joseph 's Church on the east, not including St. Joseph 's Church: • For all new construction, there shall be landscaped setback areas extending a minimum of 50-ft. from curb line. Alternatively, the landscaped setback areas adjacent to North De Anza Blvd. may have a varied depth but a minimum square footage equal to the lot frontage distance multiplied by 50 ft., and a minimum setback distance at any point of 35 ft . from curb line . Policy LU-3.2.4: Stevens Creek Boulevard • The minimum setback on both sides of Stevens Creek Boulevard from CA-85 to the eastern boundary of the City of Cupertino is no less than 3 5 feet from the curb line . • On both sides of Stevens Creek Boulevard from CA-85 to Perimeter Road buildings shall be below a 1: 1 (i .e . 1 foot of stepback for every 1 foot of building height drawn from the curb line) slope line drawn from the Stevens Creek Boulevard curb line . • On the north side of Stevens Creek Boulevard from Perimeter Road to the eastern boundary of the City of Cupertino buildings shall be below a 1.5 :1 (i .e. 1.5 feet of stepback for every 1 foot of building height drawn from the curb line) slope line drawn from the Stevens Creek Boulevard curb line. • On the south side of Stevens Creek Boulevard from Perimeter Road to the eastern boundary of the City of Cupertino buildings shall be below a 1: 1 slope line drawn from the Stevens Creek Boulevard curb line . 8 400 Policy LU-3.2.5: Homestead Road in the North Valko Park Area On Homestead Road from Linnet Lane (west of Wolfe Road) to Swallow Drive (east of Wolfe Road) buildings shall be below a 1. 5 : 1 slope line drawn from the Homestead Road curb line. Policy LU-3.2.6: Building Planes on Arterial/Boulevard Streets. Unless specified in other LU-3.2 policies, all other arterial/boulevard streets buildings shall be below a 1: 1 (i .e . 1 foot of stepback for every 1 foot of building height drawn from the curb line) slope line drawn from the curb line or lines. The Subsection "City Center Subarea" is amended as follows: Strategy LU-16.1.3: Building form. The form ofB.Quildings should, through the use of step- downs and setbacks, be designed be moderately scaled to transition from existing taller buildings (new or existing) to the scale of the surrounding area. Taller buildings should provide appropriate transitions to fit into the surrounding area. The subsection "Vallco Shopping District Special Area" is amended as follows: Valko Shopping District Special Area The City envisions encourages the renovation and improvement of the existing Cupertino 's Valko Fashion Shopping Mall while maintaining its important role as a retail shopping center serving Cupertino 's residents and regional visitors. a complete redevelopment of the existing Vallee Fashion Mall into a vibrant mixed use "tovm center" that is a focal point for regional visitors and the community. This new As renovated, the Vallco Shopping District will become a destination for shopping, dining and entertainment in the Santa Clara Valley . GOAL LU-19 CREATE A DISTINCT AND l\4Etv10RABLE l\4IXED USE "TO'.VN CENTER" THAT IS PRESERVE AND ENHANCE THE V ALLCO SHOPPING DISTRICT AS A LOCAL AND REGIONAL RETAIL, HOTEL, DINING AND ENTERTAINMENT COMMERCIAL DESTINATION AND A FOCAL POINT FOR THE COMMUNITY Policy LU-19.1: Specific Plan Create a Vallco Shopping District Specific Plan prior to any development or other significant changes in use on the site that lays out the land uses, design standards and guidelines, and infrastructure improvements required. The Specific Plan will be based on the following strategies: Strategy LU 19.1.1: l\faster De,'eloper. Redevelopment will require a master developer in order remove the obstacles to the development of a cohesive district ·.vith the highest levels of urban design. 9 401 Strategy LU-19.1.2: Parcel assembly. Parcel assembly and a plan for complete redevelopment of the site is required prior to adding residential and office uses. Parcelization is highly discouraged in order to preserve the site for redevelopment in the future . Strategy LU 19.1.J: Complete Redevelapment. The "tovm center" plan should be based on complete redevelopment of the site in order to ensure that the site can be planned to carry out the community vision. Strategy LU-19.1.4: Land use. The following uses are allowed on the site (see Figure LU 1 for residential densities and criteria): 1. Retail : High-performing retail, restaurant and entertainment uses . Maintain a minimum of 600,000 1,200,000 square feet ofretail/dining/entertainment that provide a good source of sales tax for the City and provides high quality convenient shopping for residents of the city and surrounding areas . Entertainment uses may be included but shall consist of no more than 30 percent of retail uses . 2. Hotel: Encourage a business class hotel with conference center and active uses including main entrances, lobbies, retail and restaurants on the ground floor. 3. Residential: Allow residential on upper floors with retail and active uses on the ground floor. Encourage a mix of units for young professionals, couples and/or active seniors vmo like to li•;e in an active "tovm center" environment. 4. Office : Encourage high quality office space arranged in a pedestrian oriented street grid with active uses on the ground floor, publicly accessible streets and plazas/green space . Strategy LU 19.1.5: "Tawn Center" layaut. Create streets and blocks laid out using "transect planning" (appropriate street and building types for each area), 'tvhich includes a discernible center and edges, public space at center, high quality public realm, and land uses appropriate to the street and building typology . Strategy LU-19.1.6: Connectivity. Provide a newly configured complete street grid hierarchy of streets, boulevards and alleys that is Any changes to the existing circulation pattern as part of a development or revision should be pedestrian-oriented, connects-to existing streets, and creates- walkable urban blocks for buildings and open space. It should also incorporate transit facilities, provide connections to other transit nodes and coordinate with the potential expansion of Wolfe Road bridge over Interstate 280 to continue the walkable, bikeable boulevard concept along Wolfe Road. The project Any such development or revision should also contribute towards a study and improvements to a potential Interstate 280 trail along the drainage channel south of the freeway and provide pedestrian and bicycle connections from the project sites to the trail. Strategy LU-19.1.8: Open space. Ground-level Gopen space areas in the form ofa central town square on thew-est and east sides of the district interspersed with plazas and "greens" should be included that create community gathering spaces, locations for public art, and event space for community events:- 10 402 Policy LU-19.2: The Vallco Shopping District shall continue to be devoted to retail, hotel, dining and entertainment commercial use. No residential or office use shall be allowed. Building heights shall be restricted to a maximum of 45 feet. Figure LU-1 and the Land Use Map shall be conformed to this policy. The subsection "North Valko Park Special Area" is amended as follows: Policy LU-20.3: Building Form. Buildings in the retail and hotel area should provide active, pedestrian-oriented uses along the street. Buildings should shall transition to fit the scale of the surrounding area. Taller buildings should shall provide appropriate transitions to fit into the surrounding area. In addition to the height limits established in the Community Form Diagram, buildings abutting the campus shall incorporate appropriate setbacks, landscaped buffering, and building height transitions to minimize privacy and security impacts. Section 4. Chapter 4 -Housing Element a. The Section "Housing Resources" is amended as follows: The subsection "Overview of Available Sites for Housing" is amended in its second and third paragraphs as follows: Figure HE-1 indicates the available residential development opportunity sites to meet and exceed the identified regional housing need pursuant to the RHNA. The opportunity sites can accommodate infill development of up to l,400--1,3 86 residential units on properties zoned for densities of 20 dwelling units to the acre or more. The potential sites inventory is organized by geographic area and in particular, by mixed use corridors. The sites identified to meet the near term development potential are shown in Table HE-5. As shovm in Table HE 5, sites identified to meet the near term development potential lie v1ithin the North Vallco Park Special Area, the Heart of the City Special Area, and the Vall co Shopping District Special Area. One particular site will involve substantial coordination for redevelopment (Because redevelopment of the Vallco Shopping District, Site A2h cannot involve additional housing units, Due to the magnitude of the project, the City has established a contingency plan to meet the RHNA if a Specific Plan is not approved ·.vithin three years of Housing Element adoption. This contingency plan (called the City must follow its contingency plan to meet the RHNA, known as Scenario Band (discussed further in General Plan Appendix B),. Scenario B wettltl involve§ the City removing Vallco Shopping District from its inventory of available sites for housing, adding other mere priority sites to the inventory, and also increasing the density/allowable units on some of the other priority sites. Figure HE-1: Priority Housing Element Sites: Scenario A is deleted in its entirety and replaced by Figure B-8 from Appendix B, page B-148, which shall be relabeled as Figure HE-1: Priority Housing Element Sites -Scenario B. Both the current Figure HE-1 and Figure B-8 are provided below. 11 403 TABLE HE-5: SUMMARY OF PRIORITY HOUSING ELEMENT SITES TO MEET THE RHNA -SCENARIO A ' Site Site A 1 (The Hamptons) Site A2 (Va llco Shopping District) Site A3 (The Oaks Shopping Center) Site A4 (Marina Plaz a) Site AS (Ba r ry Swenson ) Adopted General Plan/ Adopted Zoning High Density P(Res ) RS /O/R P(Regional Shopping) & P{CG) C/R P(CG, Res) C/O/R P(CG, Res ) C/O /R P(CG , Res) •• _· • • North Vallco Park 85 Valko Shopp ing 35 D istrict Heart of t he City 30 Heart of t he City 35 Heart of the City 25 Max Height 75 ft; or 60 ft in certain lo cations*; height to be determined in Vallco Shoppi ng District Spe ci fic Pla n 45 ft 45 ft 45 ft Total • . 600 net 389 200 200 11 1,40oj Notes: Zoning for Si te A2 (Val/co) will be determined by Specific Plan to allow residential uses. Site A 1 (Hamptons) height limit of 60 feet is applicable for buildings located within 50 feet of property lines abutting Wolfe Rd, Prune ridge Ave. & Apple Campus 2 site. Site A2 (I/al/co) height will be determined by Specific Plan. For more detail on height limits, see Land Use and Community Design Element, Figure LU-1 . Site B1 (Ha mptons) North Vallco Park High De nsity 12.44 750 Ve ry Low/ P{Res) Low Site B2 (T he Oa ks Heart of t he City C/R 35 (b) 7.9 23 5 Very Low/ Shoppi ng Cen ter) P(C G, Res) Low Site B3 {Marina Plaza) Heart of the C ity C/O/R 35 6.86 200 Very Low/ P(CG , Res) Low Site B4 (Barry He art of t he City C/0 /R 25 0.5 5 11 Very Low/ Swen son ) P{CG, Res) Low Site BS (Glenbrook Heart of t he City Medium De nsity 20 3 1.3 58 Very Low / Apartments) R3 (10-20) Lo w Site B6 (H omest ead Homest ead C/R (c) 3 5 (c) 5 .1 132 Very Low/ Lanes an d Adjace ncy) P(CG , Res) {c) Lo w Total 64.24 1,386 Notes: (a) A General Plan Amendement and zoning change w ill be ncessary to allow the increase in density from 85 to 99 un its per acre on Site 81. (b) A Genera l Plan Amendment and zoning change w ill be necessary to allow the increase in density from 30 to 35 units per acre on Site 82. (c} A General Plan Amendment and zoning change w il I be necessary to allow residentia l uses at 35 units per acre on Site 86. Existing zoning for Site 86 is P(Rec, Enter). (d) Realistic capacity reduces the max i mum developable units by 15 percent on Sites 8 1, 82, 83, B4, and 8 6. Realistic capacity of Site BS is (d) reduced by 46 percent due to existing site constraints. (e) Identified capacity of sites that allow development densit ies of at least 20 units per acre are credited toward the lower-i ncome RH N A based on State law. Pursuant to Government Code Section 65583 .2(c)(3)(8), local governments may utilize "defau lt" density standards to provide evidence that "af>propriate zon ing" is in place to support the deve lopment of housing for very-low and low-income liouseholds . The default density standard for Cupertino and other suburban Jurisdictions in Santa Clara County is 20 dwelling units per acre (DUA) or more. (f) Real istic capacity for sites B 1 and BS represent net new units. 14 406 b. The Section "Housing Plan" is amended as follows: The subsection "Implementing Strategies" is amended as follows: The fifth bullet point under Strategy 1: Land Use Policy and Zoning Provisions is amended as follows: • Priority Housing Sites : As part of the Housing Element update, the City has identified fi.ve-priority sites under Scenario-A B-(see Table HE-5) for residential development over the next eight years . The General Plan and zoning designations will allow the densities for this development. shovm in Table HE 5 for all sites except the Vallee Shopping District site (Site A2). The redevelopment of Vallee Shopping District \vill involve significant planning and community input. /•£ specific plan will be required to implement a comprehensive strategy for a retail/office/residential mixed use development. The project applicant would be required to \Vork closely vfith the community and the City to bring forth a specific plan that meets the community's needs, with the anticipated adoption and rezoning to occur within three years of the adoption of the 2014 2022 Housing Element (by May 31 , 2018). The specific plan would permit 3 89 units by right at a minimum density of20 units per acre . If the specific plan and rezoning are not adopted within three years of Housing Element adoption (by May 31 , 2018), the City will schedule hearings consistent with Government Code Section 65863 to consider removing Vallee as a priority housing site under Scenario A , to be replaced by sites identified in Scenario B (see detailed discussion and sites listing of "Scenario B" in Appendix B Housing Element Technical Appendix). As part of the adoption of Scenario B, the City intends to add two additional sites to the inventory: Glenbrook Apartments and Homestead Lanes, along ·.vith increased number of permitted units on The Hamptons and The Oaks sites . All sites in Scenario B, except the Homestead Lanes, have Aapplicable zoning is in place"' for Glenbrook Apartments; hov;ever the The Homestead Lanes site will weuld need to be rezoned at that time to permit residential uses. Any rezoning required will allow residential uses by right at a minimum density of 20 units per acre. Delete the following table: 15 407 Cupertino Department of Responsible Agencies: Community Development/ Planning Division Ongoi ng; Adopt Specific Plan and rezon i ng for Vallco by May 3 1, Time Frame: 2018; otherwise, conduct public hearings to consider adoption of "Scenario B" of sites strategy. Funding Sources: None required 1,064 units (178 extremely !ow-, 178 very !ow-, 207 low-, Quantified Objectives: 231 moderate-and 270 above moderate-income units) Part V: EXEMPTIONS FOR CERTAIN PROJECTS This Initiative shall not apply to any development project which has obtained as of the effective date of this Initiative a vested right pursuant to State law. Part VI: EFFECTIVE DATE, PRIORITY, AND CONSISTENCY This Initiative shall become effective immediately upon the certification of the election results. Within six (6) months of the effective date of this measure, all provisions of the municipal code, ordinances, including zoning ordinances, resolutions, administrative policies, general plans, specific plans, conceptual plans or any other plan of the City shall be revised and amended to make them conform with the provisions of this Initiative. Until such time as the above referenced ordinances and plans have been so revised and amended, the provisions of this Initiative shall prevail over any conflicting provisions. Part VII: SEVERABILITY The people of Cupertino hereby declare that they intend to enact each and every provision of this Initiative regardless of the presence or absence of any other provision, and to that extent all of the provisions of this Initiative are to be considered severable. In the event a final judgment of a court of competent jurisdiction detennines that any provision, section, subsection, sentences, clause, or phrase or application of this Initiative measure is found to be invalid or unenforceable for any reason, the invalid or unenforceable portion shall be severed from this measure, and the remaining portions of this measure shall remain in full force. Part VITI: AMENDMENT OR REPEAL Except as otherwise indicated herein, this Initiative may be amended or repealed only by the voters at a City election. 16 408 [5)~(C~~~~~ lru DEC 1 0 2015 l.W Section 9608 Statement f"llnrnTIP'"' f"IT" ('\I ,..,,, I vurLn 1 ll'JV v11 1 VLL11f\ 1,-Anne 13,,.°"(J_ fr?4tcknow ledge that it is a misdemeanor under state law (S ect ion 18650 of the E lections Code) to knowingly or w illfull y allow the signatures on an in it iative petition to be used for any purpose other than quali fication of the proposed measure for the ba ll ot. I certify that I will not knowi ng ly or wi ll fully allow the signatures for this initiative to be used for any purpose other than qua lification of the measure for the ballot. ~ but(_ f~ ~ (Signature of Proponent ) Dated this ..J.Q_ day of &..v , 20 ;) f I, S'teve.V\ ()'\ .f c.'v\~ ~cknow l edge that it is a misdemeanor under state law {Section 18650 of the E lections Code) to knowingly or willfully allow the signatures on an init iative petition to be used for any purpose other than qualification of the proposed measure for the bal lot. I cert ify that I will not k nowi ng ly or wi ll fu l ly a ll ow the signatures for this initiative to be used for any purpose other than qua lification of the measure for the ballot. ~ ~ M . ~ . (Signature of Proponent ) C?' Dated th is J.Q_ day of 0~~~\l'\b~~ 20 \S" I, X 1'ct1~ cheM Xu , acknowle_dge that it is a misci.emeanor _under state law (Section 18650 of the Elections Code) to knowingly or willfully allow the signatures on an initiative petition to be used for any purpose other than qualification of the proposed measure for the ballot. I certify that I will not knowingly or willfully allow the signatures for this initiative to be used for any purpose other than qualification of the measure for the ballot. __ /0"---~--£,__----;/f_t--.__ ___ (Signature of Proponent) > ? Dated this /otf... day of Pe.c0111NY , 20/S 409 CITY A TIORNEY'S BALLOT TITLE AND SUMMARY FOR PROPOSED INITIATIVE SUBMITTED ON NOVEMBER 24, 2015 TITLE: Initiative amending Cupertino's General Plan to limit redevelopment of the Vallco Shopping District, limit building heights and lot coverages in areas throughout the City, establish new setbacks and building planes on major thoroughfares, and require voter approval for any changes to these provisions. SUMMARY: As required by State law, the City of Cupertino's General Plan establishes permissible land uses, maximum development densities, and intensities for all properties within the City. The City recently completed a multi-year planning effort that resulted in the adoption of its General Plan (Community Vision 2015 -2040), intended to guide development through the year 2040. The initiative amends Cupertino's General Plan in several ways, including requirements for: the Valko Shopping District; building heights, setbacks, planes, and lot coverage in other areas of the City; residential allocation; and the Housing Element. For the Valko Shopping District, the initiative: (1) removes the General Plan's vision for the "complete redevelopment of the existing Valko Fashion Mall into a vibrant mixed use 'town center"' and restates the City's goal as to "preserve and enhance the Vallco Shopping District as a local and regional retail, hotel, dining and entertainment commercial destination .... "; (2) prohibits residential and office uses; (3) restricts building heights to a maximum of 45 feet; and (4) increases the minimum square footage of retail/dining/entertainment uses from 600,000 to 1,200,000 square feet. In other areas of the City, the initiative: (1) prohibits building heights greater than 45 feet except in North Valko Park and South Valko Park Gateway within the Heart of the City Special Area; (2) adds policies regarding setbacks, "stepbacks," "building planes," and rooftop height extensions citywide; (3) adds specific policies applicable to North De Anza Boulevard, Stevens Creek Boulevard, and Homestead Road in North Valko Park; ( 4) limits the maximum lot coverage for projects over 50,000 square feet to 70%; and (5) reduces the Citywide residential allocation by 146 units. For the Housing Element, state law requires that every general plan identify priority housing sites to accommodate that city's share of regional housing needs. The initiative removes the current General Plan "Scenario A" of priority sites and replaces it with the General Plan's "contingency plan", "Scenario B". Scenario B: (1) removes the Valko Shopping District as a priority housing site; (2) increases residential units allocated to 410 the Heart of the City and North Valko Park Special Areas: (3) adds two other sites; and (4) reduces the total number of priority housing units by 14. The initiative states that it shall not apply to any development project that has obtained, prior to the initiative's effective date, a vested right pursuant to state law. It directs the City to amend all other provisions of its municipal code, ordinances, plans, policies, and resolutions to conform with the initiative within six months. The initiative states that, except as indicated therein, no provision of the initiative may be amended without voter approval. The initiative has no expiration date. 411 RESOLUTION NO. 16- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO DIRECTING CITY STAFF TO PREPARE A REPORT ON THE EFFECTS OF THE PROPOSED INITIATIVE ENTITLED, “INITIATIVE AMENDING CUPERTINO’S GENERAL PLAN TO LIMIT REDEVELOPMENT OF THE VALLCO SHOPPING DISTRICT, LIMIT BUILDING HEIGHTS AND LOT COVERAGES IN AREAS THROUGHOUT THE CITY, ESTABLISH NEW SETBACKS AND BUILDING PLANES ON MAJOR THOROUGHFARES, AND REQUIRE VOTER APPROVAL FOR ANY CHANGES TO THESE PROVISIONS” AND TO APPROPRIATE FUNDS FOR THE PREPARATION OF THE REPORT WHEREAS, on November 24, 2015, the Cupertino Residents for Sensible Zoning Action Committee submitted to the City Clerk a Notice of Intent to circulate an initiative petition (“Initiative”) and a request for the City Attorney to prepare the official ballot title and summary; and WHEREAS, the City Attorney thereafter prepared the official title and summary for the Initiative and provided it to the Initiative proponents; and WHEREAS, Elections Code section 9212 authorizes the City Council to direct City staff to prepare a report on the impacts of the Initiative, including seven specified types of impacts as well as on “any other matter” that the City Council requests to be included in the report; and WHEREAS, the City Council has determined that such a report would provide valuable information about the Initiative to the Council and to all interested residents of the City; and WHEREAS, this is not a project under provisions and requirements of the California Environmental Quality Act of 1970, together with related State CEQA Guidelines (collectively, "CEQA"), in that this is administrative action which does not involve a direct or reasonably foreseeable indirect impact on the physical environment; and; NOW THEREFORE, be it RESOLVED: 1. The City Council directs City staff to : 412 Resolution No. 16- Page 2 a. Prepare a Report on the effects of the Initiative pursuant to Elections Code section 9212, addressing each of the impacts specified in subsection (a)(1)-(7) of that section, to the extent applicable, as well as any other items identified by the City Council; and b. Retain, at the direction of the City Manager, any consultants that the City Manager determines are necessary to complete the Report, in an amount not to exceed $120,000.00; and c. Present the Report to the City Council no later than the latest date authorized by Elections Code section 9212(b); and 2. The City of Cupertino’s Operating Budget for the Fiscal Year 2015/2016 is hereby amended to appropriate $155,000.00 for the preparation of the Report. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th date of January, 2016, by the following vote: Vote Members of the City Council AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: _________________________ ________________________ Grace Schmidt, City Clerk Barry Chang, Mayor, City of Cupertino 413 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1206 Name: Status:Type:Ordinances and Action Items Agenda Ready File created:In control:11/3/2015 City Council On agenda:Final action:1/19/2016 Title:Subject: Council committee assignments Sponsors: Indexes: Code sections: Attachments: Action ByDate Action ResultVer. City Council1/19/20161 Subject: Council committee assignments Approve assignments CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™414 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:116-1364 Name: Status:Type:Reports by Council and Staff Agenda Ready File created:In control:1/13/2016 City Council On agenda:Final action:1/19/2016 Title:Subject: Report on Committee assignments and general comments Sponsors: Indexes: Code sections: Attachments: Action ByDate Action ResultVer. City Council1/19/20161 Subject: Report on Committee assignments and general comments Report on Committee assignments and general comments CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™415 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:115-1304 Name: Status:Type:Ordinances and Action Items Agenda Ready File created:In control:1/5/2016 City Council On agenda:Final action:1/19/2016 Title:Subject: Approval of the City of Cupertino entering into an Antenna Ground Lease between the City and GTE Mobilnet of California Limited Partnership, a California Limited Partnership, d/b/a Verizon Wireless and Receive and File the Letter from Independent Bond Counsel, Brian Quint Finding no Tax Implications from the Lease Sponsors: Indexes: Code sections: Attachments:Staff Report A - Opinion Letter Thimmig Brian Cupertino Public Facilities Corporation Action ByDate Action ResultVer. City Council1/19/20161 Subject:ApprovaloftheCityofCupertinoenteringintoanAntennaGroundLeasebetween theCityandGTEMobilnetofCaliforniaLimitedPartnership,aCaliforniaLimitedPartnership, d/b/aVerizonWirelessandReceiveandFiletheLetterfromIndependentBondCounsel,Brian Quint Finding no Tax Implications from the Lease a.ReceiveandFiletheLetterfromIndependentBondCounsel,BrianQuintFindingnoTax ImplicationsfromtheLease;andb.ProvideconsenttotheCityofCupertinotopermittheCity toenterintoanAntennaGroundLeasebetweentheCityandGTEMobilnetofCalifornia Limited Partnership, a California Limited Partnership, d/b/a Verizon Wireless CITY OF CUPERTINO Printed on 1/14/2016Page 1 of 1 powered by Legistar™416 1 CUPERTINO PUBLIC FACILITIES CORPORATION STAFF REPORT Meeting: January 19, 2016 Subject Approval of the City of Cupertino entering into an Antenna Ground Lease between the City and GTE Mobilnet of California Limited Partnership, a California Limited Partnership, d/b/a Verizon Wireless. Recommended Action 1. Receive and File the Letter from Independent Bond Counsel, Brian Quint Finding no Tax Implications from the Lease. 2. Provide consent to the City of Cupertino to permit the City to enter into an Antenna Ground Lease between the City and GTE Mobilnet of California Limited Partnership, a California Limited Partnership, d/b/a Verizon Wireless Background The Civic Center is the subject of a lease agreement dated May 1, 2012 between the Cupertino Public Facilities Corporation and the City of Cupertino. The lease agreement is part of the security for Certificates of Participation issued by the City for certain improvements. In order for the City to lease a portion of the Civic Center area to a third party the Cupertino Public Facilities Corporation must approve of the City entering into the lease. Paragraph 8.2 of the Cupertino Public Facilities Corporation (“Corporation”) allows the City to sublease the Civic Center property, but only with the consent of the Corporation In addition, the Corporation must obtain an opinion letter from independent bond counsel that the lease will not result in tax implications for the holders of the Certificates of Participation. The bond counsel opinion letter making those findings is attached as Exhibit “A” to this staff report. Sustainability Impact There is no sustainability impact by this action. 417 2 Fiscal Impact Should the Cupertino Public Facilities Corporation not approve the lease and receive and file the accompanying opinion letter the City will not receive the financial benefits of the lease. _____________________________________ Prepared by: Rick Kitson, Public Affairs Director Approved for Submission by: David Brandt, City Manager Attachments: A – Opinion Letter from Brian Quint, Quint & Thimmig, dated June 17, 2105 418 Quint & Thimmig LLP Attorneys at Law 900 Larkspur Landing Circle, Suite 270 Larkspur, CA 94939-1726 Phone: 415/925-4200 Fax: 415/925-4201 June 17, 2015 City of Cupertino 10300 Torre Avenue Cupertino, California 95014 Cupertino Public Facilities Corporation 10300 Torre Avenue Cupertino, California 95014 The Bank of New York Mellon Trust Company, N.A. 400 South Hope Street, Suite 400 Los Angeles, California 90071 Re: Antenna Ground Lease, by and between the City of Cupertino and GTE Mobilenet of California Limited Partnership, d/b/a Verizon Wireless Ladies and Gentlemen: We have been advised that the City of Cupertino (the “City”) contemplates entering into an Antenna Ground Lease, by and between the City and GTE Mobilenet of California Limited Partnership, d/b/a Verizon Wireless (the “Ground Lease”), relating to a portion of the property (the “Property”) that is the subject of a lease agreement, dated as of May 1, 2012, by and between the Cupertino Public Facilities Corporation (the “Corporation”) and the City (the “Lease Agreement”). The Corporation has, pursuant to an Assignment Agreement, dated as of May 1, 2012, by and between the Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), assigned certain of its rights under the Lease Agreement, including its right to receive a portion of the lease payments made by the City thereunder (the “Lease Payments”), to the Trustee. Pursuant to the Trust Agreement, dated as of May 1, 2012, by and among the Trustee, the Corporation and the City (the “Trust Agreement”), the Trustee has executed and delivered certificates of participation (the “Certificates”) evidencing direct, undivided fractional interests of the owners thereof in the Lease Payments. The Certificates have been sold to investors. Capitalized terms used, but not otherwise defined, herein shall have the meanings ascribed thereto in the Trust Agreement. Pursuant to Section 8.2 of the Lease Agreement, the City may sublease the Property, or any portion thereof, but only with the satisfaction of certain conditions, including the receipt of a written opinion of Bond Counsel, which shall be an Independent Counsel, stating that such sublease does not cause the interest components of the Lease Payments to become subject to federal income taxes or State personal income taxes. This opinion is rendered in satisfaction of that opinion requirement. In connection with the following opinion, we have reviewed the Ground Lease, the Lease Agreement and such other information and documents as we consider necessary in the 419 City of Cupertino June 17, 2015 Cupertino Public Facilities Corporation Page 2 The Bank of New York Mellon Trust Company, N.A. circumstances. As to questions of fact material to our opinion, we have relied upon such representations and certifications of public officials and others furnished to us and such other documents as we deemed necessary in the circumstances, without undertaking to verify such facts by independent investigation. Based upon the foregoing, we are of the opinion, as of the date hereof, that the execution of the Ground Lease will not cause the interest components of the Lease Payments to become subject to federal income taxes or State personal income taxes. This opinion is rendered solely for the benefit of the addressees hereof, and may not be relied upon by any other person without our prior written consent. Respectfully submitted, 420