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06-04-2018 Searchable PacketCITY OF CUPERTINO AGENDA CITY COUNCIL 4:00 PM 10350 Torre Avenue, Council Chamber Monday, June 4, 2018 Televised Special Meeting (Study Session) NOTICE AND CALL FOR A SPECIAL MEETING OF THE CUPERTINO CITY COUNCIL NOTICE IS HEREBY GIVEN that a special meeting of the Cupertino City Council is hereby called for Monday, June 04, 2018, commencing at 4:00 p.m. for a Study Session in 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 PLEDGE OF ALLEGIANCE ROLL CALL STUDY SESSION 1.Subject: Study Session regarding Vallco Specific Plan Recommended Action: Conduct study session regarding Vallco Specific Plan and provide direction to staff Staff Report A - kick off meeting notes B - interview notes C - guiding principles D - charrette 1 summary report E - market assessment F - CMC Ch 13.08 ORAL COMMUNICATIONS Page 1 1 June 4, 2018City Council AGENDA 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. ADJOURNMENT Page 2 2 June 4, 2018City 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. IMPORTANT NOTICE: Please be advised that pursuant to Cupertino Municipal Code 2.08.100 written communications sent to the Cupertino City Council, Commissioners or City staff concerning a matter on the agenda are included as supplemental material to the agendized item. These written communications are accessible to the public through the City’s website and kept in packet archives. You are hereby admonished not to include any personal or private information in written communications to the City that you do not wish to make public; doing so shall constitute a waiver of any privacy rights you may have on the information provided to the City. 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 Page 3 3 June 4, 2018City Council AGENDA 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 4 4 CITY OF CUPERTINO Legislation Details (With Text) File #: Version:118-4004 Name: Status:Type:Study Session Agenda Ready File created:In control:5/17/2018 City Council On agenda:Final action:6/4/2018 Title:Subject: Study Session regarding Vallco Specific Plan Sponsors: Indexes: Code sections: Attachments:Staff Report A - kick off meeting notes B - interview notes C - guiding principles D - charrette 1 summary report E - market assessment F - CMC Ch 13.08 Action ByDate Action ResultVer. City Council6/4/2018 1 Subject: Study Session regarding Vallco Specific Plan Conduct study session regarding Vallco Specific Plan and provide direction to staff CITY OF CUPERTINO Printed on 5/30/2018Page 1 of 1 powered by Legistar™5 CITY COUNCIL STUDY SESSION STAFF REPORT Meeting: June 4, 2018 Subject Study Session regarding Vallco Specific Plan. Recommended Action Conduct study session regarding Vallco Specific Plan and provide direction to staff. Discussion The study session creates a format in which City Council and members of the community give comments and questions, continue a dialogue for future decisions, and shape the focus of the specific plan team’s remaining work, prior to the preparation of the dra ft specific plan and formal public hearings. Attachments A through E of this report summarizing key meetings of the process so far include kick-off meeting notes, interview notes, guiding principles, charrette 1 summary report, and real estate market assessment. During the study session, the city’s specific plan consultant, Opticos Design, will present the charrette 2 summary. Additional economic analysis will follow after the team receives comments from City Council. Once the development program mix and community benefits are determined, the recommended General Plan amendments would also be presented along with the public review draft specific plan. While creating the options for City Council’s future decision, these five broad categories have guided the work and reflect the broader community input: 1. Aesthetics. Careful attention must be paid to massing, scale and transitions between the site and the adjacent neighborhoods and the streetscape. 2. Mobility. A realistic and robust transportation demand management program must be included and implemented, which offers both choices and results in the reduction of automobile trips to and from the site. 3. Parks and open spaces. Parks and open spaces with public access must activate the public areas and complement retail and civic components. Opportunities for private open space may be identified to serve residents, employees, and visitors. 4. Community amenities/benefits. The size and location of the project site offers a rare opportunity to include a combination of various amenities that contribute to the community interest and quality of life. The study session provides an opportunity to identify key components of amenities that are desirable. 6 5. Economic feasibility. The plan must balance items 1-4 listed above, while acknowledging market conditions and establishing a development mix and parameters that would ensure that existing property owners are enabled to reinvest in Cupertino, and that the city continues to attract new businesses, investment and revenue. The city team requests additional feedback and discussion as follows:  Aesthetics. The specific plan recommends reduced heights of 35’ along the western edge of the site adjacent to single family homes, increasing to 55’ in a transitional area, and then a maximum base height of 85’ throughout the project site west of Wolfe Road. Additional heights up to 120’ could be allowed with appropriate transitions if certain community amenities are provided. Additionally, some key areas at the intersections of Vallco Parkway and Wolfe Road as well as the northeastern port in east of Wolfe Road are recommended for additional height up to 160’ with appropriate transitions to allow for architectural interest and to accommodate the development while ensuring appropriate transitions to the single family developments to the west. The graphic below shows the range of heights recommended for discussion, which places additional heights on the side of the plan area east of Wolfe Road a djacent to 280 (up to 160’) and allows heights at 120 feet or less for the plan area west of Wolfe Road. Question 1 – Does the Council have additional comments/direction related to the recommended heights?  Development mix/program. The following range of uses are recommended in the plan area to ensure economic feasibility: Hotel – 191 rooms (allowed in the General Plan (“GP”)) 7 Retail – 400,000 to 600,000 square feet (GP allows a minimum of 600,000 square feet, of which 30% would be entertainment) Residential – 2,640 to 3,250 units (2,640 units with the maximum density bonus allowed by state law for the entire plan area. Hyatt House property, under construction, not assumed to be developed with residential uses. GP amendment recommended for increase of units.) Office – 750,000 to 1.5 million square feet (GP currently allows up to 2 million square feet; GP amendment recommended for reduction of office) Civic spaces – 45,000 to 65,000 square feet (GP amendment recommended for civic use) The recommended retail at 400,000 to 600,000 square feet would ensure the creation of a downtown format with a mix of various retail, entertainment and service uses. Recommended commercial uses include those that are typical to a shopping center, such as those located at Valley Fair/Santana Row. Uses such as the bowling alley and ice rink are considered entertainment amenities since they are costs to development rather than revenue generators. However, some level of flexibility is recommended to allow Cupertino retailers to remain competitive to choices at other locations within the Bay Area. Retail has evolved from traditional formats and definitions, in response to online competition. Recent reports from the International Council of Shopping Centers identify “experient ial retail” and food halls as top retail center trends. Residents have shared examples seen in other cities of successful experiential retail/food halls, such as Eataly in Boston, The Ferry Building, and China Live in San Francisco, all offering smaller fo otprints (which invites small business investment) combined with a larger distinct, retail marketplace. Other national retailers are offering services and amenities in order to maintain unique retail identities and competitive differentiation from the online or traditional retail experiences. Those offerings may include spas, salons, entertainment or classes related to the retailer’s expertise, blended with the ability to make purchases. Question 2 - Would the City Council consider: A. reduction of retail from 600,000 to 400,000 as a trade for increased affordable housing units and/or civic spaces? B. for the retail component: i. flexibility in allowed uses such as salons and spas? ii. flexibility on the 30% entertainment criterion? 8 C. increase of housing units for a decrease of office to ensure economic feasibility? D. expanding flexibility in the definition of office to include and allow a certain percentage of service offices and medical offices?  Parks/open space. Depending upon the final unit count and the percentage/number of affordable units, the Park Land Dedication ordinance requires that approximately 13 acres to 18 acres of park land be provided on the site either as park space, in in-lieu fees or a combination of the two, at the discretio n of the City Council. Reducing the park requirement for affordable units per the City’s BMR mitigation Manual and Housing Element would require between 11 acres and 14 acres for the 2,640-3,250 unit range. In- lieu fees would allow for improvements to existing parks and/or development of new parks in residential neighborhoods that are in need of park space, such as Rancho Rinconada or other neighborhoods developed prior to incorporation under Santa Clara County. Modeling has been completed for various options that study 5, 8 and 12 acres of grade level parks. In order to accommodate the same land use mix, an increase of in the size of grade level parks requires an increase in building heights. The General Plan envisions the Vallco Special Area as an active downtown-like environment, which would be difficult to accomplish with large parks on site. Existing town centers with successful, actively -used spaces range between 1-2 acres, with smaller areas for pocket parks and greenways throughout the plan area. The city team is recommending a range of between 6 to 7 acres of parks and open space at the ground level in the form of neighborhood parks, plazas, pocket parks, greenways, children’s play area, etc. and minimum sizes for each of those that are open to the public. These ground level parks/open space provide visual relief, sustainable natural areas maintained over the long-term, gathering spaces, and activated spaces that complement retail and civic spaces. The suggested acreage of parks would also keep heights at a reasonable range. An increase of grade level parks increases heights, as shown in Attachment D. If the Council wishes to have more parks/open space on site, the specific plan could allow that the additional space be provided in green roof format s, including roof gardens and roof top terraces. Plants or solar panels as roofing material would also be allowed, but should be noted as different from spaces that provide public access. Where private open space is provided for residents use only, fifty percent credit is given against the requirement of land dedication or payment of in lieu fees, subject to the standards of Cupertino Municipal Code 13.08.080 (Credit for Private Recreation or Open Space), included as Attachment F. 9 Some members of the community have brought to staff’s attention other proposals that show a 30-acre green roof that allows public access by connecting the roof -top park space via a walk way between buildings. There is both community support and community concern for such a proposal and how the specific plan would or would not accommodate such a design. The city team’s role is to ask and vet the questions as raised by the Cupertino community with respect to general urban design principals, implications on community aesthetics/form, long-term maintenance/flexibility/adaptability of each building, and the implications of how park in-lieu fees are calculated. With City Council direction on these issues, the city team can adapt the specific plan as necessary to reflect the desired outco mes and accommodations within the development standards. Question 3: A. Should the specific plan consider allowing a combination of park land dedication and in-lieu fees? If so, what combination of on-site space vs in-lieu fees should the Specific Plan require? B. Should the specific plan include an increase in the maximum height limits for more than a base amount of grade level parks? C. What size and format of parks and open spaces should be required or allowed, including requirements for public access? D. What types of roof top parks and open spaces should be expected or allowed, including public access and bridging of buildings, and those dedicated for private use only? What percentage may be included as a credit toward the in-lieu fee if applicable?  Community amenities/benefits. The modeling for the specific plan has so far included programming for some community amenities. Before generating a draft specific plan, Council’s direction is requested on the items that should be considered or included. These amenities/benefits are a cost to the developer and may require additional development components to make it feasible. Once the team receives the desirable list of components, the recommended development mix will be included in the specific plan. Question 4 - Which of these community amenities would the City Council wish to direct staff to prioritize? o Affordable housing (more than 15% typically required). The preliminary economic analysis has included an even mix of 20% low and very low units. There has been 10 some community discussion about moderate income and extremely low income (supportive housing) categories. o Schools/education space o Business incubator/innovation center o City Hall or other civic space. The specific plan diagrams have included a mix of about 45,000 to 65,000 square feet of civic space for City and school use. o Performing arts theater o Contributions to mobility/transit choices: such as trails, off-site improvements, autonomous vehicles, community shuttles.  TDM Program. An appropriate and complementary mix of uses allowed on the site will contribute to traffic reduction. For example, office uses can provide a day time population that would support local businesses and serve as a location for potential employers or services, such as medical office, to local residents. The location of retail stores, entertainment and services within reasonable distance to where people live can also reduce traffic, either through reduction of miles traveled by car or through the opportunity to utilize other modes of transit. Residential units would increase both housing supply and diversity of housing choices within Cupertino, reducing the in - bound traffic of those who already work in Cupertino. Like office use, residential use would support the commercial/retail businesses and likely have different peak hours of use (weekend use rather than weekday), which distributes the traffic volumes. a. Target reduction for the project – 30% to 35% as a basic requirement for the office component. b. The team will work on program elements that could help get to the target: i. Reduced or unbundled parking ii. Performance measures iii. Community shuttle or pilot program for autonomous vehicles iv. Parking cash out Question 5 - Are there any other program provisions or considerations that the City Council would like to add? Sustainability Impact Not applicable. Fiscal Impact Not applicable for this study session. City consultants will be preparing a fiscal study once City Council provides comments on the development mix to be included in the draft specific plan. 11 Next steps: The city team will receive City Council feedback and focus the subsequent efforts on the specific direction to complete a draft specific plan for public review by July. Additional economic analysis will likewise focus on the aspects emphasized by City Council during the study session to be completed with the draft specific plan. _____________________________________ Prepared by: Catarina Kidd, Senior Planner Reviewed by: Aarti Shrivastava, Assistant City Manager Piu Ghosh, Principal Planner Approved by: David Brandt, City Manager Attachments: A– Kick-off meeting notes B – Interview notes C – Guiding principles D – Charrette 1 summary report E – Real estate market assessment F – Cupertino Municipal Code Chapter 13.08 12 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 0 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Vallco is the only large site available for Cupertino to have a major retail/shopping/entertainment/fitness center for a fast growing city whose populations is like to double in 20-40 years • Other sites are blocks divided by streets. Vallco is ideal site for an innovative design as one complete site. Don't divide it up by boring streets like any other downtown. • Squatting on precious space • Great location convenient to freeway • Untapped potential for housing, transportation and community space • Cupertino has no real down town. Let's make Vallco our new downtown. • We need a new 'landmark' for Cupertino. Apple space ship is one. Vallco can be another one to make a 'pair' with it. • Most valuable real estate on Pacific Rim • New Heart and soul of Cupertino • Needs public space for people not cars • Potentially dense housing location to offset worker influx • Close to Apple Park • Community gathering place where its enjoyable for everyone to spend an afternoon. And a whole family. But not on the rooftop. • Prime placement within Cupertino for public transportation hub. Challenges • The most precious site at Vallco was 'dead' for decades. Time to do something with it. • Eye-sore Could be transformed into something beautiful • Wasted space • Reduce freeway congestion. Transfer people in Airspace between Vallco- Apple • Lack of public transportation • Wolfe-road between the two lots- is a two-lane road. Effectively, traffic sucks. • Need system of transportation to and from center. Current streets not adequate. Transportation hurts. • Workers driving in from cheaper areas is causing traffic during rush hour. • Too much traffic in current transportation hub • The site is somewhat near (<15 min) tons of office space a few other malls • 2 miles from both Apple campuses (ie ideally situated for housing to reduce congestion) • The site doesn't seems to have demand for retail so the mall was abandoned. • No local shopping • Deserted. Not many store can spend my money • Vallco is nearly deserted (ie not generating tax revenues) • Dying retail/failed mall • Not open to community What is your vision for the future of the Vallco site? • Central meeting space accessible for all • Mixed-use • People walking from their homes to the local farmers market then meeting at the neighborhood coffee shop all without using a car • Mixed-use like Santana Row • People living without cars with low carbon footprint 13 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 0 Notes Continued • Pedestrian/bike friendly • Bike access prioritized over autos • Pedestrian only zone, don’t mix auto with people like Main Street today • World class wonderful plaza • Must be accessible to all community • Open spaces, restaurants, coffee shops located on top of building. Vary roof line with public spaces for a view of surrounding hills • See a new downtown Vallco a new complex with wow factor • Dense, boisterous, tall apartment buildings • Kids using the ice rink • People of all ages gather at Vallco • Best shopping and technical hub, unique architecture and art, trees • Visual symmetrical look • Buildings that do not block the views of the mountains but complement it-narrow building, not a huge block of buildings • Diverse people of all classes, Rich and poor all living and enjoying the space together, raising families in their own homes, walking to shops and walking to work and no one has to drive or leave the city or have to share housing with five others • Tell apartment complex with small retail and food on ground floor • BMR housing • No ugly garages are parking lots, no underground ones either • BMR housing to enable service workers to live in Cupertino to mitigate traffic • A place where regular people can afford to live and teachers, store clerks, service workers, young people • Protection of sea of wonderful suburbia drawing in congestion • Clean public transportation hub. If cars, use garage to save space • Light rail point where Vallco meets Wolfe. Routes to Apple Park, Main St., Cupertino and Infinite loop • Public park with lots of green space so people and pets can roam around • Beautiful with vistas • To see a structure can be put on Architecture Digest cover story. People say wow. • Central meeting space accessible for all • People walking from their homes to the local farmers market then meeting at the neighborhood coffee shop all without using a car • Mixed-use like Santana Row 14 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 1 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Potential for mixed use • Dead space • Crime rates increasing • Single use • Need revitalization • Lack of landscape/green • Missing trails, gardens, plants • No housing for seniors and local workers • Lack different levels and affordable housing • Community disagreement • Adjacent neighbors Challenges • Housing: seniors, locals, millennials, different BMR land • Create lively area • Traffic bottleneck in all directions • Chance to be recognized landmark • Centrally located • Entertainment, shops, restaurants, services • Create green spaces • Walkable/bikeable • Open spaces that attract all kinds of families • Enough retail • Great location What is your vision for the future of the Vallco site? • Futuristic design • People: the place you think of when you think of Cupertino. Young/old, families, professionals, diversity, local workers • Food, entertainment, retails, shops, health services • Bart station • Public transportation network • Port for futuristic transportation (smart) sophisticated • Connectedness: walk/bike/auto • Green: open space/park, trails, connected gardens, trees, plants, sustainable, renewable (beat Apple) 15 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 1 Map 16 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 2 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Vallco is heart of Cupertino, next to main street • Vallco is close to Apple which is our innovation center • Vallco is close to freeways • Vallco is a cross roads • Opportunity for excellence • Close to freeways • Close and have city center • Next to freeway and good access Challenges • Empty unused space • Was a major shopping centers • Retain trees and walkable space • Empty eyesore and time to do something • Was once retail center of Cupertino • Wolfe Rd is a major commute corridor • Public right of way should be retained as they are now • Modern/ shopping mall What is your vision for the future of the Vallco site? • Racial and economic diversity • Shopping and entertainment center • Lots of young families living in housing on Vallco site • Most of the people who live there walk or bike to nearby places of employment • Presence of children and grand children while accommodating seniors • Place where residents will go to meet for activities, charitable events • 2 or 3 story retail • Mixed use, including commercial, retail and housing • Outside parks and inside community center together • Integrated park space next to housing • 90% of cars would be self-driving • Small electric shuttle buses • Place with no cars • Need for housing and multi-gen housing • Gathering places: parks, community center, senior center, entertainment center • Walkable/bikeable places • Solar, recycled water • On-site water and run-off go back into aquifer 17 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 3 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Showcase/possibility • Showcase/possibility • Main St-build on what we have • Apple on the other side-let's make it something we are proud of • Upscale retail/housing/Santana Row • AMC Cupertino • Ice rink/bowl/family-oriented entertainment Challenges • Traffic and congestion and safety • Empty and a waste • Traffic concerns • Buses and bike safety • Antiquated blight • No housing • Lack of specified retail • Lacks sense of place/personality • Neighborhood privacy • Just office space What is your vision for the future of the Vallco site? • Eco-friendly • Entertainment destination: art, park, dining • More options for transit-more bus routes/stops • Upscale mixed housing/retail-Santana row-like • Mixed retail/hospitality/flex space/residential/office • Setbacks/more open space between buildings • Park outdoor community space • Well integrated with freeway and traffic • Attraction to corporate function • Flow with Main St. • Permanent art park that is more accessible • Gateway • Dining 18 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 3 Maps 19 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 3 Maps 20 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 4 What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Convenient E-W access- bus/transit/car • Wolfe-crucial n/s artery with potential for multi-modal transit (necessary) • Good access of highway 280 but interior confusing (parking) Challenges • Site hard to walk into • Good access of highway 280 but interior confusing (parking) • Confusing interior/exterior layout • Not enough transit and funding reduces further • Impacts on neighbors-privacy and traffic • Dangerous biking/walking environment • No usable outdoor space • Housing near freeway can be problem What is your vision for the future of the Vallco site? • x2 Retail/entertainment/public gathering/fitness and rec center • More intimate/green spaces-not hard feel • Housing dynamism- Workers, Active seniors move out of SF homes • Housing for teachers (schools) Firefighters/affordable and service workers • Integrates electric free public transit (environment-friendly) • Environment-friendly project (high quality) • Includes housing for families and room-mate groups (2-3 bedroom units) • Flat/usable open space on ground • Walkable/bikeable/multi-modal access. Complete streets and internal • Open space-consider how it's used- provide shade, etc. • Discourages driving-make it easy and safe to walk/bike/transit 21 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 4 Maps 22 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 5 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Central location near transportation corridors • Near employers • Valuable recreation opportunities • Opportunity for housing • Near Apple • Industrial/residential neighbors • Central location, location between multiple cities • Community center opportunity Challenges • Abandoned site • Wolfe Road splits the site • Increased housing costs in region • Not currently pedestrian/bicycle friendly • No consensus from public on what to do • Dead retail What is your vision for the future of the Vallco site? • Bike-ability • Walkable • Alleviate traffic • Mixed housing (age, income, etc) • Parks/green space • Entertainment venues • Self-contained region9housing, green space, retail) • Air taxi landing! • Car-free transit-rail, trails, bus, self-driving • Car-free transit-ped, bus, bike, etc. • Mixed-use: housing, retail, income, venues, age • Entertainment: recreation, parks, theaters, 'sense of space', gathering place, place making 23 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 5 Map 24 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 6 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Shopping • Medical facility • Affordable housing • Gathering place • Near large employer (lots of potential retail customers) • Cinema • Bowling alley • Ice rink • Good family activities • Lots of history as a cool place • Close to existing retail • Lots of parking • Buildings that could be used Challenges • Cold dead mall by design • Vacant retail spaces • Site on perimeter of sewer system • Pollution from highway • No more office • No more housing than 800 units • Site =park-starved area of city • Not pedestrian friendly • Traffic bottleneck in all directions • Super fund site • Adjacent to residential neighborhoods • Site near city borders where don't have control over developments in neighboring cities (very dense) • Not community uses What is your vision for the future of the Vallco site? • Diversity of residents-ethnicity and income • Retail or housing • Housing-low profile, all types • Retail destination-keep tax $$ • No office • Library • Public meeting space • Schools, local retail, parks, affordable housing • Open space • Trees, gardens, safe, non-toxic(from underground pollution) • Low-noise • Place for families of all ages • Childcare-low cost • Walkable • Height transitions: 4 story buildings max-no higher, 2- story near residential neighborhood, 35' set back from Stevens Creek, Wolfe 25 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 6 Maps 26 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 6 Maps 27 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 7 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Proximity to schools • Close to freeway • Close to Cupertino High School • Large piece of property • Possibility for downtown city center • Un-reassessed property tax • Mixed use • Bay health club • Good road access • Opportunity to innovate • Great for open space • Opportunity for revenue • Low height construction • Quiet Challenges • Vacant • High traffic area • Traffic bottleneck in all directions • Awkward piece of land • Lack of access to mass transit • Ghost town What is your vision for the future of the Vallco site? • Really good restaurants • Vibrant Community • Affordable housing-so hourly workers can live here • People work and live here • No housing • Thriving local economy • Walkability and bikeability-all ages and states • Arial tramway to Apple • Mass transportation • Trees, outdoor plants, Green! • No traffic or less traffic • Community gather-Europe Café-Paris • Water features • Indoor and outdoor spaces for children and adults to explore and play • Stunning 'classical' architecture (not boxy) • Bike trails (mountain) • No high rises • World class life long educational system • Accessible parks • Multiple heights • Community 'maker' space 28 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 7 Maps 29 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 7 Maps 30 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 8 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Near Apple for 12K employees • No longer in prime • Near Cupertino Main Street • Fantastic location-freeway etc. • Game changing opportunity for community to reinvent itself • No longer great retail have to drive out of time • Incredible opportunity for community • Most significant opportunity for Cupertino • Opportunity to create jobs (used to have jobs there) • Used to have child care • AMC theater • Pedestrian Bridge (ped connections great) • Keep Wolfe Road open, do not narrow Challenges • Unattractive site • Unproductive for several years • No change should be made to Wolfe • Tensions in community regarding change in use • No longer serves community • Dead sears parking lot • Dead JCP parking lot • More ped connectivity (aerial and Vallco parkway and Wolfe) What is your vision for the future of the Vallco site? • Ped/bike connection over I280 on far east of site to AC2 • Underground Wolfe Road. Expands site • Diverse housing types including: affordable housing for people with developmental disabilities, assisted senior housing (affordable), housing for millennials • Put Wolfe over ground (fly over) • Narrow streets, underground, ground level for people, no parking and no cars • Good shopping • Open space, landscaping • Good setbacks from open space so it is usable, attractive • Pleasant place to walk around, charming • Do not want Main St. experience • Transit center on SCB • Publicly accessible electric trolley in the area at grade (cars underground) • Community center 31 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 8 Maps 32 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 8 Maps 33 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 9 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Next to one of the most famous modernist structures in world • Catalyst to re-invigorate the rest of Stevens Creek location-central to Silicon Valley • Ice rink is well used • Next to largest corporation in the world • Former vibrant community • Was economic driver in city • Lots of room for potential • Heart of Silicon Valley • Is there hazardous waste on the site? Challenges • Eyesore at center of community • Unappealing • Eyesore-not a way to welcome people to Cupertino • Neighbors to west sensitive to traffic noise • Neighbors love their wall • Dead zone • Empty, blighted eyesore • Controversial • Has entertainment only • Dying redwoods • Dead zone in the center of the community • Ghost town, used to be place to go • Retail mode past prime • Windowless zombie habitat in the heart of Silicon Valley What is your vision for the future of the Vallco site? • Affordable housing-rent and own • Hills of Vallco • Urban village spreads down Stevens Creek • Transit-walking, biking path • Multi-use entertainment, retail, senior housing work • Vertical forest • Green space with local native plants • Underground parking • Green roof • Medical-PAMF center with helicopter pad. • Walking corridors through wall to connect neighborhood to property • Open spaces • Community spaces with art and shade • Community theater • Multi-age housing • Variety of housing-rent and own, senior and other • Gathering place • Park over 280 • Economic engine 34 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 9 Maps 35 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 9 Maps 36 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 10 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Large area (58 acres) • On a majorly visible intersection • Nice movie theater • Prime location close to Apple • Opportunities for transit • Valuable frontage on Stevens Creek • Last major/rare opportunity for large retail space Challenges • Too much traffic congestion • Sit is one of only 3 interchanges from freeway to Cupertino • Traffic bottleneck in all directions • Current site is all concrete and very grim • The only good business is the move theater • Lot of area wasted for dead retail- not meeting community needs • Source of stationary air pollution • Trees are not being maintained • Ugly and smells bad What is your vision for the future of the Vallco site? • Street level green parks with long walking paths • Dedicated bicycle paths • Affordable housing for special needs adults • Autonomous taxis • Delivery drone landing pad • State of the art out patient medical facility • Large parks for soccer etc./open space • Community space • Underground people mover terminal/transit center 37 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 10 Maps 38 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 10 Maps 39 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 11 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Little traffic Challenges • Little impact on existing infrastructure • Retail • Affordable housing • Housing for all income levels • Park • Theater • Empty space • Pleasing architecture • Urban farm • Green building What is your vision for the future of the Vallco site? • Park/open space/urban farm • An ecovillage with native gardens and open spaces and children's gardens for all the resident and members of the community who visit • Park and urban farm • Vallco area with parks, trees, walking paths, etc • All open space in beautiful condition-usable for all ages • Open space • Tranquil • An ecovillage with a regenerative farm that provides most of the fruits and veggies for all residents • I want to see Vallco area not too crowded and with smiling faces • Fewer buildings than not • An urban village that reduces CO2emissions for all people who live there by 86% • Retail/commercial • Some commercial with a largish motel with conferences/meeting space • Mixed use • Walk to shops/pedestrian zone street cafes • Santana row with more retail-less housing • Some housing-low profile • Pleasing architecture • More intention between diverse community • Transit • Rapid transport present to get to Cupertino and leave Cupertino • Ease of getting around town (ie. convenient methods for all-maybe at no cost to riders • Connection to Cupertino Main Street (ped and bike) • Less traffic with no need for car ownership 40 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 11 Map 41 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 12 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Large opportunity site in the city (housing) • Prime location (freeway) • Near major employment site • Dead mall/dead space • History (formerly viable mall) • Major thoroughfare adjacent • Build on current amenities nearby Challenges • Chance to impact better traffic patterns • Live-work • Potential to reduce congestion • Opportunities for transit hub • Retail • Vacant room for improving amenities • Community center-downtown potential • Housing What is your vision for the future of the Vallco site? • Transit-oriented o Gondolas, trains, bike, pedestrian path o Transit center for connections • Entertainment o Mini-golf course o Basketball o Expanded ice center/bowling o Arcade (video/games) o Amphitheater for summer time activities o Farmers market (Sunnyvale Murphy Ave) o Urban farm • Art magnet school: performing arts (not just tech) • Inclusive housing and spaces for all people • Housing • Tiered; scale to office/retail and single families • Not just studio but good mix for families • Freeway cap-like they have internationally • Retail-affordable, small shops for residents to walk to 42 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 12 Maps 43 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 12 Maps 44 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 13 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • One major retail center • Gym-Bay Club • Historic landmark • The neighborhood is a quiet family area • Love the theater and ice rink and bowling-things to do • Show that Cupertino is a welcoming place • Very close to major employment • Site can intersect bike route from AC1 to AC2 • Last opportunity to do a great large project in a large area or open space • Location • Destination-shopping, activities • Apprenticeship language incorporated in project • Prevailing wages for construction workers • Great location to house working families • Community sports opportunity • Large site with potential for a mixed- income and mixed -use community Challenges • Enough parking • It has been a road-block for future community opportunities. • Became an eyesore • Dead mall • Literally front yard eye sore • Increase building height, but maintain the floor to land ratio to have more open space • Too much traffic. Noisy buses already • School where would children go to school? • Community-housing • Transportation-don't open wall What is your vision for the future of the Vallco site? • Schools for families • Open spaces that attract all kinds of families • Beautiful buildings with people out on the street walking • Divide the site to several districts. Retail only area, housing only area • Senior housing • Room to relax • Open Space-activated • Spaces full of children playing • Diverse community of people proud of their home • Small and medium scale • Gathering space for play, music, theater, engaging community • For sale units (not just rentals) • Beautiful buildings with people walking on street • Centerpiece for Cupertino • Bike lane • Modern/futuristic shopping-internet pick up, displays 45 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 13 Map 46 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 14 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Memories and historical value • Recreational facilities and theater • Walkability regardless of weather. • Ideal destination -retail and entertainment-for Sunnyvale, Mt V, and other surrounding cities • Health club, ice rink, move theater • Adjacent neighborhood likes wall separation without holes, city and developers promised to maintain. • Close to Apple transit center • Centrally located • Centrally located • Close to Apple transit center Challenges • Traffic bottleneck in all directions • Subpar transit • Big waste of space • Not a lot of housing options-renters and young people • Retail-lack • Affordable housing • Restaurant • Not enough entertainment • Impact on residential neighborhoods • Impact of schools, traffic, livability- don't want downtown San Jose • Loss of big retail stores What is your vision for the future of the Vallco site? • Retain walkability • Entertainment • Trees and greenery • Condos (owner-occupied) and apartments, 2-3 stories high • 3-5 stores • Clothing stores, grocery, restaurants, hardware, retail and entertainment center • No increased traffic • Parkland and open space -view of the Hills • Diverse community-age, economics, ethnicity, ability • Community does not ignore housing/homeless crisis • Community spread wealth across community • Schools, local retail, parks, affordable housing • Adequate parking • Walkability and bikeability-all ages and states • Traffic reduced by transit • More efficient transit • Apple has positive influence in Cupertino • Open space for leisure • Safety for walking • Attractive gathering spot • Inclusive diverse housing • Entertainment and community services • Open space and walkability\Lower traffic, better transportation options 47 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 14 Map 48 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 15 Notes What are the opportunities and challenges in and around the Vallco Mall site? Opportunities • Existing uses-ice rink, movie theater • Used to have farmers market • Walk over Wolfe Rd nice Challenges • Neighborhood transitions-need to be considered • Wolfe Rd-unsafe for pedestrians • Parking lots-no shade. Very tough to find parking • Traffic congestion • Current mall-empty buildings, used to have wooden floors, barriers to pedestrian movement • Wolfe Rd divides site • Areas outside theater unpleasant What is your vision for the future of the Vallco site? • Transportation-transit o Transit center and BART Station at Wolfe and Stevens Creek (not on highway) o Traffic from highway and parking underground o Pedestrian Safety/public space o Wolfe Rd made safer for people and bikes, keep trees o Large usable public spaces-plazas o Stay within general plan • Teen center, places for kids • Retail and Entertainment o Want 'Santana Row' but for all price ranges o Outdoor mall and greenery and public space o Like Dillards-grocery shops, not just restaurants • Housing o Mixed use but 4 stories max (like Main Street) o Stick to general plan o Affordable housing o Apartments above shops o New homes should mean new elementary school • Parking underground 49 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 15 Maps 50 February 5, 2018 Public Meeting Notes by Table – Vallco Specific Plan Project Table 15 Maps 51 52 February 6, 2018 Interview Notes – Vallco Specific Plan Project February 6, 2018 Group Interviews Issues, Comments, Concerns: Retail •No place to shop in Cupertino. •People want a place to shop and gather along with retail •Need retail for sales tax revenue, not housing •Retail needed to avoid long drives for everyday functions - keep it to Hills level; big malls already there at Valley Fair, Stanford, Santana Row, etc. - so keep shopping retail, more local, not big. •Experiential retail is what sells now. This is what people drive to - Don Weden was on speaker series, was kicked off - statistics to prove future demographic changes. •Shops will fail if stacked. •Need a good amount of retail so City can keep the tax base •Needs local-serving services and offices, like in a town center. •Minimal commercial business space needed. We are over-supplied w/retail and commercial. •Retail isn’t coming back in traditional sense; only old people go to grocery store, so retail has to change. •Things are changing so fast in our society that we don’t know what retail should look like- buying online. Need vision for new modern retail experience- we don’t know what to ask for •Feel like we have enough retail. Valley Fair expanding constantly. •Many restaurants are closing in the area, Island, Life Kitchen both closed •We have too much retail- sick of same shops over and over •Create entry-level jobs. Capitalize off of the CHS kids. •If Valley Fair can work, why not Vallco? •Retail is a complex, challenging problem •When Vallco closed, they still had 1.2 million sf retail operating. So - it was profitable when they closed it. They had stable customers, and 9212 report proves it - sales have been steady when adjusted to inflation. In the 2008-2009 economic downturn they remained stable even in economic crisis. •Valley fair is so close- we don’t need to be that close to a shopping mall •Retail need regular local shoppers but people from Cupertino are frugal- lowest national credit card balances. •Fun to imagine what should be built there, but demographics will decide what kind of retail - need better retail manager. •Retail - no big stores, no Costco – only neighborhood stores. •Retail will be successful if Vallco has the only ‘small shops’ retail in region. •Wants similar gym with enough parking. 600k retail will be used by region. •Underground parking w/grocery 53 February 6, 2018 Interview Notes – Vallco Specific Plan Project Housing • Low income housing- need people working in city at all income levels. People drive an hour or two to get here. • Multi-family housing does not pay fair share of parcel taxes for schools • 389 units is ok but should be ownership homes to create a sense of community • Need a mix of housing and office to not dig deeper hole to compensate in future projects (too much office this time that would require more housing for next project) • Cupertino needs no new housing, no office. Low cost housing has been provided. • Marina and Hamptons projects have extremely low affordable units (approved projects) • Create diverse housing options (from micro units to 3 BR) - create substantial affordability • Tax laws make it hard for people to move. Slow turnover limits housing stock, makes it hard for families to buy a home. • Major need for affordable housing- less than 1% who apply get affordable housing • Public/private partnership for affordable housing? • If catering to Apple, apartments will be make this anti-community ‘company town’ - walled off gated area. • Housing is needed for service workers • Micro units or whatever is possible to solve affordable housing problem, make it for-profit to make it practical; embrace housing, integrate with Main Street, porous design. • Housing for active empty-nesters • Housing very important now especially after Apple campus, SB-35. Constructing only condos will be a disaster; we’ll end up with small units with no parking. • New proposed proposition 65 will make it easier for seniors to move out of their homes, making room for new families • Want to shift to housing; it will be enough to drive financials. We do not need more office, except what is needed to finance retail. Nowhere to move, if you want to downsize. • Housing needs to be more varied • Issues w/schools, fire, traffic with adding too much new housing too fast • Frustrated about housing situation. City needs to meet our own goals for affordable housing. • We haven’t made much progress on affordable housing • Vallco needs to not be able to buy their way out of affordable housing- very few undeveloped properties left to solve the problem • Mixed income living will be good for future. • Insane housing prices and need to take collective action 54 February 6, 2018 Interview Notes – Vallco Specific Plan Project • Want affordable housing of all levels • Multi-family higher density housing vs. suburban history. • People who work here will want to live in new housing so traffic won’t increase • No other sites and public will for affordable housing in Cupertino- we are way behind in meeting affordable housing goals • Address w/public education that affordable housing doesn’t mean increased crime • 750k sq ft office is ok • Differently-abled need extremely low affordable housing • City needs to get backbone and stand up against developers and office projects- ruining community if we don’t meet housing needs • Quantity of homelessness is heartbreaking. No place for them to live. Needs to be addressed vs. current nimbyism about affordable housing • Minimum 15% affordable housing ratio but need a number w/nod to how far behind Cupertino is in meeting goals • Teachers need a place to live • What does affordable housing mean in this context? • Lottery factor - prop taxes capital gains has had huge impact on housing costs. • Want to see 389 housing for ownership. Mixed use will not work in Cupertino - suburban location. • Housing. Entry-level housing and graduated levels • BMR housing-where does money come from, who is paying for it? • Really want affordable housing now to increase, if the developer can give money to schools they why not more affordable housing? • We don’t have transit infrastructure for more housing. • Not concerned about adding housing, especially affordable housing for younger people • Sky-high costs housing costs are preventing young families and young people from moving to (or back to) Cupertino and its environs • J/H ratio in Cupertino is 1.29 - lowest in Santa Clara; less jobs than neighboring cities, including Apple. • How can office space create educational and career opportunities for our kids? Office • More office means we’re not doing our share of housing • Please no offices, only generates more traffic • Office space all locked up by Apple, need small business space in Cupertino. • Need office that provide services to people who live nearby • Why add more office? • No problem w/office- it provides jobs for local residents. Office worker doesn’t cause more traffic than shoppers. Traffic impact not bigger for office than retail. • If more office, need same ratio of more housing. 55 February 6, 2018 Interview Notes – Vallco Specific Plan Project • Need diversity of companies in town. What if something happens to Apple? • We have a lot of office space here. Cupertino has done its share. • Long-term office leases not easy. • Like neighborhood service type offices (such as medical), allowed uses need to be defined more clearly. • A viable project will need office • In favor of 2 mil+ sf of office similar to Santa Clara Square. Ideally it could be someone other than Apple to diversify the business climate within the city. • Need office but 2mil sf too much • Minimum amount of office is needed, it will generate profit and revenue - will allow better amenities, better construction, such as the green roof. Schools • Schools are overcrowded in adjacent neighborhood • Declining school enrollment because cost of housing so high. • Whatever goes in for housing make sure schools aren’t going to be negatively impacted • Need a clear story about impact on Cupertino High • Education isn’t talked about as much as it used to be. If families can’t live here the schools will decline. Already seeing declining enrollment. • Cupertino needs more schools. • Schools are still a draw, whether or not people can live here. More people are renting to be in school district even though they can’t afford to buy. • Declining school enrollment across district. Will lose 500 students this year. Losing money. • More housing is not going to affect school enrollment w/current decline in enrollment • School enrollment reducing to the point that teachers may get fired; impact fees are simply not enough to build additional spaces if needed. Right now there is capacity in schools. • Schools, city losing money, not enough students, losing money from state • A lot of strong education has to do w/extra tutoring and outside education, not just what is happening in schools. • Lynnbrook school enrollment is declining, elementary school enrollments are declining in general, perhaps we need a vocational school • Look at CUSD website - Jan 2018 - video recording, annual report. Projected to lose 400 kids over next few years, lost similar number in previous years - root causes: no houses for people to buy + families can’t afford to live here. • Regnart Elementary losing enrollment • Amenities for high school - safe hang-out place for high school - Teen Center. • School enrollment reducing is misrepresentation of facts • School board member – facts being misrepresented - declining schools are on west side. Schools on this side of city near Vallco are overflowing. Numbers are 56 February 6, 2018 Interview Notes – Vallco Specific Plan Project wrong, student generation rate is higher than neighboring cities. Misrepresentation of data. • Don’t buy the idea that housing hurts schools • Teachers leaving because they can’t afford to live here Transportation/Traffic • Traffic huge issue in this community, no more slow traffic windows. Problem from surrounding cities since enclosed by other cities. Effect of San Jose building up to edges of Cupertino- don’t have control. • Don’t get too dense- concerns about traffic and parking • People living west of the site are afraid they will be cut through • Walkable/bikeable environment- get people out of cars • Nobody walks in Cupertino, need cycling, walking, Google has a community shuttle for community • Bike connectivity • Get more specific and creative about innovative transportation solutions that prevent/eliminate congestion • Disagree with light rail - people don’t use it right now, lowest fare-box recovery. • Address traffic issues from preexisting office space before adding more office • Construction will bring noise and also freeway noise; a big sound wall will be great - less noise, more privacy. • Connectivity will destroy the adjacent quiet neighborhood. • Intersections are being terribly impacted - N Wolfe & Vallco Parkway, N Wolfe & Miller. • Transportation is a regional problem, they have been promising to bring BART to San Jose for 40 years • Neighbors close to the south wall are concerned about opening the wall, it will flood their streets with parkers and traffic • Want bikes but doesn’t support bike lanes • Need flow across entire project site. Current buildings are constricting flow to surrounding properties. Need connectivity to surrounding neighborhoods. • Density at Vallco would create potential for transit center. • Center things around pedestrian not just cars • Need more busses, smaller busses in neighborhoods, active bus routes and other transit if possible • Don’t have history of transit here. People are married to their cars. Nobody rides the bus. • BRT fails too. • Have a big project vision - autonomous taxis and other futuristic ideas. • Is there a shuttle bus up and down Stevens Creek Blvd that residents and business people can take to Vallco/Main Street instead of uber or driving in individual cars? • In 20 years from now – new mobility solutions will be needed. 57 February 6, 2018 Interview Notes – Vallco Specific Plan Project • No space on Stevens Creek for light rail. • A lot of anxiety can be reduced by addressing traffic impacts of big vision • Emphasize public transportation • Bike share for Vallco area • Public campaign to increase alternate modes of transportation • Want a Bikeabke environment • Bike lane from Apple to Vallco • Better pedestrian routes needed • Dental clients are leaving because of traffic in Cupertino. • Consider connectivity to planned AC1 to AC2 bike route • Try doing something to take cars off the road. Could this be required for a period of time funded by developer? • Were promised LOS at intersections won’t drop beyond D, they dropped to F in General Plan EIR. Disingenuous that they are using old data. • Traffic will be studied too late. Impact of Apple will be profound. 80% of 35,000 workers go outside Cupertino to work - congestion. • Look at how the future of transportation will impact development. Build for the future, not the past. Private car ownership will be very different in 5-10 year, when the Vallco project is just opening and making its place in the Valley • Look at creating a ramp across the freeway to the north side of 280 (near Apple Park) • Reduce parking substantially • Traditional thinking needs to be changed on traffic problem. Public transportation not a solution. Housing and jobs are not close together. We have a good balance of housing and jobs but majority of residents commute out and many commute in to work. Why are jobs so far away from housing? If we didn’t have a traffic issue we wouldn’t have a housing issue- its’ all about impact. Need to reduce driving- walkable neighborhoods to neutralize driving. • Closeness to work is not a priority for many people. • Make it easy to get in and out and it will be used more • Future transportation - need to build thinking ahead. Parking spaces are too expensive. We are technology center in region – need to be bold. Maybe even a ramp connecting to Apple campus. • Wide sidewalks to walk/bike around on (think Memorial Park)Design • Human scale very important, connectivity very important; walkability very important. • Not much historic fabric. But future architecture could tie into agricultural background - mimic agricultural roots; use of farm aesthetic. Also - Mexican- Spanish aesthetic. Now architecture is just chrome and glass. • Urban agriculture - embrace as a historical element. • Architectural style - a lot of Cupertino’s residents have vacations with grandparents from India and China - ask older community what they’d like; how they use public space, architectural elements that make them feel comfortable. 58 February 6, 2018 Interview Notes – Vallco Specific Plan Project Future vision/ desired end result - Diversity with capital D - ethnic, income, architecture, ages, trees, everything. Health - trees, active lifestyle, culture (all lead to health). Livability and aging in place = walkable communities. • More in line w/modern architecture. Looks like any other suburban city. Apple campus is a start. Start looking more distinctive, more like Silicon Valley. • Focus on placemaking. Project for Public Spaces - pps.org - is a great resource Development/Financing • Developers aren’t in business of giving free lunch for BMR. We will pay for it in another way- taxes, bonds, etc. • Safeguards need to be in the new plan that what we plan for/agree on is going to happen • Deed restrictions keep landlords from making as much on rent as they want so developers won’t agree to deed restrictions (service use, etc.) • Worry about private rights of developer. Citizens can give input but developer has some rights to make choices. • City Council in Dec 2014 did not approve 2 mill sf office. It was pushed through in a hidden way as a last-minute change. No evidence of corruption. Planning Commission may be ok; but City Council is influenced by Sandhill. Significant donations to current council members - indirect payoffs. The day after the city approved General Plan 2 mill sf office amendment, there is a ‘good job’ email from Sandhill to City. • Speed and ease of development will be key. • Get rid of myth that affordable housing is substandard housing • Everyone here wants affordable housing until it affects them- they want it until it causes any potential inconvenience- not near me, no impact on my daily life. • Fair ROI to developer is allowed • Sandhill didn’t build what was approved for Main Street project. Lost community benefit on Main Street. It’s not bad but tangible community benefits got squeezed out in build out process. • Question developer trustworthiness- Main Street promises weren’t realized • Oct 13 2014 - letter from Sandhill to city threatening that project has to have minimum 2 million SF office to be viable; threatening when they hadn’t even completely acquired the complete ownership of the site - sent letter on same day as PC meeting. Hidden in CC meeting the next day. City Council bought by Sandhill. All calculations done to maximize profit to developer. • I’d like the city to be transparent about the financial balance between housing and revenue generating businesses. Do we have a sustainable balance now? How would any Vallco plan affect the economic sustainability of the city? • People want the developer to not just build a school but to fund operations, but how legally? • Insist that BMR units are developed and green space instead of taking fee. Don’t defer requirement. 59 February 6, 2018 Interview Notes – Vallco Specific Plan Project • The developer changed Mowry Road project and Sunnyvale- City should have known developer’s questionable past • Developer actually did OK with Whole Foods and Cupertino Village • Developer did a bait and switch on Main Street re Senior Housing, • Some amount of retail and restaurant is necessary to get support. Wants something new that developer will do, something financially viable. Wants to see pedestrian-oriented development, tie in with Main Street. • An economically viable project • Need to diversify our tax base Politics/Context • People are concerned about all the construction of the past few years • Not good to become too dependent on one company, such as Apple • Fear of density in Cupertino. • The orchards left a long time ago, so people need to change viewpoint. • Planning Commission quite cohesive, so is Parks & Rec but City Council has issues. • No trust in Sandhill. Violations in Main Street still happening. They are very disingenuous. Requested public records; emails revealed collusion - solid evidence that there is enough that is going against community. Was accidentally replied to (reply-all) by Peter Pau of Sandhill – revealed an attitude of entitlement. • There are other struggling properties in area. Can’t plan Vallco in a vacuum. Does the vision extend to nearby properties? • Rumor that Apple has made internal decision not to locate any more employees in Cupertino. No longer looking here for employee housing affordability. • Corruption in process - no trust in city. • Tension has started rising after Apple development - fears of overcrowding in schools, transportation, etc. • Construction fatigue in community • City Council needs to listen to local small businesses and residents. • Confusion between Measures C and D - many people voted no in confusion. • Don’t like development by ballot. Not pro C or D but anti both- not because of content but problem with process. • Major issue that we don’t have consensus on affordable housing - Mayor’s state of the city speech is problematic. Need consensus to change conversation more broadly across community. • Historically, neighbors have complained about affordable housing • NIMBYism huge here. History of major opposition to affordable housing- due to schools, traffic. • Glad C and D failed. Council needs to take charge and not leave it to a vote • Community scared that new Apple office will cause total gridlock 60 February 6, 2018 Interview Notes – Vallco Specific Plan Project • People are burned by all of the Apple construction- people need break from construction even though they were not against Vallco project • Mall operator did not update or invest in mall to changing demographic - decline by design. • Look at Don Weden for insight on this region and the growth over the next 15 years • Housing and office - what we can tolerate to get other stuff. Wants truth to come out about what people actually want today - situation has changed - office versus housing theory. Parks/Open Space • Community space to hang out- currently hang out outside library • Parks and recreation needed. Local parks. City isn’t programming parks so that people want to use them. • Want a space to be without spending money, good for teens • Want entire space available to open space • Third space to hang out- plaza or other open space • Involve city as ongoing partner in programming public spaces • Lots of free greenspace (urban oasis) Programming • Trees are a common denominator. Apple campus will have 9000 trees but from zones that will withstand climate change. We need to be forward-thinking in the same way. • The new library at City Hall is trying to expand within current location – they want to be embedded in the community. Suggestion: include other cultural functions, non-profit organizations, etc to form part of larger integrated library/ public amenities system - all can coordinate with each other better by sharing a physical space. Older people could volunteer, interact with younger people; would be easy to organize after-school teen activities. In other words - use existing resources. • 40% voters have voted for retail-only with 45 feet height limit - Measure C – so plan should stick to general plan prior to Vallco allocations. • Quality of life- space needed for library, not enough parking at city hall • Need a performing arts center/theater. • Need more places for seniors to congregate. Senior center doesn’t have enough to offer seniors. • Don’t have anything addressing fine arts and culture in this area. Do something w/culture and fine arts in this community for students. Open air theater. Need to leave a legacy for our children. Have something unique this community can be proud of. • Areas for leisure, culture, relaxation, time and space to relax- sustain higher quality of life 61 February 6, 2018 Interview Notes – Vallco Specific Plan Project • Part of new community there should be seniors- won’t have impact on schools or congestion. Stable population who will become a community- public safety and crime standpoint. • Not worried about building height but want to maintain floor to land ratio. Open space will attract people so it won’t be a dead area. Plan for whole site to make more attractive to citizen and attract business. • Create an extraordinary public realm • New forward-thinking uses: virtual reality theater, rock climbing gym. • that the City of Santa Clara has already engaged). • Cupertino needs to support the arts, we need a community theater, it doesn’t have to be big, 365 seats are fine • Community spaces can change a city- people of different ages can interact and engage each other • Want quality restaurants-people go to Palo Alto and Mountain View • Community downtown needed, want community gathering space • Need enough parking, entrances and exits, walking • Keep theater, ice rink and bowling alley • Memorial for indigenous recognition and reclamation. • There should be green roofs on all buildings, but they should be designed to match California's ecology (not grass, still plants though.) • Want something that will draw people in • Ice rink may need to be subsidized as a recreational benefit in order to have this operation exist in a new development. City may need to discuss cost with rink owner and developer. • Embrace the area’s innovation and technology. Most of the advanced technology being deployed all over the country and the world is developed here. Embrace that. • Look to future- expand view of what is traditional commercial/retail- showroom, internet order and pick up, self driving cars, charging stations • Integrate with Main Street • Focus on people, create substantial density, preserve open spaces/public spaces by going taller • Idea for a theater/dance hall on site • Entertainment uses • Connectivity, gathering space, identity, get people out of cars. • Need towers at Vallco - height to conserve land for parkland. • Quality of life – needs amenities such as Palo Alto Children’s Theatre. Some education needed to promote art. • Wants something like the Milan vertical forest; a tapering tower, won’t cause shadows, a stunning landmark - rooftop restaurant, expensive but what Cupertino needs. Other inspiration: Mile high tower (FLW), a park bridge. • Need a little of everything so it becomes self-sustaining. • Need childcare for local employees 62 February 6, 2018 Interview Notes – Vallco Specific Plan Project • Dedication to public art • Would be good to have sustainable wow factor- lifeblood of area- not novelty. • In favor of proper development - no need for housing, no need for office - convert to retail and open space, community amenities. • We can build a landmark for a hundred years. Create the sense of history that is currently lacking. • Performing arts center. 50 artists live in Cupertino, the Cupertino Fine Arts Commission has been around for 50 years, but no gallery or exhibition space in Cupertino. • Wants park, housing, to get the community involved. Project can provide an endowment for civic functions. • Community sharing, to come together in ways we normally cannot do. • Supports mixed use, office, retail, housing. Office is an important element - residents don’t need it but developer profits only from office, gets higher tax revenue to city. • Want to be proud of it- good place- do the right thing for housing and open space • Community space; a hall for weddings, performances, exhibitions, other activities, multi-purpose; nothing cultural existing in Cupertino. • Santana Row attractive; thought Main Street would be like that but reality not very appealing. Maybe they can improve that area as part of this project. Make it a nice downtown similar to Los Altos, Los Gatos. • Housing is key. Retail is changing, we need to embrace changing business models. Has to be a developer-friendly solution. • Wanted to punch hole in wall to go to Macys. Who owns the wall? They just got solar panels - 1200 kw, now paying $10 instead of $600. Don’t want shading. • public realm should be key driver - something the community embraces, not something they have to put up with. • Personal garden getting ruined by city allowing more water permits. If we don’t have water we should not have more people - maybe plan should have recycled water - if designed at initial stages, won’t be very expensive. Much more expensive for retrofitting - check proposal for black water pipe near El Camino (Apple using it for watering). • No impact on schools, traffic – keep neighborhoods the way they are. Keep tax dollars in Cupertino. • Mostly retail, some housing, more BMR the better, support people/city supporting BMR • Core group of people who live there- make it a village where people are home and live, shop, spend time. Needs to be big enough (main street is a glorified strip mall)- what does it take to really live there. • Provide heart and soul, sense of community. Need all elements to keep it alive • Provide civic space- gathering space- like Santana Row • Very expensive for city to do earthquake retrofit in current location of City Hall 63 February 6, 2018 Interview Notes – Vallco Specific Plan Project (currently unsafe), they can move to new Vallco site; save 20 million dollars – freed up space can have the expanded library with other functions – will be a win-win. • Vallco was the place to go- we want people to come here and spend money Process • It takes 90 meetings before a design can be successful – example of Santa Cruz downtown. • Reassure people to provide solutions - educate them with slides. Show pictures of places where such things are happening - no one understands a plan, show visuals of what the future places can be like. • Show lots of slides, images, visual preference survey. • Skepticism within community- is this process Sandhill v2 • Vallco Hills plan didn’t go along with the Cupertino general plan- mistrust from community • Design will change but the process was why Measure D failed; we must follow process. • Fear of change here. Infrastructure needs to be built. Lots of meetings; people must understand that there needs to be compromise. • How can we speed this up? We have Vallco plan, good design; but now best way to save time and money - modify Vallco plan rather than start from scratch. • All segments of community should have easy access to the process- interpreters for immigrants- Chinese, Japanese, Korean • Specific Plan that was formulated last time was not with community focus. • In Main Street project process - 6 persons given half an hour to give feedback, no one got a chance to voice concerns. Community Involvement • Is the data we are collecting relevant? People came from as far as south San Jose to meeting. Makes data not relevant to people of Cupertino. • More data needed from people who live nearby to assess changes to quality of life. • Consider viewpoints of people who work here but don’t live here • Space will be used by broader community outside of Cupertino so they should have involvement • Need to track who is at meetings • Need feedback from neighbors around site as well as those who work nearby • People were sent here to public meetings for political means from outside of community who aren’t otherwise stakeholders here • Interested in all points of view- not just those who live here but those who are interested in whats happening here. Willing to listen to all people w/open mind and creative ideas. Need to mine people for creative ideas. • Want to hear from people who don’t come to these events 64 February 6, 2018 Interview Notes – Vallco Specific Plan Project • Half the city was out of the loop on what was happening at Vallco so a lot of people voted “no” on both referenda • What is phasing approach to protect residential neighborhoods - privacy. Want a taller wall. Got a letter from city - graffiti on sound wall. Made the residents pay for it - 3 times. • Engage renter population, rhetoric of “home-owner community” • Renters make up a significant part of our community • YIMBY groups coming to Cupertino outreach, disrupting and misrepresenting opinions. Who isn’t in the room? Who else should we be talking to? • Chinese community – may not come to meetings – must go to them, especially older folks. • Senior affordable house- Charity’s Housing • School district- people say they haven’t been connected • Service clubs- Rotary, Lions, Kiwanis • Homeschooling and homeschooling advocacy groups- out in community during business hours • HOA associations should be involved, board members. • High School Democrats of Cupertino • Do something at deAnza • Need to get into high schools • Incentives for students- have to take government as a senior- teacher incentive of extra credit for attending Charrette • Bring food truck to school- free food • Do something at library- publicize • Get booth/table outside of library • Apple employees • Ask people to put survey on Nextdoor • Sandhill should go door to door at this stage of project like they did • People of color have own social media apps- ask to distribute • India Currents free monthly magazine • Racial communities- Black and Latino • Engage service workers- retail and restaurants • Block leaders • Arrange for block party and give more input so people feel that they have had their say • People in Sunnyvale would love to be included but haven’t been asked • Certain geographic areas where others have a right to say • San Jose neighborhood • Young people • People who come here to work - what would draw you in more? 65 February 6, 2018 Interview Notes – Vallco Specific Plan Project • Ask teachers how whatever is build affects their classrooms • Students who come back home- millennials living w/parents What did you LIKE about the Sandhill “Hills of Vallco” plan? • World class architect, maybe too much office but realize developer needs to make money. • Iconic • Regional draw • It as an interesting plan and visionary • Developer talked about a space for Fremont High - an activity space for kids. • Innovative, world class. • Experiential place (retail) • Creating a distinct identity is important. • As a Vallco neighbor, wasn’t concerned about parking though neighbors were. • 2 mill sf = Empire State, could be landmark for Cupertino. Largest roof park could be cool - need to recognize that times have changed. • Like green roofs • Like design with open space • Liked trails and green space, bike paths • Had potential for huge revitalizing effort • Liked modern landscape of retail, housing, entertainment • Liked modern architecture • Ambitions but not ostentatious • Liked how it proposed a free shuttle to the shopping mall. • Project was going to generate recycled water not just for site but also for community. • Park was great idea, grocery store great too. • Final proposal was great - if you need to get people to retail, it has to be different. • Good design, would have been regional draw. • Liked the project, traveled to Asia and saw the indoor super-malls, feels it would work here. Big fan of roof garden, vineyards. • Sandhill offered a large grant for schools - very generous. • Liked big public spaces, preserving ice rink, theaters, bowling - Cupertino needs activities for young folks and millennials. • Liked integration with 19800 and Main Street but they didn’t talk about it enough. • Liked nonprofit center for space rental • Recreation park • Liked the ice rink • We wanted it to be a community place • Liked theater 66 February 6, 2018 Interview Notes – Vallco Specific Plan Project • Liked that density was hidden in the middle • Mixed use is right direction • Liked traffic flow and community areas • Against office at first but office is most profitable and allowed them to be more creative (green roofs) • Sandhill needs to make money with development- this needs to pencil out or city will have to pay for it or it won’t happen. • This will be one of the three regional draws for central Santa Clara County (TriVillage - Valley Fair/Santana Row is the current one and City Place will come online over the next 5-10 years). This needs to be extraordinary. Silicon Valley is full of innovation and amazing technology. The area should hold itself to the level of excellence and extraordinary. What did you DISLIKE about the Sandhill “Hills of Vallco” plan? • Nothing would have benefited the community at large- we weren’t asked what we wanted- built a lot of divisions in the community. Didn’t take into account environment factors, inc. air, water, traffic. • Original plan was novel to the point of tourist attraction. Felt overblown- too much attention to it rather than blend in w/Cupertino. • Hills project assumed 1.5 children per unit, not real, people pack 4 children into apartments and condos to be in school district. Also assume 1.5 car/unit not realistic. • Transit, bike lanes, bus routes need to be included- not a part of project, which made people angry • Too much office without more housing • Data didn’t tally up - green roof too expensive, not feasible – it’s a ‘lawyer’s heaven’ for liability, structural problems, etc. Not satisfied with Sandhill’s answers to technical questions. Found the legal clause that would have gotten Sandhill out of actually building the green roof. • Need housing for all income levels. • Traffic from Cupertino High would cause gridlock at certain times of day. Original plan didn’t address any congestion that would have happened. • Reduce office by half - get more housing; keep elements that are nice like green roof - save money and time. • Streets were poorly designed. Millers Creek intersections should have been larger to avoid conflict. Traffic is only going to get worse. • Would have liked more affordable housing and housing for people w/developmental disabilities • Didn’t address traffic and larger community impact from traffic- not explained, very fearful • Not enough affordable housing for all income groups 67 February 6, 2018 Interview Notes – Vallco Specific Plan Project • Lack of financial sustainability plan for green space- tax revenue vs. private development. Would parks and rec have to help w/maintenance? Didn’t address that issue. • Didn’t address questions of possibility for community garden • Was missing a mitigation plan for construction impact • Maybe too much space if on ground level. No parking on ground level. • Grass (green roofs) too water intensive • Too light on housing. • Want green spaces that match California’s native flora • Plan had too many cars through plan • Few wanted to make the decision for most via referendum. • Overdeveloped and overplanned- bad approach. • Resentment that shopping was taken away • Park too speculative, not sustainable • Fear about traffic re: density • 2 mil sf of office too much • Need to clarify what office means- medical, small business, apple • Never broke plan down into how they were going to use space. Ex. All office to Apple. No picture of what reality would be for people- most time on entertainment. Not enough detail. • Wanted bike-ped bridge over 280. • Supported Hills, but they should have gone through the normal process. • Covering with garden was a waste – there are hiking options nearby within 2 miles. • Traffic, schools, noise, pollution - side effects just like every project. • Question viability of roof in earthquake zone 68 Revised Guiding Principles 4/12/18 The City envisions a complete redevelopment of the existing Vallco Fashion Mall into a vibrant mixed-use “town center” that is a focal point for regional visitors and the community. This new Vallco Shopping District will become a destination for shopping, dining and entertainment in the Santa Clara Valley. (Chapter 3 Land Use, Cupertino General Plan 2014-2020) • Provide a vibrant retail environment that combines goods and entertainment for all ages • Utilize innovative transportation solutions that: • Eliminate or reduce potential traffic impacts • Provide mobility choices and walkability, bikeability • Consider the future of mobility • Provide parks, greens and plazas • Assess and monitor potential impacts on schools • Provide housing choices for people of all incomes and abilities who live or work in Cupertino • Provide robust public and cultural amenities – theaters, art facilities, civic buildings, skating rink, bowling 69 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 1 Charrette One Summary Report 70 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 2 Table of Contents •Charrette Purpose and Overview •Shared Design Elements •Plan Options •Next Steps 71 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 3 Charrette Purpose and Overview •A valuable opportunity for the community to create a viable Preferred Plan. •A week-long collaborative design process with several feedback loops. 72 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 4 Charrette Purpose The SB 35 submittal by Sandhill Inc., the primary property owner on March 27th 2018, could move forward without negotiation under state law. The Charrette was an opportunity for the community to put a viable Preferred Plan on the table. This also offered an opportunity to get some public benefits within the project. 73 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 5 Charrette Schedule The Charrette was organized at Cupertino City Hall from April 9th to 13th. The Charrette included formal and informal presentations and topic- specific educational brown-bag lunch presentations, held at Community Hall. Open studio at City Hall allowed the community to see the design team at work and share their ideas. 74 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 6 Charrette Schedule 75 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 7 Community Participation The charrette attracted a range of interested participants: •75-80 people at Opening and Closing Presentations •Approximately 150 people attended Open Studio over the course of the week. •25-30 people at each of the three Brown Bag presentations.Data gathered throughout process at public meetings and via online polling (self-reported) 76 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 8 Community Participation 77 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 9 Guiding Principles (Revised 4/12/18) The City envisions a complete redevelopment of the existing Vallco Fashion Mall into a vibrant mixed-use “town center” that is a focal point for regional visitors and the community. This new Vallco Shopping District will become a destination for shopping, dining and entertainment in the Santa Clara Valley. (Chapter 3: Land Use, Cupertino General Plan 2014-2020) 78 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 10 Monday: Opening Presentation and Break-Out Discussions Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 10 Monday: Opening Presentation and Break-Out Discussions 79 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 11 Monday-Tuesday: Studied Plan Options 80 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 12 Wednesday: Down to 3 Plan Options Wednesday evening (11th April) included an informal pin-up/discussion of progress in the studio. 81 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 13 Thursday: 2 Plan Options + Program 82 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 14 Friday: Closing Presentation and Break-Out Discussions 83 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 15 Brown Bag Lunchtime Presentations: A deeper dive into topics relevant to the project: •Economics and Retail (Tuesday) •Transportation (Wednesday) •Form-Based Codes (Thursday) Videos can be found online on the City of Cupertino’s Youtube Channel 84 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 16 Brown Bag Lunch: Economics Key Discussion Topics: •Cupertino’s economic performance and competitive market position is strong, primarily fueled by the dominant high-tech sector of Silicon Valley. •The location of the Vallco Site is likely to successfully capture demand for office and housing but being between nearby, well-established “super-regional malls” and “lifestyle centers” limits the potential for a significant retail project. •The closure of retail anchors at the Vallco Site reflect broader national trends affecting retail, with traditional mall stores and indoor retail formats needing to evolve to meet current consumer preferences for experiences and services. •Although the City historically has supported single-family and lower density multifamily developments, the recent construction of the Apple Campus II and ongoing economic expansion in Silicon Valley have intensified demand for housing. •While the City of Cupertino has permitted few office developments in recent years, robust local regional economic performance suggests significantly greater development potential. •Along with the growing Silicon Valley economy, demand for lodging in Cupertino also will grow to meet the needs of business travelers. 85 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 17 Brown Bag Lunch: Economics What We Heard / Potential Land Use Concepts: •Senior Ecosystem –market-rate senior housing (and co- housing), subsidized senior housing, medical services (e.g., urgent care, rehab, dialysis). Many of the uses could be market rate. •Innovation Center –while there are coworking spaces and various innovation uses in Silicon Valley, there hasn’t been anything done at scale. Elements of this land use concept include (a) business incubator / accelerator space, (b) educational institution/satellite campus and (c) incubator exchange program (e.g., executive-level continuing education). These uses may pay market rates, but will require s on-site dormitory-density housing, an auditorium, and other specialized amenities. •Workforce Housing –Housing products for teachers, emergency response workers, and other middle-income households. These housing products likely would require some subsidy to be economically feasible. 86 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 18 Brown Bag Lunch: Transportation Key Discussion Topics: •Understanding Existing Conditions •Transportation Demand Management Opportunities •Analysis and Evaluation 87 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 19 Brown Bag Lunch: Transportation £101 Ã260 Ã152 Ã237 Ã112 Ã114 Ã262 Ã238 Ã123 Ã130 Ã185 Ã236 Ã92 Ã61 Ã87 Ã9 Ã13 Ã77 Ã82 Ã24 Ã1 Ã85 Ã17 Ã35 Ã84 ¥580 ¥280 ¥980 ¥880 ¥680 ¥80 Monte Sereno Los Gatos Saratoga Campbell Cupertino Los Altos Hills Los Altos Santa Clara Sunnyvale San Jose Milpitas Mountain View Palo Alto Newark Fremont Union City Hayward Pleasanton Livermore San Leandro Dublin San Ramon Alameda Piedmont Danville Emeryville Moraga Oakland Orinda Walnut Creek San Francisco Redwood City Pacifica South San Francisco Daly City Santa Cruz Brisbane Foster City Half Moon Bay Watsonville Scotts Valley Woodside Atherton San Carlos Belmont Hillsborough San Bruno Colma Portola Valley Menlo Park San MateoBurlingame Millbrae Capitola East Palo Alto Tiburon 0 2.5 5 MILES VALLCO SPECIAL AREA SPECIFIC PLAN Vallco Special Area Destination Caltrain Station Caltrain Line Fewer Trips More Trips TRIPS SAN FRANCISCO BAY PACIFIC OCEAN 1-hour AM trips to Apple's TAZ Source: VTA. Map produced April 2018. CUPERTINO, CA Office Example –Peak Hour to Apple 88 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 20 Brown Bag Lunch: Transportation What we heard: Desire for: •Thoughtful solution for North Wolfe Rd. •Transit solutions Concern about: •Traffic impact of development •Ability to mitigate traffic •Managing parking Community would like to see more detailed analysis and examples of TDM and traffic mitigation 89 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 21 Brown Bag Lunch: Form-Based Codes Key Discussion Topics: •Use-Based (Conventional) Zoning invented to prevent or avoid but is largely silent on what it intends to make. It’s not set up to respond to the realities of physical character. •Density and Floor Area Ratio (FAR) are ineffective regulatory approaches. When used in Form-Based Zoning, Density and Floor Area Ratio are resultants. •Form-Based Zoning prioritizes physical form over land use to predictably generate the intended physical character. •Form-Based Zoning connects to as few or as many physical characteristics and uses you want to regulate. •At a minimum, Form-Based standards regulate physical character, building form and size, building height, frontage, streetscape, parking, civic spaces, and uses. •Form-Based Zoning replaces existing zoning as the new base zoning. 90 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 22 Brown Bag Lunch: Form-Based Codes What we heard: •Where have Form-Based Codes been adopted? •Does a Form-Based Code provide flexibility? How much? •Does a Form-Based Code deal with transit viability? •Does a Form-Based Code simplify or complicate the review process? 91 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 23 Open Studio Conversations Studio was open nearly 30 hours from Tuesday through Thursday. During this time, community members could talk with the team and share ideas. 92 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 24 What we heard Design Principles: •Place-making, create identity •Inclusive and diverse community •Better streets for pedestrians •Respect heights and density 93 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 25 What we heard Public Space: •More green, less concrete •Places for kids •Community gardens Built Form: •Lower heights adjacent to residential neighborhood. •Taller buildings at carefully selected locations. 94 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 26 Daily Updates on Website www.envisionvallco.org 95 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 27 Shared Design Elements •Ideas and concepts that can be applied across the Plan Options. •These design elements include community feedback received throughout the design process, including the April charrette. 96 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 28 Making the Streets More Pedestrian Friendly 97 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 29 Pedestrian Friendly Streets North Wolfe Road: •Potential Multi-way Boulevard. •Goal is to make it more pedestrian oriented so that uses want to front onto it. •Existing trees are a community asset and are being preserved in all schemes. 98 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 30 North Wolfe: Potential Multi-way Boulevard 99 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 31 North Wolfe: Potential Multi-way Boulevard 100 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 32 North Wolfe: Potential Multi-way Boulevard I-280 to Vallco Parkway -Alternative A: The two innermost rows of trees are preserved and create a buffer between the main through-corridor and frontage roads. 101 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 33 I-280 to Vallco Parkway -Alternative B: Existing rows of trees and sidewalks are preserved and used to establish the median between the main through-corridor and frontage roads. North Wolfe: Potential Multi-way Boulevard 102 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 34 Thoughtful Transitions to Context (North Blaney Neighborhood) 103 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 35 Thoughtful Transitions to Context Perimeter Road: •No intent in this process to remove the wall separating the site from the North Blaney residential neighborhood unless the community asks for it. •Existing trees along Perimeter Road to be preserved. 104 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 36 Thoughtful Transitions to Context Concept 1: Perimeter Road becomes a residential street (parallel to the wall). 105 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 37 Thoughtful Transitions to Context Concept 2: Park or a Community Garden at the western edge of the site, along Perimeter Road. 106 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 38 Program Elements Important to the Community 107 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 39 Existing Uses the Community Wants to Keep Program Elements: •Bowling Alley •Movie Theater •Skating Rink 108 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 40 Other Program Ideas Innovation Center/Hub: •Business incubator/ accelerator space •Educational institutions (all levels) and satellite campus •Incubator exchange program •Executive level continuing education facility •Maker space •On-site dormitory 109 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 41 Additional Ideas to Consider •A senior ecosystem •Medical services •Co-Housing •Affordability at all ranges •Thinking creatively about broader range of office uses •Adult education •An Eco-District •Vertical Forest 110 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 42 Housing Approach 111 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 43 Housing Approach: Ideas Discussed •Include options for Co- Housing. •How much affordable housing to be provided? •Affordability for groups that have not been discussed to date. •Is high-rise necessary? If so, how tall and where to place them. 112 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 44 Summary of Plan Options The Plan Options were generated at the first Charrette from April 9th –13th 2018. These options were created taking into consideration the General Plan, public input and initial economic analysis. They are a work in progress and will be further refined based on additional feedback received through the CiviComment site and will be vetted for economic and transportation feasibility. The team is also developing a third option that will be included in the second charrette to be held from May 20th–24th. 113 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 45 Plan Options Note: •The program mixes need to be tested by the economist and refined by the design team. •Parking for these options assumes a combination of below ground and above ground parking, using current city standards with no reductions. Targeted reductions will be tested later in the process. •For the Simeon and Hyatt Place parcels, hotel and residential uses have been assumed. The Vallco Special Area allows hotel use according to the Cupertino General Plan allocation but has not been included in any of the programs. Further analysis of this land use is pending. Design Process: •Multiple frameworks developed over the 4.5 days, narrowing down to 2 primary framework options. •The frameworks differ in the configuration of streets and blocks; locations, sizes, and combinations of public spaces, and program distribution. Two Plans Internal Square Edge Plaza Program Mixes for each Plan Option: •Option A: “SB 35 Comparable” •Option A: “SB 35 Comparable” with reduced office •Option B: “SB 35 Comparable” with more open space 114 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 46 Plan 1: Internal Square Options A and B 115 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 47 Plan 1: Internal Square Options A and B The key design move for this Plan Option is focusing activity around an internal square within a traditional urban pattern of streets and blocks. Within that framework are multiple opportunities to establish a unique destination, experience, and place. This space is shown as a rectangle in this alternative, but could take many different shapes and orientations as long as the size stays similar. 116 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 48 A New Focal Point for the Community 117 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 49 Cross Section of the Public Square 118 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 50 Plan 1: Internal Square Option A In Plan 1A, a large town square creates an active core for the new Downtown. Direct access to the square off Wolfe Road is provided by extending Vallco Parkway to the west into the site. The north-west edge of the square is defined by a potential city hall, performing arts center and the skating rink. This would create a civic anchor for the new vibrant retail district. These could also be located on other sites, ideally near the square. Option 1A New civic uses: potential city hall, performing arts center (approximately 500 seats as shown), and the skating rink. 119 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 51 Plan 1: Internal Square Option B Option 1B The alternative for this framework, Plan 1B, introduces a new green space along the western edge of the property along Perimeter Road. The trade off for this is that, to keep the same program (and consequently same number of units and ratio of affordable units), taller buildings need to be integrated into other suitable locations in the project. New community park 120 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 52 Plan 1: Internal Square Options A and B Option 1B In both options, the retail would primarily be located on the ground floors of buildings framing the square, then along adjacent streets as is necessary to complete a shopping loop without distributing the retail & entertainment uses too broadly. The area to the southwest functions primarily as a residential neighborhood with a variety of housing types that transition down in scale to the west, with 3-4 stories along the western edge. Option 1A 121 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 53 Plan 1: Framework Diagrams Small-Medium-Large Buildings and Land Uses The framework diagrams are preliminary ideas (on this page and the next) for allocating land uses, massing and scale of buildings, circulation networks for autos, bikes, pedestrians and transit. The diagrams shown here are for Plan 1B, but will be similar for Plan 1A. 122 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 54 Plan 1: Framework Diagrams Transit Network, Street Network and Bike Network 123 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 55 Existing Vista (looking west from Vallco Parkway) 124 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 56 Creating a Gateway to Downtown A New Vista: Plan 1A •Vallco Parkway redesigned to make it more pedestrian- oriented. •Ground floor retail for new buildings on the north side of the street improves connectivity between Main Street and the Downtown. •A signature building or architectural feature will act as a project gateway and identity generator. View from Vallco Parkway towards Wolfe, looking west: Plan 1A 125 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 57 Adding Height -Plan 1B •To allow for more park space, taller buildings can be sited along Wolfe Road, with adequate separation from the North Blaney neighborhood. •Taller elements would function as a gateway, and in place-making. •The ‘vertical forest’ concept for buildings can provide high quality green space for owners or renters. View from Vallco Parkway towards Wolfe, looking west: Plan 1B Creating a Gateway to Downtown 126 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 58 Plan 1A –“SB 35 Comparable” Program Studies This is a necessary baseline that needs to be established to enable comparison with the SB 35 submittal. Use Allowed Program Retail/Ent.410,000 sf Office 1,810,000 sf Housing Units 2,400 Civic 65,000 sf Parks/Public Space 215,000 sf / 5 acres 127 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 59128 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 60 Plan 1A with Reduced Office Program Studies If the program provides less office, what needs to be added to make this a viable and attractive alternative? Use Allowed Program Retail/Ent.410,000 sf Office 1,300,000 sf Housing Units 2,400 Civic 65,000 sf Parks/Public Space 215,000 sf / 5 acres Reduced Office 129 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 61 Plan 1B – More Open Space Program Studies What if the plan provided more at-grade open space? To keep the same program, some buildings get taller. Use Allowed Program Retail/Ent.410,000 sf Office 1,810,000 sf Housing Units 2,400 Civic 65,000 sf Parks/Public Space 309,000 sf / 8 acres Adding height at a few appropriate locationsAdding height at a few appropriate locations 130 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 62 Plan 2: Edge Plaza Options A and B 131 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 63 Plan 2: Edge Plaza Options A and B In this scheme, the focal point and retail core of the new downtown is shifted to the edge of the site, directly adjacent to Wolfe Road. A large, iconic, multi-story retail and entertainment “pavilion”, set within a large public space, would be a central feature and act as the gateway to downtown. 132 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 64 This Can be Achieved in Many Ways 133 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 65 Cross Sections of the New Plaza 134 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 66 In Plan 2A, the geometry of the street layout and blocks is more irregular, creating interesting vistas and pubic spaces. The part of the site south-west of the Vallco Parkway/Wolfe Road intersection is set aside for the iconic pavilion. The retail and entertainment uses will mostly be concentrated within this area. The City Hall or similar civic functions are adjacent, and anchor the north-west corner. Option 1A Civic uses Plan 2: Edge Plaza Option A Retail and entertainment pavilion and public plaza, with retail uses framing the plaza. 135 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 67 Plan 2: Edge Plaza Option B The alternative for this framework, Plan 2B, introduces a new green space along the western edge of the property along Perimeter Road. Similar to Plan 1B, the trade off to keep the same program (and consequently same number of units and ratio of affordable units), is that taller buildings need to be integrated into a few suitable locations within the project. New community park Option 2B 136 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 68 Plan 2: Framework Diagrams Small-Medium-Large Buildings and Land Uses The framework diagrams are preliminary ideas (on this page and the next) for allocating land uses, massing and scale of buildings, circulation networks for autos, bikes, pedestrians and transit. The diagrams shown here are for Plan 2A, but will be similar for Plan 2B. 137 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 69 Plan 2: Framework Diagrams Transit Network, Street Network and Bike Network 138 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 70 Existing Vista (looking west from Vallco Parkway) 139 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 71 Creating a Gateway to Downtown A New Vista: Plan 2A •Vallco Parkway redesigned to make it more pedestrian- oriented, and ground floor retail for new buildings help activate the street. •The new gateway is the large, iconic, retail and entertainment pavilion surrounded by a series of public spaces which can be landscaped or hardscaped. View from Vallco Parkway towards Wolfe, looking west: Plan 2A 140 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 72 Creating a Gateway to Downtown Adding Height -Plan 2B •Similar to Plan 1B, to allow for more park space, taller buildings can be sited closer to Wolfe Road, away from the North Blaney neighborhood. •Taller elements would function as a gateway, and in place-making. •The ‘vertical forest’ concept for buildings can provide high quality green space for owners or renters.View from Vallco Parkway towards Wolfe, looking west: Plan 2B 141 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 73 Plan 2A: “SB 35 Comparable” Program Studies This is a necessary baseline that needs to be established to enable comparison with the SB 35 submittal program. Use Allowed Program Retail/Ent.405,200 sf Office 1,830,000 sf Housing Units 2,400 Civic 65,000 sf Parks/Public Space 351,000 sf / 8.6 acres 142 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 74143 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 75 Plan 2A with Reduced Office Program Studies Use Allowed Program Retail/Ent.405,200 sf Office 1,300,000 sf Housing Units 2,400 Civic 65,000 sf Parks/Public Space 351,000 sf / 8.6 acres If program provides lower office, what needs to be added to make this a viable and attractive alternative? Reduced Office 144 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 76 Plan 2B – More Open Space Program Studies Use Allowed Program Retail/Ent.405,200 sf Office 1,830,000 sf Housing Units 2,400 Civic 65,000 sf Parks/Public Space 552,000 sf / 12.6 acres What if the plan provided more at-grade open space? To keep the same program, some buildings get taller. Adding height at a few appropriate locations 145 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 77 Next Steps The Plan Options generated at the first Charrette (April 9th –13th 2018) need to be vetted for economic and transportation feasibility, and will be further refined based on technical analysis and feedback received from the community. 146 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 78 There is More to Do Project Kick-off and Interviews – February 5, 6 t -JTUPGDPNNVOJUZ JOUFSFTUT WBMVFT  JTTVFT t 6OEFSTUBOEJOH TJUFJTTVFT  DPOUFYU Evening Existing Conditions & Guiding Principles Meeting – March 13 t &YJTUJOH DPOEJUJPOT t $POöSNHVJEJOH QSJODJQMFT t 1FSGPSNBODF NFUSJDT Evening Charrette 1 – April 9-13 t 1VCMJDFNCFEEFEJO EFTJHOQSPDFTT t 1MBO0QUJPOT t #VJMEJOHT QVCMJDTQBDF  MBOEVTF t 3FOEFSJOHT QIZTJDBM% TJUFNPEFM t 4USFFUTZTUFN  USBOTQPSUBUJPO QBSLJOH t &DPOPNJDöTDBMJNQBDUT Day 1 Day 2 Day 3 Day 4 Day 5 POMJOFJOQVU POMJOFJOQVU POMJOFJOQVU Charrette 2 – May 21-25 t 1VCMJDFNCFEEFEJO EFTJHOQSPDFTT t 1SFGFSSFEQMBO t #VJMEJOHT QVCMJDTQBDF  MBOEVTF t 3FOEFSJOHT QIZTJDBM% TJUFNPEFM t 4USFFUTZTUFN  USBOTQPSUBUJPO QBSLJOH t &DPOPNJDöTDBMJNQBDUT Day 1 Day 2 Day 3 Day 4 Day 5 We understand the alternatives need to be carefully assessed, which is partly why we set up a two- stage charrette process. 20-24 147 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 79 Next Steps: Economics Real Estate Financial Feasibility •A site-specific pro forma financial feasibility model and analysis for the Vallco Specific Plan will offer critical input to preparation of preferred Specific Plan alternatives. •Testing of development alternatives and key real estate development variables. The EPS pro forma will detail the development program by use, with cash flow analysis and development cost budgets for each. •The model will establish the “residual land value” for each land use (i.e., value net of development costs including required developer returns to establish project feasibility and provide a gauge on the potential for additional community benefits.Market/ Project Value Development Cost Value based on rent or sales prices Construction Costs (Horizontal and Vertical) Permits and Fees Soft Costs Residual Value Total Project Cost Illustrative Project Economics 148 Vallco Special Area Specific Plan—Charrette One Summary Memo | April 2018 80 Next Steps: Transportation Studying Transportation Impacts and First Pass at TDM Strategies: •Identify expected traffic impacts and evaluate available capacity. •Modeling and analysis to determine potential effectiveness of TDM strategies. •Refining package of improvements and programs needed to help manage transportation impacts. Potential Circulator Route 149 Report Vallco Special Area Real Estate Market Assessment Prepared for: City of Cupertino Prepared by: Economic & Planning Systems, Inc. May 14, 2018 EPS #171128 150 Table of Contents 1. INTRODUCTION AND KEY FINDINGS ............................................................................ 1  2. SOCIOECONOMIC CONTEXT ...................................................................................... 5  Population ................................................................................................................ 5  Employment ............................................................................................................. 6  3. RETAIL REAL ESTATE MARKET CONDITIONS ................................................................. 12  Market Trends ........................................................................................................ 12  Pipeline Projects ..................................................................................................... 15  Retail Conclusion .................................................................................................... 16  Project Profiles ....................................................................................................... 17  4. OFFICE REAL ESTATE MARKET CONDITIONS ................................................................. 22  Market Trends ........................................................................................................ 22  Pipeline Projects ..................................................................................................... 25  Office Conclusion .................................................................................................... 25  Project Profiles ....................................................................................................... 26  5. RESIDENTIAL REAL ESTATE MARKET CONDITIONS .......................................................... 29  Residential Permitting .............................................................................................. 29  Market Trends ........................................................................................................ 31  Pipeline Projects ..................................................................................................... 34  Residential Conclusion ............................................................................................. 35  Project Profiles ....................................................................................................... 36  6. HOTEL MARKET CONDITIONS .................................................................................. 40  Hotel Conclusion ..................................................................................................... 40  Project Profiles ....................................................................................................... 43  151 List of Figures Figure 1 Site Location Relative to Highways and Freeways .................................................. 1  Figure 2 Cupertino Employment Trend ............................................................................. 9  Figure 3 Employment Sector Trends in Santa Clara County ............................................... 10  Figure 4 Average Retail Rental Rate per Square Foot in Cupertino and Santa Clara County ... 13  Figure 5 Retail Market Performance in Cupertino ............................................................. 13  Figure 6 Retail Market Performance in Santa Clara County ................................................ 14  Figure 7 Taxable Retail Sales in Cupertino ...................................................................... 15  Figure 8 Office Lease Rates in Cupertino and Santa Clara County ...................................... 23  Figure 9 Office Market Performance in Cupertino ............................................................. 24  Figure 10 Office Market Performance in Santa Clara County ................................................ 24  Figure 11 Residential Building Permits in Cupertino ........................................................... 30  Figure 12 Residential Building Permits in Santa Clara County .............................................. 30  Figure 13 Total Residential Building Permits in Selected Jurisdictions ................................... 31  Figure 14 Average Multifamily Rental Rate per Square Foot in Cupertino and Santa Clara County ................................................................................... 32  Figure 15 Multifamily Market Performance in Cupertino ...................................................... 32  Figure 16 Multifamily Market Performance in Santa Clara County ........................................ 33  Figure 17 Value of Condominium (For-Sale) Units in Cupertino ........................................... 34  Figure 18 Cupertino Hotels ............................................................................................. 41  152 List of Tables Table 1 Santa Clara County Historical Population Growth Trends ........................................ 7  Table 2 Santa Clara County Jobs-to-Working Residents Ratios ........................................... 8  Table 3 Cupertino Commute Patterns .............................................................................. 9  Table 4 Santa Clara County Employment Trends by Industry ........................................... 11  Table 5 Santa Clara County Pipeline Retail Development ................................................. 16  Table 6 Santa Clara County Pipeline Office Development ................................................. 25  Table 7 Santa Clara County Pipeline Multifamily Development .......................................... 35  Table 8 Hotel Inventory in Cupertino............................................................................. 41  Table 9 Cupertino Hotel Performance (2017) ................................................................. 42  153 Economic & Planning Systems, Inc. 1 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx 1. INTRODUCTION AND KEY FINDINGS The 58-acre Vallco Special Area (Site) is home to the 1970s-era Vallco Shopping Mall, located off of Interstate 280 in the City of Cupertino, as shown in Figure 1. The Mall’s decline was reaffirmed with the closure of its anchor tenants including Macy’s, Sears, and J.C. Penney during 2015 and 2016. As of early 2018, the 1.2 million-square foot Vallco Mall was about 85 percent vacant, with AMC Theatres, Cupertino Ice Center, Bowlmor Lanes, Cold Stone Creamery, Dynasty Seafood Restaurant, and Benihana remaining as tenants.1 As part of an effort to revitalize the Vallco Special Area (Site), the City is working to develop a Specific Plan, along with an Environmental Impact Report (EIR) that evaluates possible alternative reuses. Figure 1 Site Location Relative to Highways and Freeways Source: ArcGIS Online; Economic & Planning Systems, Inc. The City of Cupertino retained Economic & Planning System (EPS), as part of a larger consultant team (Team), to assist with the preparation of a Specific Plan for the Site. This initial assessment of market conditions and reuse opportunities seeks to provide essential, foundational local and regional market information to inform land use options. This report focuses on four primary land use types which EPS agreed upon with City staff, including office, retail, residential, and hotel uses. As part of this market assessment, EPS has considered socioeconomic and real estate market trends as well as detailed information concerning new, high-performing local and regional projects, including their market positioning, architectural format, amenity offerings, and market 1 AMC Cupertino Square 16 closed during March, after data collection for this report had concluded. 154 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 2 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx value. In subsequent tasks, EPS will coordinate with City staff and the Team to prepare detailed development options for the Site and to evaluate the financial viability of those alternatives. Key Findings 1. Cupertino’s economic performance and competitive market position is strong, primarily fueled by the dominant high-tech sector of Silicon Valley. Between 2006 and 2015, Cupertino experienced a 46.3 percent increase in jobs, largely driven by growth in the technology-driven sectors. In contrast, population growth in Cupertino over the last decade has lagged behind employment growth, and has been modest compared to growth rates of neighboring cities and Santa Clara County overall. While job growth has benefitted some residents, over 90 percent of Cupertino jobs are held by nonresidents. Despite the growth imbalance, the City’s jobs-to-resident ratio remains below some of the most employment rich jurisdictions in the County. The region’s strong economic climate has positioned Cupertino as a highly attractive location for development, with strong market performance across residential, office, and hotel land uses. Retail development potential is more limited, largely owing to national shopping trends that are negatively affecting brick-and-mortar retailers. Nonetheless, excluding Vallco from the market data reveals that retail vacancy in Cupertino is a very low 2 percent Citywide and there likely are strategic opportunities for new retail development. 2. The location of the Vallco Site is likely to successfully capture demand for office and housing but being between nearby, well-established “super-regional malls” and “lifestyle centers” limits the potential for a significant retail project. The growing high-tech sector in the South Bay has catalyzed significant demand for housing and office space, evidenced by Countywide real estate development and market price escalation. Demand for these land uses likely would be strong at the Site, given its convenient freeway access and central location in Silicon Valley. While the Site location also is appropriate for retail, the competitive landscape for retailing at Vallco has become more challenging over time as major super- regional malls and lifestyle centers now serve this Source: CoStar Group; ArcGIS Online; Economic & Planning Systems, Inc. 155 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 3 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx trade area. These centers include Westfield Valley Fair and Santana Row in San Jose, the Stanford Shopping Center in Palo Alto, and the Great Mall in Milpitas, all of which are located within a 20-minute drive of Cupertino. 3. The closure of retail anchors at the Vallco Site reflect broader national trends affecting retail, with traditional mall stores and indoor retail formats needing to evolve to meet current consumer preferences for experiences and services. Retail reuse of the Site would require unique positioning that complements rather than competes with regional and local retailers. After the 2008 recession, consumers altered their spending habits. Shifting spending patterns and competition from online retail have resulted in a sustained demand for luxury and value-oriented retail real estate, with internet purchases now capturing a significant share of mid-market retail sales. In general, successful malls have evolved tenant mixes and formats to cater to luxury or value consumers. Regional examples of luxury lifestyle centers include Santana Row and the Stanford Shopping Center. At struggling retail centers, mall managers go to great lengths to sustain high occupancy rates and may discount lease rates in order to avoid losing anchor tenants. When this tactic is no longer effective, malls are often pushed to close or renovate and reposition in the market, often adding a mix of new uses. Despite the well-publicized retail store closures, some retail businesses with unique market positioning and customer service offerings continue to outcompete and expand. Successful, growing retailers often are seeking to locate in high-barrier-to-entry markets with strong consumer demographics, such as in Cupertino. Examples of new development, including Sunnyvale Town Center and Santa Clara Square, indicate potential for mixed-use development with a retail component. There has been limited retail development in Cupertino over the last decade. The Main Street project, the City’s most significant retail addition in recent years, comprises about 130,000 square feet of retail space. While the project is near full occupancy, at least one restaurant has closed, an indication of the challenges face new retail and restaurant uses. Currently, there is an additional 14,500 square feet of retail space in the City’s development pipeline. These figures are dwarfed by the 1.2 million square feet of retail within Vallco. Accordingly, while full-fledged reuse of Vallco as a shopping center appears highly unlikely, significant opportunities for retail likely exist along with growth in the City and additional mixed-use development in the Vallco Special Area. 4. Although the City historically has supported single-family and lower density multifamily developments, the recent construction of the Apple Campus II and ongoing economic expansion in Silicon Valley have intensified demand for housing. With an insufficient supply of available residential inventory and resulting price escalation, housing affordability challenges in Silicon Valley continue to amplify. While residential permitting data reveal a historical bias toward single-family housing development in Cupertino, both County and City data reveal a significant rise in multifamily permitting since 2009, indicating a shift towards more compact and affordable housing options. Despite this new housing, residential development in Cupertino has lagged relative to the economic expansion. Clearly, the strong demand for housing in the South Bay and desirable Vallco location suggest great potential for housing at the Site, with demand across the full spectrum of affordability. 156 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 4 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Over the last eleven years, the City has issued 870 residential unit permits, accounting for just over 1 percent of the County total. Of these units, the City has delivered 200 units in multifamily projects, with another 135 units aimed to be completed in early 2018. With limited supply growth, multifamily lease rates are relatively strong in Cupertino. With new multifamily housing generating rents approaching $4.00 per square foot per month, the market likely can support denser housing formats, although new multifamily projects in the City have been limited to five stories. 5. While the City of Cupertino has permitted few office developments in recent years, robust local regional economic performance suggests significantly greater development potential. Strong regional economic indicators and associated market demand for office space in core Silicon Valley locations have spurred significant new office development in Silicon Valley. However, Cupertino has purposely limited new office development in recent years, with the notable exception of the recently opened 2.8-million-square foot Apple Campus II. Due to growth control measures in Cupertino (i.e., General Plan Amendments required for new office development), market performance does not fully reveal the potential for new development. Today, the City has no office projects in the pipeline, office vacancy is only 2 percent, and lease rates are above the County average. In Santa Clara County overall, over the past decade office stock grew by 23 million square feet, and meanwhile vacancy rates fell from 2009 highs of 17 percent to current rates of roughly 10 percent (February 2018). Even after seven consecutive years of positive net absorption, investor demand remains strong for office space that is well-designed and strategically located. Despite mounting concerns about oversupply (roughly 22 million square feet of office is in the pipeline countywide 2) the Vallco location on I-280 and proximity to Apple’s global headquarters suggest significant potential for office development at the Site. 6. Along with the growing Silicon Valley economy, demand for lodging in Cupertino also will grow to meet the needs of business travelers. Cupertino’s hotel market has seen markedly high occupancy rates and strong room rates in recent years. The City’s hotels primarily cater to business travelers, with weekday occupancy rates regularly reaching 90 percent and demand remaining fairly consistent year-round. Hotel demand may be satisfied in the near term, given the 2013 opening of the Aloft Hotel, the 2017 opening of the Residence Inn, the Hyatt House currently under construction, and two additional proposed hotels in the City. However, there likely will be additional opportunities for well-positioned hotels to satisfy future visitor needs over the longer term. 2 Includes projects currently Proposed and Under Construction in Santa Clara County, as reported by CoStar Group. 157 Economic & Planning Systems, Inc. 5 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx 2. SOCIOECONOMIC CONTEXT Cupertino is a city of roughly 60,000 residents located in Santa Clara County, directly west of San Jose, at the insersection of Highway 85 and Interstate 280. The City is at the core of Silicon Valley, with numerous technology companies located in the vicinity. Cupertino has become well- known as the headquarters location of Apple, Inc., the City’s largest employer. Apple has had a growing presence in Cupertino, particularly owing to the Apple’s multibillion dollar headquarters, Apple Campus II, completed in 2017. In addition to its importance to the Silicon Valley economy, Cupertino has a good reputation as a residential location, largely due to its high-performing schools and well-cared for residential communities. Furthermore, DeAnza Community College is one of the City’s largest public sector employers, as well as one of the largest community colleges in the United States, attracting local and international students. Source: ArcGIS Online; Economic & Planning Systems, Inc. Population Over the last decade, the City has seen modest population growth averaging just 0.6 percent per year, which is well below that of neighboring jurisdictions. While the City experienced growth of roughly 1 percent average annual growth in the period from 2007 to 2012, there was a significant slowdown from 2012 to 2017. During this period, Cupertino had average annual growth of just 0.07 percent, as compared to the average for the County’s cities of 1.1 percent. In 158 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 6 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx fact, Cupertino experienced the lowest growth rate of all Santa Clara cities over the last five years (2012 to 2017). Table 1 presents population trends in Santa Clara County from 2007 through 2017. Employment Cupertino has evolved with the rise of Silicon Valley and the influx of businesses. With regard to the composition of employment, the City’s economy continues to be fueled by science and technology-related businesses. In addition to being home to Apple headquarters, Cupertino is the corporate headquarters of CRC Health, DURECT, Mirapath, Seagate Technology, and others. As of 2015, the City was home to approximately 40,000 jobs and a relatively healthy jobs-to- working residents ratio of 1.59, as seen in Table 2. Employment in Cupertino increased 46.3 percent from 2006 to 2015, as shown in Figure 2. While the City does not have a CalTrain stop, it does have easy freeway access, allowing for regional commuting. Cupertino is well-integrated into the regional economy with 93 percent of the City’s employees commuting from outside the City. Table 3 presents commuting trends for Cupertino. The dominant industry in Santa Clara County is Manufacturing, followed Professional, Scientific, and Technical Services, with jobs in those sectors accounting for 15.9 percent and 14.5 percent of total jobs, respectively. The County’s other dominant industries include Health Care and Social Assistance, Information, and Accommodations and Food Services, as seen in Figure 3 and Table 4. Over the last decade, the County has seen relatively modest job growth, which is largely attributable to the significant loss of jobs resulting from the 2008 recession. From 2006 to 2011, Santa Clara County saw a loss in the total number of jobs, while the next five-year period, from 2011 to 2016, saw a 3 percent increase in total jobs, as detailed in Table 4. Source: ArcGIS Online; Economic & Planning Systems, Inc. 159 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 7 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Table 1 Santa Clara County Historical Population Growth Trends Change Annual Growth RateChange Annual Growth RateChange Annual Growth RateCupertino 55,61158,714 58,917 3,103 1.1% 203 0.1% 3,306 0.6%Campbell 38,38240,050 42,726 1,668 0.9% 2,676 1.3% 4,344 1.1%Gilroy 47,04750,695 55,936 3,648 1.5% 5,241 2.0% 8,889 1.7%Los Altos 27,83129,696 31,402 1,865 1.3% 1,706 1.1% 3,571 1.2%Los Altos Hills 7,7728,127 8,634 355 0.9% 507 1.2% 862 1.1%Los Gatos 28,17730,142 31,314 1,965 1.4% 1,172 0.8% 3,137 1.1%Milpitas 62,68467,613 75,410 4,929 1.5% 7,797 2.2% 12,726 1.9%Monte Sereno 3,3143,383 3,501 69 0.4% 118 0.7% 187 0.6%Morgan Hill 36,46739,426 44,145 2,959 1.6% 4,719 2.3% 7,678 1.9%Mountain View 71,41075,188 79,278 3,778 1.0% 4,090 1.1% 7,868 1.1%Palo Alto 61,38565,882 68,691 4,497 1.4% 2,809 0.8% 7,306 1.1%San Jose 913,310980,347 1,046,079 67,037 1.4% 65,732 1.3% 132,769 1.4%Santa Clara 111,507119,399 123,983 7,892 1.4% 4,584 0.8% 12,476 1.1%Saratoga 29,72730,247 30,569 520 0.3% 322 0.2% 842 0.3%Sunnyvale 134,232143,006 149,831 8,774 1.3% 6,825 0.9% 15,599 1.1%Balance Of County 96,21086,581 87,764 -9,629 -2.1% 1,183 0.3% -8,446 -0.9%Incorporated1,628,8561,741,9151,850,416113,0591.4%108,5011.2%221,5601.3%County Total1,725,0661,828,496 1,938,180 103,430 1.2% 109,684 1.2% 213,114 1.2%Source: California Department of Finance; Economic & Planning Systems, Inc.Place / ItemChange 2007-2012 Change 2012-2017 Change 2007-2017201720122007160 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 8 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Table 2 Santa Clara County Jobs-to-Working Residents Ratios County / City Jobs Employed Residents Jobs : Employed Resident Cupertino 41,934 26,486 1.58 Campbell 28,261 20,967 1.35 Gilroy 16,780 23,067 0.73 Los Altos 11,393 13,004 0.88 Los Altos Hills 2,032 3,325 0.61 Los Gatos 17,791 13,694 1.30 Milpitas 47,538 36,012 1.32 Monte Sereno 365 1,718 0.21 Morgan Hill 14,467 19,495 0.74 Mountain View 73,205 40,948 1.79 Palo Alto 111,968 30,223 3.70 San Jose 411,008 474,260 0.87 Santa Clara 111,954 61,257 1.83 Saratoga 7,529 12,979 0.58 Sunnyvale 90,730 73,514 1.23 Balance of County 19,913 36,468 0.55 Santa Clara County 1,006,868 887,417 1.13 Source: LEHD OnTheMap 2015; Economic & Planning Systems, Inc. 161 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 9 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 2 Cupertino Employment Trend Source: LEHD OnTheMap 2015; Economic &Planning Systems, Inc. Table 3 Cupertino Commute Patterns 25,000 27,000 29,000 31,000 33,000 35,000 37,000 39,000 41,000 2006200720082009201020112012201320142015Employment Place Number Share Place Number Share San Jose 4,902 19.6% San Jose 10,960 27.5% Cupertino 2,698 10.8% Sunnyvale 3,340 8.4% Sunnyvale 2,419 9.7% San Francisco 2,720 6.8% Santa Clara 2,329 9.3% Cupertino 2,698 6.8% Palo Alto 1,982 7.9% Santa Clara 2,398 6.0% Mountain View 1,525 6.1% Mountain View 1,247 3.1% San Francisco 1,081 4.3% Fremont 1,016 2.5% Fremont 778 3.1% Campbell 771 1.9% Milpitas 572 2.3% Palo Alto 649 1.6% Menlo Park 558 2.2% Milpitas 601 1.5% All Other Locations 6,198 24.8%All Other Locations 13,449 33.7% Total 25,042 100%Total 39,849 100% Source: LEHD OnTheMap 2015; Economic & Planning Systems, Inc. Employment Destinations for Cupertino Residents Commute Origins for Cupertino Employees 162 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 10 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 3 Employment Sector Trends in Santa Clara County 020,00040,00060,00080,000100,000120,000140,000160,000180,0002006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016ManufacturingRetail TradeFinancial ActivitiesFinance and InsuranceProfessional, Scientific and Technical ServicesAdministrative and Support and Waste ServicesEducational ServicesHealth Care and Social AssistanceLeisure and HospitalitySource: California Economic Development Department; Economic & Planning Systems, Inc. 163 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 11 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Table 4 Santa Clara County Employment Trends by Industry ChangeAnnual Growth RateChangeAnnual Growth RateChangeAnnual Growth RateConstruction 45,500 30,400 47,700 -15,100 -7.7% 17,300 9.4% 2,200 0.5%Manufacturing 159,500 154,500 162,300 -5,000 -0.6% 7,800 1.0% 2,800 0.2%Wholesale Trade 37,800 33,500 37,500 -4,300 -2.4% 4,000 2.3% -300 -0.1%Retail Trade 82,100 78,200 83,600 -3,900 -1.0% 5,400 1.3% 1,500 0.2%Transportation, Warehousing and Utilities 12,700 11,900 14,700 -800 -1.3% 2,800 4.3% 2,000 1.5%Financial Activities 36,600 32,000 35,300 -4,600 -2.7% 3,300 2.0% -1,300 -0.4%Finance and Insurance 21,500 19,000 21,500 -2,500 -2.4% 2,500 2.5% 0 0.0%Real Estate and Rental and Leasing 15,100 13,000 13,800 -2,100 -3.0% 800 1.2% -1,300 -0.9%Professional, Scientific and Technical Services 107,600 108,900 147,300 1,300 0.2% 38,400 6.2% 39,700 3.2%Management of Companies and Enterprises 10,000 8,800 13,000 -1,200 -2.5% 4,200 8.1% 3,000 2.7%Administrative and Support and Waste Services 52,100 47,700 63,200 -4,400 -1.7% 15,500 5.8% 11,100 2.0%Educational Services 31,300 37,000 46,000 5,700 3.4% 9,000 4.5% 14,700 3.9%Health Care and Social Assistance 78,800 91,000 114,900 12,200 2.9% 23,900 4.8% 36,100 3.8%Leisure and Hospitality 76,500 77,000 97,500 500 0.1% 20,500 4.8% 21,000 2.5%Other Services 25,300 24,200 27,000 -1,100 -0.9% 2,800 2.2% 1,700 0.7%Government 94,50093,30093,000-1,200-0.3%-300-0.1%-1,500-0.2%Total, All Industries886,900 860,400 1,018,300 -26,500 -0.6% 157,900 3.4% 131,400 1.4%Source: California Department of Finance; Economic & Planning Systems, Inc.2006-2011 2011-2016 2006-2016Industry201620112006164 Economic & Planning Systems, Inc. 12 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx 3. RETAIL REAL ESTATE MARKET CONDITIONS The Silicon Valley region’s strong economic climate has positioned Cupertino as a highly attractive location for development for most land uses. Although the potential for retail development is more limited, largely due to national shopping trends, when excluding vacancies at Vallco the City’s retail real estate market appears healthy. Lease rates per square foot in the City are also significantly higher than that of the County’s, an indication of the desirability of the location. However, due to the Site’s location between various established regional retail centers, retail will likely need to be a component of a larger mixed-use development. In the last decade, the City has seen limited retail development deliveries with the exception of the Main Street project. Market Trends Cupertino has seen minor fluctuations in retail inventory over the last decade, aside from the 2016 delivery of Main Street Cupertino. The Main Street development, built by Sand Hill Property Company, consists of over 130,000 square feet of retail space across over a dozen buildings in an open-air, walkable, town center environment located adjacent to the Vallco Site. Retail at Main Street is nearly fully leased, with its opening marking a downturn in vacancy rates caused by the closing of Vallco’s anchors. The City’s retail lease rates have been on the rise since 2013 and currently stand at an average of $50 per square foot per year, well above the County average at above $30 per square foot, as seen in Figure 4. The high vacancy rates in 2015 and 2016 (see Figure 5) are largely attributable to the closing of Sears, Macy’s and J.C. Penney, with smaller Vallco Mall retailers following subsequently. When removing the effect of Vallco vacancy, the vacancy rate in the City is close to 2 percent. Santa Clara County has seen strong retail performance over the last decade, building approximately 6.7 million square feet with vacancy rates hovering around 5 percent and new inventory being consistently absorbed, as detailed in Figure 6. 165 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 13 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 4 Average Retail Rental Rate per Square Foot in Cupertino and Santa Clara County Source: CoStar Group; Economic & Planning Systems Figure 5 Retail Market Performance in Cupertino Source: CoStar Group; Economic & Planning Systems $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 2006200720082009201020112012201320142015201620172018 YTDCupertino Santa Clara County 0% 5% 10% 15% 20% 25% 30% 35% -600,000 -500,000 -400,000 -300,000 -200,000 -100,000 0 100,000 200,000 200620072008200920102011201220132014201520162017Inventory Change Net Absorption SF Total Vacancy Vacancy RateSquare Feet Rent/Sq.Ft. (NNN) 166 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 14 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 6 Retail Market Performance in Santa Clara County Source: CoStar Group; Economic & Planning Systems Even with the closing of Vallco anchors and high retail vacancy, Cupertino’s taxable sales experienced just a modest dip of 1 percent in the period from 2014 to 2016, as seen in Figure 7. This dip is negligible when considering that the City experienced over 100 percent increase in taxable sales over the last decade. The City’s taxable sales, however, include business-to- business sales and have benefitted tremendously from Apple’s success. 0% 1% 2% 3% 4% 5% 6% 7% -1,000,000 -500,000 0 500,000 1,000,000 1,500,000 2,000,000 2006200720082009201020112012201320142015201620172018 YTDInventory Change Net Absorption SF Total VacancySquare FeetVacancy Rate167 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 15 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 7 Taxable Retail Sales in Cupertino Source: CA Board of Equalization; Economic & Planning Systems As is the case for retail throughout the country, the nature of new retail offerings has evolved from the traditional indoor mall and strip mall formats. In Silicon Valley alone, there are a number of recently renovated retail centers, including Westfield Valley Fair located in San Jose and the Stanford Shopping Center located in Palo Alto (see case study detail below), that have set the bar high for lifestyle shopping centers that have high profile retailers, amenities, and extensive restaurant offerings that are key traits of this new retail format. That isn’t to say that there isn’t successful retail being delivered outside modern formats. However, most other retail is stand-alone and site-specific, or catering to the value-oriented or convenience market. Pipeline Projects There is nearly 1.25 million square feet of retail currently under construction countywide with another 1.03 million proposed, as seen in Table 5. As for Cupertino, data from CoStar Group indicate that one retail project is currently in the pipeline, located west of Highway 85 on Stevens Creek Boulevard. While project tenanting has not yet been disclosed, it will consist of roughly 14,500 square feet of rentable retail space. In addition, a proposal for redevelopment of the Oaks Shopping Center might bring upwards of 50,000 square feet in retail space. $0 $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000 $3,000,000,000 20062007200820092010201120122013201420152016168 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 16 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Table 5 Santa Clara County Pipeline Retail Development3 Retail Conclusion Adjusting for effects of Vallco on Citywide retail real estate performance metrics, it is evident that Cupertino’s retail market is performing well with low vacancy and healthy rental rates. However, the changing nature of retail must be accounted for when considering possible retail reuse of the Vallco Site. Research and observed trends suggest that retail-dominant centers must either fit into one of two extremes, luxury or value, with the middle market struggling to compete with online retailers. Retail reuse of the Site would require unique positioning that complements rather than competes with regional and local retailers or positions retail in a mixed-use development that may fulfill local demand while providing convenience to other on-site uses. 3 As of March 8, 2018, CoStar Group reports retail pipeline development that includes phase I of Related Santa Clara (a 240-acre mixed use development). The total proposed retail square footage in the project is 1.1 million square feet at buildout. Property Type Total Sq. Ft. Proposed General Retail 344,060 Community Center 314,898 Neighborhood Center 133,258 Power Center 198,500 Strip Center 42,601 Sub-Total 1,033,317 Under Construction General Retail 367,797 Community Center 155,080 Lifestyle Center 216,855 Neighborhood Center 275,055 Power Center 214,091 Strip Center 19,360 Sub-Total 1,248,238 Total New Retail in Pipeline 2,281,555 Source: CoStar Group; Economic & Planning Systems, Inc. 169 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 17 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Project Profiles Westfield Valley Fair Westfield Valley Fair is a super-regional mall located in the Winchester area of San Jose. The upscale, indoor, shopping mall is anchored by Nordstrom and Macy’s. Since the Mall was first constructed, it has undergone numerous renovations and remodels. The most recent renovation is a $1.1 billion ongoing project that will expand the Center’s footprint by roughly 650,000 square feet and add an outdoor dining area, a Bloomingdales department store, a luxury cinema, and other features to enhance the walkability and lifestyle orientation of the Center.4 The Mall is host to numerous retailers, restaurants, and service providers, while also providing additional services such as valet parking, phone charging stations, and family play areas. 4 Silicon Valley Business Journal, 6/30/2017 Location 2855 Winchester Boulevard Year Built 1987 (renovated in 2002) Jurisdiction City of San Jose Rentable Building Area 1,415,765 Square Feet Year Built 1987 (renovated in 2002) Anchors Nordstrom, Macy's Vacancy 0% 170 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 18 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Stanford Shopping Center The Stanford Shopping Center is an open-air super-regional mall located near downtown Palo Alto on the campus of Stanford University. The upscale center is anchored by Bloomingdales, Macy’s, Neiman Marcus, and Nordstrom. The Mall recently underwent a two-year renovation that added 45 new stores along with place-making improvements such as floral planters and public fireplaces. The Center is home to numerous luxury retailers as well as alternative retail, including exercise studios, pop-up shops and varied dining options. The Center is owned and operated by Simon Property Group, an internationally recognized owner of high-end shopping and entertainment centers. Location 500‐680 Stanford Shopping Center Year Built 1972 Jurisdiction City of Palo Alto Rentable Building Area 928,607 Square Feet Vacancy 0% Parking 1,910 Surface, 600 Covered Anchors Bloomingdales, Macy's, Neiman Marcus, Nordstrom 171 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 19 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Main Street Cupertino Main Street Cupertino is mixed-use development located near Interstate 280, adjacent to the Vallco Site. This development includes a town square, public park and open spaces, restaurant and retail offerings, 120 residential units, a 180-room hotel, and office spaces. The development marks the first phase of Sand Hill’s plans to develop the area into a mixed-use entertainment and retail district. Location 19419 Stevens Creek Boulevard Year Built 2016 Jurisdiction City of Cupertino Uses Retail , Office, Residential, Hotel Retail Sq. Ft. 133,000 Office Sq. Ft. 160,000 Apartment Units 120 (Under Construction) Stories 1‐story retail, 4‐5 stories for other uses Retail Vacancy 3% Retail Parking Spaces 350 Anchors Target 172 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 20 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Santana Row Santana Row is located adjacent to Westfield Valley Fair in San Jose’s Winchester neighborhood. This mixed-use development includes 680,000 square feet of ground floor retail, 622 residential units, 214 hotel rooms, and 65,000 square feet of office. Santana Row also includes an entertainment component with a six-screen movie theater. There are plans to grow the site by adding an additional 1,182 residential units, 404 hotel rooms, and 700,000 square feet of office (284,000 square feet of office currently is under construction). Location 377 Santana Row, San Jose, CA Year Built 2002 (Phase I) ‐ Present Uses Residential, Retail, Dining, Entertainment, Hotel,  Public Space Stories Above Ground 4 Retail Sq. Ft.680,000 (55,640 planned) Residential Units 622 (1,182 planned) Type of Units Lofts, Townhomes, Villas, Flats Hotel Rooms 220 (404 planned) Office Sq. Ft.65,000 existing, 284,000 under construction (zoning  approved for an additional 226,000) Parking Spaces 4,182                                                                                  FAR 0.7 Anchors Best Buy, Crate & Barrel This development includes a a six‐screen movie theater, multiple parks and public open  spaces, and pedestrian amenities development on 18‐blocks with parking obscured from site. 173 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 21 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Santa Clara Square Santa Clara Square, a mixed-use planned development located adjacent to Highway 101 in the City of Santa Clara, was delivered in 2016. The site’s 120,000 square foot retail component provides amenities for the 1.7 million square feet of office space and 2,000 residential units. The development is a horizontally mixed-use format with connectivity via pedestrian walkways. All offerings are highly amenitized with office spaces featuring floor-to-ceiling glass and indoor- outdoor working spaces and apartment communities featuring resort-style pools, spas and gyms as well as integrated social and co-working spaces. Location 2082 El Camino Real, Santa Clara, CA Year Built 2016 Uses Office, Dining, Retail, Residential Stories Above Ground Office (6/8), Retail (1), Apartment (4) Retail Sq. Ft.120,000                                                                            Residential Units 2,000                                                                                Type of Units Apartments Office Sq. Ft.1.7 million  Parking Spaces Office (3,600)  Anchors Whole Foods (50,000 sf) 174 Economic & Planning Systems, Inc. 22 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx 4. OFFICE REAL ESTATE MARKET CONDITIONS Cupertino and the County have experienced very strong office performance as indicated by low vacancy rates. Even as the County delivered over 20 million square feet of office space in the last ten years, vacancy has decreased, indicating strong and lasting demand for office products. Despite speculation that the office market is overbuilt, trends suggest that the market has potential to grow. Roughly 22 million square feet of office space is currently in the County’s development pipeline. Market Trends Cupertino has seen minimal development of office properties over the last decade, which has resulted in consistently low vacancy rates of just 2 percent since 2015, as seen in Figure 8. Apple Campus II, completed in 2017, added 2.8 million square feet to Cupertino’s office inventory, accounting for over 30 percent of 2017 office development deliveries in Santa Clara County. Countywide, over 23 million square feet of office space has been delivered in the last decade, 36 percent of which was delivered since 2016 (see Figure 9). While the County’s office stock grew by 23 million square feet, vacancy rates fell from 2009 highs of 17 percent to current rates of roughly 10 percent. These data indicate high demand for office space throughout the region. In 2016, lease rates reached over $45 per square foot in Cupertino, slightly above the County’s average of about $42 per square foot, as seen in Figure 10. Despite some speculation that the strong Silicon Valley office market is overbuilt, given the significant new inventory and nature of economic cycles, recently observed trends and continued building suggests market confidence. A primary concern is the mismatch between housing growth and job growth, with costly and undersupplied housing posing a threat to the continued expansion of high-tech sectors in the South Bay. However, net office absorption increased last year relative to the previous year, even while the Silicon Valley market ended its seventh consecutive year of positive net absorption.5 Investor demand continues to remain strong for office product that is well-designed, strategically located, and has a long-term tenant in place. Real estate professionals do expect office rents to flatten in 2018 as a result of the significant increase in supply, especially with the delivery of developer-led speculative space.6 5 Why Silicon Valley Isn’t headed for a recession any time soon, Economist Predicts, Janice Bitters, Silicon Valley Business Journal, 2/14/2018 6 Cushman and Wakefield, Silicon Valley Office Q4 2017 175 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 23 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 8 Office Lease Rates in Cupertino and Santa Clara County Source: CoStar Group; Economic & Planning Systems $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00 1997199819992000200120022003200420052006200720082009201020112012201320142015201620172018 YTDCupertino Santa Clara CountyRent / Sq.Ft. (Annual, Full Service)176 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 24 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 9 Office Market Performance in Cupertino Source: CoStar Group; Economic & Planning Systems Figure 10 Office Market Performance in Santa Clara County Source: CoStar Group; Economic & Planning Systems 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% -1,000,000 -500,000 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 199719981999200020012002200320042005200620072008200920102011201220132014201520162017Inventory Change Net Absorption SF Total VacancySquare FeetVacancy Rate0% 5% 10% 15% 20% 25% -2,000,000 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 1997199819992000200120022003200420052006200720082009201020112012201320142015201620172018 YTDInventory Change Net Absorption SF Total VacancySquare FeetVacancy Rate177 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 25 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Pipeline Projects There continues to be significant office projects in the pipeline for Santa Clara County. Roughly 5.6 million square feet of office space is currently under construction in Santa Clara County with another 16.7 million square feet proposed, as detailed further in Table 6. Cupertino, however, has no major office projects currently planned or under development. Table 6 Santa Clara County Pipeline Office Development Office Conclusion Cupertino has added very little new office inventory in the last decade, which is surprising when considering that office inventory in Santa Clara County grew by 23 million square feet over the same period. Given the strong business climate in the Silicon Valley and the strong observed market conditions for office real estate in Cupertino and the greater region, the Vallco Site is well positioned for office development. The Site is especially attractive given its convenient freeway access and central location in Silicon Valley. Building Address / Item Building Park / Name City Rentable Building Area Proposed Largest Building Parks 1100 Campus Way North First Campus San Jose 1,824,500 2890 N 1st St The Station on North First San Jose 1,756,200 N Shoreline Blvd Google Mountain View 1,600,000 Coleman Ave Coleman Highline San Jose 1,178,459 Wright Ave NASA Ames Research Center Moffett Field 1,100,000 Other Office Developments N/A 9,296,145 Total Office Sq.Ft. Proposed 16,755,304 Under Construction Largest Building Parks 1190 Discovery Way Moffett Towers II Sunnyvale 1,752,652 222 N Wolfe Rd Central & Wolfe Sunnyvale 777,170 1152 Bordeaux Dr Moffett Place Sunnyvale 630,544 900 Santana Row Santana Row San Jose 545,840 N 1st St Midpoint@238 San Jose 415,000 Other Office Developments N/A 1,487,907 Total Office Sq.Ft. Under Construction 5,609,113 Total Office Sq.Ft. in Pipeline 22,364,417 Sources: CoStar Group; Economic & Planning Systems, Inc. 178 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 26 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Project Profiles Sutter Health 179 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 27 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Apple (Building A) Location 5409 Stevens Creek Blvd, Santa Clara Year Built 2014 Uses Class A Office Stories Above Ground 6 Building Sq.Ft.187,500                                                                            Land Acreage 2.54                                                                                  Parking Format 640 Subterranean, 19 Surface Parking Spaces 659                                                                                   Parking Ratio per 1,000 Sq.Ft.3.30                                                                                  Average Lease Rates (per Sq.Ft.)Owner Occupied Occupancy Rate 100% 180 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 28 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Main Street Cupertino 181 Economic & Planning Systems, Inc. 29 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx 5. RESIDENTIAL REAL ESTATE MARKET CONDITIONS While Cupertino has seen little multifamily development over the last decade, rental rates and performance metrics suggest a healthy market. The 2014 delivery of Nineteen800 and the development of the Lofts at Main Street reveal potential for mixed-use residential development. Additionally, the statewide housing crisis has magnified effects on Silicon Valley’s housing market due to the influx of jobs and investment without a commensurate increase in housing supply, leading to lengthy commutes and a constrained talent supply for local businesses. Most of the region’s new multifamily housing supply caters to the upscale market. Real estate professionals predict that multifamily demand will remain strong as the region remains under-supplied and job growth remains positive.7 Residential Permitting The issuance of single-family residential building permits in the City of Cupertino has been relatively steady over the last decade, with annual permits for units in single-family structures ranging from 20 to 80 permits per year. While historically Cupertino has not delivered many multifamily units, there was an uptick in 2013 that marked the first multifamily building permitting in five years, as seen in Figure 11. Cupertino appears to be building relatively less residential units than its neighbors. In Santa Clara County, residential building permits increased sharply after the 2008 recession, with multifamily building permits increasing by nearly 90 percent over 2009 lows, as seen in Figure 12. Over ten years, the total building permits issued in Cupertino (roughly 870) account for just over 1 percent of the County total. Cupertino has issued 66 percent single-family permits, as compared to the County’s 28 percent. Figure 13 illustrates building permit trends in selected Cities proximate to Cupertino. Despite the relatively low level of housing production in Cupertino, it is likely that these data reveal City policy and planning for housing, more so than market demand. 7 Will 2018 Be another Good Year for Multifamily, Julie Littman, Bisnow Bay Area, 1/3/2018 182 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 30 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 11 Residential Building Permits in Cupertino Source: State of the Cities Data System Building Permits Database (HUD USER); Economic & Planning Systems, Inc. Figure 12 Residential Building Permits in Santa Clara County Source: State of the Cities Data System Building Permits Database (HUD USER); Economic & Planning Systems, Inc. 0 20 40 60 80 100 120 140 20062007200820092010201120122013201420152016Permits for Units in Single Family Structures Permits for Units in Multifamily StructuresNumber of Building Permits Issued Per Year0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 20062007200820092010201120122013201420152016Permits for Units in Single Family Structures Permits for Units in Multifamily StructuresNumber of Building Permits Issued Per Year 183 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 31 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 13 Total Residential Building Permits in Selected Jurisdictions Source: State of the Cities Data System Building Permits Database (HUD USER); Economic & Planning Systems, Inc. Market Trends Multifamily Rental Product Delivery of new inventory has been modest and residential demand has put upward pressure on rental rates, with average monthly rent per square foot currently at $3.08, an increase of roughly 40 percent since recessionary lows of 2009, as shown in Figure 14. New product rents for roughly $3.50 to $3.80 per square foot. Rental rates in Cupertino have remained roughly 10 percent above the Santa Clara County average, although, the County has seen much greater development over the same period. While Cupertino added just 204 rental units since 2008, Santa Clara County has delivered about 27,600 units while exhibiting relatively consistent vacancy rates hovering around 5 percent, as seen in Figures 15 and 16. 0 100 200 300 400 500 600 700 800 900 1,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Cupertino Campbell Mountain View Palo Alto SunnyvaleNumber of Building Permits Issued Per Year 184 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 32 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 14 Average Multifamily Rental Rate per Square Foot in Cupertino and Santa Clara County Source: CoStar Group; Economic & Planning Systems, Inc. Figure 15 Multifamily Market Performance in Cupertino Source: CoStar Group; Economic & Planning Systems, Inc. $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 2000200120022003200420052006200720082009201020112012201320142015201620172018 YTDCupertino Santa Clara CountyRent / Sq.Ft.0% 1% 2% 3% 4% 5% 6% 7% 8% -200 -150 -100 -50 0 50 100 150 200 250 200020012002200320042005200620072008200920102011201220132014201520162017Inventory Change Net Absorption Units VacancySquare FeetVacancy Rate185 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 33 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 16 Multifamily Market Performance in Santa Clara County Source: CoStar Group; Economic & Planning Systems, Inc. Multifamily For-Sale Market Cupertino has a number of condominium developments, including within mixed-use projects and in traditional residential communities. Condominium units have an average valuation of nearly $1.2 million as of 2017, which marks a 120 percent increase since 2012, as seen in Figure 17. The existing condominium units in the City are all relatively low-density, with no projects identified over four stories. 0% 1% 2% 3% 4% 5% 6% 7% 8% -2,000 -1,000 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 1997199819992000200120022003200420052006200720082009201020112012201320142015Inventory Change Net Absorption Units VacancySquare FeetVacancy Rate186 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 34 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 17 Value of Condominium (For-Sale) Units in Cupertino Source: Zillow Data; Economic & Planning Systems, Inc. Pipeline Projects Cupertino has two multifamily projects under construction and another two proposed, while Santa Clara County has 9,900 units under construction and another 17,700 units proposed, as seen in Table 7. The residential portion of Main Street Cupertino, which is currently under construction, will add roughly 120 units. Additionally, a multifamily development located at 10121 N Foothill Blvd is nearing completion, which will add another 15 units to the City’s housing stock. Two projects proposed for Cupertino, the Hamptons and Marina Plaza, are part of larger mixed-use developments and could potentially add a cumulative 1,130 units by 2020, if approved and constructed. $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 2000‐012000‐082001‐032001‐102002‐052002‐122003‐072004‐022004‐092005‐042005‐112006‐062007‐012007‐082008‐032008‐102009‐052009‐122010‐072011‐022011‐092012‐042012‐112013‐062014‐012014‐082015‐032015‐102016‐052016‐122017‐07187 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 35 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Table 7 Santa Clara County Pipeline Multifamily Development Residential Conclusion While Cupertino has historically offered primarily low-density housing product, the recent completion of Apple Campus II and the ongoing economic activity in Silicon Valley have intensified the need for housing at a local and regional scale. In the last decade, Cupertino has added just 200 units in multifamily rental projects, even while experiencing high rental rates and consistently low vacancy. Observed multifamily performance trends in the City and County suggest that the Vallco Site could successfully accommodate residential uses and support denser housing formats than are currently offered in the City. Building Status # of Projects # Of Units Rentable Building Area Campbell Under Construction 2 135 115,400 Cupertino Proposed 2 1,130 1,047,800 Under Construction 2 135 120,504 Gilroy Under Construction 2 100 245,000 Milpitas Proposed 3 1,633 1,529,200 Under Construction 4 1,815 1,989,390 Morgan Hill Proposed 1 61 70,000 Under Construction 13 228 672,113 Mountain View Proposed 9 2,715 3,048,330 Under Construction 6 1,651 1,624,981 Palo Alto Proposed 2 64 91,600 San Jose Proposed 35 8,519 7,819,019 Under Construction 16 3,128 2,908,889 Santa Clara Proposed 9 2,434 2,206,801 Under Construction 2 2,476 1,894,000 Sunnyvale Proposed 6 1,152 1,557,211 Under Construction 3 198 406,310 TOTAL Proposed 67 17,708 17,369,961 TOTAL Under Construction 50 9,866 9,976,587 TOTAL Pipeline 117 27,574 27,346,548 Source: CoStar Group; Economic & Planning Systems, Inc. 188 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 36 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Project Profiles Nineteen800 Location 19800 Vallco Pkwy, Cupertino  Year Built 2014 Uses 47,228 square feet of ground floor retail/  residential above Stories Above Ground 6                                                                                     Building Sq.Ft.n/a Land Acreage n/a Units 204                                                                                 Average Unit Size (Sq.Ft.)1,356                                                                              Parking Format surface/ subterranean  Parking Spaces*896                                                                                 Parking Ratio per Unit 4.39                                                                                Average Lease Rates (per Sq.Ft.)$3.59 Occupancy Rate 96.1% Sale Price/ Date n/a *Includes parking for commercial uses Amenities available to residents include a theater, a conference room, a yoga room,  game room, fitness room, shared kitchen & dining facilities as well as an outdoor  playground, fire pit, dog‐washing area, and multiple barbeques. 189 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 37 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Main Street Cupertino Lofts Location 19550 Vallco Pkway, Cupertino Year Built 2018 Uses 10,000 sq.ft. of retail/ residential Stories Above Ground 4 Building Sq.Ft.100,000                                                                           Land Acreage 1.60                                                                                  Units 120                                                                                   Average Unit Size (Sq.Ft.)1,031                                                                               Parking Format 2 levels of subterranean The project is organized around a central courtyard which includes a BBQ area and  outdoor movie theater. 190 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 38 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Sunnyvale Loft House Apartments Location 150 S Taaffe St, Sunnyvale Year Built 2014 Uses 6,891 sq.ft. of ground floor retail/  residential above Stories Above Ground 5 Building Sq.Ft.146,000                                                                            Land Acreage 1.59                                                                                   Units 133                                                                                    Average Unit Size (Sq.Ft.)924                                                                                    Parking Format 2 levels of subterranean parking Parking Spaces 235                                                                                    Parking Ratio per Unit 1.77                                                                                   Average Lease Rates (per Sq.Ft.)$4.18 Occupancy Rate 94% Sale Price/ Date $104,000,000/ June 17, 2017 The property includes a sundeck with a poolside bar, social Lounge with fireside retreat,  complimentary Wi‐Fi, business center, modern fitness center, car charging station, pub‐ style billiards room, resident bike storage, and outdoor grill/dining area. 191 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 39 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Oakwood Location 881 E El Camino Real, Mountain View Year Built 2015 Uses residential Stories Above Ground 4 Building Sq.Ft.130,000                                                                            Land Acreage 2.31                                                                                   Units 149                                                                                   Average Unit Size (Sq.Ft.)868                                                                                   Parking Format Subterranean Parking Spaces 153                                                                                   Parking Ratio per Unit 1.03                                                                                   Average Lease Rates (per Sq.Ft.)n/a Occupancy Rate n/a Sale Price/ Date $110,000,000/ December 9, 2015 This property includes a business center, fitness center, conference room, central court  yard, pool/jacuzzi, pet play area, and bike storage.  192 Economic & Planning Systems, Inc. 40 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx 6. HOTEL MARKET CONDITIONS Over the last couple years, Silicon Valley has experienced strong demand for visitor accommodations, generated primarily by the strong and growing regional economy. As of 2017, Silicon Valley8 had a hotel inventory of roughly 46,800 rooms across 420 properties.9 The market experienced year-over-year RevPAR (revenue per available room) growth in the period from 2010 to 2016, with just minor slow-downs in occupancy and daily room rates over those years, mostly attributable to new supply. 10 As of early 2017, Silicon Valley hotel occupancy stood at 78 percent with average daily rates at roughly $203 and RevPAR at $158.11 With demand for accommodations in this market primarily driven by business travel, many operators reported being fully booked on Tuesdays and Wednesdays with average annual occupancy rates at over 91 percent on Tuesdays and Wednesdays.12 Furthermore, hotel demand appears fairly consistent year-round, February to October, with some declines over the Holiday months. The City of Cupertino has six existing hotels, as depicted in Figure 18, with one hotel currently under construction and located on the Project Site. These six hotels supply the City with roughly 970 rooms and range in scale from Upscale to Upper Upscale, as defined by Smith Travel Research, seen in Table 8. Furthermore, the City’s existing hotels have experienced remarkable performance over the last year with average occupancy rates over 80 percent and room rates averaging $223 per night, as seen in Table 9. These data suggest that the City could absorb more demand, though there are two hotels in the City’s development pipeline. In the long-run, the addition of more accommodation options likely will be supported by the local and regional market at the Vallco Site. Hotel Conclusion Cupertino’s hotel market has seen markedly high occupancy rates and strong room rates in recent years. The City’s hotels primarily cater to business travelers and demand remains fairly consistent year-round. There are likely additional opportunities for well-positioned hotels to satisfy future visitor needs over the longer term. 8 Silicon Valley defined here as southern portion of San Francisco Bay, including San Mateo County, Santa Clara County and portions of Alameda County. 9 HVS Market Pulse: Silicon Valley 10 HVS Market Pulse: Silicon Valley 11 Development demand has Silicon Valley hotels trending, Bryan Wroten, Hotel News Now, 4/6/2017 12 Smith Travel Research average for Silicon Valley Hotels in 2017, excluding economy and midscale offerings. 193 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 41 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Figure 18 Cupertino Hotels Table 8 Hotel Inventory in Cupertino Hotel Address Chain Scale1 Rooms Existing Cupertino Inn (Cupertino Hotel) 10889 N. De Anza Blvd.Upper Upscale 128 Hilton Garden Inn 10741 N. Wolfe Rd.Upscale 164 Marriott Courtyard 10605 N. Wolfe Rd. Upscale 149 Juniper Hotel by Curio 10050 S. De Anza Blvd.Upper Upscale 224 Aloft Cupertuno Hotel 10165 N. De Anza Blvd.Upscale 123 Residence Inn by Marriott 19429 Stevens Creek Blvd.Upscale 180 Total 968 Under Construction Hyatt House 10380 Perimeter Road (Vallco Park) Upscale 148 Total, All Hotels 1,116 1STR Categorization Source: Westport Cupertino Hotel Proposal, 2017; Economic & Planning Systems, Inc. 194 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 42 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Table 9 Cupertino Hotel Performance (2017) Hotel Chain Scale1 Occupancy Estimate2 Avg. Rate Estimate2 Meeting Space (SF)2 Existing Cupertino Inn (Cupertino Hotel) Upper Upscale 81% $200 1,720 Hilton Garden Inn Upscale 83% $210 1,650 Marriott Courtyard Upscale 82% $215 1,248 Juniper Hotel by Curio Upper Upscale 80% $260 4,897 Aloft Cupertuno Hotel Upscale 80%$230 1,101 Residence Inn by Marriott Upscale - - 4,138 Total/Average 81% $223 2,459 1STR Categorization Source: Westport Cupertino Hotel Proposal, 2017; Economic & Planning Systems, Inc. 2Market Study and Product Recommendation, Proposed Westport Cupertino Hotel, Hospitality Link International, Inc; Economic & Planning Systems, Inc. 195 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 43 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Project Profiles Residence Inn The Residence Inn, opened in October 2017, is located within the Main Street Cupertino development. This new extended stay hotel includes 180 guest rooms featuring kitchenettes with limited cooking equipment, an on-site fitness center, and over 4,000 square feet of meeting space. The hotel offers studio, one-bedroom, and two-bedroom suites that are designed for extended stays of five-nights or more.13 This hotel is primarily marketed towards employees relocating to the area for a limited time or seeking interim accommodations as they find more permanent housing, and thus, is uniquely positioned amongst the other Cupertino hotel offerings. 13 Residence Inn Hotel Opened in Cupertino, Travel Daily News, October 27, 2017 Location 19429 Stevens Creek Blvd, Cupertino, CA 95014 Year Built 2017 Number of Rooms 180 Hotel Type / Class Extended Stay Amenities kitchenettes, fitness center, meeting space 196 Vallco Special Area Real Estate Market Assessment Report 05/14/18 Economic & Planning Systems, Inc. 44 P:\171000s\171128_VallcoSP\Deliverables\Market\171128 VSA PMA REPORT.docx Aloft Cupertino Aloft Cupertino, a 123-room hotel, was well-received upon opening in 2013 due to its unique technology-focused positioning. The hotel features robotic butlers that act as a guest concierge, delivering extra towels to guestrooms or assisting hotel employees with tasks in the back of house. Additionally, the hotel offers amenities like apple-TVs in every room, keyless door entry, 1,100 square feet of meeting space, an on-site gym, live-music at their branded W XYZ bar and an on-site café. The hotel has seen consistently strong performance metrics with estimated occupancy of roughly 80 percent and average daily room rates of about $230 in 2016.14 14 Market Study and Product Recommendation, Proposed Westport Cupertino Hotel, Hospitality Link International, Inc; Economic & Planning Systems, Inc. Location 10165 N De Anza Blvd, Cupertino, CA 95014 Year Built 2013 Number of Rooms 123 Hotel Type / Class Upscale Amenities ocus, meeting spcae, fitness cener, restaurant and bar Average Occupancy 80% Average Room Rate 230                                                                                     197 CHAPTER 13.08: PARK LAND DEDICATION FEE 13.08.010 Purpose. The purpose of this Chapter is to regulate, in the public interest, convenience, health, welfare and safety, the provision of park and recreational facilities upon development for which dedication of land and/or payment of a fee is required in accordance with the open space and conservation element of the adopted General Plan of the City of Cupertino, and any amendments. (Ord. 14-2125, § 1 (part), 2014) 13.08.020 Definitions. "Dwelling unit" or "unit" means a room or group of rooms including living, sleeping, eating, cooking and sanitation facilities, constituting a separate and independent housekeeping unit, occupied or intended for occupancy on a non-transient basis and having not more than one kitchen. (Ord. 14-2125, § 1 (part), 2014) 13.08.030 Applicability. Upon development of a new dwelling unit, at the option of the City, a park land dedication, or a payment of a fee in lieu thereof, or both, shall be required. (Ord. 14-2125, § 1 (part), 2014) 13.08.040 Reserved. 13.08.050 Park Land Dedication. A. Where the City determines that a park or recreational facility is to be located in whole or in part within the proposed development, land sufficient in topography and size shall be dedicated per the formula below. Park land dedication/DU = (Average number of persons/DU) x (Park Acreage Standard)/1000 persons B. The Park Acreage Standard is three acres of property for each one thousand persons. C. Park land dedication based on development density: Table 13.08.050 indicates the average park land dedication required per dwelling unit based on development density per the formula above (Section 13.08.050.A). Table 13.08.050: Park Land Dedication Formula Table Density (DU/acre) Average number of persons/DU Average Park Land Dedication/ DU (in acres) 0 - 5 3.5 .0105 5 - 10 2.0 .0060 10 - 20 2.0 .0060 20+ 1.8 .0054 10+ 1.8 .0054 Senior Citizen Housing Development 1.0 .0030 198 (Ord. 14-2125, § 1 (part) 2014) 13.08.060 Fees in Lieu of Park Land Dedication. A. General Standard. 1. If the City determines that a park land dedication is not required, a fee shall be paid in lieu thereof. 2. Fees in Lieu of Land - Fifty units or Less. If a proposed development contains fifty units or less, a fee in lieu of park land dedication shall be paid, unless dedication is deemed appropriate and in the public interest by the City. B. Amount. The amount of the fee shall be equal to the fair market value of the land prescribed for dedication pursuant to Section 13.08.050. The fee shall be calculated as follows: In lieu fee = ((Average Park land Dedication/DU)*(Net new dwelling units)*(Fair Market Value of land/acre)) C. Fair Market Value of land per acre. The Department of Public Works shall establish the fair market value of land within the City and update the value on an annual basis in the City's Fee Schedule. The fair market value shall be determined by reference to comparable land within the City. As used herein, the term "comparable" means land of similar size and development potential as the land which would otherwise be dedicated. D. Use of Money. The money collected shall be paid to the Treasurer of the City or his or her authorized agent. Such money shall be placed in a special revenue fund which shall be known as the "park dedication in-lieu fee fund" and shall be used for all purposes allowed by State Law. (Ord. 14-2125, § 1 (part), 2014) 13.08.070 Combination of Park Land Dedication and Fee. A. The City shall determine whether it accepts park land dedication, elects to require payment of a fee in lieu, or a combination of both a park land dedication and a fee in lieu, upon consideration of the following: 1. Topography, geology, access and location of land in the development available for dedication; 2. Size and shape of the development and land available for dedication; 3. Feasibility of dedication; 4. Availability of previously acquired park property. B. The determination of the City as to whether land shall be dedicated, or whether a fee shall be charged, or a combination thereof, shall be final and conclusive. (Ord. 14-2125, § 1 (part), 2014) 13.08.080 Credit for Private Recreation or Open Space. A. Where private open space for park and recreational purposes is provided in a proposed development, fifty percent credit shall be given against the requirement of land dedication or payment of fees in lieu thereof, if the approval authority finds that it is in the public interest to do so and that all the standards in Section 13.08.080B, below are met and findings in Section 13.08.080C can be made. B. That the open space for which credit is given complies with the following standards: 1. The total usable open space acreage for the development must be equivalent to the 199 park land dedication calculated pursuant to Section 13.08.050. 2. The open space must contain the mandatory elements and at least four of the six optional elements indicated in Table 13.08.080 below and meet the following criteria: a. The combined minimum acreage for a facility with a recreation center and children's play apparatus area is 1.3 acres. b. The minimum combined acreage for a facility not including a recreation center or children's play area is 1.5 acres. Table 13.08.080 - Mandatory and Optional Elements for private open space Minimum Acreage Mandatory Element Turfed playfield The playfield shall be a single unit of land which is generally level and free of physical barriers which would inhibit group play activities. .50 Optional Elements Children's play apparatus area .15 Recreational community gardens .25 Family picnic area .25 Game court area .25 Swim pool (42' x 75' with adjacent deck and lawn areas) .25 Recreation center buildings and grounds .15 C. The approval authority may grant park credit for a combination of the above elements or a combination of the above elements and other recreation improvements that will meet the specific recreation needs of a specialized housing development, such as a senior housing development, with occupancy controlled via a covenant with the City named as a third party beneficiary. D. Findings. The approval authority shall adopt the following written findings and shall require the recordation of covenants running with the land to ensure that credited elements are maintained, before credit is given: 1. That yards, court areas, setbacks, decorative landscape areas normally associated with residential site design and other areas required to remain free and clear by zoning and building ordinances and regulations shall not be included in the computation of such private open space; 2. That such space is to be wholly or partially owned and maintained by the future residents of the development and that the private ownership and maintenance of the open space is adequately provided for by recorded written agreement, conveyance or restrictions; 3. That the use of the private open space is restricted for park and recreational purposes by recorded covenant, which runs with the land in favor of the future owners of property and which cannot be eliminated without the consent of the City or its successor; 4. That the proposed private open space is reasonably adaptable for use for park and recreational purposes, taking into consideration such factors as size, shape, topography, 200 geology, access and location; 5. That the facilities proposed for private recreation or open space are in substantial conformance with General Plan policies. (Ord. 14-2125, § 1 (part), 2014) 13.08.090 Credit for Existing Dwelling Units. When dwelling units exist on the property where development is proposed, a credit shall be given against the requirement of land dedication or payment of fees in lieu thereof for the number of units existing. As used herein, the term "existing" refers to units which exist at the time of approval of the dwelling units or which were demolished within one year prior to the submittal of an application for development of the dwelling units. (Ord. 14-2125, § 1 (part), 2014) 13.08.100 General Procedures. A. At the time of approval of the dwelling units, the approval authority shall determine whether a park land dedication or a fee in lieu thereof is required unless a park land dedication or fee has already been provided. B. At the time of building permit application, land shall be dedicated to the City or the fee in lieu thereof shall be paid. C. Open space covenants for private park or recreational facilities shall be submitted to the City prior to approval of the building permits and shall be recorded simultaneously with the issuance of final occupancy. D. If park land dedication is required, the design of the park shall be reviewed and approved and construction shall be completed prior to occupancy of the development. (Ord. 14-2125, § 1 (part), 2014) Disclaimer: This Code of Ordinances and/or any other documents that appear on this site may not reflect the most current legislation adopted by the Municipality. American Legal Publishing Corporation provides these documents for informational purposes only. These documents should not be relied upon as the definitive authority for local legislation. Additionally, the formatting and pagination of the posted documents varies from the formatting and pagination of the official copy. The official printed copy of a Code of Ordinances should be consulted prior to any action being taken. 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