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08-20-19 Written Communications (Updated 8-21-19)Community Benefits • The group was supportive of Community Benefits Program if benefits fall within "the norm" • The group requested examples of what other cities have done with community benefits (lessons learning and results) and that the City provide a legal framework that guides the developer through the community benefits program • Acceptable Community Benefits components could include: -Schools -Parks -Transit Building Heights Input by area: • Stelling Gateway: 60 • North De Anza Gateway: 60 feet • North De Anza Special Area: 60 feet • North Vallee Gateway: n/a • City Center Node: n/a • North Crossroads Node: 90 feet • Oaks Gateway: 60 feet Building Heights (continued) Other Comments • Med/high rise concentrated near Apple II campus 4836-6503-0302.9 Charmaine G. Yu D 415.772.5729 cyu@coblentzlaw.com August 19, 2019 VIA E-MAIL and FEDEX Cupertino City Council 10300 Torre Avenue Cupertino, California 95014 citycouncil@cupertino.org Re: August 20, 2019 City Council Meeting, Public Hearings Item # 11 General Plan Amendments for Vallco Fashion Mall Site Dear Mayor Scharf and City Council Members, This firm represents Vallco Property Owner, LLC (“VPO”), which owns the 50.82-acre site of the former Vallco Fashion Mall (the “Vallco Site” or the “Site”). VPO was recently notified that the City was considering amendments to the general plan and zoning map (the “Amendments”) that would, among other things, severely limit the development of housing and altogether eliminate the development allocation for office uses on the Vallco Site. Because of the grave doubts raised by Planning Commissioners Fung and Takahashi, the proposed resolutions to recommend the adoption of the Amendments failed. Those Amendments are now due to be considered by the City Council. The misgivings expressed by two long-serving Planning Commissioners about the intent and effect of the Amendments were justified. If the Amendments are adopted, and the currently-entitled SB 35 project does not proceed on the Vallco Site, the City will have placed itself at serious risk. For example: • The Department of Housing and Community Development (“HCD”) has made plain that the City’s Housing Element will not be compliant with state law. • The Amendments will expose the City to hundreds of millions of dollars of damages to VPO (plus attorneys’ fees). • The General Plan amendment unlawfully requires another, unknown future General Plan amendment. City Council August 19, 2019 Page 2 4836-6503-0302.9 • The changes to zoning will have citywide impacts that have not been studied and would impact many other properties. • The Amendments violate the California Environmental Quality Act. Indeed, in the event that the SB 35 project is blocked, the best case, albeit improbable, scenario for the City is that the Amendments are deemed valid — and the City is saddled, for the foreseeable future, with a blighted 50-acre parcel with an unusable, partially-demolished mall on it. This is a rushed effort that, as the Planning Commission has confirmed, has nothing to do with an actual planning exercise. Rather, the sole purpose of the Amendments is to ensure that nothing will be developed at the Vallco Site, in the unlikely event that Friends of Better Cupertino, with the City’s support and assistance, prevails in its challenge to the SB 35 project. I. The City Failed to Provide Proper Notice for This Meeting, and It Is Repressing Public Participation. Where the City proposes to substantially amend a general plan, it must grant a 45-day comment period to a slew of other public agencies, including the County of Santa Clara, the school district, and the State Water Resources Control Board.1 (Gov. Code § 65352.) In addition, when the City proposes to amend its general plan in any respect, it must notify certain Native American tribes, and provide them 90 days to request consultation, and then additional time if consultation is requested. (Gov. Code § 65352.3.) Further, although the City has been careful to not propose any changes to the Housing Element, the effect of the changes require modifications to the Housing Element to maintain “horizontal consistency,” which triggers review by HCD. As far as we can tell, the City did not comply with any of these notice provisions. Rather, at least as to the requirement that the City provide Native American tribes the opportunity to conduct, the City has tried weakly to “work around” the statutory requirements as it pushes through the Amendments. The City is proposing to adopt a new General Plan policy (which was not presented to the Planning Commission) that requires coordinating with “applicable Native American tribal representatives following approval of development in the Vallco Shopping District Special Area to ensure appropriate cultural sensitivity training is provided to all contractors prior to the start of ground-disturbing activities.” Of course, this is an 1 It goes without saying that amending a General Plan to remove two million square feet of office space and to allow by-right housing development with no design review is “substantial”. City Council August 19, 2019 Page 3 4836-6503-0302.9 empty solution that will not mitigate the cultural impacts of any future project; the City requiring consultation after the General Plan is amended does not comply with the statute, which requires the consultation to occur “prior to” any amendment. Even setting aside the City’s failure to comply with these notice requirements, the Planning Commissioners pointed out that the best that could be said of the City’s process for the Amendments is that it met the bare minimum required for legal compliance. That might be legal government process, but it is not good, or even acceptable, government process. The redevelopment of the Vallco Site has been the major land use, planning, and community issue in Cupertino for at least five years. The City undertook a multi-year general plan process, then a specific plan process that resulted in the certification of an environmental impact report and approval of a specific plan, which was then subject to a referendum and repealed. Hundreds, if not thousands, of community members participated in years of planning, charettes, campaigning, and organizing about how to address the site. For its part, VPO contributed approximately $4 million to the City’s recent specific plan process (to pay for consultants, lawyers, and others, as well as staff time). During these years of community planning and negotiation, the office use allocation was one of the most hard-fought issues. With that background, it is shocking that the City Council would instruct City staff to hastily and covertly prepare the Amendments, without soliciting any input from the actual property owner. It is appalling that the City Council would consider adopting the Amendments, with only the minimum compliance with notice requirements, and almost no community participation. It is a disservice to City residents to consider the Amendments in the middle of summer, while many residents are away, and on the fastest schedule that the Planning Commission and City Council can muster. The City only sent 96 notices to neighboring Cupertino households within 300 feet of the Vallco Site,2 even though residents from across all parts of the City participated in the prior processes, and the redevelopment of Vallco will affect all City residents, perhaps for generations to come.3 2 Compare this with the citywide notice requirement that applies if a property owner seeks a General Plan amendment. In both instances, the effect is the same: amendment of the General Plan; but the City believes it can hold itself to a different standard and take advantage of a “loophole” in the notice provisions that allows it to notify only a small percentage of City residents. 3 When the FPPC opined that Vice Mayor Chao be permitted to participate in certain decisions about the SB 35 litigated, the basis of its opinion was that the redevelopment of the Vallco Site is so significant City Council August 19, 2019 Page 4 4836-6503-0302.9 Vice Mayor Chao and Councilman Willey campaigned on a platform of “transparency.” They complained that former City Council members failed to conduct City business in a forthright way that allowed for maximum public participation.4 Indeed, at this meeting, at the recommendation of Vice Mayor Chao and Councilman Willey, the City Council will consider proposals to increase the notice requirements for development proposals. But the Amendments raise the question of whether this Council is in fact interested in transparency or simply rather the appearance of transparency, in the event that transparency is not politically convenient. In any event, the Amendments lay bare their actual agenda: if there is an opportunity to kill development at the Vallco Site, it should be undertaken swiftly, before City residents have an opportunity to understand what the City Council proposes to do or, heaven forfend, oppose it. The only plausible reason to undertake the Amendment process in such a hasty and covert way is to deprive those who would oppose the Amendments from having a full opportunity to participate in the process. A project for the Vallco Site has already been approved under SB 35. The Amendments are inconsistent with the approved SB 35 project, and, as the City has correctly confirmed, the Amendments will not give the City any grounds to block or alter the SB 35 project. Friends of Better Cupertino—the political benefactors of Mayor Scharf, Vice Mayor Chao, and Councilpersons Willey and Paul — and Planning Commissioner Kitty Moore have sued the City to block the SB 35 project, but that matter is not scheduled to be heard by the Superior Court until October. Even if that were a legitimate basis for requiring hasty action, which it is not, there is no urgency to the Amendments. The City is nevertheless moving forward, as quickly as it can, without necessary consultation with technical experts or the actual property owner, and with scant notice to the public. II. The City Council Can Only Consider the Resolutions That Were Presented to the Planning Commission. In an effort to try to “repair” defects that were identified by VPO and the Planning Commission, the City has generated additional proposals for the City Council to consider that were not presented to the Planning Commission. Most significantly, the “Tribal Coordination” policy, and the proposals (and recommendations) for specific that its effects may be felt by a broad range of Cupertino residents, many of whom live beyond the 300- foot radius from the Vallco Site that was used to notice these meetings. 4 In fact, Councilman Willey recently complained about a perceived inadequacy in the notice given for the Cupertino Village hotel project, even though that project will have a far narrower impact than the Vallco Project and the Amendments. City Council August 19, 2019 Page 5 4836-6503-0302.9 siting of the 13.1 acre residential site were not presented to the Planning Commission. The City Council is prohibited from acting on these items, and they must “first be referred to the planning commission for its recommendation.” (Gov. Code, § 65356.)5 III. If the City Adopts the Amendments, and the SB 35 Project Does Not Proceed, the City’s General Plan Will Be Non-Compliant With State Law. A. The General Plan Will Not Contain an Adequate Housing Element. HCD has already warned the City that if the SB 35 project does not proceed, the City will be out of compliance with mandatory housing requirements.6 Enforcing compliance with housing requirements against recalcitrant municipalities that are trying to block or delay residential development is a priority for HCD.7 The Amendments make the City’s non-compliance with state law more acute. Cupertino’s militantly anti- affordable-housing reputation is not accidental. It is deserved, even if its public officials have become more savvy about disguising their true purpose. The City’s General Plan must include a Housing Element that identifies “adequate sites for housing.” (Gov. Code § 65583.) A Housing Element is not compliant simply because the City designates “every unoccupied mote” within its boundaries as available for “residential development,” but the inventory needs to include sites that are “actually” available. (Hoffmaster v. City of San Diego (1997) 55 Cal.App.4th 1098, 1111.) The Vallco Site, in particular, is identified as a “Priority Housing Element Site” in the General Plan’s Housing Element, and it must therefore be “suitable and available for residential development.” “Suitable and available” means that there is a “realistic and demonstrated potential” to develop the allotted number of residential units during the planning period. (Gov. Code § 65583(a)(3).) The City must provide information showing that the site will “actually” be suitable for residential development during the planning period, and that the site will accommodate the amount of development attributed to it. (Gov. Code §§ 65583.2(b), 65583(c).). 5 In fact, the only “recommendation” from the Planning Commission is that the City Council adopt a height limit for the Vallco Site. As to the balance of the Amendments, the resolution to recommend them failed, and there is therefore no recommendation for the City Council to act on. 6 On August 2, 2019, HCD issued a letter to the City stating that compliance with state law was contingent on the City proceeding with either the Specific Plan project (which was repealed by the City) or the SB 35 project. If neither proceeds, the City’s housing element will be non-compliant. 7 HCD recently sued the City of Huntington Beach after its housing element fell out of compliance. City Council August 19, 2019 Page 6 4836-6503-0302.9 The Housing Element must also contain a program that sets forth a schedule of actions during the planning period that, among other things, will “remove governmental . . . constraints to the . . . development of housing.” (Gov. Code § 65583(c)(2).) The City’s obligation to demonstrate the potential of its priority housing sites to accommodate residential development is even more acute now, more than halfway through the current planning period, since there is relatively little time left for the housing to be produced. All four Planning Commissioners commented that they had insufficient information to determine whether it would be “actually” feasible to develop the Vallco Site if the Amendments are adopted. Prior to the Planning Commission meeting, VPO submitted a preliminary report from the Concord Group (“TCG”), illustrating the infeasibility of future development pursuant to the Amendments. In response, the City commissioned a “preliminary financial feasibility assessment” by Hausrath Economics Group (“Hausrath”), which purports to show that it would be feasible to develop the Vallco Site (or, at least, 13.1 acres of the Site). Hausrath purports to show that if the $400+ million8 development of the 13.1 acre residential parcel, alone, goes exactly according to Hausrath’s projection, then that portion of the Site would have a $1 million residual value. Of course, Hausrath ignores the remaining 37 acres of the Site (to which the Amendments impute a colossal negative residual value by mandating infeasible new retail development) and, as to the 13.1 acres, assumes that a developer would assume all of the risks attendant to the residential development for such a paltry, razor-thin upside. But even Hausrath’s conclusion that the 13.1 acres could generate a nominal residual value is implausible and wrong. Hausrath’s preliminary assessment is rebutted by four other in-depth feasibility reports, two of which were commissioned by the City: 2018 reports by Economic & Planning Systems (“EPS”) and TCG, a 2019 TCG report, and a feasibility analysis by Strategic Economics (“SE”) prepared just last month for an August 13, 2019 Planning Commission meeting.9 In 2018, the City engaged EPS, an economic feasibility consultant, to study the Vallco Site.10 The EPS study recognized that office would be an “essential” economic 8 Excluding land costs. All Hausrath cost assumptions come from the 2018 EPS report. 9 The 2019 SE report is Exhibit A to this letter. 10 The 2018 EPS report is Exhibit B. City Council August 19, 2019 Page 7 4836-6503-0302.9 component of any large project on the Vallco Site.11 Also in 2018, TCG prepared an economic feasibility report in connection with VPO’s 2018 SB 35 application.12 Among other things, that report describes the effect of certain aspects of the Amendments, and the portions of the General Plan that will remain un-amended, on the feasibility of developing the Site. Specifically, the City proposes to eliminate office uses, but will retain costly, non-revenue generating elements required by the General Plan, including the requirement that the Site largely be re-used as a shopping center. According to both TCG and EPS, in order for development of a minimum of 600,000 square feet of retail, as required by the Amendments, to be feasible, it must be sufficiently subsidized by other revenue-generating land uses. Indeed, in 2018, TCG concluded that requiring the Site to absorb 600,000 square feet of retail is an “unrealistic scenario” and anything more than 400,000 square feet of retail would result in extraordinarily high (i) ‘carry’ costs and operating losses and (ii) lease transaction and construction costs. Per EPS, in order for a minimum of 600,000 square feet of retail to be “in the realm of financial feasibility,” the City would need to entitle — and allow “by right” — a minimum additional development program of 1,779 residential units (with no more than 15% affordable 13) and 750,000 square feet of office. These 2018 conclusions are consistent with the SE Report concerning the feasibility of proposed changes to the City’s BMR program that was prepared for the City and submitted just last week to the Planning Commission for its August 13, 2019 meeting. SE evaluated the feasibility of retail development and supported the TCG and EPS conclusions: The financial feasibility analysis shows that retail developments are not financially feasible under current market conditions. 11 Consistent with the EPS report, Commissioners Fung and Takahashi both understood that the removing office use will make the Vallco Site “undevelopable.” 12 The 2018 TCG report is Exhibit C. 13 We understand that the City is currently studying updates to the affordable housing requirements and that the Housing Committee has suggested that the City should consider increasing the percentage to 20% or even 25%, and disallow payment of an in-lieu fee. If adopted, those proposals would render any development even more challenging than assumed by EPS. City Council August 19, 2019 Page 8 4836-6503-0302.9 The SE report also acknowledged the challenge in residential development today, determining inclusionary apartment projects to be infeasible as well: The results from the feasibility analysis show that rental development in Cupertino cannot feasibly provide BMR units on-site under current market conditions. . . . In other words, according to SE, an apartment project with any BMR units is not feasible. The Amendments would require VPO to include 15 percent BMR.14 Notwithstanding their conclusion that most forms of development other than office use are infeasible in today’s market, SE (and EPS in 2018) concluded that for- sale residential is potentially feasible. Accordingly, in order to substantiate the Amendments, Hausrath was forced to solely underwrite an inclusionary condominium development, effectively limiting the use of the 459 housing units to for-sale only.15 Even these bleak feasibility outlook suggested by the SE and EPS reports were too optimistic. Attached to this letter is a more comprehensive report prepared by TCG, analyzing the feasibility of the Amendments.16 Using inputs provided by Hello Housing,17 TCG corrected two major inputs by Hausrath that are wildly inaccurate. First, Hausrath assumed (as did EPS) that BMR units would be sold for an average 14 The SE report also point to other material defects in the Hausrath report. For example, Hausrath assumed $42,609 in Permits and Fees per market-rate unit, and $33,609 per BMR unit. The SE Report assumed current “City Fees” to be $59,655 per unit on a blended basis in a 15% BMR condominium project. Correcting this element, alone, results in a negative swing in Hausrath’s report of more than $8 million. This is only one of many items that are inaccurate, or not accounted for, in the Hausrath report. Any one of them would immediately erase Hausrath’s residual value conclusion. 15 Hausrath failed to account for the additional risks attendant to condominium development that any reasonable developer would take into account, and which makes Hausrath’s $1 million residual value even more absurd. For example, condominium developers carry a 10-year tail of construction defect liability. In addition, Developers of condominium projects are also far m ore susceptible to market volatility – if the project is released during a recession, then the developer has to bear that impact when it brings the units to market, whereas a rental project has the ability and time horizon to weather a recession. 16 The TCG report is Exhibit D to this letter. 17 Hello Housing is the organization that the City engaged to manage its BMR housing program. City Council August 19, 2019 Page 9 4836-6503-0302.9 price of $835,000, but the correct projection is only $482,000.18 Second, Hausrath also assumed (again, as did EPS) that construction costs would be only $349 per foot, but a more reasonable, and current, projection is $486 per square foot. When those two inputs are corrected, the residual value of developing the 13.1 acres 19 plummets by nearly $140 million. The effect of these corrections, separately and together, is depicted in Exhibits 1A, 1B, and 1C to the TCG report. And, of course, that nearly $140 million negative residual value does not account for additional design and improvements required, or logistics necessitated, by the Amendments that will only serve to increase the cost of development and further impair feasibility.20 TCG also studied two scenarios that analyzed feasibility of the entire Site (Exhibits 1D and 1E to the TCG report). In new General Plan Section LU-19.2, the Amendments require the 13.1-acre residential project to carry such major Site-wide improvements as the creation of a “Town Center layout” and “high quality public realm” and a new “street grid” internal to the Site and major improvements to Stevens Creek Boulevard and Wolfe Road to include new features such as bike lanes, wide sidewalks, street trees, and improved pedestrian intersections. The 13.1-acre project will also require VPO to incur the lion’s share of the “Site Costs” (i.e., demolition, site work, open space improvements, and right-of-way and backbone and utility infrastructure) for the entire 50.8-acre Site implemented up-front, as a part of the 13.1-acre project, not the 26% proportionate share that Hausrath unrealistically estimates in their analysis. LU-19.3 goes on to impose significant design and construction burdens on the 37-acre portion of the development by requiring such things as “complete redevelopment” of the Site, a new street network, transit facilities, off-site bike/ped connections and improvements, substantial open space, high-quality architecture, gateway features, hidden parking, and neighborhood buffers, to name a few. This only 18 Indeed, SE projected an average BMR unit price of $375,431. 19 TCG assumed development of 390 market rate condominiums, 69 below market rate condominiums, and 25,000 square feet of retail. 20 The TCG report incorporated many elements of the prior Hausrath and EPS reports, purely for the purpose of simplifying the analysis, even though those elements make the feasibility conc lusion more rosy than it should be. In other words, if every element in the Hausrath report were corrected, rather than just the most major ones, TCG’s residual value conclusion would be even lower. Much of the data necessary to correct those other elements is located in the technical appendix to the TCG report. City Council August 19, 2019 Page 10 4836-6503-0302.9 adds to the substantial value loss suffered by the remaining 37 acres as a result of the Amendments’ completely infeasible land use designation. It requires little study to see that the 37-acre development is also infeasible. The Hausrath report is a purely cynical exercise, calculated to provide the City Council with a fig leaf to allow it to proceed with the Amendments. That is political showmanship, not good governance. Every plausible analysis – including the SE report submitted to the Planning Commission last week – points the same direction: if the Amendments are adopted, no project could pencil on the Vallco Site, regardless of whether one looks only at the 13.1 acres or at the entire Site, whether the 13.1 acre portion is developed with rental housing or condos, or any other variation permitted by the Amendments. The City’s strategy is a classic anti-housing maneuver: list a site on the inventory that it knows with certainty will never be developed in the manner that the City has advertised.21 But the Legislature has made clear that inventories must contain sites on which the allotted residential development is reasonably probable. Where there are governmental constraints, the City must set forth a program of actions to remove such constraints. These Amendments do the opposite. They will kill the prospect of any redevelopment of the Vallco Site and will cause the City’s General Plan to violate state law.22 B. The City Is Out of Compliance With Its Housing Element. As HCD set forth in its August 2 letter, the City is not in compliance with its Housing Element. As the HCD Letter explains, the City committed in its Housing Element to either adopt a Specific Plan by May 31, 2018, that allows at least 389 units on the Vallco Site, or allocate units to Priority Housing Element Sites. By rescinding the Specific Plan and not pivoting to Scenario B, and instead taking action that will 21 Planning Commissioner Wang trotted out a “pro-housing” spin on the Amendments that is patently baseless. Commissioner Wang claimed that the Amendments will allow Vallco to put shovels in the ground immediately if it wants to build housing. Commissioner Wang ignored the fact that the Amendments do not delete from the General Plan references to a “complete redevelopment” of the Vallco Site, including the creation of an entire street grid, and a variety of other components that will require a massive planning effort, and could preclude the piecemeal development of exclusively residential portions of the Site. And, of course, Commissioner Wang ignored the existence of the SB 35 project, which includes development of 2,402 residential units, 1,201 of which are affordable. That project is being challenged in Court. 22 If the City approves the Amendments, the Site should be removed from the Housing Element inventory, and replacement sites must be identified. The City must provide the proposed amendments to the Housing Element to HCD for review and comment. City Council August 19, 2019 Page 11 4836-6503-0302.9 ensure that no housing will be developed on the Site, the City is out of compliance with its Housing Element. If the City desires to pursue this third path, it must also amend its Housing Element to make it consistent with this amended Land Use Element. Of course, to do so would require review and approval by HCD, a process the City now apparently wants to avoid. Without amending the Housing Element, the entire General Plan suffers from a lack of “horizontal consistency.” HCD’s letter also confirms the folly of the path on which the City has now embarked. According to HCD, the only reason the City is not currently in violation of its housing obligations is because of the approved SB 35 project. If Friends of Better Cupertino, with the City’s assistance, prevails in the lawsuit challenging the SB 35 project, then the “housing element will no longer demonstrate adequate sites to accommodate the RHNA” and that this “may result in revocation of the City’s housing element compliance.”23 HCD also warned that in such case, it may notify the Attorney General’s Office, which has authority to bring an enforcement action. So if the true intent is—as Commissioner Wang claims—to gain “leverage” in the event Friends of Better Cupertino prevails, the Amendments will have the opposite effect. They will put the City directly in the Attorney General’s crosshairs. C. The General Plan Amendment Unlawfully Requires a Subsequent General Plan Amendment. The City runs afoul of other aspects of state law governing general plans. One of the Amendments’ more unusual (and unlawful) features is that they require a future General Plan amendment: Create a Vallco Shopping District Specific Plan and a related General Plan amendment prior to any development on the site portion of the site with the Regional Shopping designation, which shall seek to provide substantial additional housing opportunities at the site, and that lays out the land uses, design standards and guidelines, and infrastructure improvements required. The current, un-amended General Plan requires the adoption of a specific plan prior to development of the Vallco Site. This is a commonplace method by which to “phase” the planning of a large development; the specific plan must be consistent with 23 In theory, if VPO opted not to proceed with the SB35 project (for example, as a result of obstacles created by the City), the City will not be in compliance with its Housing Element. In other words, if the City wants to avoid being sued by the State, it should be doing everything to assure that the SB 35 project gets built, instead of working with Friends of Better Cupertino to block it. City Council August 19, 2019 Page 12 4836-6503-0302.9 the General Plan. The City is turning this method on its head—the Amendments propose to amend the General Plan to say that prior to development of the Vallco Site, the City “shall” adopt another General Plan amendment. There is no way to even guess what that further amendment might be, or what it might require or allow. It is patently illegal to amend the General Plan in this manner. A city’s general plan is its most important land use planning document. (Citizens of Goleta Valley v. Board of Supervisors (1990) 52 Cal. 3d 553, 570–71 (1990).) It is the “constitution for all future development.” (Lesher Communications, Inc. v. City of Walnut Creek (1990) 52 Cal. 3d 531, 540.) All “subordinate” planning documents (like specific plans and zoning) must be consistent with it. The Government Code sets out a number of requirements for a legally adequate General Plan, but the most fundamental one is that the General Plan include a “comprehensive, long-term” plan for the physical development of the City. (Gov. Code § 65300.) That requirement is carried forward in several “elements.” The Amendments propose to amend the land use element, which is “the central framework for the entire plan and is intended to correlate all land use issues into a set of coherent development policies.” (Barclay & Gray, California Land Use & Planning Law, at 13 (36th ed. 2018).) The land use element must include: the proposed general distribution and general location and extent of the uses of the land for housing . . . [and] a statement of the standards of population density and building intensity recommended for the various districts and other territory covered by the plan. (Gov. Code § 65302.) Courts enforce compliance with these minimal requirements. (Camp v. Mendocino County (1981) 123 Cal.App.3d 334, 348 (a general plan must show “substantial compliance with the statutory requirements”).) Failure to comply will invalidate the General Plan, and a court may enjoin a city from taking other actions (like approving subdivisions) until the document is compliant. (Gov. Code § 65755.) Failure to provide population density and building intensity renders a general plan inadequate. (Twin Harte Homeowners Association v. City of Tuolumne (1982) 138 Cal.App.3d 664, 699.) City Council August 19, 2019 Page 13 4836-6503-0302.9 The Amendments violate all of these general plan requirements. The Amendments are neither “comprehensive” nor “long term” because they contemplate that future residential development will be determined by another General Plan amendment, at some point in the future. The Amendments are a temporary placeholder, where development is contingent on some future action. The Amendments also fail to include the land use regulations for the Vallco site, including the distribution, location, and extent of the land for housing. The Amendments simply contemplate that a future amendment will “provide substantial additional housing opportunities.” Further, the fact that a future amendment will add “substantial” housing means that the General Plan, if the Amendments are adopted, will not include the actual standards of population density for whatever development may be permitted by the future amendment. The General Plan should be a stable vision for the City’s future, not a document that says “we’ll figure it out later.” Finally, even if one were to set aside all of these violations, this City Council cannot obligate a future City Council to undertake a legislative action, which is why the General Plan must always be comprehensive, and not rely on future City Councils to take any particular action. A leading land use treatise advises that a city, when assessing its General Plan, should be able to affirmatively answer to the following questions: “Does it serve as a yardstick? Can one take an individual parcel and check it against the plan and then know which uses would be permissible?” (California Land Use & Planning Law, at 33.) Here, the answer is clearly no. This shoddy work shows the City’s true intentions. The City is not going through a legitimate planning exercise that will help the community and property owner understand the future uses of Vallco, and to actually achieve any meaningful economic benefit from its property. Instead, as Planning Commission Chair Wang said, it is simply seeking to gain “leverage” in the event the City “loses” the lawsuit. IV. The Amendments Downzone the Vallco Site’s Housing Capacity. The City is marketing the Amendments by claiming that they simply remove office use while otherwise maintaining the status quo with regard to the Site’s housing capacity. That is false. Even if one were to assume that redeveloping the Site is economically feasible without the office use, the Amendments actually reduce the housing capacity of the Site. City Council August 19, 2019 Page 14 4836-6503-0302.9 At present, there are 389 residential units specifically allocated to the Vallco Site, and there is no specific area on the Site where they must be placed. But that figure is not a maximum, because the General Plan allows the City to allocate units from other parts of the City to the Vallco Site through approval of a conditional use permit and without any amendment to the General Plan. The limitation on the number of residential units is actually governed by the General Plan’s density limit of 35 units per acre, which generates an actual maximum of 1,778 units. By reducing the portion of the Site that can be used for residential from 50 acres to 13.1 acres, but maintaining the density limit, the City has reduced the Site’s housing capacity to only 459 units. This is simply another example of the City’s sham disclosures about the actual effect of the Amendments. But it is more than a sham disclosure; it is illegal. State law requires that whenever the number of housing units that could be developed on a site is reduced, that reduction must be based on findings that the limitation promotes the public health, safety, and welfare of the City. (Gov. Code § 65863.6.) Here, of course, the City has failed to make any such findings. Nor could it. The downzoning is unlawful. V. The City Council Cannot Identify a 13.1-Acre Portion of the Vallco Site that Should Be Zoned for Residential. One of the Amendments proposes that the City Council identify a 13.1-acre portion of the Vallco Site where the 389 residential units will be developed. If this were a proper planning exercise, the City would have studied where it made the most sense to place the residential and non-residential portions of the site, and would study the traffic, aesthetic, noise, and other impacts that would flow from that decision. Indeed, the Government Code requires that a staff report with recommendations, and the basis for those recommendations, be provided whenever a City considers rezoning a parcel of 10 acres or more. (Gov. Code § 65804.) Here, the Amendments were rushed, and none of that was done. No technical reports were prepared. City staff made no recommendation to the Planning Commission as to where that 13.1-acre portion should be set, or even if it should be a single portion, rather than being divided into two or more portions of the Site that would total 13.1 acres in total size. The draft resolution before the Planning Commission simply identified a number of parcels that could be rezoned, but it does not even state the size of each nor whether any would add up to precisely 13.1 acres. City Council August 19, 2019 Page 15 4836-6503-0302.9 While the Planning Commissioners failed to come to any decision, they were unanimous on one point: they lacked sufficient expertise and information to ascertain where the 13.1-acre portion(s) should be set. The Staff Report for the City Council meeting includes four “potential alternative locations” for the residential use with only a cursory explanation of the differences between the locations. These “potential alternative locations” were not, but should have been, presented to the Planning Commission. The Staff Report does not provide a specific recommendation to the Council on a preferred location. The City Council— whose members have no real estate or property development experience—also lacks the expertise to do so without sufficient study of the potential sites, or a recommendation from staff, technical experts, or the Planning Commission. If the City is going to reduce the area where residential is allowed, it must provide some staff recommendation to guide the City Council’s decision, and to allow members of the public and the property owner to comment. Instead, the City Council is being asked to make a decision with minimal information, and no guidance from actual professionals who would understand the scope of the task at hand. There is no justification for slogging ahead with this critical decision in an informational vacuum. If the City Council chooses to disregard these problems, and decides that it ought to select that 13.1-acre portion or portions of the Site to zone for residential development, the City’s failure to solicit public participation will become even more problematic. The 2014 EIR studied the allocation of 800 residential units on the Vallco Site, but it presumed that the sites could be placed throughout the Site, and did not study the impact of confining the residential units to only a fraction of the Site. As Planning Commissioner Fung pointed out, based on his rough view of the Vallco Site, the only portion of the Site that might be suitable for placement of the 13.1 acres would be the section that directly abuts other residences. The owners and residents of those homes, and other Cupertino residents, would surely want to understand how concentrating housing on the portion of the Vallco Site closest to them will affect traffic on adjacent streets, and understand any other impacts that may result from this decision. The City also fails to consider the implications of its arbitrary selection of potential residential sites. The City ignores parcel lines and the fact that the City prohibits construction over parcel lines. It is unclear whether the city intends to saddle the property owner with awkward setbacks from lot lines in the middle of the residential sites, or whether it will require a subdivision map to change the parcels to conform to City Council August 19, 2019 Page 16 4836-6503-0302.9 the eventual residential site. The proposed potential allocations could also create split- zones, and the City does not have a split-zone ordinance that clarifies how development standards are interpreted for such parcels. Finally, the siting of the 13.1 acre residential site will govern how the remainder of the Site is developed, and the City has not yet studied what those impacts may be, from a feasibility or environmental perspective (or any other). LU-19 is the section of the Land Use Element that addresses the Vallco Site. It imposes a host of requirements, many of which only really make sense when there is a “complete redevelopment” of the Site. For example, LU-19 requires “a central town square on the west and east” sides of Wolfe Road, and requires that the Site’s development be interspersed public recreational and gathering spaces. The 13.1 acre residential site will be subject to only a few of those Development Standards, but the rest of the Site remains subject to all of them (limits on above- ground parking, neighborhood buffers, etc.). The City has not studied whether creating the 13.1 residential site will make it impossible to develop the remaining portions of the Vallco Site in a manner consistent with the Development Standards, or whether certain of the location options are preferable to others. For example, Location B would make it virtually impossible to develop the remainder of the Site in a manner consistent with the Development Standards. The City has not given these considerations any thought, at all. VI. The Amendments Include Arbitrary Land Use Regulations That Will Affect Developments Other Than Vallco. A. The City Has Illegally Singled Out the Vallco Site for a Restrictive Zoning Designation. The Amendments remove the “Commercial/Residential/Office” designation for the Vallco Site, and replace it with two new land use designations: “Regional Shopping” and “Regional Shopping/Residential.” The “Regional Shopping” designation is not found in any other land use designation. Singling out this site for a General Plan designation that is not found anywhere else in the city, without furthering any stated purpose, and against the wishes of the property owner is arbitrary, discriminatory, and against the law. (Avenida San Juan Partnership v. City of San Clemente (2011) 201 Cal.App.4th 1256.) City Council August 19, 2019 Page 17 4836-6503-0302.9 The City has not provided any justification for why this site should be subject to a more restrictive designation, especially when all technical experts—EPS, SE and TCG—have confirmed that retail development must be subsidized or is not feasible. This restriction is even more dubious, given the City’s claim that it desires to reduce traffic and greenhouse gas emissions, because retail often generates a significantly greater volume of traffic than residential or office.24 In addition, the new “Tribal Coordination” policy applies only to the Vallco Site. There is no rational reason for singling out the Site in this manner. B. The Amendments to the Zoning Code Will Fundamentally Alter the City’s Approach to Planned Development and Will Complicate Development Across the City. The Amendments do not comply with City procedures for changes to the Zoning Code. For example, there are no proposed factual findings for the zoning change of the 13.1 acres of the Vallco Site to P(R3,CG). But City residents should also understand that these proposed changes to the Zoning Code will likely affect development across the City, not just at the Vallco Site. The changes are ambiguous, and will leave developers and property owners unclear about which development standards might apply to their properties. These (presumably) unintended consequences are yet another result of the lack of scrutiny, diligence, and care that was taken in preparing the Amendments. According to the Municipal Code, Planned Development (“PD”) zoning is “intended to provide a means of guiding land development . . . that is uniquely suited for planned coordination of land uses and to provide for a greater flexibility of land use intensity and design because of accessibility, ownership patterns, topographical considerations, and community design objectives.” (Cupertino Mun. Code § 19.80.010.) PD zoning does not set uniform development standards to sites with a particular designation. It sets site-specific standards. In other words, the site is “planned” for a specific development, and the zoning standards conform to that plan. Not surprisingly, in order to accomplish this planned zoning, rezoning to a PD district requires significant planning, generally through the preparation and adoption of a “conceptual development plan.” This document effectively becomes the zoning and 24 Planning Commissioner Fung described exactly this traffic pattern in the July 30 hearing. Retail creates a greater overall volume of traffic, albeit at hours that are more dispersed than office. City Council August 19, 2019 Page 18 4836-6503-0302.9 sets all the development standards. It must include a general description of the proposed uses, proposed traffic-circulation system, a topographical map of the site and neighboring properties, and a landscaping plan. (Cupertino Mun. Code § 19.80.040.A.) Further, when approving a PD rezoning, in addition to making the findings applicable to all rezonings, the City must make findings about the conceptual development plan, including about its consistency with the General Plan, and must confirm that the plan “provides for an organized and unified system of land uses and land use intensities which would be compatible with the surrounding neighborhood” and that it would “not create undue and unreasonable traffic congestion in the area.” (Cupertino Mun. Code § 19.80.040.B.) None of this has been done. There is no conceptual development plan. Staff has not prepared any of the findings required. No one even knows where the 13.1- acre site is that will be rezoned.25 The City cannot ignore its own Municipal Code and the mandatory process that it sets forth for PD zoning. In apparent recognition of this flaw, the City attempted to address it by committing an even greater sin: the Amendments propose to revise the Municipal Code provisions applicable to PD zoning generally. However, as one might have guessed would occur, the proposed revisions are unclear, and may affect zoning across the City, not just at the Vallco Site. Section 19.80.030 specifies how uses for PD zones are determined. Subsection F gives specific direction on uses for certain mixed-use residential areas (for example, for Priority Housing Sites, residential development that does not exceed the number of permitted units “shall be a permitted use”). With regard to development standards, Section 19.80.030 says that they are established together with the “conceptual and definitive plans” for the project. (Cupertino Mun. Code § 19.80.030.E.) The next section then describes what must be included in a conceptual plan and the findings required for approving one. (Cupertino Mun. Code, § 19.80.040.) In sum, section 19.80.030 governs how uses are established, and section 19.80.040 addresses development standards. The City now proposes to up-end and confuse the orderly process of how PD zones have historically been established and entitled. The Amendments propose to retitle Section 19.80.030 as “Establishment of Districts-Permitted and Conditional Uses 25 It would be impossible for staff to create a “topographical map of the site and the neighboring properties.” City Council August 19, 2019 Page 19 4836-6503-0302.9 and Development Standards,” even though Section 19.80.040 governs development standards. The Amendments then make three changes to Section 19.80.030: (1) sites listed under Section 19.80.030(F) are exempted from preparing a conceptual development plan; (2) the newly created, as-yet-unidentified 13.1-acre portion of Vallco that will be the designated site for the 359 residential units is added to Subsection (F); and (3) “[d]evelopments which are not subject to discretionary approval by the City” (in other words, developments subject only to ministerial approval) must “comply with the development standards of the underlying zoning district.” But the proposed zoning amendment is silent about development regulations applicable to discretionary approvals. Apparently, no conceptual plan will be required for Subsection (F) listed sites, but there is no guidance about what development regulations would apply. Further, Subsection F includes many other sites, not just Vallco, such as the Monte Vista Village Special Area. The Amendments provide no guidance about how the City will treat already-approved conceptual plans for these other sites.26 If the intent of the Amendments is to require the development standards for projects listed in Section 19.80.030(F) to comply with the “underlying zoning,” then that would, for example, change the zoning for all of Monte Vista Village. This would be a significant change to zoning throughout the City. It appears that the City’s intent is to rezone 13.1 acres of Vallco to allow a mix of residential and commercial uses. But because there is no general mixed-use zoning district, the only option was to use the planned development designation. The problem then became that PD districts require a conceptual plan, which was impossible to create in the compressed timeframe demanded by City Council. So, rather than taking the time to do so, the City now proposes to simply eliminate the “planned” aspect of a series of sites, including Vallco, which undermines the entire purpose of having PD zoning districts. There is no justification for forcing the Amendments forward without adequate notice to City residents who are likely interested in, and affected by, the development of the impacted sites. 26 No notice of the Planning Commission meeting was given to the owner of the Monte Vista Village Special Area, or the residents who live in proximity to it. City Council August 19, 2019 Page 20 4836-6503-0302.9 VII. The Amendments Cannot Proceed Without Environmental Review. A. The City Must Prepare and Certify a Supplemental EIR. Approval of the Amendments will also violate the California Environmental Quality Act (“CEQA”). CEQA requires the City to analyze and disclose the environmental impacts that a “project”27 may cause. City staff believe that the Amendments were already analyzed and disclosed as part of the 2014 Environmental Impact Report that the City prepared as part of prior General Plan amendments (the “2014 EIR”), and that no further analysis is required. That conclusion is wrong. A supplemental report must be prepared under either of the following conditions: (a) Substantial changes are proposed in the project which will require major revisions of the environmental impact report[, or] (b) Substantial changes occur with respect to the circumstances under which the project is being undertaken which will require major revisions in the environmental impact report.28 Both of these conditions apply to the Amendments. In 2014, the Vallco Mall was 85% occupied. The General Plan amendments proposed in 2014 were intended to facilitate and encourage redevelopment of the Vallco site to “create a new ‘downtown’ for Cupertino,” and the 2014 EIR analyzed the reasonably anticipated impacts from that change. Today, the Vallco Mall is almost completely vacant. A portion of the Vallco Mall has been demolished. The currently-proposed amendments will prohibit office uses on the site, even though office use was one of the central uses contemplated in the 2014 EIR. The current amendments will block redevelopment of the Vallco Site and will have the opposite effect of the amendments that were proposed in 2014. The 27 A “project” for CEQA purposes means an activity that may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and which is undertaken by a public agency, or requires discretionary approval from such an agency. (Pub. Res. Code § 21065.) 28 Pub. Res. Code, § 21166. City Council August 19, 2019 Page 21 4836-6503-0302.9 Mall’s newly vacant condition will be prolonged by these new amendments, perhaps indefinitely. The protracted vacancy of such a large property will cause blight to surrounding properties, because, if the City and Better Cupertino have their way, those properties will be directly adjacent to a partially or completely demolished, fenced-off, completely vacant, former mall site. As Planning Commissioner Takahashi pointed out, the Amendments will turn the Vallco Site into a “ghost town.” Urban decay and all of its typical symptoms—multiple long-term vacancies, dumping, graffiti and vandalism, abandoned vehicles, etc.—can be expected if the Vallco Site is not redeveloped to some productive use in the near future. Because the possibility of blight was not analyzed at all in the 2014 EIR and there is sufficient evidence to support a “fair argument” that the Amendments will cause blight, a supplemental EIR must be prepared that studies at least that issue. (Friends of Coll. of San Mateo Gardens v. San Mateo Cty. Cmty. Coll. Dist. (2017) 11 Cal.App.5th 596, 608.29) The 2018 EPS report, the 2019 SE report, and the TCG report are exactly such evidence. Those reports show that if the Amendments are adopted, a centrally-located, 50-acre parcel in the City will remain the site of a vacant and partially or wholly demolished mall for the foreseeable future—an outcome that was never contemplated in the 2014 EIR. The public is entitled to know that urban decay and blight are reasonably likely outcomes of these General Plan amendments, to understand the severity of those impacts, to understand whether the City intends to make any effort to mitigate that impact, and to be presented with alternatives to the General Plan amendments and all of the other disclosures that are required by CEQA. The Response to Comments prepared for the City council meeting claims that “there is no substantial evidence that the uses cannot be developed on the site.” But the EPS, TCG, and SE reports provide exactly that evidence. In addition to the blight-inducing aspects of the Amendments, they also presage the possibility of development that could exceed the scope of what was studied in the 2014 EIR. The Amendments require a subsequent amendment or amendments to the 29 San Mateo Gardens concerned a project that was approved after a mitigated negative declaration. The 2015 General Plan was approved after certification of an EIR, but the EIR contained no analysis of blight. Therefore, for purposes of this potentially significant environmental impact, the state of public disclosure is as if there had been a negative declaration: no analysis at all. Even if the more substantial evidence standard applies, all of the available evidence points to the need to study the potential impacts of a protracted vacancy. City Council August 19, 2019 Page 22 4836-6503-0302.9 General Plan that will provide “substantial additional housing opportunities.” Such development is a reasonably foreseeable consequence of the Amendments, and the City must determine whether providing the anticipated “substantial additional housing opportunities” will cause environmental impacts that were not studied in the 2014 EIR. B. The Residential Development Requires a Project-Specific Analysis. The 2014 EIR is a “program EIR,” and “does not evaluate the impacts of individual projects under the General Plan.” According to that EIR, “subsequent projects will require a separate environmental review.” The Amendments do authorize such a project on the Vallco Site – development of 389 residential units. The 2014 EIR studied the allocation of 800 residential units throughout the Vallco Site. It did not study the impact of concentrating the residential units on a currently unidentified fraction of the Site. When a program EIR is used, an agency must later prepare a project EIR if there is evidence to support a fair argument that the project may have significant environmental impacts. (Sierra Club v. County of Sonoma (1992) 6 Cal.App.4th 1307, 1319.) No one has yet analyzed or disclosed the traffic or other impacts that might result from that concentration. And because residential development is now “by-right” there will be no additional opportunities for the City to conduct further environmental review or to impose additional conditions of approval. It is also unclear whether, and how, the City could impose any mitigation measures on the by-right development.30 The City also failed to analyze the potential impacts of by-right development at the proposed potential locations. The specific location of the development is critical to understanding the circulation and impacts to specific intersections. The location of residential developments is also important to understand the air quality impacts, and 30 If the residential development is, in fact, “by-right,” then these complications arise. But it is far from clear that the Amendments actually create a “by-right” residential development opportunity. The Amendments do not specify what development standards may apply to the 13.1 acre residential site, but we assume that the R3 development standards are “imported” by the P(CG/R3) zoning designation. Some of those development standards are subjective, and would require the City to exercise discretion when authorizing the residential development, which conflicts with the entire premise of “by-right” development. In addition, PD districts (like the one proposed to be created by the Amendments) require a development permit, but “by right” development should not require any such permit. The Amendments therefore create “vertical inconsistency,” where the zoning will be inconsistent with the General Plan, and a situation of great uncertainty as to which development standards will apply, and how City staff should treat any proposal to develop the 13.1 acre residential site. City Council August 19, 2019 Page 23 4836-6503-0302.9 specifically whether implementation of the project would expose sensitive receptors to substantial concentrations of air pollution. C. The Municipal Code Amendments Affect Other Sites Throughout the City, Impacts of Which Must Be Studied. As described above, the amendments to the Planned Development zoning impact other planned development districts, including all planned development districts in Monte Vista and all residential planned development districts. The City cannot proceed with the Amendments without analyzing those impacts. As a matter of good governance, it would also presumably want input from the owners of those properties. D. Effect on General Plan Mitigation Measures Was Not Analyzed. Even if, as the City’s EIR addendum claims, the Amendments simply reduce the impacts of the previously analyzed redevelopment of the Vallco Site, the City should have studied whether the mitigation measures should also be reduced. The CEQA Guidelines require mitigation to bear a reasonable relationship to the impacts of the project. The presumed reduction in transportation impacts could render some of the proposed transportation improvements required by the General Plan EIR mitigation unnecessary, and it would be illegal for the City to require the property owner to provide or pay for such improvements. Moreover, if the impacts are reduced, but the required mitigation measures are not, the feasibility of development becomes even more bleak, and the measures no longer have any nexus to the impacts. VIII. The Amendments Constitute an Unconstitutional Taking of Vallco’s Property. The Amendments restrict the vast majority of the 50-acre Site to retail use only, even though that use must be subsidized to be developed. The City has not offered any justification for such a restriction, except to say that it is “temporary” and the City plans to change it again in the future. That violates the requirement that a General Plan provide a comprehensive, long-term vision for the City, and Vallco certainly cannot count on the City to amend the General Plan again to provide for an economically viable development in light of the City’s overt hostility to developing Vallco into any productive use. The Fifth Amendment protects property owners against having to bear the burden of using their property in a manner that, in fairness, should be subsidized by City Council August 19, 2019 Page 24 4836-6503-0302.9 the entire community. (Armstrong v. United States (1960) 364 U.S. 124.) The City’s actions disregard these protections, placing unreasonable restrictions on the property that render any development infeasible. These actions amount to both a regulatory taking under Penn Central Transportation Co. v. City of New York (1978) 438 U.S. 104, and a total taking under Lucas v. South Carolina Coastal Council (1992) 505 U.S. 1003. A. The Amendments Meet the Requirements of a Regulatory Taking for which the City Is Liable. A government action that unreasonably reduces the value of property, even on a temporary basis, can make the City liable to the owner for the lost value. (Lockaway Storage v. Cty. of Alameda (2013) 216 Cal.App.4th 161, 184.) A court will evaluate three factors to determine the City’s liability. (Avenida San Juan Partnership v. City of San Clemente, 201 Cal.App.4th 1256 (2011) First, the court will evaluate the economic impacts of the Amendment on the value of the Vallco Site. The Amendments render the Vallco Site functionally undevelopable in the manner that VPO intended. VPO need not show that it no longer is able to make any use of the property, or that every economically feasible use is lost. (For example, any evidence that the City may muster showing that the Vallco Site might be economically feasible as a mobile home park, or a collection of single-family homes, is irrelevant.) Rather, VPO need only show that it is unable to pursue the use that it reasonably intended: a large, mixed-use development with significant residential, office, and retail uses. (Lockaway, 216 Cal.App.4th at 185.) Second, a court will evaluate the extent to which the Amendments interfere with VPO’s economic expectations. VPO reasonably expected that it would be able to proceed with the type of development that it intended to pursue. Indeed, under a prior City Council, a specific plan was approved for the Site that would have fulfilled those expectations. As Planning Commissioner Fung recognized, under the Amendments, roughly 37 acres of the Vallco Site will be rendered completely unusable. The City own numbers value land in Cupertino at $10 million per acre. Rendering 37 acres valueless contravenes any reasonable economic expectation, and the City’s own figures will set the “floor” for any damages award to Vallco. Finally, a court will evaluate the “character” of the Amendments. The “character” of the Amendments is punitive and designed to kill the prospect of redeveloping the Vallco Site in the event that VPO is unable to proceed with the SB 35 City Council August 19, 2019 Page 25 4836-6503-0302.9 project. In Lockaway, the County of Alameda was adjudged liable for a regulatory taking and attorney’s fees, because the “character” of its actions constituted a “showstopping u-turn” on a property owner’s development plans, a description that applies equally here. B. The Amendments Amount to a Total Taking of the Property. Under Lucas, a land use restriction that deprives a property of all economically beneficial use amounts to an unconstitutional taking of property. Here, the Concord report demonstrates that the Amendments are so restrictive that any development would result in a financial loss to the developer, even without accounting for the cost of the land. And as discussed above, the City has provided little to no justification for this deprivation. The City must therefore compensate the property owner for the loss in value. IX. The Amendments Are Abusive, Arbitrary, and Discriminatory. The City Council must exercise its authority for the benefit of its constituents. It cannot wield its power in an arbitrary and discriminatory manner, to punish VPO, to try to run it out of town, or for any other improper purpose. There are no circumstances warranting the adoption of the Amendments, nor has the City prepared appropriate analyses to understand the effect of the Amendments. The only purpose of the Amendments is to destroy the possibility that VPO can redevelop its property. The Amendments are therefore abusive, arbitrary, and discriminatory, and, if adopted, will be set aside. (Arnel Development Co. v. City of Costa Mesa (1981) 126 Cal.App.3d 330; Avenida San Juan Partnership v. City of San Clemente (2011) 201 Cal.App.4th 1256.) X. Vice Mayor Chao Must Continue to Recuse Herself From Discussion and Decision on The Amendments. Because Vice Mayor Chao lives within 1,000 feet of the Vallco Site, she is required to recuse herself from all deliberation and voting on these Amendments. The FPPC’s letter on Vice Mayor Chao’s recusal relied on the size of the project since such a large project would have impacts to at least 25% of the City’s population. Although we continue to disagree with that analysis, it does not apply and provides no legal protection here because the Amendments propose to materially reduce the size of any City Council August 19, 2019 Page 26 4836-6503-0302.9 project on the Site.31 Vice Mayor Chao recused herself from the prior discussion on the Amendments. She should do the same when the Amendments come before Council. Very truly yours, Charmaine G. Yu CGY:mwa cc: Deb Feng, City Manager (via e-mail: manager@cupertino.org) Heather Minner, City Attorney (via e-mail: Minner@smwlaw.com) Department of Housing and Community Development, Division of Housing Policy Development (via e-mail: compliancereview@hcd.ca.gov) 31 The letter states that the FPPC assumes that the facts are “complete and accurate” and says that if the underlying facts change, additional advice must be sought. EXHIBIT A ECONOMIC FEASIBILITY ANALYSIS CUPERTINO BELOW MARKET RATE (BMR) HOUSING PROGRAM Prepared for: City of Cupertino 7/16/19 TABLE OF CONTENTS Introduction ............................................................................................................................. 1 BMR Requirements for Residential Development ............................................................... 3 Approach................................................................................................................................................... 3 Financial Feasibility Methodology ........................................................................................................ 10 Key Results ............................................................................................................................................ 19 Peer Cities ............................................................................................................................................. 32 Non-Residential Linkage Fee ........................................................................................... 34 Approach................................................................................................................................................ 34 Peer Cities ............................................................................................................................................. 45 Key Takeaways .................................................................................................................. 47 Appendix ....................................................................................................................................... 49 1 TABLE OF FIGURES Figure 1: Description of Prototypes ............................................................................................................ 6 Figure 2: City of Cupertino BMR Income Limits and Income Target for Pricing BMR Units .................... 7 Figure 3: Inclusionary Housing Scenarios Tested for Ownership Prototypes (Detached Single-Family Prototype 1, Small Lot/Townhouse Prototype 2, and Condominium Prototype 3) .................................. 8 Figure 4: Inclusionary Housing Scenarios Tested for Rental Prototypes (Lower Density Rental Prototype 4 and Higher Density Rental Prototype 5) .................................................................................................. 9 Figure 5: Minimum Return Thresholds by Prototype .............................................................................. 11 Figure 6: Market Rate Residential Sale Prices and Monthly Rents, By Prototype ................................ 13 Figure 7. Market Rate Residential Value Calculation, by Prototype ...................................................... 14 Figure 8. Below Market Rate Residential Values, by Prototype and AMI Level .................................... 15 Figure 9. Retail Revenue Assumptions and Capitalized Value .............................................................. 16 Figure 10: Development Cost Assumptions ............................................................................................ 18 Figure 11: Return On Cost for Ownership Prototypes by Inclusionary Housing Scenario .................... 21 Figure 12: Yield on Cost under Different Inclusionary Housing Scenarios for Multi-Family Rental Prototypes 4 and 5.................................................................................................................................... 21 Figure 13: Yield on Cost Under Different Revenue Assumptions for Lower Density Multi-Family Rental (Prototype 4) with 15% BMR Requirement ............................................................................................. 22 Figure 14: Feasibility of Lower Density Multi-Family Rental Prototype (Prototype 4) with 15% Inclusionary BMR Requirement and Increased Revenues ..................................................................... 22 Figure 15: Yield on Cost Under Different Cost Assumptions for Lower Density Multi-Family Rental (Prototype 4) with 15% BMR Requirement ............................................................................................. 23 Figure 16: Feasibility Results of Lower Density Multi-Family Rental Prototype (Prototype 4) with 15% Inclusionary BMR Requirement and Lower Costs ................................................................................... 23 Figure 17: Yield on Cost Under Different Revenue Assumptions for Higher Density Multi-Family Rental (Prototype 5) with 15% BMR Requirement ............................................................................................. 24 Figure 18: Feasibility Results of Higher Density Multi-Family Rental Prototype (Prototype 5) with 15% Inclusionary BMR Requirement and Higher Revenues .......................................................................... 24 Figure 19: Yield on Cost Under Different Cost Assumptions for Higher Density Multi-Family Rental (Prototype 5) with 15% BMR Requirement ............................................................................................. 25 Figure 20: Feasibility Results of Higher Density Multi-Family Rental Prototype (Prototype 5) with 15% Inclusionary BMR Requirement and Lower Costs ................................................................................... 25 Figure 21. Detailed calculation of the City of Cupertino’s permits and fees for each prototype (Per Unit) ................................................................................................................................................................... 26 2 Figure 22: Financial Feasibility Results for Single-Family Detached Prototype 1 ................................. 27 Figure 23: Financial Feasibility Results for Small Lot Single-Family/Townhouse Prototype 2 ............ 28 Figure 24: Financial Feasibility Results for Condominium Prototype 3 ................................................. 29 Figure 25: Financial Feasibility Results for Lower Density Rental Apartments Prototype 4 ................ 30 Figure 26: Financial Feasibility Results for Higher Density Rental Apartments Prototype 5 ............... 31 Figure 27: Inclusionary Housing Requirements and Housing Mitigation Fees in Peer Cities ............. 33 Figure 28. Description of Development Prototypes ................................................................................ 35 Figure 29. Hard Costs Assumptions by Prototype ................................................................................... 36 Figure 30. Land Comparables for Office and Hotel ................................................................................ 37 Figure 31. Soft Cost Assumptions by Prototype ...................................................................................... 37 Figure 32. Revenue Assumptions by Prototype ...................................................................................... 39 Figure 33. Office Comparables ................................................................................................................ 39 Figure 34: Retail Comparables in Cupertino ........................................................................................... 39 Figure 35: Yield on Cost Thresholds by Prototype .................................................................................. 40 Figure 36. Summary of Financial Feasibility of Office/R&D Prototype .................................................. 40 Figure 37. Summary of Financial Feasibility of Hotel Prototype ............................................................ 41 Figure 38. Summary of Financial Feasibility of Retail Prototype ........................................................... 41 Figure 39. Office/R&D Pro Forma Results .............................................................................................. 42 Figure 40. Hotel Pro Forma Results ......................................................................................................... 43 Figure 41. Retail Pro Forma Results ........................................................................................................ 44 Figure 42. Non-Residential Linkage Fees (per Gross S. Ft. of Net New Space) in Nearby Cities ........ 46 Figure 43: Current and Maximum Housing Mitigation Fees Based On Nexus for Ownership Prototypes ................................................................................................................................................................... 47 1 INTRODUCTION Strategic Economics was retained by the City of Cupertino (the “City) to evaluate potential changes to the Below Market Rate (BMR) Housing Program. The BMR program requirements are currently as follows: • The City currently has a BMR Housing Program that imposes an inclusionary requirement of 15% on for-sale and rental residential developments with seven or more units. For rental developments, the BMR units must be affordable to very-low (up to 50% Area Median Income “AMI”) or low-income (up to 80% AMI) households 1. For-sale developments must provide BMR units affordable to median- (up to 100% AMI) and moderate-income (up to 120% AMI) households.2 • Small residential projects of less than seven units can pay the City’s Housing Mitigation In-Lieu Fees 3 (the “Housing Mitigation Fees”) or provide one BMR unit. The Housing Mitigation Fees are based on the City’s 2015 Residential Below Market Rate Housing Nexus Analysis and Non- Residential Jobs-Housing Nexus Analysis (the “2015 Nexus Study”). Housing Mitigation Fees are currently set at $17.82 per square feet for detached single family, $19.60 per square feet for small lot single family/townhomes, $23.76 for attached multifamily residences (ownership and rental), and $11.88 per square foot for commercial/retail uses. • The City first adopted linkage fees for office and Research and Development (“R&D”) projects in 1992 and expanded the program to apply to retail and hotel developments in 2004. The City updated the non-residential linkage fees in 2015 (based on the 2015 Nexus Study) to the current levels of $23.76 per square foot for office/R&D uses, and $11.88 per square foot for hotel and retail uses.4 The City Council is considering modifying the BMR Housing Program, providing direction to examine the following issues: • Study the potential to increase the inclusionary requirements to 20% or 25% • Explore inclusionary housing policy to include units for extremely-low income/disabled persons • Include median- and moderate-income units in rental projects • Study inclusionary housing programs in other cities as a comparison • Study the economic feasibility of increasing non-residential linkage fees on new office/R&D, hotel, and retail developments This report provides technical findings on the economic feasibility of increasing the City’s BMR requirements for residential developments and non-residential developments. It also provides findings regarding the potential for including extremely-low income housing units and/or median-and moderate-income units in rental projects. The report also summarizes inclusionary housing programs and non-residential linkage fees in other cities in Santa Clara County. The report is divided into three sections. 1 Rental BMR policy states that 40% of affordable units must be set aside for low income, and 60% for very low income units. 2 For-Sale BMR policy states that half of affordable units must be set aside for median income households, and half for moderate income households. 3 Housing Mitigation In-Lieu Fees: A fee assessed in accordance with the City's General Plan Housing Element, Municipal Code (CMC 19.172) and the City's BMR Housing Mitigation Program Procedural Manual. 4 Keyser Marston Associates, “City of Cupertino: Non-residential Jobs-Housing Nexus Analysis,” City of Cupertino, April 2015. 2 • Section II: The first section focuses on the BMR requirements on housing development. • Section III: The second section is focused on the non-residential linkage fees on new office/R&D, hotel, and retail developments. • Section IV: The third section provides key takeaways and conclusions. The appendix to the report provides additional background data on housing trends. 3 BMR REQUIREMENTS FOR RESIDENTIAL DEVELOPMENT Approach The following summarizes the methodology of the financial feasibility analysis. Step 1. Develop Prototypes The first step in the financial feasibility analysis is to review the types of residential and mixed-use (residential and retail) projects that would be subject to the BMR policy. In close coordination with City staff, Strategic Economics updated the residential and nonresidential prototypes used in the 2015 Nexus Study, ensuring that they represent the ownership and rental residential development types that are likely to occur in city in the short term. The prototypes varied based on assumptions regarding building type, density, unit size, etc. Step 2. Develop Assumptions about BMR Units Strategic Economics worked closely with City staff to develop assumptions about the percentage of inclusionary units that should be tested, the income targets, and the affordable sales prices and rents. Maximum sales prices and rents were calculated using the method and parameters established by City policy, in coordination with Hello Housing, the BMR Program administrator. Step 3. Collect Key Inputs and Build Pro Forma The financial feasibility of each prototype is measured using a static pro forma model that solves for the profit to the developer. A pro forma model is a tool that is commonly used to estimate whether a project is likely to be profitable. The key inputs into the financial feasibility analysis are the revenues (rents/ sales prices), development costs, and land costs. Strategic Economics collected and summarized data on land prices, residential values, and construction costs using the following data sources: • Costar, a commercial real estate database that tracks rental multifamily properties and property transactions • Interviews with local developers and brokers • Redfin, a real estate brokerage firm that collects data on residential sales prices • Review of pro formas from other projects and clients Step 4. Calculate Financial Feasibility The pro forma model tallies all development costs, including land costs, hard costs (construction costs), soft costs, and financing costs. The pro forma also tallies the project’s total value. The project’s total value is the sum of (1) the estimated value of the condominiums or townhomes (i.e. the average per unit sale price multiplied by the number of units), and (2) if applicable, the capitalized value of retail. The project’s ROC is then calculated by dividing the project’s net revenue (i.e. total value minus total development costs), by total development costs. To understand the potential impact of inclusionary requirements on financial feasibility, the ROC results for each prototype and inclusionary housing scenario are compared to developers’ typical expectation of return, or the threshold for feasibility. If the ROC for a project is above the threshold for feasibility, it is considered financially feasible. If the ROC is below the threshold, it is not financially feasible. 4 More details on each step of the analysis is provided in the section below. DEVELOPMENT PROTOTYPES The analysis estimates the feasibility of different inclusionary requirements for five residential prototypes, as described in Figure 1. The building characteristics of each development prototype, including size, density (floor-area-ratio), and parking assumptions are based on prototypes analyzed as part of the City’s 2015 Nexus Study 5. These development prototypes represent the range of typical residential development expected to come online in Cupertino in the short term. These prototypes are mostly based on recently completed projects or development proposals in the pipeline in Cupertino. It is also assumed that future development will likely be located along Stevens Creek Boulevard, and in existing residential neighborhoods, given that these locations have been identified in the City’s General Plan and Heart of the City Specific Plan as key areas for new residential and mixed-use development. The prototypes vary based on the following characteristics: • Ownership and Rental. Three of the prototypes include only for-sale units (Prototypes 1, 2, and 3) and two are rental developments (Prototypes 4 and 5). • Mixed-Use and Residential Only. Two of the prototypes (Prototypes 1 and 2) are 100% residential while the attached multifamily prototypes have a ground-floor retail component (Prototypes 3, 4, and 5). • Project Density and Size o The single-family detached prototype 1 represents detached single-family custom-built homes with an average density of 4.5 dwelling units per acre. Because this prototype has fewer than eight units, it would be allowed to pay the in-lieu fee or provide one BMR unit under the current BMR policy. The small number of units in this prototype reflects the fact that there are few potential single-family detached sites in Cupertino that can accommodate more than 7 units. o Prototype 2 represents two-story small lot single-family and townhome developments with a density of 15 dwelling units per acre. o Prototype 3 is a three-story multi-family condominium building with a density of 35 units per acre. Parking is accommodated in an above-ground podium. o Prototype 4 is a three-story multifamily rental building with a density of 40 units per acre. Parking is accommodated in an above-ground podium. o Prototype 5 is a higher-density six-story project with a density of 76 units per acre. This prototype is based on a Housing Element site that allows six to eight story heights. Parking is accommodated in an above-ground podium. • Parking Ratios. The City requires 2 parking spaces per unit. However, for the multi-family prototypes there are opportunities to achieve parking reductions under certain conditions. The assumptions in the pro forma are as follows. o For Prototype 1 and Prototype 2, the assumption is that the development would provide all of the required parking. 5 Keyser Marston Associates (2015). Residential Below Market Rate Housing Nexus Analysis. 5 o For the condominium prototype 3, developers can lower parking by 10%, assuming that the reduction is justified by a parking study. o For multi-family rental housing prototypes 4 and 5, developers can receive parking reductions on residential units in the scenarios where 5% of the housing units are for very low-income households, in accordance with Gov’t Code Sec. 65915(p). 6 FIGURE 1: DESCRIPTION OF PROTOTYPES Prototype 1 Prototype 2 Prototype 3 Prototype 4 Prototype 5 Detached Single Family Small Lot Single Family/Townhome Condominium Lower Density Rental Apartments Higher Density Rental Apartments Tenure For-Sale For-Sale For-Sale Rental Rental Unit Mix 5 bedrooms 3 bedrooms 2 and 3 bedrooms Studios, 1, 2, and 3 bedrooms Studios, 1, 2, and 3 bedrooms Format Low-rise, large sites Low-rise, small sites Mid-rise, small sites Mid-rise, small sites Higher density, small sites Number of Units 7 50 100 100 100 Parcel Size (Acres) 1.6 3.3 2.9 2.9 1.3 Residential Program Studios - - - 10 10 1-BD - - - 45 45 2-BD - - 50 40 40 3-BD - 50 50 5 5 4-BD 0 - - - - 5-BD 7 - - - - Total 7 50 100 100 100 Dwelling Units Per Acre 4.5 15 35 35 76 Ground Floor Retail (Sq. Ft.) 0 0 10,000 10,000 15,000 Parking 2-Car Garage + Driveway 2-Car Garage + Driveway Podium Podium Podium Parking Requirement (Per Unit) 4 2.8 2 2 2 Parking Requirement (Commercial) n/a n/a 4 per 1,000 sq. ft. 4 per 1,000 sq. ft. 4 per 1,000 sq. ft. Required Parking Spaces 28 140 240 240 260 Reduced Parking Spaces (a) 28 140 216 185 205 (a) For the condominium prototype 3, developers can lower parking by 10%, assuming that the reduction is justified by a parking study. For multi-family rental housing prototypes 4 and 5, developers can receive parking reductions on residential units in the scenarios where 5% of the housing units are for very low-income households (50% AMI), in accordance with Gov’t Code Sec. 65915(p). Source: Strategic Economics, City of Cupertino. 7 BMR HOUSING PROGRAM ASSUMPTIONS Strategic Economics built a pro forma model that tested the feasibility of various inclusionary housing scenarios under the existing BMR housing program and alternative scenarios. Below is a summary of the existing BMR program: • The City currently has a BMR Housing Program that imposes an inclusionary requirement of 15% on for-sale and rental residential developments with seven or more units. For rental developments, the BMR units must be affordable to very low or low-income households6. For-sale developments must provide BMR units affordable to median- and moderate-income households.7 • Small residential projects of less than seven units can pay the housing mitigation fee or provide one BMR unit. The housing mitigation fees are based on the 2015 Nexus Study, and are currently set at $17.82 per square feet for detached single family, $19.60 per square feet for small lot single family/townhomes, $23.76 for attached multifamily residences (ownership and rental), and $11.88 per square foot for commercial/retail uses. • The BMR program uses income limits published annually by the California Department of Housing and Community Development (HCD) for Santa Clara County, per household size. For some income categories, the income targets for pricing BMR units are slightly different from household income limits that determine eligibility. Maximum BMR sales and rent prices are determined by the City and its BMR program administrator, Hello Housing, based on the maximum affordable housing cost provisions of Section 50052.5 of the California Health and Safety Code, Section 6920 of the California Code of Regulations, and most recent published HCD income limits. The household income limits for BMR eligibility as well as the income targets for pricing BMR units are shown in Figure 2. FIGURE 2: CITY OF CUPERTINO BMR INCOME LIMITS AND INCOME TARGET FOR PRICING BMR UNITS Household Income Limits Income Target for Pricing BMR Units Ownership Median 100% AMI 90% AMI Moderate 120% AMI 110% Ami Rental Extremely Low 30% AMI 30% AMI Very Low 50% AMI 50% AMI Low 80% AMI 60% AMI Sources City of Cupertino Housing Element; City of Cupertino Housing Mitigation Program Procedural Manual. The inclusionary housing scenarios tested in this analysis reflect the range of policy options under consideration by the City for ownership and rental development. They are summarized below and shown in Figure 3 and Figure 4. 6 Rental BMR policy states that 40% of affordable units must be set aside for low income, and 60% for very low-income units. 7 For-Sale BMR policy states that half of affordable units must be set aside for median income households, and half for moderate income households. 8 OWNERSHIP DEVELOPMENT Strategic Economics tested the economic feasibility of the development of ownership housing (single- family, townhouse, and condominium prototypes) under five different inclusionary scenarios: • Scenario 0 (No Requirements): This scenario assumes that the project is 100% market- rate, with no affordable units and no in-lieu fees required. • Scenario 1 (Existing Policy): This scenario mirrors the City’s existing inclusionary housing requirement. The development projects must provide 15% of the units at prices affordable to median- (100% AMI) and moderate-income households (120% AMI). • Scenario 2 (20% Inclusionary): This scenario requires new ownership projects to include at least 20% BMR units, targeting median and moderate-income households. • Scenario 3 (25% Inclusionary): This scenario requires new ownership projects to include at least 25% BMR units, targeting median and moderate-income households. • Scenario 4 (In-Lieu Fees): This scenario assumes that the development is required to pay in-lieu fees instead of providing affordable units on-site. These scenarios are summarized in Figure 3 below. FIGURE 3: INCLUSIONARY HOUSING SCENARIOS TESTED FOR OWNERSHIP PROTOTYPES (DETACHED SINGLE-FAMILY PROTOTYPE 1, SMALL LOT/TOWNHOUSE PROTOTYPE 2, AND CONDOMINIUM PROTOTYPE 3) Inclusionary Housing Scenarios % of Units at BMR Prices Income Targets for BMR Units* In-Lieu Fee Payment Scenario 0 (No Requirements) 0% N/A No Scenario 1 (Existing Policy) 15% 8% of units at 90% AMI 7% of units for 110% AMI No Scenario 2 (20% Inclusionary) 20% 10% of units at 90% AMI 10% of units at 110% AMI No Scenario 3 (25% Inclusionary) 25% 13% of units at 90% AMI 12% of units at 110% AMI No Scenario 4 (In-Lieu Fees) 0 N/A Yes *Per the City of Cupertino Housing Mitigation Program Procedural Manual, the maximum sales price for median income BMR units is set at 90% AMI. The maximum sales price for moderate income BMR units is set at 110% AMI. Sources: City of Cupertino Housing Mitigation Program Procedural Manual, 2018; Strategic Economics, 2018. RENTAL DEVELOPMENT Strategic Economics tested the economic feasibility of the development of ownership housing (single- family, townhouse, and condominium prototypes) under five different inclusionary scenarios: • Scenario 0 (No Requirements): This scenario assumes that the project is 100% market- rate, with no affordable units and no in-lieu fees required. • Scenario 1 (Existing Policy): This scenario mirrors the City’s existing inclusionary housing requirement. The development projects must provide 15% of the units at prices affordable to low-income (80% AMI) and very low-income households (50% AMI). • Scenario 2 (20% Inclusionary): This scenario requires new ownership projects to include at least 20% BMR units, targeting median and moderate-income households. 9 • Scenario 3 (25% Inclusionary): This scenario has a higher inclusionary requirement of 25% and targets lower income groups. The income targets include low-income (80% AMI), very low-income (50% AMI), and extremely low-income households (30% AMI). • Scenario 4 (In-Lieu Fees): This scenario assumes that the development is required to pay in-lieu fees instead of providing affordable units on-site. These scenarios are summarized in Figure 4 below. FIGURE 4: INCLUSIONARY HOUSING SCENARIOS TESTED FOR RENTAL PROTOTYPES (LOWER DENSITY RENTAL PROTOTYPE 4 AND HIGHER DENSITY RENTAL PROTOTYPE 5) Inclusionary Housing Scenarios % of Units at BMR Rents Income Targets for BMR Units* In-Lieu Fee Payment Scenario 0 (No Requirements) 0% N/A No Scenario 1 (Existing Policy) 15% 9% of units at 50% AMI 6% of units at 60% AMI No Scenario 2 (20% Inclusionary) 20% 10% of units at 50% AMI 10% of units at 60% AMI No Scenario 3 (25% Inclusionary) 25% 10% of units at 50% AMI 10% of units at 60% AMI 5% of units at 30% AMI No Scenario 4 (In-Lieu Fees) 0 N/A Yes *Per City policy, pricing for low-income BMR units is set at 60% AMI. Sources: City of Cupertino Housing Mitigation Program Procedural Manual, 2018; Strategic Economics, 2018. 10 Financial Feasibility Methodology This section describes the method used to measure financial feasibility and the major cost and revenue assumptions underlying the analysis. Additional information is provided in the Appendix. MEASURING FINANCIAL FEASIBILITY The financial feasibility of each prototype is measured using a static pro forma model that solves for the profit to the developer. A pro forma model is a tool that is commonly used to estimate whether a project is likely to be profitable. For a policy analysis like this one, we use development prototypes to represent typical projects. However, it is important to note that individual development projects may be less or more profitable than these prototypes, depending on the specifics of the development program, development costs (construction and land), sources of financing, and other factors. Furthermore, because it is a static model reflecting today’s market conditions, the pro forma analysis does not factor in changes in prices/rents, construction costs, or financing. For the purposes of measuring financial feasibility in this analysis, developer profit was measured by using one of two metrics: • Return on cost (ROC) for ownership housing. ROC is a common measure of project profitability for residential ownership development. The pro forma model tallies all development costs, including land costs, hard costs (construction costs), soft costs, and financing costs. The pro forma also tallies the project’s total value. The project’s total value is the sum of (1) the estimated value of the condominiums or townhomes (i.e. the average per unit sale price multiplied by the number of units), and (2) if applicable, the capitalized value of retail. The project’s ROC is then calculated by dividing the project’s net revenue (i.e. total value minus total development costs), by total development costs. • Yield on cost (YOC) for rental housing. YOC is a common measure of profitability for income- generating projects, such as residential rental development. The pro forma model tallies all development costs (land costs, hard costs, soft costs, and financing costs). The pro forma also estimates total revenues: the project’s net annual operating income is the stabilized income from the property (i.e. rental income generated from both the residential and retail uses), minus operating expenses and an allowance for vacancy. The YOC is estimated by dividing the total annual net operating income by total development costs. RETURN THRESHOLDS To understand the potential impact of inclusionary requirements on financial feasibility, the ROC and YOC results for each prototype and inclusionary housing scenario are compared to developers’ typical expectation of return. These return thresholds are summarized in Figure 5 and discussed below: • For the Single-Family Detached Prototype 1, the minimum ROC threshold ranges between 10 to 15%, based on developer interviews for new single-family development in Cupertino. • For the Small Lot Single-Family/Townhouse Prototype 2 and the Condominium Prototype 3, the minimum ROC threshold ranges between 18 to 20%, based on a review of pro forma models for new multifamily ownership projects in Santa Clara County. • For the Lower Density Apartment Prototype 4 and the Higher Density Apartment Prototype 5, the minimum YOC threshold ranges between 4.75% and 5.25%. According to the developers interviewed for this study, and a review of recent development project pro formas in the Silicon 11 Valley, the minimum YOC for a new multi-family development project should usually be 1.0 to 1.5 points higher than the published capitalization rate (cap rate). The current cap rate for multifamily properties in the San José Metropolitan Area is between 3.75 to 4.25%.8 The cap rate, measured by dividing the net operating income generated by a property by the total project value, is a commonly used metric to estimate the value of an asset. Cap rates rise and fall along with interest rates. In a climate of rising interest rates, it is important to set the expectations of YOC at a conservative level, to allow for a margin between the cap rate and the rate of return. It is also important to consider that investors consider a wide range of factors to determine if a development project makes financial sense, and some investors may have different levels of risk tolerance than others. FIGURE 5: MINIMUM RETURN THRESHOLDS BY PROTOTYPE Return on Cost Thresholds Prototype 1: Detached Single Family 10-15% Prototype 2: Small Lot/Townhomes 18-20% Prototype 3: Condominiums 18-20% Yield on Cost Thresholds Prototype 4: Lower-Density Rental Apartments 4.75-5.25% Prototype 5: Higher-Density Rental Apartments 4.75-5.25% Source: Developer interviews and a review of recent project pro formas, 2018; Strategic Economics, 2018. REVENUE ASSUMPTIONS MARKET RATE RESIDENTIAL There is significant pent-up housing demand in Santa Clara County and the broader Bay Area region, as housing development has not kept up with employment growth. Between 2009 and 2015, Santa Clara County added over 170,000 new jobs between 2010 and 2015, but only 29,000 new housing units.9 Apartment rents accelerated beginning in 2011, as the economy emerged from the Great Recession, and continued growing at an average annual rate of nearly eight percent until 2015. Since then rents have continued to grow at a slower pace of about four percent. Sales prices in Cupertino and Santa Clara County have been escalating at a rapid rate over the last five years. In Cupertino, the median sales price for a single-family home increased from $1.68 million in 2014 to $2.37 million in 2018. 10 Similarly, the median sales price for a condominium climbed from $895,500 in 2014 to $1.4 million in 2018.11 The market-rate sale prices and rents assumed for each prototype are summarized in Figure 6. The values are calculated as a weighted average to reflect that different types of units have different unit 8 CBRE Investor’s Cap Rate Survey (H1, 2018). 9 SPUR, “Room for More: Housing Agenda for San José,” August 2017. 10 Santa Clara County Association of Realtors, 2014 and 2018. https://www.sccaor.com/pdf/stats/2014.pdf https://www.sccaor.com/pdf/stats/2018.pdf. 11 Ibid 12 values. For new single-family detached development (Prototype 1), sale prices were based on sales of newly built single-family homes in Cupertino as reported by Redfin. Sales prices for small lot single- family/townhomes (Prototype 2) and condominium projects (Prototype 3) were based on recent re- sales in Cupertino as reported by Redfin. The Appendix to this report (Figures A-1 through A-3) includes detailed information on the project comparables used to inform these estimates. Because of the lack of recently built apartment projects in Cupertino, the rental rate estimates for rental units (Prototypes 4 and 5) were based on developer interviews and a review of recently built, comparable apartment projects in Cupertino and neighboring cities (Mountain View, Sunnyvale, Campbell, and Santa Clara), as reported by Costar. Since Cupertino’s apartment buildings command higher rents than in the other cities, a 5% premium was applied over the market area’s weighted average. Figure A-4 in the Appendix includes detailed information on the project comparables used to inform these estimates. 13 FIGURE 6: MARKET RATE RESIDENTIAL SALE PRICES AND MONTHLY RENTS, BY PROTOTYPE Unit Mix Unit Size (Sq. Ft.) Sale Price Per Sq. Ft. Sale Price Per Unit Prototype 1: Single Family 5-BD 100% 3,700 $946 $3,500,200 Prototype 2: Small Lots/Townhomes 3-BD 100% 1,850 $970 $1,794,500 Prototype 3: Condominiums 2-BD 50% 1,350 $1,100 $1,485,000 3-BD 50% 1,600 $1,000 $1,600,000 Weighted Average Unit Size/Sale Price 1,475 $1,050 $1,542,500 Prototype 4: Lower-Density Rental Studios 10% 680 $4.94 $3,360 1-BD 45% 800 $4.73 $3,780 2-BD 40% 1,100 $4.30 $4,725 3-BD 5% 1,400 $4.13 $5,775 Weighted Average Unit Size/Monthly Rent 938 $4.54 $4,216 Prototype 5: Higher-Density Rental Studios 10% 680 $4.94 $3,360 1-BD 45% 800 $4.73 $3,780 2-BD 40% 1,100 $4.30 $4,725 3-BD 5% 1,400 $4.13 $5,775 Weighted Average Unit Size/Monthly Rent $4.54 $4,216 Source: Strategic Economics, 2018. The total value of market-rate units is summarized in Figure 7. For the ownership prototypes (Prototypes 1, 2, and 3), the total project value is obtained by multiplying the per unit sale price by the total number of units. For the rental prototypes (Prototypes 4 and 5), an income capitalization approach is used. This approach first estimates the annual net operating income (NOI) of the prototype, which is the difference between project income (annual rents) and project expenses 14 (operating costs and vacancies). The NOI is then divided by the current cap rate to derive total project value.12 FIGURE 7. MARKET RATE RESIDENTIAL VALUE CALCULATION, BY PROTOTYPE Prototype 1 Prototype 2 Prototype 3 Prototype 4 Prototype 5 Detached Single Family Small Lot Single Family/ Townhome Condo Lower Density Rental Apartments Higher Density Rental Apartments Weighted Average Monthly Rent (a) per unit n/a n/a n/a $4,216 $4,216 Annual Rent per unit n/a n/a n/a $50,589 $50,589 Vacancy Allowance n/a n/a n/a 5.00% 5.00% Operating Expenses % gross revenue n/a n/a n/a 30.00% 30.00% Annual Net Operating Income per unit n/a n/a n/a $32,883 $32,883 Capitalization Rate (b) n/a n/a n/a 4.25% 4.25% Sales Value/Capitalized Value per unit $3,500,200 $1,794,500 $1,542,500 $773,714 $773,714 Total Units 7 50 100 100 100 Total Residential Value (c) total project $24,501,400 $89,725,000 $154,250,000 $77,371,412 $77,371,412 (a) See Figure 5 for details on how the per unit sale price was derived. (b) CBRE, H1 2018 Cap Rate Survey. Cap rates for the San José Metropolitan Area were between 3.75% and 4.25% for infill multifamily Class A. (c) Assuming all units are market rate. Total residential value is calculated by multiplying the per unit sales value/capitalized value (which is a weighted average) by the total number of units. Sources: CBRE, 2018; CoStar, 2018; Strategic Economics, 2018. BELOW MARKET RATE HOUSING BMR residential values at different AMI levels are summarized in Figure 8. Maximum sales prices and rents were provided by Hello Housing, the City’s BMR program administrator. Sales prices and rents for BMR units were calculated using the method and parameters established in the City’s Policy and Procedures Manual for Administering Deed Restricted Affordable Housing Units (“BMR Manual”).13 An income capitalization approach is also applied to BMR units to derive total residential value. 12 As mentioned above, the CBRE Investor’s Cap Rate Survey (H1, 2018) estimates the cap rate for infill multifamily Class A in San José Metro Area to range from 3.75 to 4.25%. 13 Maximum sales price calculations incorporate a 10% down payment, as well as an interest rate based on a 10-year rolling average for 30- year fixed-rate mortgages, according to data from Freddie Mac. Resale prices for existing BMR units are determined by the City. Annual housing costs associated with BMR rental units, including rent, utility costs, parking fees, and other costs, may not in sum exceed 30% of the annual income associated with the income target for which the unit is designated. 15 FIGURE 8. BELOW MARKET RATE RESIDENTIAL VALUES, BY PROTOTYPE AND AMI LEVEL Prototype 1 Prototype 2 Prototype 3 Prototype 4 Prototype 5 Income Target for Pricing BMR Units Detached Single Family Small Lot Single Family/ Townhomes Condominium Lower Density Rental Apartments Higher Density Rental Apartments 30% AMI (Extremely Low) n/a n/a n/a $116,806 $116,806 50% AMI (Very Low) n/a n/a n/a $211,968 $211,968 60% AMI (Low)* n/a n/a n/a $260,224 $260,224 90% AMI (Median)* $483,270 $344,879 $322,981 n/a n/a 110% AMI (Moderate)* $612,662 $462,872 $435,374 n/a n/a *Per policy, the maximum price for BMR units for low income is set at 60% AMI, median income at 90% AMI, and moderate income at 110% AMI. Note: All values are weighted averages, according to each prototype’s unit mix. Affordable sale prices and rents were provided by the City of Cupertino and Hello Housing, based on 2018 Santa Clara County income and rent limits, published by the California Tax Credit Allocation Committee, and the 2018 Santa Clara County maximum utility allowance, published by HUD. RETAIL COMMERCIAL Retail lease assumptions were developed from Costar listings for comparable ground floor retail spaces in Cupertino, with capitalization rates reported by CBRE for the San José Metro Area. The annual net operating income and capitalized value were calculated based on the assumptions shown in Figure 9. 16 FIGURE 9. RETAIL REVENUE ASSUMPTIONS AND CAPITALIZED VALUE Unit New Retail (NNN) Assumptions Monthly Rent, Triple Net (a) Per SF $4.25 Vacancy Percent 10% Operating Expenses Percent Pass through Capitalization Rate Percent 7.00% Capitalized Value Gross Annual Retail Income Per SF $51.00 Less Retail Vacancy Per SF -$5.10 Less Operating Expenses Per SF $0.00 Annual Net Operating Income Per SF $45.90 Capitalized Value Per SF $655.71 (a) Based on recent lease transactions in Cupertino for recently constructed ground-floor retail. Under a triple net lease (NNN) the tenant pays operating expenses, including real estate taxes, building insurance, and maintenance (the three "nets") on the property in addition to the rents. (b) Based on the CBRE H1 2018 Cap Rate Survey. Cap rates for the San José Metropolitan Area were between 4.5% to 5.5% for (Class A) and 6.25% to 7.25% (Class B) for Neighborhood Retail. Source: CBRE, 2018; Costar, 2018; Strategic Economics, 2018. 17 DEVELOPMENT COSTS The development costs incorporated into the pro forma analysis include land costs, hard costs (construction materials and labor), soft costs, and financing costs. Cost assumptions are summarized in Figure 10 and described below. LAND COSTS A critical factor for development feasibility is the cost of land. To determine the market value of sites zoned for residential use in Cupertino, Strategic Economics interviewed developers and reviewed recent pro formas for similar development projects in Cupertino and nearby communities. Recognizing that one of the key factors that drives the value of the site is the permitted density, this analysis assumes that sites zoned for single family detached homes are valued at $9 million per acre ($207 per square foot), while sites zoned for higher-density housing are valued at $10 million per acre ($230 per square foot). Note that these values are approximations for the purposes of the feasibility analysis; in reality, the value of any particular site is likely to vary based on its location, amenities, and property owner expectations. HARD COSTS Hard costs are based on Strategic Economics’ review of pro formas for similar development projects, as well as interviews with developers active in Cupertino and surrounding cities. The assumptions for hard costs, shown in Figure 10, include estimates for basic site improvements and construction costs for residential areas, retail areas, and parking structures. It should be noted that construction costs have been escalating rapidly in the Bay Area in the last several years14; project feasibility is highly sensitive to changes in construction cost assumptions. SOFT COSTS AND FINANCING COSTS Soft costs include items such as architectural fees, engineering fees, insurance, taxes, legal fees, accounting fees, marketing costs, developer overhead, and city fees, as shown in Figure 10. City fees and other development impact fees were calculated for the individual prototypes based on data provided by City staff. Detailed fee calculations are shown in Figure 21. Other soft costs were estimated based on standard industry ratios, calculated as a percentage of hard costs. 14 Terner Center for Housing Innovation, UC Berkeley. Understanding the Drivers of Rising Construction Costs in California (Ongoing Research), https://ternercenter.berkeley.edu/construction-costs. 18 FIGURE 10: DEVELOPMENT COST ASSUMPTIONS Metric Estimate Land Costs Land zoned for single-family per site acre $9 million Land zoned for townhomes/multi-family/mixed-use per site acre $10 million Hard Costs Site Costs (demo, infrastructure, etc.) per site sq. ft. $30 Residential Area Single Family (includes 2-car garage) per gross sq. ft. $95 Townhomes (includes 2-car garage) per gross sq. ft. $150 Stacked condominiums (Type V) per gross sq. ft. $275 Stacked apartments (Type V) per gross sq. ft. $235 Higher density apartments (Type 3 modified) per gross sq. ft. $300 Retail Area (Including T.I) per gross retail sq. ft. $130 Surface parking per space $10,000 Podium parking per space $35,000 Soft Costs Architectural, Engineering, Consulting % of hard costs 6% Taxes, Insurance, Legal, Accounting % of hard costs 3% Other % of hard costs 3% Contingency % of hard costs 5% Developer Overhead and Fees % of hard costs 4% City Permits and Fees (a) Prototype 1 per unit $153,022 Prototype 2 per unit $83,463 Prototype 3 per unit $67,755 Prototype 4 per unit $65,949 Prototype 5 per unit $67,241 Financing Costs Financing % of hard and soft costs 6% (a) Includes City fees and permits, school district fees, and sanitation district fees paid on the residential and retail component of each prototype for market rate units. Includes housing mitigation fee for the retail component. Sources: Developer interviews, 2018; City of Cupertino, 2018; Cupertino School District and Fremont High School District, 2018; Strategic Economics, 2018. 19 Key Results This section summarizes the findings of the financial feasibility analysis under different inclusionary housing scenarios for each prototype. Figure 11 and Figure 12 demonstrate the return obtained by each prototype, compared to the minimum threshold for feasibility. Figure 21 shows development costs by type and detailed City fees. Figure 22 through Figure 26 provide the pro forma results for each prototype. Ownership residential development can feasibly support higher inclusionary requirements than rental development. While growth in apartment rents has reportedly started to plateau in Santa Clara County in the last year, ownership prices (including condominium prices) continue to increase, making it generally more feasible to build ownership projects.15 Detached single-family development (Prototype 1) can support an inclusionary requirement of 15%, 20%, or the payment of Housing Mitigation Fees. As shown in Figure 11, the single-family detached Prototype 1 shows positive project revenues for Scenarios 1, 2, and 4, achieving a return on cost (ROC) well above the minimum threshold of 10%. Recent sales prices of newly constructed single-family homes in Cupertino are sufficient to offset development costs as well as support inclusionary requirements or the payment of Housing Mitigation Fees. However, the single-family detached prototype cannot support an inclusionary requirement of 25% (Scenario 3), which generates a return of less than 1%. Figure 22 provides more detailed pro forma results for this prototype. Small lot/townhome development (Prototype 2) can also support all inclusionary requirement of 15%, 20%, or the payment of Housing Mitigation Fees. As shown in Figure 11, Prototype 2 shows positive project revenues for Scenarios 1, 2, and 4, achieving a return exceeding the minimum threshold of 15% required for feasibility. Although there has been limited townhome construction in recent years in Cupertino, recent townhome re-sales suggest that prices for new construction would generate sufficient revenues to offset development costs as well as support any inclusionary requirement or the payment of Housing Mitigation Fees. Figure 23 provides more detailed pro forma results for this prototype. A mixed-use condominium prototype (Prototype 3) can support inclusionary requirements of 15%, 20%, or the payment of Housing Mitigation Fees. As shown in Figure 11, Prototype 3 shows positive project revenues for Scenarios 1, 2, and 4, achieving a return well above the minimum threshold of 15%. Despite the lack of recent condominium construction in Cupertino, condominium re-sales suggest that prices for new construction would support any of the scenarios that impose an inclusionary requirement or the payment of in-lieu fees. Figure 24 provides more detailed pro forma results for this prototype. The lower density mixed-use apartment prototype (Prototype 4) is nearly feasible as a 100% market- rate project. Without any BMR requirements, the lower density rental prototype achieves a yield on cost of 4.5%, below the minimum requirement of 4.75%, as shown in Figure 12. The lower density rental prototype does not generate sufficient revenues to support inclusionary requirements or in-lieu fees under current rents and costs. Figure 25 provides the pro forma for this prototype. 15 Mercury News, Louis Hansen, May 16, 2018. Bay Area condo market heats up as alternative to pricey homes. https://www.mercurynews.com/2018/05/16/bay-area-condo-market-heats-up-as-alternative-to-pricier-homes/ 20 The higher density rental multifamily prototype (Prototype 5) can support Housing Mitigation Fee payments (Scenario 4) but cannot feasibly provide inclusionary BMR units under current market rents, construction costs, and land costs. Prototype 5 achieves a higher YOC than Prototype 4, largely due to the greater efficiencies of a higher density project, and is financially feasible in Scenario 1 and Scenario 4 (see Figure 12). Figure 26 provides more detailed pro forma results. The lower density mixed-use apartment prototype (Prototype 4) can feasibly provide up to 15% inclusionary BMR units if it could command 15% higher revenues or if construction and land costs were reduced by 15%. If a lower density rental project were able to achieve higher revenues (15% higher) on the apartment units and on the ground-floor retail space, as shown in Figure 13 and Figure 14, the project could feasibly accommodate an inclusionary requirement of 15% BMR units. Alternatively, if a development project were able to secure a construction bid and purchase a site that reduced these costs by 15%, the lower density mixed-use apartment prototype could feasibly provide 15% inclusionary BMR units (see Figure 15 and Figure 16). The higher density mixed-use apartment prototype (Prototype 5) can feasibly provide inclusionary BMR units if it can command 10% higher revenues or if construction and land costs were reduced by 5%. If a higher density rental project can achieve 10% higher rents on the apartments and retail space, the project can feasibly accommodate an inclusionary requirement of 15% BMR units (see Figure 17 and Figure 18). In another scenario, if a higher density mixed-use apartment could secure a construction bid and site that is 5% less expensive, this prototype could also feasibly provide 15% inclusionary BMR units (see Figure 19 and Figure 20). 21 FIGURE 11: RETURN ON COST FOR OWNERSHIP PROTOTYPES BY INCLUSIONARY HOUSING SCENARIO Inclusionary Housing Scenarios Prototype 1: Prototype 2: Prototype 3: Single Family Detached Small Lot SF/Townhouse Condominiums Minimum Required Return 10-15% 18-20% 18-20% Scenario 0 (No Requirements) 31% 41% 38% Scenario 1 (Existing Policy) 15% 26% 23% Scenario 2 (20% Inclusionary) 14% 21% 19% Scenario 3 (25% Inclusionary) 1% 16% 14% Scenario 4 (In-Lieu Fees) 28% 37% 33% Source: Strategic Economics, 2019. FIGURE 12: YIELD ON COST UNDER DIFFERENT INCLUSIONARY HOUSING SCENARIOS FOR MULTI-FAMILY RENTAL PROTOTYPES 4 AND 5 Inclusionary Housing Scenarios Prototype 4: Prototype 5: Lower Density Rental Higher Density Rental Minimum Required Yield on Cost 4.75%-5.25% 4.75%-5.25% Scenario 0 (No Requirements) 4.52% 4.93% Scenario 1 (15% Inclusionary) 4.22% 4.63% Scenario 2 (20% Inclusionary) 4.10% 4.50% Scenario 3 (25% Inclusionary) 3.94% 4.34% Scenario 4 (In Lieu Fees) 4.40% 4.76% Source: Strategic Economics, 2019. 22 FIGURE 13: YIELD ON COST UNDER DIFFERENT REVENUE ASSUMPTIONS FOR LOWER DENSITY MULTI-FAMILY RENTAL (PROTOTYPE 4) WITH 15% BMR REQUIREMENT Revenue Assumptions Monthly Market Rate Apt. Rent per Unit Monthly Retail Rent per SF Yield on Cost Feasibility Results Current Apartment and Retail Rents $4,216 $4.25 4.22% Not Feasible Increased Rents (15% Higher Revenues) $4,848 $4.89 4.82% Feasible Source: Strategic Economics, 2019. FIGURE 14: FEASIBILITY OF LOWER DENSITY MULTI-FAMILY RENTAL PROTOTYPE (PROTOTYPE 4) WITH 15% INCLUSIONARY BMR REQUIREMENT AND INCREASED REVENUES Source: Strategic Economics, 2019. 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% Current Apartment and Retail Rents Increased Rents (15% Higher Apartment and Retail Revenues)Profit (Yield on Cost) Minimum Threshold for Feasibility of 4.75% 23 FIGURE 15: YIELD ON COST UNDER DIFFERENT COST ASSUMPTIONS FOR LOWER DENSITY MULTI-FAMILY RENTAL (PROTOTYPE 4) WITH 15% BMR REQUIREMENT Cost Assumptions Construction Cost per Unit Land Cost per Unit Yield on Cost Feasibility Results Current Costs $385,958 $250,000 4.22% Not Feasible Reduced Costs (15% Lower Costs) $328,064 $212,500 4.90% Feasible Source: Strategic Economics, 2019. FIGURE 16: FEASIBILITY RESULTS OF LOWER DENSITY MULTI-FAMILY RENTAL PROTOTYPE (PROTOTYPE 4) WITH 15% INCLUSIONARY BMR REQUIREMENT AND LOWER COSTS Source: Strategic Economics, 2019. 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% Current Costs Reduced Costs (15% Lower Costs)Yield on CostMinimum Threshold for Feasibility of 4.75% 24 FIGURE 17: YIELD ON COST UNDER DIFFERENT REVENUE ASSUMPTIONS FOR HIGHER DENSITY MULTI-FAMILY RENTAL (PROTOTYPE 5) WITH 15% BMR REQUIREMENT Revenue Assumptions Monthly Market Rate Apt. Rent per Unit Monthly Retail Rent per SF Yield on Cost Feasibility Results Current Rents $4,216 $4.25 4.63% Not Feasible Increased Rents (10% Higher Revenues) $4,637 $4.68 4.91% Feasible Source: Strategic Economics, 2019. FIGURE 18: FEASIBILITY RESULTS OF HIGHER DENSITY MULTI-FAMILY RENTAL PROTOTYPE (PROTOTYPE 5) WITH 15% INCLUSIONARY BMR REQUIREMENT AND HIGHER REVENUES Source: Strategic Economics, 2019. 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% Current Rents Increased Rents (10% Higher Apartment and Retail Revenues)Yield on Cost Minimum Threshold for Feasibility of 4.75% 25 FIGURE 19: YIELD ON COST UNDER DIFFERENT COST ASSUMPTIONS FOR HIGHER DENSITY MULTI-FAMILY RENTAL (PROTOTYPE 5) WITH 15% BMR REQUIREMENT Cost Assumptions Construction Cost per Unit Land Cost per Unit Yield on Cost Feasibility Results Current Costs $460,195 $131,579 4.63% Not Feasible Reduced Costs (5% Lower Costs) $437,185 $125,000 4.85% Feasible Source: Strategic Economics, 2019. FIGURE 20: FEASIBILITY RESULTS OF HIGHER DENSITY MULTI-FAMILY RENTAL PROTOTYPE (PROTOTYPE 5) WITH 15% INCLUSIONARY BMR REQUIREMENT AND LOWER COSTS Source: Strategic Economics, 2019. 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% Current Costs Reduced Costs (5% Lower)Yield on Cost Minimum Threshold for Feasibility of 4.75% 26 FIGURE 21. DETAILED CALCULATION OF THE CITY OF CUPERTINO’S PERMITS AND FEES FOR EACH PROTOTYPE (PER UNIT) Prototype 1 Prototype 2 Prototype 3 Prototype 4 Prototype 5 Detached Single Family Small Lot Single Family/Townhome Condominium Lower Density Rental Apartments Higher Density Rental Apartments Planning Fees Planning Applications $9,210 $1,289 $645 $400 $400 CEQA $3,571 $2,447 $1,223 $1,223 $1,223 Consultant Review $2,111 $296 $148 $148 $148 Housing Mitigation Fee (Non-residential only) $0 $0 $1,188 $1,188 $1,782 Public Works Fees Transportation Impact Fee $6,177 $3,380 $4,374 $4,374 $4,871 Grading $420 $59 $29 $29 $29 Tract Map $1,350 $189 $94 $94 $94 Plan Check and Inspection $543 $76 $38 $38 $38 Storm Drain Fees $4,902 $501 $367 $354 $312 Parkland Dedication (a) $105,000 $60,000 $54,000 $54,000 $54,000 Building Division Fees Building Fees $11,428 $10,592 $1,664 $1,133 $1,199 Construction Tax $752 $752 $1,075 $1,075 $1,237 Other Fees School District Fees (b) $7,012 $3,506 $2,826 $1,808 $1,823 Sanitary Sewer District Connection Permit Fee $350 $350 $70 $70 $70 Stormwater Management Fee $197 $28 $14 $14 $14 Estimated City Fees, Total Per Unit $153,022 $83,463 $67,755 $65,949 $67,241 (a) Parkland dedication fees waived for affordable units. (b) Based on the average of Cupertino School District and Fremont Union High School District school fees. Sources: City of Cupertino, 2018; Fremont Union School District; Cupertino School District; Cupertino Sanitary Sewer District, 2018. 27 FIGURE 22: FINANCIAL FEASIBILITY RESULTS FOR SINGLE-FAMILY DETACHED PROTOTYPE 1 Scenario 0 (No BMR Req.) Scenario 1 (15% On-Site) Scenario 2 (20% On-Site) Scenario 3 (25% On-Site) Scenario 4 (In-Lieu Fees) Total Units 7 7 7 7 7 Market Rate Units 7 6 6 5 7 Affordable Units 0 1 1 2 0 Fractional Units 0 0.05 0.4 0 0 Revenues Residential Capitalized Value $24,501,400 $21,484,470 $21,484,470 $18,596,932 $24,501,400 Per Unit $3,500,200 $3,069,210 $3,069,210 $2,656,705 $3,500,200 Development Costs Land Costs Land Costs $14,000,000 $14,000,000 $14,000,000 $14,000,000 $14,000,000 Per Unit $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 Direct Costs Gross Residential Area (a) $2,775,564 $2,775,564 $2,775,564 $2,775,564 $2,775,564 Subtotal Direct Costs $2,775,564 $2,775,564 $2,775,564 $2,775,564 $2,775,564 Per Unit $396,509 $396,509 $396,509 $396,509 $396,509 Per Gross Sq. Ft. $95 $95 $95 $95 $95 Indirect Costs City Fees (b) $1,071,155 $991,537 $1,169,211 $861,155 $1,532,693 Other Soft Costs (c) $582,868 $582,868 $582,868 $582,868 $582,868 Per Unit $83,266.92 $83,266.92 $83,266.92 $83,266.92 $83,266.92 Subtotal Indirect Costs $1,654,023 $1,574,405 $1,752,079 $1,444,023 $2,115,561 Per Unit $236,289 $224,915 $250,297 $206,289 $302,223 Financing $265,775 $260,998 $271,659 $253,175 $293,468 Per Unit $37,968 $37,285 $38,808 $36,168 $41,924 Total Development Costs $18,695,363 $18,610,968 $18,799,302 $18,472,763 $19,184,593 Per Unit $2,670,766 $2,658,710 $2,685,615 $2,638,966 $2,740,656 Per Gross Sq. Ft. $640 $637 $643 $632 $657 Feasibility Net Revenue (d) $5,806,037 $2,873,502 $2,685,168 $124,169 $5,316,807 Return on Cost (e) 31% 15% 14% 1% 28% (a) Includes costs for site prep and 2-car parking garage (b) Figure 14 shows detailed City fees. Includes fractional in-lieu housing mitigation fee for scenario 1 and 2. Parkland dedication fees waived for affordable units. (c) Includes architectural fees, engineering fees, insurance, taxes, legal fees, accounting fees, marketing costs, and developer overhead (d) Net revenue is the project total revenue minus total development costs. (d) Return on cost is the net revenue, divided by total development costs. (e) Return on cost is the net revenue, divided by total development costs. Source: Strategic Economics, 2018. 28 FIGURE 23: FINANCIAL FEASIBILITY RESULTS FOR SMALL LOT SINGLE-FAMILY/TOWNHOUSE PROTOTYPE 2 Scenario 0 (No BMR Req.) Scenario 1 (15% On-Site) Scenario 2 (20% On-Site) Scenario 3 (25% On-Site) Scenario 4 (In-Lieu Fees) Total Units 50 50 50 50 50 Market Rate Units 50 42 40 37 50 Affordable Units 0 8 10 13 0 Revenues Residential Capitalized Value $89,725,000 $79,265,818 $75,818,755 $72,312,696 $89,725,000 Retail Capitalized Value $0 $0 $0 $0 $0 Total Capitalized Value $89,725,000 $79,265,818 $75,818,755 $72,312,696 $89,725,000 Per Unit $1,794,500 $1,585,316 $1,516,375 $1,446,254 $1,794,500 Development Costs Land Costs Land Costs $33,333,333 $33,333,333 $33,333,333 $33,333,333 $33,333,333 Per Unit $666,667 $666,667 $666,667 $666,667 $666,667 Direct Costs Site Prep/Demo $4,356,000 $4,356,000 $4,356,000 $4,356,000 $4,356,000 Gross Residential Area (a) $15,651,677 $15,651,677 $15,651,677 $15,651,677 $15,651,677 Subtotal Direct Costs $20,007,677 $20,007,677 $20,007,677 $20,007,677 $20,007,677 Per Unit $400,154 $400,154 $400,154 $400,154 $400,154 Per Gross Sq. Ft. $192 $192 $192 $192 $192 Indirect Costs City Fees (b) $4,173,154 $3,693,154 $3,573,154 $3,393,154 $5,986,154 Other Soft Costs (c) $4,201,612 $4,201,612 $4,201,612 $4,201,612 $4,201,612 Per Unit $84,032 $84,032 $84,032 $84,032 $84,032 Subtotal Indirect Costs $8,374,767 $7,894,767 $7,774,767 $7,594,767 $10,187,767 Per Unit $167,495 $157,895 $155,495 $151,895 $203,755 Financing $1,702,947 $1,674,147 $1,666,947 $1,656,147 $1,811,727 Per Unit $34,059 $33,483 $33,339 $33,123 $36,235 Total Development Costs $63,418,723 $62,909,923 $62,782,723 $62,591,923 $65,340,503 Per Unit $1,268,374 $1,258,198 $1,255,654 $1,251,838 $1,306,810 Per Gross Sq. Ft. $608 $603 $602 $600 $626 Feasibility Net Revenue (d) $26,306,277 $16,355,895 $13,036,032 $9,720,772 $24,384,497 Return on Cost (e) 41% 26% 21% 16% 37% (a) Includes 2-car parking garage (b) Figure 14 shows applicable city fees. Only Scenario 4 pays in-lieu housing mitigation fees. Parkland dedication fees waived for affordable units. (c) Includes architectural fees, engineering fees, insurance, taxes, legal fees, accounting fees, marketing costs, and developer overhead (d) Net revenue is the project total revenue minus total development costs. (d) Return on cost is the net revenue, divided by total development costs. (e) Return on cost is the net revenue, divided by total development costs. Source: Strategic Economics, 2018. 29 FIGURE 24: FINANCIAL FEASIBILITY RESULTS FOR CONDOMINIUM PROTOTYPE 3 Scenario 0 (No BMR Req.) Scenario 1 (15% On-Site) Scenario 2 (20% On-Site) Scenario 3 (25% On-Site) Scenario 4 (In-Lieu Fees) Total Units 100 100 100 100 100 Market Rate Units 100 85 80 75 100 Affordable Units 0 15 20 25 0 Revenues Residential Capitalized Value $154,250,000 $136,743,959 $130,983,540 $125,110,729 $154,250,000 Retail Capitalized Value $6,557,143 $6,557,143 $6,557,143 $6,557,143 $6,557,143 Total Capitalized Value $160,807,143 $143,301,101 $137,540,683 $131,667,871 $160,807,143 Per Unit $1,608,071 $1,433,011 $1,375,407 $1,316,679 $1,608,071 Development Costs Land Costs Land Costs $28,571,429 $28,571,429 $28,571,429 $28,571,429 $28,571,429 Per Unit $285,714 $285,714 $285,714 $285,714 $285,714 Direct Costs Site Prep/Demo $3,733,714 $3,733,714 $3,733,714 $3,733,714 $3,733,714 Gross Residential Area $50,703,125 $50,703,125 $50,703,125 $50,703,125 $50,703,125 Gross Retail Area $1,300,000 $1,300,000 $1,300,000 $1,300,000 $1,300,000 Parking $7,560,000 $7,560,000 $7,560,000 $7,560,000 $7,560,000 Subtotal Direct Costs $63,296,839 $63,296,839 $63,296,839 $63,296,839 $63,296,839 Per Unit $632,968 $632,968 $632,968 $632,968 $632,968 Per Gross Sq. Ft. $343 $343 $343 $343 $343 Indirect Costs City Fees (a) $6,775,479 $5,965,479 $5,695,479 $5,425,479 $10,398,879 Other Soft Costs (b) $13,292,336 $13,292,336 $13,292,336 $13,292,336 $13,292,336 Per Unit $132,923 $132,923 $132,923 $132,923 $132,923 Subtotal Indirect Costs $20,067,815 $19,257,815 $18,987,815 $18,717,815 $23,572,415 Per Unit $200,678 $192,578 $189,878 $187,178 $235,724 Financing $5,001,879 $4,953,279 $4,937,079 $4,920,879 $5,212,155 Per Unit $50,019 $49,533 $49,371 $49,209 $52,122 Total Development Costs $116,937,963 $116,079,363 $115,793,163 $115,506,963 $120,652,839 Per Unit $1,169,380 $1,160,794 $1,157,932 $1,155,070 $1,206,528 Per Gross Sq. Ft. $634 $630 $628 $626 $654 Feasibility Net Revenue (c) $43,869,180 $27,221,739 $21,747,520 $16,160,909 $40,154,304 Return on Cost (d) 38% 23% 19% 14% 33% (a) Figure 14 shows detailed city fees. In-lieu housing mitigation fees apply to non-residential sq. ft. and Scenario 4. Parkland dedication fees waived for affordable units. (b) Includes architectural fees, engineering fees, insurance, taxes, legal fees, accounting fees, marketing costs, and developer overhead. (c) Net revenue is the project total revenue minus total development costs. (d) Return on cost is the net revenue, divided by total development costs. Source: Strategic Economics, 2018. 30 FIGURE 25: FINANCIAL FEASIBILITY RESULTS FOR LOWER DENSITY RENTAL APARTMENTS PROTOTYPE 4 Scenario 0 (No BMR Req.) Scenario 1 (15% On-Site) Scenario 2 (20% On-Site) Scenario 3 (25% On-Site) Scenario 4 (In-Lieu Fees) Total Units 100 100 100 100 100 Market Rate Units 100 85 80 75 100 Affordable Units 0 15 20 25 0 Revenues Residential Net Operating Income $3,288,285 $2,942,477 $2,831,310 $2,691,717 $3,288,285 Retail Net Operating Income $459,000 $459,000 $459,000 $459,000 $459,000 Total Net Operating Income $3,747,285 $3,401,477 $3,290,310 $3,150,717 $3,747,285 Total Capitalized Value $83,928,555 $75,791,903 $73,176,197 $69,891,657 $83,928,555 Per Unit $839,286 $757,919 $731,762 $698,917 $839,286 Development Costs Land Costs Land Costs $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 Per Unit $250,000 $250,000 $250,000 $250,000 $250,000 Direct Costs Site Prep/Demo $3,267,000 $3,267,000 $3,267,000 $3,267,000 $3,267,000 Gross Residential Area $27,553,750 $27,553,750 $27,553,750 $27,553,750 $27,553,750 Gross Retail Area $1,300,000 $1,300,000 $1,300,000 $1,300,000 $1,300,000 Parking $7,560,000 $6,475,000 $6,475,000 $6,475,000 $7,560,000 Subtotal Direct Costs $39,680,750 $38,595,750 $38,595,750 $38,595,750 $39,680,750 Per Unit $396,808 $385,958 $385,958 $385,958 $396,808 Per Gross Sq. Ft. $338 $329 $329 $329 $338 Indirect Costs City Fees (a) $6,594,875 $5,784,875 $5,514,875 $5,244,875 $8,942,363 Other Soft Costs (b) $8,332,958 $8,105,108 $8,105,108 $8,105,108 $8,332,958 Per Unit $83,329.58 $81,051.08 $81,051.08 $81,051.08 $83,329.58 Subtotal Indirect Costs $14,927,832 $13,889,982 $13,619,982 $13,349,982 $17,156,520 Per Unit $149,278 $138,900 $136,200 $133,500 $171,565 Financing $3,276,515 $3,149,144 $3,132,944 $3,116,744 $3,410,236 Per Unit $32,765 $31,491 $31,329 $31,167 $34,102 Total Development Costs $82,885,097 $80,634,876 $80,348,676 $80,062,476 $85,247,506 Per Unit $828,851 $806,349 $803,487 $800,625 $852,475 Per Gross Sq. Ft. $707 $688 $685 $683 $727 Feasibility Net Revenue (c) $1,043,457 ($4,842,973) ($7,172,479) ($10,170,819) ($1,318,952) Yield on Cost (d) 4.5% 4.2% 4.1% 3.9% 4.4% (a) Appendix shows detailed city fees. Excludes affordable housing mitigation in-lieu fee, except in Scenario 4. Parkland dedication fees waived for affordable units. (b) Includes architectural fees, engineering fees, insurance, taxes, legal fees, accounting fees, marketing costs, and developer overhead. (c) Net revenue is the project total revenue minus total development costs. (d) Yield on cost is the total project net operating income divided by total development costs. Source: Strategic Economics, 2018. 31 FIGURE 26: FINANCIAL FEASIBILITY RESULTS FOR HIGHER DENSITY RENTAL APARTMENTS PROTOTYPE 5 Scenario 0 (No BMR Req.) Scenario 1 (15% On-Site) Scenario 2 (20% On-Site) Scenario 3 (25% On-Site) Scenario 4 (In-Lieu Fees) Total Units 100 100 100 100 100 Market Rate Units 100 85 80 75 100 Affordable Units 0 15 20 25 0 Revenues Residential Net Operating Income $3,288,285 $2,942,477 $2,831,310 $2,691,717 $3,288,285 Retail Net Operating Income $688,500 $688,500 $688,500 $688,500 $688,500 Total Net Operating Income $3,976,785 $3,630,977 $3,519,810 $3,380,217 $3,976,785 Total Capitalized Value $87,207,126 $79,070,475 $76,454,769 $73,170,229 $87,207,126 Per Unit $872,071 $790,705 $764,548 $731,702 $872,071 Development Costs Land Costs Land Costs $13,157,895 $13,157,895 $13,157,895 $13,157,895 $13,157,895 Per Unit $131,579 $131,579 $131,579 $131,579 $131,579 Direct Costs Site Prep/Demo $1,719,474 $1,719,474 $1,719,474 $1,719,474 $1,719,474 Gross Residential Area $35,175,000 $35,175,000 $35,175,000 $35,175,000 $35,175,000 Gross Retail Area $1,950,000 $1,950,000 $1,950,000 $1,950,000 $1,950,000 Parking $8,190,000 $7,175,000 $7,175,000 $7,175,000 $8,190,000 Subtotal Direct Costs $47,034,474 $46,019,474 $46,019,474 $46,019,474 $47,034,474 Per Unit $470,345 $460,195 $460,195 $460,195 $470,345 Per Gross Sq. Ft. $401 $392 $392 $392 $401 Indirect Costs City Fees (a) $6,724,069 $5,914,069 $5,644,069 $5,374,069 $9,688,129 Other Soft Costs (b) $9,877,239 $9,664,089 $9,664,089 $9,664,089 $9,877,239 Per Unit $98,772 $96,641 $96,641 $96,641 $98,772 Subtotal Indirect Costs $16,601,308 $15,578,158 $15,308,158 $15,038,158 $19,387,168 Per Unit $166,013 $155,782 $153,082 $150,382 $193,872 Financing $3,818,147 $3,695,858 $3,679,658 $3,663,458 $3,985,299 Per Unit $38,181 $36,959 $36,797 $36,635 $39,853 Total Development Costs $80,611,823 $78,451,384 $78,165,184 $77,878,984 $83,564,835 Per Unit $806,118 $784,514 $781,652 $778,790 $835,648 Per Gross Sq. Ft. $688 $669 $667 $664 $713 Feasibility Net Revenue (c) $6,595,303 $619,090 ($1,710,416) ($4,708,755) $3,642,291 Yield on Cost (d) 4.9% 4.6% 4.5% 4.3% 4.8% (a) Appendix shows detailed city fees. Excludes affordable housing mitigation in-lieu fee, except in Scenario 4. Parkland dedication fees waived for affordable units. (b) Includes architectural fees, engineering fees, insurance, taxes, legal fees, accounting fees, marketing costs, and developer overhead. (c) Net revenue is the project total revenue minus total development costs. (d) Yield on cost is the total project net operating income divided by total development costs. Source: Strategic Economics, 2018. 32 Peer Cities Strategic Economics researched BMR housing programs in peer cities, including: San Jose, Santa Clara, Campbell, Mountain View, Sunnyvale, and Palo Alto. The key findings from the research are explained below and summarized in Figure 27. INCLUSIONARY REQUIREMENTS As shown in Figure 27, all of the cities have inclusionary requirements for ownership housing. They are typically set at 15%, with the exception of Mountain View and Sunnyvale, which have requirements of 10% and 12.5%, respectively. For rental housing, Palo Alto and Sunnyvale have a housing mitigation fee, but no inclusionary requirements. However, both cities are considering revising their policies on rental housing. TARGET INCOME For inclusionary requirements on ownership housing, all of the peer cities have targeted moderate- income households, roughly defined as between 80 and 120% of AMI. For rental housing, the income target is typically low-income (up to 80% AMI), although San Jose also targets very low-income households (up to 50% AMI). Santa Clara has targeted moderate-income households for both ownership and rental housing requirements. Cities that charge housing mitigation fees on rental or ownership housing have set their fees based on nexus studies that measure the affordable housing needs of very-low, low-, and moderate-income households. None of the peer cities have targeted extremely-low income households for their inclusionary requirements. However, city staff from Sunnyvale and San Jose have indicated that they are providing funding to develop housing for extremely-low income households through the revenues they have collected from housing mitigation fees, in-lieu fees, and other housing funds. Local revenues are often combined with Santa Clara County Measure A funds – which are specifically targeted to extremely-low income households – as well as 9% and 4% Low Income Housing Tax Credits (LIHTC) and Section 8 vouchers from the Santa Clara County Housing Authority. ALTERNATIVE MEANS OF COMPLIANCE All of the cities prefer that units are built onsite, but they allow alternative means of complying with inclusionary requirements. Developers can typically satisfy the requirement by providing units off-site, paying in-lieu fees, or dedicating land for affordable housing. However, in some cases, the developer must first demonstrate that the inclusionary requirement is not feasible. For example, the City of Palo Alto requires that the applicant present “substantial evidence to support a finding of infeasibility” and of “feasibility of any proposed alternative.” In other cities, like Mountain View, Sunnyvale, and Santa Clara, developers must receive approval from the City Council for the alternative. In Sunnyvale and San Jose, developers that pursue an alternative to the onsite inclusionary requirement must provide a higher number of affordable units. 33 FIGURE 27: INCLUSIONARY HOUSING REQUIREMENTS AND HOUSING MITIGATION FEES IN PEER CITIES City Inclusionary Requirement Target Income for BMR Policy Housing Mitigation Fee/In Lieu Fees Alternatives to compliance Ownership Rental Ownership Rental Ownership Rental Cupertino 15% 15% 1/2 of BMR units at Median (100% AMI) and 1/2 of BMR units at Moderate (120% AMI)* 60% of BMR units at Very Low (50% AMI) and 40% of BMR units at Low (60% AMI) -Single family: $17.82/sf -Small lot single family/Townhome: $19.60/sf -Multifamily attached: $23.76/sf -Multifamily Attached (up to 35 du/ac): $23.76/sf -Multifamily attached (over 35 du/ac): $29.70/sf Onsite units are preferred, but alternatives may be possible with City Council approval. These include: on-site BMR rental units where ownership units or a fee is required; purchase of off-site units to be dedicated/rehabbed as for-sale or rental BMR units; development of off-site units to be dedicated as for-sale or rental BMR units; land for development of affordable housing. An Affordable Housing Plan is required. Mountain View 10% 15% Moderate (80 - 120% AMI) Low (50-80% AMI) In-lieu fee of 3% of sales price $34/sf (applies to fractional units only) Onsite units are preferred, but City Council can approve other alternatives. Sunnyvale 12.5% None Moderate (Below 120% AMI) Low (Below 80% AMI) In-lieu fee of 7% of sales price $17/sf For ownership units, onsite units are preferred. With Council approval, developers may provide alternatives if they result in a higher number of BMR units. San Jose 15% 15% Moderate (Below 120% AMI) 9% Mod (80% AMI) 6% VLI (30- 50% AMI) In-lieu fee of $153,000 per unit. $17.41/sf for projects of 3 to 19 units in size Developers have the option of providing units off-site or paying in-lieu fees, but the affordable housing requirement is 20%, and the target income is lower. Santa Clara 15% 15% Moderate (Below 100% AMI) Moderate (Below 100% AMI) $20-$30/sf, depending on housing type Alternatives include dedication of land for affordable housing, development of affordable units at an off-site location, or some combination thereof, with approval from City Council through a Development Agreement. Campbell 15% 15% Moderate (Below 110% AMI) Low (Below 70% AMI) $34.50/sf for projects of 6 units or less None Developers can dedicate land or pay in lieu fees. Palo Alto 15% None 2/3 BMR units at 80- 100% AMI and 1/3 BMR units at 100- 120% AMI Mod (80- 120% AMI) Low (50-80% AMI) VLI (30-50% AMI) $50-$75/sf depending on housing type $20/sf Developers can dedicate land, pay in lieu fees, provide rental units within the ownership project, convert or rehabilitate affordable housing units. They must first demonstrate that the inclusionary requirement is not feasible. *Sales prices set at 110% for BMR moderate income unit and 90% for a BMR median income unit. Source: Interviews with City staff, BMR housing ordinances, Strategic Economics, 34 NON-RESIDENTIAL LINKAGE FEE The City is considering updating non-residential fees, otherwise known as commercial linkage fees, on new workplace buildings (office, R&D, hotel, and retail development projects). Linkage fees are used to mitigate the impacts of an increase in affordable housing demand associated with a net increase in worker households. as employees at new non-residential developments seek housing nearby. The funds raised by the linkage fees are deposited into a housing fund specifically reserved for use by a local jurisdiction to increase the supply of affordable housing for the workforce. Linkage fees are one of several funding sources that jurisdictions can use to help meet affordable housing needs of new workers. The City first adopted linkage fees for office and R&D projects in 1992, and expanded the program to apply to retail and hotel developments in 2004. Following a 2015 nexus study update completed by Keyser Marston Associates, the City amended the fees for all three uses to their current levels--$23.76 for office/R&D uses, and $11.88 for hotel and retail uses.16 This memo report provides updated policy analysis, including a financial feasibility analysis, and a review of current non-residential linkage fees in neighboring cities to establish a recommendation on updated linkage fees in Cupertino. Approach METHODOLOGY The financial feasibility of establishing updated non-residential linkage fees in Cupertino was tested using a pro forma model that measures profit for the developer or investor. Yield on cost (YOC) is a commonly used metric indicating the profitability of a non-residential project. The pro forma model tallies all development costs, including land, direct construction costs, indirect costs (including financing), and developer fees. Revenues from lease rates or hotel room rates are the basis for calculating annual income from the new non-residential development. The total operating costs are subtracted from the total revenues to calculate the annual net operating income. The YOC is then estimated by dividing the annual net operating income by the total development costs. The fee levels were then added as an additional development cost to measure the resulting change in the YOC. DEVELOPMENT PROTOTYPES The analysis estimates the feasibility of potential linkage fees for three non-residential prototypes: office/R&D, hotel, and retail. The building characteristics of each development prototype, including size, density (floor-area-ratio), and parking assumptions are based on a review of projects that were recently built, and in planning stages in Cupertino, as well as recently built and pipeline projects in surrounding areas. Based on the development activity in Cupertino, the following is assumed regarding each prototype: • Office/R&D: Based on a review of market activity in the City, recent and proposed developments in neighboring cities, it is assumed that the office/R&D development project would be a speculative building serving the tech industry. 16 Keyser Marston Associates, “City of Cupertino: Non-residential Jobs-Housing Nexus Analysis,” City of Cupertino, April 2015. 35 • Hotel: Newer hotel development projects in Cupertino and surrounding areas are typically upscale, select-service chains that serve business travelers. • Retail: The retail development prototype is assumed to be a small low-density retail center. The details regarding the size, density (floor-area ratio), parking, and other key assumptions for each prototype are summarized in Figure 28 below. FIGURE 28. DESCRIPTION OF DEVELOPMENT PROTOTYPES Prototype Description Office/R&D Hotel Retail Project Type Class A Office Speculative Building Select-Service Upscale Business Hotel Neighborhood Retail Shopping Center Parcel Size (Sq. Ft.) 174,240 87,120 21,780 Parcel Size (Acres) 4 2 0.5 Total Stories 4 5 1 Floor-Area Ratio (without parking) (a) 1.50 1.20 0.35 Gross Building Area (GSF) 261,360 104,544 7,623 Efficiency Ratio (b) 90% n/a 90% Net area (NSF) 235,224 n/a 6,861 Number of rooms n/a 140 n/a Total Parking Spaces 825 155 30 Surface 93 70 30 Structured Garage 732 0 0 Underground 0 85 0 Parking Ratio (per room) n/a 1.1 n/a Parking Ratio (per 1,000 SF) 3.2 1.5 4.0 Notes: (a) The Floor-Area Ratio (FAR) is often used as a measure of density. In this analysis, it is calculated as the gross building area, not including parking, divided by the parcel size. (b) The Efficiency Ratio refers to the ratio of gross building area to ne leasable area. An efficiency ratio of 90% means that 90% of the gross building area is leasable space. In hotels, revenue is informed by room count, rather than square footage, and therefore the net area is omitted. DEVELOPMENT COSTS The development costs incorporated into the pro forma analysis include hard costs, (construction materials and labor) land costs, soft costs (indirect costs), and financing costs. HARD COSTS Hard costs are based on Strategic Economics’ review of pro formas for similar development projects, industry publications, and interviews with developers with projects in Cupertino and nearby jurisdictions. The assumptions for hard costs by prototype are described in Figure 29. They include estimates for basic site improvements, construction costs for the building, and costs for parking by type. In addition, the cost of construction includes a tenant improvement allowance for office/R&D and retail uses, as well as a Furniture, Fixtures, and Equipment (FF&E) allotment for hotel uses, which are both typical for this market. 36 FIGURE 29. HARD COSTS ASSUMPTIONS BY PROTOTYPE Cost Category Metric Office/R&D Hotel Retail Site Prep Per Site Sq. Ft. $3 $3 $3 Construction Costs Per Gross Building Sq. Ft. $300 $250 $165 Per Room $342,472 Parking Costs Cost per Space Surface $7,000 Structured Garage $30,000 Underground $60,000 Land Costs Entitled Land Per Site St. Ft. $137.74 $137.74 $75.00 Per Acre $6,000,000 $6,000,000 $3,267,000 Tenant Improvement Allowance Per Building Net Sq. Ft. $75 n/a $35 Furniture, Fixtures, Equipment Per Room n/a $35,000 n/a Source: Costar, 2019; HVS Consulting, 2017; review of pro formas for comparable development projects in Santa Clara County; interviews with developers in Cupertino and Santa Clara County, 2019; Strategic Economics, 2019. LAND COSTS One of the critical cost factors for a non-residential development project is land cost. To determine the land value of sites zoned for commercial uses, Strategic Economics analyzed recent sales transactions and estimates for properties in Santa Clara County and interviewed developers. Land values are similar for both hotel and office development in the Cupertino area, based on a review of recent transactions. Comparable values for office and hotel sites are showed in Figure 22 below. As shown, the land values typically range from $120 to $185 per square foot. One exception in the Cinnabar Street land sale for over $200 per square foot, which is in the Diridon Station Area, and planned for higher intensity development projects than the prototypes for this study. For the purposes of this analysis, it is assumed that sites zoned for office/R&D or hotel would have a land value of $138 per square foot ($6 million per acre). There are fewer land sales transactions for sites that are entitled for low-density retail development. However, a review of smaller retail property transactions shows that typically the land values are usually under $100 per square foot. For the purposes of this analysis, it is assumed that a low-density retail site in Cupertino would have a land value of $75 per square foot (about $3.2 million per acre). 37 FIGURE 30. LAND COMPARABLES FOR OFFICE AND HOTEL Property Jurisdiction Year Sold Acres Estimated Value Per Sq. Ft. Land Proposed Land Use 4995 Patrick Henry Dr. Santa Clara 2016 48.6 $118 Office 357-387 Cinnabar St. (a) San Jose 2017 5.6 $210 Office 767 Mathilda Ave. Sunnyvale 2017 3.28 $146 Hotel 10801 N. Wolfe Rd. (b) Cupertino 2018 1.72 $185 Hotel Notes: (a) 357-387 Cinnabar St. is in the Diridon Station area, and part of Google's transit village, which will have a significantly higher FAR than the office prototype. (b) Estimated value for 10801 N. Wolfe Rd. is based on valuation from CBRE in 2018 rather than a sales transaction. Sources: Costar, 2019; CBRE, 2018; SOFT COSTS Soft costs (often referred to as indirect costs) include items such as architectural fees, engineering fees, insurance, taxes, legal fees, accounting fees, city fees, and marketing costs. Cupertino’s Traffic Impact Fee was calculated based on the City’s fee schedule. Other permits and fees were calculated for each prototypes based on estimates generated for new development projects as part of the feasibility analysis for the Vallco Specific Plan. Soft costs were estimated based on standard industry ratios, calculated as a percentage of hard costs. These assumptions are shown in Figure 31. FIGURE 31. SOFT COST ASSUMPTIONS BY PROTOTYPE Soft Cost Metric Office/R&D Hotel Retail City Permits and Fees Traffic Impact Fee Office Per Gross Building Sq. Ft. $17.40 $4.70 $9.94 Hotel Per Room $3,387 Other Permits and Fees Per Gross Building Sq. Ft. $48.01 $38.34 $57.16 Subtotal City Permits and Fees Per Gross Building Sq. Ft. $65.41 $43.04 $67.10 Other Soft Costs Arch, Eng., & Consulting % of Hard Costs 5% 5% 5% Taxes, Insurance, Legal, Acct % of Hard Costs 3% 3% 3% Developer Overhead % of Hard Costs 4% 4% 4% Subtotal Other Soft Costs (Excluding Fees) % of Hard Costs 12% 12% 12% Construction Financing % of Hard + Soft Costs 6% 6% 6% Source: Review of pro formas for comparable development projects in Cupertino, 2019; Individual developer interviews, 2019; Vallco Specific Plan Feasibility Analysis, 2018; Strategic Economics, 2019. 38 REVENUES Revenue assumptions for each prototype are informed by a range of resources, including commercial broker reports, hospitality industry reports, and Costar, as well as from interviews with developers and brokers active in Cupertino and Santa Clara County. They are summarized in Figure 32. Office: For office rents, Strategic Economics reviewed Cupertino’s office market and the greater Santa Clara County office market. The largest office development in Cupertino has been the Apple Park project, which is a build-to-suit development specifically intended for Apple. There has been minimal recent speculative office development in Cupertino targeting other users. (Main Street was the only such project completed in the last five years, and most of the space has also been leased to Apple.) Buildings that are leased by Apple typically achieve rents of $4 per square foot per month (NNN), compared to lease rates of $4.50-$5.00 per square foot for tech office buildings in neighboring West San Jose and Sunnyvale (see Figure 33). This is due to the fact that landlords are willing to accept a lower rent for a long-term lease with Apple, due to the low risk associated with a major corporation. According to brokers and developers, there is potential to achieve higher rents for buildings that attract other smaller tech office tenants. For the purposes of this analysis, the rental rate assumption is $4.50 per square foot per month (NNN). While this rental rate is higher than the current average office rent in Cupertino, it is a reasonable estimate for a new, multi-tenant tech office building in the Silicon Valley. Hotel: The assumptions of hotel revenues are based on a combination of data sources, including interviews with hotel developers in Cupertino, and data from STR, a hotel research firm that tracks hotel room rates, vacancy rates, and revenues per available room for properties in Cupertino (see Figure 32). Retail: Strategic Economics reviewed leases from 2018 and 2019 for retail spaces in Cupertino, as summarized in Figure 34. Average lease rates (asking NNN) were between 4.25 to 5.42. All of these recent leases were for restaurant spaces on Stevens Creek Boulevard. For the purposes of this analysis, it is assumed that the retail space would lease for about $4 per square foot per month (NNN). 39 FIGURE 32. REVENUE ASSUMPTIONS BY PROTOTYPE Prototypes Metric Assumption Retail Annual Rent (NNN) Per Net Sq. Ft. $48.00 Vacancy Rate 5% Operating Expenses % of Gross Revenue 10% Annual Net Operating Income Per Net Sq. Ft. $40.80 Office/R&D Annual Rent (NNN) Per Net Sq. Ft. $54.00 Vacancy Rate 5% Operating Expenses % of Gross Revenue 7% Annual Net Operating Income Per Net Sq. Ft. $47.52 Hotel Gross annual Room Income RevPAR (a) $79,154 Gross Annual Other Revenue (b) Per Room $27,704 Gross Revenue Per Room $106,858 Vacancy Rate (c) n/a Operating Expenses 70% of Gross Revenue ($74,800) Annual Net Operating Income $32,057 Source: Costar, 2019; STR Trends Report, 2019; Individual developer interviews, 2019; Strategic Economics, 2019. Notes: (a) RevPAR is a measure of revenue per room, calculated as occupancy percentage times average daily rate. (b) Other Revenue for hotels based on data from STR Consulting, and from hotel developer interviews. (c) Vacancy is already reflected in RevPAR estimate. FIGURE 33. OFFICE COMPARABLES Project Name Address City Year Built Mo. Rent/ Sq. Ft. Lease Type Source Lot 11 @ Santana Row 500 Santana Row San Jose 2017 $4.45 NNN Costar Santana Row 700 Santana Row San Jose 2019 $4.45 NNN Costar Bldg. 5 Pathline Park (a) 700 Mary Ave Sunnyvale 2019 $4.95 NNN Costar Main Street 19319 Stevens Ck. Cupertino 2016 $3.75-$4.00 NNN Interviews FIGURE 34: RETAIL COMPARABLES IN CUPERTINO Project Name Address Year Built Mo. Rent/ Sq. Ft. Lease Type Source The Biltmore 20030-80 Stevens Creek Blvd 2015 $4.50 NNN (asking) Costar Main Street 19369 Stevens Creek Blvd 2016 $5.42 full service Costar Saich Way Station 20803 Stevens Creek Blvd 2015 $4.25 NNN (asking) Costar 40 YIELD ON COST THRESHOLDS In order to understand how the introduction of non-residential linkage fees impacts financial feasibility, the yield on cost (YOC) results can be compared to an investor’s expectations of return for each type of development. The YOC thresholds for this analysis were established relative to capitalization rates (cap rates) for each product type in the Bay Area. The cap rate, which is measured by dividing net income generated by a property by the total project value, is a commonly used metric to estimate potential returns. To ensure that the financial analysis is conservative and does not reflect peak market conditions, the thresholds selected for determining project feasibility are slightly higher than the published cap rates. Office/R&D projects with a YOC of above 6.0% and hotel projects with a YOC above 7.5% were considered feasible in this analysis. Retail projects were considered feasible with a YOC higher than 7.0%. These thresholds are summarized in the Figure 35 below. FIGURE 35: YIELD ON COST THRESHOLDS BY PROTOTYPE Prototype Yield on Cost Threshold Published Cap Rate Office/R&D (Class AA) 6.0% 4.50%-5.25% Hotel (Select Service) 7.5% 7.0%-8.0% Retail 7.0% 6.25-7.25% Source: CBRE Cap Rate Survey, H2 2018; HVS, 2019; Developer interviews. RESULTS Using the YOC thresholds defined above, the following summarizes the results of the financial feasibility of different linkage fee scenarios for each prototype. The pro formas for each prototype is shown in Figure 39, Figure 40, and Figure 41. OFFICE/ R&D As shown in Figure 36 and Figure 39, the prototypical office/R&D project can support the existing linkage fee of $23.76 per square foot, which generates a YOC of 6.04%. A linkage fee of $25 (Scenario 2) would also be feasible. However, the prototype cannot feasibly support a fee higher than $30 per square foot. At this fee level, the prototype is only marginally feasible, with a yield on cost of 5.99%. FIGURE 36. SUMMARY OF FINANCIAL FEASIBILITY OF OFFICE/R&D PROTOTYPE Fee Scenario Fee Level Per Sq. Ft. Yield on Cost Office Feasibility Current Linkage Fee $23.76 6.04% Feasible Scenario 1 (No Fee) $0 6.25% Feasible Scenario 2 $25 6.03% Feasible Scenario 3 $30 5.99% Marginally Feasible Note: Office/R&D projects must have a minimum yield on cost of 6.0% to be considered feasible Source: Strategic Economics, 2019. HOTEL As summarized in Figure 37 for hotel projects, the existing linkage fee of $11.88 is financially feasible, with a yield of cost of 7.65%. A fee of $15 per square foot (Scenario 2) is marginally feasible, resulting 41 in a YOC of 7.46%. A higher linkage fee of $20 per square foot (Scenario 3) is not feasible (see Figure 40). FIGURE 37. SUMMARY OF FINANCIAL FEASIBILITY OF HOTEL PROTOTYPE Fee Scenario Fee Level Per Sq. Ft. Yield on Cost Hotel Feasibility Current Linkage Fee $11.88 7.50% Feasible Scenario 1 (No Fee) $0 7.65% Feasible Scenario 2 $15 7.46% Marginally Feasible Scenario 3 $20 7.39% Not Feasible Note: Hotel projects must have a minimum yield on cost of 7.5% to be considered feasible Source: Strategic Economics, 2019. RETAIL The financial feasibility analysis shows that retail developments are not financially feasible under current market conditions. Even without a linkage fee (Scenario 1), the retail project achieves a yield on cost that is lower than the threshold of 7.0 % (see Figure 38 and Figure 41). There may be cases in which a retail project could support the current Housing Mitigation Fee if it were combined with other land uses (residential or office) in a mixed-use project. FIGURE 38. SUMMARY OF FINANCIAL FEASIBILITY OF RETAIL PROTOTYPE Fee Scenario Fee Level Per Sq. Ft. Yield on Cost Retail Feasibility Current Linkage Fee $11.88 6.35% Not Feasible Scenario 1 (No Fee) $0 6.48% Not Feasible Scenario 2 $15 6.32% Not Feasible Scenario 3 $20 6.26% Not Feasible Note: Retail projects must have a minimum yield on cost of 7.0% to be considered feasible. Source: Strategic Economics, 2019. 42 FIGURE 39. OFFICE/R&D PRO FORMA RESULTS Office/R&D Site and Building Characteristics Parcel Size (Sq. Ft.) 174,240 Parcel Size (acres) 4.00 Total Stories 4 - 5 stories Building Type Steel FAR (without parking) 1.50 Revenues Income $12,702,096 Net Operating Income $11,177,844 Project Costs Land Costs $24,000,000 Direct Costs Site Prep $522,720 Gross Building Area $78,408,000 Tenant Improvement Allowance $17,641,800 Parking $22,611,000 Subtotal Direct Costs $119,183,520 per net Sq. Ft. $507 per gross Sq. Ft. $456 Indirect Costs Soft Costs $14,302,022 City Permits and Fees (excl. non-residential linkage) $12,548,925 Subtotal Indirect Costs $26,850,948 Financing Costs $8,762,068 Total Development Cost Including Land (TDC) $178,796,536 per net Sq. Ft. $760 Fee as % of Total Development Cost Scenario 1: No Linkage Fee 0% Scenario 2: Linkage Fee of $25/Sq. Ft. 2.84% Scenario 3: Linkage Fee of $30/Sq. Ft. 3.53% Current Linkage Fee ($23.76/Sq. Ft.) 3.36% Yield on Cost (NOI/TDC) Scenario 1: No Linkage Fee 6.25% Scenario 2: Linkage Fee of $25/Sq. Ft. 6.03% Scenario 3: Linkage Fee of $30/Sq. Ft. 5.99% Current Linkage Fee ($23.76/Sq. Ft.) 6.04% Source: Strategic Economics, 2019. 43 FIGURE 40. HOTEL PRO FORMA RESULTS Hotel Site and Building Characteristics Parcel Size (Sq. Ft.) 87,120 Parcel Size (acres) 2.00 Total Stories 5 stories Building Type Concrete FAR (without parking) 1.20 Revenues Income $15,494,376 Net Operating Income $4,648,313 Project Costs Land Costs $12,000,000 Direct Costs Site Prep $261,360 Gross Building Area $26,136,000 FF&E $5,075,000 Parking $5,590,000 Subtotal Direct Costs $37,062,360 per gross Sq. Ft. $355 Indirect Costs Soft Costs $4,447,483 City Permits and Fees (excl. non-residential linkage) $4,499,679 Subtotal Indirect Costs $8,947,162 Financing Costs $2,760,571 Total Development Cost Including Land (TDC) $60,770,093 per room $419,104 Fee as % of Total Development Cost Scenario 1: No Linkage Fee 0% Scenario 2: Linkage Fee of $15/Sq. Ft. 1.69% Scenario 3: Linkage Fee of $20/Sq. Ft. 2.52% Current Linkage Fee ($11.88/Sq. Ft.) 2.00% Yield on Cost (NOI/TDC) Scenario 1: No Linkage Fee 7.65% Scenario 2: Linkage Fee of $15/Sq. Ft. 7.46% Scenario 3: Linkage Fee of $20/Sq. Ft. 7.39% Current Linkage Fee ($11.88/Sq. Ft.) 7.50% Source: Strategic Economics, 2019. 44 FIGURE 41. RETAIL PRO FORMA RESULTS Retail Site and Building Characteristics Parcel Size (Sq. Ft.) 21,780 Parcel Size (acres) 0.50 Total Stories 1 story Building Type Concrete FAR (without parking) 0.35 Revenues Income $329,314 Net Operating Income $279,917 Project Costs Land Costs $1,633,500 Direct Costs Site Prep $65,340 Gross Building Area $1,257,795 Tenant Improvement Allowance $266,805 Parking $213,444 Subtotal Direct Costs $1,803,384 per net Sq. Ft. $263 per gross Sq. Ft. $237 Indirect Costs Soft Costs $216,406 City Permits and Fees (excl. non-residential linkage) $511,470 Subtotal Indirect Costs $727,876 Financing Costs $151,876 Total Development Cost Including Land (TDC) $4,316,636 per net Sq. Ft. $629 Fee as % of Total Development Cost Scenario 1: No Linkage Fee 0% Scenario 2: Linkage Fee of $15/Sq. Ft. 1.74% Scenario 3: Linkage Fee of $20/Sq. Ft. 2.58% Current Linkage Fee ($11.88/Sq. Ft.) 2.05% Yield on Cost (NOI/TDC) Scenario 1: No Linkage Fee 6.48% Scenario 2: Linkage Fee of $15/Sq. Ft. 6.32% Scenario 3: Linkage Fee of $20/Sq. Ft. 6.26% Current Linkage Fee ($11.88/Sq. Ft.) 6.35% Source: Strategic Economics, 2019. 45 Peer Cities A large share of municipalities in San Mateo and Santa Clara counties, particularly cities that are desirable locations for tech and biotech companies, have adopted non-residential linkage fees. Figure 42 summarizes non-residential linkage fees in these jurisdictions. For office/R&D uses, most cities have set linkage fees between $15 and $25 per square foot. The majority of cities have lower fee levels for retail uses, typically in the range of $5 to $10 per square foot. The non-residential linkage fees for hotel uses are usually between $5 and $15 per square foot. The cities of Palo Alto and San Francisco have higher linkage fees than the rest of the local jurisdictions. These cities also have higher average retail and office rents, and hotel room rates than other Bay Area locations. Many municipalities provide exemptions or fee reductions for the following types of projects: • Smaller non-residential projects. For example, non-residential linkage fees do not apply to projects adding less than 5,000 gross square feet in Redwood City, San Carlos, San Mateo City, Colma, or Burlingame. Projects adding less than 3,500 gross square feet in unincorporated land in San Mateo County, and less than 10,000 gross square feet in Menlo Park or East Palo Alto are also exempt. Some cities also tie their fee to building size on a sliding scale. Mountain View offers a 50% fee reduction for office projects under 10,000 square feet, and hotel or retail projects under 25,000 square feet. Sunnyvale also offers a 50% fee discount for the first 25,000 square feet of any project. • Prevailing wage. Multiple jurisdictions, including Redwood City, San Carlos, San Mateo City, and San Mateo County, provide 25% fee reductions for projects that pay prevailing wage. • Community-serving facilities. Most cities exempt projects such as hospitals/clinics, child care, public, educational, religious, and/or non-profit uses. Additionally, projects that are replacing property damaged from natural disasters are also often exempted. It is common for jurisdictions to allow alternative means of complying with non-residential linkage fee requirements. Developers can typically satisfy the requirement by providing affordable housing either on or off-site, or by dedicating land for affordable housing. East Palo Alto and Palo Alto allow for the requirement to be met by either converting market-rate units to affordable units, or by rehabilitating existing affordable units. In most cases, the applicant must first prove that an alternative is necessary. For example, Palo Alto requires that the applicant present “substantial evidence to support a finding of infeasibility” of paying the fee, and of “feasibility of any proposed alternative.” Many cities have either enacted or updated their fees in the last four years, and fees are typically adjusted annually, based on either ENR’s Construction Cost Index for the San Francisco Bay area, or on the national Consumer Price Index. 46 FIGURE 42. NON-RESIDENTIAL LINKAGE FEES (PER GROSS S. FT. OF NET NEW SPACE) IN NEARBY CITIES Jurisdiction Office/ R&D/ Medical Office Hotel Retail/ Restaurant/ Services Date Fee Was Adopted Burlingame (a) $18 - $25 $12 $7 2017 Colma $5 $5 $5 2006 Cupertino $23.76 $11.88 $11.88 2015 East Palo Alto $10.72 none none 2016 Foster City $27.50 $12.50 $6.25 2016 Los Altos $25 $15 $15 2018 Menlo Park $17.79 $9.66 $9.66 2018 Mountain View (a) $13.14 - $26.27 $1.41 - $2.81 $1.41 - $2.81 2014 Palo Alto $36.22 $21.08 $21.08 2017 Redwood City $20 $5 $5 2015 San Bruno $12.50 $12.50 $6.25 2015 San Carlos $20 $10 $5 2017 San Francisco (b) $19.04 - $28.57 $21.39 $26.66 1996 San Mateo City $25 $10 $7.50 2016 San Mateo County $25 $10 $5 2016 Santa Clara City (a) $10 - $20 $5 $5 2017 South San Francisco $15 $5 $2.50 2018 Sunnyvale (a) $8.25 - $16.50 $8.25 $8.25 2015 Source: City Ordinances and Fee Schedules; 21 Elements, 2019; Silicon Valley at Home, 2019; Strategic Economics, 2019 Notes: (a) Fees vary based on project size in four cities: Burlingame, Mountain View, Santa Clara, and Sunnyvale. Hotel and retail projects under 25,000 sq. ft, and office projects under 10,000 sq. ft. in Mountain View are charged the lower fee; In Burlingame, Santa Clara and Sunnyvale, office projects under 50,000 sq. ft., 20,000 sq. ft. and 25,000 sq. ft. respectively pay the lower fee. (b) San Francisco's fees for R&D are $19.04 per sq. ft., while its fees for office are $28.57 per sq ft. Small Enterprise Workspace and Production/Distribution/Repair fees are $22.46 per sq. ft. 47 KEY TAKEAWAYS Based on the economic feasibility analysis, Strategic Economics offers the following conclusions regarding the City Council’s direction on the BMR Housing Program. Is it financially feasible to increase the inclusionary requirements to 20% or 25%? • For ownership housing prototypes, it would be financially feasible to raise the inclusionary requirement from 15% to 20%. The analysis indicates that the existing requirement of 15% and a higher requirement of 20% are economically feasible for single-family detached, small lot single-family/townhouse, and condominium developments. • Ownership housing prototypes can support a higher Housing Mitigation Fee per square foot. The analysis shows that single-family detached, small lot single-family/townhouse, and condominium developments could support paying the maximum housing mitigation fee (in-lieu fee). The maximum nexus-based fees are $30.10-$30.60 per square foot for single-family detached; $35.60 per square foot for small lot single-family/townhouse development; and $35.10 per square foot for condominiums. The City’s Housing Mitigation Fees cannot exceed the maximum housing impact fees justified by the 2015 Nexus Study (see Figure 43 below). Exceeding the amounts shown below would require conducting a new nexus study. FIGURE 43: CURRENT AND MAXIMUM HOUSING MITIGATION FEES BASED ON NEXUS FOR OWNERSHIP PROTOTYPES Prototype Current Housing Mitigation Fee Maximum Nexus- Based Fee Return on Cost At Maximum Fee Is Maximum Fee Feasible? Single-Family Detached $17.82 $30.10-$30.60 25.5% Yes Small Lot SF/ Townhouse $19.60 $35.60 34.2% Yes Condominium $23.76 $35.10 31.4% Yes Source: Keyser Marston Associates (2015). Residential Below Market Rate Housing Nexus Analysis • The rental apartment prototypes cannot feasibly support an inclusionary requirement under current rents and construction/land costs. The higher density rental housing prototype can support payment of Housing Mitigation Fees of nearly $30 per square foot, but cannot feasibly provide inclusionary BMR units under today’s rents, construction costs and land costs. However, with increases in rental revenues or decreases in construction costs and land costs, rental housing development could potentially support the current inclusionary requirement of 15%. Can the inclusionary housing policy be amended to include units for extremely low income/ disabled persons? The results from the feasibility analysis show that rental development in Cupertino cannot feasibly provide BMR units on-site under current market conditions. An increase in revenues or a decrease in construction and land costs could make it possible for lower density and higher density rental prototypes to provide 15% inclusionary BMR units for very low income and low income households. Under current market conditions, it is not financially feasible for the inclusionary housing policy to include units for extremely low-income households. 48 However, there are strategies that could allow the City to generate funding for the development of extremely low-income units, and for disabled persons. City staff from Sunnyvale and San Jose have indicated that they are providing funding to develop housing for extremely low-income households through the revenues they have collected from housing mitigation fees, in-lieu fees, and other housing funds. These local revenues are often combined with Santa Clara County Measure A funds – which are specifically targeted to extremely-low income households – as well as 9% and 4% Low Income Housing Tax Credits (LIHTC) and Section 8 vouchers from the Santa Clara County Housing Authority. Can the inclusionary housing policy be amended to include median-income and moderate-income units in rental projects? The results from the feasibility analysis show that rental housing development in Cupertino is not feasible with an inclusionary requirement of 15% under current conditions (see Figure 25 and Figure 26). However, a 15% increase in project revenues or a decrease in construction and land costs of 15% could make the low density rental prototype feasible with a 15% BMR requirement. The higher-density rental prototype can feasibly provide Housing Mitigation Fees at the current level. An increase in revenues of 10% or a decrease in construction and land costs of 5% can make the higher density rental prototype feasible with a 15% BMR requirement. Adding a requirement for median-income and moderate-income units in addition to the existing inclusionary requirement of 15% would not be economically feasible for the rental prototypes. For this reason, it is not financially feasible for the inclusionary housing policy to be amended to also require units for median-income and moderate-income households. Can the BMR requirements for non-residential development (linkage fees) be increased for office/R&D, hotel, and retail developments? • For office and R&D development, it would be possible to raise the Housing Mitigation Fees to a level between $25 to $30 per square foot. As shown in Figure 39, the office/R&D prototype is feasible with a non-residential linkage fee of $25 per square foot. At $30 per square foot, the prototype achieves a yield on cost that is slightly under the threshold required for feasibility. • For hotel development, it may be possible to increase the Housing Mitigation Fees to between $12 and $15 per square foot. At the current fee level of $11.88, a hotel project is feasible (Figure 37). With a fee of $15 per square foot, the project achieves a yield on cost that is slightly lower than the threshold for feasibility. • The financial feasibility analysis shows that retail developments are not financially feasible under current market conditions. Even without a Housing Mitigation Fees, the retail project achieves a yield on cost that is lower than the threshold of 7.0% (see Figure 38). There may be cases in which a retail project could support the current Housing Mitigation Fee if it were combined with other land uses (residential or office) in a mixed-use project. 49 APPENDIX The appendix includes additional information on: • Recent single-family sales for new construction in Cupertino (Figure A-1) • Recent townhome re-sales in Cupertino (Figure A-2) • Recent condominium re-sales in Cupertino (Figure A-3) • Recent rental project comparables in Cupertino and surrounding cities (Figure A-4) 50 FIGURE A-1: RECENTLY BUILT SINGLE FAMILY COMPARABLES Address City Lot Size Beds Baths Price Square Feet Price/Sq. Ft. Year Built 21825 Lomita Ave Cupertino 9,671 5 4.5 $3,380,000 3,891 $869 2016 21800 Almaden Ave Cupertino 11,098 5 3.5 $3,220,000 3,555 $906 2017 10240 Lebanon Dr Cupertino 9,048 5 4.5 $4,100,000 3,623 $1,132 2018 10257 Glencoe Dr Cupertino 9,375 5 4.5 $3,593,800 3,727 $964 2016 7425 Heatherwood Dr Cupertino 9,396 5 4 $3,650,000 3,763 $970 2017 805 Rose Blossom Dr Cupertino 8,660 5 4.5 $2,980,000 3,339 $892 2017 10308 N Stelling Rd Cupertino 9,612 5 4.5 $3,350,000 3,769 $889 2017 10381 Bret Ave Cupertino 9,374 5 4.5 $3,270,000 3,727 $877 2016 20861 Dunbar Dr Cupertino 9,750 5 3.5 $3,998,000 3,949 $1,012 2016 Weighted Average $3,512,995 3,705 $946 Sources: Redfin, 2018; Strategic Economics, 2018. Sources: Redfin, 2018; Strategic Economics, 2018. 51 FIGURE A-2: RECENTLY BUILT TOWNHOME COMPARABLES Address City Lot Size Beds Baths Price Square Feet Price/Sq. Ft. Year Built 10280 Park Green Ln #836 Cupertino 2,176 3 2.5 $1,760,000 1,670 $1,054 2006 10281 Torre Ave #817 Cupertino 2,176 3 2.5 $1,800,000 1,670 $1,078 2006 10700 Stevens Canyon Rd Cupertino 1,570 3 2.5 $1,852,000 2,239 $827 2007 20652 Gardenside Cir Cupertino 1,480 3 2.5 $1,680,000 1,704 $986 1990 20679 Gardenside Cir Cupertino 1,440 3 2 $1,665,000 1,640 $1,015 1990 23020 Stonebridge St Cupertino 3,348 3 2 $1,830,000 2,202 $831 1980 23030 Stonebridge Cupertino 3,348 3 2 $1,698,000 2,202 $771 1980 22981 Stonebridge Cupertino 3,348 3 2 $1,710,000 2,202 $777 1980 10910 Lucky Oak St Cupertino 1,312 3 3.5 $1,780,000 2,082 $855 1980 10826 Northridge Sq Cupertino 1,487 3 2 $1,455,000 1,389 $1,048 1978 10107 Lamplighter Sq Cupertino 1,753 3 2.5 $1,740,000 1,727 $1,008 1975 10174 Potters Hatch Cmn Cupertino 1,575 3 2.5 $1,816,000 1,785 $1,017 1974 10020 Mossy Oak Ct Cupertino 1,662 3 2.5 $1,680,000 1,645 $1,021 1972 10142 Amador Oak Ct Cupertino 1,854 3 2.5 $1,600,000 1,614 $991 1970 Weighted Averages: All years $1,728,250 1,841 $934 Since 2000 $1,808,896 1,860 $970 Sources: Redfin, 2018; Strategic Economics, 2018. 52 FIGURE A-2: RECENT RE-SALES OF TOWNHOME COMPARABLES Address City Beds Baths Price Square Feet Price/Sq. Ft. Year Built 20488 Stevens Creek Blvd #2207 Cupertino 2 2 $1,338,000 1,171 $1,143 2003 20488 Stevens Creek Blvd #2309 Cupertino 2 2 $1,430,000 1,171 $1,221 2003 19999 Stevens Creek Blvd #209 Cupertino 2 2 $1,266,000 1,039 $1,218 2003 19999 Stevens Creek Blvd #101 Cupertino 2 2 $1,265,000 1,192 $1,061 2003 19503 Stevens Creek Blvd #317 Cupertino 2 2 $1,400,000 1,158 $1,209 2006 19503 Stevens Creek Blvd #251 Cupertino 2 2 $1,200,000 1,087 $1,104 2006 19503 Stevens Creek Blvd #139 Cupertino 2 2 $1,468,000 1,130 $1,299 2006 19503 Stevens Creek Blvd #261 Cupertino 2 2 $1,530,000 1,359 $1,126 2006 19503 Stevens Creek Blvd #331 Cupertino 3 2 $1,728,000 1,502 $1,150 2006 20488 Stevens Creek Blvd #1813 Cupertino 3 3 $1,930,000 1,766 $1,093 2003 20488 Stevens Creek Blvd #1401 Cupertino 3 2 $1,480,000 1,578 $938 2003 Weighted Averages: 2-Bd $1,367,604 1163 $1,171 3-Bd $1,720,858 1615 $1,060 Sources: Redfin, 2018; Strategic Economics, 2018. 53 FIGURE A-3: RECENT RE-SALES OF CONDOMINIUM COMPARABLES Address City Beds Baths Price Square Feet Price/Sq. Ft. Year Built 20488 Stevens Creek Blvd #2207 Cupertino 2 2 $1,338,000 1,171 $1,143 2003 20488 Stevens Creek Blvd #2309 Cupertino 2 2 $1,430,000 1,171 $1,221 2003 19999 Stevens Creek Blvd #209 Cupertino 2 2 $1,266,000 1,039 $1,218 2003 19999 Stevens Creek Blvd #101 Cupertino 2 2 $1,265,000 1,192 $1,061 2003 19503 Stevens Creek Blvd #317 Cupertino 2 2 $1,400,000 1,158 $1,209 2006 19503 Stevens Creek Blvd #251 Cupertino 2 2 $1,200,000 1,087 $1,104 2006 19503 Stevens Creek Blvd #139 Cupertino 2 2 $1,468,000 1,130 $1,299 2006 19503 Stevens Creek Blvd #261 Cupertino 2 2 $1,530,000 1,359 $1,126 2006 19503 Stevens Creek Blvd #331 Cupertino 3 2 $1,728,000 1,502 $1,150 2006 20488 Stevens Creek Blvd #1813 Cupertino 3 3 $1,930,000 1,766 $1,093 2003 20488 Stevens Creek Blvd #1401 Cupertino 3 2 $1,480,000 1,578 $938 2003 Weighted Averages: 2-Bd $1,367,604 1163 $1,171 3-Bd $1,720,858 1615 $1,060 Sources: Polaris Pacific, 2018; Redfin, 2018; Strategic Economics, 2018. 54 FIGURE A-4: RECENTLY BUILT RENTAL COMPARABLES Rent Per Unit Unit Size Rent Per Sq. Ft. Project Name City Year Built Stories Studios 1-BD 2-BD 3-BD Studios 1-BD 2-BD 3-BD Studios 1-BD 2-BD 3-BD Nineteen 800 Cupertino 2014 6 $4,026 $5,477 0 1,339 1,562 $3.01 $3.51 Main Street Lofts Cupertino 2018 4 $3,508 $3,995 916 1,044 $3.83 $3.83 Verve Mountain View 2017 3 $3,860 $5,071 $6,195 737 1,112 1,286 $5.24 $4.56 $4.82 Domus on the Boulevard Mountain View 2015 4 $3,868 $4,876 788 1,061 $4.91 $4.60 Elan Mountain View Mountain View 2018 4 $3,860 $5,071 $6,195 737 1,112 1,286 $5.24 $4.56 $4.82 Montrose Mountain View 2016 4 $3,816 $5,443 739 1,154 $5.16 $4.72 Madera Apartments Mountain View 2013 4 $4,113 $5,510 849 1,181 $4.84 $4.67 Carmel the Village Mountain View 2013 5 $3,282 $3,623 $5,866 573 797 1,258 $5.73 $4.55 $4.66 6tenEAST Sunnyvale 2017 4 $3,309 $3,515 $4,414 $5,185 701 808 1,136 1,406 $4.72 $4.35 $3.89 $3.69 Naya Sunnyvale 2016 4 $3,250 $4,336 693 1,038 - $4.69 $4.18 481 On Mathilda Sunnyvale 2016 4 $3,098 $3,251 $4,160 701 781 1,174 $4.42 $4.16 $3.54 Encasa Apartments Sunnyvale 2016 3 $2,854 $3,356 $4,235 $5,854 572 856 1,163 1,688 $4.99 $3.92 $3.64 $3.47 Anton 1101 Sunnyvale 2015 4 $3,145 $3,280 $4,490 569 704 1,069 $5.53 $4.66 $4.20 2295-2305 Winchester Blvd Sunnyvale 2014 3 $3,371 $4,248 662 1,005 $5.09 $4.23 Ironworks Sunnyvale 2017 7 $3,520 $4,036 $5,109 . 784 1,174 1,365 $4.49 $3.44 $3.74 Solstice Sunnyvale 2013 6 $2,955 $3,329 $4,099 462 778 1,122 $6.40 $4.28 $3.65 Orchard City Lofts Campbell 2018 3 $2,946 $3,707 $4,817 607 924 1,237 $4.85 $4.01 $3.89 Revere Campbell Campbell 2015 5 $3,662 $3,912 $5,219 1,015 1,198 1,233 $3.61 $3.27 $4.23 Monticello Village Santa Clara 2016 6 $3,356 $3,244 $4,074 920 842 1,251 $3.65 $3.85 $3.26 Weighted Average $3,225 $3,568 $4,541 $5,516 677 790 1,137 1,383 $4.71 $4.49 $3.98 $3.98 Sources: Costar, 2018; Strategic Economics, 2018. EXHIBIT B Report Vallco Special Area Real Estate Market Assessment Prepared for: City of Cupertino Prepared by: Economic & Planning Systems, Inc. May 14, 2018 EPS #171128 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 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 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 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. 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. 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. 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. 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 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. 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 2007-2017201720122007 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. 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 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. 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 2006-2016Industry201620112006 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. 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) 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 Rate 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 20062007200820092010201120122013201420152016 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. 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% 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 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 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. 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) 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 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) 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 Rate 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. 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 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% 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 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 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 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 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 Rate 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 Rate 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 2000‐012000‐082001‐032001‐102002‐052002‐122003‐072004‐022004‐092005‐042005‐112006‐062007‐012007‐082008‐032008‐102009‐052009‐122010‐072011‐022011‐092012‐042012‐112013‐062014‐012014‐082015‐032015‐102016‐052016‐122017‐07 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. 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. 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. 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. 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. 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. 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. 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. 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 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 EXHIBIT C Vallco Property Owner, LLC Page 1 June 2018 _____________________________________________________________________________ To: Vallco Property Owner, LLC Attn: Reed Moulds, Managing Director From: The Concord Group Date: June 1st, 2018 Re: Analysis of Cost Reductions Associated with Reduced Retail in Vallco Town Center Project ___________________________________________________________________________________________ Vallco Property Owner, LLC (“VPO”) is pursuing the redevelopment of the Vallco Shopping Center in Cupertino, California (the “Site”) and on March 27th of this year submitted a mixed-use project known as “Vallco Town Center”. As part of that application, VPO has requested a “concession” under the State Density Bonus Law to allow the project to include 400,000 square feet of retail, rather than the normally required amount of 600,000 square feet. In order to qualify under the law, a concession must result in identifiable and actual cost reductions. The purposes of this report is to document the cost reductions that will be achieved by building 400,000 square feet of retail instead of 600,000 square feet. Our analysis was focused on: 1.Identifying the ideal, market-driven scale of retail development on the site, and; 2.Comparing key metrics regarding costs, feasibility and market risks/opportunities of the 400,000 square feet of retail included in the Vallco Town Center plan versus the 600,000 square feet of retail specified in the General Plan for the Site. The following memorandum and technical appendix exhibits attached outline The Concord Group’s (“TCG”) findings and conclusions: Market Feasibility Analysis, Depth of Demand and the Changing Nature of Retail Market Areas: For all retail product, the Retail Trade Area ("RTA"), represents the geographic source of competitive supply. For the subject property, the RTA is defined as zip codes effectively covering the City of Cupertino, parts of Sunnyvale and parts of Santa Clara. While market activity in the Primary Market Area (“PMA”), especially at key retail centers such as Westfield’s Valley Fair and Stanford Shopping Center, will influence retail demand at the Site, future potential retail tenants at the Site can expect to compete directly with other retail product within the RTA. (See map of the RTA and PMA below and in Exhibits 1 and 2) Vallco Property Owner, LLC Page 2 June 2018 Retail Market Performance: The RTA is currently home to 223,280 people, 12MM square feet of retail space, and more than $4 Billion of annual retail sales. o With ongoing strong job growth in the region, the RTA is expected to add more than 2,000 people each year through 2023 o As a high-affluence area proximate to the cities of San Francisco and San Jose and their dynamic retail offerings, the RTA currently sees leakage of retail expenditures. Although $6B of retail spending is done by households within the RTA, only $4B is spent in the area. The largest leakage comes from large-format big-box or ecommerce sales categories that have been concentrated and pushed out of the RTA given the reorganization of consumer behaviors and preferences over the past several decades. o The RTA has seen net absorption of only 76,000 square feet over the past year and negative net absorption for seven out of the past ten years, again a symptom of retail reorganization, consolidation and ecommerce impacting the landscape. o At current, vacancies in the RTA sit at 12.5%, significantly higher than the 4.3% across the PMA as a whole. o Retail rents have grown slowly over the past decade, hitting increases of 2.1% per year. o See Exhibits 2 & 3 for more detail. Changing Nature of Retail: Ecommerce has created seismic shift in the retail industry. According to the Census Bureau and the US Department of Commerce, the share of all retail spending conducted online has grown from 4.1% in 2010 to 10.0% this year with further growth to 17.1% projected through 2023. In real terms, this represents a cumulative drop of retail space demanded by the marketplace as sales (and resulting inventories, fulfillment, etc.) move increasingly online. o Despite a growing population, the impact of this further ecommerce growth will mean a negative demand of 390,000 square feet of retail through 2023. See Exhibit 4 for more detail. o Ecommerce, consolidation and eroding demand for traditional malls, shopping centers and key tenants have impacted a wide variety of retail spending categories. The result is a small list of protected retail spending classes/categories that offer experiential, immediate or entertainment opportunities suitable for inclusion in a 21st century retail project, most notably Food and Beverage, Health/Personal Care/Wellness/Fitness. Interestingly, these – and related – categories make up 72% of all retail spending in the region. These categories constitute the Site’s true target retail tenant types and shall be referred to in this report as “Key Categories”; project sizing decisions should ultimately be made based on the extent of demand from the Key Categories. Developer Reactions, Mixed Use Communities and Real World Examples: As the built environment adjusts to the new retail reality, developers are reacting to stay ahead of the trends and build for the new world. There are clear examples in the SF Bay Area alone. o Not far from the Site, a large developer is pursuing the development of a large mixed use master planned community. Originally contemplating 1.1MM square feet of retail anchored by high-end department stores amongst significant office, hotel and residential space, the developer is currently reworking the retail plan to focus on Food and Beverage/Entertainment Uses and reducing the overall retail footprint by as much as 20%. o Macerich has recently exited the JV Agreement on Candlestick Point redevelopment. Originally planned for 635,000 square feet of large format retail, in a JV between Fivepoint and Macerich, the mall development will no longer move forward due to concerns about the macro-economic retail environment. o See Exhibit 5 for more detail. Retail Demand Forecast: TCG has conducted a demand/opportunity analysis for new retail in the RTA over the next 5 years, a reasonable time frame for the buildout of 100% of the retail component of the Vallco Town Center project. Demand is made up of two component parts: o “Clawback” of retail spending categories currently leaking to other jurisdictions given lack of contemporary product, key tenants, or 24-hour environments. This analysis yields a cumulative demand for 309,000 square feet over the next five years, of which 203,000 square feet is in the Key Categories. See Exhibit 8, Page 1 o Demand resulting from new household and population growth. New people bring new spending and demand for new retail space. Vallco Property Owner, LLC Page 3 June 2018 This analysis yields a cumulative demand for 320,000 square feet of retail through 2022 and 208,000 square feet in the Key Categories. See Exhibit 8, Page 2 o All told, TCG forecasts the total demand throughout the entire RTA for the next 5 years to be 629,000 square feet of all retail types and 411,000 square feet in Key Categories. Retail Demand Capture: Given the narrowing of likely tenant types and the surge in online spending, on the tenant side competition is and will continue to be fierce for sales in the Key Categories. Furthermore, on the landlord side, the Site will be competing with other retail developments in the RTA for this total retail and Key Category forecasted demand. Given all of this – and the real pipeline that will compete for customers across the region using similar concepts and anchors – it is unreasonable to assume the subject property could capture 95-100% of the 629,000 square feet net new demand in the RTA for each of the next 5 years. Recommended Retail Footprint: TCG believes it is appropriate to assume the Site will capture between 60% and 65% of the total retail demand in the RTA over the next 5 years. Given the above factors, TCG believes the Site can absorb ±400,000 square feet of retail (approximately 63% total forecasted retail demand) during its development period and recommends no more than 400,000 square feet as the project’s retail footprint. Cost Reduction, 400,000 sq. ft. vs. 600,000 sq. ft. In simple terms, building less retail space in the project would significantly reduce the project’s overall costs. Construction costs for retail components within dense mixed-use residential/office over retail projects with parking currently reach upwards of $800 per square foot excluding land (as recently attested to by the City of Cupertino’s economic consultant, Economic & Planning Systems, Inc.). o Using a conservative $770 per gross square foot cost, a reduction of 200,000 square feet of retail would generate a primary cost reduction of $154,000,000. However, because a 600,000 square foot retail project would exceed the projected retail demand for the Site, adjustments must be made to economic assumptions for the difficult-to-lease 200,000 retail square feet surplus. VPO would in this case have two options: (1) Allow the surplus 200,000 square feet of retail to remain vacant beyond the initial 5-year development period, either until a tenant is procured or, potentially, permanently. Both scenarios would result in extraordinarily high carry costs and/or operating losses for the Project; (2) Incentivize lease-up of the surplus 200,000 retail square feet (in order to avoid the significant down-time described above) by agreeing to: o Fund above-market cash contributions toward a tenant’s improvement of the space o Deliver retail spaces in “turn-key” condition, relieving the tenant from having to pay for such improvements, which are typically tenant costs o Pay extraordinarily large leasing commissions to brokers who procure retail tenants o Discount the project’s rental rates beneath typical market rates in order to attract tenants Both options (1) and (2) to contend with the surplus 200,000 square feet of retail would result in (i) extraordinarily high “carry” costs and operating losses and (ii) extraordinarily high lease transaction and construction costs. Assuming the typical soft cost per square foot of the retail component in a typical mixed-use project is approximately $150, TCG estimates the soft costs for the incremental 200,000 square feet of surplus retail would be at least double the typical cost, or $300 per square foot, and that such incremental costs would be 100% unrecoverable, which is to say they will not be recovered nor will they generate any return on investment, a pure loss. As such, the 400,000 square feet retail project will result in an incremental cost reduction of approximately $60,000,000 in soft costs. Without the incremental $60,000,000 reduction in soft costs directly resulting from the reduction in retail area from 600,000 to 400,000 square feet, the Vallco Town Center project would be infeasible. * * * * Vallco Property Owner, LLC Page 4 June 2018 This assignment was completed by Chase Eskel and Taylor Henry under the direction of Tim Cornwell. We have enjoyed working with you on this assignment and look forward to our continued involvement with your team. If you have any questions, please do not hesitate to call. SAND HILL PROPERTY June 2018 17666.02 LIST OF EXHIBITSRETAIL OPPORTUNITY ANALYSIS1.Retail Regional Location2.Retail Submarket Performance3.Retail Macroeconomic Trends4.Changing Nature of Retail Space5.Changing and Retooling of Space6.Consumer Spending Capacity7.Retail Opportunity Gaps8.Retail Demand9.Selected Competitive Retail Inventory Space1 EXHIBIT I-1REGIONAL LOCATION AND SUBMARKET DELINEATION RETAIL TRADE AREAJUNE 2018The red area represents the Retail Trade Area, ("RTA"), the geographic source of competitive retail supply. The blue arearepresents thePrimary Market Area market, a secondary area with comparable market attributes that will be considered throughout the study. Given the size and scale of the Vallco redevelopment, the "PMA" also features numerous directly competitive projects. These projects are competitive because their size has the ability to draw in consumers from all areas of the "PMA". These projects include: Santana Row, CityPlace(in development), Westfield Valley Fair, and Stanford Mall. RTA1 Mile RadiusPMA17666.02 Reg Loc - Retail: RetailPage 1 of 2THE CONCORD GROUP2 EXHIBIT I-1REGIONAL LOCATION AND SUBMARKET DELINEATION RETAIL TRADE AREAJUNE 2018The red area represents the Retail Trade Area, ("RTA"), the geographic source of competitive retail supply. RTA1 Mile RadiusPMAThe blue arearepresents thePrimary Market Area market, a secondary area with comparable market attributes that will be considered throughout the study. Given the size and scale of the Vallco redevelopment, the "PMA" also features numerous directly competitive projects. These projects are competitive because their size has the ability to draw in consumers from all areas of the "PMA". These projects include: Santana Row, CityPlace(in development), Westfield Valley Fair, and Stanford 17666.02 Reg Loc - Retail: Retail ZoomPage 2 of 2THE CONCORD GROUP3 EXHIBIT I-2RETAIL SUBMARKET PERFORMANCE PRIMARY MARKET AREAJUNE 2018Geography1-MileRetail Trade AreaPMAGeneral InformationPopulation ('18)24,058223,2801,855,647Households ('18)8,46880,765634,221% PMA1.3%12.7%100.0%Ann. Growth (#, '18-'23)997456,556% PMA1.5%11.4%100.0%Over $100K HH Growth1501,26410,189Under $100K HH Growth(51)(518)(3,633)Ann. Growth (%, '18-'23)1.1%0.9%1.0%Household Size ('18)2.842.762.93Consumer Spending Patterns ('18)Consumer Expenditures ($000)$662,491$6,025,190$42,440,532Per Capita$27,537$26,985$22,871Retail Sales ($000)$494,451$4,019,980$54,221,288Per Occupied Square Foot$508$379$783Spending Inflow/ (Leakage)($168,041)($2,005,210)$11,780,756Retail Market Performance (1Q18)Rentable Building Area (SF)999,71610,893,93572,082,254Annual Deliveries (SF)Last Four Quarters038,500752,461Five-Year Average32,68960,344587,743Ten-Year Average19,30039,001496,645Annual Net Absorption (SF)Last Four Quarters29,57371,123924,290Five-Year Average32,55855,876398,829Ten-Year Average15,430(10,954)81,054Vacancy Rate (Available Vacant SF)2.59%2.60%3.88%Vacant Stock (SF)25,881283,1542,798,262Asking Rent (NNN)$49.10$36.18$35.28Rent GrowthLast Four Quarters(25.5%)2.0%7.2%Five-Year Average6.2%2.8%4.3%Ten-Year Average1.9%2.1%1.2%Source: Claritas; US Census; CoStar17666.02 Demos: SubmarketTHE CONCORD GROUP4 EXHIBIT 3RETAIL INVENTORY PERFORMANCERETAIL TRADE AREA2009 THROUGH Q8 2018Market Factor 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Retail Trade AreaRental Building AreaT10,723,524 10,738,209 10,753,115 10,750,817 10,746,647 10,767,143 10,794,613 10,839,771 10,865,685 10,893,935Net AbsorptionT(257,050) (24,076)96,161(121,549) (40,808)268,632(76,150)77,427 100,092(58,662)DeliveriesR24,693 28,2032,8550 14,200 31,532 37,090 156,398 42,000 20,500Total Vacancy RateT5.0%5.8%5.5%6.4%5.6%3.7%3.2%3.2%3.4%2.60%Vacant SFT534,131 618,431 589,963 689,545 603,137 401,821 342,023 343,045 369,901 283,154Source: CoStar0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%-300,000-200,000-100,0000100,000200,000300,000400,000500,0002009 2010 2011 2012 2013 2014 2015 2016 2017 2018Vacancy RateSquare Feet - RetailRetail Trade AreaNet AbsorptionDeliveriesVacancy Rate17666.02 Retail Macro Market Trends: RTA RBAThe Concord Group5 EXHIBIT 4CHANGING NATURE OF RETAIL AND IMPACT ON LOCAL RETAIL NEEDRETAIL TRADE AREA2010 THROUGH 2021I. Online Share of Total Retail SpendingYear Share Growth2010 4.1%2011 4.8% 17.1%2012 5.1% 6.2%2013 5.8% 13.7%2014 6.5% 12.1%2015 7.3% 12.3%2016 8.0% 9.6%2017 9.0% 12.5%2018 10.0% 11.1%2019 11.1% 11.0%2020 12.4% 11.7%2021 13.7% 10.5%Average YoY Growth 11.6%Source: US Census & US Dept of CommerceII. Square Footage Impact of Annual ChangeAssumptions and InputsSourcesNew Population per Year2,066Nielsen/Claritas/US CensusTrade Area Retail Spending per Person per Year$17,056Nielsen/Claritas/US CensusTotal Retail Spending by Trade Area Consumers$3,808,209,492Nielsen/Claritas/US CensusTotal Retail Space in Trade Area12,172,957CostarRetail Spending per Square Foot$312.84Calculated201920202021202220235 YrPopulation Added2,0662,0662,0662,0662,06610,330x Retail Spending per Capita$17,056$17,056$17,056$17,056$17,056$17,056= Total Retail Spending Added$35,237,696 $35,237,696 $35,237,696 $35,237,696 $35,237,696$176,188,480Total Retail Spending ($MM)$3,843$3,879$3,914$3,949$3,984$19,570Online Share of Retail Spending11.1%12.4%13.7%15.3%17.1%13.9%Online Spending ($MM)$427$481$536$604$680$2,728Incremental Online Spending$45,801,689 $54,334,288 $55,250,468 $67,696,345 $76,188,877$299,271,666Resulting Brick & Mortar Spending($10,563,993) ($19,096,592) ($20,012,772) ($32,458,649) ($40,951,181) ($123,083,186)Resulting SqFt Impact(33,768)(61,042)(63,971)(103,754)(130,901)(393,436)0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%16.0%2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021Online Share of Total US Retail Sales17666.05 Changing Retail:CNRthe concord group6 EXHIBIT 5CLOSINGS AND RETOOLING OF RETAIL PLANS SAN FRANCISCO BAY AREA, CALIFORNIA JUNE 2018I. Major Retail Anchor ClosingsII. Map of Retailers at RiskNational ClosingsRetailers20172018Total▪Radioshack1470--1,470▪Toys'R'Us--735735▪Payless700--700▪Sears/Kmart358166524▪Gymboree330102432▪Macy's10011111▪Walgreen's Rite Aid--600600▪Ann Taylor/Dress Barn70500570▪Rue21400--400▪Gap Inc.70200270▪The Limited250--250▪Best Buy250--250▪Mattress Firm--200200▪J.C. Penney138--1384,1362,5146,650III. Changing Large Scale Development Plans•Westfield Valley Fair Mall is currently undergoing a $1.1 billion expansion project adding 685k sf to the existing 1.5M sf.The expansion is said to focus specifically on adding more F&B and on upscale distinct retailers that pull customers from a wider radius.Already underway, this project will draw in customers who otherwise wouldn’t have traveled to the mall. This strategytargets consumers in our "Key Categories" which will compete directly with the Vallco redevelopment.•Lennar's Candlestick Point development has suspended development amid rising concerns in the retail market. Macerich andLennar partnered on the development of a 635k sf mall in the master-planned community in San Francisco. Macerich is now leaving the mall joint venture over concerns of the retail market. Macerich has also been selling off some of their retail assets as the market has struggled, indicating macroeconomic weakness on large-scale retail formats.San JoseSan JoseSan JoseSan JoseSan JoseSan JoseSan JoseSan JoseSan JoseSan FranciscoSan FranciscoSan FranciscoSan FranciscoSan FranciscoSan FranciscoSan FranciscoSan FranciscoSan FranciscoOaklandOaklandOaklandOaklandOaklandOaklandOaklandOaklandOaklandFremontFremontFremontFremontFremontFremontFremontFremontFremontBerkeleyBerkeleyBerkeleyBerkeleyBerkeleyBerkeleyBerkeleyBerkeleyBerkeleyHaywardHaywardHaywardHaywardHaywardHaywardHaywardHaywardHaywardSunnyvaleSunnyvaleSunnyvaleSunnyvaleSunnyvaleSunnyvaleSunnyvaleSunnyvaleSunnyvalePleasantonPleasantonPleasantonPleasantonPleasantonPleasantonPleasantonPleasantonPleasantonPalo AltoPalo AltoPalo AltoPalo AltoPalo AltoPalo AltoPalo AltoPalo AltoPalo AltoPacificaPacificaPacificaPacificaPacificaPacificaPacificaPacificaPacificaRedwood CityRedwood CityRedwood CityRedw ood CityRedw ood CityRedwood CityRedwood CityRedwood CityRedw ood CitySan RamonSan RamonSan RamonSan RamonSan RamonSan RamonSan RamonSan RamonSan RamonSan MateoSan MateoSan MateoSan MateoSan MateoSan MateoSan MateoSan MateoSan MateoSan LorenzoSan LorenzoSan LorenzoSan LorenzoSan LorenzoSan LorenzoSan LorenzoSan LorenzoSan LorenzoSan LeandroSan LeandroSan LeandroSan LeandroSan LeandroSan LeandroSan LeandroSan LeandroSan LeandroSan BrunoSan BrunoSan BrunoSan BrunoSan BrunoSan BrunoSan BrunoSan BrunoSan BrunoSouth San FranciscoSouth San FranciscoSouth San FranciscoSouth San FranciscoSouth San FranciscoSouth San FranciscoSouth San FranciscoSouth San FranciscoSouth San FranciscoSanta ClaraSanta ClaraSanta ClaraSanta ClaraSanta ClaraSanta ClaraSanta ClaraSanta ClaraSanta ClaraUnion CityUnion CityUnion CityUnion CityUnion CityUnion CityUnion CityUnion CityUnion CityWalnut CreekWalnut CreekWalnut CreekWalnut CreekWalnut CreekWalnut CreekWalnut CreekWalnut CreekWalnut CreekAlamedaAlamedaAlamedaAlamedaAlamedaAlamedaAlamedaAlamedaAlamedaCampbellCampbellCampbellCampbellCampbellCampbellCampbellCampbellCampbellCupertinoCupertinoCupertinoCupertinoCupertinoCupertinoCupertinoCupertinoCupertinoCastro ValleyCastro ValleyCastro ValleyCastro ValleyCastro ValleyCastro ValleyCastro ValleyCastro ValleyCastro ValleyEast Palo AltoEast Palo AltoEast Palo AltoEast Palo AltoEast Palo AltoEast Palo AltoEast Palo AltoEast Palo AltoEast Palo AltoDanvilleDanvilleDanvilleDanvilleDanvilleDanvilleDanvilleDanvilleDanvilleDaly CityDaly CityDaly CityDaly CityDaly CityDaly CityDaly CityDaly CityDaly CityMilpitasMilpitasMilpitasMilpitasMilpitasMilpitasMilpitasMilpitasMilpitasLivermoreLivermoreLivermoreLivermoreLivermoreLivermoreLivermoreLivermoreLivermoreNew arkNew arkNew arkNew arkNew arkNew arkNew arkNew arkNew arkMountain ViewMountain ViewMountain ViewMountain ViewMountain ViewMountain ViewMountain ViewMountain ViewMountain ViewTamalpais Homestead ValleyTamalpais Homestead ValleyTamalpais Homestead ValleyTamalpais Homestead ValleyTamalpais Homestead ValleyTamalpais Homestead ValleyTamalpais Homestead ValleyTamalpais Homestead ValleyTamalpais Homestead ValleyAl u m R o ckAl u m R o ckAl u m R o ckAlum RockAlum RockAlum RockAlum RockAlum RockAlum RockAl am oAl am oAl am oAlamoAlamoAl amoAl amoAl amoAlamoBlackhawkBlackhawkBlackhawkBlackhawkBlackhawkBlackhawkBlackhawkBlackhawkBlackhawkBelmontBelmontBelmontBelmontBelmontBelmontBelmontBelmontBelmontCherrylandCherrylandCherrylandCherrylandCherrylandCherrylandCherrylandCherrylandCherrylandBurlingameBurlingameBurlingameBurlingameBurlingameBurlingameBurlingameBurlingameBurlingameEl CerritoEl CerritoEl CerritoEl CerritoEl CerritoEl CerritoEl CerritoEl CerritoEl CerritoDublinDublinDublinDublinDublinDublinDublinDublinDublinHalf Moon BayHalf Moon BayHalf Moon BayHalf Moon BayHalf Moon BayHalf Moon BayHalf Moon BayHalf Moon BayHalf Moon BayFoster CityFoster CityFoster CityFoster CityFoster CityFoster CityFoster CityFoster CityFoster CityLafayetteLafayetteLafayetteLafayetteLafayetteLafayetteLafayetteLafayetteLafayetteHillsboroughHillsboroughHillsboroughHillsboroughHillsboroughHillsboroughHillsboroughHillsboroughHillsboroughLos GatosLos GatosLos GatosLos GatosLos GatosLos GatosLos GatosLos GatosLos GatosLos AltosLos AltosLos AltosLos AltosLos AltosLos AltosLos AltosLos AltosLos AltosMoragaMoragaMoragaMoragaMoragaMoragaMoragaMoragaMoragaMillbraeMillbraeMillbraeMillbraeMillbraeMillbraeMillbraeMillbraeMillbraeMill ValleyMill ValleyMill ValleyMill ValleyMill ValleyMill ValleyMill ValleyMill ValleyMill ValleyMenlo ParkMenlo ParkMenlo ParkMenlo ParkMenlo ParkMenlo ParkMenlo ParkMenlo ParkMenlo ParkPiedmontPiedmontPiedmontPiedmontPiedmontPiedmontPiedmontPiedmontPiedmontOrindaOrindaOrindaOrindaOrindaOrindaOrindaOrindaOrindaSan CarlosSan CarlosSan CarlosSan CarlosSan CarlosSan CarlosSan CarlosSan CarlosSan CarlosStanfordStanfordStanfordStanfordStanfordStanfordStanfordStanfordStanfordSaratogaSaratogaSaratogaSaratogaSaratogaSaratogaSaratogaSaratogaSaratoga20528058010168010168010110168068010180880188010113880859211353548492Paradise DrParadise DrParadise DrParadise DrParadise DrParadise DrParadise DrParadise DrParadise DrRedwood Rd Redwood Rd Redwood Rd Redwood Rd Redwood Rd Redwood Rd Redwood Rd Redwood Rd Redwood Rd Bubb RdBubb RdBubb RdBubb RdBubb RdBubb RdBubb RdBubb RdBubb RdS 1 3 th S tS 1 3 th S tS 1 3 th S tS 1 3 th S tS 1 3 th S tS 1 3 th S tS 1 3 th S tS 1 3 th S tS 1 3 th S tE Hillsdale BlvdE Hillsdale BlvdE Hillsdale BlvdE Hillsdale BlvdE Hillsdale BlvdE Hillsdale BlvdE Hillsdale BlvdE Hillsdale BlvdE Hillsdale Blvd3rd St3rd St3rd St3rd St3rd St3rd St3rd St3rd St3rd St Great HwyGreat HwyGreat HwyGreat HwyGreat HwyGreat HwyGreat HwyGreat HwyGreat HwySai nt Mar ys Rd Sai nt Marys Rd Sai nt Marys RdSaint Mar ys Rd Sai nt Marys Rd Saint Mar ys Rd Sai nt Marys Rd Sai nt Marys Rd Sai nt Marys Rd Fairmont DrFairmont DrFairmont DrFairmont DrFairmont DrFairmont DrFairmont DrFairmont DrFairmont DrStevens Creek BlvdStevens Creek BlvdStevens Creek BlvdStevens Creek BlvdStevens Creek BlvdStevens Creek BlvdStevens Creek BlvdStevens Creek BlvdStevens Creek BlvdMetcalf RdMetcalf RdMetcalf RdMetcalf RdMetcalf RdMetcalf RdMetcalf RdMetcalf RdMetcalf Rd C lo ver d al e R C l ove r d al e R Cl ove r da le R C lo ver d al e R Cl ove r da le R C lo ver d a le R C love r d a le R C love r da le R C l ove r d al e RHillsdale AveHillsdale AveHillsdale AveHillsdale AveHillsdale AveHillsdale AveHillsdale AveHillsdale AveHillsdale AveMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdMarsh Creek RdBlossom Hill RdBlossom Hill RdBlossom Hill RdBlossom Hill RdBlossom Hill RdBlossom Hill RdBlossom Hill RdBlossom Hill RdBlossom Hill RdPatterson Pass RdPatterson Pass RdPatterson Pass RdPatterson Pass RdPatterson Pass RdPatterson Pass RdPatterson Pass RdPatterson Pass RdPatterson Pass RdMines RdMines RdMines RdMines RdMines RdMines RdMines RdMines RdMines RdByron HwyByron HwyByron HwyByron HwyByron HwyByron HwyByron HwyByron HwyByron HwyQuimby RdQuimby RdQuimby RdQuimby RdQuimby RdQuimby RdQuimby RdQuimby RdQuimby RdPal omar es RdPalomares RdPalomares RdPalomares RdPalomares RdPalomares RdPalomares RdPalomares RdPalomares Rd Monroe StMonroe StMonroe StMonroe StMonroe StMonroe StMonroe StMonroe StMonroe StN Vasco RdN Vasco RdN Vasco RdN Vasco RdN Vasco RdN Vasco RdN Vasco RdN Vasco RdN Vasco RdVasco RdVasco RdVasco RdVasco RdVasco RdVasco RdVasco RdVasco RdVasco RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdTesla RdN Vasco RdN Vasco RdN Vasco RdN Vasco RdN Vasco RdN Vasco RdN Vasco RdN Vasco RdN Vasco RdMckeMckMckMckeMckMckeMckMckMckPage Mill RdPage Mill RdPage Mill RdPage Mill RdPage Mill RdPage Mill RdPage Mill RdPage Mill RdPage Mill RdC a lave r as Av eCalaveras Av eCalaveras A v eCalaveras Av eCalaveras A v eCalaveras Av eCalaveras Av eCalaveras A v eCalaveras Av e Tasman DrTasman DrTasman DrTasman DrTasman DrTasman DrTasman DrTasman DrTasman DrConcord AveConcord AveConcord AveConcord AveConcord AveConcord AveConcord AveConcord AveConcord AveW Grant LinW Grant LinW Grant LinW Grant LiW Grant LiW Grant LiW Grant LiW Grant LiW Grant Li7th St7th St7th St7th St7th St7th St7th St7th St7th StHighland RdHighland RdHighland RdHighland RdHighland RdHighland RdHighland RdHighland RdHighland Rdlm Rdlm Rdlm RdElm RdElm RdElm RdElm RdElm RdElm RdVasco RdVasco RdVasco RdVasco RdVasco RdVasco RdVasco RdVasco RdVasco RdBranham LnBranham LnBranham LnBranham LnBranham LnBranham LnBranham LnBranham LnBranham LnNoriega StNoriega StNoriega StNoriega StNoriega StNoriega StNoriega StNoriega StNoriega StPortola RdPortola RdPortola RdPortola RdPortola RdPortola RdPortola RdPortola RdPortola RdAlpine RdAlpine RdAlpine RdAlpine RdAlpine RdAlpine RdAlpine RdAlpine RdAlpine RdN Gate RdN Gate RdN Gate RdN Gate RdN Gate RdN Gate RdN Gate RdN Gate RdN Gate Rd114849Union CityUnion CityUnion CityUnion CityUnion CityUnion CityUnion CityUnion CityUnion CityColor-coded by National Retailer Closings (I)17666.05 Changing Retail:closing and retoolingthe concord group7 EXHIBIT 6CONSUMER SPENDING CAPACITY RETAIL TRADE AREAJUNE 20182018 PopulationPMA1,855,647Retail Trade Area 223,2801-Mile Radius24,058Consumer Spending CapacityTarget MarketPerSpending CategoryRadiusPop.Total Cap. ShareGAFO (1)Department StoresRetail Trade Area 223,280 $188,426,415 $844 4.9%FurnitureRetail Trade Area 223,280 $134,636,183 $603 3.5%Sporting Goods/HobbyRetail Trade Area 223,280 $91,035,366 $408 2.4%Books & MusicRetail Trade Area 223,280 $21,204,309 $95 0.6%Office Supplies, Gift StoresRetail Trade Area 223,280 $35,560,260$159 0.9%Electronics/AppliancesRetail Trade Area 223,280 $120,290,505 $539 3.2%Clothing & AccessoriesRetail Trade Area 223,280 $358,688,040 $1,606 9.4% 9.4%Other General MerchandiseRetail Trade Area 223,280 $527,471,281 $2,362 13.9% 13.9%GAFO TotalRetail Trade Area 223,280 $1,477,312,359 $6,616 38.8%Non-GAFOEating & Drinking PlacesRetail Trade Area 223,280 $833,202,953 $3,732 21.9% 21.9%Misc. StoresRetail Trade Area 223,280 $92,887,134 $416 2.4%Health & Personal CareRetail Trade Area 223,280 $302,092,003 $1,353 7.9% 7.9%Building/Garden MaterialsRetail Trade Area 223,280 $385,030,957 $1,724 10.1%Food & BeverageRetail Trade Area 223,280 $717,684,086 $3,214 18.8% 18.8%Non-GAFO TotalRetail Trade Area 223,280 $2,330,897,133 $10,439 61.2%Total Excluding Vehicle/Gas/Non-Store Retail Trade Area 223,280 $3,808,209,492 $17,056 100.0%Key Categories (New Format Retail)71.9%Motor Vehicle/Gas/Non-StoreMotor VehicleRetail Trade Area 223,280 $1,117,864,280 $5,007Gas StationsRetail Trade Area 223,280 $387,891,494 $1,737Other Non-Store RetailersRetail Trade Area 223,280 $711,224,924 $3,185Motor Vehicle/Gas/Non-Store Total Retail Trade Area 223,280 $2,216,980,698 $9,929TotalRetail Trade Area 223,280 $6,025,190,190 $26,985Source: Claritas; TCG(1) GAFO = General Merchandise, Apparel, Furniture, and Other17666.05 Retail Spend.Gap.Demand: Spend_RTAThe Concord Group8 EXHIBIT 7RETAIL OPPORTUNITY GAPS RETAIL TRADE AREA JUNE 20182018 PopulationPMA1,855,647Retail Trade Area 223,2801-Mile Radius24,058Consumer SpendingTarget MarketConsumer Actual Retail Opportunity GapSpending CategoryRadiusPop. DemandSales$%GAFO (1)Department StoresRetail Trade Area 223,280 $188,426,415 $83,539,406 $104,887,009 55.7%FurnitureRetail Trade Area 223,280 $134,636,183 $30,807,637 $103,828,546 77.1%Sporting Goods/HobbyRetail Trade Area 223,280 $91,035,366 $31,565,669 $59,469,697 65.3%Books & MusicRetail Trade Area 223,280 $21,204,309 $12,603,262 $8,601,047 40.6%Office Supplies, Gift StoresRetail Trade Area 223,280 $35,560,260 $7,093,763 $28,466,497 80.1%Electronics/AppliancesRetail Trade Area 223,280 $120,290,505 $228,267,785($107,977,280)(89.8%)Clothing & AccessoriesRetail Trade Area 223,280 $358,688,040 $81,567,142 $277,120,898 77.3%Other General MerchandiseRetail Trade Area 223,280 $527,471,281 $67,063,241 $460,408,040 87.3%GAFO TotalRetail Trade Area 223,280 $1,477,312,359 $542,507,905 $934,804,454 63.3%Non-GAFOEating & Drinking PlacesRetail Trade Area 223,280 $833,202,953 $602,732,216 $230,470,737 27.7%Misc. StoresRetail Trade Area 223,280 $92,887,134 $19,559,348 $73,327,786 78.9%Health & Personal CareRetail Trade Area 223,280 $302,092,003 $152,229,820 $149,862,183 49.6%Building/Garden MaterialsRetail Trade Area 223,280 $385,030,957 $135,582,463 $249,448,494 64.8%Food & BeverageRetail Trade Area 223,280 $717,684,086 $488,153,882 $229,530,204 32.0%Non-GAFO TotalRetail Trade Area 223,280 $2,330,897,133 $1,398,257,729 $932,639,404 40.0%Total Excluding Vehicle/Gas/Non-Store Retail Trade Area 223,280 $3,808,209,492 $1,940,765,634 $1,867,443,858 49.0%Outflow Categories$3,687,918,987 $1,712,497,849 $1,975,421,138 53.6%Motor Vehicle/Gas/Non-StoreMotor VehicleRetail Trade Area 223,280 $1,117,864,280 $1,574,453,637($456,589,357)(40.8%)Gas StationsRetail Trade Area 223,280 $387,891,494 $173,202,195 $214,689,299 55.3%Other Non-Store RetailersRetail Trade Area 223,280 $711,224,924 $331,558,607 $379,666,317 53.4%Motor Vehicle/Gas/Non-Store Total Retail Trade Area 223,280 $2,216,980,698 $2,079,214,439 $137,766,259 6.2%TotalRetail Trade Area 223,280 $6,025,190,190 $4,019,980,073 $2,005,210,117 33.3%Source: Claritas; TCG(1) GAFO = General Merchandise, Apparel, Furniture, and Other17666.05 Retail Spend.Gap.Demand: Gap_RTAThe Concord Group9 EXHIBIT 8ESTIMATED RETAIL DEMANDRETAIL TRADE AREA2018 THROUGH 2023I. Consumer Spending Opportunity Gap Demand PotentialConsumer Spending Expected Current UnfulfilledConsumer Actual Sales/ Sales Retail Retail Space Future PotentialSpending Category Demand Sales DemandPer SF (2)Gap@ $550/SF Capture New SFGAFO (1)Department Stores$188,426,415 $83,539,40644.3%$104,887,009190,70410.0%19,070Furniture$134,636,183 $30,807,63722.9%$103,828,546188,77910.0%18,878Sporting Goods/Hobby$91,035,366 $31,565,66934.7%$59,469,697108,12710.0%10,813Books & Music$21,204,309 $12,603,26259.4%$8,601,04715,63810.0%1,564Office Supplies, Gift Stores$35,560,260 $7,093,76319.9%$28,466,49751,757 ---Not Compatible---Electronics/Appliances$120,290,505 $228,267,785189.8%($107,977,280)0 ---Not Compatible---Clothing & Accessories$358,688,040 $81,567,14222.7%$277,120,898503,85610.0%50,38650,386Other General Merchandise$527,471,281 $67,063,24112.7%$460,408,040837,10610.0%83,71141,855GAFO Total$1,477,312,359 $542,507,90536.7%$934,804,454 1,895,9679.7%184,421Non-GAFOEating & Drinking Places$833,202,953 $602,732,21672.3%$230,470,737419,03810.0%41,90441,904Misc. Stores$92,887,134 $19,559,34821.1%$73,327,786133,32310.0%13,332Health & Personal Care$302,092,003 $152,229,82050.4%$149,862,183272,47710.0%27,24827,248Building/Garden Materials$385,030,957 $135,582,46335.2%$249,448,494453,543 ---Not Compatible---Food & Beverage$717,684,086 $488,153,88268.0%$229,530,204417,32810.0%41,73341,733Non-GAFO Total$2,330,897,133 $1,398,257,72960.0%$932,639,404 1,695,7087.3%124,217Motor Vehicle/Gas/Non-StoreMotor Vehicle$1,117,864,280 $1,574,453,637140.8%($456,589,357)0 ---Not Compatible---Gas Stations$387,891,494 $173,202,19544.7%$214,689,299390,344 ---Not Compatible---Other Non-Store Retailers$711,224,924 $331,558,60746.6%$379,666,317690,302 ---Not Compatible---Motor Vehicle/Gas/Non-Store Total $2,216,980,698 $2,079,214,43993.8%$137,766,259 1,080,6470.0%0Total (All Spending Categories)$6,025,190,190 $4,019,980,07366.7%$550$2,005,210,117 4,672,3216.6%308,637Excluding Vehicle/Gas/Non-Store$3,808,209,492 $1,940,765,63451.0%$1,867,443,858 3,591,6758.6%308,637Key Categories (New Format Retail)203,12566%Note: In addition to the demand derived from spending gapswithin the Retail Trade Area, an additional portion ofdemand will come from new population growth, as shownon the next page.New Format RetailAs traditional retail faces accelerating headwinds and therise of online shopping continues, brick and mortar retailspaces increasingly turns towards experiential excursionsfocused on food and entertainment. These spendingSource: Claritas; TCGcategories represent approximately 2/3 of the potential(1) GAFO = General Merchandise, Apparel, Furniture, and Otherspending clawback in the Trade Area.(2) High-end retail realizes a higher Sales per Foot. Thus $550 being a more appropriate figure than the traditional $300-$350 per foot.17666.05 Retail Spend.Gap.Demand: Demand_RTAPage 1 of 2The Concord Group10 EXHIBIT 8ESTIMATED RETAIL DEMANDRETAIL TRADE AREA2018 THROUGH 2023II. Consumer Spending Opportunity Gap Demand PotentialPer Capita Spending New Resident Generated SpendingMarket Factor $ % 2018/2019 2019/2020 2020/2021 2021/2022 2022/2023 5-Yr Total201820192020202120225Yr TotalNew Population Growth2,066 2,066 2,066 2,066 2,066 10,329Spending CategoriesDepartment Stores $844 3.1% $1,743,333 $1,743,333 $1,743,333 $1,743,333 $1,743,333 $8,716,663Furniture $603 2.2% $1,245,662 $1,245,662 $1,245,662 $1,245,662 $1,245,662 $6,228,310Sporting Goods/Hobby $408 1.5% $842,265 $842,265 $842,265 $842,265 $842,265 $4,211,323Books & Music $95 0.4% $196,184 $196,184 $196,184 $196,184 $196,184 $980,918Office Supplies, Gift Stores $159 0.6% $329,006 $329,006 $329,006 $329,006 $329,006 $1,645,028Electronics/Appliances $539 2.0% $1,112,935 $1,112,935 $1,112,935 $1,112,935 $1,112,935 $5,564,675Clothing & Accessories $1,606 6.0% $3,318,603 $3,318,603 $3,318,603 $3,318,603 $3,318,603 $16,593,017Other General Merchandise $2,362 8.8% $4,880,196 $4,880,196 $4,880,196 $4,880,196 $4,880,196 $24,400,980Eating & Drinking Places $3,732 13.8% $7,708,844 $7,708,844 $7,708,844 $7,708,844 $7,708,844 $38,544,219Misc. Stores $416 1.5% $859,397 $859,397 $859,397 $859,397 $859,397 $4,296,987Health & Personal Care $1,353 5.0% $2,794,973 $2,794,973 $2,794,973 $2,794,973 $2,794,973 $13,974,867Building/Garden Materials $1,724 6.4% $3,562,330 $3,562,330 $3,562,330 $3,562,330 $3,562,330 $17,811,648Food & Beverage $3,214 11.9% $6,640,056 $6,640,056 $6,640,056 $6,640,056 $6,640,056 $33,200,282Motor Vehicle $5,007 18.6% $10,342,548 $10,342,548 $10,342,548 $10,342,548 $10,342,548 $51,712,738Gas Stations $1,737 6.4% $3,588,795 $3,588,795 $3,588,795 $3,588,795 $3,588,795 $17,943,977Other Non-Store Retailers $3,185 11.8% $6,580,296 $6,580,296 $6,580,296 $6,580,296 $6,580,296 $32,901,479Total (All Spending Categories)$26,985100.0% $55,745,422 $55,745,422 $55,745,422 $55,745,422 $55,745,422 $278,727,112Excluding Vehicle/Gas/Non-Store$17,05663.2% $35,233,783 $35,233,783 $35,233,783 $35,233,783 $35,233,783 $176,168,917Key Categories (New Format Retail)$22,902,575 $22,902,575 $22,902,575 $22,902,575 $22,902,575 $114,512,875Retail Sales per Square Foot$550$550$550$550$550$550Total Demand for Retail Space (SF)64,06164,06164,06164,06164,061320,307Key Categories (New Format Retail)41,64141,64141,64141,64141,641208,205III. Total DemandTotal 5-Year Demand from Opportunity Gaps:308,637 Annualized assuming 5-yearTotal 5-Year Demand from New Population Growth:320,307 absorption flow of current leakageTotal 5-Year Demand:628,945125,789IV. Total Demand (Key Categories)Total 5-Year Demand from Opportunity Gaps:203,125 Annualized assuming 5-yearTotal 5-Year Demand from New Population Growth:208,205 absorption flow of current leakageTotal 5-Year Demand:411,33082,26617666.05 Retail Spend.Gap.Demand: Demand_RTAPage 2 of 2The Concord Group11 EXHIBIT 9SELECTED COMPETITIVE RETAIL INVENTORY SPACE RETAIL TRADE AREAJUNE 2018AvailableYearTypicalRBAAnn. Lease RateBuilding NameAddressCityBuilt Reno. Elev.TypeSubtypeFloor Total Avail. Occ. Avg. TypeRetail Trade Area696 W El Camino Real696 W El Camino RealSunnyvale2018 -- 1s General RetailFreestanding9,836 9,836 9,836 0.0% $72.00 NNNBldg B (108-116 E El Camino Real)108-116 E El Camino RealSunnyvale2010 -- 1s General Retail (Community Center)Freestanding8,339 8,339 1,000 88.0% 69.00 NNNHomestead Center (20916 Homestead Rd)20916 Homestead RdCupertino1984 -- 1s General Retail (Neighborhood Center) Freestanding7,200 7,200 1,200 83.3% 66.00 NNN10129-10191 S De Anza Blvd10129-10191 S De Anza Blvd Cupertino1952 -- 1s General RetailFreestanding20,527 20,527 975 95.3% 54.00 NNNSaratoga Plaza (375 Saratoga Ave)375 Saratoga AveSan Jose1970 --1s General Retail (Neighborhood Center) Restaurant38,000 38,000 1,080 97.2% 54.00 NNNLoree Center (19050-19088 Stevens Creek Blvd)19050-19088 Stevens Creek Blvd Cupertino1951 -- 1s General Retail (Strip Center)20,000 20,000 6,400 68.0% 54.00 NNNBiltmore (20030-20080 Stevens Creek Blvd)20030-20080 Stevens Creek Blvd Cupertino2015 -- 1s General Retail7,045 7,045 1,271 82.0% 54.00 NNN751-799 E El Camino Real751-799 E El Camino RealSunnyvale1993 --2s General Retail (Community Center)Freestanding172,613 172,613 7,066 95.9% 51.00 NNN798-820 E El Camino Real798-820 E El Camino RealSunnyvale2008 --1s General Retail (Strip Center)5,720 5,720 1,800 68.5% 51.00 NNNV Center (1191-1195 S De Anza Blvd)1191-1195 S De Anza BlvdSan Jose2017 -- 2s General RetailFreestanding13,000 13,000 3,824 70.6% 48.00 NNN1375 S De Anza Blvd1375 S De Anza BlvdCupertino1985 2006 1s General RetailFreestanding6,222 6,222 6,222 0.0% 48.00 NNN1253 W El Camino Real1253 W El Camino RealSunnyvale1980 -- 1s General Retail (Strip Center)Restaurant8,979 8,979 2,262 74.8% 48.00 NNN717 E El Camino Real717 E El Camino RealSunnyvale1985 -- 1s General Retail (Strip Center)20,000 20,000 1,910 90.5% 46.20 NNN510 E El Camino Real510 E El Camino RealSunnyvale1979 -- 1s General Retail (Strip Center)12,606 12,606 2,591 79.4% 45.00 NNN1018 W El Camino Real1018 W El Camino RealSunnyvale1958 1995 1s General RetailFreestanding7,250 7,250 7,250 0.0% 45.00 NNNWestmoor Village (1211-1291 S Mary Ave)1211-1291 S Mary AveSunnyvale1961 -- 1s General Retail (Neighborhood Center) Storefront60,909 60,909 2,520 95.9% 42.00 NNN455-489 Saratoga Ave455-489 Saratoga AveSan Jose1973 -- 1s General Retail (Neighborhood Center) Storefront42,677 42,677 1,500 96.5% 42.00 NNN580 South Murphy (101-103 E El Camino Real)101-103 E El Camino RealSunnyvale1965 -- 1s General Retail (Neighborhood Center) Freestanding24,032 24,032 1,500 93.8% 39.00 NNNHenderson Center (1053 E El Camino Real)1053 E El Camino RealSunnyvale1968 -- 1s General Retail (Strip Center)11,249 11,249 1,350 88.0% 37.20 NNN740 E El Camino Real740 E El Camino RealSunnyvale1975 -- 1s General RetailRestaurant10,947 10,947 10,947 0.0% 36.00 NNNPepper Tree Plaza (1084 S De Anza Blvd)1084 S De Anza BlvdSan Jose1900 -- 1s General Retail (Strip Center)11,500 11,500 3,698 67.8% 35.60 NNNPark Lane Plaza (5152-5278 Moorpark Ave)5152-5278 Moorpark AveSan Jose1968 -- 1s General Retail (Neighborhood Center) Freestanding70,000 70,000 4,022 94.3% 34.56 NNNBldg 4 & 5 (4360 Stevens Creek Blvd)4360 Stevens Creek BlvdSan Jose1972 -- 1s General Retail (Neighborhood Center) Freestanding31,981 31,981 1,360 95.7% 31.30 NNN*130 E El Camino Real130 E El Camino RealSunnyvale1964 -- 1s General Retail (Community Center)Freestanding39,500 39,500 39,500 0.0% 30.00 NNNCivic Square (802-844 W El Camino Real)802-844 W El Camino RealSunnyvale1964 2009 1s General Retail (Neighborhood Center) Freestanding42,178 42,178 23,900 43.3% 30.00 NNNKiely Plaza (1052-1092 Kiely Blvd)1052-1092 Kiely BlvdSanta Clara1974 1999 1s General Retail (Strip Center)Freestanding23,766 23,766 1,655 93.0% 29.40 NNNMoonlite Shopping Center (2610-2790 El Camino Real) 2610-2790 El Camino RealSanta Clara1960 1994 1sGeneral Retail (Community Center)Freestanding169,375 169,375 15,780 90.7% 28.77 NNN1587-1595 Pomeroy Ave1587-1595 Pomeroy AveSanta Clara1964 -- 1s General Retail (Strip Center)Freestanding6,000 6,000 2,416 59.7% 27.00 NNN942-948 W El Camino Real942-948 W El Camino RealSunnyvale1960 2016 1s General Retail (Strip Center)Freestanding7,200 7,200 7,200 0.0% 24.92 NNN*1080 Saratoga Ave1080 Saratoga AveSan Jose1966 -- 1s General Retail (Strip Center)Freestanding17,380 17,380 1,178 93.2% 24.48 NNNTotals: 30,868 926,031 173,213 82.2% $38.21 NNNSource: CoStar17666.02 RTA Comps: CompsThe Concord Group12 EXHIBIT D Vallco Property Owner, LLC Page 1 August 2019 19446.00 _____________________________________________________________________________ Memorandum To: Vallco Property Owner, LLC From: The Concord Group Date: August 19, 2019 Re: Feasibility Impact of a Revised General Plan Scenario for the Vallco Redevelopment in Cupertino, California ___________________________________________________________________________________________ Vallco Property Owner, LLC (“VPO”) is pursuing the redevelopment of the site of the Vallco Fashion Mall (the "Vallco Site"), a 51-acre site located in Cupertino, California. The City of Cupertino (“City”) is currently entertaining a General Plan amendment that will effectively downzone the Vallco Site. VPO has retained The Concord Group (“TCG”) to assesses the financial feasibility of the proposed amended General Plan Scenario. The review described herein evaluates the feasibility of a program from a report issued by Hausrath Economics Group (“HEG”) using TCG’s more recently collected data and assumptions. It also evaluates two other scenarios in which VPO develops the full 51-acre Vallco site instead of the smaller 13.1 acre site evaluated in the HEG study. The following represent our key preliminary conclusions: Scenarios and Evaluation Methods In the following report, TCG evaluated the three scenarios shown below. The first scenario is the program described in the HEG report. TCG conducted its own evaluation of this program using three different methods. 1. The first replaces HEG’s assumed revenue from BMR condominiums (taken from an earlier report by Economic and Planning Systems (“EPS”) with TCG’s own calculated revenue. TCG’s methodology is detailed in the attached report; it calculates the affordable price for median and moderate income households using methods outlined in City policy and Program Comparison HEG Program VPO Scenario 1 VPO Scenario 2 Apartment Market Rate 0 0 0 BMR Apartment 0 0 0 Condominium Market Rate 390 1,512 390 BMR Condo 69 267 69 Traditional Office 0 0 0 Reta il Traditional 25,000 480,000 480,000 Entertainment 120,000 120,000 Hotel 0 0 0 Vallco Property Owner, LLC Page 2 August 2019 19446.00 used by Hello Housing, the organization that administers Cupertino’s BMR Purchase Program. 2. The second replaces HEG’s assumed building construction costs with TCG’s assumed costs. TCG’s assumptions average the cost estimates provided by three third-part developers currently building condominium units in the South Bay. 3. The third method uses both TCG’s BMR revenue assumptions and construction cost assumptions. All three of the above evaluation methods use the horizontal site costs described in the HEG report. The latter two scenarios are evaluated using TCG BMR revenue assumptions and construction cost assumptions, as well as horizontal site cost estimates that reflect the development of 51 acres in place of 13.1 acres. Overall Conclusions and Impact Tables Using the assumptions from the 2018 EPS report, Hausrath concluded that the project had a positive residual of about $1MM. TCG’s evaluation found a negative residual under every scenario. TCG’s determination of affordable purchase price for BMR units was a little over half the value of EPS’ estimate. This led to a negative residual value for the product type as opposed to a positive one and rendered the project underwater by $22MM. TCG’s cost estimates, derived from those of third-party developers, were also much higher than EPS assumptions leading to a negative project residual of $112MM. Together these assumption corrections led to a decidedly infeasible project, with a total negative residual of $135 MM. TCG also evaluated two scenarios where VPO developed the full 51-acre site. Even if VPO were to build a smaller program, several of the possible options for site placement would make it necessary for the developer to demolish and prepare much larger portions of the Vallco site. Assuming that they incurred horizontal costs for the entire 51-acre site, built out all of the entitled 600,000 SF of retail, and the entitled 459 condominium units, the project would be underwater by $271 MM. HEG Program VPO Program HEG Evaluation BMR Revenue Change Construction Cost Change BMR and Cost Change Scenario 1 Scenario 2 Land Use Program Value Program Resulting Value Program Resulting Value Program Resulting Value Program Resulting Value Program Resulting Value Apartment Market Rate 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 BMR Apartment 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 Condominium Market Rate 390 $139,165,260 390 $139,147,978 390 $40,535,076 390 $40,535,076 1512 $157,151,371 390 $40,535,076 BMR Condo 69 $8,140,896 69 ($15,467,422)69 ($6,480,115)69 ($29,905,451)267 ($115,721,094)69 ($29,905,451) Traditional Office 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 Reta il 25,000 $550,000 25,000 $553,599 25,000 $553,599 25,000 $553,599 600,000 ($33,197,505)600,000 ($33,197,505) Traditional 25,000 $550,000 25,000 $553,599 25,000 $553,599 25,000 $553,599 480,000 $10,608,580 480,000 $10,608,580 Entertainment 0 $0 0 $0 0 $0 0 $0 120,000 ($43,806,085)120,000 ($43,806,085) Hotel 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 Residual Value Before Site Costs/Fee Credits $147,856,156 $124,234,155 $34,608,560 $11,183,224 $8,232,772 ($22,567,880) Site Costs/Fee Credits ($53,613,952)($53,613,952)($53,613,952)($53,613,952)($125,071,293)($125,071,293) VPO's Approximate Land Cost Basis ($93,184,000)($93,184,000)($93,184,000)($93,184,000)($124,262,259)($124,262,259) Estimated Project Residual:$1,058,204 ($22,563,797)($112,189,392)($135,614,728)($241,100,780)($271,901,432) Feasibility Analysis for the Vallco Mall Redevelopment in Cupertino, California Report Prepared for Vallco Property Owner August 2019 Newport Beach San Francisco New York Atlanta 369 San Miguel Dr, #265 251 Kearny St, 6th Floor 641 Lexington Ave, #1400 1170 Peachtree ST NE, #1200 Newport Beach, CA 92660 San Francisco, CA 94108 New York, NY 10022 Atlanta, GA 30309 (949) 717-6450 (415) 397-5490 (212) 535-2225 (404) 879-5000 Vallco Property Owner August 2019 Cupertino, CA 19446.00 EXECUTIVE SUMMARY 1. Summary of Scenario Feasibility A. Scenario 1: Hausrath Program Corrected for BMR Revenue B. Scenario 2: Hausrath Program Corrected for Vertical Costs C. Scenario 3: Hausrath Program Corrected for Both BMR Revenue and Vertical Costs D. Scenario 4: 51-Acre Lot Program – Large Scale Residential E. Scenario 5: 51-Acre Lot Program – Small Scale Residential 2. Land Residual Model A. For-Sale Residential i. Market Rate ii. Below Market Rate B. Retail i. Traditional ii. Entertainment 3. Below Market Rate Condominium Affordable Prices 4. Construction Cost Evaluation and Comparison TECHNICAL APPENDIX A. Regional Location B. Demographic Summary C. For-Sale Residential 1. Current Inventory i. Performance ii. Location 2. Product Positioning D. Retail 1. Retail Market Performance 2. Current Inventory i. Available ii. Executed iii. Location 3. Product Positioning 3 Executive Summary4 EXHIBIT 1AEPS/HAUSRATH INPUTS CORRECTED FOR BMR REVENUE ONLYVALLCO MALL REDEVELOPMENTAUGUST 2019Residential Uses Non-Residential UsesApartment Condominium Office Retail Hotel TotalProject Factors Market Rate BMR Market Rate BMR Traditional EntertainmentDwelling Units0 0 390 69N/AN/AN/A0Gross Square Feet 0 0 487,423 86,2500 25,000 0 0Structured Parking Stalls 0 0 780 138 0 100 0 0Market Value -- -- $422,498,058 $33,325,439--$22,224,063 -- -- $478,047,559Value/ Gross SF -- -- $867 $386 -- $889 -- --Value per Unit-- --$1,083,328 $482,977 N/AN/A----Development BudgetSoft Cost----($54,012,938) ($8,957,340)--($3,936,397)----($66,906,675)Hard Cost----($169,979,220) ($30,076,949)--($13,653,264)----($213,709,433)Other Costs and ROI----($59,357,922) ($9,758,572)--($4,080,802)----($73,197,296)Total Cost----($283,350,080) ($48,792,861)--($21,670,463)----($353,813,404)Total Cost/ Gross SF----($581)($566)--($867)------Total Cost per Unit----($726,539) ($707,143)--N/A------Residual Value(Before Site Costs)---- $139,147,978.46($15,467,422)-- $553,599---- $124,234,155Land Value/ Gross SF----$285($179)--$22------Land Value per Unit----$356,790($224,166)--N/A------Impact Fee Credits (Including Avoided Contingency and ROI) None AssumedSite CostsDemolition($4,600,000)Basic Site Work($6,600,000)Open Space Improvements$0Parkland In-Lieu Fee($21,060,000)Right-of-Way and Backbone Infrastructure($12,900,000)Additional Off-Site Improvements/Mitigation$0Subtotal($45,160,000)Site Development Financing Cost6% Financing Cost($2,709,600)Developer Return on Site Costs12% ROI($5,744,352)Total Site Costs Including ROI($53,613,952)VPO's Approximate Land Cost Basis($93,184,000)Estimated Project Residual($22,563,797)19446.00 Residuals and Conclusions - Verticals: Scen 1 BMR ONLYTHE CONCORD GROUP5 EXHIBIT 1BEPS/HAUSRATH INPUTS CORRECTED FOR CONSTRUCTION COSTS ONLYVALLCO MALL REDEVELOPMENTAUGUST 2019Residential Uses Non-Residential UsesApartment Condominium Office Retail Hotel TotalProject Factors Market Rate BMR Market Rate BMR Traditional EntertainmentDwelling Units0 0 390 69N/AN/AN/A0Gross Square Feet 0 0 487,500 86,2500 25,000 0 0Structured Parking Stalls 0 0 780 138 0 100 0 0Market Value -- -- $422,565,000 $56,750,775--$22,224,063 -- -- $501,539,838Value/ Gross SF -- -- $867 $658 -- $889 -- --Value per Unit-- --$1,083,500 $822,475 N/AN/A----Development BudgetSoft Cost----($68,733,423) ($11,560,919)--($3,937,056)----($84,231,398)Hard Cost----($236,890,516) ($41,911,399)--($13,653,474)----($292,455,388)Other Costs and ROI----($76,405,985) ($9,758,572)--($4,081,003)----($90,245,560)Total Cost----($382,029,924) ($63,230,890)--($21,671,532)----($466,932,346)Total Cost/ Gross SF----($784)($733)--($867)------Total Cost per Unit----($979,564) ($916,390)--N/A------Residual Value(Before Site Costs)---- $40,535,075.92($6,480,115)-- $553,599---- $34,608,560Land Value/ Gross SF----$83($75)--$22------Land Value per Unit----$103,936($93,915)--N/A------Impact Fee Credits (Including Avoided Contingency and ROI) None AssumedSite CostsDemolition($4,600,000)Basic Site Work($6,600,000)Open Space Improvements$0Parkland In-Lieu Fee($21,060,000)Right-of-Way and Backbone Infrastructure($12,900,000)Additional Off-Site Improvements/Mitigation$0Subtotal($45,160,000)Site Development Financing Cost6% Financing Cost($2,709,600)Developer Return on Site Costs12% ROI($5,744,352)Total Site Costs Including ROI($53,613,952)VPO's Approximate Land Cost Basis($93,184,000)Estimated Project Residual($112,189,392)19446.00 Residuals and Conclusions - Verticals: Scen 2 COSTS ONLYTHE CONCORD GROUP6 EXHIBIT 1CEPS/HAUSRATH INPUTS CORRECTED FOR BOTH BMR REVENUE & CONSTRUCTION COSTSVALLCO MALL REDEVELOPMENTAUGUST 2019Residential Uses Non-Residential UsesApartment Condominium Office Retail Hotel TotalProject Factors Market Rate BMR Market Rate BMR Traditional EntertainmentDwelling Units0 0 390 69N/AN/AN/A0Gross Square Feet 0 0 487,500 86,2500 25,000 0 0Structured Parking Stalls 0 0 780 138 0 100 0 0Market Value -- -- $422,565,000 $33,325,439--$22,224,063 -- -- $478,114,501Value/ Gross SF -- -- $867 $386 -- $889 -- --Value per Unit-- --$1,083,500 $482,977 N/AN/A----Development BudgetSoft Cost----($68,733,423) ($11,560,919)--($3,937,056)----($84,231,398)Hard Cost----($236,890,516) ($41,911,399)--($13,653,474)----($292,455,388)Other Costs and ROI----($76,405,985) ($9,758,572)--($4,081,003)----($90,245,560)Total Cost----($382,029,924) ($63,230,890)--($21,671,532)----($466,932,346)Total Cost/ Gross SF----($784)($733)--($867)------Total Cost per Unit----($979,564) ($916,390)--N/A------Residual Value(Before Site Costs)---- $40,535,075.92($29,905,451)-- $553,599---- $11,183,224Land Value/ Gross SF----$83($347)--$22------Land Value per Unit----$103,936($433,412)--N/A------Impact Fee Credits (Including Avoided Contingency and ROI) None AssumedSite CostsDemolition($4,600,000)Basic Site Work($6,600,000)Open Space Improvements$0Parkland In-Lieu Fee($21,060,000)Right-of-Way and Backbone Infrastructure($12,900,000)Additional Off-Site Improvements/Mitigation$0Subtotal($45,160,000)Site Development Financing Cost6% Financing Cost($2,709,600)Developer Return on Site Costs12% ROI($5,744,352)Total Site Costs Including ROI($53,613,952)VPO's Approximate Land Cost Basis($93,184,000)Estimated Project Residual($135,614,728)19446.00 Residuals and Conclusions - Verticals: Scen 3 BMR & CostsTHE CONCORD GROUP7 EXHIBIT 1DLARGE SCALE RESIDENTIAL PLAN ON FULL 51 ACRESVALLCO MALL REDEVELOPMENTAUGUST 2019Residential Uses Non-Residential UsesApartment Condominium Office Retail Hotel TotalProject Factors Market Rate BMR Market Rate BMR Traditional EntertainmentDwelling Units0 0 1,512 267N/AN/AN/A0Gross Square Feet 0 0 1,890,000 333,7500 480,000 120,000 0Structured Parking Stalls 0 0 3024 534 0 1920 480 0Market Value -- -- $1,638,252,000 $128,954,958--$426,702,000 $53,337,750 -- $2,247,246,708Value/ Gross SF -- -- $867 $386 -- $889 $444 --Value per Unit-- --$1,083,500 $482,977 N/AN/AN/A--Development BudgetSoft Cost-- --($266,474,196) ($44,735,729)--($75,591,471) (15,840,157)--($402,641,553)Hard Cost-- --($918,406,307) ($162,178,892)--($262,146,695) (63,010,358)--($1,405,742,252)Other Costs and ROI-- --($296,220,126) ($37,761,432)--($78,355,254) (18,293,320)--($430,630,131)Total Cost -- --($1,481,100,629) ($244,676,052)--($416,093,420) (97,143,835)--($2,239,013,936)Total Cost/ Gross SF-- --($784) ($733)--($867) (810)-- --Total Cost per Unit -- --($979,564) ($916,390)--N/AN/A----Residual Value(Before Site Costs)---- $157,151,371.26($115,721,094)-- $10,608,580($43,806,085)--$8,232,772Land Value/ Gross SF----$83($347)--$22($365)----Land Value per Unit----$103,936($433,412)--N/AN/A----Impact Fee Credits (Including Avoided Contingency and ROI) None AssumedSite CostsDemolition1,200,000 SF$15/SF($18,000,000)Basic Site Work51 Acres$498,235/Acre($25,410,000)Open Space Improvements 6.0 Acres (Public Access) $500,000/AcreNone AssumedParkland In-Lieu Fee2.2 2.2 Acres (Fee Basis)$10,000,000/Acre($21,656,100)Right-of-Way and Backbone Infrastructure($50,000,000)Additional Off-Site Improvements/Mitigation$0Subtotal($115,066,100)Site Development Financing Cost6% Financing Cost($3,206,793)Developer Return on Site Costs12% ROI($6,798,400)Total Site Costs Including ROI($125,071,293)VPO's Approximate Land Cost Basis($124,262,259)Estimated Project Residual($241,100,780)19446.00 Residuals and Conclusions - Verticals: Scen 4 LargeTHE CONCORD GROUP8 EXHIBIT 1ESMALL SCALE RESIDENTIAL PLAN ON FULL 51 ACRESVALLCO MALL REDEVELOPMENTAUGUST 2019Residential Uses Non-Residential UsesApartment Condominium Office Retail Hotel TotalProject Factors Market Rate BMR Market Rate BMR Traditional EntertainmentDwelling Units0 0 390 69N/AN/AN/A0Gross Square Feet 0 0 487,500 86,2500 480,000 120,000 0Structured Parking Stalls 0 0 780 138 0 1920 480 0Market Value -- -- $422,565,000 $33,325,439--$426,702,000 $53,337,750 -- $935,930,189Value/ Gross SF -- -- $867 $386 -- $889 $444 --Value per Unit-- --$1,083,500 $482,977 N/AN/AN/A--Development BudgetSoft Cost-- --($68,733,423) ($11,560,919)--($75,591,471) (15,840,157)--($171,725,971)Hard Cost-- --($236,890,516) ($41,911,399)--($262,146,695) (63,010,358)--($603,958,967)Other Costs and ROI-- --($76,405,985) ($9,758,572)--($78,355,254) (18,293,320)--($182,813,131)Total Cost -- --($382,029,924) ($63,230,890)--($416,093,420) (97,143,835)--($958,498,069)Total Cost/ Gross SF-- --($784) ($733)--($867) (810)-- --Total Cost per Unit -- --($979,564) ($916,390)--N/AN/A----Residual Value(Before Site Costs)---- $40,535,075.92($29,905,451)-- $10,608,580($43,806,085)--($22,567,880)Land Value/ Gross SF----$83($347)--$22($365)----Land Value per Unit----$103,936($433,412)--N/AN/A----Impact Fee Credits (Including Avoided Contingency and ROI) None AssumedSite CostsDemolition1,200,000 SF$15/SF($18,000,000)Basic Site Work51 Acres$498,235/Acre($25,410,000)Open Space Improvements 6.0 Acres (Public Access) $500,000/AcreNone AssumedParkland In-Lieu Fee2.2 2.2 Acres (Fee Basis)$10,000,000/Acre($21,656,100)Right-of-Way and Backbone Infrastructure($50,000,000)Additional Off-Site Improvements/Mitigation$0Subtotal($115,066,100)Site Development Financing Cost6% Financing Cost($3,206,793)Developer Return on Site Costs12% ROI($6,798,400)Total Site Costs Including ROI($125,071,293)VPO's Approximate Land Cost Basis($124,262,259)Estimated Project Residual($271,901,432)19446.00 Residuals and Conclusions - Verticals: Scen 5 SmallTHE CONCORD GROUP9 EXHIBIT 2Ai MARKET RATE RESIDENTIAL CONDOMINIUMS - LAND RESIDUAL VALLCO MALL REDEVELOPMENT AUGUST 2019 EPS Evaluation TCG Evaluation - Cost Change Only TCG Source Development Program Assumptions Dwelling Units 11 Gross Building Area (Square Feet)1,250 per unit 1,250 1,250 per unit 1,250 Net Building Area (Square Feet)80%GBA 1,000 80%GBA 1,000 Structured Parking Spaces 2.0 spaces per unit 2.0 2.0 spaces per unit 2.0 Cupertino Planning Dept Building Value Condominium Sale Value $1,100 Market Value/ SF $1,099,826 $1,100 Market Value/ SF $1,100,000 Appendix C2 Other Value Additions $0 Market Value/ Unit $0 $0 Market Value/ Unit $0 Building Value $1,099,826 $1,100,000 Disposition Cost 1.5%of Building Value -$16,497 1.5%of Building Value -$16,500 Net Value $1,083,328 $1,083,500 Project Costs Construction Costs Building Direct Costs $256 cost/SF (GBA) $320,137 $387 cost/SF (GBA) $483,125 Structured Parking Direct Cost $46,958 per Space $93,915 $46,958 per Space $93,916 PLA Cost Premium 5% of Total Const. Cost $21,792 5% of Total Const. Cost $30,371 Total Construction Cost $435,844 $607,412 Soft Costs Architecture and Engineering 4% of Construction Cost $17,434 4% of Construction Cost $24,296 Other Professional Services 2% of Construction Cost $8,717 2% of Construction Cost $12,148 Permits and Fees $42,609 per Dwelling Unit $42,609 $42,609 per Dwelling Unit $42,609 Taxes and Insurance 3% of Construction Cost $13,075 3% of Construction Cost $18,222 Financing 6% of Construction Cost $26,151 6% of Construction Cost $36,445 Marketing/Leasing 3% of Construction Cost $13,075 3% of Construction Cost $18,222 Developer Fee 4% of Construction Cost $17,434 4% of Construction Cost $24,296 Total Soft Costs $138,495 $176,240 Other Costs Development Contingency 10% of Hard and Soft Costs $57,434 10% of Hard and Soft Costs $78,365 Developer ROI 15% of Development Costs $94,766 15% of Development Costs $117,548 Total Other Costs $152,200 $195,913 Total Project Costs $726,539 $979,564 Residual Land Value Residual Land Value $356,790 $103,936 Per Dwelling Unit $356,790 $103,936 Per Square Foot (GBA)$285.48 $83.15 19446.00 Residuals and Conclusions: MR Condo THE CONCORD GROUP 10 EXHIBIT 2AiiBELOW MARKET RATE RESIDENTIAL CONDOMINIUMS - LAND RESIDUALVALLCO MALL REDEVELOPMENTAUGUST 2019EPS EvaluationTCG Evaluation - Cost Change OnlyTCG Evaluation - BMR Price Change Only TCG Evaluation - Cost & BMR Price ChangeTCG SourceDevelopment Program AssumptionsDwelling Units11 11Gross Building Area (Square Feet)1,250per unit 1,2501,250per unit 1,2501,250per unit 1,2501,250per unit 1,250Net Building Area (Square Feet)80%GBA 1,00080%GBA 1,00080%GBA 1,00080%GBA 1,000Structured Parking Spaces2.0spaces per unit 2.02.0spaces per unit 2.02.0spaces per unit 2.02.0spaces per unit 2.0 Cupertino Planning DeptBuilding ValueCondominium Sale Value$835Market Value/ SF $835,000$835Market Value/ SF $835,000$490Market Value/ SF $490,332$490Market Value/ SF $490,332 Per City policy, Exhibit 3Other Value Additions $0 Market Value/ Unit $0 $0 Market Value/ Unit $0 $0 Market Value/ Unit $0 $0 Market Value/ Unit $0Building Value $835,000 $835,000 $490,332 $490,332Disposition Cost1.5%of Building Value -$12,5251.5%of Building Value -$12,5251.5%of Building Value -$7,3551.5%of Building Value -$7,355Net Value $822,475 $822,475 $482,977 $482,977Project CostsConstruction CostsBuilding Direct Costs$256cost/SF (GBA) $320,187$387cost/SF (GBA) $483,125$256cost/SF (GBA) $320,187$387cost/SF (GBA) $483,125Structured Parking Direct Cost$46,957per Space $93,915$46,958per Space $93,916$46,958per Space $93,916$46,958per Space $93,916PLA Cost Premium5% of Total Const. Cost $21,795 5% of Total Const. Cost $30,371 5% of Total Const. Cost$21,795 5% of Total Const. Cost$30,371Total Construction Cost$435,897$607,412$435,898$607,412Soft CostsArchitecture and Engineering4% of Construction Cost $17,436 4% of Construction Cost $24,296 4% of Construction Cost $17,436 4% of Construction Cost $24,296Other Professional Services2% of Construction Cost $8,718 2% of Construction Cost $12,148 2% of Construction Cost$8,718 2% of Construction Cost $12,148Permits and Fees$33,919 per Dwelling Unit$33,919 $33,919 per Dwelling Unit$33,919 $33,919 per Dwelling Unit$33,919 $33,919 per Dwelling Unit$33,919Taxes and Insurance3% of Construction Cost $13,077 3% of Construction Cost $18,222 3% of Construction Cost $13,077 3% of Construction Cost $18,222Financing6% of Construction Cost $26,154 6% of Construction Cost $36,445 6% of Construction Cost $26,154 6% of Construction Cost $36,445Marketing/Leasing1% of Construction Cost $4,359 3% of Construction Cost $18,222 3% of Construction Cost $13,077 3% of Construction Cost $18,222Developer Fee4% of Construction Cost $17,436 4% of Construction Cost $24,296 4% of Construction Cost $17,436 4% of Construction Cost $24,296Total Soft Costs$121,098$167,550$129,817$167,550Other CostsDevelopment Contingency10% of Hard and Soft Costs $55,699 10% of Hard and Soft Costs $56,571 10% of Hard and Soft Costs $56,571 10% of Hard and Soft Costs $56,571Developer ROI15% of Development Costs $91,904 15% of Development Costs $84,857 15% of Development Costs $84,857 15% of Development Costs $84,857Total Other Costs$147,604$141,429$141,429$141,429Total Project Costs$704,599 $916,390 $707,143 $916,390Residual Land ValueResidual Land Value$117,876-$93,915-$224,166-$433,412Per Dwelling Unit$117,876-$93,915-$224,166-$433,412Per Square Foot (GBA)$94.30-$75.13-$179.33-$346.7319446.00 Residuals and Conclusions - Verticals: BMR CondoTHE CONCORD GROUP11 EXHIBIT 2Bi RETAIL - LAND RESIDUAL VALLCO MALL REDEVELOPMENT AUGUST 2019 EPS Evaluation Development Program Assumptions Gross Building Area (Square Feet)1 Rentable Area (Square Feet)100%GBA 1 Structured Parking Spaces 0 Building Value Gross Potential Rent $5.00 per SF/Month (NNN) $60 Losses to Vacancy 5%of GPR -$3 Collection Losses 0%of GPR $0 Losses to Concessions 0%of GPR $0 Other Value Additions $0 Market Value/ Unit $0 Gross Office Revenue $57 Operating Expenses 5.0%of Gross Revenue -$3 Net Operating Income - Office $54 Net Operating Income - Parking $0.00 per Space/Month $0 Net Operating Income $54 Building Value 6.00%Capitalization Rate $903 Disposition Cost 1.5%of Building Value -$14 Net Value $889 Project Costs Construction Costs Building Direct Costs $311 cost/SF (GBA) $311 Tenant Improvement $20 cost/SF (GBA) $20 Structured Parking Direct Cost $46,958 per Space $188 PLA Cost Premium 5% of Total Const. Cost $27 Total Construction Cost $546 Soft Costs Architecture and Engineering 3% of Construction Cost $16 Other Professional Services 1% of Construction Cost $5 Permits and Fees $53 per Square Foot (GBA) $53 Taxes and Insurance 2% of Construction Cost $11 Financing 6% of Construction Cost $33 Marketing/Leasing 3% of of 10-Year Lease Value $17 Developer Fee 4% of Construction Cost $22 Total Soft Costs $157 Other Costs Development Contingency 10% of Hard and Soft Costs $70 Developer ROI 12% of Development Costs $93 Total Other Costs $163 Total Project Costs $867 Residual Land Value Residual Land Value $22 Per Square Foot (GBA) $22.14 19446.00 Residuals and Conclusions - Verticals: Retail THE CONCORD GROUP 12 EXHIBIT 2Bii ENTERTAINMENT RETAIL - LAND RESIDUAL VALLCO MALL REDEVELOPMENT AUGUST 2019 EPS Evaluation Development Program Assumptions Gross Building Area (Square Feet)1 Rentable Area (Square Feet)100%GBA 1 Structured Parking Spaces 0 Building Value Gross Potential Rent $2.50 per SF/Month (NNN) $30 Losses to Vacancy 5%of GPR -$2 Collection Losses 0%of GPR $0 Losses to Concessions 0%of GPR $0 Other Value Additions $0 Market Value/ Unit $0 Gross Office Revenue $29 Operating Expenses 5.0%of Gross Revenue -$1 Net Operating Income - Office $27 Net Operating Income - Parking $0.00 per Space/Month $0 Net Operating Income $27 Building Value 6.00%Capitalization Rate $451 Disposition Cost 1.5%of Building Value -$7 Net Value $444 Project Costs Construction Costs Building Direct Costs $311 cost/SF (GBA) $311 Tenant Improvement $0 cost/SF (GBA)$0 Structured Parking Direct Cost $46,958 per Space $188 PLA Cost Premium 5% of Total Const. Cost $26 Total Construction Cost $525 Soft Costs Architecture and Engineering 3% of Construction Cost $16 Other Professional Services 1% of Construction Cost $5 Permits and Fees $39 per Square Foot (GBA) $39 Taxes and Insurance 2% of Construction Cost $11 Financing 6% of Construction Cost $32 Marketing/Leasing 3% of of 10-Year Lease Value $9 Developer Fee 4% of Construction Cost $21 Total Soft Costs $132 Other Costs Development Contingency 10% of Hard and Soft Costs $66 Developer ROI 12% of Development Costs $87 Total Other Costs $152 Total Project Costs $810 Residual Land Value Residual Land Value -$365 Per Square Foot (GBA) -$365.05 19446.00 Residuals and Conclusions - Verticals: Ent Retail-EPS THE CONCORD GROUP 13 EXHIBIT 3BELOW MARKET RATE CONDOMINIUM AFFORDABLE HOME PRICE TABLECUPERTINO, CALIFORNIAAUGUST 2019EPS Hausrath Strategic Economics (Existing Policy) The Concord Group9/11/2018Based on EPS7/16/20198/15/2019Affordability Target Unknown/BlendedUnknown/Blended Median (90%) Moderate (110%) Median (90%) Moderate (110%)Affordability Mix (1) 53% 47% 53% 47%2 Bed 3 Bed 2 Bed 3 Bed 1 Bed 2 Bed 3 Bed 1 Bed 2 Bed 3 BedAssumed Average Unit Size (GSF) 1,250 1,250 1,688 2,000 1,688 2,000 8131,275 1,663 813 1,275 1,663Assumed Average Unit Size (NSF) 1,000 1,000 1,350 1,600 1,350 1,600650 1,020 1,330650 1,020 1,330Unit Mix27% 27% 23% 23% 18% 18% 18% 16% 16% 16%Overall Average Net Unit Size1,4751,000Household Size (2)234234Santa Clara County Median Income$105,100 $118,250 $131,400 $105,100 $118,250 $150,000% of Median Income Target90%90%90% 110% 100% 100%Qualifying Income$94,590 $106,425 $118,260 $115,610 $118,250 $150,000Max % of Income Spent on All Housing Costs (3)30%30%30%35%35%35%Funds Available for Mortgage (Assuming No Other Costs)$28,377 $31,928 $35,478 $40,464 $41,388 $52,500Utility Allowance (4)$2,052 $2,436 $3,228 $2,052 $2,436 $3,228Property Tax (5)$4,131 $5,072 $5,562 $6,658 $6,754 $8,590Homeowner's Insurance (6)$984$984$984$984$984$984Mortgage Insurance (7)$1,818 $2,008 $2,203 $2,637 $2,675 $3,402Net Funds Available for Mortgage$19,393 $21,428 $23,501 $28,132 $28,538 $36,29610 Year Trailing Interest Rate4.2%4.2%4.2%4.2%4.2%4.2%Loan Amount Supported$330,468 $365,149 $400,482 $479,404 $486,320 $618,514Down Payment10%10%10%10%10%10%Average BMR Condo Price Per Unit Type$367,187 $405,721 $444,980 $532,671 $540,356 $687,238Price per Net Rentable Square Feet$565$398$335$819$530$517Overall Average BMR Condo Price $835,000 $835,000$375,431$490,332Price per Net Rentable Square Feet$835$835$278$490(1) Under existing policy, 7% of units required to be affordable to median incomes, and 8% required to be affordable to moderate incomes.(2) City of Cupertino BMR Housing Mitigation Program Procedural Manual; Section 2.3.5 Initial Maximum Sales Prices and Rents of BMR Units A.1(3) City of Cupertino BMR Housing Mitigation Program Procedural Manual; Section 2.3.5 Initial Maximum Sales Prices and Rents of BMR Units A.3(4) Santa Clara County Housing Authority, 2019 Utility Allowances Schedule.(5) Property tax of 1.125%.(6) Hello Housing(7) 0.55% of Loan Amount; Hello Housing19446.00 Residuals and Conclusions - Verticals: BMR Calc and ComparisonTHE CONCORD GROUP14 EXHIBIT 4CONSTRUCTION COST EVALUATION AND COMPARISONCUPERTINO, CALIFORNIAAUGUST 2019EPS Hausrath Strategic Economics The Concord Group9/11/2018Based on EPS7/16/20198/15/2019Residential Construction Costs (1) Type VType III ModTruebeckDevconSouth Bay ConstructionCondo ApartmentsLow High Low High Low HighBuilding Direct Costs (per GSF)256256275300Structured Parking (per Space)46,958 46,95830,000 30,000PLA Cost Premium5%5%ConsensusTotal Construction Costs (per GSF) (2) $349$349$323 $348$420 $477 $500 $540 $455 $525 $486(1) TCG construction cost estimates provided by named developers; see attached letters.(2) Total Construction Costs do not include site costs.19446.00 Residuals and Conclusions - Verticals: Hard CostsTHE CONCORD GROUP15 Technical Appendix 16 APPENDIX AREGIONAL LOCATION AND SUBMARKET DELINEATIONSANTA CLARA COUNTY, CALIFORNIAAUGUST 2019The red outlined area is the Competitive Market Area, ("CMA"), the source of competitive rental , for-sale, hotel, and office supply. This area is defined by zip codes and consists of all or most of Sunnyvale, Santa Clara, Cupertino, Saratoga, Los Gatos, Campbell, and South San Jose.The blueoutlined area represents thePrimary Market Area ("PMA"), the geographical limit for prospective renters and owners in the CMA. This area is defined by zip code and stretches from Palo Alto down through the southern edge of Los Gatos.CMAPMASee Page 2 for a detailed view The multi-coloredregions represent the various submarkets of the PMA.Subject Site19446.00 RegLoc: RegLocSCTHE CONCORD GROUP17 APPENDIX AREGIONAL LOCATION AND SUBMARKET DELINEATIONSANTA CLARA COUNTY, CALIFORNIAAUGUST 2019CMASubject SiteThe multi-coloredregions represent the various Palo AltoMountain View/Los AltosCupertinoSanta ClaraCentral San JoseMilpitas/ North San JoseEast San JoseCampbell/ SouthSan JoseSaratoga/ LosGatosSunnyvale19446.00 RegLoc: SCZoomTHE CONCORD GROUP18 APPENDIX AREGIONAL LOCATION AND SUBMARKET DELINEATIONRETAIL TRADE AREAAUGUST 2019The red area represents the Retail Trade Area, ("RTA"), the geographic source of competitive retail supply. RTA1 Mile Radius19446.00 Reg Loc - Retail: Retail ZoomTHE CONCORD GROUP19 APPENDIX BDEMOGRAPHIC SUMMARYPRIMARY MARKET AREAAUGUST 2019Geography Cupertino Sunnyvale Santa ClaraCampbell/ South San JoseSaratoga/ Los Gatos CMA East San JoseCentral San JoseMilpitas/ North San Jose Palo AltoMountain View/ Los AltosPMAGeneral InformationPopulation ('18) 66,278 158,631 129,986 407,766 112,223 874,884 399,443 158,644 184,177 120,358 127,543 1,865,049Households ('18) 22,626 59,162 47,028 145,947 40,631 315,394 101,719 58,443 58,103 42,077 51,250 626,986% PMA3.6%9.4%7.5%23.3%6.5%50.3%16.2%9.3%9.3%6.7%8.2% 100.0%Ann. Growth (#, '18-'23)8113,3512,5854,7621,164 12,6733,0744,4255,6311,3043,372 30,479% PMA2.7%11.0%8.5%15.6%3.8%41.6%10.1%14.5%18.5%4.3%11.1% 100.0%Over $100K HH Growth3901,2689982,6945295,8791,6791,2351,4836381,040 11,954Under $100K HH Growth4212,0831,5872,0686356,7941,3953,1904,1486662,332 18,525Ann. Growth (%, '18-'23)3.4%5.1%5.0%3.1%2.7%3.7%2.9%6.6%8.2%2.9%5.9%4.4%Household Size ('18)2.932.682.762.792.762.773.932.713.172.862.492.97Employed Population ('18)31,280 84,329 68,533 215,140 53,674 452,956 186,132 84,054 94,853 59,218 68,898 946,111% PMA3.3%8.9%7.2%22.7%5.7%47.9%19.7%8.9%10.0%6.3%7.3% 100.0%% White Collar1.2%2.5%2.7%3.0%1.4%2.5%5.7%4.8%2.9%1.9%1.7%3.3%Household Breakdown ('18)1 Person16%23%23%22%18%21%12%28%13%27%26%20%2 Person22%23%22%23%29%24%17%17%18%22%24%21%3+ Person62%54%55%55%52%55%72%55%70%51%50%58%Age Breakdown - Population ('18)Median Age (Pop.)41.037.535.538.948.139.234.734.037.635.240.437.4Under 1825%23%22%23%22%23%26%20%22%22%21%23%18-247%7%10%8%7%8%9%12%8%14%7%9%25-3410%15%18%13%7%13%15%19%16%14%14%15%35-4415%16%16%14%10%14%14%15%16%11%14%14%45-5416%14%12%15%17%15%13%12%14%12%14%14%55-6413%11%11%13%17%13%11%10%12%11%13%12%65-748%7%7%8%12%8%7%6%8%8%9%8%75+6%6%5%6%9%6%5%4%5%7%8%6%Income/Wealth Breakdown - Households ('18)Median Income$140,772 $109,169 $102,591 $102,098 $164,835 $110,772 $82,347 $67,961 $112,508 $117,460 $126,243 $103,994Average Income$182,947 $143,939 $129,941 $133,439 $226,888 $150,477 $110,484 $99,219 $141,466 $181,509 $182,999 $143,117% PMA127.8% 100.6%90.8%93.2% 158.5% 105.1%77.2%69.3%98.8% 126.8% 127.9% 100.0%Under $50K15%19%23%22%12%20%30%38%19%25%20%23%$50-$75K9%12%13%14%8%12%15%15%11%10%11%13%$75-$100K10%14%12%13%8%12%12%12%12%9%9%12%$100-$150K19%21%21%20%17%20%19%15%23%13%17%19%$150-$200K15%13%12%13%14%13%10%9%15%10%12%12%$200K+32%21%18%19%41%23%14%11%20%32%31%21%Rental Housing ('18)% Rent40%53%55%40%21%42%37%66%44%48%46%45%Renter Households9,095 31,487 26,026 58,6748,368 133,650 37,373 38,518 25,717 20,300 23,562 279,120% PMA3.3%11.3%9.3%21.0%3.0%47.9%13.4%13.8%9.2%7.3%8.4% 100.0%Annual New Renters3261,7831,4311,9142405,3701,1292,9162,4926291,550 13,569% Renter HHs Rent SFD ('18)21.8%14.4%14.8%21.6%41.5%19.7%36.7%14.6%19.4%25.8%13.6%21.4%% Renter HHs Rent 1-4 Unit Att. ('18)30.6%22.8%20.9%26.5%23.3%24.6%26.8%22.3%20.0%14.2%20.0%23.1%% Renter HHs Rent 4-50 Unit Att. ('18)25.2%38.8%40.5%33.9%21.6%35.1%20.4%35.9%18.1%36.2%45.7%32.6%% Renter HHs Rent 50+ Unit Att. ('18)22.2%22.0%23.6%17.7%12.6%19.9%14.2%26.3%40.7%22.9%20.0%22.0%For-Sale Housing ('18)% Own60%47%45%60%79%58%63%34%56%52%54%55%Owner HHs13,531 27,675 21,002 87,273 32,263 181,744 64,346 19,925 32,386 21,777 27,688 347,866% of PMA3.9%8.0%6.0%25.1%9.3%52.2%18.5%5.7%9.3%6.3%8.0% 100.0%Annual New Owners ('18-'23)4851,5681,1542,8489247,3031,9451,5093,1396751,822 16,910% Own SFD77.3%69.5%74.1%80.4%88.9%79.4%77.4%68.1%68.4%84.3%73.8%77.2%% Own 1-4 Unit Attached16.6%13.8%16.7%12.5%9.7%13.0%14.3%11.7%20.4%6.5%14.4%13.5%% Own 5-49 Unit Attached2.1%3.0%4.9%2.5%0.7%2.5%1.8%4.4%2.9%4.8%5.2%2.8%% Own 50+ Unit Attached4.0%0.9%4.0%1.0%0.3%1.4%0.5%10.8%1.6%3.4%2.8%2.0%76%31%64%28%70%28%69%30%68%29%65%24%64%29%64%28%80%27%54%27%70%30%47%28%70%28%19446.00 DemosDemand: DemosTHE CONCORD GROUP20 APPENDIX C1iCURRENT INVENTORYPRIMARY MARKET AREAAUGUST 2019July 2019Product Base PriceProject Name Address City Builder Type Total Rem. Absorption Home Size $ PSFSan JosePlatinum II at Communications Hill Casselino Drive San Jose KB Home SFD 31 4 0.9 2,628 $1,619,000 $616The Capitol 641 North Capitol Avenue San Jose Pulte TH 188 159 4.5 1,541 $890,323 $578Lexington At Avenue One 5951 Sunstone Dr #302 San Jose LennarCondo/TH190 1254.1 1,411 $792,780 $562SP78127 W Julian StreetSan Jose Trumark Homes TH78 403.1 1,514 $825,056 $545Promenade II at Communications Hill Communications Hill Blvd & Hillsdale Ave San Jose KB Home SFD32 20-- 2,165 $1,160,000 $536Catalyst at Communications Hill Communications Hill Blvd & Mullinix Way San Jose KB Home TH98 88-- 1,913 $1,016,667 $532Metro II at Communications Hill Manuel Street & Casellino DriveSan Jose KB Home TH94 ---- 1,873 $957,400 $511Cottlestone3810 Dove Hill RoadSan Jose LaffertySFD17 140.2 3,373 $1,702,000 $505The Residences at UrbanOak6825 Chroma CourtSan Jose PulteSFD60 491.7 2,347 $1,084,990 $462The Rows at UrbanOak6825 Chroma CourtSan Jose PulteTH97 920.8 1,873 $849,990 $454Asana2675 Interlude StreetSan Jose DeNova Homes TH250 2064.2 3,149 $1,336,000 $424Overall Total/Weighted Average:11 Projects1,135 7972.8 2,117 $1,032,888 $488Mountain ViewRadius Townhomes320 Circuit WayMountain ViewPulteTH113 43.7 1,597 1,618,323 $1,013Palmero Homes326 Cherokee LoopMountain ViewClassic CommunitiesTH33 1-- 1,694 1,702,667 $1,0056Sixty660 Tyrella AvenueMountain ViewTaylor Morrison Condo37 161.6 1,466 1,465,667 $1,000Estancia2290 Mora PlaceMountain ViewLennarTH/SFD 73 54.7 1,776 1,709,880 $963Overall Total/Weighted Average:4 Projects256 263.2 1,555 $1,545,232 $994Santa ClaraDowntown Gateway1048 Monroe St.Santa ClaraSiliconSage HomesTH44 71.5 1,544 1,347,683 $873Nuevo - Terraces3505 Kifer Rd.Santa ClaraSummerhill HomesTH176 1554.9 1,762 1,433,000 $813Nuevo - E-Town3505 Kifer Rd.Santa ClaraSummerhill HomesTH114 983.7 2,034 1,598,333 $786Overall Total/Weighted Average:3 Projects334 2604.0 1,859 $1,493,021 $803SunnyvaleNova at the Vale915 Cotati TerraceSunnyvale Taylor Morrison TH136 127.8 1,563 $1,367,857 $875Classics at Lawrence Station1122 Aster AveSunnyvaleClassic CommunitiesTH34 51.3 1,771 $1,521,250$859The Vale 812 Galt Terrace SunnyvaleLand Sea HomesTH314 45 11.8 1,926 1,455,327 $756Overall Total/Weighted Average:3 Projects484 629.9 1,843 $1,443,713 $783Grand Total/Weighted Average:21 Projects2,209 1,1454.6 2,031 $1,171,252 $577Units19446.00 FS RecComps: Cleaned Inv- July19The Concord Group21 APPENDIX C1iiLOCATION OF NEW HOME COMMUNITIESSOUTH BAY; SAN FRANCISCO BAY AREA, CALIFORNIAAUGUST 2019Color Coded by $/SFPurple= Below $500Blue= $500 - $550Green= $550 - $700Yellow= $700 - $850Orange= $850 - $900Red= Above $90019446.00 FS RecComps: CompMapthe concord group22 APPENDIX C2PRODUCT PROGRAM POSITIONING - ALL NEW HOME PRODUCTPRIMARY MARKET AREAAUGUST 2019$500,000$700,000$900,000$1,100,000$1,300,000$1,500,000$1,700,000$1,900,000$2,100,000600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800 3,000 3,200 3,400 3,600 3,800 4,000Price ($)Home Size (SF)Asana - THCatalyst at Communications Hill - THClassics at Lawrence Station - THCottlestone - SFDDowntown Gateway - THEstancia - TH/SFDLexington At Avenue One - Condo/THMetro II at Communications Hill - THNuevo - Terraces - THPlatinum II at Communications Hill - SFDPromenade II at Communications Hill - SFDThe Capitol - THThe Residences at UrbanOak - SFDThe Rows at UrbanOak - THThe Vale - THNova at the Vale - THRadius Townhomes - TH6Sixty - CondoPalmero Homes - THNuevo - E-Town - THSP78 - THEPS Assumed PriceSan Jose TrendlineSunnyvale TrendlineMountain View TrendlineSanta Clara TrendlineColor Coded by SubmarketYellow/Orange= Central San JosePurple= Santa ClaraGreen= SunnyvaleBrown= Mountain View19446.00 Positioning NG: PSPage 1 of 1the concord group23 APPENDIX D1 RETAIL MARKET PERFORMANCE PRIMARY MARKET AREA AUGUST 2019 Primary Market Area Geography 1-Mile Retail Trade Area PMA General Information Population ('17) 24,058 223,280 1,855,647 Households ('17) 8,468 80,765 634,221 % PMA 1.3% 12.7% 100.0% Ann. Growth (#, '17-'22) 99 745 6,556 % PMA 1.5% 11.4% 100.0% Over $100K HH Growth 150 1,264 10,189 Under $100K HH Growth (51) (518) (3,633) Ann. Growth (%, '17-'22) 1.1% 0.9% 1.0% Household Size ('17) 2.84 2.76 2.93 Consumer Spending Patterns ('17) Consumer Expenditures ($000) $662,491 $6,025,190 $42,440,532 Per Capita $27,537 $26,985 $22,871 Retail Sales ($000) $494,451 $4,019,980 $54,221,288 Per Occupied Square Foot $517 $377 $786 Spending Inflow/ (Leakage)($168,041) ($2,005,210)$11,780,756 Retail Market Performance (2018) Rentable Building Area (SF) 2,104,901 12,172,957 72,082,254 Annual Deliveries (SF) Five-Year Average 32,689 58,384 587,743 Ten-Year Average 18,814 37,519 496,645 Annual Net Absorption (SF) Five-Year Average (192,093) (159,938)398,829 Ten-Year Average (97,092) (124,198)81,054 Vacancy Rate 54.5% 12.5% 4.3% Vacant Stock (SF) 1,147,633 1,523,654 3,067,884 Asking Rent (NNN) $49.10 $36.18 $35.28 Rent Growth Five-Year Average 6.2% 2.8% 4.3% Ten-Year Average 1.9% 2.1% 1.2% Source: Claritas; US Census; CoStar 17666.02 Demos: Submarket THE CONCORD GROUP 24 APPENDIX D2iCURRENT RETAIL INVENTORY - AVAILABLE LISTINGSRETAIL MARKET AREAAUGUST 2019Available RMA ListingsYearTypicalArea Rentable Building Area (RBA)Ann. Lease RateBuilding NameAddressCityBuilt Elev. Type Floor Leased TotalAvail. % Lease RentDate TypeRetail Market Area20520-20540 Stevens Creek Blvd 20520-20540 Stevens CreeCupertino1959 1s Standalone 17,555 -- 17,555 6,765 61.5% $60.02-- NNNLoree Center19050-19088 Stevens CreeCupertino1951 1s Standalone 20,000 -- 20,0000 100.0% $52.20-- NNN10562-10624 S De Anza Blvd10562-10624 S De Anza BlCupertino1975 1s Standalone 27,778 -- 27,7780 100.0% $51.00-- NNN10215-10225 S De Anza Blvd10215-10225 S De Anza BlCupertino1960 1s Standalone 11,180 -- 11,180 2,220 80.1% $48.00-- NNN21739-21749 Stevens Creek Blvd 21739-21749 Stevens CreeCupertino1949 1s Standalone5,288 -- 5,288 600 88.7% $47.40-- NNNSt. Joseph's Retail20325-20387 Stevens CreeCupertino1987 1s --20,222 -- 20,2220 100.0% $46.80-- NNNHomestead Square20580-20680 Homestead RCupertino1976 1s Standalone 167,019 -- 167,0190 100.0% $45.90-- NNN*1375 S De Anza Blvd1375 S De Anza Blvd Cupertino1985 1s Standalone6,222 -- 6,222 6,222 0.0% $42.00-- NNN19625-19805 Stevens Creek Blvd 19625-19805 Stevens CreeCupertino1978 1s Standalone 53,489 -- 53,489 2,299 95.7% $42.00-- NNN20149 Stevens Creek Blvd20149 Stevens Creek Blvd Cupertino1957 1s Standalone9,600 -- 9,600 6,000 37.5% $40.50-- NNN*10650 Bubb Rd10650 Bubb RdCupertino1980 1s Standalone2,400 -- 2,4000 100.0% $39.96-- NNN*ABN Plaza19929-19989 Stevens CreeCupertino2003 2s In-line5,322 -- 10,643 2,638 75.2% $34.08-- NNN*1189 S De Anza Blvd1189 S De Anza Blvd San Jose1951 1s Standalone2,844 -- 2,8440 100.0% $48.00-- NNN1071-1091 S De Anza Blvd1071-1091 S De Anza Blvd San Jose1978 1s Standalone 26,433 -- 26,433 10,000 62.2% $42.00-- NNNClarendon Plaza1072 S De Anza Blvd San Jose1989 2s In-line19,834 -- 39,668 4,608 88.4% $42.00-- NNN1510 S De Anza Blvd1510 S De Anza Blvd San Jose1974 1s Standalone7,000 -- 7,000 7,000 0.0% $42.00-- NNN5124-5144 Stevens Creek Blvd5124-5144 Stevens Creek BSan Jose1995 1s Standalone 24,729 -- 24,729 6,102 75.3% $42.00-- NNNSafeway/ Cost Plus World Market/ Total Win5146-5170 Stevens Creek BSan Jose1973 1s Standalone 158,392 -- 158,392 9,811 93.8% $42.00-- NNNPark Lane Plaza5152-5278 Moorpark Ave San Jose1968 1s Standalone 70,000 -- 70,000 1,208 98.3% $36.00-- NNN5205 Prospect Rd5205 Prospect Rd San Jose1960 1s Standalone 74,218 -- 74,218 18,114 75.6% $36.00-- NNN1080 Saratoga Ave1080 Saratoga Ave San Jose1966 1s Standalone 17,380 -- 17,380 1,178 93.2% $31.80-- NNN1547-1551 Saratoga Ave1547-1551 Saratoga Ave San Jose1962 1s Standalone6,770 -- 6,770 630 90.7% $30.47-- NNN*982 S De Anza Blvd982 S De Anza Blvd San Jose1964 2s Standalone1,410 -- 10,048 1,410 86.0% $19.98-- NNN*2801-2807 El Camino Real2801-2807 El Camino Real Santa Clara2005 1s Standalone3,926 -- 3,9260 100.0% $54.00-- NNN5241-5245 Stevens Creek Blvd5241-5245 Stevens Creek BSanta Clara1995 1s Standalone 20,122 -- 20,1220 100.0% $44.40-- NNN3530-3560 Homestead Rd3530-3560 Homestead Rd Santa Clara1974 1s Standalone7,000 -- 7,000 1,610 77.0% $42.00-- NNN4343 Stevens Creek Blvd4343 Stevens Creek Blvd Santa Clara1966 1s --18,905 -- 18,9050 100.0% $33.10-- NNN*3510 Homestead Rd3510 Homestead Rd Santa Clara1974 1s Standalone 89,750 -- 89,750 33,350 62.8% $30.00-- NNNKiely Plaza1052-1092 Kiely Blvd Santa Clara1974 1s Standalone 23,766 -- 23,766 846 96.4% $29.40-- NNN3220-3232 El Camino Real3220-3232 El Camino Real Santa Clara1951 1s Standalone6,319 -- 6,319 1,600 74.7% $25.38-- NNN*3330 El Camino Real3330 El Camino Real Santa Clara1975 2s Standalone4,811 -- 9,623 409 95.7% $24.30-- NNN*2570 El Camino Real2570 El Camino Real Santa Clara1964 1s Standalone5,992 -- 5,9920 100.0% $22.14-- NNN*3203-3207 Cabrillo Ave3203-3207 Cabrillo Ave Santa Clara1989 2s In-line3,164 -- 6,327 1,312 79.3% $18.90-- NNN*Moonlite Shopping Center2610-2790 El Camino Real Santa Clara1960 1s Standalone 169,375 -- 169,375 10,525 93.8% $12.00-- NNN151-161 E El Camino Real151-161 E El Camino Real Sunnyvale1979 1s Standalone 10,615 -- 10,615 3,000 71.7% $47.40-- NNN510 E El Camino Real510 E El Camino Real Sunnyvale1979 1s Standalone 12,606 -- 12,6060 100.0% $45.00-- NNN913-919 W El Camino Real913-919 W El Camino RealSunnyvale1991 1s Standalone5,211 -- 5,211 1,384 73.4% $42.00-- NNN1265 W El Camino Real1265 W El Camino Real Sunnyvale1967 1s Standalone6,020 -- 6,020 5,400 10.3% $42.00-- NNNWestmoor Village1211-1291 S Mary Ave Sunnyvale1961 1s In-line60,909 -- 60,909 2,520 95.9% $42.00-- NNN1111 W El Camino Real1111 W El Camino Real Sunnyvale1984 2s Standalone 13,122 -- 26,2430 100.0% $36.13-- NNN984-994 W El Camino Real984-994 W El Camino RealSunnyvale-- 1s Standalone 13,339 -- 13,339 4,056 69.6% $36.00-- NNN130 E El Camino Real130 E El Camino Real Sunnyvale1964 1s Standalone 37,203 -- 37,2030 100.0% $30.00-- NNN631-693 Grape Ave631-693 Grape Ave Sunnyvale1965 1s Standalone 10,044 -- 10,044 936 90.7% $28.80-- NNN751-799 E El Camino Real751-799 E El Camino Real Sunnyvale1993 2s Standalone 172,613 -- 172,613 4,812 97.2% $28.58-- NNN*Available RMA Listings Totals: 46 Properties 197332,9521,504,786 158,565 89.5% $35.41NNN19446.00 Retail Comps: InvAvailThe Concord Group25 APPENDIX D2iiCURRENT RETAIL INVENTORY - EXECUTED LEASESRETAIL MARKET AREAAUGUST 2019Executed RMA LeasesYearTypicalAreaRentable Building Area (RBA)Ann. Lease RateBuilding NameAddressCityBuilt Elev.TypeFloor Leased TotalAvail. % Lease Rent Date TypeRetail Market Area - Retail Leases20735 Stevens Creek Blvd20735 Stevens Creek Blvd Cupertino1991 1s 3 Star Retail13,205 1,200 13,2050 100.0% $57.00 3/28/2019 NNN*20672-20676 Homestead Rd20672-20676 Homestead RCupertino1989 1s 3 Star Retail7,097 2,041 7,0970 100.0% $57.00 1/24/2019 NNN*20030-20080 Stevens Creek Blvd 20030-20080 Stevens CreeCupertino2015 1s 3 Star Retail7,045 1,271 7,0450 100.0% $54.00 2/14/2019 NNN*19369 Stevens Creek Blvd19369 Stevens Creek Blvd Cupertino2016 1s 3 Star Freestanding 9,502 2,217 9,5020 100.0% $52.00 10/11/2018 NNN19625-19805 Stevens Creek Blvd 19625-19805 Stevens CreeCupertino1978 1s 3 Star Freestanding 53,489 1,600 53,489 2,299 95.7% $51.00 10/29/2018 NNN*20803 Stevens Creek Blvd20803 Stevens Creek Blvd Cupertino2015 1s 3 Star Retail7,000 2,809 7,0000 100.0% $51.00 10/9/2018 NNN*20269-20289 Stevens Creek Blvd 20269-20289 Stevens CreeCupertino1980 1s 2 Star Freestanding 9,706 1,294 9,7060 100.0% $47.40 10/15/2018 NNN*1131-1173 S De Anza Blvd1131-1173 S De Anza Blvd San Jose1965 2s 3 Star Freestanding 20,383 1,600 31,4120 100.0% $54.00 11/16/2018 NNN*1191-1205 S De Anza Blvd1191-1205 S De Anza Blvd San Jose2017 2s 3 Star Freestanding 13,000 1,560 13,000 2,117 83.7% $48.00 6/18/2019 NNN*5152-5278 Moorpark Ave5152-5278 Moorpark Ave San Jose1968 1s 3 Star Freestanding 70,000 2,011 70,000 1,208 98.3% $34.20 8/6/2018 NNN*6130-6186 Bollinger Rd6130-6186 Bollinger Rd San Jose1969 1s 3 Star Freestanding 106,000 23,672 106,0000 100.0% $30.00 7/5/2019 NNN*3070-3080 El Camino Real3070-3080 El Camino Real Santa Clara2006 1s 3 Star Freestanding 8,894 1,592 8,8940 100.0% $54.00 3/1/2019 NNN*3070-3080 El Camino Real3070-3080 El Camino Real Santa Clara2006 1s 3 Star Freestanding 8,894 1,100 8,8940 100.0% $42.00 5/3/2019 NNN*777 Lawrence Expy777 Lawrence Expy Santa Clara1961 1s 3 Star Freestanding 19,920 6,010 19,9200 100.0% $42.00 2/13/2019 NNN*4611 Stevens Creek Blvd4611 Stevens Creek Blvd Santa Clara1973 1s 3 Star Freestanding 3,750 3,750 3,7500 100.0% $36.00 10/10/2018 NNN*3460-3488 El Camino Real3460-3488 El Camino Real Santa Clara1992 1s 3 Star Freestanding 41,287 1,777 41,2870 100.0% $34.20 10/18/2018 NNN*3148 El Camino Real3148 El Camino Real Santa Clara1988 2s 3 Star Office7,600 992 15,200 1,475 90.3% $33.00 6/17/2019 NNN*3330 El Camino Real3330 El Camino Real Santa Clara1975 2s 2 Star Retail4,811 600 9,623 409 95.7% $30.00 4/11/2019 NNN*2610-2790 El Camino Real2610-2790 El Camino Real Santa Clara1960 1s 4 Star Freestanding 169,375 18,144 169,375 10,525 93.8% $24.00 8/17/2018 NNN*2610-2790 El Camino Real2610-2790 El Camino Real Santa Clara1960 1s 4 Star Freestanding 169,375 17,542 169,375 10,525 93.8% $24.00 8/17/2018 NNN*2610-2790 El Camino Real2610-2790 El Camino Real Santa Clara1960 1s 4 Star Freestanding 169,375 10,000 169,375 10,525 93.8% $12.36 2/1/2019 NNN*751-799 E El Camino Real751-799 E El Camino Real Sunnyvale1993 2s 4 Star Retail172,613 1,320 172,613 4,812 97.2% $51.00 8/27/2018 NNN*751-799 E El Camino Real751-799 E El Camino Real Sunnyvale1993 2s 4 Star Retail172,613 2,306 172,613 4,812 97.2% $51.00 8/27/2018 NNN*798-820 E El Camino Real798-820 E El Camino Real Sunnyvale2008 1s 3 Star Retail5,720 1,800 5,7200 100.0% $42.00 6/1/2019 NNN*510 E El Camino Real510 E El Camino Real Sunnyvale1979 1s 3 Star Retail12,606 2,591 12,6060 100.0% $41.40 4/29/2019 NNN*510 E El Camino Real510 E El Camino Real Sunnyvale1979 1s 3 Star Retail12,606 4,732 12,6060 100.0% $41.40 11/27/2018 NNN*440-474 E El Camino Real440-474 E El Camino Real Sunnyvale1987 1s 3 Star Retail32,000 956 32,0000 100.0% $37.80 10/15/2018 NNN*984-994 W El Camino Real984-994 W El Camino RealSunnyvale-- 1s 2 Star Retail13,339 2,093 13,339 4,056 69.6% $36.00 3/28/2019 NNN*751-799 E El Camino Real751-799 E El Camino Real Sunnyvale1993 2s 4 Star Retail172,613 922 172,613 4,812 97.2% $29.48 1/10/2019 NNN*Executed RMA Leases Totals: 29 Properties 191852,201 119,502 1,537,259 57,575 96.3% $32.71NNNRetail Market Area - Entertainment Retail Leases22350-22382 Homestead Rd22350-22382 Homestead RCupertino1962 1s 2 Star Freestanding 7,257 1,076 7,2570 100.0% $32.52 8/23/2018 NNN*639-643 S Bernardo Ave639-643 S Bernardo Ave Sunnyvale1958 1s 3 Star Freestanding 34,544 1,420 34,5440 100.0% $33.02 12/6/2018 NNNExecuted Entertainment RMA Leases Totals: 2 Properties 196020,901 2,496 41,8010 100.0% $32.80NNN19446.00 Retail Comps: InvExecThe Concord Group26 EXHIBIT D2iiiCOMPARABLE RETAIL LOCATIONSRETAIL MARKET AREAAUGUST 2019Note: Values in parentheses represent year built and NNN lease terms PSF.Color-Coded by FSG Lease:Red= Above $45.00Yellow = $45.00 - $40.00Green= $40.00 - $35.00Blue= $35.00 - $30.00Purple= Below $30.00Subject Site19446.00 Retail Comps: Retail MapPage 1 of 2The Concord Group27 EXHIBIT D2iiiCOMPARABLE RETAIL LOCATIONS - ZOOMRETAIL MARKET AREAAUGUST 2019Note: Values in parentheses represent year built and NNN lease terms PSF.Subject SiteColor-Coded by FSG Lease:Red= Above $45.00Yellow = $45.00 - $40.00Green= $40.00 - $35.00Blue= $35.00 - $30.00Purple= Below $30.0019446.00 Retail Comps: Retail MapPage 2 of 2The Concord Group28 APPENDIX D3 PROGRAM RECOMMENDATIONS & POSTIONING - RETAIL RETAIL MARKET AREA AUGUST 2019 Product Monthly Annual Assumed Positioning - Traditional Retail $5.00 $60.00 /NNN Assumed Positioning - Entertainment Retail $2.50 $30.00 /NNN $10 $15 $20 $25 $30 $35 $40 $45 $50 $55 $60 $65 $70 $75 Assumed Positioning - Traditional Retail TCG Recs - Entertainment Retail 20520-20540 Stevens Creek Blvd Loree Center 10562-10624 S De Anza Blvd 10215-10225 S De Anza Blvd 21739-21749 Stevens Creek Blvd St. Joseph's Retail Homestead Square 1375 S De Anza Blvd 19625-19805 Stevens Creek Blvd 20149 Stevens Creek Blvd 10650 Bubb Rd ABN Plaza 1189 S De Anza Blvd 1071-1091 S De Anza Blvd Clarendon Plaza 1510 S De Anza Blvd 5124-5144 Stevens Creek Blvd Safeway/ Cost Plus World Market/ Total Wine Park Lane Plaza 5205 Prospect Rd 1080 Saratoga Ave 1547-1551 Saratoga Ave 982 S De Anza Blvd 2801-2807 El Camino Real 5241-5245 Stevens Creek Blvd 3530-3560 Homestead Rd 4343 Stevens Creek Blvd 3510 Homestead Rd Kiely Plaza 3220-3232 El Camino Real 3330 El Camino Real 2570 El Camino Real 3203-3207 Cabrillo Ave Moonlite Shopping Center 151-161 E El Camino Real 510 E El Camino Real 913-919 W El Camino Real 1265 W El Camino Real Westmoor Village 1111 W El Camino Real 984-994 W El Camino Real 130 E El Camino Real 631-693 Grape Ave 751-799 E El Camino Real 20735 Stevens Creek Blvd 20672-20676 Homestead Rd 20030-20080 Stevens Creek Blvd 19369 Stevens Creek Blvd 19625-19805 Stevens Creek Blvd 20803 Stevens Creek Blvd 20269-20289 Stevens Creek Blvd 1131-1173 S De Anza Blvd 1191-1205 S De Anza Blvd 5152-5278 Moorpark Ave 6130-6186 Bollinger Rd 3070-3080 El Camino Real 3070-3080 El Camino Real 777 Lawrence Expy 4611 Stevens Creek Blvd 3460-3488 El Camino Real 3148 El Camino Real 3330 El Camino Real 2610-2790 El Camino Real 2610-2790 El Camino Real 2610-2790 El Camino Real 751-799 E El Camino Real 751-799 E El Camino Real 798-820 E El Camino Real 510 E El Camino Real 510 E El Camino Real 440-474 E El Camino Real 984-994 W El Camino Real 751-799 E El Camino Real 639-643 S Bernardo Ave 22350-22382 Homestead Rd Annual Lease Rate (NNN) AVAILABLE LEASES Cupertino EXECUTED LEASES Entertainment Retail Cupertino San Jose Santa Clara Sunnyvale San Jose Santa Clara Sunnyvale 19446.00 Retail Comps: Retail Positioning The Concord Group Agenda Item #11 Attachment A -for Attachment 14 From: Beth Ebben To: Abby Ayende; Benjamin Fu; Bonnie Yee. Cheung: Ell en Yau; Erick Ser ran o; Erika Poved a; Gian Martire; Jeff Tsumura; Kerri Heusler ; Krista Yost; Piu Ghos h Subject: Date: Attachments: FW : Save Vallco"s future -VOTE NO on Genera l Plan Amendments Wednesday, July 3 1, 2019 10 :24:52 AM im age00l.png image002 .png im age003.png im age004.png imaqe00S.png image006.png im age007.png im aqe008.png From the general m a ilbox: m._-.. --.! , - 44 .- CUP ERTINO From: al be rt liu Beth Ebben Deputy Board Clerk Planning Di vis ion Be thE @cupertino.org ( 408) 777 -3308 ®~o ,oo,@o Sent: Tuesday, July 30, 20 19 5:32 PM To: City of Cupertino Plannin g Commission Subject: Save Va llco's fu ture -VOTE NO o n General Pl an Ame n dments You folks are acting without any considerations from other Cupertino residents . Your unilateral way is very much like our president Trump. Is that the democratic way ? You are bringing lawsuits which are costly and will be paid by Cupertino residents ... unwillingly . What are you doing this for? Not for the real better Cupertino. I don't see anything better about what you are doing. Are we becoming snobbish ? We don't allow low income housing to Cupertino ? Do you know who are the people needing low income housing these days ? Not welfare recipients . Not the homeless . The teachers, the office workers, the bank tellers , the police , the firemen , ... regular working people. Because of the high price housing market, they have to have low incoming housing in order to live close to where they work, not having to commute for 45 miles away . I am sure everyone of you know this , but you still carry on with your agenda . I think some of you are not in the interest of the public . You have personal issues with this developer and you use them in disguise as "Better Cupertino". Shame on you . Albert Liu 35+ years Cupertino resident From: To: Subject: Date: Beth Ebb en Abby Ayende; Benjamin Fu; Bonnie Yee. Cheung; Ellen Ya u; Erick Serrano; Erika Pov eda; Gian Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Piu Ghosh FW : General Plan amendment Wednesday, July 3 1, 2019 10 :28:37 AM From the gen eral mailbox: Beth Ebben Deputy Board C lerk Planning Division BethE@ cupertino .o rg (408) 777-3308 -----Ori ginal Message----- From : A nn Cleaver Sent: Tuesday, July 30, 2019 3 :53 PM To: City of Cupertino P lann in g Commission Subject: General Plan amendm e nt Dear Commiss ioners, I know yo u commissioners have the best interests of the city at heart or you wouldn't be serving in yo ur ro les. With that in mind, I urge you to defer approval of any significant general plan amendment until comp lete city-wide review has been accomplished. We desperately need to keep housi ng a key component in the city's plans. Without a city-wide review the city wi ll incur severe legal costs that will affect me and the rest of the city's taxpayers. Do what 's right for the city . Ann C leaver !!!II. Sent from my iPhone From: City of Cupertino Planning Dept. To: Abby Ayende; Benjamin Fu; Bonnie Yee. Cheu ng; Ellen Yau; Er ick Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Piu Ghosh Subject: Date: Attachments: FW: Maintain zoning to allow Vallco project to continue Wednesday, July 31, 2019 10 :50 :02 AM image00l.p ng im age002 .png image003.png image004.png image00S.png image006 .png image007 .png image008 .png From the general mailbox: CUPERTINO From: Ansh Shukla Beth Ebben Deputy Board Clerk Planning Di v ision BethE@cupertino .org (408) 777-3308 ®~OO,O@>·O Sent: Tuesda y, July 30, 2019 3:22 PM Subject: Maintain zoni ng to allow Vallco proj ect to co ntinue Hi,, I've been a Cupetiino resident for nearly twenty years and also went through the Cupertino school system. I am in extreme support of the cutTent redevelopment plans at Vallco . It 's come to my attention that the planning commission intends to revisit the site's zoning, which would make current pl ans infeasible. This would be a huge loss to the community, and I am writing to express my strong opposition to an y such action. -Ansh Total Contro l Panel To: c itvc le rk@cupertin o.org From:- Message Score: 15 My Spam Blocking Le ve l: C usto m B lock this sender B lock anshuk la.com This message was delivered because the content filter score did not exceed your filter lev el. High (60): Pns s Medium (75): P,i,;s Low (90): P.1,; Custom (55): l',i,;, From: To: Subject: Date: Attachments: Beth Ebben Brian Babcoc k; Abby Ayende; Benjamin Fu; Bo nni e Yee . Cheung; Ellen Yau; Erick Serrano; Erika Poveda ; Gian Martire; Jeff T sumu r a; Kerri Heu sler; Krista Yost; Piu Gh os h FW: Save Vallco"s future -VOTE NO on General Plan Amendments Wednesday, Jul y 31, 2019 10 :37 :46 AM image001.pnq imag e0 0 2.png imaqe003 .png image004.png imaqe00S.png imaq e00 6 .png imag e007.png imag e008 .png From the general mailbox : CUP ERTI NO From: Chi Yeh Beth Ebben D eputy Board Clerk Pl anning Division BethE @cupertino .org {408) 777-3308 (1}) Cl O o, O@ , 0 Sent: Tuesda y, July 30, 2019 6:03 PM To: City of Cupertin o Planning Commiss ion Subject: Re: Save Vallco's futu re -VOTE NO on Genera l Plan Amendments Just read the following , w hat was the chairman 's ex planation? http s://s anjose s potlight.com /cupetiino-p o l icymaker-in-hot-wate r-for -p ast-sexual-hara ss ment- lawsuit/ Best, Chi Yeh Sent from my iPhone On Jul 30, 2019, at 5:22 PM, Chi Yeh-> wrote: As a 30 year resident of Cupertino who has raised fam il y in this city , I urge yo u not to pass the down zoni ng -a mendments th at are und er co n siderat ion at tonight's meeting. These amendments wi ll block any feasib le project that would provide sorely needed additional housing to Cupertino and would leave the valuable Vallco property unused and wasted for yet another generation. The proposed rezoning increases the retail the City previously required and plans for additional low-wage jobs, while cutting all forms of housing, including a 95% reduction in low-income housing! The rezoning is being considered without community input or further study. General Plan updates typically include extensive months-long community outreach processes, separate from normal Council and Commission meetings. Plus, no environmental studies have been done . This reactionary proposal is following the City Council 's action earlier this spring to repeal the Vallco Specific Plan without putting the referenda to a public vote, despite an entire campaign dedicated to promising that vote. This action sends the wrong message about Cupertino 's values , shrinks the City's role in addressing the region's affordable housing crisis, exposes the City and its taxpayers to significant legal liabilities, and attempts to ruin any chance to restore the Valko site to viable use. It is most distressing to me as a long time resident that our local government is potentially acting so irresponsibly and I urge you to table these rezoning proposals pending community input and more serious discussions about the effects of these potential changes. Best, Chi Yeh Sent from my iPhone From: To: Subject: Date: Attachments: Beth Ebben Abby Ayende; Benjamin Fu ; Bonnie Yee. Cheung: Ellen Yau; Erick Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Piu Ghosh FW: Save Vallco"s future -VOTE NO on General Plan Amendments Wednesday, July 31, 2019 10:26:06 AM imaqeOOl.pnq imaqe002 .pnq imaqe003 . pnq imaqe004.pnq imaqeOOS.pnq imaqe006.pnq imaqe007.pnq imaqe008 .pnq From ·the general mailbox: CUPERTINO From: Chi Yeh Beth Ebben Deputy Board Clerk Planning Division BethE @cupertino.org (408) 777-3308 @()000@ 0 Sent: Tuesday, July 30, 2019 5:23 PM To: City of Cupertino Planning Commission <PlanningCommission@cupertino.org> Subject: Save Vallco's future -VOTE NO on General Plan Amendments As a 30 year resident of Cupertino who has raised family in this city, I urge you not to pass the down zoning-amendments that are under consideration at tonight's meeting. These amendments will block any feasible project that would provide sorely needed additional housing to Cupe1iino and would leave the valuable Valko property unused and wasted for yet another generation. The proposed rezoning increases the retail the City previously required and plans for additional low-wage jobs, while cutting all forms of housing, including a 95% reduction in low-income housing! The rezoning is being considered without community input or futiher study. General Plan updates typically include extensive months-long community outreach processes, separate from normal Council and Commission meetings. Plus, no environmental studies have been done. This reactionary proposal is following the City Council's action earlier this spring to repeal the Valko Specific Plan without putting the referenda to a public vote , despite an entire campaign dedicated to promising that vote. This action sends the wrong message about Cupertino 's values , shrinks the City's role in addressing the region 's affordable housing crisis, exposes the City and its taxpayers to significant legal liabilities, and attempts to ruin any chance to restore the Valko site to viable use. It is most distressing to me as a long time resident that our local government is potentially acting so irresponsibly and I urge you to table these rezoning proposals pending community input and more serious discussions about the effects of these potential changes. Best, Chi Yeh Sent from my iPhone From: To: Subject: Date: Attachments: Beth Ebben Abby Aye nd e; Benjam in Fu; Bonnie Yee. Cheung : Ellen Yau; Er ick Serrano; Erika Pov eda; Gian Martire; Jeff T sumura; Ker ri Heusler; Krista Yost; Piu Gho s h FW: Save Vallco"s future -VOTE NO on General Plan Amendments Monday, August 5, 2019 10:18:03 AM image001.png imag e002.png image003.pnq image004 .pnq image00S.pnq image006.png image007 .png image00B.png From the general mailbox : ffl -CUPERTINO From: Chris Ambrose Beth Ebben Deputy Board C lerk Pl anning Di v ision Beth E@cuperti no. org ( 408 ) 777 -3308 ®C,·OOO,@O Sent: Monday, August 05 , 2019 9 :25 AM To: City of Cupertino Planning Comm ission Subject: Save Vallco's future -VOTE NO on Genera l Plan Amendments Dear Planning Commission , Please vote no to changes on the fine plans Sand Hill Properties have put forward. There are confused voiced in Cupertino who lack vision for moving the city forward . Vallco needs to be revitalized for the good of the Valley .. It has great access right off 280 making it easy to get to and will be another option for visitors who may normally bypass Cupertino and head straight to Santa Row and Valley Fair. Thanks , Chris Ambrose From: To: Cc: Subject: Date: Attachments: Hi Ben Reena Brilliot Benjamin Fu; Chad Mosley Piu Ghosh; Beth Ebben; Falguni Amin; Alexander Abbe; John Belisle; Micha el Li w RE: Addendum for Vallco--areas of clarification and concern Tuesday, July 30, 2019 5 :20:27 PM imageDOl.png image002.png image003.png image004 . png imageOOS .png image006.png image007.png image008 .png image009.png imageOlO.png imageOll.png image012.png image013.png image014.png imageDlS.png image016.png image □ 17. png image018.png image □ 19 . png Thanks for th is information. Piu also reached out to me and shared some more informat_ion on the project scope that I wi ll forward to others on this email chain so we are all in the loop. This is a much smaller scope that the previous EIR . Our concern is that there hasn't been sufficient communicat ion from the Cupertino San itar y District to our Public Works staff (Falguni Amin who is cop ied on this ema il) to exp lain the proposed changes so a proper flow analysis can be conducted/reviewed. There's also been some assumptions on what the rate of fl ow is for residential uses that we may disagree with. Can you please assist with gettin g the Sanitary District to relay the project in formation to Falguni? We may provide a comment l etter prior to the City Council meeting on this to make sure our issues are addressed. Thank you, Reena Brilliot Planning Manager! Community Development Department 1500 Warburton Ave . Santa Clara, CA 95050 (di rect ) 408-615-2452 I RBrilliot@SantaClaraCAgov www.santac laraca.gov Cityof . Santa Clara From: Benjamin Fu <Be njaminF@cuperti no.org> Sent: Monday, Jul y 29, 2019 9:49 AM To: Chad Mosley <ChadM@cupertino.org>; Reena Brilliot <R Brilliot@SantaClaraCA.go v> Cc: Piu Ghosh <PiuG@cupertino .org>; Beth Ebben <Bet hE@cupertino.org>; Falguni Amin <FAmin@santacl araca.gov>; Alexander Abbe <aabbe@Sa ntaClaraCA.gov>; John Belisle <JBe lis le@SantaC l araCA.gov> Subject: RE: Addendum for Va ll co--areas of clarificat io n and concern Hi Reena, I hope Ch ad was able t o address your concerns . To reiterate, there w ill be no approval made at tomorrow's Planning Commission meeting. There is also no n ew development submitted for consideration . Th e site still h as an ac ti ve SB 35 p roject th at the city is cu rren tl y processing. Based on City Counci l's direction, the proposed GPA re verts back to the previous land use designation of comme r cial/res identia l and removes th e office l an d use that was added in 2014. The GPA also co nside r s new res idential and non-residential development stan dards . Th anks, Ben m -CUPERTINO Benjamin Fu Director of Community Developme nt Com munity Deve lopmen t BeniaminF@cupertino.org (408 ) 777-3247 @fl,OOO@O From: Chad Mos ley <ChadM@cuoertino.org> Sent: Fri day, July 26, 2019 3:14 PM To: Reena Brilliot <RBri ll iot@Sa ntaClaraCA.gov> Cc: Benjamin Fu <BenjaminF@cuoe rtino.org>; Piu Ghosh <PiuG@cupert i no.org>; Beth Eb ben <BethE@cupertino.org>; Falguni Am in <FAmin@santac laraca.gov>; Alexander Abbe <aabbe@SantaClaraCA.gov>; Jo h n Be l isle <JBel isle@S antaCla ra CA.gov> Subject: RE: Addendum for Vallco--areas of clarification and concern Reena, The GP con sidered: 2,000,000 SF of Office 625,335 SF of Commercial 339 Hotel R ooms 80 0 Residentia l Currently there is the e xisting mall with 1,207,704 SF of commercial and 148 H o tel rooms . Sincere l y, Ch ad m . . ' CUPERTINO Chad Mosley C it y Eng in eer Pu b li c Works ChadM @cupertino .org (40 8 ) 777 -760 4 @()000@)·0 From: Reena Bri ll iot [ma il to :RBril liot@SantaClaraCA.gov] Sent: Frid ay, Jul y 26 , 201 9 3 :0 2 PM To: Chad Mos ley <ChadM@cupertino .o r g> Cc: Ben j am i n Fu <BeniaminF@cupertino.org>; Pi u Ghosh ; Be th Ebbe n <BethE@c u oe r tino.org>; Fa lg uni Amin <FAmin@santac l ar aca .gov>; A lexa nde r Abb e <aabbe@SantaC laraCA.gov>; John Bel isle <JBe l isle@SantaC l araCA.gov> Subject: RE: Adde n d um fo r Val lco--ar eas of cla ri f ication and co n ce rn Hi Chad, Th ank yo u fo r you r p rompt r esponse an d r equest o f t h e Cu pert in o Sa nitary District. Ca n yo u pl ease co nfir m if th e leve ls of d eve lo p ment yo u descr i be (hi g hl ighted i n ye ll ow) are fo r new deve lopment o n ly o r what (i f any) cove r s ex ist in g development/approved entitle m e nts? It see m ed as if th er e wi ll be a n et in crease in com m erc ial deve lo pm ent and r es ide nti al un its fro m th e proposed project. Not sure if t he hote l entit lement fo r 339 u n its al rea dy ex ists? Re e na Brilliot Pla nn ing Man ager! Communi ty De velopment Department 1500 Warburton A ve. Santa Clara, CA 95050 (dire ct) 408-615-2452 I RBrilli ot@Sa nt aC la raC A .g ov www .sa ntacla raca.gov City of Santa Clara From: Chad Mos ley <C hadM@cupertino.org> Sent: Fr i day, Ju ly 26, 20 19 1:40 PM To: Reena Br illi ot <RBrill iot@SantaC laraCA.gov> Cc: Be njam i n Fu <BeniaminF@cuoertino.org>; Pi u Ghosh <PiuG@cuoerti no.om:>; Bet h Ebbe n <BethE@cup e rt i no.org>; Fa lgu n i Amin <FAmin@santac l araca.gov>; Al exa nd er Abbe <aabbe@SantaC laraCA.gov>; John Bel isl e <JBelisle@SantaC laraCA.gov> Subject: FW: Adde n dum fo r Va ll co --areas of clarification and concern Reena , The planning co mmiss ion will be making recommendations t o Council, but no final d ecisions wil l be made on Tuesday. The development being considered is: 1,207,704 SF of commercial (consistent with the existing mall) 620 Residential Units (457 + density b onus) 339 Hotel rooms (this includes Hyatt and there is no change in the number of hotel rooms from the General Plan) This is a reduced intensity from the General Plan. I have requested that Cupertino Sanitary District analyze these numbers and provide both the City of Cupertino and Santa Clara the flow rates for the considered development. I've requested the in formation by Tuesday, but I can 't guarantee we'll get the information by then. Sincerely, Chad CUPERTINO From: Benjamin Fu Chad Mosley City Engineer Public Works ChadM@c u pertino.org (408) 777-7604 @()OO,O@O Sent: Friday, July 26, 20 19 12:06 PM To: Piu Ghosh <PiuG@cupertino.org> Cc: Beth Ebben <BethE@cupertino .org>; Chad Mosley <ChadM@cupert i no .org> Subject: Fwd: Addendum for Vallco --areas of clarification and concern Pi u, Can you coordinate with Chad to provide a brief response? Thanks, Ben Begin forwarded message: From: Reena Brilliot <RBr illi o t@ Sa ntaC lar aCA .gov> Date: Ju ly 26, 2019 at 10:35:27 AM PDT To: "be ni am i nf@ cu oe rt in o.o rg" , "B et hE@ cup e rt in o .o rg " Cc: Falgu ni Am in <FAmin@ sa nta clar aca.gov >, Alexa nd er Abbe <a abbe @Sa ntaC lar aCA .gov>, John Be li sle <JBe li sle @Sa ntaC lar aCA .gov> Subject : Addendum for Vallco--areas of clarification and concern Hi Benjamin, Thank you for sending the City of Santa Clara the City of Cupertino's hearing notice on the Va ll co site. W ill the Planning Commiss ion {7 /30) be taking action to adopt the environmental c learance for the project o r wil l that be done at the Ci t y Counci l {8/20)? The City of Santa Clara {CSC) has commented on the previous Val lco EI R regarding concerns of the project's imp acts to th e CSC san itary sewer system. Th e hearing notice and the posted Addendum provide different information o n what is proposed for development on th e site. The heari ng notice we received cal ls out u p to 457 re siden t ial units and the removal of office allocat ion . The posted Addendum (pg5) states th at t h e modifications to the previous EI R as follows: • there are the same amount of hotel rooms • a net in crease in i n comme r cia l square footage (+582,439 sq ft) • l ess office square footage {-2.0 million sq ft) • f ewer res identia l units (-181 un its) Please clar ify for us what amount of development proposed on the Va ll co site . We ha v e concern that the Cupertino San itary District has not pro v ided CSC the i nfo r mation necessary (which has been requested by CSC staff) for the calculation of an accu r ate flow mode l anal y sis a nd that there may be i mp acts t o the City of Santa Clara's sa ni tary sewer system. Also, we need to r eso lve this issue now to understand the level of impact being proposed, please have the Cupertino San itary District prov id e the in formation requested by CSC staff. Thank you for your cooperation . Reena Brilliot Planning Manager! Community De velopme nt Dep artm ent 1500 Warburton Ave . Santa Clara , CA 95050 (d ire ct) 408-615-2452 I RBrilliot@SantaClaraCA .g ov www .sa ntaclaraca.gov City of Santa Clara Total Contro l Pane l Log in To: benjaminfral cupertino.org Remo ve this sender from my a ll ow list From: rbri 11 iotials antac laraca. gov You r eceived this m essage because th e sender is on your allow list. Total Contro l Panel To: chadm ial cupertino.org From: rbri 11 io t!m santac Iara ca. go v Message Score: I My Spam B locking Leve l: Custom Block this sender Block santaclaraca.gov This message was delivered because the content filter score did not exceed yo w·filter lev el. High (60): Pa,s Medium (75): P:is s Low (90): Pa ,s Custom (55): Pass From: To: Subject: Date: Attachments: Beth Ebb en Abby Ayende; Benjamin Fu ; Bo nni e Yee. Cheung: Ell en Yau; Erick Serrano; Erika Po veda; Gian Martire; Jeff Tsumura; Kerri Heusle r; Krista Yost; Piu Ghosh FW : Yo ur article in the San Jos e Mercury News-thank yo u for supporting housing in Cupertino Tuesday, July 30, 2019 8:41:13 AM imageOOl.png image002.png image003.png image004.png imageOOS .png image006 .png imag e0 07 .png imageOOB.png imag e017 .png imag e018.p ng imag e019.p ng ima ge020.p ng image021.pn g imag e022 .png imag e023 .png image024 .png From t he gene r al m ailbox : m . -. CUPERTINO From: Lauren Sap udar Beth Ebben Depu ty Board C lerk Planning Di v isio n BethE @cupertino .org (40 8) 777-3308 © ·O Sent: Monday, Jul y 29, 2019 1:54 PM To: Beth Eb ben <Be thE@cupe r t i no.org> Subject: FW: Your articl e in the San Jos e Mercury News-thank you for supportin g housing in Cupert in o m' ' ' . CUP ERTI NO From: Connie Cunningham Lauren Sapudar Exec uti v e Assista nt to C it y Manager & C ity Coun cil Cit y Manager's Office LaurenS @cuoertino.o rci (40 8) 777-1312 ® -0 -O·@· Sent: Mond ay, July 29, 2019 1:39 PM To: Steven Scharf <SScharf(a)c u oertino .org > Cc: Connie Cunn in gham Subject: Your arti cle in the San Jose Mercury News-thank you for supporting housing in Cupertino Dear Mayor, I read your July 23, 2019 article in the San Jose Mercury Ne ws. It was great to see clear support for housing in Cupertino! I was heartened to read that "The RHNA entitlement for Vallco is 389 units, but the Council would almost certainly approve a Specific Plan with many more units." Cupertino ha s a shortage of affordable homes although we ha ve a good jobs/housing balance. I read your comment th at "expensive r e ntal housing has high vacancy rates". That supports the need for affordable hou sing, since there is not enough to keep up with demand. When the Council has the Vallco Shopping Dist ric t Special Area General Plan, ... etc. on its agenda , after the Planning Commission holds a Public Hearing Tue sday night, Jul y 30, I encourage you and the Council to in crease the le ve ls of housing for any future Vallco Specific plan,. Than k you for writing the articl e . Sincerely, Connie (se lf only) .. From: To: Subject: Date: Attachments: Beth Ebb en Abby Ayende; Benjamin Fu; Bonnie Yee . Ch eung: Ell en Yau; Eric k Serrano; Erika Poveda; Gian Martire; Jeff Tsum ura ; Kerri Heu sler ; Kri sta Yost; Piu Gho sh FW: ACTION ALERT: GO AHEAD Wm-l DOWNZONING ATVA LLCO Wednesday, July 31 , 2019 10:42:40 AM imaq e0 0l.png imaq e002.png imaq e003.p nq imaqe004 .p nq imaqe00S.pnq imaqe006.pnq imaq e0 07.pnq imaqe008.png From the general mailbox: CUPERTINO From: Betini Beth Ebben Deputy Board Clerk Planning Di vision BethE @cupertino.org (408) 777-3308 @ ·-O, O@O Sent: Tuesd ay, July 30, 2019 1:48 PM To: Reed Moulds <info@revitalizevallco.com>; City of Cupertino Planning Commission <PlanningComm is sion@cupe rtin o.org> Subject: ACTION ALERT: GO AHEAD WITH DOWNZONING AT VA LLC O Please don't listen to the Sand Hill Property at all. Meaningless development with just one agenda by Sand Hill: "Make Money" in BUG WAY! Stop them with just proposed 389 Units! Hope you make the right decision tonight! Sincerely, Cupertino Resident. On Tuesday , July 30 , 2019, 01 :02:48 PM PDT , Reed Moulds wrote: ·o: Friend s: Now is the time to act. Tonight, the Cupertino Planning Commission w ill be reviewing a slate of amendments to the General Plan that·seek to ensure that no viable project can ever be bui lt on the Vallco site and that would eliminate thousands of units of desperately needed housing. I have submitted a letter to the Planning Commission cautioning th e Ci _ty on the proposed action and outlining at least a half dozen reasons the P lanning Commission should refuse to act on the amendments. Despite this , it seems the "Better Cupertino" Planning Commission, under direction from the Better Cupertino Council is hell-bent on speeding ahead with a reckless downzoning that will: • Expose th e City t o sign ificant liabilit ies , " Provide clear evidence of the City's true ant i-housin g colors , and " If Planning Comm issioner and SB 35 litigant Kitty Moore gets her way, put the final nail in the Vallco revitalization coffin. While we fully expect to build our approved SB 35 Vallco Town Center project, that approval is currently being challenged in court. We are confident the lawsuit will not overturn the approval as there are no facts to support that, even if the City w ill no l onger defend its actions. Hovv1ever, lawsuits always carry uncertainty. With today's proposed downzoning, an adverse legal decision would ens ure that Vallco rema in s what it now is -a ha lf-demolished p ile of rubble, a symbol of the inertia, obstructionism and abuse of power exhibited by current "Better" leadership. The proposed amendments being cons idered tonight seek to downzone the s ite from 2,402 hou s ing units to j ust 389, mandate retail development up to 1.2 million square feet , and e lim inat e office altogether across the site's 58 acres . Our current V a ll co Town Center project bri ngs 1,201 un its of affordab le housing -the C ity's new p lan would prov id e for only 58 . I'm asking you to ra ise your voice today to stop this egregious action that seeks to s eal the fate of the Vallee site and render it useless for another generation . Call the City 's Planning division offices at 408.777.3308. Email the Planning Commissioners using this link: planningcommission@cupertino.org . Come to the Planning Commission meeting on Tuesday night, a nd speak your three minutes . Your voice matters. • This action attempts to kill the future of Vallco and the viability of any other project un de r these circumstances. The Cit y's own analysis, commissioned last yea r through the economic analytics fir m EPS, confirmed this. Knowing full well the effect of their action, the Planning Commission's move Tuesday night will demonstrate the ir vision for the Vallco site to rem ain_ an empty hole for yet another generation. This must be stopped . .. This action adds more low-wage jobs while preventing homes for low-wage workers . Cupertino has a failing grade in jobs-housing "fit" with one of the Bay Area's worst ratios -1 low-income residence for every 14 lo w-wage jobs . This proposed rezoning increas es the retail the City previously required and plans for additional low-wage jobs , wh il e cutt ing all forms of housing, including a 95% reduction in low-income housing . What message does this communicate to our City 's low-income workforce? "You can serve us , but you can't live near us ." • This a ction puts the City at substantial legal risk by rendering this site economically infeasible for development, a violation of multiple laws, including Housing Element law. Hasn 't there been enough taxpayer money wasted on legal costs between the Randy Hom fiasco, Mayor Scharfs failed Measure C lawsuits and appeals , Vice Mayor Chao's FPPC situation, and the many other distraction s? • This action is being considered without community input or further stud y . General Plan updates typ ically in clude extensive months-long community outreach processes , separate from normal Council and Commission meetings. Not only that, typical environmental revi ew and feasibility analysis are being foregone. Why skip all these steps no vv? It seems to follow the City Council 's action earlier thi s spring to repeal the Vallco Specific Plan w i thout putting the referenda to a public vote , despite an entire campa ign dedicated to promising that vote. This action sends the wrong message about Cupert ino 's values, shirks the City 's ro!e in addressing the region 's affordab le h ous i ng cr isis , exposes the C ity and its ta x payers to significant legal liabilities , and attempts to ruin any chance to restor e the Vallco site to viable use. If any of this resonates with you and you care about t he future of Cupertino , not to mention Vallco, I strongly encourage you to attend t he hear ing ton ight and share your concerns with the Planning Commission. Now is the time to be heard. Join us. S incerely, Reed Moulds Managing Director Sand Hill Property Co. From: To: Subject: Date: Attachments: Beth Ebben Ab by Ayende; Benj amin Fu; Bonnie Yee. Cheung; Ellen Yau; Erick Serrano; Er ika Poveda; Gian Martire; Jeff Tsu mura; Kerr i Heusler; Krista Yost; Piu Ghosh FW: Save Vallco"s future -VOTE NO on General Plan Amendments Wednesday, July 31, 2019 10:27:21 AM image00l.png im age002 .png imag e0 03.pnq image004 .pn g imaqe00S .png imaqe006.png im aqe007 .png im age00B.png From the general mailbox: n -CUPERTINO From: Doug Rowe Beth Ebben Deputy Board Clerk Planning Di vis ion Beth E@cupertino.org ( 408) 777 -3308 @--o·-. . . Sent: Tu es da y , Jul y 30, 2019 4:50 PM ---- To: Ci ty of Cupe rtino Plann in g Comm ission <PlanningCommi ssio n@cupertino.org> Subject: Save Va ll co's future -VOTE NO on General Plan Amendme nts Please do not deny others a chance to live in this community. These amendments cut out our teachers a chance to live in Cupertino . Do the right th ing and stick with the SB 35 plan. Regards , Doug Rowe Cupert ino resident and registered voter From: To: Subject: Date: Attachments: Beth Ebben Abby Ayende; Benjamin Fu; Bonnie Yee. Cheung; Ellen Yau; Erick Serrano; Erika Poveda; Gia n Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Piu Ghosh FW : Vallee Monday, July 29, 2019 8:40:20 AM image00l.png image002.png image003 .png image004.png image00S.png image006.png image007 .png image008.png image017.png image018.png image019.png image020 .pnq imaqe02 l.png imaqe022.pnq imaqe023.png imaqe024.png From the general mailbox: fl ' . CUPERTINO From: Lauren Sapudar Beth Ebben Deputy Board Clerk Planning Division BethE @cupertino.o rg (408) 777-3308 --. o-A ,f).• I ~ -- Sent: Monday, July 29, 2019 7:47 AM To: Beth Ebben <BethE@cupertino .org> Cc: Benjamin Fu <BenjaminF@cupertino.org> Subject: FW: Vallco CUPERTINO From: EMM A BRIDGE Lauren Sapudar Exec utive Assistant to City Manager & City Council City Manager's Office LaurenS @cuoertino .o rg (408) 777-1312 @ O, ·0@)«, Sent: Sunday, July 28, 2019 7:00 PM To: St even Scharf <SScharf@cupertino .org> Subject: Va ll co vallco isues people will spend money on food and entertainment movies, bowling , ice skating simp le food and more expensive restaurants 3 stories for offices no housing minimal office space Total Contro l Panel Mes s age Score: I My Spam Blocking Level: Custom Bl ock this se nde r Block corneas! net This message was delivered because the content filter sco re did not exceed your filter le vel. High (60): Pa ss Medium (75): Pa ss Low (90): Pa ss C usto m (55): Pass From: To: Subject: Date: Attachments: Beth Ebben Abby Ayende; Benjamin Fu; Bonnie Yee. Cheung; Ellen Yau; Erick Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heus ler; Krista Yost; Piu Ghosh FW: Please allow the Valko owners to build out as they have proposed Wednesday, July 31, 2019 10:29:29 AM image00l.png image002 .png image003.png image004. png image00S.png image006 .png image007.png image00 8 .png From the general mailbox : CUPERTINO From: eric wilson Beth Ebben Deputy Board Clerk Planning Di v ision BethE @cupert ino.org (408) 777 -3308 @ -,oo ,o,@,o, Sent: Tuesday, July 30, 2019 5:52 PM To: City of Cupertino Planning Commission Subject: Please allow the Vallco owners t o build out as they have proposed We have played games long enough! The state law allows them to build something larger than what Cupettino negotiated so why try to change it again? Sandhill has been very patient with the Better Cupertino effo1ts to destroy their plans. Cupertino needs a Santa Row or a downtown Mountain View or downtown Sunnyvale or Los Gatos. We drive to Willow Glen to walk and talk and have dinner --I wish Cupettino had a pleasant place to walk, sit, people watch, dance in the plaza (I did that last Friday in Sunnyvale), and have dinner. Thank you for your consideration! Eric Wilson -Where there is a Wilson; there is a way, son! From: To: Subject: Date: Attachments: Beth Ebben Abby Ayende; Benjamin Fu; Bonnie Yee. Cheung; Ellen Yau; Erick Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Piu Ghosh . FW: VALLCO DOWNZONING HEARING -PLANNING COMMISSION Monday, July 29, 2019 8:38:41 AM image00l.png image002.png image003.png image004.png image00S.png image006.png image007.pnq image008.png From the general mailbox : m . I CUPERTINO From: Frank Geefay Beth Ebben Deputy Board Clerk Planning Division BethE @cupertino .org ( 408) 777 -3308 ~f)O, @ Sent: Sunday, Jul y 28, 2019 7:29 PM To: City of Cupertino Plann ing Commission <Plann ingCommission@cupertino.org>; Cupertino City Manager's Office <manager@c upertino.org>; City Clerk <CityClerk@cupertino.org>; City Council <CityCouncil@cupertino.org> Subject: VALLCO DOWNZONING HEARING -PLANNING COMMISSION Dear Chairman Wang and Planning Commissioners, I, as a concerned citizen, am extremely concerned at the Commissions proposal to downzone the Housing Element of the General Plan for Vallco property which in effectively limits , on this very larger site, fewer than 400 units of R3 type housing. The 2015-2023 RHNA housing allocation for Cupertino is: Extremely to Very Low Income : 355 BMR units Low Income: 207 BMR units Moderate Income: 231 BMR units Total BMR: 793 units Above Moderate Income: 270 units Total RHNA: 1063 units The Vallco site is by far the largest available property for housing in our city. All approved projects with housing not yet built have been on voluntary hold for more than three years while construction cost have continued to increase. There is no assurance that any of these projects will ever be built. The Planning Commission has not proposed where all of this BMR housing will be built as a backup in the event most of the approved housing is not built. Even with the 15% mandatory BMR requirement there is no backup plan for where market rate and BMR housing can be built other than less than 400 total units at Vallco. There appears to be no attempt to consider the viability of any developer to build housing or anything else on such a valuable and expensive Valko propetiy. The elimination of all office and limitation of housing make this propetiy very unattractive for future development, potentially opening the city to a huge lawsuit by the cmTent owner should they not be able to build there. This GP A, if approved , gives the appearance of a city that is opposed to further housing development and refusal to build the minimum housing requirement as determined by the RI-INA. This opens the City to lawsuits from a number of organizations and governing bodies and actions by the State. I feel that passing such a GP A would not accomplish its intended purpose and would unnecessarily place our City in financial jeopardy. I implore you to carefully reconsider the unintended consequences of what you are proposing to do. Sincerely, Frank Geefay Cupertino Resident Sent from Yahoo Ma il for iPhone From: To: Subject: Date: Beth Ebben Abby Ayende; Benjamin Fu; Bonnie Yee. Cheung: Ellen Yau; Erick Serrano; Erika Po veda; Gian Martire; Jeff Tsumura; Ke rri Heusler; Krista Yost; Piu Ghosh FW: Save Vallco"s future -All for 389 units Wednesday, Jul y 31, 2019 10 :27:55 AM From the gene ra l ma ilb ox: Beth Eb ben Deputy Board C le rk Planning Di v ision BethE@ cup ertin o .org ( 408) 777-330 8 -----Original M essage----- From: ga il.c @ app le .c o m Sent: Tuesday, Jul y 30, 2019 1:17 PM To: C ity of Cupertino Pla nnin g Commission Subject: Save Vallco's futu re -A ll fo r 389 units I am not for Ree d Moulds Vallco Pl a n just to much hou s in g a nd traffic . Th is plan needs to be reduced. I a lso feel th e public nee ds to vo te on w hat we want in stead of just BI G m o ney tak ing over C upertino. Thanks OUR ci ty counsel is doing a fine job if taking care of the publi c nei ghborhood. From: To: Subject: Date: Attachments: Beth Ebben Piu Ghosh FW: Concerns regarding your Jul y 30, 2019 agenda Tuesday, July 30, 2019 8:36:33 AM image009 .pnq imaqe0l0.pnq imaqe0ll.pnq imaq e012.p nq ima ge013.pnq imaqe014 .pnq imaqe015.pnq imaqe016.pnq im aqe00l.pnq im age002.png im aqe003.p nq image004 .png imaqe00S.pnq imaqeDD6.pnq im age007.p nq im aqeD0B.pnq From the gene r al ma il box : m . ' CUPERT IN O Beth Ebben Deputy Board Clerk Planning Divisio n BethE@cupertino.org (408) 777 -3308 @, Cl O O· o, ® O, From: Grace Sc hmidt, MMC Sent: Tuesday, July 30, 20 19 8:00 AM To: Beth Ebben <BethE@cupertin o .o r g> Subject: FW: Concerns r egarding your July 30, 2019 agenda m . -. CUPERTINO From: GEOFFREY PAULSEN Grace Schmidt, MMC Ci t y Clerk City Manager's O ffi ce/City Clerk's Office GroceS @cu oert in o. ora (408) 777-3224 ® f)· O, 0 O, ® O· Sent: Mond ay, July 29, 2019 6 :43 PM To: City of Cupertino Planning Comm ission <PlanningCommi ssion@c uo ertino om> Cc: City Counci l <CitvCounci l @cuoertino.org>; Deborah L. Feng <D ebF@cuoertino .om>; Benjam i n Fu <Beniam inF (a)cuoert i no.oi-g>; City Clerk <Ci tvClerk @cuoertino.om>; Sandy James ; Orrin Mahoney Subject: Concerns re ga rding your July 30, 2019 agenda Planning commissioners: I have three main concerns regarding your agenda for tomorrow: 1) Lack of public input. We learned in public administration grad school that successful resolution of complex planning issues often requires as many as 200 meetings. That's TWO HUNDRED meetings . The recent Council election results give neither you nor the City Council license to forgo extensive community discussion of such an important change. 2) Financial viability. Your suggested Vallco limitations may make development there financially unfeasable. 3) Liability. Inverse condemnation (reducing the value of land without paying for it) was successfully invoked in a lawsuit by a developer in Palo Alto when I lived there. Your Vallco changes could put the City of Cupertino at considerable financial risk. So please -slow down, involve the whole community, and be fully aware of ALL the ramifications of what is being proposed tomorrow evening. Regards, Geoff Geoffrey Paulsen Former Chair, Cupertino Planning Commission From: To: Subject: Date: Beth Ebben Abby Ayende; Benjamin Fu; Bonnie Yee. Cheung: Ellen Yau; Erick Serrano; Erika Po veda; Gian Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Piu Ghosh FW: Save Vallco"s future -VOTE NO on General Plan Amendments Wednesday, July 31, 2019 10:23: 10 AM From the general mailbo x : Beth Ebben Deputy Board Clerk Planning Division BethE@ cupetiino.org ( 408) 777-3308 -----Original Message----- From: Glenn Cabral Sent: Tuesday , Jul y 30, 2019 2:29 PM To: City of Cupertino Planning Commi ssion <PlanningCommission@ cupetiino .org> Subject: Sav e Vallco's future -VOTE NO on General Plan Amendments Who is REAL Y behind the so call Better Group for Cupertino. We are 50 year residents of Cupertino and have never all these years seen so much political bickering over a project like there is about Vallco prope1iy. There seems to be no negotiations. Do it our way . There seems to be a grudge against the company who is trying to develop an attractive project rather than what is presently a empty piece of property. Please vote no on General Plan Amendments. If the Planning Commiss ion and City Council thinks by passing the New Amendments it will sol ve the Va llco problem they are in my opinion on the wrong track . The Better Group for Cupertino will only demand and I do mean demand more from you down the road now that they see by stamping their feet got their way. Pleas e, consider very seriously what you are voting for . You can not stop progress. One way or another progress wins out . Glenn Cabral Sent from my iPad From: To: Subject: Date: Attachments: Beth Ebben Lauren Sapudar; Abby Ayende; Benjamin Fu ; Bonnie Yee. Cheung: Ellen Yau; Eri ck Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Piu Ghosh FW: I support the adoption of the 7/30/2019 CPC proposed Amendments t o the City"s General Plan Monday, July 29, 2019 8: 26:05 AM imaqe00l.pnq imaqe002 .png im aqe003.png imaq e004.png imaq e00S .pnq im age006.png im aqe007.png imaqe008.png From the genera l m a ilbox : n -CUPERT INO From: James Moore Beth Ebben Deputy Board Clerk Planning Division BethE @cupert ino.org (408) 777-3308 ® -i) Sent: Sunday, July 28, 2019 1 :09 PM To: City of Cupertino Planning Commission ; City of Cupertino Planning Dept.<planning@cupertino.org>; Cupertin o City Manager's Office <manage r @cupertino.o r g>; City Counc il <CityCounc il @cupertino .org >; City Attorney's Office <CityAttorney@cupe rtino.org>; City Clerk <CityC lerk@c upertino.o r g> Subject: I support the adopt io n of the 7/30/2019 CPC proposed Amendments to the City's Genera l Plan Dea r Pl annin g Co mmi ss ione rs. Pl annin g St aff. Cit y Ma nage r, City Co unc il. Cit y Atto rn eys , and C ity Cl erk , As a C up e rtin o res id ent s inc e 19 76 , I wa nt to th ank the new Cup ertin o Pl annin g Co mmi ss io n, City staff/ma na ger/atto rn eys, and new C it y Co un c il fo r th e th oro ug h resea rch, co mmunit y outr each, a nd e vidence~b ase cl ana lys is th at res ult ed in th e 7/30 /2019 prop ose d Amendm ent s to th e C it y's Ge nera l Pl an, Zo nin g M a p, a nd l'vluni c ipa l Code. and Add e ndum to th e Fin a l EIR re lat ed to th e Vallc o Sh o ppin g Di strict Sp eci a l Area. I sup po rt th e ad o pti o n of th ese fo ur Dra ft Reso luti o ns whi ch \vo ulcl: I) remove office as a permit te d use, 2) es ta blish hei g ht limit s and e nac t res id e nt ia l deve lo pm e nt stand ard s. 3 ) e limin ate Munic ipa l Co de refer e nces t o th e Va llc o S pec ific Plan (V SP ) & cre ate a zo nin g des ignati o n of P(R3.CG ). a nd 4) amend th e zo nin g ma p to rezo ne to P(R3 .CG ) 1.3 .1 ac res to Mi xe d Use Pl ann ed Deve lo pm e nt. Cup ertin o res id ents, in defeat in g Meas ur e D (th e Hill s at Va llc o). s ig nin g/qu a li fy in g th e Referend um s o pp osi ng th e YSP, supp o1iin g a nd e lec tin g a C ity counc il th at lis ten s to res idents not ju st s pecial int erests. a nd op pos in g th e ill egal mini ste rial approva l of the SB35 Ya llc o Town Ce nter Proj ec t, have cons iste ntl y vo ic e d their strong di sap pro va l of a nea rl y 2M sq ft offi ce deve lop ment at Ya llco , a deve lop me nt which ,vo ulcl exacerbate o ur increas in g ly dangerous traffi c gridl oc k and s ignificant ly wo rse n C u pertino's job t o ho usin g ba la nce . Adopting the se draft reso lu t ions w ill co ntinu e C upertin o o n it s path to recovery after ove r fo ur yea rs of di v is ion a nd strife that be ga n in 20 14 with Pet er Pau's purcha se of Vall co. S inc ere ly, Ja mes (Jim ) Moore *** Ple ase make thi s pati of th e Public Rec ord *** From: To: Subject: Date: Attachments: Beth Ebben Piu Ghosh FW: Inadequate Public Notice for Vallco Changes at Public Hearing at Planning Commission, June 30, 2019 Tu esday, July 30, 2019 8:34:29 AM Cupertino Courier 20190726 A29 2-Va llco Notice.pdf imaqe002.pnq imaqe004.pnq imaqe006.pnq imaqe008.pnq imaqe0lO.pnq imaqe012 .pnq imaqe014.pnq imaqe016.pnq imaqe017.pnq imaqe018.pnq imaqe019 .pnq imaqe020.pnq imaqe021.pnq imaqe022.pnq imaqe023.pnq imaqe024 .pnq From the general mailbox: CUPERTINO From: Lauren Sapudar Beth Ebben Deputy Board Clerk Planning Division BethE@cupertino .org ( 408) 777 -33 08 ® ~-o, -o,@ Sent: Tuesday, July 30, 2019 7:49 AM To: Beth Ebben <BethE@cupertino .org> Cc: Benjamin Fu <BenjaminF@cupertino .org> Subject: FW: Inadequate Public Notice for Vallco Changes at Public Hearing at Planning Commiss ion, June 30, 2019 m -CUPERTINO From: Jean Bedard Lauren Sapudar Executive Assistant to City Manager & City Council City Manager's Office LaurenS @cupertino.org (408) 777-1312 ® -,@l Sent: Monday, July 29, 2019 8:13 PM To: Cupertino City Manager's Office <m anage r@cupertino.org>; City Clerk <CitvClerk@cupertino.org>; City Council <CityCouncil@cupertino.org>; Steven Scharf <SScharf@cupertino.org>: Liang Chao <LiangChao@cupertino.org>; Rod Sinks <RSinks@cuoertino.org>; Darcy Paul <DPaul@cupertino.org>; Jon Robert Willey <JWilley@cuoertino.org> Subject: Inadequate Public Notice for Vallco Changes at Public Hearing at Planning Commission, June 30, 2019 Good morning, I am appalled at the failure of the city to provide adequate notice for public engagement for the General Plan Amendments. Public noticing and outreach require 10 days notice via a legal ad in a newspaper of general circulation (see staff report). The original item appeared in July 12 issue of the Cupertino Courier for the agenda of the canceled July 23 meeting. That notice was republished this week, on July 26, noticing the July 30 meeting, BUT this is just 5 days before the Public Hearing, not 10 days. See the attached PDF. More impo1iantly, this public hearing on July 30 is rushed when much of the general public is out of town, so needs to be deferred until this fall to more fully engage the public, as promised by new members of council. General Plan Amendments are major decisions on land use which ordinarily involve lengthy public engagement and environmental review to consider unintended consequences. NONE of this has happened. This is NOT good governance. Frankly, this feels like the imposition of Measure C -which an overwhelming 61 % of voters rejected. Pleased defer this Public Hearing until community meetings are held. Watm regards, Jean Bedord Total Con trol Panel To: ssc har f<ro cupe1tino.org From: beclorcliwgma il.com Cupertino, CA- Message Score: l My Spam Blocking Level: Custom Block this sende r Block gmail.com This message was delivered because the content filter sco re did not exceed your filter level. High (60): Pas, Medium (75): Pass Low (90): Pass Custom (55): Pas, From: To: Subject: Date: Beth Ebbe n Abby Ayende; Benjamin Fu ; Bonni e Yee. Cheung: Ellen Yau; Erick Serrano; Erika Poveda; Gian Martire; Jeff T sumura; Kerri Heusl er; Kr ista Yost; Piu Ghosh FW: Pla nning Commission Agenda Item s 2 and 3 Tu esday, Jul y 30, 2019 8:44:51 AM From the genera l mailbo x : Beth Ebben Deputy Board C lerk Planning Di v isio n BethE@ cupertino.org ( 408) 777-3308 -----Original Message----- From: Joan Trampenau Sent: Monday, July 29 , 2019 2:20 PM To: City of Cupertino P lanning Commission ; Cupertino C ity Manager's Office <manager@ cupetiino.org>; City Cle rk <CityClerk@ cupertino .org>; City Council <CityCoun c il @ c up eti in o.org>; Steven Scharf <SSc harf@ c upetiin o.org>; Liang Chao <LiangC hao @ cupertino.org>; Rod Sinks <RSinks@ cupetiino.org>; Darcy Paul <DPaul@ cupertino.org>; Jon Robert Wi ll ey <JWilley@cup ertino.org> Cc: Cupe1iin0Matters@ gmail.com Subject: P lanning Commission Agenda Items 2 and 3 I am a 46 year re s ident of Cupert in o , and my home on-is about 500 feet from Vallc o. 'Nhen Sandhill 's original reno vatio n of Vall co was propose d, I was proud to think that Cupe1i in o , the home of Apple, would have another impressive la ndmark. As time has passed, my fee lin gs have gone from disappointed to disgusted. Better Cupertino (in my op ini on the ultimate NIMBY group) and the majority of the current City Counc il members are turning Cup ertino into a laughingstock, with all the ir regre ss ive proposal s and actio ns. I fear that, in addition to the cost of the city's reputation, they are a lso causing increasing financia l costs to the c ity. I believe Sandhil l has made good fa ith effotis to wo rk with the city , while being attacked time and time again. T hese attacks and delays ca used by Better Cu pert in o and the City Co un ci l have led to various perks to the city being eliminated due to the cost of Sandhill having to defe nd its plan , as well as to currently escalati ng leg a l costs. I strong ly urge the Planning Commission and the City Counci l to do what is be st for Cupertino and drop their opposition to the current Va llco p lan . Joan Trampenau Cupertino re s ident From: To: Subject: Date: Attachments: Beth Ebben Abby Ayende; Benjamin Fu; Bonnie Yee. Cheung: Ellen Yau; Erick Serrano; Erik a Poveda; Gian Martire; Jeff Tsumura; Kerri Heusl er; Krista Yost; Piu Ghosh FW : Save Vallco"s future -VOTE NO on General Plan Amendments Wednesday, July 31, 2019 10 :3 9:23 AM imageO0 1.png image002.png image003 .png image004.png imageO0S.png image006.png image007.png imag e008.png From the general mailbox: m ' ' CUPERTINO From: John B. Stubblebine Beth Ebben Deputy Board Clerk Planning Division BethE@cupertino .org ( 408) 777 -3308 @ ()· o, O· o, @, fl, Sent: Tuesday, July 30, 2019 6:17 PM To: City of Cupertino Planning Commission <PlanningCommission@cupertino.org> Cc: John Stubblebine Subject: Save Vallco's future -VOTE NO on General Plan Amendments Planning Commissioners, Please vote NO on the General Plan Amendments. They will box Vallco property into being unable to be developed. This will lead to a parade of lawsuits, that will drain the Cupertino City assets to defend. If you are proposing these things, you MUST have a competent developer already lined up to develop VALLCO property within the limits of your proposals . You must also have independent specialist consultants that verify that your limits are viable. Failing these two , leaves you open to being accused of misuse and malfeasance in office. Please let cooler heads prevail. Sincerely, John Stubblebine , Ph.D . Cupertino Resident and Voter. From: To: Subject: Date: Attachments: Beth Ebbe n Abby Ayend e; Benjamin Fu ; Bonnie Yee. Cheung: Ell en Yau; Eri ck Serrano; Erika Poveda; Gian Martire; Jeff Tsu mura; Kerri Heu sler; Kri sta Yost; Piu Ghosh FW : YES VOTE SAVES Vallco"s future -VOTE YES! on General Plan Amendments Wednesday, July 31, 2019 12:37:10 PM imag e00 1.pnq image002 .pnq imag e0 03 .p ng imaqe004.png imaq e00 S.p ng im aqe006.p ng imaqe007.pnq im age008.p nq From the gene r a l mailbox: CUPERTINO From: Beth Ebben Deputy Board Clerk Planning Division BethE@cupertino.org (408) 777-3308 ®()·00· if)O Sent: Wednesday, July 31, 20 19 12 :11 PM To: City of Cupertino Plannin g Commission Subject: YES VOTE SAV ES Vallco 1s future -VOTE YES! on General Plan Amendments Dear Cupertino Planning Commissioners Vallco has never been run by owners/administrators interested in long term , regional , quality , sustainability retail in our city of Cupertino. It was equally unfortunate that our own City had imposed a redevelopment agreement on the Vallco mall and its owners, as retail was not enhanced by that administrative meddling in a retail operation -it's easy to connect the dots that housing was injected into a commercial retail project only as a Hail Mary by city staffers and by our ill advised elected public representatives overseeing that RDA ; one proposed by a short sighted redevelopment agency that would d a mage school funding revenue streams and redirect city funds surely better used for intercity infrastructure repairs , instead transferring tho se fund s into the hands of a redevelopment ag enc y which existed outside the control of representative governing. We don't need to discuss the failure of the Vallco RDA, one that teased residents to turn out at city council meetings for decades to challenge those bad redevelopment policies being proposed and passed by those prior city councils , one 's having little interest in acting on beha lf of our own residents desires for suppotiing a successful regional retail mall destination which only a trul y dedicated busines s owner of Vallco could provide , a busine ss collective hav ing a ret a il vision not nee din g the public hand outs of our residents , which out "the crutch" of re zo ning for hou s ing and office space, which was being touted by elected officials as development seeding gifts to many owners of the V a llco shopping mall , past and present, this carrot be ga n the fa lse narrati ve th at Vallco could not succeed as a regiona l sh op ping center, then blew the siren call for rezoning of the Vallco commercial retail property , for housing and office, as if that was the only option left. Prior city councils of that era ALL overlooked placing adequate housing of low income and affordability in other areas of the city that were redeveloping at that prior time , doing so to FAIRLY spread around our city's ABAG requirements for supporting local housing development, but projects that fairly burdened all commercial property owners redeveloping there properties though out our entire city -not just at Vallco , that commercial property being the last remaining propetiy where massive dense housing could be placed, but I suggest our city staffers an d city councils acted ( conspired) in a conflicted manner to force Val!co into the dubious position of being the last large commercial site that could be rezoned for profitable housing at the expense of a once viable regional shopping center, a retail mall that played dead for years waiting for gifts of public entitlements and rezoning for housing. Westfield regional shopping center prospered while Vallco sank under the weight of the RDA and profiteers -corporate raiders -seeking to gut Vallco retail viability and redevelope it as housing -sustainable retail was not the goal. Hell, a prior city council and RDA denied Nordstrom from being a tenant! They moved in and prospered at Westfield Mall as a profitable retail anchor store to this very day. Residents of communities through out our state had become resolved RDA's were failures, that pressure forced former Gov. Brown to dismantle the failed RDA programs let loose in local communities, citing inept oversight of those RDA properties and failures to include constituents fairly in the redevelopment of there own community. Our local residents own a relic of the overturned Vallco RDA -our own Winchester mystery hou se "parking garage", one having a mysterious unapproved top floor exceeding height limitations , this extra floor was never approved by the community, unclear what your own planning commission knew at the time, or our city staffers, which your predecessor 's oversees -such lack of confidence our Cupertino residents have in our elected representatives and the administrators which you oversee. Vallco is a thorn in our community that didn 't need the kind of "fixing" which prior city counsels forced upon our community, a blight on representative governing which forced a backlash, multiple community referenda and lawsuits were the result. No reasonable community resotis to taking such drastic measures unless there wishes for a "better" Cupertino are going unheard , and it appears it's a multi generational movement now spanning several decades. San Jose State, CA State colleges and other university's around the country and world have studied what has and is transpiring in Cupertino, amazed by the community backlash over revitalization of what was once a regional destination shopping center one gone rouge, a shopping center willing to become a grey field of inactivity as its owners willingly abandoned retail as a tool -weapon -to force rezoning of the commercial area over to housing -The academic world under stands this profit driven game, but do you? I , and many residents , have communicated with college students and academics doing phd 's on city planning and redevelopment of commercial areas, we offered our first hand personal views of our city's redevelopment schemes, and more specifically, we shared our accumulated wealth of public and private records of what actually transpired here in Cupertino since the the beginning of Vallco in the 1960s through 2018 eras , including updated about the last 3 recent referendums and SB50 lawsuit. A group of residents recently mailed a large legal box of records to our CA Gov Newsom, hoping his staff will review the untold story of Vallco as seen by residents, one that explains the charade of community charrett outreach's, those manipulative public outreach sessions paid for by the same community also having the developmental wool pulled over there eyes . I need only quote the words of former multi-decade serving City Attorney Killian, who described community benefits being paramount when a planning commission decide an approval of any development, including Vallco: Quote: "A recommending body (I.E . planning commission) is obliged to make a finding; if it is affirmative , it must recomend approval on grounds that the project (in some way) "promotes public safety, welfare, convenience, ... and will improve or protect property values ... " Further, the prior City Attorney makes comments about residents: Quote: "However, the delaying faction must show good faith by coming to public hearing on new ordinances , or else terminate the freeze . Deliberate stalling by conservationist, ecologist, college rebel's , and anti-propetty, people has been flagrant enough in recent years to raise some questions about there doctrines, or understandings of facts, or sincerity." .... Are facts a matter of simply what faction you are "perceived" or "labeled" to be a part of? Fmther o in the 1970s planning document the City Attorney described: Quote: "Jurisdictions sometimes get carried away by the apparent ease of sand-bagging developers into making valuable "gifts " to the city, and more than a few homeowners (who never gave the city anything) seem to think (propetty owners) should gift them with ball parks, open space, wild flowers , and what not." .... Really?, residents give nothing to our city ; are our local commercial properties owners more civic minded then other Residents , when there left to there own profit driven devices? The City Attorney continues: " Cities have sandbagged developers for "free school sites " and "free park sites." Some developers, trapped this way, seemed to go along , and did .... until they finished the tract (project) and sold it. Then they sued the cities and won. The cities had to pay up. De facto confi s cation is a very risky game against courageous and knowledgable land owners." I think we see the beginning of development factions be pitted against each other I, which dates back to the 1960s era , now many decades ago, yet our residents are still being pitted against land owners and developers. Why was this situation fostered by our own elected officials and unelected city administrators they oversee? I recall that Pruneridge street and sewer dedications, which were sold back to the current land owner, Apple , but at first our city staffers were willing to "gift" them both the street and sewer dedications for free! If it was not for a dedicated and concerned resident who spoke up and questioned if that gift was customary -anywhere in our state -it was found not to be; the resident offered facts that showed cities owned street and sewer dedications and would only sell them to benefit the safety, welfare and woukd improve property values of the residents. Please revirew, reconsider, and be reminded of the many decades of Vallco history that residents have been dedicated participants in the fashioning of, not as NIMBYs, but as citizens exercising good will , desire to participate in all things civic, and a love for the their City of Cupetiino , that includes ore new developments and our new residents living in them . Please , let it never be said again at a public hearing , by any esteemed mayor, as a former mayor once discussed her own thought process for approving the Metropolitan housing development said: "I enjoy the quiet solemnity of suburban residential living, free to enjoy my private backyard rose garden : who am I to stand in the way of people who wish to live the city apartment lifestyle, as most will be single adults, and very few will be families with children." We heard this argu~ent that few families were intended for dense packed housing developments , only to find the majority were infactvfamilies not singles living a metro centric lifestyle better suited to living in a real city like San Francisco. How about we fix the Vallco specific development plan so that it does not build densely packed housing projects that force families into a cramp life style which they would prefer to avoid, ifthere was a choice ?, as they desire better lives for there family and kids, there kids who they enroll in Cupetiino schools , and this is no longer guessing or speculation by the so called NIMBY residents. Thank you for your time. I support changes to limit housing and office development in the Vallco specific development plan and by de facto , I support the same limitations be included in the Heati of the City specific plan too. Resident Keith Murphy 1960-2019 + Original editing by then City Attorney , part of Cupertino Planning Com. Document, 1971 This copy was maintained for public review by our local Cupertino historical museum, but oddly went missing after it was mentioned by residents in early 2000's at a public hearing. From: To: Subject: Date: Beth Ebben Abby Ayende; Benjamin Fu; Bonnie Yee. Cheung; Ellen Yau; Erick Serrano; Erika Poveda; Gian Martire; Jeff T sumura; Kerri Heusler; Krista Yost; Piu Ghosh FW: Save Vallco"s future -VOTE NO on General Plan Amendments Wednesday, July 31, 2019 10:43 :57 AM From the general mailbox : Beth Ebben Deputy Board Clerk Planning Division BethE@c upertino.org ( 408) 777-3308 -----Ori ginal Message----- From: kirk vartan Sent: Tuesday , July 30, 2019 2:10 PM To: City of Cupertino Planning Commission <PlanningCommiss ion @ cupertino.org> Cc: senator.wiener@senate.ca.gov; info@ revita lizevallco.com Subject: Save Vallco's future -VOTE NO on General Plan Amendments Planning Commissioners, It seems pretty itT esponsible for the Planning Commission to consider any General Plan Amendment changes on the Vallco site at this time . You already h ave an approved and sanctioned SB-35 project. You have a deve loper that has committed to 2,402 housing units (50% affordable). They have spent tens of millions of dollars in planning and approvals for this site. And now yo u want to change the General Plan to modify the uses on the site? Seriously? Sand Hill has lots of money and your actions cou ld put the City of Cupertino at serious risk. They could sue the City for the value they could have gotten from a complete development should it be blocked by an anti -h ousing/anti- development group. The track record is clear. The appeals in the courts have a ll failed . The City w ill lose. Don't stand in the way of this project. Get Vallco developed. We al l need more good development. And while this is not the ideal project, it is a good one, and one that will serve the residents of Cupertino and the surrounding region well. PLEASE DO NOT SUPPORT ANY GENERAL PLAN AlvIENDMENTS THAT MODIFY THE CURRENT V ALLCO/SAND HILL SB-35 PROJECT . Thanks fo r yo ur consideration, Kirk Vartan From: To: Subject: Date: Attachments: City of Cupertino Planning Dept. Abby Ayende; Ben jamin Fu; Bonnie Yee. Cheung: Ell en Yau; Eric k Serrano; Erika Poveda; Gian Martire; kff Tsu mura; Kerri He us ler; Krista Yost; Piu Ghosh FW: Planning Commission, 7/30/2019, Age nda Item 3, Resolutions Affecti ng Land Use Changes at the Vallco Shopping District Site Wednesday, July 31, 2019 10:49: 17 AM im age00l.png image002.png imag e003.png image004.png im age00S.png image006.png im age007 .png im age00B.png im age0lO.png From the general mailbox: CUPERTINO From: Liana Crabtree Beth Ebben Deputy Board Clerk Planning Division BethE @c upertino.org (408) 777°3308 ® 0 0@>· Sent: T uesday, July 30, 2019 12:37 PM To: R Wang <RWang@cupertino.org>; V i kram Saxena <VSaxena@cupertino.org>; Dav id Fun g <DFung@cupert in o.org>; Kitty Moo r e <Kmoore@cupertino.org>; Alan Takahashi <ATakahash i@cuoerti no .org> Cc: City Clerk <C ityC lerk@c upertin o.org> Subject: Planning Commission, 7/30/2019, Agenda Item 3, Resolutions Affecting Land Use Changes at the Va ll co Shopp in g Di str ict Site Honorable Planning Commission Chair Wang, Vice Chair Saxena, Planning Commissioners Fung, Moore, and Takahashi: Please add this letter to public comments for the 7/30/2019 Planning Commission meeting, Agenda Item 3. Please consider my comments below to be IN SUPPORT OF draft General Plan Amendment Resolutions 2019-01 and 2019-02, draft Municipal Code Amendment Resolution 2019-01, and draft Zoning Resolution 2019-01. It was irresponsible overreach by the 2014 Council majority to have added to the Vallco Shopping District site 2 MILLION square feet of office and to have relaxed density standards so thoroughly for the site that the property owner was effectively given rights to raise building heights to 3X and 4X of what was permitted prior to 12/4/2014. Tonight's resolutions represent a correction that has been in the making for the past 5 years. We must stop pretending that 2-3,000 housing units will improve the region's housing shortfall when those housing units come bundled with an office complex that would add 10,000 new jobs (in the form of nearly 2 MILLION square feet of office development) in the same or adjacent parcels. Residents have repeatedly shown opposition to additional office development in Cupertino as long as our region has persistent problems related to homelessness and housing insecurity, insufficient public transit , and worsening traffic congestion and particulate matter pollution that cannot be mitigated. For a snapshot of what re·sidents will support at the Vallco Shopping District site , I encourage you to review the results from the 2018 petition circulated by residents in support of a "Community-friendly Vallco". Over 1,200 residents residing in Cupertino or within 5 miles of the Vallco Shopping District site signed the petition and the results were submitted to Council during the September 18, 2018 Council meeting . See the blog post "Neighbors' Concerns and an Alternative Vision for Vallco" for the petition results: Neighbors' Concerns and an Alternative Vision for Vallco Thank you for your consideration of the information I have shared her~. Sincerely, Liana Crabtree Cupertino resident representing myself only Neighbors' Concerns and an Alternative Vision for Vallco !,, 2•}13 r2:;ic!2ms circr)lat2.~: J;, unon'ici.al 0-=Iit1on. -:-h':: 'D2Scii-,at,o;, R2tail" p2,it:on sug,;,1est2d an iill2rnat1v2 ... Tota l Co ntr o l Pane l Remo ve thi s sender from my allow li st You received th is message because the sender is on your allow list. From: To: Subject: Date: Attachments: Beth Ebben Abby Ayende; Benjamin Fu; Bonnie Yee. Cheung; Ellen Yau ; Eri ck Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Pi u Ghosh FW : Vallco park development Wednesday, July 31, 2019 11 : 15:20 AM imageOOl.pnq image002.pnq image003.pnq image004.pnq imageOOS.png imag e006. pn g imag e007.p nq imaq eOOB.p nq From the general mailbox: CUPERTINO From: choies Beth Ebben Deputy Board Clerk Planning Division BethE@cupertino.org ( 408) 777 -3308 ® f)· O; O· O, ®· o, Sent: Wednesday, July 31, 2019 4:07 AM To: City of Cuperti no Planning Commission Subject: Vallco park development I have been living at Cupertino for almost 30 years. Vallco Par k used to be my favorite place to go regularly. I totally understand with so many housing units put into market, it will have an impact to the value of my house at Cupertino. But since_ the proposed project has been approved by the City , I don'♦♦t like the way people keep dragging the development by lawsuits and opposition through city agencies. The current state of the site is an eyesore of the city. I urge the Planning to refuse to take actions to the amendments. Minglam Choi Cupertino From: R Wang Sent: Wednesday, August 7, 2019 11:44 PM To: City Council <CityCouncil@cupertino.org>; City Clerk <CityClerk@cupertino.org> Subject: VALLCO ECONOMICS 101 : DON'T NEED 2,000,000 SQ FT IN OFFICE SPACE TO CREATE AFFORDABLE HOUSING Dear Esteemed City Council Members, I wanted to do some back of the envelope calculations on economic viability and feasibility. Please let me know if we're missing any assumptions. Let's do some basic math: COST PER ACRE FOR VALLCO Sand Hill Properties and Abu Dhabi Investment Authority (ADIA) via Peter Pau purchased Vallco for $320M The property spans 50 acres of development. TOTAL COST : $6.4M per acre SCENARIO 1: SINGLE FAMILY HOME PER ACRE EXAMPLE Let's take one acre and build some single family housing. Let's say we divide the acre into 8 lots of about 5,000 sq feet each (one acre is 43,750 sq feet). We can build a 2250 square foot home . Average price per sq feet is running $1000 these days . cost to build is about $300 per square feet not including land for very nice finishes . Think Level-5 walls, high end appliances, granite finishes, etc. 8 Homes $2.25 million market value per home Cost to build of $675,000 per home. Land is worth $1.28M per home Total is $1.955M per home The lowest estimate of profit is $295,000 per home That's $2 .36M per acre of profit. Not a bad return right? SCENARIO 2: MULTI STORY CONDO FOR PURCHASE Let 's say we build a 4 story condo on the acre. We've got a foot print of 43,750 square feet to build on, Let's say each floor is about 30,000 square feet and we create a mi x of units. We also know that it's about $1000 per square feet for market value . So on each floor we could have: 10 -1500 sq feet units at $1 .5M each 15 -1000 sq feet units at $1.0M each That's $30 million in market value for each floor. With 4 floors that's $120M in revenue We can build 100 units of housing per acre Now let's look at the cost side . It's actually cheaper to build condos than single family homes so we'll give that $250 per square feet of costs for build not including land, This number comes up to $30M in construction costs So let's recap: 100 units of housing that includes 40 -1500 sq ft units 60 -1000 sq ft units Cost to build 100 units $30M Land cost $6.4M for the acre Total Cost $36.4M to build Total Revenue $120M for sale all the units at market rates PROFIT IS $83.6M per acre if each unit is sold at market rates Let's say you put 10 of condos and 10 acres of SFH, you'd have 10 acres of 4-story condos (1000 units) -$836M 10 acres of SFH 8 unit homes {80 units) -$47 .2M That's almost 883.2M in potential profit. Okay, fine, we have 30 acres not built! So let's include that cost 30 ac r es at $192M not built of the 50 acres should be accounted for, So the profit is $691 .2M. I think we can find enough concessions for a Costco Park lands Community center City Hall Speci al nee ds hou si ng Senior housing BMR Units Retail space for ta x revenue Convention space and almost whatever you want here AND SHP , Peter Pau, and Abu Dhabi Investment Authority or any developer would still make their numbers with at least HALF A BILLION IN PROFITS $500,000,000 OR IS THAT $S00M? BOTTOM LINE -DO YOU REALLY NEED RETAIL OR OFFICE TO MAKE THE NUMBERS WORK? ANSWER: NO! R Wang From: To: Subject: Date: Attachments: Beth Ebben Abby Ayende; Benjamin Fu; Bonnie Yee. Cheung: Ellen Yau; Erick Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Piu Ghosh FW : Vallco Wednesday, July 31, 2019 10:44:32 AM image00l.pnq image002.pnq imaqe003.pnq image004.pnq im age00S.png im age006.png image007.pnq image008.pnq From the general mailbox: CUPERTINO From: Hylk Beth Ebben Deputy Board C lerk Planning Division BethE @cupertino.org (408) 777-3308 @ ()· 0 O· 0 ·@ O· Sent: Tuesday, Jul y 30, 2019 8:38 PM To: City of Cupertino Planning Comm ission Subject: Va ll co It's time t o stop wasting money fighting the State of Ca li fornia . Vallco needs to be developed ASAP . Randy & Carle Hylkema Cupert in o Sent from M ail for Windows 10 V ALLCO PROPERTY OWNER, LLC July29,2019 Cupertino Plamling Commission Cupertino City Hall 10300 Torre Avenue Cupertino, CA 95014 pla:nnin gcommission@.cu pertino . or g Dear Planning Commission: Val1co Property Owner, LLC ("Val1co") owns the site of the Val1co Fashion Mall (the "Vallco Site"). Vallco was recently notified that the Planning Commission is considering amendments to the general plan and zoning map that would, among other things, limit the development of housing and eliminate the development allocation for office uses on the Vallco Site. We disagree with any change to the Vallco Site's planning standards that seek, directly or indirectly, to restrict the ability to add significant levels of residential development, as has been proposed and is being implemented with the approved SB 35 project. As you know, a project for the Vallco Site has aheady been approved under SB 35. The proposed amendments are inconsistent with the approved SB 35 project, but they will not give the City of Cupertino (the "City") any grounds to block or alter the SB 35 project. There is, therefore, no urgency to the proposed amendments. The City is nevertheless moving forward, as quickly as it can, without any consultation with technical experts or the actual property owner, and scant notice to the public. 1 This is a hazardous proposition. First, it is apparent to us that the proposed amendments are simply another effort by elected and appointed City officials to work in concert with "Better Cupertino," whose members and sponsors populate this Commission and the City Council. Those officials apparently hope that, in the unlikely event that Better Cupertino prevails in their litigation against the SB 35 project, these General Plan amendments will render any development of the Vallco Site economically infeasible, and make the Vallco Site functionally ineligible for any future SB 35 project -or any mixed-use housing development at all. SlllTeptitious coordination with a special interest group is against the public interest to begin with, but there also are practical reasons this is not a valid strategy, as set forth below. Second, the amendments are anti-housing. Given the sorry state of Cupertino's compliance with state-mandated housing goals -at present, Cupertino has permitted only a quarter of its share of housing, almost none in the very low or low income category -this is a noxious objective. Under the proposed amendments, only 58 below-market-rate units are required-this is a fraction of the 1,201 units approved in the SB 35 project, and of the 572 units approved in the now-repealed Specific Plan. This Council boasts about how many housing entitlements it has granted, but when those homes are not built because their ultimate entitlements were infeasible, can the City really take credit? The amendments to the General 1 The Staff Report indicates that 36 notices were mailed to agencies, service and utility providers, but th ere is no mention of tribes affiliated with the area, which is required by Government Code§ 65352.3. Plan here remove a critical economic driver that make residential development at the Vallco Site viable and possible and would have a similar effect: another infeasible entitlement in Cupertino. The City's own economic studies confirm that office development is the economic driver for any residential development that might be proposed or considered for the Vallco Site: [M]arket rate housing and office uses generate positive residual value for the project, while below-market-rate apartments, retail, hotel, and civic uses must be subsidized .... Office uses are anticipated to be an essential value g enerator for the project.2 Further, while eliminating the primary "value generator," the City proposes to maintain not only uses that "must be subsidized," but also other high cost items, such as a "complete redevelopment," creation of a new "street grid" and requiring a minimum of 600,000 square feet ofretail uses. As carefully documented in the repo1t from The Concord Group last year, given changes in the broader market and existing regional retail competition, the site can only absorb approximately 400,000 square feet in retail over the next five years, meaning that the extra 200,000 square feet the City continues to require "would result in (i) extraordinarily high 'carry' costs and operating losses and (ii) extraordinarily high lease transaction and construction costs ."3 So the City's proposal continues to impose requirements that cause a significant "drag" on project economics, yet is only effectively allowing 389 residential units (15% of which must be affordable) to make up for these losses. It does not take much to realize that no project could ever pencil under the City's proposal. Rather than allowing a development program that would include some office and enable significan t affordable housing, Better Cupertino, and its City allies , prefer the Vallco Site to remain vacant and undeveloped. The City's attempt to hide behind a statement that it is "only" removing office is disingenuous. The purpose of this amendment is to prevent any sort of development on site. The concept of feasibility is well known to the City, as it previously engaged a consultant during the Specific Plan process to test the feasibility of various scenarios. In fact, this very analysis informed the City that in order for a minimum of 600,000 square feet ofretail to be "in the realm of financial feasibility", the City would need to entitle -and allow "by right" -a minimum additional development program of 1,779 residential units (with no more than 15% allocated as affordable) and 750,000 square feet of office.4 Ignoring the good practice of assessing financial feasibility, the City has rushed forward to advance the political and litigation goals of a few members, without assessing the best interests of the community, or principles of sound planning strategy. It's clear the proposed General Plan amendments are nothing more than a deceptive strategy for the City to appear "housing-friendly" while actually preventing the development of housing. Third, approval of these amendments will violate the California Environmental Quality Act. We understand that the City believes that these amendments were already analyzed and 2 September 11 , 2018 Report by Economic & Planning Systems, Inc. 3 June 1, 2018, Analysis of Cost Reductions Associated with Reduced Retail in Valko Town Center Project, The Concord Group. 4 September 11 , 2018 Report by Economic & Planning Systems, Inc . 1757 1.00l 4 8 18-4754-2685.9 disclosed as part of the 2014 Environmental Impact Report that the City prepared as part of prior General Plan amendments (the "2014 EIR"). That assumption is wrong. The City must prepare and certify a subsequent environmental impact report because the proposed amendments are a substantial change to the project that was approved in 2015, and the amendments will cause new significant impacts not discussed in the 2014 EIR. In 2014, the Vallco Mall was 85 percent occupied. The General Plan amendments proposed in 2014 were intended to facilitate and encourage redevelopment of the Vallco site to "create a new 'downtovvn' for Cupertino," and the 2014 BIR analyzed the reasonably anticipated impacts from that change. Today, the Vall co Mall is almost completely vacant. A portion of the Vall co Mall has been d emo lished'. The currently~proposed amendments will prohibit office uses on the site, even though that was one of the central uses that was contemplated in the 2014 EIR. The current amendments will block redevelopment of the Vallco Site, and will have the opposite effect of the amendments that were proposed in 2014. The Mall's newly-vacant condition will be prolonged by these new amendments, perhaps indefinitely. The protracted vacancy of such a large property will cause blight to sunounding properties, because they-if the City and Better Cupertino have their way -will be directly adjacent to a partially or completely demolished, fenced-off, completely vacant, former mall site. Urban decay and all of its typical symptoms -multiple long-term vacancies, dumping, graffiti and vandalism, little, abandoned vehicles, etc. -can be expected if the Vallco Site is not redeveloped to some productive use in the near future. The possibility of blight was not analyzed, at all, in the 2014 EIR . The public is entitled to know that urban decay is a reasopably likely outcome of these General Plan amendments, as well as the severity of those impacts, if the City intends to make any effort to mitigate that impact, alternatives to the General Plan amendments, and all of the other disclosures that are required by CEQA. Fourth, the amendments suffer from another fundamental and fatal defect. The Vallco Site is identified as a "Priority Housing Element Site" in the City's Housing Element. A site included in the Housing Element inventory must be "suitable and available for residential development," meaning that it has a "realistic and demonstrated potential for redevelopment during the planning period." The City's approach is a classic anti-housing city play-call: put a site on the inventory that it knows with certainty has no possibility of actually developing. But the days of Housing Element shenanigans are over, as the Legislatme has made clear that inventories must be real sites, meaning that they must be economically feasible. Housing Element law requires that the City re move governmental constraints to developing housing on inventory sites. Here the City is proposing to do the opposite and, if adopted, will render housing infeasible on the Site. 5 As the City's own financial feasibility study recognized , office is "an essential value generator" for any large project on the site. Removing office ensures the 5 I have enclosed a preliminary report from The Concord Group, dated today, assessing the feasibility of development of the Vallco Site if these General Plan amendments are adopted, based on the conclusions and analysis from the 2018 EPS Report. In short, the proposed amendments will result in a negative land value, even before considering our land cost basis and the constant site costs incurred in any deve lopment scenario. It is plain that the amendments will render redevelopment of the Valko Site infeasible. 175 7 1.00 I 4818-4754-2685 ,9 site will never be redeveloped, in which case the Site must be removed from the Housing Element inventory and other replacement sites identified. Of course, since this will require amendments to the Housing Element, the City must provide the proposed amendment to HCD for its review and comment. The City's General Plan, if amended in the way that is currently proposed, will lack a Housing Element that complies with state law. Fifth, because the proposed amendment is designed to deny Vallco economically viable use of the Vall co Site, the City would be liable for loss of value to Vall co. Sixth, we remind the City and Planning Commission that Kitty Moore must recuse herself from any consideration, discussion (including on social media, even when purportedly "representing (her)self only"), or vote on these proposed amendments. She is a co-Plaintiff in the SB 35 litigation, together with Better Cupertino. She is plainly abusing her role her a Planning Commissioner to better her position in that litigation -if, for example, the parties were to ever discuss settlement, she would certainly cite the General Plan amendments that she recommended as a point of significant leverage in her favor. Her attorney might file some brief in the hi.al court, citing the amendments as a point in her favor in the litigation. The amendments, in short, present opportunities to Ms. Moore and Better Cupertino to improve their litigation position, and Ms. Moore's participation in the process of recommending the . amendments for City adoption would be an abuse of her position, and a conflict of interest. This is especially true because the amendments so directly target the Valko Site. Further, to the extent Ms. Moore may currently be liable for attorneys' fees, depending on the outcome of litigation, this situation gives her a financial interest in the proposed amendments. Finally, one must consider the fiscal ramifications of the proposed action. The City's decision to speed through a pointless legislative exercise will simply generate more litigation and require depletion of the City's general fund to pay for attorneys to defend the City's ill-advised decisions. There is no rational justification for the proposed amendments to the General Plan. For the foregoing reasons, conscientious Planning Commissioners should refuse to act on the amendments, disapprove them or, at a minimum, defer them to study environmental and Housing Element impacts. \ Re Mou ds Managing bh-ector, San Hill Prope1iy Company Authorized Representative, Vallco Property Owner LLC Cc: Benjamin Fu, Community Development Director [benjaminf(a~cupertino.on!] Deborah Feng, City Manager [manager(h .cupertino.org] Enclosure: Preliminary Feasibility Impact of a Revised General Plan Scenario for the Vall co Redevelopment in Cupertino, California, The Concord Group, Jul y 29, 2019 17571.001 4818-4754-2685.9 Preliminary Feasibility Impact of a Revised General Plan Scenario for the Vallco Redevelopment in Cupertino , California, TI1e Concord Group, Jul y 29, 2019 1757 1.00 l 4818-4754-2685 .9 Memorandum To: From: Va ll co Property Owner, LLC The Concord Group Date: July 29, 2019 Re: Preliminary Feasibility Impact of a Revised General Plan Scenario for the Vallco Redeve lopment in Cupertino, California Vallco Property Owner, LLC ("VPO") is pursuing the redevelopment of the site of the Vallco Fashion Mall {the "Vallco Site"), a 51-acre site located in Cupertino, California . The City of Cupertino {"City") is currently entertaining a General Plan amendment that will effectively downzone the Vallco Site. VPO has retained The Concord Group ("TCG") to assesses the financial feasibility of the proposed amended General Plan Scenario. The review described herein will be based primarily or completely on assumptions and valuation conclusions from a report issued by Economic & Plannin'g Systems, Inc. ("EPS") dated September 11, 2018. These conclusions have been applied to the proposed General Plan Scenario to evaluate its likely financial feasibility. Th e followi ng represent our key preliminary conclusions: Proposed General Pion Scenario and Similarity to EPS Th e proposed General Plan Scenario excludes office, limits residential to 459 units {85% market rate; 15 % BMR); requires at least 600,000 square feet of retail and provides for a 191-key hotel on the 51-acre property. l. The EPS report -presented to the City on September 11, 2018 -evaluates two tiers of development. The proposed General Plan Scenario shares some basic similarities with EPS's Tier l program. Please see the table below: The proposed General Plan Scenario eliminates all office and condominiums, reduces the apartments from 932 units to 459 units, and leaves retail and hotel uses the same . Apartment Market R3te BMRApartment Condominium Market R3te BMRCondo Tradi tiona l Office Retail Program Comparison EPS Tier 1 Proposed GP 792 390 140 69 720 0 127 0 750,000 0 600,000 600,000 Chang e (402) (7 1) (720) (127) (750,000) 0 Hotel 139,000 139,000 0 2. By using per unit/per square f oot/per key residual valuation conclusions from the Ti er 1 EPS analysis and applying them to the proposed General Plan Scenario, preliminary valuation impacts can be identif ied . Vallco Property Owner, LL C 19446 .00 Page 1 July 2019 Preliminary Conclusions The majority of the economic weight of EPS's Tier l development scenario was carried by product types eliminated in the Proposed General Plan Scenario. In fact, based on EPS data, 84% of the total Residual Value Before Site Costs can be attributed to Office and Condominiums, two product types eliminated in the Proposed General Plan Scenario. See Figure l on Page 5 of the EPS report . From the report: "The analysis finds that Tier l is in the realm of financial feasibility assuming that the majority of the 1,779 units of housing is developed as for-sale product. With just over 50% of Tier l housing developed as condominiums, Tier l appears financially viable. The need for for-sale housing in the program derives primarily from the relatively high value of market rate condominium units and the fact that the City's below-market-rate [BMR) policy for ownership units targets median-and moderate-income households, as compared to the deeper affordability required for below-market-rate rental housing." Additionally: "As shown, market rate housing and office uses generate positive residual value for the project, while below-market-rate apartments, retail, hotel, and civic uses must be subsidized." Impact Table Eliminating high-value product types from the proposed General Plan Scenario has significant impacts on project feasibilit y . Using assumptions completely from EPS's report, we have compiled the following table demonstrating the impact of the proposed change· in product mix: Land Use Apartment Market Rate EMRApartment Condominium Market Rate EMRCondo Traditional Office Retail HolEI Residual Value Before Site Costs'Rae Credits Site Costs' Fee Credits Im pact Fee Credits Demolition Bisic Sle Work Open ~ce Improvements Farkland ln-Ueu Fee Rght-oF-Way and Eec:kbona lnfra&TUCture Additiona l Off-site Improvements' Mitigation Financing Costs and D~oper R:d.um on Ste Costs VPO's Approximate Land Cos Basis Program 792 140 720 127 750,000 600,000 139,000 EPS ller 1 Value $156,156,107 ($45,182,519) $256,920,406 $14,983,914 $121 ,596,757 ($33,1 75,543) (15,198,717) $466,100,405 ($107,700,405) $32,467,671 (S ·13,000,000) ($25.410,000) iS3,000,000) i$2 1,B50, 100) (SS0,000,000) so {$22, 101,97B) (S338,400,000) Value per Unit/ s= $197,166.80 (SJ22 , 732.28) $356,834 $117,984 $162 (;55 ) ('S37 ) D0W1120ne Program lerulting Value 390 $76,924,628 69 ($22,220,117) 0 $0 0 $0 0 $0 600,000 ($33,175,543) 139,000 ($5,198,717) ($16,845,293) . ($135,799,417) NoneAswmed {S1 8 ,000 ,000) (525,410,000) None Assumed {$20,970,300) (Sso,000,000) $0 ($21,413,117.38) ($358,400 ,000) Estimated Project -dual: $0 ($51 1,044,710 ) The elimination of product types (namely condominium housing and office) renders the project underwater as the total Residual Value Before Site Costs/Fee Credits 1 is in negative territory at ($17 MM). With Site Costs of more than $ l 35MM and a land cost basis of more than $358MM the proposed General Plan Scenario is clearly infeasible . 1 Site Costs of the Downzone scenarios are based on Figure 5 on page 14 of the EPS report, where costs associated demolition, basic site work, and additional off-site improvements/mitigations remain the same but costs ossociatad with open space improvements are assumed to be $0 and costs associated with parkland in-lieu fees re duce to $2 1,068,100 (based on th e City's policy to waive the fee fo r BMR units and g iven that no open sp ace im p rovements are assumed in this scenario for use as credit agoinst the fee ). Vallco Property Owner, LLC Page 2 July 29, 2019 19446.00 From: To: Subject: Date: Attachments: City of Cupertino Planning Dept. Abby Ayende; Benjamin Fu; Bonni e Yee. Cheu ng : El len Yau; Erick Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heusl er; Krista Yost; Piu Ghosh FW : Planning Commission 7/30 Public Hea ring Item 3 Wednesday, July 31, 2019 10:48:14 AM Cupertino Va llee GenP lan Amend 7-30-20 19.pd f image001.png im age002 .png imag e003.p ng image004. png imag e00S.png imag e006.png image007.png im age008.pn g From the general mailbox: CUPERTI NO From: Ben Lib bey Beth Ebben Deputy Board Clerk Planning Divis ion BethE @cupertino.org ( 408) 777 -3308 @, (), o, O· o, @· o, Sent: T u esday, Jul y 30, 2019 12 :29 PM Cc: City Clerk <CityC lerk@cupertino .o r g>; R Wang <RWang@cuoertin o .org>; Vikram Saxena <VSaxe n a@c uo ert ino.o r g>; Kitty Moore <Kmoore@cupertino.org>; Al an T akahashi <A Takahashi@c~pertino.org>; Q_~v~d. Fun g <DFun g@cupertin o.org> Subject: Pl ann in g Comm ission 7/30 Public He ar ing Item 3 7/30/2 019 C up e1iino Planning Comm is sion 10350 Torre Avenue C up e1iino, CA 95014 citvc le rk@cupertino.org; R Wang, Chair, rwang@c up e tiin o.org; Vikram Saxe na , Vice Chair, vsaxe na @cu pe ti in o .org; Kitty Moore, Commissioner, krnoore!alcupetiino .org; Alan Takahashi , Commiss ioner, ataka has hi @c up e1tin o.org; D avid Fung, Commissioner, dfung@c upertin o.o rg ; Via Email Re: Vallco General Plan Amendment s Dear C up e1iino Planning Commiss ion ers, The California R e nt ers Legal Advocacy and Education Fund (CaRLA) subm it s this letter to inform yo u that the City of Cupetiin o has an obligatio n to ab id e by a ll relevant state housing law s w hen considering General Pl an amendments. The purpose of a g iven hou s ing element, as se t forth by Cali forn ia state code sect ion 65863, is to ensure that cities adequately zone for their regional housing needs assessment allocation . As part of this process cities must designate sites that are suitable for development. CA code section 65583(a) (3) outlines this as follows, "An inventory of land suitable and available for residential development, including vacant sites and sites having realistic and demonstrated potential for redevelopment during the planning period ." In the case of the Vallco site, residential development at the density required for RHNA compliance is only possible as . long as retail space requirements are kept low and the site 's mixed use designation is preserved. The retail component of the site is particularly problematic . A repoti commissioned by the City of Cupertino in 2018 outlines , in detail, the over-saturation and overwhelming competition any new retail businesses would face at the Vallco site. The report points out that even regional retail, the specific type being prioritized by the city in this prospective general plan amendment, would have trouble surviving due to large nearby shopping centers. To preserve viability, the Vallco site should be subjected to very sparing retail requirements. Disallowing office uses at the Vallco site would also have a negative effect on the viability of housing on the site , especially affordable housing. To achieve a reasonable level of affordability cross-subsidization is necessary. Office space, unlike retail, is in reliably high demand in Cupertino and allows projects to go forward that would · never be financially viable otherwise. The ongoing SB 35 Vallco Project is a great example of this. It is important that the city of Cupertino carefully considers state law as it weighs possible amendments to the General Plan. The follow through on Cupertino's RHNA commitments has been very poor and only a very small number of the necessary units have been built. In addition to the Vallco site , the city is relying on the Hamptons Apts and the Oaks Shopping Center to fill out its RHNA requirements. The Hamptons Apts project shows no indication of moving forward , likely due to the difficulty of adding units to existing multifamily housing. The Oaks Shopping Center is unlikely to be developed this RHNA cycle as any development on the site would necessarily involve buying out leaseholders and the owners have made no indication of being interesting in re- development. · CaRLA is a 501 ( c )3 non-profit corporation whose mission is to restore a legal environment in which California builds housing equal to its needs, which we pursue through public impact litigation and providing educational programs to California city officials and their staff. Sincerely , Sonja Trauss Co-Executive Director California Renters Legal Advocacy and Education Fund From: To: Subject: Date: Beth Ebben Abby Aye nd e; Benjamin Fu; Bonnie Yee. Cheu ng; Ellen Yau; Erick Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Piu Ghos h FW: rezoning of Vall co Wednesday, Jul y 31, 2019 10:20: 52 AM From the general mailbox : Beth Ebben Deputy Board Clerk Planning Division BethE@cupertino .org ( 408) 777-3308 -----Original Message----- From: Stephanie Pressman Sent: Tuesday, July 30, 2019 2:33 PM To: City of C upertino Planning Commission <PlanningCommission@ cupertino.org> Subject: rezoning ofVall co Please reject any amandments to the General Plan that would quash the Vallco project and li mit the number of housing units to be built. I personally never shop in retail stores any more as I do much ofmy shopping on-lin e . I have li ved in Cupertino for over 50 years. Had I voted for limi ting housing when I first moved here, we wou ld not have such a strong community. Many of you wou ld not even be li ving here. The Vallco project is a good one which provides open space to walk and much of what is needed for our community. Stephanie Pressman Rainbow Drive From: St eve Kelly Sent: Wednesday, Augu st 7, 2019 10:59 AM To : City Council <C ityCounci l@cupe rtin o.org> Cc: Cupertino City Manager's Office <manager@cup ert i no.org> Subject : RE: HCD lette r and Vallco Dear Mayor Scharf & Vice Mayor Chao, You have pushed my home town to the breaking point with your anti housing pro office jobs plan . It is environmentally unsustainable to put large office parks far away from the needed housing for employees that bring wealth to our region! You continue to act in bad faith to bring critically needed housing into our area as surrounding cities of San Jose, Santa Clara, and Sunnyvale have done to date. Think Big & Bold as Mountain View has committing to 10 ,000 new housing units in its city. Your residents have stated for the record at the Stevens Creek advisory meetings they want to see light rail extended down Stevens Creek . It will take vision & planning with medium & high density housing next to retail and office parks but it will only happen if San Jose , Santa Clara , and Cupertino plan for the needed growth along the Stevens Creek Transit Coordinator . Sincerely, Steve Kelly Your Neighbor & A Proud Santa Clara Planning Commissioner Santa Clara, CA 95051 From: To: Subject: Date: Beth Ebben Abby Ayende; Benjamin Fu; Bonnie Yee. Cheung: Ellen Yau; Erick Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Piu Ghosh FW: Vallco Specific Plan Wednesday, July 31, 2019 10:26:44 AM From the general mailbox: Beth Ebben Deputy Board Clerk Planning Division BethE@ cupertino.org (408) 777-3308 -----Original Message----- From: Teresa Erdman Sent: Tuesday, July 30, 2019 2:30 PM To: City of Cupertino Planning Commission <PlanningCommission@ cupertino.org> Subject: Vallco Specific Plan To whom it may concern, I want to register my full support for the Vallco Specific Plan . I am a 20 plus year resident of Cupertino. Sincerely , Teresa Erdman Sent from my iPad From: To: Subject: Date: Attachments: Beth Ebb en Abby Ayende; Benjamin Fu; Bonnie Yee. Che un g; Ell en Yau ; Erick Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heusl er; Krista Yost; Pi u Gho sh FW : Cupertino housing crisis Frida y, July 26, 2019 2:28 : 17 PM imaq e00l.png image002 .png image003.pnq imaqe004.p nq imaqe00S .pnq imag e006.p nq imaqe007 .pnq imaqe00B.p nq imaqe0l 7 .p nq imaqe018.pnq imaqe019.p ng imaqe020 .pnq image021.pnq image022.pnq imaqe023.pnq imaqe024 .pnq From the g e neral mai l box : ii . I CUPERTINO From: Lauren Sapudar Beth Ebben D eputy Board C lerk Planning Di vis ion BethE @c upertino.org (40 8 ) 777 -3308 @ --O@ •OI Sent: Friday, Ju ly 26, 2019 8 :23 AM To: Beth Ebben <Be thE@cup ertin o .org> Subject: FW: Cupertino hou si ng cr isis m -CUP·ERTINO From: Va l Lauren Sapudar Exec uti ve Assistan t to City Manager & C it y Council C ity Manager's Office LourenS @cuoert in o.orq (40 8) 777-1312 @ @ Sent: Fri day, Ju ly 26, 2019 8:19 AM To: City Council <CityCo un c il@ cu oertin o .org> Subject: Cupertin o hou si ng crisis Mayor, Councilman, I have lived in Cupe1iino for 30 years and your position on low income housing is unacceptable if you plan any development at all. All the people supporting this collllllunity tbrnugh service jobs have no affordable place to live. Leaving Valko empty is criminal. Stopping a mixed development plan over the past years and undermining cunent effo1is is unconscionable. I will vote the mayor and bis suppo1iers out as soon as possible . You are sho1i sighted snobs thinking retail trnmps low income housing as a priority. Life is about people , not money. Eve1y restaurant or shop I frequent in Cupe1iino has "help wanted" signs . That's because no one can afford to work and live in Cupertino. Open your eyes to the new reality. To ta l Control P an el To : ci tvcouncil@ cupertino .oro- From: -• ! • / • ----L '"';'~ -. , ;. Message Score : 1 M y Spam Blocking: Level: Custom Block this sender B lo ck g:mail.com This message was delivered because the content filter score did nor exceed yo11rfilter level. High (60): Pass Meditm1 (75):-PaiS -·- Low (90): Pass Custom (55): P:1,s From: To: Subject: Date: Attachments: Beth Ebb en Abby Ayende; Benjamin Fu; Bonnie Yee. Cheu ng: Ellen Yau; Erick Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Piu Ghos h FW: ACTION ALERT: GO AHEAD WITH DOWNZONING AT VALLCO Wednesday, July 31, 2019 10:42:40 AM imageO0l.png imaqe002.pnq imaqe003 .pnq imag e004 .png imaqeO0S.pnq image006.pnq image007.pnq image008.pnq From the general mailbox: CUPERTINO From: Betini [m ailto. Beth Ebben Deputy Board Clerk Planning Division BethE@cupertino.org ( 408) 77 7 -3308 ©-0 0@0 Sent: Tuesday, July 30, 2019 1:48 PM To: , Reed Moulds <info@revitalizevallco.com>; City of Cupertino Planning Commission <PlanningCommission@cupertino.org> Subject: ACTION ALERT: GO AHEAD WITH DOWNZONING AT VALLCO Please don't listen to the Sand Hill Property at all. Meaningless development with just one agenda by Sand Hill: "Make Money" in BUG WAY! Stop them with just proposed 389 Units! Hope you make the right decision tonight! Sincerely, Cupertino Resident. On Tuesday, July 30, 2019, 01 :02:48 PM PDT, Reed Moulds <info@revitalizevalko .com> wrote: Friends: Now is the time to act. Tonight, t he Cupertino Planning Commission w i ll be reviewing a slate of amendments to the General Plan t hat seek to ensure that no viable project can ever be bu il t on the V a llco site and that would el imin ate tho u sands o f units of desperately needed housing. I have submitted a letter to the Planning Commission cautioning the City on the proposed action and outlining at least a half dozen reasons the Planning Commission should refuse to act on the amendments . Despite this, it seems the "Better Cupertino" Planning Commission , under direction from the Better Cupertino Council is hell-bent on speeding ahead with a reckless downzoning t hat wil l: • Expose the C ity to significant liabilities , • Provide clear ev id ence of the City's true a~~-::rnd .. If Planning Commissioner and SB 35 li tigant K itty Moore gets her way , put the final nail in the Vallco revitalization coffin. lil4llb llllilf ti• While 1.Ne fully expect to build our approved SB 35 Vallco To wn Center project , tha t approval is currently being challenged in court. \/Ve are confident th e lawsuit wi l l not ove rturn th e approval as there are no facts to support tha t, even if the C i ty will no lon ger defend its actions. However, la ws ui ts always carry uncertainty. With today's proposed downzoning , an adverse legal decision would ensure t hat Va llco rema ins what it now is -a half-demolished pile of rubble , a symbol of the inertia , obstructio ni sm and abuse of power exhibited by current "Be tter" leadership. The proposed amendments being considered t onight seek to downzone the site from 2,402 housing units to just 389, mandate retail development u p to 1 .2 million squa re f eet , and e li minate office altogether across the site 's 58 acres. Our current Vallco To wn C e nt er project brings 1,201 units of affordable housing -the City's new plan would provide for only 58 . I'm ask i ng you to raise your voice today to stop this egregious act ion that seeks to sea l the fate of the Va ll co s ite and render it use l ess for another generation . Call the City's Plann ing division offices at 408.777.3308. Email the Planning Commissioners using this link: planningcommission@cupertino.org . Come to th e Pl anning Commission meeting on T uesday night, and s peak you r three minute s. Your voice matters. • This action attempts to k i ll the f ut ure of Vallco an d the v ia bil ity of any other project under t hese circumstances . The City's own analysis, commissioned last year through the econom ic ana lytics firm EPS, confirmed this. Knowing full well the effect of t heir action, the Planning Commission's move T uesday n ight wi ll d emo nstrate their vision for the Vallco s it e to rema i n an empty hole for yet another generation . Thi s must be stopped . • T hi s action adds more low-w-age jo bs w hil e p reventing hom es for ~ .. low-wage \;v orke rs. Cupe rtino has a failing grade in jobs-housing "fit " with one of the Bay Area's worst ratios -1 lo w-income re s idence for eve ry 14 ·1ovv-viiag e Jobs. This proposed rezoning increases t he retail the City previously required and plans for additional lo w-wage jo bs, while cutting all forms of hous ing, in cluding a 95 % reduction in lo w -incom e housing. What message does this communicate to our City's lo w -income workforce? "You can serve us, but you can 't live near us." • Th i s action pu ts t he City at substan t i a l l egal risk by rendering this si te economically in feasible for development, a violation of multiple laws, i ncluding Ho usi ng Element law. Hasn't t here been enough taxpa ye r money waste d on lega l costs between the Randy Hom fi asco, Mayor Scharfs failed Measure C lawsuits and appeals , Vice Mayor Chao's FPPC situation , and the many other dis tractions? • This action i s be in g considered without commun ity in put o r f u rther study. General Plan up dates typically include extens ive months -l ong community outreach processes, separate from norma l Council and Commission meetings. Not only that, typical environmental review and feasibi lity analysis are being foregone. Why skip all t hese steps now? It seems to follow the City Council 's action earlier this spring to repea l the Vallco Specific Plan 1Nithout puttin g the referenda to a pub lic vote , despite an entire campaign dedicated to promising that vote. This action sends the wrong message about Cupertino 's va lues , shirks the City's role in addressing the region 's affordable housing crisis, exposes the City ancl its taxpayers t o significant lega l liabilities , and attempts to ruin any chance to restore the Vallco site to viable use . If any of this resonates with you and you care about the fu t ure of Cupertino, not to mention Vallco, I strongly encourage you to attend the hearing tonight and share your concerns with the Planning Commission. Now is the time to be heard. Join us . Sincerely, Reed Moulds Managing Director Sand Hill Property Co. From: To: Subject: Date: Attachments: City of Cupertino Plan ning Dept. Abby Ayende; Benjam in Fu; Bonnie Yee. Cheung: Ellen Yau; Erick Serrano; Erika Poveda; Gian Martire; Jeff Tsumura; Kerri Heusler; Krista Yost; Piu Ghosh ' - FW : Planning Commission 7/30 Public Hearing Item 3 Wednesday, July 31, 2019 10:48: 14 AM Cuperti no Vallco GenPlan Amend 7-30-2019.pdf image001.png image002.png image003.png image004.png image00S.png imag e006.png image007.png image00B.png From the general mailbox : CUPERTINO From: Ben Libbe y [mailt Beth Ebben Deputy Board Clerk Planning Division BethE@cupertino.org ( 408) 777-3308 @-.-o , Sent: Tuesday, Jul y 30, 2019 12:29 PM Cc: City Clerk <CityC l er k@cuo e rtino.org>; R Wang <RW an12:@cupertino.org>; Vikram Saxena <VSa xena@cupertino.org>; Kitty Moore <Kmoore (a)c upert ino.org>; Alan Takahashi <ATakahashi@cuo ertino.org>; David Fun g <DFung@cupertin o .org> 1'.+ .. Subject: Pl anning Comm ission 7/30 Public Hearing Item 3 7/30/2019 Cupertino Planning Commission 10350 Torre Avenue Cupertino, CA 95014 citvc lerk@cuperti no.o rg; R Wang, Chair, rwang @cup e rtino.org; Vikram Saxena, Vice Chair, vsaxena @cupertino.org ; Kitty Moore, Commissioner, kmoore @cup etiin o.org; Alan Takahashi, Co mmi ss ioner , atakaha shi @cupe 11in o .or g; David Fung, Commissioner, dfung @cupertino.org; Via Email Re: Vallco General Plan Amendments • . t,· Dear Cupettino Planning Comm issioners, The California Renters Legal Advocacy and Educat ion Fund (CaRLA) s ubmit s this letter to inform yo u that the City of Cupertino has an obligation to abide by all releva nt state housing laws when co nsidering General Plan amendme nts. The purpose of a given housing element, as set fotih by Ca liforni a state code sect ion 65863 , is to ensure that cities adequately zone for their regional housing needs assessment allocation. As part of this process cities must designate sites that are suitable for development. CA code section 65583(a) (3) outlines this as follows, "An inventory of land suitable and available for residential development, including vacant sites and sites having realistic and demonstrated potential for redevelopment during the planning period." In the case of the Vallco site, residential development at the density required for RHNA compliance is only possible as long as retail space requirements are kept low and the site 's mixed use designation is preserved . The retail component of the site is paiticularly problematic. A report commissioned by the City of Cupertino in 2018 outlines , in detail , the over-saturation and overwhelming competition any new retail businesses would face at the Vallco site. The report points out that even regional retail, the specific type being prioritized by the city in this prospective general plan amendment, would have trouble surviving due to large nearby shopping centers. To preserve viability, the Vallco site should be subjected to very sparing retail requirements. Disallowing office uses at the Vallco site would also have a negative effect on the viability of housing on the site , especially affordable housing. To achieve a reasonable level of affordability cross-subsidization is necessary. Office space, unlike retail, is in reliably high demand in Cupe1tino and allows projects to go forward that would never be financially viable otherwise . The ongoing SB 35 Vallco Project is a great example of this. It is impo1tant that the city of Cupertino carefully considers state law as it weighs possible amendments to the General Plan. The follow through on Cupertino's RHNA commitments has been very poor and only a very small number of the necessary units have been built. In addition to the Vallco site, the city is relying on the Hamptons Apts an~~~g Center to fill out its RHNA requirements . The Hamptons Apts project shows no indication of moving forward, likely due to the difficulty of adding units to existing multifamily housing. The Oaks Shopping Center is unlikely to be developed this RHNA cycle as any development on the site would necessarily involve buying out leaseholders and the owners have made no indication of being interesting in re- development. CaRLA is a 50l(c)3 non-profit corporation whose mission is to restore a legal environment in which California builds hou s ing equal to its needs , which we pursue through public impact litigation and providing educational program s to California city officials and their staff. Sincerely, Sonja Trauss Co-Executive Director California Renters Legal Advocacy and Education Fund Cyrah Caburian From: Sent: To: Cc: Subject: Danessa Techmanski <danessa@pacbell.net > Wednesday, August 14, 2019 10 :4 1 PM cc 8/20/19 Item #11A Steven Scharf; JonWilley@cup.org; Liang Chao; Darcy Paul ; Cupertino City Manager's Office Ray Wang; Kitty Moore; Vikram Sa xena Some Thoughts on Housing At Vallco Hi Mayor Scharf, Council , Manager Feng, and Planning Commissioners, I know with all of the noise about the housing shortage that it may be tempting to add tons of extra above our RHNA for insurance or good measure, and that might not be too bad if we had the ability to spread it around so that no one area of Cupertino becomes a mini San Francisco or a total traffic clog. I'd love to see a substantial amount of housing at Vallco, maybe even up to 1200 units, but not 2,400. It's way too much . Our city was just never laid out to handle that kind of a load in my opinion . I've been thinking about how extreme density affects neighborhoods in places like San Francisco and why I would hate to see that at Vallco . The anonymity, overcrowding, and dirty air aren't good for people's mental or physical health. Sure, you have super density in places like Paris and New York, but those cities have excellent transit, park spaces, and basic amenities within walking distance . Paris has a park about every three blocks . Look what a pit San Francisco has turned into with dirty needles, trash, and car break-ins everywhere . Do we want our residents to live in overcrowded, anonymous neighborhoods with dirty air and copious amounts of stressful traffic? Maybe we should ask how many of our City officials or residents would like to live in the middle of a 2400 -unit housing comple x. Let's see a show of hands! Why build way over our RHNA at Vallco when we still have other developers with open housing allocations? I know that they may be dragging their feet, and a recession is very likely, but they'll want to build on that land eventually. Excessive housing at Vallco is also irresponsible since it's next to one of the most crowded freeway stretches in the Bay Area with no way to mitigate the traffic or obtain funding for transit. Besides, once we add housing over our RHNA (combined Vallco, Oaks, Hamptons, Marina and possibly Homestead lanes), the argument will be that we are short on office! I don't have to lecture you about office, but the poignant question is why even bother building anything at Vallco if the added office will negate the desperately needed housing? What's in it for Cupertino besides a greater housing deficit and more traffic? Wiener's own city sets one of the ugliest examples (besides LA) in the country. CA now has 25% of the country's homeless people despite that it only has 12% of the country's population . As SF tech workers have migrated over into Oakland the homeless rate there has gone up 47 % in the last two years! Within SF, tech workers have pushed 8,000 people out of their homes, or 1% of the city's population, many of whom are newly drug-addicted as a way to deal with the pain and shame of being homeless. San Francisco has 4 new full-time positions for sweeping up human feces off the street, and others who pick up used drug needles 12 hours a day. And yet I wonder if MTC will have another $29K holiday party this year at the taxpayer's expense? All of that said however, I believe that the people of Cupertino are lucky enough to have a greater collective humanitarian conscience and will hopefully never become so numb and oblivious to what is happening in the Bay Area . I pray that through our City leadership and guidance we can set an example and never even start down the road to an even greater housing/jobs imbalance. Unfortunately our federal government makes it harder for us by allowing Saudi Arabia and Abu Dhabi to pour more and more money into our most saturated metropolitan tech and business centers instead of into the parts of our country where jobs are needed and housing is more affordable . I was just in Denver and Boulder and the song there is very much the same as here . One last thought, I know that the majority of people don't live and work in the same city, but I do wonder ifthose numbers couldn't be improved by building housing that better matches the real and particular needs of our local work force. It seems instead that housing levels and types are developer driven. I would guess that there are many Apple employees who would be interested in buying starter condos close to work in Cupertino, but they will likely get tons of apartments and tiny BMR units if SHP has their way. Is that responsible planning? Why is it that cities are not making the effort to poll and research exactly the types of housing that their local workforce actually needs? I had previously mentioned the idea of getting together with large employers like Apple to do such a poll-although developers will probably balk that it won't "pencil out." It sure seems a lot better than letting Sacramento decide what types of housing we need since they have little if any understanding abdut our community other than salaries and family sizes. Plan Bay Area seems like it's been as bad as having no plan at all-or worse . I am writing a paper on the forces behind the housing "crisis" and it sickens me to see that none of the 13 major factors that continue to drive our problems are even addressed by bills like SB 35 . $$$$$$$$$$$$ reigns supreme . More on that later ...... . Most sincerely, Danessa Techmanski 2 Cyrah Caburian From: Sent: To: Cc: Subject: Attachments: Allen, M ar k W . <mallen@coblentzlaw .com > Monday, August 19 , 2019 1 :28 PM City Council Yu , Charmaine ; Cupertino Cit y Manager's Offi ce; Heather Minn er Law Email; compliancerev iew @hcd .ca .gov Vallco Cup ertin o Cit y Council Letter with Attachments-c.pdf Dear City Council -attached please find a letter from Ms . Yu rega r ding Item No . 11 at tomorrow's City Council meeting, regarding the General Plan Amendments and rezoning for the former Vallco Fashion Mall Site . A hard copy follows via FedE x for delivery tomorrow. Thank you . Mark Allen I Secretary to Charmaine G. Yu, Esq. Coblentz Patch Duffy & Bass LLP One Montgomery Street, Suite 3000 San Franc isco, CA 94104 415-677-5242 I Office 415-391-4800 ma ll en@coblentzlaw .com www .coblentz law.com T his transm i ttal is in te nd ed so lely for use by its add ressee, an d may co ntain co nfid entia l or legally priv ilege d informatio n . If you receive thi s transmittal in er ror, p lease emai l a reply to the se nder and de lete th e transmitta l and any attac hm ents. Cyrah Caburian From: Sent: To: Cc: Subject: Eric Schaefer <sericar7@gmail.com > Monday, Augus t 19, 2019 11 :34 AM Steven Scharf; Liang Chao; Jon Robert Willey; Darcy Paul City Clerk For the record : Remove office from Vallco : Support! Cupertino City Council members, Re : Aug . 20 agenda item : 19-109 (GPA-2019-01), a resolution amending the General Plan to remove Office as a permitted use from the Vallco Shopping District Special Area and remove associated office allocations Support! City Clerk: Please add my comments to the City Council meeting record . Thank you. Eric Schaefer "Cities have the capabili ty of providing something for everybody, only because, and only when , they are created by everybody ." -Jane Jacobs, The Death and Life of Great American Cities Cyrah Caburian From : Sent: To: Cc: Subject: Eric Scha efer <seri ca r7 @gmail.com > Monday, Augu st 19 , 2019 11 :28 AM Steven Scharf; Liang Chao ; Jon Robert Willey; Darcy Paul City Clerk For th e record : Don't g ift Valko property own er wi t h upzone Cupertino City Council members , Re: Aug. 20 agenda item : 19 -2188 (Z-2019-01), "An Ordinance of the City Council of the City of Cupertino amending the zoning map to rezone 13.1 acres within the Valko Shopping District Special Area to Mixed Use Planned Development with Multifamily (R3) Residential zoning P(R3,CG) and General Commercial uses and the remainder of the Special Area to General Commercial (CG)" Housing might be a great use for some of Valko . But any permanent upzone of the property will provide a w i ndfall for the current, unreasonable owner and make it harder for a more reasonable owner to acquire and develop the property in line with the community vision . Gifting Valko upzone now also decreases the City's negotiating power with the current or a futu r e Vallco property owner. City Clerk : Please add my comments to the City Council meeting record . Thank you . Eric Schaefer Cupertino resident "Cit ies h ave the ca p a bility of p r ovi di ng something for everybody, only becau se, a nd o nl y wh en, they are cr eat ed by everyb ody ." -Jane Jacobs, The De at h and Li fe of Great American C it ies Bo ard of Directors Ro n Gonza les, Chair Hispanic Foundation of Silicon Volley Jan ice Jense n, Vice Chair Habitat for Humanity East Boy/Silicon Valley Kevin Zwick, Treasurer Housing Trust Silicon Volley Kathy Th ibo d ea u x, Secretary KM Thibodeaux Consulting LLC Shilo h Ballard Silicon Volley Bicycle Coalition Bob Brownstein Working Partnerships USA Gi n a Dalma Silicon Volley Community Foundation Kat ie Ferr ick Linkedln Amie Fishman Non-Profit Housing Association of Northern California Jav ier Gonzalez Google Ponc ho Guevara Sacred Heart Communi ty Service Nath an Ho Silicon Volley Leadership Group Janikke Klem Technology Credit Union Jan Li ndenthal MidPen Housing Je nn ifer Lov in g Destination: Home M ary Murtagh EAH Housing Chris Nea le The Core Companies Andrea Osgood Eden Ho using Ke ll y Sn ide r Kelly Snider Cons ulting Jenn ifer Van Every The Von Every Group St aff Les lye Co rsig lia Executive Director TRANSMITTED VIA EMAIL August 19, 2019 Honorable Mayor Scharf and Members of the City Council City of Cupertino 10300 Torre Avenue Cupertino, CA 95014 sv (Q)home Dear Mayor Scharf, Vice Mayor Chao, and Councilmembers Paul, Sinks, and Willey: RE: Item 11-Valko Shopping District Special Area General Plan Amendments and Associated Zoning Amendments On behalf of SV@Home and our members, we write today to reiterate our strong support for the Vallco Town Center SB35 proposal, which will bring 1,201 affordable homes to Cupertino. We 're excited to see this project move forward and glad to see the latest phase of demolition permits approved . While we were disappointed to see the Vallco Specific Plan repealed by the Council after months of engagement by community members, the SB35 proposal will be a major step towards meeting the city's affordable housing goals . Since the beginning of the 2015-2023 Regional Housing Needs Assessment (RHNA) cycle, Cupertino has permitted only 19 new homes for people who make very low incomes, 56 homes for people who make moderate incomes, and none for people with low incomes . This leaves a gap of 719 affordable homes in the current cycle alone . And while we applaud the City for supporting the construction of the Veranda, a Measure A-funded affordable housing development that is providing 19 new homes for seniors, including seniors who have recently experienced homelessness, there is a need to tackle this challenge at scale. Cupertino 's jobs-housing fit ratio is among the highest in Santa Clara County, with nearly 14 low wage jobs for every one existing deed-restricted affordable home. This means that many of the people who work in service jobs critical to the city's economy cannot afford to live nea r their job or that they overpay or overcrowd to avoid long commutes . We are concerned that the Council is considering actions that will undermine efforts to build more housing in Cupertino, particularly housing for lower-income families . The best opportunity for Cupertino to make progress on its goals is through significant affordable housing development at the Vallee site. We urge the Council to take action to expedite the development of the Vallee SB35 project so that 2,402 households can find a place to call home . Sincerely, ,,1·2 -V/$ / cl:'tl/( '.ln07,,,-,...-z David K Meyer Director of Strategic Initiatives 350 W . Juli a n St r eet, Bu i ldi ng 5, San Jose, CA 95110 408.780.226 1 • www.svatho m e.org • in fo@s ili co nva ll eyat home.org Cyrah Caburian From: Sent: To: Cc: Subject: Attachments: David Meyer <david@siliconvalleyathome.org > Monday, August 19, 2019 9:30 AM Steven Scharf; Liang Chao; Darcy Paul; Rod Sinks; Jon Robert Willey City Clerk; Kriti Garg; Michael Lane SV@Home letter RE : Item 11 -Vallco Shopping District Special Area Initial GP Amendments SVH Letter RE Item 11 -Vallco GP Amendments 081919.pdf Dear Mayor Scharf, Vice Mayor Chao, and Councilmembers Paul, Sinks, and Willey: On behalf of SV@Home and our members, we write today to reiterate our strong support for the Vallco Town Center SB35 proposal, which will bring 1,201 affordable homes to Cupertino. We're excited to see this project move forward and glad to see the latest phase of demolition permits approved . While we were disappointed to see the Vallco Specific Plan repealed by the Council after months of engagement by community members, the SB35 proposal will be a major step towards meeting the city's affordable housing goals . Since the beginning of the 2015-2023 Regional Housing Needs Assessment (RHNA) cycle, Cupertino has permitted only 19 new homes for people who make very low incomes, 56 homes for people who make moderate incomes, and none for people with low incomes. This leaves a gap of 719 affordable homes in the current cycle alone. And while we applaud the City for supporting the construction of the Veranda, a Measure A-funded affordable housing development that is providing 19 new homes for seniors, including seniors who have recently experienced homelessness, there is a need to tackle this challenge at scale. We are concerned that the Council is considering actions that will undermine efforts to build more housing in Cupertino, particularly housing for lower-income families. The best opportunity for Cupertino to make progress on its goals is through significant affordable housing development at the Vallco site. We urge the Council to take action to expedite the development of the Vallco SB35 project so that 2,402 households can find a place to call home. Sincerely, David David Meyer Director of Strategic Initiatives david@siliconvalleyathome.org ( 408) 462-1572 Website Facebook Newsletter Linkedln Twitter Become a Member Cyrah Caburian From: Sent: To: Cc: Subject: David Rolnick <daverol@sbcglobal.net > Sunday, August 18, 2019 7:3 9 PM City Council City Clerk; Cupertino City Manager's Office Hausrath Economics Group Memo Members of the Cupertino City Council, I have reviewed the Hausrath Economics Group memo regarding the viability of housing at Vallco. While I have no particular expertise on evaluating housing and commercial development viability at Valko, this memo is clearly lacking even to the most untrained evaluator. The entirety of the permitted uses (both housing and retail) need to be completely evaluated together, not solely the 13 .1 acres of housing in isolation. One cannot tell from this memo if the housing element is viable or not because so much of the cost estimates are missing (construction cost estimates, school fees, city fees, etc.). The estimated cost of $4.6 million to tear down 13 .1 acres of the existing mall implies a cost of about $18 .1 million to tear down all 51 acres of the mall. It seems to me that the cost to completely tear down the all the existing mall structures will far exceed this amount. Even simpler tasks like putting in dedicated bicycle lanes or upgrading the Regnart Creek trail or adding a small room to the library cost millions . If the Valko Property Owner chooses to spend their own money generating garbage economic viability reports, they can spend their money doing so . For the city to waste the taxpayers money on such an unobjective and unserious memo to counter VPO's garbage is shameful. Su rely there must be a city employee who could have done a more thoughtful and complete job on this task. Regards, David Rolnick Cyrah Caburian From: Sent: To: Cc: Subject: James Moore <cinco777@icloud .com > Sunday, August 18, 2019 6:24 PM Steven Scharf; Liang Chao; Jon Robert Willey; Darcy Paul; Rod Sinks; Cupertino City Manager's Office; City Attorney's Office Sue Moore; City Clerk Please support the passage of the Resolutions and Ordinances (Agenda Item #11) for the 8/20/19 CCC meeting Dear City Council, City Manager, and City Attorneys, Please conduct the 8/20/2019 CCC Public Hearing, deliberate, and adopt the three Resolutions li sted und er Agenda Item 11. Additionally, please conduct the fir st reading of the two related Ordinances. We, our neighbors, and Cupertino friends do not want or need more office. All of us, as long-tim e residents, have seen th at more office brings more stressed out commuters and traffic congestion, and is never accompa ni ed with sufficient and afford able h o u s ing. Bay Area media, bu siness interests, and developers, on a daily basis, laud the number of n ew jo bs being created in Cupertino a nd nearby co mmuniti es. They rarely mention the severe si d e effects w hich includ e traffic gridlock, in c r eas in gly lengthy commute tim es, shockingly high home prices, sky high rents, la ck of affordab le h ous ing, and in creased toxic and gree n house gas emiss ions . Between 2010 and 2017, per Cens u s Bureau data, Cupertino added 11,219 new jobs but added only 2,155 n ew employee res id ents. 9,064, or 80% of these new Cupertino-based jobs were taken by employees commuting from outside Cupertin o. For the first six months of 2019, Cupertino's unemployment rate averaged 2.4%. Our rate has been below 3% for years . These facts d emonstrate that Cu pertino residents don't need jobs e lici ted by more office. Instead of more office, residents, includi ng seniors and children, need relief from th e increasingly dangerous traffic coriditions plaguing our stree ts a nd highways. We, o ur City, needs a break from th is jobs/office onslaught to catch our breath a nd resolve our unaffo rdabl e hous ing crisis without continuing to worsen it by building more office without s uffi cient compensating affordable housing. Cupertino, w ith a "new jobs t o new emp loyee residents" ratio of 5.2, more than double that of an overloaded and congeste d San Francisco County, is fast b eco ming th e Poster Boy City of "Too Much Of A Good Thing". Continuing at our current p ace with new job/office creation will le a d to our streets resembling a vast and stressed-out parking lot durin g commute and school drop-off h o urs. Pl ease note tha t our Cup ertino-spec ific jobs/office/hou s in g /co mmute imb a lances dwarf those ofother West Bay communities as en umerated in Greg Schmid's 9-page "Plan Bay Area 2050 Methodology" provided to MTC/ ABAG on August 15, 2019. We and many other concerned citizens s uppo r t ed and s igned it. This paper offers valuable in s ig ht into our ne e d to balance jobs, office, and housing, an d r ecomme nd s soluti ons to the num erous problems and challenges confronting Bay Area communities. We rate it a "Mu st Read" for a ll Bay Area re side nts and officia ls . Thank you for supportin g the residents of Cupertino who, in recent years, rarely spend a week without experiencing m ed ia , bus iness, a nd d evel oper interests treating o u r comm unity as a m ea ns to in crease th eir riches at th e expense of our suburban quality of life . We, ou r fri e nd s, and clo se n e ighb ors moved to Cupertino and h ave staye d because it has been a desirable community to ra ise our children, e njoy our diverse and friendly nei ghb orh oods, and benefit from our excellent sch oo ls, parks, and a wealth of city services. Let's keep Cupertino as a safe and neighborly community Jim and Sue Moore Lindy Lan e (west ofBubb) Residents s in ce 1976/1980 **** Please add this letter to Public Comments for the 8/20/19 CCC Mtg**** Cyrah Caburian From: Sent: To: Subject: Yan Yu <yanyu2005@gmail.com> Friday, August 16, 2019 5:13 PM City Council downsize Vallco GPA Dear Citycouncil, Happy Friday! I am a cupertino resident and I support to downsize Vallco GPA: 1. Allocate ZERO office space at Vallco. We already a gigantic Apple spaceship across the street. Have more office buildings would be disaster to rush hour commute and burden local infrastructures beyond its current capacity. 2. Make the project Mainly for shopping and entertainment. The majority of Cupertino land are occupied by housing and office buildings. We as Cupertino resident, would like to keep the Vallco as shopping and entertainment center instead of re-purposing or rezoning it for office building or housing units. Our city needs a balanced development. We barely has any entertainment or shopping centers left. 3. Leave more green landscape on the ground. 4. As mentioned above, keep the Vallco as shopping and entertainment center instead of repurposing it for other uses. definitely, Keep housing units MINIMAL. please keep my comments as public record. Thanks! Best regards, yan cc 8/20/19 Item #118 Cyrah Caburian From: Sent: To: Subject: Reed Moulds <info @revitalizevallco.com > Monday, Augu st 19 , 2019 7:29 PM Rod Sinks Last chan ce to stop Vallco downzon i ng August19 ,2019 ~ Dear neighbors and friends, This Tuesday's City Council meeting is one of the most important yet for the future of Vallee, as the Council considers the downzoni ng of the property to allow just 389 units of housing and no office space. This act would render any future project infeasible, as noted by the City's own analysis. This action would als o o pen Cupertino to s ignificant legal and financ ial exposure,.as the State noted in their recent lette r warning the Counc il that Cupertino is at risk for not complying with Housing Element law. When these motions came before the Planning Comm ission earlier this month , they failed . W hile we are confident that our SB35-approved Vallco Town Center project will survive current pending litigation , there are no guarantees. If we do not win in court, and if Council downzones the property in the meantime, the Vallee si te will likely remain a vacant eyesore for another generation . Sand Hill has advised the City multiple times , i ncludin g ea rl ier toda y , as the property owner that we do not see a viable path forward under the proposed reduction in zoning . Citizens and even some commissioners have expressed frustra t ion at the lack of visibility and due process for a change of this magnitude . For those of you who have not yet spoken on this matt er , now is you r la st chance to do so. Email the councilmembers and tell them to stop the gambling with taxpayers' money . Tell them to stop speaking platitudes to Cupertino 's low-income workers while blocking the affordable housing that is so desperate ly needed . Tell them to stop preaching about balancing jobs and housing when their plan worsens the balance . Tell them that the only way t o build the affordable housing Cupertino desperately needs is through hundreds of millions of taxpayer dollars or through an allocation of office use. Tell them to stop building the wall that keeps the people who work in Cupertino and serve them daily from raising their families inside the city. To those of you who have already written or spoken at a City Council meeting, thank you fo r raising your voice . To the rest: now is the time fo r action . I hope to see you on Tuesday . Sincerely, Reed Moulds Managing Directo r Sand Hill Property Co . P.S. A quick update on construction is below. 2 Demolition at Vallco is continuing at full speed. We are nearing completion on demolition of the second parking garage near the former Sears, and launched demolition this week on a significant portion of the mall , starting with the former TGI Fridays (pictured above). We've received very positive feedback on our extensive public noticing. As the initial noticing period is complete, subsequent e-notices about demolition activity related to these areas will be sent only to those who have signed up to receive these updates. To sign up, visit www.revitalizevallco.com/demolition-updates/. Ongoing updates also are posted to our website at www.revitalizevallco.com/construction. As always , if you have questions about demolition , you can reach us directly via email, or call us on our construction hotline at 408 .659.2455 . www.RevitalizeVallco .com Copyright© 2019 Revitalize Vallco 3 I Want to change how you receive these emails? You can update your preferences or unsubscribe from this list. 4 Cyrah Caburian From: Sent: To: Subject: Grace Li <grace .huame i.li@gmail.com > Monday, August 19, 2019 8:41 PM City Council Vallee and downzoning To whom it may concern : I grew up in Cupertino, attending Kennedy Middle School, Monta Vista High School, and De Anza Community College . During college, it was my dream to go on to teach where I grew up. I taught at CUSD for 3 years, but ultimately teaching and living in Cupertino was not feasible for me. Please think about the teachers and other non-tech workers when considering what to do with Vallee . I grew up here and understand the culture, but I will likely end up in the East Bay longterm because there are not many housing options for those of us who make less than 100k per year. A couple of years ago the community shot down the proposal to turn an old school site into teacher housing. Unless Cupertino deals with their very real affordable housing shortage, I imagine many more teachers will choose to leave the area . Thanks , Grace Li 1 Cyrah Caburian From: Sent: To: Subject: Samuel Wood <wood@responsive.net > Monday, August 19, 2019 8:58 PM City Council Vallco feedback Dear Cupertino Councilmembers , Like many Cupertino citizens I continue to receive alarmist and barely coherent e-mailed threats from Sand Hill Property Company . Today the subject line was "Last chance to stop Vallco downzoning." When I see e-mails like that I assume the city council must be doing something right . Thank you for working to make sure that Sand Hill speculators do not profit at the city's expense by rezoning to office any land that they purchased zoned as retail. I would be dismayed if Vallco was replaced by anything other than a sensible mix of retail, housing, and public spaces . Thank you, Sam Wood 7723 Seeber Court Cupertino, CA 95014 Resident of Cupertino for 15+ years 1 Cyrah Caburian From: Sent: To: Cc: Subject: m malik1 @comcast.net Monday, Augu st 19, 2019 9:12 PM City Council City Attorney's Offi ce ; City Clerk; Cupertino Cit y Manager's Offic e Vallco Downsi zing on the agenda I have read the entire contents of the letter sent to Council by Charmaine G. Yu, of Coblentz Patch Duffy & Bass, LLP. and trust you all have too ........ ? If this does not convince you to drop the downzoning of Valko, then what will ...... ? Don't answer that in haste: It will then take a lawsuit by the State, a huge fine by the State Attorney General, and a possible lawsuit by SHP -IOW's Triple Jeopardy @ Hope the CAO office and Deb Feng will be able to open your eyes to the enormous risk you may be undertaking . I don't place much hope in the BC/FoBC aligned members of the Council, but perhaps Darcy with his legal training will be able to sway some thoughts. You are playing with fire and are very likely to be burnt. T he 52% of voters that did not vote for this Council don 't want to be burnt as collateral damage! Respectfully, Mike Malik mmalikl@comcast.net Cell : 408.464.1039 43 year resident Cyrah Caburian From: Sent: To: Cc: Subject: Anne Ng <anneng@aol.com > Monday, August 19, 2019 9:14 PM City Council Deborah L. Feng no to vallco downzoning Honorable Councilmembers-- Sorry I can't make the Council meeting tomorrow night. Please go back to the drawing boards with your inadequately publicized and ill advised extreme downzoning of Vallee . Both morally and legally, Cupertino must make possible more affordable housing , in some quantity . To be affordable in Cupertino, housing must be quite dense and Vallco is the logical place for it. Anne Ng 6031 Bollinger Road Cyrah Caburian From: Sent: To: Subject: Dear Council, Julian Morley <jmorley@heliocentric.net > Monday, August 19, 2019 9:19 PM City Council Please don't downzone Vallco I am a Cupertino resident and home owner on Stendhal Ln, and I am writing to urge you NOT to downzone the Vallco property. The South Bay, and Cupertino in particular, are desperately in need of more housing stock. More housing -especially more affordable housing -means lower commute times for our workers, which means less traffic on our streets and highways . I am not concerned about the impact this might have on the price of my home, or overcrowding in our schools (I have two children in CUSD); I'm sure that the long lead time and ingenuity of our residents will be able to make this work. I am likewise more than happy to take the risk of a decrease in my home value if the end result is more housing supply and cheaper housing in this city -the good of the community, both here and throughout the South Bay, is more important to me than whatever Zillow thinks my house might be worth this month . What doesn't work for me is the thought of the City being sued and then losing in court . It is not responsible stewardship of this city -or my tax dollars -to roll the dice on prevailing in the inevitable lawsuit should down-zoning occur, and it is not in the best interests of this city to have a pile of rubble be our welcome sign to the rest of Silicon Valley . Please listen to legal advice, and to the planning committee, and do not downzone this property. Sincerely, Julian Morley Cyrah Caburian From: Sent: To: Subject: Dennis Vaughn <dennisdvaughn@gmail.com > Monday, August 19 , 2019 9:22 PM City Council Vallco Redevelopment Dear Cupertino City Council, Good evening and thank you for each of you r service to the community. I know each of you seek to do what's best for our community and maintain a high quality of living. About 23 years ago I moved here from Los Angeles, not a suburb of LA, but the actual City of Los Angeles. During this time I had two cars stolen, attended sub par schools from elementary through high school and dealt with city services that were non - responsive. I moved to Cupertino to have a better life for myself and my children . I'm a proud teacher in a local public school district and saved my money to purchase a townhouse here . I love Cupertino and have enjoyed living here, but I'm becoming increasingly concerned about the magnitude of the project at Vallco . I'm in agreement with most on the council that this project is too big, bringing thousands of more people into the city and more and more offices with even more people . This is not the Cupertino that I moved from LA to come to. Please stand firm against politicians from San Francisco who likely care very little about the life style people in Cupertino desire and push through bills in Sacramento to satisfy political points from voters . Please continue to take a stand against developers who seek to push through projects that the city as a whole rejected in a ballot initiative a couple years ago . I live just south of Vallco off Greenwood Drive . My family and neighbors will be directly affected by both the construct ion and in the future, daily commuters who didn't get to buy a home at Vallco and are now coming to Cupert i no . I don 't think this problem will go away by building 2400 housing units in Cupertino. I'm hoping Sand Hill will work with the city on developing a plan that both the citizens, State and themselves will be satisfied as good enough, not the current plan that Sand Hill is moving ahead with . Thank you , Dennis Vaughn Cyrah Caburian From: Sent: To: Cc: Subject: John McGu igan <jguig2000@yahoo.com > Monday, August 19, 2019 9:39 PM City Council J. Mc; Barb McGuigan We Agree With The Vallco Downzoning Thanks for trying to stop adding more office space at Vallco, worsening the Jobs -Housing imbalance . Also, workers living to the south of Cupertino will have HW85 & 1280 completely blocked by the ADDED 416,531 VMT PER DAY estimated by the SB35 EIR . John and Barb McGuigan ... Cupertino Residents for 42 years Cyrah Caburian From: Sent: To: Subject: Lesley Boncich <lboncich@sbcglobal.net > Monday, August 19, 2019 9:59 PM City Counc i l Vallco Dear Mayor and Council members, As a 23 year Cupertino resident , retired local government employee with strong interest in current affairs at the national and local level, it is distressing to read about Cupertino in various local, state and national news reports and how the city is failing to pull its weight in providing affordable and other housing for our fast growing working population and residents . Please stop gambling with taxpayers' money. Stop speaking platitudes to Cupertino's low-income workers while blocking the affordable housing that is so desperately needed . Stop preaching about balancing jobs and housing when your plan worsens the balance . Just get on with building the affordable housing Cupertino desperately needs . Stop building the wall that keeps the people who work in Cupertino from raising their families inside the city. I did not vote for any of you and look forward to helping vote you out of office unless this ridiculous stance ends . As elected representatives you are supposed to act in the community's best interests (not Better Cupertino's) and ensure the City meets its legal obligations under State law . Oh and please remove Planning Commission Chair Wang . He is an embarrassment and has no place on any public body -let alone in a leadersh i p role-given the whiff or appearance at least of impropriety on his part and apparent poor character. His response to allegations rings hollow and insincere. Were he a City employee there would be an invest igation with the potential for reprimand or termination. His retention reflects poorly on you all and on our community. This is not a time to feel proud of our local leadership . Please shape up. Thank you for listening Lesley Boncich Oak Valley Cyrah Caburian From : Sent: To: Subject: joeppereira @gmail.com Monday, August 19, 2019 10:56 PM City Coun cil ; City Clerk Eliminate Offi ce from Vallco Respected City Council Based on historical plans and citizens demand to improve housing situation in Cupertino, please eliminate office space in any Vallco plans . Best regards Joe Pereira Cyrah Caburian From: Sent: To: Subject: Keith Chiem <chiem@yahoo.com > Monday, August 19, 2019 7:51 PM City Council YES downzoning at Vallco Keep fighting Sand Hill! --k Cyrah Caburian From: Sent: To: Subject: Hello, Justin Amans <justinamans@gmail.com > Tuesday, August 20, 2019 12:51 AM City Council YES downzoning at Vallco I just wanted to let you know, as a resident of Cupertino for most of my life (1988 onward), I've seen Cupertino change more , and grow both positively and negatively than I think most people see in their hometowns in a century. I've seen movie theaters, book stores, shopping malls, coffee shops, and video rental stores come up, and disappear in a matter of years, or in some cases months. I've been receiving updates from Sand Hill Properties at the Vallco site , not because I support them, but because I'm disappointed to see another piece of my town's history get demolished , and wantto hear what they have to say for themselves . I've just received an email from them (as I frequently do), up in arms about what they can and can't have or do, and that the city wants to re-zone for less housing. I just want you to know that I support the cities decision to do this . I know we're in a housing crisis of sorts in Cupertino, and I realize that people in my age group, myself included, can barely afford to live here. But I don't like big business coming in and tearing something down "to help", when I've seen nothing but scare tactics and finger pointing from them since their initial proposal. I'd rather see the Mall owned by the city and repurposed in its current state . I know it's probably not going to happen , but It would be far less expensive than sand hill's proposal, and could be a spectacular mixed use center, while maintaining some structural and historic elements of it's past glory. Not everything has to be rebuilt for us to achieve progress . Sometimes the most progressive action is reflection . And remembering where we came from . No matter what we do, Cupertino is not a big city, and Sand Hill does not own us . Thank you for your time, and hearing my thoughts, Justin Amans Born in, concerned for, and residing in Cupertino. Justin Amans My Band Linkedin Cyrah Caburian From: Sent: To: Cc: Subject: Ignatius Y. Ding <ignatius.ding@gmail.com> Tuesday, August 20, 2019 3:54 AM City Council Cupertino City Manager's Office; City Clerk; City Attorney's Office; Kirsten Squarcia Written Communication regarding Agenda Item #11 of 8/20/19 Cupertino Council Meeting Request this letter to be included in the public record. Dear Council members, We all know that Cupertino , like the rest of the Bay Area and California in general, has two major problems: 1. Traffic gridlocks and overloads 2. Housing shortage crisis. No question, Cupe1iino must do its paii to help alleviate the crises that literally destroy the quality of our lives bit by bit and make everyone miserable . All of us support the city to pursue solution(s) to address both. Cupertino residents are absolutely for housing. We are definitely NOT a group of anti-housing activists as some fringe nut jobs and local media try to portray us as such. It is also a fact that the City of Cupertino has granted 40% more housing allocations to various developers above the RHNA (Regional Housing Needs Allocation) set by ABAG as the state law mandates. We have to work with the state legislature to make the developers moving forward to build these allocated units or they should lose their entitlements if they do not make progresses or certain legally binding milestones as proposed in their development plans . Fmihermore the state could conceivably legislate to give the counties or the municipalities the power to purchase or seize the land from developers through "eminent domain" provisions . That is something w01ihwhile for our state, county and city officials to explore. In the last ten years or so , the growth of number of jobs is more than five times faster than the increase of housing developments even though the recent consolidation of a large number of Apple offices into Apple Park in Cupertino since the company mostly moved its employees around without substantial increase headcounts. With that in mind, Cupe1iino must stop building any more offices or mixed-use complex with large amount of office space as proposed by ce1iain developers. Otherwise, we are adding fuel to the fire . That would accelerate the increase of morning inbound traffic of office workers into our city through already congested highways and lo cal streets and afternoon outbound traffic when they 1 leave. All of our major thoroughfares (such as Stevens Creek Blvd., Homeste ad Road, Bollinger Rd., De Anza Blvd., Stelling Rd. and etc.) are severely backed up on both ends of our city limit. It is not uncommon to take up to 40 minutes to get through merely three or four blocks during rush hours. When we welcome the construction of much needed housing , we must also be careful in planning and distribute the housing unit allocation. Cupe1iino must make sure the additional housing not to create immitigable traffic loads as the results . In other words , we should not allow high density construction at "choke points " (bottlenecks) such as the overloaded highway entrance to I-280 or Highway 85 because it would seriously aggravate traffic congestion and turn Cupertino into a complete city-wide gridlock. Both Vallco and Westport development proposals are the worst of this kind!! Therefore, I supp01i Resolution No . 19-109 (GPA-2 019-01) -to remove office a llocation from the Vallco plan. We welcome the property owners to work with the resident community and jointly develop a true 2040 or 2050 plan to address the traffic and housing crisis . There is no reason that we have to fight against each other. The resident community and the developers have a common interest to improve and develop our city to host more newcomers into our neighborhoods. First, all the smear and attacks must stop!! Ignatius Y . Ding 42-year resident of Cupertino 2 Cyrah Caburian From: Sent: To: Subject: Sameer Makada <sameer.ma kada@gmail.com > Tuesday, August 20, 2019 5:57 AM City Council Support for your work at Vallco I am a Cupertino Resident living in the Monta Vista district and have been diligently following the frequent emails from the Sand Hill Managing Director Reed Moulds on the development of Vallco as real estate is my passion and part of my business. I just wanted to send an email to support the work you are doing to prevent Cupertino from becoming a traffic nightmare by pushing back on the grandiose plans of Sand Hill to put profit over people I find the sky is falling emails from the Sand Hill Managing director to be misleading and extremely pejorative and he is a classic Sheep in Wolf's clothing. I trust the city is monitoring his emails and I wanted to do the opposite of what he is asking his "minions" to do by reaching out to offer my support . The reality is Reed is just another greedy developer trying to maximize Sand Hill's profits by engaging in a disinformation campaign . I find It bordering on insulting that he believes this will actually be effective . A small example from his most recent email that attempts to somehow associate your work with the toxic federal politics i.e . when he said "Tell them to stop building the wall that keeps the people who work in Cupertino and serve them daily from raising their families inside the city. 11 I mean I am sorry words matter and the the best words to describe this kind of hyperbole is ridiculous and disingenuous. Thank you, Sameer Makada Cyrah Caburian From: Sent: To: Subject: Balaji Chalam <2bc halam@gmail.com > Tuesday , August 20, 2019 5:50 AM citycoun cil@cuperitno.org; City Clerk Opposition to office allocation at Vallco Respected Council members and City Clerk, As a long time resident of Cupertino I would like to oppose any office allocation at Vallco it's irresponsible and unconscionable to · keep adding office in the disguise of housing shortage Please add my letter in the official records Sincerely Balaji Chalam 18820 Barnhart Ave Cupertino Sent from my iPhone Cyrah Caburian From: Sent: To: Subject: kanchan balaji <kanchancpa@yahoo.com > Tuesday, August 20, 2019 5:48 AM City Council ; City Clerk Opposition to office Allocation at Vallco Respected Council members and City Clerk, As a long time resident of Cupertino I would like to oppose any office allocation at Vallco it's irresponsible and unconscionable to keep adding office in the disguise of housing shortage Please add my letter in the official records Sincerely Kanchan Balaji 18820 Barnhart Ave Cupertino Sent from my iPhone 1 Cyrah Caburian From: Sent: To: Subject: bchalam@yahoo.com Tuesday , August 20, 2019 5:55 AM City Council Opposition to office Allocation at Vallee Dear Mayor & City Council, I am writing this email as my public comments towards Agenda Item #11 of the council meeting on 8/20/2019. As a concerned resident of Cupertino, I urge you to act on the mandate delivered to you by overwhelming majority of Cupertino voters -Please restore the zoning and height limits fo r Vallco Shopping District to be same as before the ill-conceived GPA amendment of Dec 4/5, 2014 council meeting. We don't need the unlimited heights and 2 mil SFT of office space at this shopping location without mass transit. Any office space will only aggravate the housing situation in our town and will put us in a deeper hole for compensatory housing for decades to come . Our residents spoke loud clear through defeat of Measure Din 2016, Successful referendum on Vallco GPA in 2018 and electing of resident focused super majority. It is about time the city council and the city staff pay attention to residents voice . Thanks for listening and acting in the best interests of the community . Regards Balaji Seshachalam Cupertino Resident . Sent from Yahoo Mail for iPhone 1 Cyrah Caburian From: Sent: To: Subject: Yuvaraj Athur Raghuvir <yuvaraj .a.r@gma i l.com > Tuesday, August 20 , 2019 6:3 1 AM City Council ; City Clerk Rega rding Zoning and Height l i mits for Vallco Shopping District Dear Mayor & City Council, I am writing this email as my public comments towards Agenda Item #11 of the council meeting on 8/20/2019 . As a concerned resident of Cupertino, I urge you to act on the mandate delivered to you by overwhelming majority of Cupertino voters -Please restore the zoning and height limits for Vallco Shopping District to be same as before the ill-conceived GPA amendment of Dec 4/5, 2014 council meeting. We don't need the unlimited heights and 2 mil SFT of office space at this shopping location without mass transit . Any office space will only aggravate the housing situation in our town and will put us in a deeper hole for compensatory housing for decades to come . Our residents spoke loud clear through defeat of Measure Din 2016, Successful referendum on Vallco GPA in 2018 and electing of resident focused super majority. It is about time the city council and the city staff pay attention to residents voice . Thanks for listening and acting in the best interests of the community. Regards, Yuvaraj Athur Raghuvir Cupertino Resident Cyrah Caburian From: Sent: To: Subject: naidu bollineni <bgna idu@yahoo.com > Tuesday, August 20, 2019 7:16 AM City Council Request to reduce new office allocation in City permits Dear Mayor & City Council, I am writing this email as my public comments towards Agenda Item #11 of the council meeting to be held today the 8/20/2019 . As a concerned resident of Cupertino, I urge you to utilize the citizens' mandate of overwhelming majority of Cupertino voters and restore the zoning and height limits for Vallco Shopping District to be same as before the ill-conceived GPA amendment of Dec 4/5, 2014 council meeting . We don't need the unlimited heights and 2 mil SFT of office space at this shopping location without mass transit. Any office space will only aggravate the housing situation in our town and will put us in a deeper hole for compensatory housing for decades to come. Our residents' voice was clear through defeat of Measure D in 2016, a successful referendum on Vallco GPA in 2018 and electing of resident focused super majority . It is about time the city council and the city staff to heed to residents voice . Thanks for your attention and acting in the best interests of the community. Regards Naidu Bollineni Cupertino Resident. Cyrah Caburian From: Sent: To: Subject:· Dear City Clerk , naidu bollineni <bgnaidu@yahoo.com > Tuesday, August 20, 2019 7:17 AM City Clerk request to reduce office allocations in city permits I am writing this email as my public comments towards Agenda Item #11 of the council meeting to be held today the 8/20/2019 . As a concerned resident of Cupertino, I urge city staff to utilize the citizens' mandate of overwhelming majority of Cupertino voters and restore the zoning and height limits for Vallco Shopping District to be same as before the ill-conceived GPA amendment of Dec 4/5, 2014 council meeting . We don't need the unlimited heights and 2 mil SFT of office space at this shopping location without mass transit. Any office space will only aggravate the housing situation in our town and will put us in a deeper hole for compensatory housing for decades to come . Our residents' voice was clear through defeat of Measure D in 2016 , a successful referendum on Vallee GPA in 2018 and electing of resident focused super majority . It is about time the city council and the city staff to heed to residents voice. Thanks for your attention and acting in the best interests of the community . Regards Naidu Bollineni Cupertino Resident. Cyrah Caburian From: Sent: To: Subject: Krithika Srinivasan <krithikas@yahoo .com > Tuesday, August 20, 2019 7:53 AM City Council ; City Clerk Remove office allocation at Valko Dear Mayor and City Council, Please treat this email as my public comments towards Agenda Item #11 of the council meeting scheduled on 08/20/2019 . As a concerned resident of Cupertino , I urge you to act on the mandate delivered to you by overwhelming majority of Cupertino voters -Please restore the zoning and the height limits for Vallco Shopping District to be SAME as before the ill-conceived GPA amendment of December 4/5, 2014 council meeting . We do not need the unlimited heights and 2 mil SFT of office space at this shopping location without any mass transit. Any additional office space at this location will only aggravate the housing situation in our town and will put us in a deeper hole for compensatory housing for decades to come . Compared to the time it used to take us from our house to the Cupertino High School four years ago and the time it is taking us this week , commute time has drastically increased and adding any further office space in this location will only add to the unbearable amount of traffic congestion especially at peak hours . Our residents spoke loud and clear through defeat of Measure D in 2016 , Successful referendum on Vallco GPA in 2018 and electing of resident focused super majority in the subsequent elections for Citi Council. It is about time the city council and the city staff pay attention to residents voice . Thank you for listening and acting in the best interests of our great Cupertino community . Kind Regards Krithika Srinivasan Cupertino Resident since 2011 Cyrah Caburian From: Sent: To: Subject: gail.c@apple .com on behalf of Gail Cleveland <gail.c@apple.com > Tuesday , August 20, 2019 8:02 AM City Council Sand Hill Property Dear all Council Members, Please do not let Sand Hill go ahead with their HUGE plan for Vallco. It should be scaled down to something that fits the people of Cupertino and the space . We do not want sky scrapers in our town . I hope you have our best interest in mind when this plan is presented again . I feel Sand Hill is bullying us to get their way in this plan . And they do not even live in this city so they are only looking for BIG dollars . They have not thought about traffic, schools and the environment plus other things . Please Please lets work together to stop this nonsense . Best , Gail Cleveland Wheaton Drive 1 Cyrah Cabu rian From: Sent: To: Subject: Kristal C <kcaido y@ li ve.com > Tuesday, August 20, 2019 8:41 AM City Council NO -Lim iting Vallc o Greetings city council members, I have worked and gone to school at De Anza College . I wished I was able to live there, but there wasn't any affordable housing . Vallco is a perfect place to provide affordable housing to college students and ra ise the standard of living in Cupertino . People should have access to affordable housing and not travel two hours to get a college degree in the Silicon Valley. It is unfortunate to see that the city council members are not thinking of the future of the youth in Cupertino and the bay area . Cupertino Vallco mall is a shadow and this development is an abyss and inconsiderate of future residents, who need affordable housing to live in the Silicon Valley . So, I suggest that the City Council members rethink about their legacy and how the public will say about these events . I want to remember about a city council that thought had foresight and provided solutions to the housing problem in Silicon Valley . Thanks, Kristal Cyrah Caburian From: Sent: To: Cc: Subject: pv_r959 @yahoo.com Tuesday, August 20, 2019 8:41 _AM Steven Scharf; Liang Chao City of Cuperti no Planning Dept.; Cupertino City Manager's Office; Darcy Paul ; Jon Robert Willey Vallco revitalization Hello City Council : As a resident (with an adult family of 3) of 25 years in the City of Cupertino and living in close proximity to the Vallco area, I believe my concerns and questions need to be heard as your decisions directly affect me . Vallco developers keep quoting SB35 to justify their plan , SB 35 is being challenged in court by several entities with respect to the riders that were added to favor the developers-so the city council should be cognizant of this and NOT make decisions assuming that all aspects of S835 would stay as they are . In particular, the issue of 1. Office space is an interpretation of Vallee not SB35 so that 1 M+ sq ft of office space is NOT something that is specified by SB35 and considering the huge resistance of the residents it should be voted down . 2. Vallco is asking for 389 housing units in addition to the office space, I could possibly live with the 389 units provided a big chunk are left to teachers, seniors etc to provide shelter. As much as 40-50% of the unit. My family and I are strongly against any increase to this number. Vallco has been an arrogant neighbor and not mindful of its nearby residents and community . An example has been during the demolishing activities : the effort to mitigate dust , noise has been superficial at best: streets have been washed , but what about the nearby neighbors and the dust on their property (cars and other vehicles parked in the driveway/streets)? I presented the city council with some evidence of this almost two weeks ago -still UNRESOLVED . Please vote NO on the office space and NO on any further increase in housing as most of the residents who elected you wished when you asked for their votes . Please let this not be another cause for a REFERENDUM . Please post this in a public forum so that it can be searched and reviewed from an archive . Rajeev Joshi Cyrah Caburian From: Sent: To: Subject: Sashi Segur <sashibegur@gmail.com > Tuesday, August 20, 2019 8:41 AM City Council OFFICE SPACE Dear Mayor and City Council, As a concerned resident of Cupertino, I am writing this email to you to serve as my public comments on the Agenda #11 of the council meeting today -8/20/2019. I have 2 Points to make (1) why we don't need more space and (2) why it is not the city's responsibility to ensure buying VALLCO becomes profitable to SHP. NO MORE OFFICE SPACE : I request to you to act on behalf of the citizens of the Cupertino in restoring the zoning and height limits for Vallco Shopping Plot to the limits prior to the DEC4/5 2014 Council meeting. This is clear form the successful referendum on VALLCO GPA in 2018. They do not want 2M sqft, or for that matter, any office space in the VALLCO. Any more office space will change the balance of the housing/office space ratio which currently meets the state standards. Any more office space will further aggravate the already terrible traffic situation on 280 & Stevens Creek,-going east west, the north south traffic on Wolfe, de Anza, Stelling, Bubb on the west side and of course, Tantau, Lawrence and others on the east side. AS you know there is no shortage of office space in Santa Clara County. Anyone who argues on the need for office space must take a short drive on to 237 or 101 from Sunnyvale to Santa Clara -east or west bound, to see there are so many for lease signs on the buildings . BUSINESS IS A GAMBLE: It is not our responsibility to make sure that owner of Vallco makes a profit on the purchase of the shopping area . There is always a risk in business and if it turns out that without office space, he cannot make a profit, it is not the responsibility of City of Cupertino to ensure that he happens . The owner took a bad gamble and needs to face the consequences, just like another business owner or land owner in Cupertino . Thanks for reading and I am counting on you to act in the best interests of the City of Cupertino . regards Sashi Cyrah Caburian From: Sent: To: Subject: Mozhgan Novbakhtian <mozhgann@yahoo.com > Tuesday , August 20, 2019 8:46 AM City Council Do not downzone Vallco As a longtime Cupertino resident (20+ years), I was excited to hear that Sand Hill Properties was go ing to pump millions into our schools , build a winery , rooftop trails , restaurants , housing , a real downtown gathering place . We were finally going to be able to make Cupertino a destination that would be the envy of surrounding Silicon Valley cities . Not only have you stopped that dream for Cupertino, but you're going to make Cupertino go bankrupt like Stockton and Vallejo . What a disappointment. Mozhgan 1 Cyrah Caburian From: Sent: To: Cc: Subject: Venkat Ranganathan <n.r.v@live.com > Tuesday, August 20 , 2019 9:04 AM City Council City Clerk Vallco office allocation I would strongly urge the city council to remove the office allocation for the Vallco plan as that allocation exasperates thehousing crisis . Thanks Venkat Get Outlook for Android Cyrah Caburian From: Sent: To: Subject: preethi prakash < preethiprakash@hotmail.com > Tuesday, August 20, 2019 9:05 AM City Council Office Space at Vallco Dear Mayor and members of the City Council I am a concerned citizen and long time resident of Cupertino. I understand there will be a discussion on office space at Vallco in the meeting this evening . We have collectively fought long and hard to maintain the sanctity of our city and have a mandate delivered to you by a majority of my fellow Cupertino residents against the earlier allotment of office space at Vallco. I wish to reiterate that there is absolutely NO NEED for unlimited heights and 2 million sq feet of office space . This would increase the traffic congestion and also put a burden on housing . I request you to please restore the zoning (remove or drastically limit office space), maintain height restrictions of 4 floors and please ensure proper and adequate setbacks and environmental considerations . I thank you for listening to us residents and acting in the best interests of this community. Warm regards Preethi Prakash Cyrah Caburian From: Sent: -chanel_surf er < chanel_surfer@hotmail.com > Tuesday, August 20, 2019 9:06 AM To: Liang Chao Vice Mayor, Please know that many members of the community do not like Sand hill's plans . I agree with all the below . 1. Vallco Shopping Mall should be revitalized as a regional shopping center as the General Plan envisions all along. Please restore the zoning at Vallco similar level as 2014, when it was purchased by Sand Hill and forced to close down . 2 . Please remove the office allocation . Otherwise, we sou Id create more demand for housing by the State Law. 3. Given the housing shortage in the Bay Area, the city could either keep the prev i ous allocation of 389 units at Vallco . 4. In order to work towards a Vallco Specific Plan with sufficient community features, please do not add more than 389 units (or 500 units , put in any number that you feel comfortable) this time, so that the city will have more negotiation power. 5 . Sand Hill bought a shopping mall. It was zoned ONLY for shopping, dining, and entertainment. Anything extra is already adding to their property value . Regards, Mark Matulewicz Resident at 892 Betlin Ave Cupertino. Get Outlook for Android 1 Cyrah Caburian From: Sent: To: Subject: preethi prakash <preethiprakash@hotmail.com> Tuesday, August 20, 2019 9:06 AM City Clerk Offce space at Vallco -tonights meeting Dear Mayor and members of the City Council I am a concerned citizen and long time resident of Cupertino. I understand there will be a discussion on office space at Vallco in the meeting this evening. We have collectively fought long and hard to maintain the sanctity of our city and have a mandate delivered to you by a majority of my fellow Cupertino residents against the earlier allotment of office space at Vallco. I wish to reiterate that there is absolutely NO NEED for unlimited heights and 2 million sq feet of office space. This would increase the traffic congestion and also put a burden on housing. I request you to please restore the zoning (remove or drastically limit office space), maintain height restrictions of 4 floors and please ensure proper and adequate setbacks and environmental considerations. I thank you for listening to us residents and acting in the best interests of this community. Warm regards Preethi Prakash Cyrah Caburian From: Sent: To: Subject: Vice Mayor, -chanel_surfer < chanel_surfer@hotmail.com > Tuesday, August 20 , 2019 9:11 AM Liang Chao Resident Against Sand hill plans Please know that many residents are against Sand Hill's plans . I agree with all the below . 1 . Vallco Shopping Mall should be revitalized as a regional shopping center as the General Plan envisions all along. Please restore the zoning at Vallco similar level as 2014, when it was purchased by Sand Hill and forced to close down . 2 . Please remove the office allocation . Otherwise, we sou Id create more demand for housing by the State Law . 3. Given the housing shortage in the Bay Area , the city could either keep the previous allocation of 389 units at Vallco . 4. In order to work towards a Vallco Specific Plan with sufficient community features, please do not add more than 389 units (or 500 units, put in any number that you feel comfortable) this time, so that the city will have more negotiation power. 5 . Sand Hill bought a shopping mall. It was zoned ONLY for shopping, dining, and entertainment. Anything extra is already adding to their property value . Regards, Mark Matulewicz 892 Betlin Ave Cupertino resident Get Outlook for Andro id Cyrah Caburian From: Sent: To: Subject: H Qing <hqing2001@yahoo.com > Tuesday, August 20, 2019 9:34 AM City Council Please keep the Vallco Shopping Mall development within Cupertino GDP Dear Cupertino City Council , I'm a Cupertino resident. I'm very concerned the city's development direction . First of all, appreciated your all's hard work to keep the City of Cupertino, our community as a good place to live. The discussion of Vallco Shopping Mall development has drawn too much efforts from the whole community in the past few years. It shouldn't have been the problem if the developer had just obeyed the Cupertino's GDP . The developer's nonsense, too greedy requests has torn our community apart. It's very sad! I do support our city needs to develop, but the agreed GDP is the principle to follow. 1) Look at the Valley Fair Mall's booming , please keep the zoning and restore the Vallco Shopping Mall as shopping center. We missed those stores and restaurants very much, and AMC theatre too . 2) Do not grant the owner or developer of Vallco Shopping Mall any privilege other than the GDP, do not give them any special treatment 3) Please do not approve any office allocation or housing units which is above GDP 4) DO NOT let the noise from outside the city distract our efforts to build our community as what we wish . We pay the tax, we vote, we build! Sincerely yours, Hongrong Qing Cyrah Caburian From: Sent: Ashwin Krishnan <krishnanashwin@gmail.com > Tuesday, August 20 , 2019 9:34 AM To: City Council Subject: Please take a stance on Vallco City Council Members, As a longtime resident of Cupertino , I feel STRONGLY about this . Vallco Shopping Mall should be revitalized as a regional shopping center as the General Plan envisions all along . Please restore the zoning at Vallco similar level as 2014, when it was purchased by Sand Hill and forced to close down . Please remove the office allocation. In order to work towards a Vallco Specific Plan with sufficient community features , please do not add more than 300 units. Please note my comments as public record . Thanks , Ashwin Krishnan 1 Cyrah Caburian From: Sent: To: Subject: Jane Wang <jinping_w@hotmail.com > Tuesday, August 20, 2019 9:36 AM City Council Please bring back the Vallco Shopping Mall Dear council members, I'm a Cupertino resident lived with my husband and two children. My husband and I moved to Cupertino since 19 years ago . The Vallco shopping mall was only few blocks away from our house . At that time, the convenience of accessing this facility was a big add-on among other factors for making the decision of buying a house in this area. I'd been shopping, dinning, having relaxed time and enjoy it with my family for so many years until it's fading out. My kids are missing their childhood memories of having their favorite Fresh Choice buffet and playing with their friends there ... Yes, we wanna Vallco Shopping Mall back to our life . Not only my family, all my friends are all talking about how much they miss the shopping mall and how much it's needed . We want to have some close and convenient places for entertaining. Please not make our hometown Cupertino only for working or surviving, we want living, a life . Thanks for listening our voice . Sincerely, Jane Cyrah Caburian From: Sent: To: Cc: Subject: Good evening. Gail Cleveland <gailanne@sbcglobal.net > Monday, August 19, 2019 7:37 PM City Council Gail Anne Cleveland NO downzoning at Vallco We just got the email from Mr. Moulds . I DO NOT want his 5B35 plan just to much traffic and congestion plus it is not thought out for the city of Cupertino . We are ok with 385 units and no office space. We need more businesses in Cupertino that fit the people who live here . In order to shop we have to leave our area and go to either Campbell or to Valley Fair. Pease look after the neighbors interest and get what the city needs and not just big business dollars . I could not care less if they can't do anything with the property. They need to have consideration for the people who live here . Thank you for thinking about neighbors and people of this city. Best, The Clevelands We live on Wheaton Drive and are very concerned . Cyrah Caburian From: Sent: To: Cc: Subject: JOHN TROLLMAN <trollmanclan@comcast.net > Monday, August 19, 2019 7:45 PM . Steven _ Scharf; Liang Chao; Rod Sinks ; Darcy Paul ; Jon Robert Willey Helen Troll man ; john_trollman@hotmail.com NO downzoning at Vallco I am a resident of Cupertino since February of 1982 . I love the city, have watched it mature, and frankly believe that the city's restriction as to the development of Valeo-without-offices is stupid . I believe that the preponderance of the residents support the Reed Moulds vision and it is just a very vocal few that oppose it. Please support Reed Moulds proposal! John Trollman 10255 Anthony Place Cupertino Cyrah Caburian From: Sent: To: Subject: Lenore Williams < LenWilliams2@earthlink.net > Monday, August 19, 2019 7:51 PM City Council NO downzoning at Vallco This city council is squandering funds and the future of Cupertino . We need the affordable housing. We need places for families to support Cupertino schools . We need to get rid of the old Vallco .. the original plans were beautiful. Every time you fight, the project brings less and less to the city. Stop fighting and approve the current project to revitalize Vallco . Lenore Williams 1218 Ruppell Pl Cupertino, CA 1 Cyrah Caburian From: Sent: To: Subject: Stephen Robi e <sbrobie @comca st.net > Monday, August 19, 2019 7:58 PM City Council NO downzoning at Vallco Dear City Council members , I am writing today to oppose the downzoning of the Vallco property. Allowing only 389 residential properties to be built should the Better Cupertino lawsuit to kill the SB35 plan currently under construction prevail sends a very clear message to Sacramento. that Cupertino does not take the state housing shortage seriously and invites the State to come down on us like a ton of bricks . If, as has been claimed by some of you, the problem with the SB35 plan is that it will worsen the city's job/housing ratio, then any rezoning of the Vallco property should decrease the amount of office space and increase the number of housing units, not eliminate nearly all housing at the site . Sincerely, Stephen B. Robie , PhD 20325 Via Volante Cupertino, CA 95014 Cyrah Caburian From: Sent: To: Subject: Hi, Raj Singh <raj@rajansingh .com > Monday, August 19, 2019 8:09 PM City Council NO downzoning at Vallee I'm a home owner and resident at 808 Shetland Pl, Sunnyvale (and live adjacent to the Vallee redevelopment) (walking distance) I'm not actively following the process but I've been a large fan of the development -I walk by it to go to downtown with my son (and it's been unfortunate to see it be deadweight buildings) -it reminds me a lot of that incomplete parking garage in downtown Sunnyvale which sat there for years . In any case, I'm also a startup entrepreneur and have an office for my team of ~10 people in Menlo Park . Office space in Cupertino is really difficult -Apple has taken all the larger spaces and there are actually not that many smaller spaces available for teams from 5-100 people. I was (selfishly) really looking forward to considering moving my office to the new Vallco redevelopment in a few years (when complete) (at which I'd probably be a larger company) but counting on the fact that spaces probably wouldn't be taken by Apple since it'll be part of a complex! In any case, I'm hoping that you keep the office space, I intend to be a user and really wish more startups would consider coming to Cupertino -we just unfortunately don't have a lot of the smaller office space. Raj Singh 510 282 4229 1 Cyrah Caburian From: Sent: To: Subject: Chris Robinson <chris.robins1@gmail.com > Monday, August 19, 2019 8:10 PM City Council NO downzoning at Vallco Dear Councilmembers, I am writing you as a member of the Cupertino community to express that I do not want the plan for the Vallco space to be downzoned . Thank you, Chris Robinson Cyrah Caburian From: Sent: To: Subject: kr is jen se n < k r isjensen67 @ya hoo.com > Monday, August 19, 2019 8:33 PM St eve n Scharf; Liang Ch ao ; Rod Sink s; Darcy Paul ; Jon Rob ert Will ey NO dow nzo ning at Vallco Dear Honored Council Members , I have lived in Cupertino for 10 years now and have been dismayed by what's going on with Vallee. Cupertino cannot afford to downsize the Sandhill project as it stands , especially with regard to housing . The City is in desperate need of housing, especially affordable housing for our teachers , firefighters , police, service workers , and many others . Downsizing the plan will only make matters worse and open the City up to litigation it cannot afford. Please do not vote to downsize the project. Kris Jensen 21821 Alcazar Av . Cupertino , CA 95014 Cyrah Caburian From: Sent: To: Subject: Noel Eberhardt < neberhardt@sbcglobal.net > Monday, August 19, 2019 8:50 PM City Council NO downzon i ng at Vallco Dear Cupertino Council Members, I am not in favor of downsizing Vallco . We weren't able to sustain the once vibrant shopping center, studies have shown a downsized property is economically viable for the value of the land, and it doesn't make sense to be spending on attorneys when that money could be better spent in the city . To my knowledge, no development proposal has been made that would economically justify downsizing. Downsizing will result in needlessly funding an money pit. Noel Eberhardt Cupertino Cyrah Caburian From: Sent: To: Subject: Carolyn <c arecare48@sbcglobal.net > Monday, August 19, 2019 9:41 PM City Council NO downzoning at Vallco I strongly urge the City Council to stop the downsizing attempt. As a long term resident (44 years), I am ashamed that the City Council is so arrogant that they do not want the average citizen to live in this community. I personally have no problem living next to a hair dresser, a gas station attendant, a gardener, let alone a teacher, nurse or sheriff. I beseech you to reconsider spending my tax paying dollars in a useless lawsuit against the state . Please move forward in compliance with state law, which by the way I voted for. Sincerely, Carolyn Bowker on Miller Ave. Sent from my iPhone Cyrah Caburian From: Sent: To: Subject: Cielo Ulpindo <culpindo@gmail.com > Monday, August 19, 2019 10:17 PM City Council NO downzoning at Vallco Please NO downzoning at VALLCO . I live near VALLCO, and I want to see a vibrant and busy VALLCO not this empty building and lot. It saddens me and my family, We've lived here for 15 years. Cyrah Caburian From: Sent: To: Subject: jamespaul007@gmail.com Monday, August 19, 2019 10:35 PM City Council NO downzoning at Vallco I have been a Cupertino resident since 2011 and would like to support the Vallco redevelopment . Home prices in Cupertino has increased so much that it is not affordable for practically anyone . Only high density housing can solve this problem . I would like to express my support for Vallco redevelopment project . Please support the Vallco project by not downzoning at Vallee Regards , James Paul Tel : +1-650-785-6414 Cyrah Caburian From : Sent: To: Subject: Stephanie Pressman <sap@frogonthemoon.net > Tuesday, August 20, 2019 12 :02 AM City Council NO downzoning at Vallee Stop blocking the project at Valeo . It 'is a reasonable solution to the housing crisis in our area . Don't put Cupertino at risk of lawsuits and fines . Stephanie Pressman Gerald Pressman Jennifer Pressman Long-time citizens Sent from my iPad 1 Cyrah Caburian From : Sent: To: Cc: Subject: kirk varta n <kirk@k vart an .com > Tue sday, August 20, 2019 12:06 AM City Coun cil Reed M o uld s NO downzo ni ng at Vallc o Mayor and Councilmembers, Please let this project continue with your support, whether you personally like it or not. It has been approved and th e developer has legal rights to move forward . It seems the legal rights of the developer are sound and even your legal team ha s advised of . this. The SB -35 law may not be something you are supportive o r even think is appropriate ; however, that has nothing to do with the fact it is law and this project was approved under this law . Let this project move forward with your support and get it built out as quickly as possible . The 2,402 homes (1 ,201 affordable ) are desperately needed . This project will innovate transit around the area out of necessity, not out of law . Please support the forward motion! Thank you, Kirk Vartan Community Activist Cyrah Caburian From: Sent: To: Subject: David Coffer <dave671 @att.net > Tuesday, August 20, 2019 5:46 AM City Council NO downzoning at Vallee Make it into an open pit mine. Cyrah Caburian From: Sent:. To: Subject: Michael Green <male xgreen @gm ail.com > Tuesday, Augu st 20 , 2019 5:58 AM City Council NO downzoning at Vallco Dear Cupertino City Council, As you know California is suffering a housing crisis . Fighting the Vallco Town Center Project as proposed with its 2402 housing units (50 % of which will be affordable) will go i n the direction of resolving this problem, and should not be downsized . I think the future of Cupertino, CA and the surrounding South Bay Area will be much brighter if this project is allowed to move forward . Please reconsider your proposed amendment. Sincerely, Michael Green Cyrah Caburian From: Sent: To: Subject: Jimob <jimob@att.net > Tuesday, August 20, 2019 7:05 AM City Council NO downzoning at Vallco Dear Cupertino City Council, As a 38 year Cupertino resident, I urge you NOT to downzone the Vallee property to limit affordable housing. As I drive around the valley, it is apparent that many other cities recognize the need for housing and are taking action . With major corporate campuses in the immediate area, Apple Campus 2 in particular, the need for housing in close proximity will, by its very nature, reduce traffic. To keep Cupertino viable, housing will bring in residents who would spend locally, which increases city revenue through taxes . The years of lost income to date are regrettable. If you pursue this course of action, I believe you will be on the loosing side of a legal fight that will only cost the city in legal fees which would be covered by siphoning funds away from city services . Loss of revenue, unnecessary legal expenses, reduction in city services, no impact to traffic ... this is not the recipe for success . Again , I urge you NOT to downzone the Vallco property to limit affordable housing. Sincerely, Jim Oberhofer Cupertino 1 Cyrah Caburian From: Sent: To: Subject: Deane Gardner <deane.gardner@gmail.com > Tuesday, August 20, 2019 7:09 AM City Council NO downzoning at Vallco We have lived in Cupertino for over 30 years, and welcome Vallco's transformation per Sand Hill's plans . Please stop obstructing redevelopment of this potentially valuable addition to the city. Deane 1 Cyrah Caburian From: Sent: To: Subject: Office 2004 Test Drive User <carmichael123@comcast.net > Tuesday, August 20, 2019 8:20 AM City Council NO downzoning at Vallco The downsizing at Vallco makes absolutely no sense . I disagree completely with the NIMBY approach being taken by the present City Council. It does nothing to improve the housing crisis, it reinforces the erratic behavior of the Cupertino Council in approving and then disapproving prior plans and its position on the SB 35 litigation, and ignores the reality that a viable development plan is needed for the Vall co property. Please vote against this downsizing . Paul Carmichael 11525 Upland Way 1 Cyrah Caburian From: Sent: To: Subject: Jeffrey Wurtz <jdwurtz@aol.com > Tuesday, August 20, 2019 8:30 AM City Council NO downzoning at Vallco Please allow the Vallco property to be developed by Sand Hill Property Co . As a Cupertino homeowner I do not want Vall co to remain undeveloped for years. Jeff jdwurtz@aol.com "I bend my knees before my Father ... " 1 Cyrah Caburian From: Sent: To: Subject: Sandi Urabe <urabesan@yahoo.com > Tuesday, August 20, 2019 9:23 AM City Council NO downzoning at Vallco I know who is voting against the project at Vallco and you will NOT Be getting my vote in the future. When our teachers, fire fighters, County Sheriffs, and employees cannot live in Cupertino, the community they serve while not earning mega salaries, there is something wrong with this picture. When you voted down the best plan that included middle income housing and funds for our city and schools, you made a big mistake in my opinion . This is now a big "MESS" and I don't know how you plan to fix it! Your neighbor who has lived here since 1984, Sandi Urabe 1233 Weymoth Drive Cupertino, CA Cyrah Caburian From : Sent: To: Subject: Stev e Kelly <sv p roperti es @att.net > Tuesd ay, Augu st 20 , 2019 9:3 7 AM City Coun cil NO downzo ning at Vallc o Dear Council Members , Today you decide if a misguided idea of down sizing "Critically Need Housing" at the Vallco site is a wise move as the State of California threatens legal action to stop City of Cupertino from not doing its fair share of housing ... Further to start such a fight will cost the City of Cupertino millions with little chance of winning . Now is the time to lead and decide where is the best place for the housing as our area continues to add more workers not to cost residents millions in legal fees . Your Neighbor, Steve Kelly 3093 Forbes Ave Santa Clara, CA 95051 Cyrah Caburian From: Sent: To: Subject: Archana Chilukuri <archana.chilukuri@gmail.com > Tuesday, August 20, 2019 9:41 AM City Council ; City Clerk Agenda item #11 -council meeting 8/20/2019 Dear Mayor And City Council, I am writing this email as a my public comments towards Agenda item #11 of the council meeting on 8/20/2019. As a hugely concerned resident of Cupertino, I urge you to act on the mandate delivered to you by overwhelming majority of Cupertino voters -Please restore the zoning and height limits for Vallco Shopping District to be same as before the ill- conceived GAP amendment of Dec 4/5, 2014 council meeting. We dont need the unlimited heights and 2 mil SFT of office space at this shopping location without mass transit . Any office space will only aggravate the housing situation in town and will put us in deeper hole for compensatory housing for decades to come . Our residents spoke loud clear through defeat of measure Din 2016, Successful referendum on Vallco GPA in 2019 and electing of resident focused super majority. It is about time the city council and the city staff pay attention to residents voice. Thanks for listening and acting in the best interests of the community. Regards, Archana Chilukuri Cupertino Resident I ~ ·--·-1 Virus-free . www.avg .com Cyrah Caburian From: Sent: Govind Tatachari <gtc2k 7 @gma i l.com > Tuesday, Augu st 20, 2019 9:42 AM To: Cc: City Council ; City Clerk; Cupertino City Man ag er's Office City Attorney 's Offi ce; Kirsten Squarcia Subject: 8/20/2019 Cupe rt ino Coun cil meetin g -Ag end a item # 11 -Re so lution No. 19 -109 (GPA-2019 -01) Dear Council Members, I will not be able to attend today's meeting and speak on this issue during public hearing. Please include this commun icati on as part of the public record . Regarding Resolution No. 19-109 (GPA-2019-01) b . Resolution No . 19-109 (GPA-2019-01), a resolution amending the General Plan to remove Office as a permitted use from the Va ll co Shopping District Special Area and remove associated office allocations (Attachment 2); I support the above resolution . On earlier occasions, I have written to the previous and current council that 2M sq ft of office allocation at Vallco site should be removed . 1) For several decades now, Cupertino's jobs/housing ratio has been well above its neighboring cities . Over th is decade, Cupertino's job growth has been almost five times the housing growth numbers . 2) The loss of jobs from HP's departure was made up by Apple's AC2 development at that site . AC2 modestly increased job numbers bcos it pri marily consolidated large number of offices in other parts of Cupertino. 3) The Vallco shopping district site is already in a very congested area very close t o recent large developments such as AC2 , main street etc . and several approved planned development nearby. 4) There is no reason or justification to exclusively add 2M office allocation to this site . If the City has any justification i n future to add office allocation, it should be distributed evenly across the various sites in the City. I value and fully support private property rights . However undue, large -scale GPA changes by the City to exclusively and disproportinately benefit one private property owne r, immediately when the property changed hands had raised deep concerns about the City-wide planning process and the governing council. I commend you for listening to community 's plea for taking this corrective action -Resolution No. 19-109 (GPA-2019-01) -and most importantly restoring public trust. Govind Tatachari Cupertino Resident 1 Cyrah Caburian From: Sent: To: Cc: Subject: J K <eaglenhawk @yahoo.com > Tuesday , August 20, 2019 9:53 AM City Council contact@bettercupertino.org My Vallco Feedback My name is Jim Kuehn is , and I've been a resident of Cupertino since 2006 and during most of that time have also owned a rental home in Rancho Rinconada . I want you to know I .DON'T SUPPORT ANYTHING THAT SAND HILL PROPERTIES WANTS . They already had a chance with Ma in Street , which was touted as Cupertino's version of Santa Row. Well , I'm sure you'd agree with me that Main Street is nothing like Santana Row, and is a major disappointment. We rarely go in there. The layout of parking and selection of shops there was poorly done , in my opinion . Regarding Vallee, I don't want parks and trees growing on the roof, which I understand they are doing so they don't use actual land for mandatory parks . That's ridiculous , I expects parks and green space that I can get to without going to the roof. I want restaurants . My wife and I constantly leave Cupertino to go to Valley Fair for things like California Pizza Kitchen and Cheesecake Factory . We go to Sunnyvale for P.F. Chang's. I'd like shopping too . Vallco is huge , why can't we actually have something that rivals Santa Row? Santa Row is constantly packed, is high energy, and a fun location to visit (unlike Ma i n Street). It's so busy I can 't even get my car near the place to park it. That should be your real vision , to create Cupertino's version of Santana Row . I don't know how much office and housing should be on Vallco, but I'm sure I'd want less than Sand Hill wants. Traffic on De Anza Blvd is substantial compared to what it used to be like . I can't find parking at the Cupertino Library anymore . I think our school systems are negatively impacted too by the influx of more residents. So much so I stopped using them (Myerholtz Elementary & Miller Middle) and send my child to private school now. Bottom line, I don't want a green roof, I want more shopping and restaurants . My son misses the smoothie place that used to be at Vallco , we miss the theaters . DON'T LET SAND HILL DESTROY VALLCO THE WAY THEY DID MAIN STREET. (If there 's any way to get Sand Hill to sell the property to a legitimate builder, to end this madness and delays , I think that would also be a good thing!) Best regards, Jim Kuehnis Cyrah Caburian From: Sent: To: Subject: Vinod Balakrishnan <bvinod@hotmail.com > Tuesday, August 20, 2019 9:56 AM City Council; City Clerk Comments on Agenda item #11 dated 8/20/19 Dear Cupertino Mayor & City Council , I am writing this email for the agenda Item #11 of the council meeting on 8/20/2019 . As a concerned resident of Cupertino, I urge you to act on the mandate delivered to you by an overwhelming majority of Cupertino voters -Please restore the zoning and height limits for Vallco Shopping District to be same as before the ill-conceived GPA amendment of Dec 4/5, 2014 council meeting . The resident does not want a 2 million SFT of office space at this shopping location without mass transit. Any office space will only worsen the housing situation in our town and will put us in a deeper hole for compensatory housing for decades to come. Our residents spoke loud clear through the defeat of Measure D in 2016 , Successful referendum on Vallco GPA in 2018 and electing of a resident-focused supermajority. It is about time the city council and the city staff pay attention to residents voice . Thanks Vinod Balakrishnan Cupertino Resident Cyrah Caburian From: Sent: To: Subject: greglschaffer@yahoo.com Tuesday, August 20, 2019 10 :02 AM City Council Tonight's Council Meeting I don't know what will happen at the 6:45pm meeting tonight. I support the General Plan amendment to remove the provisional allocation of office space at Vallco . I know there will be others who oppose this . If they are residents of Cupertino, they are entitled to that opinion . I also know there will be people opposing the amendment who are NOT Cupertino residents . In my opinion they have no right to meddle in our affairs . I feel that every speaker should be required to state whether or not they are a Cupertino resident . Of course, the meddlers can lie. So there probably is no solution to this ongoing interference from the developer. I am hoping that the Cupertino City Council is not swayed by those outsiders who are opposing the amendment. Thanks for reading this. Greg Schaffer 10190 Byerly Court, Cupertino Resident since 1989 Cyrah Caburian From: Sent: To: Subject: santorojj@comcast.net Tue sday, August 20 , 2019 10 :28 AM City Council Vallco Ever Mushrooming Size When Vallco was sold to Sand Hill the first proposal was almost feasible and would not have created all the traffic, educational problems due to more housing units (students), and be built at the ever growing height/ stories In the buildings being planned . If, as you say, they purchased the property as a shopping center only, how did we get to point now of being overwhelmed by the very magnitude of the latest plans . I have not seen any plans for a major department Store to be included -and , therefore, residents of Cupertino have no shopp i ng centers to spend our money and provide tax revenues for the city. There are many other is sues but this situation has just gotten too big and too out of control. Hopefully the City Council can somehow rein in this situation and do what is right for Cupert i no and its residents June Santoro Cyrah Caburian From: Sent: To: Subject: Michael Lenihan <michael_p_lenihan@yahoo.com > Tuesday, August 20, 2019 10:30 AM City Council Housing in Cupertino at Vallco Dear elected officials, You have already broken a promise made during the last election . You promised a referendum on the specific plan . Instead you tossed it in the trash . Your current plan of a few hundred housing units on 50 acres of land is designed to make a few more mini - mansions in Cupertino, and nothing else. You effectively are begging the state to take over planning for Cupertino. Your letter assuring the state that you will do the minimum required to comply with state law is not good enough by far. We need thousands more housing units, not hundreds. I urge you to adopt an economically viable plan that actually does something to mitigate the housing crisis (like the previous plan), or get out of the way of 5B35 . Given your intransigence, I think you won't have a choice . The state will make a plan for us . It does the people of Cupertino no favors to chain yourself to a bulldozer to prevent growth, when we need someone to plan for growth. Michael Lenihan, resident since 1999. 1 Cyrah Caburian From: Sent: To: Subject: Hi , council, Yan Liu <yanliu01@gmail.com > Tuesday, August 20, 2019 10:35 AM City Council vallco project please considering the points below: 1. Vallco Shopping Mall should be revitalized as a regional shopping center as the General Plan envisions all along. Please restore the zoning at Vallco similar level as 2014, when it was purchased by Sand Hill and forced to close down. 2 Given the housing shortage in the Bay Area , the city could keep the previous allocation of 389 -500 units at Vallco . 3 . In order to work towards a Vallco Specific Plan with sufficient community features, please do not add more than 500 units. 5 . Sand Hill bought a shopping mall. It was zoned ONLY for shopping , dining , and entertainment. Anything extra is already adding to their property value. Regards Yan 1 Cyrah Caburian From: Sent: To: Subject: Dorothy Levitan <dotbust2@comcast.net > Tuesday, August 20, 2019 10 :39 AM Steven Scharf Vallco PLEASE do not down zone the Vallco property at tonight's Council meeting! Listen to the recommdations of the Planning Commission . We need office space in order for the proposal to be economically valid! Plus, more community participation is needed before any decisions are made . Thank you, Dorothy Levitan Cupertino resident since1972. Cyrah Caburian From: Sent: To: Subject: Joan Owyang -Le e <joanowyang@gmail.com > Tuesday , August 20, 2019 10:39 AM City Council Keep Vallco as shopping/dining/entertainment center and <500 housing units Dear council members, I wish Vallco Mall to be a regional shopping/dining/entertainment center as the general plan envisioned originally. Please restore the zoning at Vallco to similar level as 2014 when it was purchased by Sand Hill and forced to close down . Remove the office space allocation . The previous allocation was 389 housing units at Vallco. Do not add more than a total of 500 housing units. I live near the corner of Stevens Creek and Wolfe and find present traffic already unacceptable and congested . Thank you for doing all you can to support the residents to keep Vallco from adding office space and more than 500 units. Sincerely, Joan Owyang-Lee Cupertino resident over 24 years Cyrah Caburian From: Sent: To: Subject: Eddie Lee <eddiecy2015@gmail.com > Tuesday, August 20, 2019 10 :56 AM City Council Keep Vallco as shopping/dining/entertainment center and <500 housing units Dear council members, I have been a happy Cupertino residence for more than 24 years until this "Vallee development". Most of us share the same dissatisfaction as evidenced by the latest City Council election result. I wish Vallee Mall to be a regional shopping/dining/entertainment center as the general plan envisioned originally. Please restore the zoning at Vallco to similar level as 2014 when it was purchased by Sand Hill and forced to close down. Remove the office space allocation! The previous allocation was 389 housing units at Vallco. Do not add more than a total of 500 housing units . I live near the corner of Stevens Creek and Wolfe and find present traffic already unacceptable, congested and dangerous. Yes , dangerous to our children who ride their bikes or other form of vulnerable transportation to schools like Cupertino High and others . Cupertino Children's life matter!!! Our children's life matter!!! Fatal accidents are not reversible . Thank you for doing all you can to support the residents to keep Vallco from adding office space and more than 500 units. Best Eddie Lee 10502 Rampart Ave, Cupertino , Ca Cyrah Caburian From: Sent: Kathleen Wortham < kwortham@svlg .org > Tuesday, Augu st 20, 2019 11 :00 AM To: Subject: City Clerk; Steven Scharf; Liang Chao ; Rod Sinks ; Darcy Paul; Jon Robert Willey Agenda Item 11 : Vallco Shopping District Amendments Attachments: Vallco, SVLG Letter 8.19.19.docx Dear Mayor Scharf, Vice Mayor Chao, and Honorable Councilmembers Paul, Sinks, and Willey, Thank you for your service to the City of Cupertino . On behalf of the Silicon Valley Leadership Group I am writing you to express our support for as much housing as possible at the Vallco site as we have advocated for over the last several years . Please find attached our letter of support for keeping the plans as currently drafted on site . Please feel free to reach out to me with any questions . Thank you for the consideration of our comments and for your tireless efforts to the community. Regards, Kat Kathleen Wortham Senior Associate of Health & Housing Policy Silicon Valley Leadership Group kwortham@svlg .org 408-501-7854 1 ~ ► SILICON VALLEY, LEADE~P 20 01 Gateway Plac e, Su ite 101E Sa n Jos e,Catifomia95110 (40 8)50 1-7864 sv1 g.o rg CARL GUARDINO Presiden t & CEO Board Officers ; STEVE MIWGAN, Chair W85lern Digital Corporation JAMES GUTIERREZ, Vtce Chair lnsikl RAQUEL GONZAl.EZ, Treasurer Bank of America GREG BECKER, Former Chair SVB Financial Group STEVE BERGLUND, Former Chair Trimb le Inc. AART DE GEUS, Former Chair Synopsys TOM WERNER, Former Chair SunPower Boa rd Mem bers: BOBB Y BELL KLA-Tencor DAWN ET BEVERLEY Donne!ley Financia l Solutions GEORGE BLUMENTHAL University of California, Santa Cruz JOHNBOLANO KQED CARLA BORAGNO Genentech CHRIS BOYD Kaiser Permanente JOE BURTON Plantronics RN.fl BRANITZKY Sapphire Ventures KEVIN COWNS Accenture LISA DANIELS KPMG JENNY DEARBORN SAP MICHAEL ENGH, S.J. Santa Clara University TOM FALLON ln finera JOHNGAUDER Corneas! KEN GOLDMAN Hillspire DOUG GRAHAM Lockheed Martin LAURA GU/0 IBM STEFAN HECK Nau!o ERIC HOUSER WeUsFa rgoBanlc I. JUUAHU Lark AIDAN HUGHES ARUP VICKI HUFF ECKERT PwC MAR Y HUSS SVBJ/SF Business Times TOM KEMP Centrify ERIC KUTCHER t.1c:Kinsey&Company JANET LAMKIN United Airlines JOHNLEDEK BD Biosciences JENNY LINTON OSlsort ENRIQUE LORES HP Inc. MATTMAJ-IAN Brigade TARKAN MANER Nexenta KEN MCNEELY AT&T BEN MINICUCCI Alaska Airlines MARY PAPAZIAN San JOS8 Stale University JES PEDERSEN WebcorBuilders ANDY PIERCE Stryker Endosoopy KIM POLES£ ClearSlreet RYAN POPPLE Proterra RUDY REYES Verizon 8/lLRUH GE SHARON RYAN Bay Alea News Gro~ RONSEGE Echelon DARREN SNELLGROVE Johnso n&Johnson JEFF THOMAS Nasdaq JED YORK Sen Francisco 49ers Estab li shed In 1978 by David Packard August 19 , 2019 Council Chambers City of Cupertino 10300 Torre Ave , Cupertino, CA 95014 RE: Agenda Item 11: Vallco Shopping District Specia l Area General Plan Amendments and Associated Zoning Amendments; and Second Addendum to the Environmental Impact Report for the 2014 General Plan Amendment, Housing Element Update, and Associated Rezoning Project Dear Mayor Scharf, Vice Mayor Chao, and Honorable Councilmembers Paul , Sinks , and Willey , On behalf of the Silicon Valley Leadership Group, I am writing to express our support for the Vallco Town Center Redevelopment as currently proposed . As the State is facing a dire housing shortage we strongly support innovative, dense housing projects that add high quality housing for our region's families and workforce . The Silicon Valley Leadership Group was founded in 1978 by David Packard, Co-Founder of Hewlett Packard . Today, the Leadership Group is driven by more than 340 CEOs/Senior Executives to proactively tackle issues to improve our communities and strengthen our economy, with a focu s on education, energy, the environment, health care, housing , tax policy, tech & innovation policy, and transportation . One of the top concerns of the members we represent in the Silicon Valley is a need for high quality and affordable housing here in the Bay Area. As an organization who represents business, we often hear that the cost of living and lack of housing supply in our region affects our member companies . Because of this , we are seeing numerous employers build secondary headquarters outside of Silicon Valley or move out of the region altogether. We strongly urge the Council to not adopt the "Vallco Shopping District Special Area General Plan Amendments and Associated Zoning Amendments" as drafted. Proposed changes to the development as currently planned would inhibit the economic vitality of the project and may lead to significantly less housing on the site . We look forward to seeing as much housing as possible be built at Vallco Town Center and look forward to working together to ensure that the innovative development goals are achieved . Thank you for the consideration of our comments. Sincerely, ty~b Carl Guardino Pre sident & CEO Silicon Valley Leadership Group Cyrah Caburian From: Sent: To: Subject: llango Ganga <ilangog @yahoo .com > Tuesday , August 20, 2019 11 :11 AM City Council Written Communication -Agenda Item 11 , Aug 20 , 2019 CC Meeting Dear Mayor and Council Members, I support the proposed resolutions to amend the GPA to remove office space/office allocation from the Vallco shopping district and reinstate building height limits . We do not need more office space in this area that exacerbates the housing issues , not solving it. The citizens of Cupertino have provided a clear mandate in the Nov 2018 Election, hence I request the City council to act expeditiously to reinstate the zoning and height limits. Thanks for your consideration . Regards, llango Ganga .Cupertino Resident on behalf of myself. Cyrah Caburian From: Sent: To: Subject: Dave Ghiselli <drghiselli@gmail.com > Tuesday, August 20, 2019 11 :38 AM City Council NO downzoning at Vallco Much as I have doubts about Sand Hill as a developer and many of their prior actions regarding Vallco, I have come to the opinion that they are at last in the right. It is time to get behind the 5B35-approved project as it is currently projected and cease with blocking efforts . Let's move forward . Regards, Dave Ghiselli Cyr ah Caburian From: Sent: To: Subject: Dear City Council, Ping Gao <ga oping @gmail.co m > Tuesda y, August 20 , 2019 1 1 :4 0 AM City Coun cil Rega rding Vallco Shoppin g Mall Thi s is Ping, an 12-year Cupertino residents . I would like to voice my op inion again on Vallco re -development . I have been frequenting Vallco when it was still a shopping mall. My family had a lot of sweet memories there . My kids has been dying for AMC to come back . Not to mention the only decent dim sum place is gone which my family and many of my neighbors also missed a lot. It's very obvious that who has turning Vallco to a "ghost" mall. It's the developer. I think right now the most important thing is to restore the o r iginal General Plan to Vallco Shopping Mall. Please restore the zoning at Vallco similar level as 2014 , when it was purchased by Sand Hill and forced to close down . Secondly , I don't think Cupertino need any extra office space . Enough is enough . The current traffic has said it all. Introducing more office space to Cupertino will make the housing situation even worse , which is a big NO-NO . Sand Hill bought a shopping mall. It was zoned ONLY for shopp ing , dining , and entertainment. Anything extra is already adding to their property value . Don't let the greedy develope r to destroy our city . Cupertino is the resident's home , not the developer's home. They don't care but we care! Besides , Cupertino has made its effort to meet the office to housing ratio requirement by the state . Low incoming housing for the teachers and firefighters would be a great idea , but I think it needs to be implemented very carefully . Don't let the developer fool the Cupertino residents again . Please keep my comments as public reco rd. Thanks and regards , Ping Cyrah Caburian From : Sent: To: Cc: Subject: A Aggarwal <ak2006 .1@gmail.com > Tuesday, August 20 , 2019 11 :SO AM City Council contact@bettercupertino.org Vallee GPA is on agenda #11 Hi City Council Members, I am Cupertino resident (on Peach Blossom Drive) Please keep my comments in public record that are given below . Vallco Shopping Mall should be revitalized as a regional shopping center as the General Plan envisions all along. Please restore the zoning at Vallco similar level as 2014, when it was purchased by Sand Hill and forced to close down . Thanks Anuj Resident@ Peach Blossom Drive, Cupertino 95014 Cyrah Caburian From: Sent: To: Subject: Saravanakumar Tiruthani <tv_saravanakumar @yahoo.com > Tuesday , August 20, 2019 12 :29 PM City Council; City Clerk Don't allocate office space on Vallco property Dear City Council Members, As a cupertino resident, I would like to urge the council members to eliminate adding any office space to Vallco development plan . We need housing, shopping and restaurants . Adding office space will only aggravate the office -housing ratio and further exacerbate traffic problems . Thank you, Saravanakumar Tiruthani 20172 Rodrigues Ave Cupertino Sent from my iPhone Cyrah Caburian From: Sent: To: Subject: Emmy Copriv iz a <emmycop ro @aol.com > Tuesday, August 20 , 2019 12 :31 PM City Council Vallco Plan I am a long time resident (over 25 years) of Cupertino and live in a neighborhood near Vallco . I have watched the Shopping mall fail slowly and understand that building a replacement Vallco Mall is not the answer. At the same time, I don't believe we should be building large towers filled with offices and housing as Cupertino is not a metropolis like San Jose or San Francisco. We need to find a balance that is acceptable to most. We as a city are trying to find a balance between 2 polar opposites. No growth vs uncontrolled growth. Honestly, If I could put anything I wanted in place of Vallco it would be a Beautiful park like Vasona with some houses or town houses mixed in. I know that is a pipe dream as Sand Hill properties are not about beautifying the surround i ngs and creating open space . Unless Sand Hill sells the property to a Philanthropist, my ideal will not happen . Cupertino is a residential suburb not an urban city . Yes we have grown in the last 25 years and face many challenges ahead to try to balance the growth in silicon valley and the need for more housing as more jobs are created. Our homes have gone up in value over the past decade in an incredible way . Being located next to Apple and close to many other Silicon Valley Giants makes Cupertino a convenient place to live if you can afford it. We bought in back when it was affordable to do so . We now have a nest egg that we have spent yea rs cultivating. Is it any wonder that we as a community are worried about what will be placed very near to our now expensive homes . I know you have a difficult decision in front of you, please take i nto account the long time residents who don't want to lose the suburban feel of of this city. Balance new housing with open space and some retail, but please limit additional office space as that will continue to warrant more housing in the fu t ure . Keep Cupe rt i no a pla ce of fa m ily values and civ ic p r ide, do n ot let it turn into another strip mall city with no heart. Thank you for your time, Mary (Emmy) Copriviza 10422 Denison Avenue Cupertino, CA 95014 1 Cyrah Caburian From: Sent: To: Subject: Follow Up Flag: Flag Status: Dave Vogel <drvog@sbcglobal.net > Tuesday , August 20, 2019 12 :38 PM City Council Valeo Follow up Completed As A resident of Cupertino since 1953 I would like to support the Downsizing of Valeo . I will admit that I am not clear on all the possible repercussions . I just feel that the cries for more housing will never stop. We already have a city that is so congested at rush hour we can hardly move . There comes a time when we have to say enough is enough. By continually building more high density housing we are making the quality of life for current residents less desirable . The people who are getting rich by developing have no concern. I went to a meeting a couple of weeks ago regarding the development of The oaks shopping center. The people who spoke up all had the same concern Traffic ! The developers said they would look into it, great ! I am sure they will solve the problem! There are a lot of older retired people living in Cupertino and surrounding ares who would be more inclined to move elsewhere if they could keep their current property taxes . proposition 60/90 allows that to happen. We need to get that passed state wide to make it more attractive for retired people to leave . I am not saying that is the solution just one idea . Thank You David Vogel Cyrah Caburian From: Sent: To: Subject: Marieann Shovlin <m.shovlin@comcasfnet > Tuesday, August 20, 2019 12:48 PM Cupertino City Manager's Office; City Council; City Clerk; City Attorney's Office Broken Promises , Broken Oaths -Where is the City of Cupertino Council Accountability? To Cupertino City Council and City Staff: During the 2018 City Council election campaigns and subsequent City Council elected officials' oaths , these officials promised the to represent ALL the Citizens of Cupertino and to serve and support City regulations and laws . The current resolution on housing on the VALLCO property determined by a majority of City Council members appears to negate those promises and that oath by negating the decisions and desires of the hundreds of Cupertinians from the 10 meetings on the VALLCO project in 2018 -and doing it with a significant minority of citizens being made aware of this resolution . This resolution can also put the city at risk of state suit and resulting potential fines of millions of citizen dollars . How is this representing ALL Cupertinians? How is this supporting the thousands who put their faith and trust in their elected officials to represent them fairly? How is this supporting the promises of these electe9 Council members to put this decis ion to a vote of the people? The people of Cupertino deserve an answer -and accountability by the City Council. Marieann Shovlin 10277 Vista Knoll Blvd, Cupertino Cyrah Caburian From: Sent: To: Cc: Subject: Follow Up Flag: Flag Status: Holly Lofgren <halof@sbcglobal.net > Tuesday, August 20 , 2019 1 :00 PM City Council Holly Lofgren Vallco GPA Follow up Completed Honorable Mayor and Cupertino City Council, As a resident of Sunnyvale who lives close to the Vallco site, I would like to express my sincere wish that the GPA reflect the original intent of the Vallco site as a regional retail center. I also support the addition of 389 housing units, especially if they can be affordable housing units . We have a dire need for affordable housing in the low-moderate category and I believe the the site/area could handle that many. A further need is in the senior housing category . The zoning as a regional shopping center should be supported as the loss of retail shopping in the area has left residents with only one department store in all of Cupertino, Sunnyvale, Mountain View and Los Altos and the loss of many other retail outlets . This means that I am traveling much further by car to get to any retail , which is not good environmentally and represents an imbalance in planning . Under no circumstances do I wish there to be any additions to office space in this area which exacerbates the housing situation . Secondly , please let me take a moment to say how dismayed I was to read a recent website article from one of our own in Sunnyvale , Richard Mehlinger. His malignment of the Cupertino City Council and its resident advocates does not represent the views of the majority of Sunnyvale residents. His statements last year in social media (Nextdoor) that I personally do not support affordable housing (I spoke at your Vallee hearing) were false and are supported by your own record of the hearing. Therefore , should this individual speak in Cupertino again and malign others , please disallow his speaking privileges . Please feel free to read this statement aloud if it would provide clarity to the discussion . Holly Lofgren Sunnyvale resident Cyrah Caburian From: Sent: To: Subject: Dorothy Levitan <dotbust2@comcast.net> Tuesday, August 20, 2019 1 :06 PM scharf@cupertino.org; liancho@cupertino.org; Rod Sinks; Darcy Paul; Jon Robert Willey vallco I am urging you to not downzone the Vallco property at tonight's City Council meeting. We need the office space in order to make the proposal economically sound .. Please listen to the Planning Commission's report on the matter. In addition, I feel more public notification is necessary and the citizens of Cupertino's voices should be heard . Thank you, Dorothy Levitan Cupertino resident since 1972. Cyrah Caburian From: Sent: To: Subject: Sai & Sonali Mylavarapu <sainsonali@gmail.com > Tuesday, August 20, 2019 1 :08 PM City Council In favor removing office space Dear Mayor & City Council , I am writing this email as my public comments towards Agenda Item #11 of the council meeting on 8/20/2019. As a concerned resident of Cupertino, I urge you to act on the mandate delivered to you by overwhelming majority of Cupertino voters -Please restore the zoning and height limits for Vallco Shopping District to be same as before the ill-conceived GPA amendment of Dec 4/5, 2014 council meeting. We don't need the unlimited heights and 2 mil SFT of office space at this shopping location without mass transit . Any office space will only aggravate the housing situation in our town and will put us in a deeper hole for compensatory housing for decades to come . Our residents spoke loud clear through defeat of Measure Din 2016, Successful referendum on Vallco GPA in 2018 and electing of resident focused super majority. It is about time the city council and the city staff pay attention to residents voice . Thanks for listening and acting in the best interests of the community. Regards Sonali Padgaonkar Cupertino Resident. Cyrah Caburian From: Sent: To: Cc: Subject: Venkat Ranganathan <n.r.v@live .com > Tuesday, August 20, 2019 1 :08 PM City Council · City Clerk Re : Vallco office allocation BTW, I am a resident of Cupertino for nearly 10 years residing at 19714 Amherst Drive Cupertino and a bay area resident for 25+ years . Thanks Venkat Sent from Outlook From: Venkat Ranganathan Sent: Tuesday, August 20, 2019 9:04 AM To: citycouncil@cupertino .org <citycouncil@cupertino .org> Cc: cityclerk@cupe rtino.org <cityclerk@cupertino .org> Subject: Vallco office allocation I would strongly urge the city council to remove the office allocation for the Vallco plan as that allocation exasperates thehousing crisis. Thanks Venkat Get Outlook for Android Cyrah Caburian From: Sent: To: Cc: Hi Pr abha Ven katesan Tuesd ay, August 20, 2019 1 :09 PM City Council ; City Clerk prakri sh @hotm ial.com I would strongly urge the city council to remove the office allocation for the Vallco plan as it will make worse the already congested Cupertino city . Our kids will not be able to go to school safely. As a resident of Cupertino I strongly voice my disapproval. Thx & regards Prabha [19714 Amherst Drive Cupertino CA 95014 ; 408-858-2258] Cyrah Caburian From: Sent: To: Subject: chitrasv@yahoo .com Tuesday , August 20, 2019 1:11 PM City Council; City Clerk Request to Remove Office Allocation at Vallco Dear Mayor and City Council Members, I am writing this email to express my concern about office allocation at Vallco . (Agenda Item #11 of the council meeting today, 8/20/2019.) As a long-time resident of Cupertino, I request you to restore the zoning and height limits for Vallco Shopping District to be same as before the ill-conceived GPA amendment of Dec 4/5, 2014 council meeting. We don't need 2 mil SFT and unlimited height of office space at this shopping location . Any office space will only exacerbate the dearth of housing in our town and will plunge us deeper into the housing crunch. What the residents really need in Vallco are more retail and entertainment spaces. As a concerned resident of Cupertino, I spent countless hours gathering signatures for the referendum in 2018 . The residents' choice was abundantly clear through defeat of Measure Din 2016, successful r eferendum on Vallco GPA in 2018 and the election of resident focused super majority council. l.t is about time the city council and the city staff pay attention to residents' voice. Thanks for your time and I hope you will act in the best interest of the community. Regards, Chitra Iyer Cupertino Resident Cyrah Caburian From: Sent: To: Subject: Hi All, dzhou@outd oorsti rfry. com Tuesday, August 20, 2019 1:31 PM City Council concern on too much development You guys are doing great job in representing us . I like to live in a small town environment and don't like to see those development in city of Santa clara here in Cupertino . Bests, Dong Zhou Cyrah Caburian From: Sent: To: Subject: Dear Mr. Paul: Pat Pecka < patpecko@pacbell.net> Tuesday, August 20, 2019 1 :40 PM Darcy Paul What is going on here? You stood in my driveway last year for an ice cream social and now you continue to serve on a city council that is so wrong in this message for OUR city. Having written once before and receiving a scathing reply filled with lies and innuendo from the current mayor, I hesitate to write again . I am appealing to the voice of reason -are you THAT voice? I have had enough of the theatrics that this council is engaging in at taxpayer expense . Stop the nonsense already . Let the Vallco project go forward and stop the downsizing effo1is. Pat Fecko 408/80 7-1410 j 0 ---,-Virus-free. www .avast.com 1 Cyrah Caburian From: Sent: To: Subject: Follow Up Flag: Flag Status: Emmy Copriviza <emmycopro@aol.com > Tuesday , August 20 , 2019 12 :31 PM City Council Vallco Plan Follow up Completed I am a long time resident (over 25 years) of Cupertino and live in a neighborhood near Vallco . I have watched the Shopping mall fail slowly and understand that building a replacement Vallco Mall is not the answer. At the same time, I don't believe we should be building large towers filled with offices and housing as Cupertino is not a metropolis like San Jose or San Francisco . We need to find a balance that is acceptable to most . We as a city are trying to find a balance between 2 polar opposites. No growth vs uncontrolled growth . Honestly, If I could put anything I wanted in place of Vallco it would be a Beautiful park like Vasona with some houses or town houses mixed in . I know that is a pipe dream as Sand Hill properties are not about beautifying the surroundings and creating open space. Unless Sand Hill sells the property to a Philanthropist, my ideal will not happen . Cupertino is a residential suburb not an urban city. Yes we have grown in the last 25 years and face many challenges ahead to try to balance the growth in silicon valley and the need for more housing as more jobs are created . Our homes have gone up in value over the past decade in an incredible way. Being located next to Apple and close to many other Silicon Valley Giants makes Cupertino a convenient place to live if you can afford it. We bought in back when it was affordable to do so. We now have a nest egg that we have spent years cultivating. Is it any wonder that we as a community are worried about what will be placed very near to our now expensive homes . I know you have a difficult decision in front of you, please take into account the long time residents who don't want to lose the suburban feel of of this city. Balance new housing with open space and some retail, but please limit additional office space as that will continue to warrant more housing in the future. Keep Cupertino a place of family values and civic pride , do not let it turn into another strip mall city with no heart. Thank you for your time, Mary (Emmy) Copriviza 10422 Denison Avenue Cupertino, CA 95014 Cyrah Cabu r ian From : Sent: To: Subject: A Wang <alatwa1212 @gmail.com > Tuesda y, August 20 , 2019 1 :41 PM City Coun cil Vallco plan To whom it may concern , Vallee Shopping Mall should be revitalized as a regional shopping center as per the General Plan . Please restore the zoning at Vallee similar level as 2014 . I would like to know how adding 2400 units is going to · affect the school system my children attend and the public services we use. That is a significant bump in the demand on Cupertinos services . Regards , Alvin Wang Cyrah Caburian From: Anne Ez zat <aezzat95014@gmail.com > Tuesday, August 20 , 2019 1 :59 PM Sent: To: Subject: Steven Scharf; Jon Robert Willey; Darcy Paul; Liang Chao Vallco and Housing Dear Mayor Scharf, Vice Mayor Chao, Council members Wiley and Paul, During the last several years we have been treated to well choreographed histrionics by individuals trying to sell a one size fits all solution to housing--over building . This is a solution that is short sighted and does not work. Overbuilding has certainly done wonders for the city of San Francisco--with the homelessness --70% of the homeless were former SF apartment dwellers, the crime, and the racism that is the by product of gentrification .. Please do not add office space to Vallco --it will exacerbate an already difficult housing problem . The Vallco project is a glorified office park with a housing facade. That being said, I hope that the council will consider some of the following, and possible adopt: • . Require completion bonds for housing, so that the type of housing that is marketed to the planning condition and the council materializes . It will eliminate the woops-factor. I meant to build affordable housing, but the numbers did not add up--so I built a luxury hotel instead . • Expiration dates for housing allocations . If a developer, can not meet well defined performance benchmarks, give them to another developer that is willing and capable of doing the job. • An empty unit tax . Vancouver had a problem with real estate speculators purchasing property and letting it sit fallow. The city nearly doubled the taxes on the empty units, landlords that did not want to pay the tax, put their units on the market. Some landlords interested in appreciation--not cash flow, rented the units at below market rates . • A city wide band measure to build housing. This housing shoulp be for individuals and families that really need it, not a tech ghetto for brogrammers . And finally, could you consider codifying a definition for retail? Using "retail" in any building plan seems to be an end run around height restrictions that is used way to often . Thank you for your time and consideration . Best regards, Brooke Ezzat • Cyrah Caburian From: Sent: To: Subject: J K <ea gl enhawk @yahoo.com > Tuesda y, August 20 , 2019 1 :55 PM City Coun cil Re : M y Vallc o Feedb ack Also , if I may supplement my feedback below , I forgot to mention another significant reason I dislike Sand Hill Properties. When concerned Cupertino residents had an information booth setup at the library last year , Sand Hill hired a crew of propaganda distributors/people that surrounded the booth and kept me from getting to the people I wanted to speak with . In fact , they lied to me , and led me to believe I was speaking to the concerned Cupertino residents when in fact I was speaking to Sand Hill hired people . I think that was very disreputable , and caused a very uncomfortable environment ; it speaks volumes to me about the lack of integrity at Sand Hill Properties . On Tuesday , August 20 , 2019 , 9:52:52 AM PDT , J K <eaglenhawk@yahoo.com > wrote : My name is Jim Kuehnis , and I've been a resident of Cupertino since 2006 and during most of that time have also owned a rental home in Rancho Rinconada . I want you to know I DON'T SUPPORT ANYTHING THAT SAND HILL PROPERTIES WANTS. They already had a chance with Main Street , which was touted as Cupertino 's version of Santa Row. Well , I'm sure you'd agree with me that Main Street is nothing like Santana Row , and is a major disappointment. We rarely go in there . The layout of parking and selection of shops there was poorly done , in my opinion . Regarding Vallco , I don't want parks and trees growing on the roof, which I understand they are doing so they don't use actual land for mandatory parks . That's ridiculous , I expects parks and green space that I can get to wit hout going to the roof. I want restaurants. My wife and I constantly leave Cupertino to go to Valley Fair for things like California Pizza Kitchen and Cheesecake Factory. We go to Sunnyvale for P.F. Chang's . I'd like shopp ing too . Vallco is huge , why can't we actually have something that rivals Santa Row? Santa Row is constantly packed, is high energy , and a fun location to visit (unlike Main Street). It's so busy I can't even get my car near the place to park it. That should be your real vision , to create Cupertino's version of Santana Row . I don't know how much office and housing should be on Vallee, butl'm sure I'd want less than Sand Hill wants. Traffic on De Anza Blvd is substantial compared to what it used to be like . I can 't find parking at the Cupertino Library anymore . I think our school systems are negatively impacted too by the influx of more residents . So much so I stopped using them (Myerholtz Elementary & Miller Middle) and send my child to private school now. Bottom line, I don't want a green roof, I want more shopping and restaurants . My son misses the smoothie place that used to be at Vallee , we miss the theaters . DON'T LET SAND HILL DESTROY VALLCO THE WAY THEY DID MAIN STREET. (If there's any way to get Sand Hill to sell the property to a legitimate builder, to end this madness and delays , I think that would also be a good thing!) Best regards, Jim Kuehnis Cyrah Caburian From: Sent: To: Subject: harrisau1@gmail.com Tuesday, August 20, 2019 2:02 PM City Council Vallco Plan, My Inputs Dea r Council Members, Traffics in Cupertino is already very congested in office hours . I think Vallco Shopping Mall should be revitalized as a regional shopping center as the General Plan envisions all along. Please restore the zoning at Vallco similar level as 2014 , when it was purchased by Sand Hill and forced to close down , or no more than 400 residential units. Thank you , Harris Au 10393 Noel Ave Cupertino , CA 95014 1 Cyrah Caburian From: Sent: To: Subject: Anna Payne <zieanna@juno.com > Tuesday, August 20, 2019 2:04 PM City Council VALLCO GPA Dear Council Members: As a long time Cupertino resident I want to provide my viewpoints about the Vallco GPA I would like to keep Vallco Shopping Mall as a retail zone; I used to shop there and Sand Hill purchased the property in accord that it was zoneq as retail. People say malls are the" stuff" of the past. Look atthe thriving and growing Westfield Mall in Santa Clara, Santana Road, Stanford Shopping Center High end hopping centers can thrive if they are properly managed . They will also provide a tax revenue source to the city. Because of the need for housing in the city of Cupertino, please allow only the allocation of 389 units at this property. Cupertino is already highly congested and the infrastructure will not support the additional needs for housing. Please keep my comments in public records. Respectfully, Zie A. Payne Sad News For Royal Family track . volutrk.com @[jlhirdpartyoffers. ju no .com/TGL3132/5d5c6048e32a604 70effsl02vuc Cyrah Caburian From: Sent: To: Ping Gao <gaoping@gmail.com > Tuesday, August 20, 2019 2:11 PM City Council Cc: Subject: attorney@cupertino .org; Cupertino City Manager's Office; Cupertino City Clerk's Office Re: Regarding Vallco Shopping Mall + City attorney, City manager, City clerk Thank you, Ping On Tue, Aug 20, 2019 at 11:40 AM Ping Gao <gaoping@gma i l.com > wrote: 1 Dear City Council, i This is Ping , an 12-year Cupertino residents . I would like to voice my opinion again on Vallco re-development. I have been frequenting Vallco when it was still a shopping mall. My family had a lot of sweet memories there. My kids has been dying for AMC to come back . Not to mention the only decent dim sum place is gone which my family and many of my ' neighbors also missed a lot. It's very obvious that who has turning Vallco to a "ghost" mall. It's the developer. I think right now the most important thing is to restore the original General Plan to Vallco Shopping Mall. Please restore the zoning at Vallco similar level as 2014 , when it was purchased by Sand Hill and forced to close down . Secondly, I don't think Cupertino need any extra office space. Enough is enough. The current traffic has said it all. Introducing more office space to Cupertino will make the housing situation even worse, which is a big NO-NO. Sand Hill bought a shopping mall. It was zoned ONLY for shopping, dining , and entertainment. Anything extra is already adding to their property value . Don't let the greedy developer to destroy our city . Cupertino is the resident's home, not the developer's home. They don't care but we care! 1 Besides, Cupertino has made its effort to meet the office to housing ratio requirement by the state. Low incoming housing for the teachers and firefighters would be a great idea , but I think it needs to be implemented very carefully . Don't let the , developer fool the Cupertino residents again. Please keep my comments as public record . Thanks and regards , Ping 1 Cyrah Caburian From : Sent: To: Cc: Subject: Dear city councils , Qin <qi n pan @yaho o.com > Tuesday , August 20 , 2019 2:28 PM City Council Cup ertino City Mana ge r's Office Restore 2014 zoning to vallco My name is Qin Pan, I'm a Cupertino resident for the last 20 years . I urge you to r esort the 2014 zoning for vallco . I happened to drive pass new Apple Park last Monday night at 8:00 pm, I have to wait the traffic light turn green twice before I can pass the Apple main gate -it's already past 8:00 pm,and Apple already have a lot of free shuttle, yet still a lot of cars came out of Apple after 8 :00 PM . With the shortage of region housing, and worst traffic, we cannot have more office in the area . Please cap the housing to the original allocation , so the crowed school in the area not get worse . The school in the vallco area already crowded as is , and those kids who is go i ng to move in the vallco housing deserved the good education as any other kids in the city . City should build more housing in the area see the enrollment declines . Thank you! Qin Pan, I only speak for myself Sent from my iPhone Cyrah Caburian From: Sent: To: Subject: Rahul < rahulvasanth@protonmail.com > Tuesday, August 20, 2019 2:30 PM City Council ; City Clerk; citymanager@cupertino.org Support removal of office allocation Dear Honorable Mayor and Councilmembers, There is no place for office space at the Vallco Mall sure which was originally zoned for retail. In the name of a manufactured housing crisis we cannot worsen it by building more office space to build housing units . We have an affordability crisis and far more residents and those in lower income brackets will be priced out; building more office space next to Apple's headquarters is absurd . The vote you take today is a vote for the residents , for local control, democracy, and the rejection of corruption . The will of the residents of Cupertino is clear as demonstrated by the past several years of election results. Kindly disregard the personal attacks from individuals coming from outside of the city and only take into consideration the residents of Cupertino . When the office allocat ion is removed and if the SB 35 lawsuit favors residents, not special interest groups or a billionaire backed by Abu Dhabi capital, the developer will at last be forced to negotiate in good faith with the City and its residents . This is not a typical developer with burned bridges and failed projects all around the Bay . I'd call attention to M_ain Street where senior housing was promised and really served as the impetus behind the development but instead , some of our most vulnerable were cheated in a grotesque manner which happened to be highly profitable . The city staff is supposed to represent Cupertino residents . To an extent, they do. But there are far too many inconsistencies, errors, or actions/inactions that seem to have favored SHP to the detriment of residents . It isn't their fault. There are billions of dollars on the line and the city is dealing with a developer that's proven it will do anything and everything imaginable to achieve its goals . A developer or really, one person shouldn't be able to subvert democracy and will of the vast majority of residents to this extent. Despite being shamed, intimidated, and threatened by the corporate media, bought out state legislators doing the bidding of powerful lobbying/advocacy coalitions (from developers and large, multinational corporations), most residents continue to engage in productive, good faith dialogue and continue to fight for our homes, our schools, our children/family/community, and the city that we love. You have our support. If the Vallco site is to be a site with housing, retail, parks, or anything beneficial to Cupertino, please take the office space off the table for good. Sincerely, Rahul Vasanth Representing myself only Cyrah Caburian From: Sent: To: Subject: Council members, Lori Ekman <lori .ekman@gmail.com > Tuesday, August 20 , 2019 2:36 PM City Council ; Gra ce Schmidt, MMC; Cupertino City Manager's Office Vallco GPA The Cupertino General plan should not be down graded without considerable community input and outreach . This downgrading has been rushed through. The Vallco area should not be limited to just a small amount of housing and retail. As Mayor Scharf said at the dedication of the Veranda "I think we have plenty of retail along Stevens Creek Blvd". We do not need more retail at Vallco . We do need housing, a lot of housing. We need to office at Vallco to help fund a considerable amount of BMR housing. Millions of square feet of retail and only a few hundred of housing also creates a housing to job ratio that is imbalanced. It also creates a horrid traffic situation as evidenced by Valley Fair . Also, our schools are facing funding problems due to a decline in students, because homeowners are aging in place. We need housing at Vallco to save our schools . You decided to not let the public vote on the referendum. You now need to do the prudent and ethical thing and engage the community, the entire community, in study sessions of what should happen at the Vallco site . Remember informed residents engage with city government. This meeting about the GPA was not widely published to the whole city. Transparency and ethical behavior are needed to heal our community . Lori Ekman 10449 Plum Tree Lane Cupertino, CA Cyrah Caburian From: Sent: To: Subject: Good afternoon, Eleanor Chan <eleanorchan6@yahoo .com > Tuesday, August 20, 2019 2:3 8 PM City Council ; Cupertino City Manager's Office Tonight's item #11 Vallco I want to relay my displeasure at the thought of downsizing Vallco. Anything related to this piece of property should have input from ALL of your constituents, You need to delay making a decision until you've held several citizens input sessions . Why are you placing so many restrictions on the flagship of Cupertino? After all, this property owner needs to make a profit. wouldn't think that you would like to be told what to do with your own property. Please note : with offices close to housing, you would see less traffic as people like to live near where they work. They wouldn't need to use their car as often. I was one of the citizens who attended Sand Hill's outreach sessions and I think you blew it by not working with them to come to a plan that would have benefited us all. They were going to offer free shuttle service around the city; additional fund i ng for both the elementary and high school districts, space for the kids to work, a hall for events , an amphitheater, room for adult education, and much more . They also had a plan for the traffic in the city. And soon we'll have no Flint Center! You need to stop your holier than thou stance and play nice! NO ON MEASURE C or anything like it. We voted and turned it down already! I hope you will listen to reason and work on this plan some more. OPEN YOUR MINDS TO THE GREAT IDEAS THAT ARE OUT THERE . Eleanor Chan 29-year resident Sent from my iPhone Cyrah Caburian From: Sent: To: Subject: Pavl ovi c <z ahratal ie h @gm ail.com > Tuesday , August 20 , 2019 3:08 PM City Council vallco Dear City Council Members, As a longtime Cupertino resident and member of past General Plan Citizen advisory board, I would like to ask you to make Vallco revitalization plans such that we keep this important asset as a shopping destination as it had always been envisioned and not an office and housing destination . The citizens of Cupertino deserve to be heard and they mostly hope we take Vallco back as the quiet, pleasant shopping and entertainment venue it has always been with some changes to modernize . Our surrounding cities have taken very little of the housing and office burden for the Bay Area while Cupertino has built many new housing and office units in recent years . While housing is an important issue, please consider the negative effects a large business and housing developement will have on traffic, the already burdened schools and quality of life. Sincerely, Zahra Pavlovic Cyrah Caburian From: Sent: To: Subject: albert liu <albertoliu@yahoo.com > Tuesday , August 20, 2019 3:03 PM City Council; Steven Scharf Your meeting tonight about changing the zoning of Vallco Dear Honorable Council Members , I am deeply disturbed by your decision to drastically cut down on the original zoning plan for Vallco . May be I am not us ing all the right terms, but I know without a doubt that you understand what I mean. Frankly , I have never witnessed such strong arm tactics you apply towards 'killing the Vallco Revitalization' project by Sand Hill Development in all previous 35+ years I have lived in Cupertino. All previous Cupertino Councils were reasonable and considerate of all inputs, but not your group . I feel we are dealing with a clone of the current POTUS in Cupertino. You are very good students of him . If (and I believe it is more like when) you commit Cupertino into litigations with the State , who will be paying for the legal fees ? I don't want my ta x money to go to that. My tax money should go to road improvements , schools, other community projects and services . This is a pure waste of my money . Even if you win (for bragging rights ?), we all lose . Vallco will be a waste land , an eyesore , a laughing matter among all the neighboring communities . The home of Hewlett Packard, Apple and many other well known companies becomes skid row ? Is that really for Better Cupertino ? Do you folks really want to bring Sears , JC Penney's, Macy's etc . back ? Or even the orchards ? Somebody is dreaming , or fantasizing . Cupertino needs to put in more housing for the low income people. Low income folks are not the homeless , the folks on welfare . They are the teachers , the office workers, the nurses, the policemen , the fire men, the ordinary people who make decent wages , but just can 't afford the housing prices (buy or rent) here in the Silicon Valley . I am certain you all understand that. Other neighboring cities are all participating i n building projects with low income housing included . That's why there is SB 35 signed into law . Yet , Cupertino is resisting because of you . Are we getting snobbish ? Other cities like Los Altos can be even more snobb ish , but they aren 't. Is this your way of 'Making Cupertino Great Again'? You'll all go down in history as mini-Trump . Don't you think we, Cupertino residents , should have a say ? like in a poll ? All residents should be given full information of the ramifications, i.e . lawsuits and whose pockets the lawyers' fees will come from . May be Better Cupertino should fund the lawsuit vs the State. If so , then , put that in writing first. I also feel this is a personal vendetta of some of your members against the developer. I have heard his company has lost quite a bit of money for his investors on other projects. Anyone on the council has anyone or anything related to that? That's infringing on corruption if so . I don't know how Better Cupertino really intends to improve Cupertino except leaving a pile of debris at the Vallco site . That's improvement ? May be the property would sell cheap for the future investors the council members really want to bring in. More corruption . I hope some of you will not be bl inded or coe rced or intimidated . Do your duty , please , for everyone . Thank you . Sincerely , Albert Liu Cyrah Caburian From: Sent: To: Subject: Nicholas <nicknakashima@yahoo .com > Tuesday, August 20, 2019 3:14 PM City Council No to Sandhill developers! Sand Hill bought a shopping mall. It was zoned ONLY for shopping, dining, and entertainment. Anything extra is already adding to their property value . Nicholas Nakashima Cupertino resident Collins neighborhood Cyrah Caburian From: Sent: To: Cc: Subject: Liana Crabtree < lianacrabtree@yahoo.com > Tuesday, August 20, 2019 3:15 PM Steven Scharf; Liang Chao; Darcy Paul; Rod Sinks; Jon Robert Willey City Clerk Council Meeting 8/20/2019, Agenda Item 11, In Support of Resolutions to Remove Office Allocation and Add Building Height/Density Limits to the Vallco Shopping District site Honorable Mayor Scharf, Vice Mayor Chao, and Council Members Paul, Sinks, and Willey: Please include my comments as part of the public record for Agenda Item 11, In Support of Resolutions to Remove Office Allocation and Add Building Height/Density Limits to the Vallco Shopping District site. On December 4. 2014, a majority Council enacted a terrible disservice upon the community when it chose to honor the financial interests of a non-resident property owner over the needs and interests of the residents who live here . Though public outcry at the time was strong and clear against adding office, establishing unlimited building height, and re,moving half or more of the retail component of a regional shopping center, an emboldened Council was unmoved and enacted those unpopular changes anyway. For nearly 5 years, residents have organized and spoken out against forced urbanization in Cupertino. 4 of 5 of you were elected or re-elected because residents recognize you as the strongest advocates for Democracy and the embodiment of Government-for-the-People-by-the-People. I support removal of all office entitlements at the Vallco Shopping District site. Cupertino cannot add 10,000 more jobs and 2,500 housing units and do anything other than increase displacement and housing insecurity in nearby neighborhoods. While I do not share the opinion that 75 feet is suburban in scale and would prefer maximum building heights that are no more than 45-60 feet, I trust that Council and Staff have given careful consideration to the maximum height and density constraints described in draft GPA-2019-02 and if they are the best that can be done, then I support draft GPA-2019-02 . Sincerely, Liana Crabtree Cupertino resident representing myself only Cyrah Caburian From: Sent: To: Subject: SUZANNE ABECKET <8pawprints@sbcglobal.net > Tuesday, August 20, 2019 3:20 PM Steven Scharf Vallco Please remove the office allocation and approve more housing, maybe up to 500 . We need homes , not office space . Thank you, Suzanne a'Becket, Patriot Way, Cupertino Sent from M ail for Windows 10 Cyrah Caburian From: Sent: To: Subject: SUZANNE ABECKET <8 pawprints @sbcglobal.net > Tuesday, August 20 , 2019 3:22 PM Liang Chao Vallco Please remove the office allocation at Vallco, and approve up to 500 housing units instead, preferably for sale housing. We need homes, not office space . Thank you , Suzanne a'Becket, Patriot Way, Cupertino Sent from Mail for Windows 10 Cyrah Caburian From: Sent: To: Subject: Council, Charles Eaneff < ceaneff@comcast.net > Tuesday, August 20, 2019 3:23 PM City Council For the Public Record of Council Meeting August 20, 2019 -Vallco development Please restore zoning to Vallco to its zoning prior to the toxic events that have occurred since 2014 in a manner that provides ongoing sales tax revenue to the City, and without the addition of even more office space . Developers purchased a shopping mall, zoned for community entertainment, dining, shopping, and health; a thriving major health club has left the City along with the movie theatre and previous shopping opportunities . Purchasers should be able to develop that shopping mall or sell it, the public weal demands restoration of that zoning to balance the already thriving office space of Cupertino. Arguments that it is not cost effective are specious, it abuts some of our most recent shopping, dining, and entertainment development and massive existing office space. The most recent Cupertino elections should provide clear and convincing evidence that residents understand these choices; please listen . Charles Eaneff Larry Way 1 Cyrah Caburian From: Sent: To: Subject: SUZANNE ABECKET <8pawprints@sbcglobal.net > Tuesday, August 20, 2019 3:27 PM Jon Robert Willey Vallco Please remove the office allocation at Vallco and instead approve up to 500 much needed units of housing, which we need more than additional offices . Thank you, Suzanne a'Becket, Patriot Way, Cupertino Sent from M a il for Windows 10 Cyrah Caburian From: S ent: To: BETSY ROSS < betsy3ross@comcast.net > Tuesd ay, August 20, 2019 3 :34 PM Subject: City Council; Cupertino City Manag er's Office Vallco Down sizing Dear City Council and City Manager, Please include us , the Cupertino residents, in the Vallco process; if not , just leave it as it is. Thank you for your interest in representing us. Mary Ross 20719 Celeste Circle Cupertino, CA 95014 Cyrah Caburian From: Sent: To: Subject: Mahesh Gurikar <mgurikar@yahoo.com > Tuesday, August 20, 2019 3:41 PM City Council Vallco GPA Dear City Council Members, The redevelopment plan for Vallco has been going on for years and we have lost a major shopping venue in Cupertino . Vallco was the pride of cupertino in 70's and 80's . We are totally opposed to adding any office or hotel space in Vallco site. We should keep it as shopping /retail area . However due to shortage of housing in South Bay , a limited number of high density housing (no more than 350) can be considered. This should include housing for seniors with adequate facilities . We have been long time residents of Cupertino. So no more offices in Vallco! Please help maintain the quality of life. We request this email to be kept as a part of public records on this issue . Thank you , Mahesh Gurikar Shrividya Gurikar 10486 Anson Ave Cupertino, CA 95014 Cyrah Caburian From: Sent: To: Cc: Subject: Steve, Rick Challman <rickcycles@yahoo .com> Tuesday, August 20, 2019 4 :05 PM Steven Scharf rickcycles@yahoo .com GPA I have no idea how to us e the City e -mail system so I will just e -mail you . Please don 't approve any office space with the GPA as it applies to Vallco . It makes no sense to approve any project that adds more employees than housing , as do each of the proposed a l ternative pro j ects. So my recommendation is n ot to add more office space period . SB35 should consider each city , and its employee/balance rather than the entire Bay Area as a whole. Best , Rick Cha llman Cyrah Caburian From: Sent: To: Subject: Attachments: David Bini <david@scbtc.org > Tuesday, August 20, 2019 4:30 PM City Clerk; Liang Chao ; Steven Scharf; Darcy Paul ; Rod Sinks ; Jon Robert Willey Opposition to General Plan Amendment for Vallco doc03171020190820162342.pdf Dear Mayor Scharf and Council, Please see attached letter. Regards, David Bini Executive Director Santa Clara & San Benito Counties Building & Construction Trades Council Office (408) 265-7643 -david@scbtc.org 2102 Almaden Road, Suite 101, San Jose , CA 95125 David Bini Executive Director es Santa Clara & San Benito Counties Building & Cons truction Trades Council 2102 Almaden Road Suite 101, San Jose, CA 95 US-2 19 ()). Phone 4 08.265. 764 3 . Fax 408.265.2080 Robert Baldini August 20 , 2019 President Boilermakers 549 Brick & Tile 3 Carpenters 2236 Carpenters 405 Carpet & Linoleum I 2 Cement Masons 400 Drywall Lathe rs 9144 E lectricians 332 Elevator Constructors 8 G laziers 1621 Heat & Frost Insulators I 6 Iron Workers 377 Laborers 270 Laborers 67 Millwrights 102 Operatin·g Engineers 3 Painters District Council 16 Painters 507 Plasterers 300 Plumbers & Steamfitters 393 Roofers & Waterproofers 95 Sheet Metal Workers 104 Sign, Display 510 Sprinkler Fitters 483 Teamsters 287 UALocal355 Affiliated w ith: State Building and Construction Trades Council of California California Labor Federation, AFL-CIO Cali fornia Labor C.O.P.E. South Bay AFL-CIO Labor Council -~10, OPEIU 29 ll~ -~ E :SI Mayor Steven Scharf Cupertino City Council 10300 Torre Ave . Cupe rt ino , CA 95014 Re: Opposition to St aff Recommendation to amend the General Plan regarding Vallco Dea r Mayor Scharf and Councilmembe rs: The Santa Clara and San Benito Counties Bui ld ing and Construction Trades Council opposes the staff recommendat ion on item 19-5751 , which will be a step backward in meeting the regional goals for housing . Bo t h market-rate and affordable housing are needed for Cupertino in much higher numbers than the amendments allow. Retaining the flexibility fo r housing and office space could facilitate the development our area requires . An appropri ately dense development of this unique si te will help house the region 's· workforce, add accessible jobs, and has the potential to reduce roadway congestion , and improve transit options wh ile creating t housands of new construction jobs. We both strongly support the potential SB 35 project, and t he idea t hat t he C ity of Cupertino reta in the flexibil ity t o approve an even more progressive project. The staff recommendation will close t hat door. Cupe rti no has the opportunity t o be a leader in solving the housing crisis in Cupertino , and to be an example for surround ing cit ies to do the same . On behalf of the over 30,000 members who live and wo rk in and around Cupertino , I urge the C ity Council to rej ect the staff recommendation . Sincerely, David Bini Executive Directo r www.scbtc.org Cyrah Caburian From: City of Cupertino Written Correspondence Subject: FW : Written Communications Agenda Item 1 Study Session -August 20th 2019 From : llango Ganga <ilangog@yahoo.com> Sent: Tuesday, August 20, 2019 4:34 PM To: Liang Chao <LiangChao@cupertino.org> Cc: Deborah L. Feng <DebF@cupertino.org> Subject: Re: Written Communications Agenda Item 1 Study Session -August 20th 2019 Dear Liang, Thank you for reviewing my comments . Yes, Finch/ Calle De Barcelona is essential connector to CHS . I don't understand the rationale for removing it. Also It is apparent from the Nov 2017 BPC minutes that the BPC adjusted the points to move Regnart Creek and Carmen road bridge to Tier 1. There is already pedestrian sidewalks connectivity in Regnart Creek area. Bike blvd phase 2 will provide the bike connectivity to CHS, which should be prioritized. I don't see a good justification to adjust points to RCT or Carmen . Thanks, llango On Aug 20, 2019, at 3:50 PM, Liang Chao <LiangChao @cupe rti no.org> wrote: llango, Thanks for a recap of the approval process . I had no idea that the BPC in November 2017 added 10 pts for Regnart Creek Trail when it is not exactly close to schools, except maybe CHS. And I am surprised to find out that BPC removed "the project of Finch/Calle de Barcelona." Wouldn't Regnart Creek Trail need that section of the Bike path to reach CHS? That section is one of the most dangerous sections near CHS . 10 points were added to the project of Carmen Road pedestrian bridge too. That section is kind of far from any school, I think. I wonder what's their criteria to make such a decision . I am also surprised that Carmen Road bridge was already on the mind of BPC in November 2018. Somehow it was not in the recommended CIP list for 2018 -19 either. The Carmen Road Bridge project was added at the quarterly revision of the 2018-19 budget . Pretty odd . What's the urgency, I wonder? So, what's the process to add a CIP project midyear? That should be clarified too. Liang From: llango Ganga <il angog@yahoo.com > Sent: Tuesday, August 20, 2019 9·:25 AM To: City Council <CityCouncil@cupertino.org> Cc: Deborah L. Feng <DebF@cupertino .org> Subject: Written Communications Agenda Item 1 Study Session -August 20th 2019 Dear City Council Members, It is good to see that the City has finally documented the process on how projects from 2016 Bicycle Plan and 2018 Pedestrian Plan have been brought to the City Council for consideration . However, this process was not followed for the proposed Regnart Creek Trail (RCT). I have attached the flow chart in Attachment C (from Aug 20, 2019 study session packet) with annotation to illustrate that the proce ss was circumvented while initiating the RCT feasibility study. l. Proposed Regnart Creek Trail was not in 2017-18 CIP study ses sion list of recommended projects (see attached Jun 06 AgendaStudySession CIP 2017 .pdf). 2. The RCT feasibility study was not in recommended project list in 2017 CIP study session, so no input from the community, no input from BPC. 3. No Council direction from 2017 CIP study session on RCT (see minutes of 2017 CIP study session) 4. RCT Not in the agenda packet, nor in the Staff report of CIP approval on Jun 20 , 2017 CC meeting. (See Staff report, Agenda June 20 2017.pdf) 5. The project magically appeared on the day of CC meeting presentation by then Public Works Director Tim Borden . Motion proposed by Council member Sinks and seconded by Council member Scharf (Council member Paul not present). The RCT feasibility study was inserted under McClellan corridor project. A potential violation of Brown Act because RCT was not part of study session or not in the published agenda on June 20th . (See agenda and minutes of Jun 6th and agenda of June 20th 2017 CC meeting). So the attachment C process was not followed for Regnart Creek Trail and the community residents were not given an opportunity to provide their inputs . Another point to note is Regnart Creek trail is a 40th ranking Tier 2 project in 2016 bike plan when the feasibility study was initiated . The 2018 pedestrian plan was not in existence at that time. Then when 2018 pedestrian plan was in development, even though streets next to RCT got the best safety rating and have the b~st pedestrian infrastructure in the City (See 2018 Ped Plan page 12), the BPC added 10 points to school connectivity to move RCT to tier 1 (See minutes of Nov 2017 BPC meeting). All streets in this area have pedestrian sidewalks and are well connected to schools, library and parks . So there is no good reason to adjust the priority for RCT, the city and residents will be best served to prioritize pedestrian projects in areas where there are side walk deficits . As per the AASHTO guidelines bike facilities selection guide, bike blvd projects and bike lanes are suitable for low to moderate traffic streets and residential streets(like La Mar Dr). The separated bike lanes and multi use paths are suitable for major corridors like Stevens Creek Blvd where there is more traffic. For example City of Berkeley and City of Palo Alto have successfully implemented Bike blvd projects in their infrastructure for safe biking. I request the city to be fiscally responsible and prioritize investment of ta x payer dollars in improving the safety on many miles of city wide biking and waking infrastructu re instead of spending millions of dollars on 0 .8 miles of RCT . Note that Bike blvd Phase 2 connects City center to Creekside Park and to Cupertino High School. And prioritize top ranking Stevens Creek blvd separated bike lanes project that is essential for safe biking. I request the City to follow the documented process when initiati ng projects . Prioritize projects where there is best ROI. Residents should always be notified so they can provide inputs . Thanks , llango Ganga Cupertino Resident on behalf of myself. <image00l.jpg> 2 Cyrah Caburian From: City of Cup ertino Written Correspondence Subject: FW : NO downzon i ng at Vallco -Ste i ns Beer Garden From : Ted Kim <ted@steinsbeergarden .com > Sent : Tuesday, August 20, 2019 4:36 PM To: City Council <CityCouncil@cupertino.org> Subject: NO downzoning at Vallco -Steins Beer Garden To Cupertino City Council, I have been following the redevelopment of Vallco from before we signed our lease to open Steins Beer Garden in Cupertino back in 2015 . We are the closest and largest small business adjacent to the empty mall and our primary reason for opening a new location in Cupertino was specifically because of Vallco and the vibrancy, foot traffic and energy the development would bring to the area . That was 4 years ago and I've heard of nothing but red tape, road blocks and litigation preventing this project from finally taking off. It's a shame. My business has suffered as a result of the inactivity. We are kitty corner to a dead mall. Please understand, I am not alone here . We have gotten to know the small business community of Cupertino fairly well in the past 4 years and there isn 't a single one of us who doesn't want/need Vallco to move forward (and quickly). The AMC movie theater which finally closed its doors in August of 2018 was a big hit for us . Overnight we lost on average $1000 a day as a result . Those are hard facts and the decisions made by this City Council are having a real and detrimental affect on our business . The mall is a lifeline for other businesses in the area and had we known no development would be happening, we would have gone to another city. The other issue at hand is affordable housing. Outside of small business owners, especially in the service industry, most people don 't understand the hardships of finding qualified, good staff in this area . Cupertino minimum wage is now $15/hr without any tip credit, or tip exemption in consideration . It has become harder and harder to find staffing in the area . Ask any of the restaurants that oc<,upy this city. We are finding that we need to search for good staff further and further away, mostly in San Jose at this point, since it is more affordable to live out there . We NEED more affordable housing to support not only the new small businesses expected to come into the Vallco development, but to sustain the existing small businesses in this city. When I initially read the number of affordable hous i ng units planned for the Vallco Town Center our company was thrilled . To reduce that number to just 389 units does nothing to help the city. Might as well throw a bucket of fresh water into the ocean. We love being in Cupert i no and want to be a thriving business . We need YOU, the city council to support us, the existing small business community by supporting the Vallco Town Center. I understand there are dissenting views, and some residents would rather keep Cupertino a quiet and sleepy town . Cupertino is not Saratoga, o r Los Gatos . We are the city of Apple, of De Anza College, one of the most premiere and largest Community Colleges in the country, and a city looking to the future. I agree a balance should exist, but to try and subdue what is intended to be a vib rant and energized Downtown doesn't make sense . Vallco is not located in a residential neighborhood . It shouldn't be treated as such . I am happy to meet with you to discuss our experience as a small business in Cupertino and can point to real issues that are developing in this city . Not allowing Vallco Town Center to move forward is one of them that will have dire consequence s for all small businesses . I implore you to allow Sand Hill to move forward with the project as intended -our business is depending on it. With Regards, Ted Ki m Own e r Steins Beer Garden & Restaurant 10088 N Wolfe Rd Ste 130 Cupertino, CA 95014 408.636 .8878 ted@steinsbeerqarden.com www .stei nsbeerga rden .com 2 Cyrah Caburian From: Sent: To: Subject: dicksteinp@aol.com Tuesday, August 20, 2019 4:49 PM City Council Vallco allocations Members of the Council : Please rescind the Vallco "provisional" allocations that were made in December 2014 . We need to start with a clean slate to create a new specific plan with full community input. The only possible exception is to leave the housing element , if that is considered a commitment to the state under RHINA . Phyllis Dickstein Cupertino Resident Cyrah Caburian From: Sent: To: Subject: Council Members, John McCrory <johnmccrory@yahoo .com > Tuesday, August 20, 2019 4:51 PM City Council Vallco Office Allocation We need more housing. We don't need more office space. Adding giant office buildings at Vallco will add more traffic and create more demand for housing . As for the economic feasibility of the project, it is not the city's responsibility to provide a profit for the developer. If Sand Hill needs office buildings to make their project feasible, they should consider turning the project over to another developer! John and Marilyn McCrory Residents Sent from my iPhone 1 Cyrah Caburian From: Sent: To: Subject: April Scott <aprscott@gmail.com > Tuesday, August 20, 2019 4:53 PM City Council Please please please It is time to STOP this narro w sighted, despicable approach to Vallco and supp01i of our community and community members. It is now becoming a huge embarrassment to even say that I live in Cupertino ....... how very sad is that, especially after being here for 35 years , raising my family , and working in the community. Do YOU hav e the same pride in our city? Do you see to the future to make this a respected , highly regarded , inviting, welcoming city ? If so , then you MUST stop this negative energy and narrow- minded approach to Vallco. Let Valko be developed , as designed by the visionaries of Sand Hill Properties , to provide retail , business AND HOUSING!! The time , expense , and negative energy you are putting f01ih to argue is nothing but destructive . I thought you were chosen to represent the voices ........ NOT JUST YOUR VOICE ....... but the people of the city you represent! Don 't scare us away . This is no longer the lovely community we chose to raise our families in . Instead , it has become a city making front-page news ....... for its devisive , negative, nasty, illegal , hateful , discriminatory practices. How pathetic! STOP(!!): gambling with taxpayers' money speaking platitudes to Cupertino's low-income workers while blocking the affordable housing that is so desperately needed preaching about balancing jobs and housing when your plan only worsens the balance building the wall that keeps the people who work in Cupertino and seNe them daily from raising their families inside the city The only way to build the affordable housing Cupertino desperately needs is through hundreds of millions of taxpayer dollars or through an allocation of office use . April Scott 1 Cyrah Caburian From: Sent: To: Subject: Attachments: Connie Cunningham Tuesday, August 20, 2019 4:58 PM Steven Scharf Vallee Specific Plan this evening ; also your July 23, 2019 article on housing issues 2019-07-23 Scharf article re housing .doc Good evening, Mayor, When I first read your article dated July 23, 2019, I sent you a note thanking you for your support of BMR housing . had, also, made more comments, but did not get around to sending them . I have attached them here. You had made a number of good points that I wanted to let you know I agreed with. There are, also, a couple of points that I had questions about. As far as the comment in Paragraph 4 about Vallco having negative effects on BMR housing, I had wondered about since there was a lot of BMR housing included in Tier 2. This is for your information . Sincerely, Connie 2019-07-23 Scharf article re housing .doc San Jose Mercury News Red : Agree /Like Blue : Question Green : Ta ke ac t i on no w? (see pg 3) Paragraph 1: Yay! Mayo r Scharf states that The Cupert i1no City Cou nc il agrees that there is a "need for 'families· to have a safe , decent and affordable place to ca.I I home."' States that we have entitled 1408 housing units, 41 % over our RHNA. .. including multi-family projects with a below market rate component, and a 100% affordable senior housing project. We are also working on housing for the developmentally disabled on city-owned land. Confusing c. --Includes Vallco project, which has a lawsuit ongoing, to be settled when? Units is not defined to be market-rate or BMR or total, and ultimately it is unclear what will happen in the future with these 1408 units . Hopefu l --d. By d iscussing the ELI/DD it sounds l i ke t his project is likely to happen. Paragraph 2. a. states that many cities, including Cupertino have issue with developers not building after they are entitled with RHNA projects, therefore, BMR not built. b. Good--States that Cupertino bel ieves 15% BMR. requ irement is reasonab le Paragraph 3 States we are not slashing housing, but, instead are limiting new office space States that the RHNA entitlement for Vallco is 389 units----- Question: Units is not defined . Are these all BMR units? I think not. States that the Council would "al1most certain ly approve a Spec ific Plan with many more uni1ts . Question: Would these uni t s include enough BMR to meet RHNA? 1 Paragraph 3 ( continued) States what he would like to see in a Specific Plan . --reasonable percentage of BMR housing, with no escape clause What would that look like as a policy? No option for in -lieu fees within our BMR Linkage Fees? --maintain Cupertino's jobs/housing balance (currently one of the best) What would that look l ike as a po l icy? Build BMR houses, but not market rate? Or focus on all housing? Market rate supports BMR. --provide sufficient mitigation fees for school •districts What wou ld that look like as a po l icy? City to ask for $X as a community benefit from each project? OR Increase in-lieu of fees? Paragraph 4 States that the Vallco Tier 2 plan would have had specific negative effects on BMR housing. Did not say why/how that would have happened since there was a significant number of BMR units in the plan. Recogn i zing problem is a key start: St at·es that Cupe rt ino faces an af fordab le housing shortage. States that expensive rental housing has high vacancy rates. States that developers favor in-lieu fees to avoid inclusionary BMR housing. States that those in-lieu fees are too low to purchase land and construct BMR housing somewhere else. (I assume this means in Cupertino.) Quest ion : Would the Counc il bac k a po li cy t hat incr·ease s opt i1onal in-l i'eu1 fees beyond t he amou nt ca lcu1lated as "reaso nabl e" by the BMR Li nkage Fees Update. report? The lega l lim it wou ld a l lo w it , but it was noted that no Californ ia c ity has raised the in-li eu fees anywhere near that amount . Perhaps for an optional amount that might be alright? Question: Also , need to do calculations to determine whether eno ugh money would be r aised . No t e: Th er e is ver y l ittle land in Cupertino to buy. 2 States that Vallco Tier 2 would have created a housing deficit because of the office buildings included in the project. Paragraph 5 States that the SB35 plan would have 1201 BMR units, but states the studios and 1 BD units are not suitable for families with children. Question: As a policy issue, we should consider who would live there. 1201 (or more) new residents would include single people, young couples who could live close to their work, and elderly who could live close to shopping and doctors. Paragraph 6 I agree. --States that affordab le hous ing is compl icated and requires partnersh i ps . States that SB 5, the Affordable Housing and Community Development Investment Program is a good start. Question : We need to be sure that affordable developers in our area meet the criteria for getting these funds. One requirement is likely that the City provide funds as a first step. Our BMR AHF funding stream is limited at this point by the fact that few, if any, projects are moving forward by "pulling permits" to begin construction. States that we need new laws -I f ind these interesting a) to compel developers to build units that have entitled RHNA units b) require new commercial office developments to be accompanied by sufficient new housing c ) A ll ow c i t i es to set BMR in-li eu fees at a r ea li st·i c l eve l Q uest ion : Ca n we move ahead wi th t h is no w? W e mi g h t a lr ead y have t hat ab iili'ty ! I note t hat t he lega l limit is well a bov e th e in-l1ie u fees t hat c it ies norm all y se t fo r d eve lopers. N eed to do ca lcul at ions t o see if t ha t lega l li mit wou l d be enou gh to do som ething now . May or Scharf ends with a strong statement : I ag r ee · Cit ies , and many affordab le ho us in g or ga ni zat ions . have the same goa l of creating housing security for res ide nts. We can find common ground al!l d move forward together. 3 Cyrah Caburian From: Sent: To: Cc: Subject: CUPERTINO Lauren Sapudar Monday, August 19 , 2019 7:53 AM Abby Ayende Beth Ebben ; Benjamin Fu FW: downsize Vallco GPA Lauren Sapudar Executive Assistant to City Manager & City Council City Manager's Office LaurenS @cupertino.org (408) 777-1312 @f)000@>0 From: Yan Yu <yanyu2005@gmail.com> Sent: Friday, August 16, 2019 5:13 PM To: City Council <CityCouncil@cupertino.org> Subject: downsize Vallco GPA Dear Citycouncil, Happy Friday! I am a cupertino resident and I support to downsize Vallco GPA: 1. Allocate ZERO office space at Vallco . We already a gigantic Apple spaceship across the street. Have more office buildings would be disaster to rush hour commute and burden local infrastructures beyond its current capacity. 2. Make the project Mainly for shopping and entertainment. The majority of Cupertino land are occupied by housing and office buildings. We as Cupertino resident, would like to keep the Vallco as shopping and entertainment center instead of re-purposing or rezoning it for office building or housing units. Our city needs a balanced development. We barely has any entertainment or shopping centers left. 3. Leave more green landscape on the ground. 4. As mentioned above, keep the Vallco as shopping and entertainment center instead of repurposing it for other uses. definitely, Keep housing units MINIMAL. please keep my comments as public record. Thanks! Best regards, yan Cyrah Caburian From: Sent: To: Cc: Subj e ct: Lauren Sapudar Lauren Sapudar Thursday, August 15, 2019 7:37 AM Abby Ayende; Benjamin Fu Beth Ebben FW : Some Thoughts on Housing At Vallco Executive Assistant to City Manager & City Council City Manager's Office LaurenS@cupertino .org (408) 777 -1312 -----Original Message----- From : Danessa Techmanski <danessa@pacbell.net> Sent: Wednesday, August 14, 2019 10:41 PM To: Steven Scharf <SScharf@cupertino.org>; JonWilley@cup .org; Liang Chao <LiangChao@cupertino.org>; Darcy Paul <DPaul@cupertino.org>; Cupertino City Manager's Office <manager@cupertino.org> Cc: Ray Wang <rwang0@gmail.com>; Kitty Moore <ckittymoore@gmail.com>; Vikram Saxena <VSaxena@cupertino.org> Subject: Some Thoughts on Housing At Vallco Hi Mayor Scharf, Council, Manager Feng, and Planning Commissioners, I know with all of the noise about the housing shortage that it may be tempting to add tons of extra above our RHNA for insurance or good measure, and that might not be too bad if we had the ability to spread it around so that no one area of Cupertino becomes a mini San Francisco or a total traffic clog. I'd love to see a substantial amount of housing at Vallee, maybe even up to 1200 units, but not 2,400 . It's way too much . Our city was just never laid out to handle that kind of a load in my opinion. I've been thinking about how extreme density affects neighborhoods in places like San Francisco and why I would hate to see that at Vallee . The anonymity, overcrowding, and dirty air aren 't good for people's mental or physical health. Sure, you have super density in places like Paris and New York, but those cities have excellent transit, park spaces, and basic amenities within walking distance. Paris has a park about every three blocks . Look what a pit San Francisco has turned into with dirty needles, trash, and car break-ins everywhere . Do we want our residents to live in overcrowded, anonymous neighborhoods with dirty air and copious amounts of stressful traffic? Maybe we should ask how many of our City officials or residents would like to live in the middle of a 2400-unit housing complex. Let 's see a show of hands! Why build way over our RHNA at Vallco when we still have other developers with open housing allocations? I know that they may be dragging their feet, and a recession is very likely, but they'll want to build on that land eventually. Excessive housing at Vallco is also irresponsible since it's next to one of the most crowded freeway stretches in the Bay Area with no way to mitigate the traffic or obtain funding for transit . Besides, once we add housing over our RHNA (combined Valleo, Oaks, Hamptons, Marina and possibly Homestead lanes), the argument will be that we are short on office! I don't have to lecture you about office, but the poignant question is why even bother building anything at Vallee if the added office will negate the desperately needed housing? What's in it for Cupertino besides a greater housing deficit and more traffic? Wiener's own city sets one of the ugliest examples (besides LA) in the country. CA now has 25 % of the country's homeless people despite that it only has 12% of the country's population . As SF tech workers have migrated over into Oakland the homeless rate there has gone up 47 % in the last two years! Within SF, tech workers have pushed 8,000 people out of their homes, or 1% of the city's popula tion, man y of whom are newly drug-addicted as a way to deal with the pain and shame of being homeless . San Francisco has 4 new full-time positions for sweeping up human feces off the street, and others who pick up 1 used drug needles 12 hours a day. And yet I wonder if MTC will have another $29K holiday party this year at the taxpayer's expense? All of that said however, I believe that the people of Cupertino are lucky enough to have a greater collective humanitarian conscience and will hopefully never become so numb and oblivious to what is happening in the Bay Area . I pray that through our City leadership and guidance we can set an example and never even start down the road to an even greater housing/jobs imbalance . Unfortunately our federal government makes it harder for us by allowing Saudi Arabia and Abu Dhabi to pour more and more money into our most saturated metropolitan tech and business centers instead of into the parts of our country where jobs are needed and housing is more affordable . I was just in Denver and Boulder and the song there is very much the same as here. One last thought, I know that the majority of people don't live and work in the same city, but I do wonder if those numbers couldn't be improved by building housing that better matches the real and particular needs of our local work force . It seems instead that housing levels and types are developer driven . I would guess that there are many Apple employees who would be interested in buying starter condos close to work in Cupertino, but they will likely get tons of apartments and tiny BMR units if .SHP has their way. Is that responsible planning? Why is it that cities are not making the effort to poll and research exactly the types of housing that their local workforce actually needs? I had previously mentioned the idea of getting together with large employers like Apple to do such a poll-although developers will probably balk that it won't "pencil out." It sure seems a lot better than letting Sacramento decide what types of housing we need since they have little if any understanding about our community other than salaries and family sizes . Plan Bay Area seems like it's been as bad as having no plan at all-or worse. I am writing a paper on the forces behind the housing "crisis" and it sickens me to see that none of the 13 major factors that continue to drive our problems are even addressed by bills like SB 35 . $$$$$$$$$$$$ reigns supreme. More on that later ....... Most sincerely, Danessa Techmanski 2 We all know that Cupertino , like the rest of the Bay Area and California in general , has two major problems: 1. Traffic gridlocks and overloads 2. Housing shortage crisis. No question , Cupertino must do its part to help alleviate the crises that literally destroy the quality of our lives bit by bit and make everyone miserable. All ofus support the city to pursue solution(s ) to address both. Cupertino residents are absolutely for housing. We are definitely NOT a group of anti-housing activists as some fringe nut jobs and local media try to portray us as such. It is also a fact that the City of Cupertino has granted 40% more housing allocations to various developers above the RHNA (Regional Housing Needs Allocation) set by ABAG as the state law mandates. We have to work with the state legislature to make the developers moving forward to build these allocated units or they should lose their entitlements if they do not make progresses or ce1iain legally binding milestones as proposed in their development plans. Furthermore the state could conceivably legislate to give the counties or the municipalities the power to purchase or seize the land from developers through "eminent domain" provisions. That is something wo1ihwhile for our state, county and city officials to explore. In the last ten years or so , the growth of number of jobs is more than five times faster than the increase of housing developments even though the recent consolidation of a large number of Apple offices into Apple Park in Cupertino since the company mostly moved its employees around without substantial increase headcounts. With that in mind, Cupertino must stop building any more offices or mixed-use complex with large amount of office space as proposed by certain developers. SOUTH BAY CONSTRUCTION 171 I Dell Avenue Campbell, CA 95008 (4081 379-5500 • www.sbci .com The Concord Group ATTN: Tim M. Cornwell 251 Kearny Street, 6th Floor San Francisco, CA 94108 Dear Mr. Cornwell, We appreciate your inquiry today about the costs of residential apartment and condominium buildings . Our experience lately has been that a Type 5 over Type 1 apartment construction range between $435 to $475 PSF and condo construction range between $525 to $590 PSF based on the architecture, site conditions, city conditions of approval, LEED requirements , and interior finishes. The above building PSF numbers includes the site work as well, which can range between $45 to $65 PSF . Recently we have completed and/or are providing pricing the following projects: 1. Penny Lane in Campbell, CA@ $435 PSF. 2 . Los Altos 8 in Los Altos, CA @$525 PSF (condominiums). 3. Delmas Park in San Jose , CA@ $475 PSF (this project is pending). If you should have any questions please feel free to call me at (408) 489-8461 or contact me by email rfu rtado @sbci.co m . Sincerely , ~ Richard Furtado , Partner SOUTH BAY CONSTRUCTION A REPUTATION BUILT ON TRUST. DEVCON CONSTRUCTION INCORPORATED Gene ral Buildi ng Co ntracto rs 690 Gibra ltar Drive Milpita s , CA 95035 Phone (408 ) 942-8200 Fa x (408) 262-2343 Lie . #399 163 August 16, 2019 The Concord Group 251 Kearny Street, Sixth Floor San Francisco , CA 94108 Attention : Tim M . Cornwell Reference : Bay Area Residential Projects Dear Tim , Per Nandy Kumar request we write this letter. Devcon Construction, Inc . is currently building residential apartment projects in the bay area including garage and site for the price of $520-$560 per SQ/FT. The site and garage cost varies , but the site cost is $25-$65 per SQ/FT and garage is $110-$220 per SQ/FT which is included in the total number of $520-$560 per SQ/FT . Please contact us with any questions Very truly yours, DEVCON CONSTRUCTION , INC . ~ Daisy Pereira Sr. Vice Presiden t DP :cb Tim Cornwell Principal The Concord Group TRUEBECK CONSTRUCTION 251 Kearny Street, Sixth Floor San Francisco, CA 94108 Re: Apartment Construction Historical Cost Dear Tim, We completed some internal research on Type 5 residential (apartments) over type 1 construction. In today's dollars, budgeting $415.00/SF to $460.00/SF would be appropriate with limited design information. For condominiums we are seeing a 6 to 8% premium. This range would represent a level of finish for industry standard apartment construction. Currently we have a several Bay Area projects we a providing budgeting for -Project A $415/SF, Project B $460/SF, and Project C $489/SF. These costs are based on mid-rise wood framed apartment construction, include an allowance for an above grade single level parking podium at $125.00/sf, and sitework at $20/SFsite. When more design information is available, we can provide detailed estimates to test this cost assumption. Nick Pera Chief Operating Officer Truebeck Construction RAISE THE BAR . 9 51 Mari n ers Islan d B lvd., St e. 700, San Mateo, CA 9 44 04 1 650 .227.1957 , 6 5 0 .227.1958 CA Li cense# 903798 truebeck.com August 20, 2019 Cupertino City Council Good evening, Mayor Scharf and Council Members, My name is Jean Bedard, and I live in Cupertino. I am here to ask you to vote NO on the General Plan Amendments for Vallco that you are considering tonight . First, I am appalled by the lack of noticing for these agenda items. Downzoning Vallco significantly affects the entire city of Cupertino -over 20,000 voters and over 60,000 residents. Yet NO, repeat NO, community meetings have been held on the impact on the entire community. These resolutions are being considered with a paltry 776 email addresses, and only 96 Public Hearing notices mailed to property owners within 300 feet of the site. What about renters? About 40% of Cupertino residents are renters, so they aren't important? What about seniors who don't have computers? They don't count either? Yes, there was a formal legal notice in the Cupertino Courier, but there are a lot of unread newspapers in driveways. In contrast, last year's community-driven process involved postcards to the entire city, at least 10 public meetings and interviews. Councilman Willey, you have advocated for more extensive notifications -why is this even being considered without adequate noticing? Secondly, the economic analysis provided to the city by Hausrath Economics Group makes no sense. I'm not an expert at analyzing commercial viability, but why is this report based on 13 acres, when the site is 50 acres? Shouldn't the site be developed as a whole? What about the other 37 acres? The marginal feasibility is based on the assumption that those 13 acres are solely for sale condominiums with NO multi-family rentals which are desperately needed in Cupertino. In addition, the analysis caps BMR housing at 15%, but the council has expressed a desire for 20 to 25% BMR housing which would clearly make the project economically unviable. Please vote NO tonight on these resolutions to downsize Vallco. They make no legal or economic sense. Thank you.