CC 07-21-20 Item No. 24 Draft letter to HCD re RHND_Desk ItemDiscussion Draft
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
July 21, 2020
Governor Gavin Newsom
State of California
1303 10th Street, Suite 1173
Sacramento, CA 95814
Gustavo Velasquez, Director
California Department of Housing and Community Development
2020 West El Camino Avenue
Sacramento, CA 95833
Dear Governor Newsom and Director Velasquez:
We urge HCD to take the time to re-evaluate the Final Regional Housing Need Determination
for the Association of Bay Area Governments, to work in good faith with your stakeholders to
address factors that motivate real solutions, and to take into account the long-term effects of the
Covid-19 pandemic, as well as the negative effect that unattainable RHNA numbers will
ultimately have on the construction of requisite numbers of additional affordable housing.
It would be inadvisable to adopt policies that will worsen housing insecurity for lower-income
Californians. Working together to identify achievable solutions (rather than setting up situations
that will, with near-certainty, make everyone’s affordability-, equity-, and accessibility-related
problems considerably worse), is the course that we urge you to take.
The 441,176-unit “Final Regional Housing Need Determination” was based on the statement that
HCD had considered all the information specified under California Government Code 65584.01
(c). That section refers to section 65584.01 (b) (1) (G) which clearly states “the council of
governments shall provide data assumptions from the council’s projections on the relationship
between jobs and housing, including any imbalances between jobs and housing”. Section
65584.01 (c) (1) further states “the region’s existing and projected housing need shall reflect the
achievement of a feasible balance between jobs and housing within the region.” The RHND is
based on an aggressive and completely unrealistic job growth projection for the Bay Area and
Silicon Valley, even before Covid-19.
We are witnessing the Covid-19 pandemic permanently changing jobs and housing patterns.
Companies are already reducing their office space requirements due to a permanent increase in
remote working. Remote working increases productivity, reduces transportation costs, and
allows the modification of salary structures to reflect lower cost of living in other areas.
With respect to the housing market, the exodus from high-cost areas has already had an effect on
rental housing costs in the Bay Area, with rents, which had already been falling in most cities,
CC 07-21-20 Item No. 24
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experiencing even steeper declines as the market-rate housing glut worsens. The long-term
decline in market-rate rents will continue for the foreseeable future.
When considering our public-health crisis, however, the critical factor is keeping everyone
healthy. Due to issues related to disease transmission, as it directly relates to housing density,
people are now more reluctant to live in densely packed housing. And densely packed housing is
the only possible type of housing in completely built-out cities with no empty land.
Heeding the realities of economic incentives and behavioral patterns is critically important in
other contexts as well, if we are to be successful in addressing the affordable-housing issue
without making the crisis worse.
A mandate of clearly unattainable housing goals will in fact cause a decrease in the construction
of new Below Market Rate housing for families. Many Cities in California, including Cupertino,
have inclusionary housing requirements. In Cupertino, we require 15% inclusionary BMR
housing for rental projects and recently increased our inclusionary requirement for ownership
projects to 20%. A 2019 analysis found that BMR inclusionary requirements beyond these levels
would be economically infeasible. We have also established commercial linkage fees for non-
residential developments at the maximum extent economically feasible, which is still well below
the fees that would be justified by project impacts.
In our City, BMR housing must be built to the same size and quality standards as the market rate
housing in the same project. There is no option for a developer to pay in-lieu fees. The push for
inclusionary zoning in rental housing has been one that Cupertino had supported even in pre-
Palmer days. Yet even with the much-appreciated State legislative fix to allow for inclusionary
zoning in rental housing, we cannot convince the development community to build this
additional below-market rate housing. Imposing unrealistic mandates moves us in the wrong
direction. We need and ask for, instead, solutions for the development community to be
encouraged to build BMR housing.
We further ask that HCD find ways to work with communities to set and deliver realistic goals
for housing production, and particularly the production of affordable housing. Delivering
economically feasible projects which do not worsen overall housing pressures is critical. The
impact of commercial and retail space in mixed-use projects usually create a much greater need
for housing than the housing components of the projects provide.
When cities are given unattainable RHNA goals, legislation such as SB-35 will be triggered once
a jurisdiction cannot meet its affordable housing goals, and as little as 10% affordable housing
could be submitted rather than, for example, the higher 15% requirement that is already in place
in Cupertino. In addition to this, when a project qualifies under Density Bonus Law, it will be
able to take concessions that reduce the size of the BMR and affordable units, and be able to
build the BMR units to lower standards.
These are not wild theories or conjectures. In 2018, the City of Cupertino ministerially approved
an SB-35 project. Among the below-market rate units of this mixed-use project, which contains
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approximately two million square feet of commercial office space in addition to retail, there are
no units at all for families, as every unit is either a studio or junior one bedroom.
Cupertino’s RHNA for the 2014-2022 planning period is 1,064 units. Our Housing Element
planned for 1,400 units, about a 30% safety margin. We have five Housing Element Sites. One
site, with 19 units (originally 11 units) has been completed and occupied as an 100% affordable
senior apartment building. One project with 600 units, and one project with 200 units, have been
approved but the property owners are not building. Another Housing Element site, with 200+
units is going through the approval process.
Besides working with us to deliver affordable-housing solutions, we also need to look at transit.
While we will continue our efforts to work in good faith to deliver affordable housing solutions
which are a net benefit with respect to alleviating the shortage of below-market rate units, transit
is key to our collective ability to solve this crisis. People will be able to, in the long term, reach
more affordable housing if and only if we have modern transit infrastructure. Our City and area,
and indeed, our State and the Country lack this, and we ask for a focus on making sure that the
appropriate infrastructure is considered and a plan for delivering it put into place. Such a
commitment will allow us to be able to derive a real and sustainable fix to housing pressures.
Finally, please consider equities. We have a severe lack of school funding relative to local and
State averages, to speak nothing of that funding which would be necessary to accommodate
many additional students. Our local K-8 district, Cupertino Union School District, is one of the
lowest funded districts in California on a per-pupil basis. School impact fees are capped at a
level far too low to construct new classrooms or new schools. Voters are tapped out when it
comes to approving school parcel taxes; in March 2020 every school parcel tax in Santa Clara
County failed to gain the necessary two-thirds majority. To mandate huge quantities of new
housing, without contemplating new state funding for education, is both irresponsible and
inequitable. Please consider the consequences of constructing vast amounts of new housing in
the absence of funding for necessary infrastructure that is already severely under-financed.
We ask for a delay in the allocation process in order to consider adequately the long-term effects
of the pandemic which remain uncertain at this time. We acknowledge the affordable housing
shortage in the State of California and our region. However, we cannot take actions that make the
housing crisis considerably worse while at the same time not providing plans or the necessary
funding for new educational and transportation infrastructure, while the very real possibility of
jeopardizing the general population’s health and well-being is also unfolding rapidly and in real
time. Calm foresight now will save many dollars and lives down the road.
Sincerely,
Mayor Steven Scharf On Behalf of the City Council of the City of Cupertino
cc: Senators Wieckowski, Beall, Hill, Monning
Assembly Members Rivas, Kalra, Chu, Berman, Low, Stone
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Therese Watkins McMillan, Executive Director, Association of Bay Area Governments
Seth Miller, Peninsula Division, League of California Cities
Megan Kirkeby, Acting Deputy Director, HCD