Exhibit CC 03-31-2216 Item #1 Cupertino Elections Code 9212 Report on Proposed Initiative PresentationCupertino
cc 3/31/16
Item No. 2
Elections Code 9212
Report on Proposed Initiative
CUPERTINO
March 31, 2016 Se if el
CONSULTING INC.
Presentation Overview
• Summary of Initiative
• Approach to 9212 Analysis
• Summary of Findings
• Technical Team
• Seifel Consulting, Inc.
• David J. Powers & Associates, Inc.
• Greensfelder Commercial Real Estate LLC
2
Summary of Initiative
Policy LU-3.0: Community Form
The maximum heights and densities for the special areas shown in
the Community Form
Diagram (Figure LU-1) shall not be exceeded. Outside of the Special
Areas shown in Figure LU-1, building heights may not exceed
45 feet. Building height shall be measured to the highest point of the
building, excluding light poles, antennae, minor mechanical boxes or
roof vent protrusions which are not easily visible. A below-grade
structure is not counted towards building height. For any project of
over 50, 000 sq. ft. of building area, maximum lot coverage shall not
exceed 70%.
No provision allowing additional height or density, modifying
maximum lot coverage, building plane, or minimum setback to relax
the standards set in this General Plan, other than those mandated
by state law, shall be allowed.
3
Summary of Initiative-Policy LU-3.0
P_Q.~QY_ L U-3 ~Q~ (:;Qm rn u n i!y_f osm
The maximum heights and densities for the special areas shown in the
Community Form
Outside of the
Special Areas shown in Figure LU-1,
uildi!]9_ heights ma not exceed 4§. (ee(
BTiirctii1gh e1g f'rrst-,zy.---~rirX · sure to e mgh est point onhebudaing,
excluding light poles, antennae, minor mechanical boxes or roof vent
protrusions which are not easily visible. A below-grade structure is not
counted towards building height. For any project of over 50 , 000 sq. ft. of
building area, maximum lot coverage shall not exceed 70%.
No provision allowing additional height or density, modifying maximum lot
coverage , building plane, or minimum setback to relax the standards set in this
General Plan. other than those mandated by state law, shall be allowed.
4
Community Form Diagram (from page 5 of the Initiative)
gu LU
COMMU~~ FORM DIAGRAM __ ..,_,
Upto !SWf'l!tt...,._,.peo~el"""'&..ldUMM;tp
'S"""'*~.0.~"'"""-~•-4 1'oH ... .....,_ --lD'""-,,,.cs•---:i. ..... --.. __ _,,
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_._ .... .......,
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bao/~114 ---.......... _ , _V..,Gotowoy 1 .... .,., .... .......__~a.a. ........... .... --_ _,_IW --..... ..... ........_......,~
n.-.....
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5
General Plan Special Areas
("'........ Los Aho•
I /\ ' ) I . '--
( I , \_.. f \. \ ,, ....,
Homestead
Special Area
Suvly<ole
Nine areas located
along major
mixed-use corridors
identified as key
focus areas for
future development.
-r"' ', . ....._, '
I ', I J ' ;..-.._ Com mun ity Recreatio n Node
South Vallco P Mk
Gat eway
I ,._,'\ \ ,,..-.._j--·-_,. )I
I ,,''I ,-.., ~.......... !/' <'"
' I i ', : / '~ l ./ / I
I · ' I
"J --_l / :
'-----' I / I '
Monta Vista
Village Special
Area
f I
1 ~---~
'"I I ,
I : ' l ' I -. -----_._,
Bubb Road
Special Area
De Anza College Node
~
Heart of the City ~
Special Are a
-... Node
............ , _____________________ .}
5anios.
l -1----\
I J I ---\--------
c South De Anza
Special Area
.....
\
Source: Cupertino General Plan Community Vision
2040, Chapter 2 pg. PA-5, Figure PA-1
' I I I ..... _1
r """ .....,.
Legend
Ci ty Boundary Special Are a s
-----Urban Service Arna Boundary -Heart of the City
t
Sphere of In fluen ce
Bou nda1y Ag1 eemem Line
Unincorporated Aroas
Y M I M*
0 1000 1000 l lDl ko..t
soo 10::0Met4'S -==-=
-Va llco Shopping Dm n ct
-North Valko Park
North De Anza
South De Anza
__ _ Hom e•tead
-Bubb Road
-Monta Vi sta Vi llag 6
General Plan Neighborhoods
Twelve areas located
outside of Special
Areas, which are
generally residential
with neighborhood
amenities.
,.
{
< \ -r-'\ I '\
I ~_,,...-L ............ ..
I
I
I
I
I l //
'-,I ,
I ----'
I
I
I
I
l_
lnsp r ation
He1ohts
,,
\
Source: Cupertino General Plan Community Vision
2015-2040 , Chapter 2 pg. PA-19 , Figure PA-2
Legend
C ity Boundary
-----U1ban Service A1 ca Bou11dt1ry
Sphere o f lnrlu en eo
Bo undary Agroornent line
Unincorporated Areas
ii
~
Neighborhoods
Oak Va l ley
Cresto n ·PhMb1p
c:J hu piration l l<-119hts
Mon 1aVista N 0 1tl-t
O-' IMl14
t o 1000 1000 JOOOffft c::J Mont aVis l aSouth .,,., ~ soo 1000 M•1~s c:J Hornes tea d Vill a
CJ Ga1 de n Ga te
Jo llyman
__ N o rth Blaney
-South Blaney
c:J Fairgrove
r::::J Rancho Rin conada
-,
iunnyvale
Sant• Clar;,
Rancho
inconada
7
'"----------
Summary of Initiative-Policy LU-3.0
Poji~y_ Ll)._-JO:_Cor:nmu[lity Form
The maximum heights and densities for the special areas shown in the
Community Form
Diagram (Figure LU-1) shall not be exceeded. Outside of the Special Areas
shown m Figure LU-1. buildmg heights may not exceed 45 feet. Building height
shall be measured to the highest point of the building, excluding light poles.
antennae, minor mechanical boxes or roof vent protrusions which are not
easily visible. A below-grade structure is not counted towards building
height. For any project of over 50, 000 sq. ft. of building area, maximum lot
coverage shall not exceed 70%.
No provision allowing additional height or density,
modifying maximum lot coverage, building plane, or
minimum setback to relax the standards set in this
General Plan, other than those mandated by state
law, shall be allowed. --------------
8
Vallco Shopping District Special Area
Adopted General Plan
The City envisions a complete redevelopment
of the existing Val/co Fashion Mall into a
vibrant mixed-use "town center" that is a focal
point for regional visitors and the community.
This new Val/co Shopping District will become
a destination for shopping, dining and
entertainment.
9
Vallco Shopping District Special Area
Initiative
Preserve and enhance the Val/co Shopping
District as a local and regional retail, hotel,
dinning and enterlainment commercial
destination, and a focal point for the
community.
10
I
Major Land Use Changes at Vallco
• Eliminates 2 million sq. ft. of office space
• Eliminates 389 Residential Units
(60°/o reallocated elsewhere)
• Requires 1.2 million sq. ft. of commercial
use, to be maintained as minimum
(and maximum)
• Imposes 45 ft. maximum building height
11
Comparison of Maximum Allowable Development Citywide
Table 11.1
Comparison of Citywide Development Buildout in 2040 by Land Use Category
for Adopted General Plan and General Plan With Initiative
Land Uses Citywidea
Adopted General General Plan Increase I (Decrease)
Plan with Initiative with Initiative
Residential (units) 23 ,294 23 ,148 (146)
Commercial (sq. ft.) 4 ,430,982 4,430,982 No Change
Office (sq. ft.) 11 ,470 ,005 9,470,005 (2 ,000 ,000)
Hotel (rooms) 1,429 1,429 No Change
a. As described above , this table presents the maximum allowable buildout under each scenario , which is
defined to include existing development "on the ground ," projects approved as of December 10, 2014 , and
potentially allowable future development through 2040. This definition is used consistently throughout this
Report .
12
Comparison of Maximum Allowable Development
in Special Areas
Allowable
Buildout by
Land Use
Residential
(units)
Office
(sq. ft.)
Commercial/
Retail (sq. ft.)
Hotel (rooms)
Table 11.2
Comparison of Citywide Development Buildout in 2040 by Land Use
for "Special Areas" Identified in General Plan
"Special Areas" Identified in General Plana
Vall co Heart of North Vallco Other Areas
Shopping the City
District
~ ~ ~ 19,946
0 1,898 1,304
2,QQQ,QQQ 2,464,613 3,069,676 3,935,716
0
1,207,774 2,145,000 133,147 945,061
339 526 315 249
a. Strikethrough and bold text indicates changes proposed by Initiative.
CITYWIDE
TOTAL
l3,294
23,148
11,479,QQS
9,470,005
4,430,982
1,429
13
Summary of Scenarios Analyzed in 9212 Report
Table 11.8
Summary of Development Scenarios
Without Initiative With Initiative
Scenario Adopted Adopted General Plan General Plan
General Plan General Plan with with Initiative with Initiative
2015 Sand Hill Assuming Vallco Assuming Vallco
Proposal as Enhanced Mall with 2016 Occupancy
Description Buildout of Buildout of the Buildout of the Buildout of the General Plan
the adopted adopted General Plan, General Plan as as amended by the Initiative,
General Plan including the 2015 amended by the assuming Vallco remains
Sand Hill Property Initiative, assuming largely in its current state with
Company's proposal Vallco is renovated, the projected occupancy of
for the Vallco Site (The improved, and 26 percent.
Hills at Vallco) successfully occupied
14
Comparison of Development Buildout
Under Development Scenarios
Table 11.9
Comparison of Development Buildout Under the Development Scenarios
Without Initiative With Initiative
Development Buildout Adopted Adopted General Plan General Plan
General Plan General Plan With Initiative with Initiative
With 2015 Assuming Vallco Assuming Vallco
Sand Hill Proposal As Enhanced Mall with 2016
Occupancy
Residential -
Housing (units) 23,294 23,294 23,148 23 ,148
Non-Residential -
Office (sq.ft.) 11 ,470,005 11,470,005 9,470,005 9,470,005
Commercial/Retail (sq.ft.) 4,430,982 4,430,982 4,430,982 4,430,982
Vallco (Allowable) 1,200,000 650,000 1,200,000 1,200 ,000
Vallco (Assumed Occupancy) 1, 104,000 598,000 1,104,000 312,000
Other Retail/Commercial 3,230 ,982 3,780 ,982 3,230 ,982 3,230,982
Hotel (rooms) 1,429 1,429 1,429 1,429
Source: City of Cupertino
Change in
General
Plan
Buildout
With
Initiative
(146)
(2,000,000)
-
-
-
-
-
15
9212 Analysis Components
Land Use and Housing per section 9212 (b)(2 & 3)
• · Effect on the internal consistency of the City's General and Specific Plans,
including the Housing Element, consistency between planning and
zoning, and any limitations on city actions.
• Effect on the use of land, the impact on the availability and location of
housing, and the ability of the city to meet its regional housing needs.
Development Patterns per section 9212 (b )(6 & 7)
• Impact on agricultural lands, uses of vacant parcels of land, and
developed areas designated for revitalization and existing business
districts.
Economic Development per section 9212 (b)(5)
• Impact on the community's ability to attract and retain business and
employment.
16
9212 Analysis Components (cont.)
Infrastructure per section 9212 (b)(7)
• Impact on transportation (traffic congestion), schools, parks and
open space, other public services and utility infrastructure.
Infrastructure Funding per section 9212 (b)(4)
• Impact on funding for infrastructure of all types, including, but not
limited to, transportation, schools, parks, and open space.
Fiscal per section 9212 (b )( 1)
• Impact on the City's fiscal conditions.
17
Potential Effects on Land Use and Housing
• Reduce the amount of housing (by 146 units) and office space
(by 2 million sq. ft.) that could be developed in the City.
• Prevent the revitalization of Vallco as a new pedestrian oriented,
mixed-use "town center," which has the greatest likelihood of
success given today's competitive retail environment.
• Lock into place new development and building standards for
maximum building height and density, maximum lot coverage,
building plane, and minimum setbacks throughout the City.
• Increase maximum heights in the City's residential neighborhoods
from 30 to 45 feet.
18
I
Potential Effects on Land Use and Housing
(continued)
• Create potential, but likely not insurmountable,
inconsistencies between the City's General Plan,
Zoning Ordinance, Specific Plans, and Housing
Element.
• Reduce the total number of units that can be
constructed in the City and prohibit housing in the
Vallco Shopping District Special Area.
• Modify the City's Housing Element, which reduces the
City's flexibility where housing can be located and how
the City meets its affordable housing needs.
19
Potential Effects Related to Voter Approval and
City Council Discretion
• Require voter approval for any further changes to development allocations
for Vallee and to other policies and provisions enacted by the Initiative.
• The City would be required to pay for the costs of any election required by
the Initiative.
• Estimated costs for holding an election depend on whether the City places
the measure(s) on the ballot as a "stand-alone" or "consol idated" election .
• Stand-alone election costs on a single ballot measure would be
approximately $431,000.
• Consolidated election costs (i.e., an election on a date the County is already
conducting an election) would be approximately $106,300.
• These costs are estimates only and do not include any staff time or other
expenses the City might itself incur.
• Allow changes by the City Council without voter approval to the
development allocations for other areas of the City or for any
General Plan provisions not enacted or amended by the Initiative.
20
Potential Effects on Development Patterns
• Primarily affects the future development of Vallco.
• Could increase maximum building height in areas outside
Special Areas (i.e. Neighborhoods) from 30 to 45 feet which
would allow taller buildings in neighborhoods.
• Would not have a direct impact on agricultural uses because
the City has minimal land in agricultural uses and does not
propose any specific changes to policies that would affect
agricultural land .
21
Potential Effects on Economic Development
Office
• Eliminate office space entirely at Vallco Shopping District and
reduce office space by 2 million sq. ft. Citywide, counter to
the City goals of attracting and retaining businesses.
Retail
• Maintain the existing 1.2 million sq. ft. of existing
commercial/retail at Vallco, as both a "minimum" and a
"maximum," thereby reducing flexibility to adapt to changing
market conditions.
22
Summary of Retail Trends
• Vallee has been declining for many years, due to consumer trends and its position
in a very competitive retail trade area with strong shopping alternatives.
• Mall retailers who do a better job of differentiating themselves from competitors
are consolidating into fewer, high performing Class A regional malls
• An increasingly wide divide is developing between higher performing Class A malls and
lower performing Class C malls of which Vallco is an excellent example.
• Department stores and big box retailers have consolidated, and many retailers have
experienced financial and operational challenges, including Macy's, Sears and JC Penney ,
all of which were anchors at Vallco before their closure.
• Current retail trends point to Valley Fair, Santana Row and Stanford Shopping
Center continuing to dominate the regional retail market because all evidence
points to the market having determined there is no need for another regional mall
serving the Cupertino trade area.
• Retail must constantly reinvent itself to stay "fresh" and relevant to customers.
• The addition of residential and office space in a redeveloped Vallco provides greater
opportunities to create a dynamic environment and greater critical mass to support an
active retail component.
• An owner or developer with both expertise and deep financial capability is needed to
execute a repositioning strategy at Vallco.
23
Ch $8.00
c:::
0
:?: $700
$600
rJl $500 ~
(ti
U)
en $400 :::0 co >< ·CO $300 .....
$200
$100
$0
Figure 111.3
Historical Trend of Taxable Sales of
Comparable Shopping Centers (In 2015 Constant Dollars)
--·vanco · Retail
-•Valley Fa ir Mall
--Stanford Shopp i ng Center
--
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
24
Analysis of Likelihood of Retail Success of
Alternative Development Scenarios
• Adopted General Plan-A mixed-us e pr oject with a sm aller ret ail component has
a much higher likelihood of success than preserving the existing Vallco mall in its
present configuration.
• Adopted General Plan With Sand Hill Proposal-Allowing for a mix of land uses
on the Vallco site has the greatest likelihood of success. The Sand Hill Proposa l
that includes 800 residential units and 2.0 million sq. ft. of office space has the
potential to create a dynamic environment.
• General Plan With Initiative Assuming Vallco as Enhanced Mall -This
scenario is not a feasible option from either a market or development perspective.
Something substantively new and differentiated from competing projects must be
created at Vallco in order to draw customer traffic.
• General Plan With Initiative Assuming Vallco With 2016 Occupancy-Vallco in
its present configuration is unlikely to generate the incremental income required to
justify investment in a significant renovation. Without significant investment in
redevelopment, Vallco is more likely to deteriorate as opposed to improve beyond
its present 2016 level of occupancy (314,000 sq. ft. retail occupied).
25
Infrastructure and
Infrastructure Funding Impacts
• Reduces infrastructure needs and impacts from future
development, due to reduced level of allowable development at
build-out that results in a corresponding decrease in future
residents and employees.
• Removes financial incentives for a developer or property owner to
voluntarily offer to enter into a Development Agreement to
undertake the mixed-use development of Vallco and potentially
provide significant community benefits and infrastructure
investments as part of the Development Agreement.
• Community benefits offered by Sand Hill would not be realized,
including: new 700-student elementary school and a high school
innovation center, two "town squares," and a 30-acre green roof with
publicly-accessible active and passive open spaces at Vallee.
• Reduces infrastructure funding but the impacts on infrastructure
from future development would be less under the Initiative.
26
Fiscal Impacts
Figure 111.2
Distribution of City's Fiscal Revenues
Fund Reve.nues
25°/o
Licenses &
Permits
9o/o
Utility Tax
5°/o
TOT
7°/o
Sales Tax
30°/o
27
rfJ $600
t:
0
:s $500
(J) ~00
(1)
('ll
en
41 $300 ..c
('ll x
~ $200
$100
$0
I-
Figure 111.4
Historical Trend of Taxable Retail Sales in City of Cupertino
(in Constant 2015 Dollars)
~ I •Remainder of City (Re tail )
I I • Vallco -All Othe r Retail I
I I Vallco -Misc Re ta il
.
• Vallco -Ap parel Stor es
fj.'.i~~~~t;;\~~,'..-~'~'"""·.'-~.;-·.{ ' .. :'~~ ~,,;~;-~ .'~:.;~·.~))l~~~~.:.'i"t~f~ .::r.j.~~.'.i,~~' ~-~~"'··'~· .. ~tti: ,•;:,~ii:~~,~~t~ _.... ~' .., Vallee -Res tau ran t
20 06 2007 200 8 2009 20 10 20 11 20 12 20 13 20 14 2015
Fiscal Year Ending
28
Table 111.6
Summary of General Fund Annual Revenues
Without Initiative With Initiative
General Plan
Adopted General Plan With Initiative
General Plan With Initiative Assuming
With 2015 Assuming Vallco With
Adopted Sand Hill Vallco As 2016
General Plan Proposal Viable Mall Occupancy
Net Increase in General Fund (GF) Annual Revenues
Sales Tax
From Retail Space a $1 ,750,000 $2 ,650,000 $1,480,000 $340 ,000
From Business-to-Business (B-to-B) Transactions b $1.020.000 $1 020 000 $220,000 $220,000
Sales Tax Subtotal $2,770,000 $3,670,000 $1 ,700,000 $560,000
Property Tax c $1,580 ,000 $1,730,000 $960,000 $960,000
Transient Occupancy Tax (TOT)d $2,360,000 $2,360,000 $2,360,000 $2 ,360,000
Total Net Increase in GF Revenues $6,710,000 $7,760,000 $5,020,000 $3,880,000
Comparison of Fiscal Impact of Various Scenarios to Adopted General Plan
Difference in GF Revenues NIA $1,050,000 ($1,690,000) ($2,830,000)
a. See Appendix 7 , Table 2 .
b . See Appendix 7 , Table 3 .
c . See Appendix 7 , Table 4 .
d . See Appendix 7, Table 5 .
Source : City of Cupertino , Seifel Consulting Inc .
29
Summary of Fiscal Impacts
• Fiscal revenues from 2 million sq. ft. of office space at Vallco would likely exceed the
City's service costs because of the typical fiscal revenues generated by businesses
that occupy new office space in Cupertino.
• Under the Adopted General Plan, retail at Vallco is much more likely to be successful
and generate a higher level of taxable retail sales per square foot, which would result
in a higher ratio of fiscal revenues compared to fiscal costs.
• 146 unit difference in residential development would not likely change the City's fiscal
costs, as the number of housing units citywide would only decrease by 0.6°/o, which
would not significantly change the cost of City services.
• City would need to pay for the continued cost of potential stand-alone or consolidated
elections, which would range from about $106,000 to $431,000 in direct costs for
each election plus the City's staff time to conduct the election.
• City would likely incur greater City Attorney and outside counsel costs in order to
interpret and potentially implement this proposed Initiative, as well as any future
Initiatives that might occur as the result of this Initiative.
30
Summary of Potential Impacts
• Reduce the amount of housing (by 146 units) and office space (by 2.0 million sq. ft.)
that could be developed in the City
• Prevent the revitalization of Vallco as a new pedestrian oriented, mixed-use
"town center ," which has the greatest likelihood of success given today 's competitive
retai l environment.
• Lock into place new development and building standards for maximum building height
and density, maximum lot coverage, building plane, and minimum setbacks.
• Increase maximum heights in the City's residential neighborhoods from 30 to 45 feet.
• Create potential, but likely not insurmountable, inconsistencies between the City's
General Plan, Zoning Ordinance, Specific Plans, and Housing Element.
• Reduce the total number of units that can be constructed in the City and prohibit
housing in the Vallco Shopping District Special Area.
• Decrease job and business opportunities, preventing the City from attaining its
economic development goals.
• Remove a key incentive for a developer or property owner to enter into a Development
Agreement to achieve mixed-use development of Vallco and provide significant
community benefits and infrastructure investments.
• Decrease potential revenues from the City's major source of General Fund revenues-
business-to-business sales tax, retail sales tax, and property tax revenues
31