Letters to Elected Officials near Cupertino and Beyond: January 2018

From: Liang-Fang Chao
Date: Tue, Dec 12, 2017 at 10:22 PM
Subject: Fwd: SB 35 - implementation process and other questions.
To: City Council <citycouncil@cupertino.org>, "City of Cupertino Planning Dept." <planning@cupertino.org>, David Brandt <davidb@cupertino.org>, City Attorney's Office <CityAttorney@cupertino.org>

Dear Mayor Paul, City Council Members, Planning Commissioners and Planning Staff,

I sent a series of questions on SB 35 to the staffs of Evan Low and Jim Beall.

They have gotten back to me with the answers below.

Please pay attention especially to the following passage:

“SB 35 requires a locality to follow-through on planning decisions that the city has already made. The city, in the development of its general plan, housing element, zoning ordinances, etc, has already engaged in a robust community process (complete with environmental reviews) to plan for and welcome people into their community. This is a locally controlled decision-making process as to how many families can be permitted to live in various locations throughout the city. Included in that decision-making process is how many people the city can accommodate with its services. SB 35 does not remove the requirement for a housing development to comply with applicable zoning ordinances, the housing element, the general plan, or other planning documents. (See Govt Code Section 95913.4(a)(2)). “

There was NO "robust community process (complete with environment review)" to allow 2400 housing units at Vallco Shopping Mall site. PERIOD. There was NO "robust community process (complete with environment review)" to label the density of Vallco Shopping Mall site as 35 units/acre, regardless of when the standard 35 units/acre was placed. A density should not exist only because it was slipped in when no one was looking.

Cupertino has always relied upon "max unit allocation" in combination with units-per-acre to define density, just as other cities have used floor-area-ratio to define density in a mixed use site.

When 600 units were allocated to Hamptons, the city increased the units-per-acre at Hamptons to match the "max unit allocation" of Hamptons site.

Since 389 units are allocated to Vallco Shopping Mall, the city should change the units-per-acre at Vallco Shopping Mall site to match the
"max unit allocation" of Vallco site. Thus, the units-per-acre at Vallco should be 6.7 units/acre or 7 units/acre (389 units/58 acres = 6.7 units/acre).

In case the Council would like to increase the max units allocated to Vallco AFTER
robust community process (complete with environment review)", the Council can always increase the units-per-acre at Vallco, just as the Council had increased it at Hamptons.

As stated by the answers from Jim Beall and Evan Low's staff, the general plan is a "locally controlled decision-making process".

No state laws should increase the density of any site in Cupertino. If the new laws would ignore "max unit allocation", the City should immediately use other objective standards, such as units-per-acre or floor-area-area, to provide comparable density at Vallco.

Regards,

Liang Chao

---------- Forwarded message ---------
From: Chao, Yvonne <Yvonne.Chao@sen.ca.gov>
Date: Mon, Dec 11, 2017 at 1:09 PM
Subject: RE: SB 35 - implementation process and other questions.
CC: Candelas, Domingo <Domingo.Candelas@sen.ca.gov>, Hughes, Alison <Alison.Hughes@sen.ca.gov>

Hi Liang,

Thank you for your patience—we appreciate your diligence in sending over these questions in an attempt to help everyone understand SB 35 better. Here is what we’ve received from Alison in the Senate Transportation and Housing Committee:

Question 1: [Process] The current Housing Element cycle is from 2015 to 2023. We are in the third year of the cycle. When and how the cities will be measured against the RHNA allocation to determine whether projects could qualify for streamlining? Would that happen at the end of the 8-year cycle?

Per the language in SB 35, the state Housing and Community Development Department (HCD) determines city-by-city eligibility for streamlined approval process and is working to publish this information shortly on their Web site. This is based upon the annual general plan report (also referred to as the annual progress report) required to be submitted by each jurisdiction in the state to HCD under existing law (Ca Govt Code Section 65400). Per the language in SB 35, the locality remains eligible for streamlining for four years. The every-four year review ensures that an accurate snapshot of the city’s production is identified.

Question 2: [Not Penalize Proactive Cities] Out of the 5 Housing Element sites, Cupertino has approved (600+188+19) = 807 units on two sites towards the goal of 1064 units in the RHNA allocation. Since the city cannot foretell that SB 35 would count only building permits pulled, not units approved, the City didn't include measures to encourage the developers to build early, such as a shorter expiration date on the project approval. Such as a higher percentage of BMR units or the requirement that BMR units should be built first. Would the implementation of SB 35 be designed such that it doesn't unfairly penalize cities like Cupertino who acted quickly to approve projects early in the 8-year HE cycle, before Jan. 8 2018?

Yes, see response to Question 1.

Question 3: [Good-Faith Effort Counts too] Some cities might have identified HE sites where developments are unlikely to happen. But not Cupertino. In this HE cycle, Cupertino identified 5 projects and all 5 projects have submitted project proposals. The three projects did not require any GPA, so they got approved quickly. Two other projects require GPA to add massive office use, increase height and reduce setback. The city adopted a flexible process to allow developers to negotiate for more density in exchange for community benefits. As a result, it takes longer to reach consensus.

However, SB 35 only counts permits issued and doesn't take into account any of the effort by the City of Cupertino to implement HE. Is that fair?

It is great to hear that Cupertino is taking affirmative steps to ensure housing is built quickly. The legislative package passed this year by the California legislature and signed by the Governor responds to a chronic shortage of housing production in the state over several decades. In fact, SB 35 only targets jurisdictions that are failing to meet their housing targets (specifically above-moderate housing and housing affordable to families at or below 80% of the area median income). If the streamlined approval process is triggered in Cupertino, it is due to the fact that Cupertino has not met its statewide housing targets.

Question 4: [Environment Impact of Streamlined Projects] The EIR of the General Plan was certified in Dec. 2014. At the time, the impact was evaluated based on the allocation of 4421 units over 25-year period (2015-2040). Under SB 35, within 8 years, thousands of units could get built on any site zoned for residential since the "max unit allocation", used by Cupertino's General Plan, would be ignored. The impact of SB 35 was not expected by the 2014 EIR. The mitigations identified then for traffic would be obsolete and ignored too. What will happen when projects get streamlined and their impacts are not measured and mitigated?

For example, the 2014 EIR concludes that there is no significant impact on library services, police, fire and emergency services because the build-out will be over 25 years and these agencies think that the 4421 units studied will build out naturally over 25 years. Now that all over Bay Area, thousands of units will be added to cities on sites, over the density studied, because SB 35 removed the "max unit allocation". Who will make sure that these essential services, like fire and emergency services, will keep up with these streamlined projects?

SB 35 requires a locality to follow-through on planning decisions that the city has already made. The city, in the development of its general plan, housing element, zoning ordinances, etc, has already engaged in a robust community process (complete with environmental reviews) to plan for and welcome people into their community. This is a locally controlled decision-making process as to how many families can be permitted to live in various locations throughout the city. Included in that decision-making process is how many people the city can accommodate with its services. SB 35 does not remove the requirement for a housing development to comply with applicable zoning ordinances, the housing element, the general plan, or other planning documents. (See Govt Code Section 95913.4(a)(2)). Additionally, more housing brings in more revenue through the payment of property taxes, investments in local communities, and labor revenue, as well as through the receipt of locally imposed development fees, all of which are used to pay for increased services, as necessary.

It should also be noted that SB 35 streamlining is not permitted in several environmentally protected zones, including the Coastal Zone, Wetlands, Delineated earthquake fault zone, Flood plain or floodway, or Lands under conservation easement. (see Govt Code Section 65913.4(a)(6)). SB 35 also is not permitted on sites where sites where any housing occupied by tenants in past 10 years and projects involving subdivisions unless pay prevailing wages and use "skilled and trained workforce". (See Govt Code Section 65913.4(a)(6)).

Given the novelty of this legislation, we are committed to closely monitoring the impacts of SB 35 and will welcome feedback once the legislation begins to be implemented next year.

Question 5: [Disruption of Regional Planning] RHNA allocation is assigned to different cities based on its office growth, population density and also access to transit. Such assignment is based on a regional plan, Plan Bay Area. As a result, a city like Cupertino gets assigned only 1064 units because of our lower office-housing ratio and no easy access to mass transit, like Cltran or BART. Other cities closer to mass transit or with higher office-housing ratio (higher housing deficiency) get a higher RHNA allocation.

With SB 35, there will be projects streamlined in a city like Cupertino for thousands of units to be built. This would upset the regional plan put in place, since residents from these thousands of units will clog up already very congested freeways around Cupertino.

By ignoring "max unit allocation", SB 35 will force the cities to ignore regional planning, where the allocation to each city is different according to various factors. What's the consequences? Have you evaluated it? Will there be any effort to study the Environment Impact of completely disregarding unit allocation in the General Plan?

See response to question 5.

Question 6: The General Plan of each city was approved without the knowledge of SB 35 and other housing bills. Now that SB 35 only allows "objective standards" and ignores "max unit allocation". Would the cities be allowed a grace period to revise the General Plan to use the objective standards as SB 35 specifies? It's only fair.

Again, SB 35 and other housing legislation passed this year were a response to a chronic shortage of housing production in the state over several decades. Also, as noted above to question 4, SB 35 does not remove the requirement for a housing development to comply with applicable zoning ordinances, the housing element, the general plan or other planning documents. It merely requires the city to follow-through on planning decisions the city has already made.

If a city feels the need to update its General Plan or other planning documents, another recently passed bill, SB 2, will provide an opportunity next year for locals to apply for funding to help finance the update of General Plan and other local planning tools. Our office would be happy to keep you apprised of the development of that process, if interested.

Question 7: [HCD Needs to Require Actionable Plan for BMR] It is great that SB 35 would enforce the accountability of RHNA allocation, especially on BMR housing. A great goal. However, HCD did not require the cities to provide an actionable plan to provide BMRs at all income levels when they reviewed Housing Element in May 2015. The cities only identified sites and a number of units assigned with no requirement on the contributiong of each site for BMR. As a result, most cities only used RHNA allocation as a motivation to build more market-rate units, while providing measly amount for BMR. The responsibility lies in HCD for approving HE without requiring an actionable plan for BMR housing.

HCD has not been treating RHNA allocation as a hard requirement. With SB 35, the intention of RHNA allocation has changed. Would you work with HCD to provide new guidelines for HE to require an actionable plan to provide BMR units? Would you provide cities some grace period to revise their General Plan and Municipal Code in order to have an actionable plan to provide BMR housing? Such as increase the percentage of BMR required or an increase on mitigation fees in order to fund more affordable housing project.

For example, Cupertino needs to provide 794 BMR units. With 15% onsite BMR, Cupertino needs to build 5,293 units in total. The EIR for the HE did not study for such a large amount of housing. The HE did not identify enough sites to provide 5,293 units either. Basically, the entire HE needs to be redone and re-reviewed by HCD. I bet almost every city is in the same situation.

It is correct that prior to this year, the housing element and RHNA process were used as planning documents/procedures and not building requirements. However, as previously noted, California is facing a housing shortage crisis. The purpose of SB 35 is to reduce barriers to housing construction, to increase the housing stock, and ensure that all Californians have a safe and affordable place to live. Additionally, as previously noted, SB 35 does not remove the requirement for a housing development to comply with applicable zoning ordinances, the housing element, the general plan, or other planning documents. Housing approved under the SB 35 process will be permissible in locations previously identified and vetted through public processes and local decisions made by the city.

The RHNA process, as part of the 8-year Housing Element adoption cycle, specifically identifies the housing needs for each jurisdiction at ALL income levels and is broken down by each income category for that reason. Cupertino will have been assigned housing needs at above moderate-, moderate-, low-, very low-, and extremely-low. As part of the last housing element cycle, to comply with existing state housing law, Cupertino should have identified adequate sites and ensured proper zoning to meet the needs for all of these income categories. Presently, about 80% of jurisdictions have a compliant housing element.

Question 8: [Potential Abuse: Infinite Number of Streamlined Projects] Since SB 35 only counts building permits issued, a city would be put in the vulnerable position for having to accept streamlined projects with only 10% BMR. As long as not sufficient permits are pulled for whatever reason, the city would be in the SB 35-induced vulnerable position. 10 projects could be submitted in one month and the city staff has to review and provide responses in 30 days for all 10 projects. Maybe 10 more projects the next month. This could go on for years, while the developers rush in to get streamlined project approvals without pulling any permits.

What do you have in place to prevent such abuse of the SB 35-induced vulneable situation if only building permits are counted towards RHNA allocation?

The SB 35 streamlined approval process is triggered in one of two ways:

1) A jurisdiction has not issued building permits to meet its regional housing needs by income category, AND

2) If there is not enough above-moderate income housing, a developer must have a project that dedicates 10% of the total number of units to incomes with 80% of median income or below, or if there is not enough housing affordable to incomes at 80% and below, a developer must have a project that dedicates 50% of the total number of units to incomes with 80% of median income or below.

As noted in Question 1, the determination of whether a jurisdiction must use SB 35 is based upon reporting numbers that come from that jurisdiction and are utilized for 4 years to provide an accurate snapshot of housing approvals.

To ensure housing developments actually get built under SB 35, the legislation requires as follows (see Govt Code Section 65913.4(e)):

1) If a local government approves a development under SB 35, and the project does not include 50% of the units affordable to households making below 80% of the area median income that approval shall automatically expire after three years. A project may receive a one-time, one-year extension if the project proponent can provide documentation that there has been significant progress toward getting the development construction ready, such as filing a building permit application.

2) If a local government approves a development under SB 35, that approval shall remain valid for three years from the date of the final action establishing that approval and shall remain valid thereafter for a project so long as vertical construction of the development has begun and is in progress. Additionally, the development proponent may request, and the local government shall have discretion to grant, an additional one-year extension to the original three-year period.

Hope that helps and please let us know if we can help clarify further.

Thank you,

Yvonne Chao

District Representative

Senator Jim Beall—SD 15

2105 S. Bascom Ave, Suite 154

Campbell, CA 95008

(408) 558-1295

From: Liang-Fang Chao
Sent: Tuesday, November 21, 2017 3:07 PM
To: Chao, Yvonne
Subject: Fwd: SB 35 - implementation process and other questions.

Yvonne,

I am wondering how SB 35 will be implemented and implemented fairly.

Question 3: [Good-Faith Effort Counts too] Some cities might have identified HE sites where developments are unlikely to happen. But not Cupertino. In this HE cycle, Cupertino identified 5 projects and all 5 projects have submitted project proposals. The three projects did not require any GPA, so they got approved quickly. Two other projects require GPA to add massive office use, increase height and reduce setback. The city adopted a flexible process to allow developers to negotiate for more density.in exchange for community benefits. As a result, it takes longer to reach consensus.

However, SB 35 only counts permits issued and doesn't take into account any of the effort by the City of Cupertino to implement HE. Is that fair?

What do you have in place to prevent such abuse of the SB 35-induced vulneable situation if only building permits are counted towards RHNA allocation?

Thank you for answering my questions.

Let me know if I should send my questions to somewhere else directly.

Liang

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-- Some Background Information on Cupertino --

RHNA allocation for Cupertino is 1064 units.
Extremely low/very low - 356 units (33.5%)
Low - 207 units (19.5%)
Moderate - 231 units (21.7%)
Above Moderate - 270 units (25.4%)

So, 794 BMR units and 270 market-rate units in the RHNA allocation.

Cupertino identified 5 sites for Housing Element. As of now, only 2.5 years in the 8-year HE cycle, Cupertino has approved 600 units for Hampton site and 188 units in the Marina site and 19-unit senior affordable apartment at Barry Swanson site. For the record, Better Cupertino did not oppose to any one of these projects. Better Cupertino pushed for-sale affordable housing and pushed for higher percentage of BMR housing at these sites.

The projects at Oaks site and Vallco are delayed because both developers want to raise building heights and add massive office so that the amount of housing provided is only enough for 1/10 or 1/20 of the number of employees at the site. Both proposed projects would worsen the housing crisis. It defeats the purpose of Housing Element.

Out of 1064 RHNA allocation, Cupertino has approved 807 units with the understanding that the cycle ends in 2023. So, the project approval for Marina site has 5-year expiration date. The expiration date on Hampton's approval is 10 years. Maria hasn't pulled building permits because they are tied up in a lawsuit over easement issue with its neighbor. Hamptons hasn't pulled permits for whatever reason.

This memo from Cupertino has more details:"The City of Cupertino’s Response to the Bay Area Housing Crisis"

Letters to Elected Officials near Cupertino and Beyond

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Monday, January 8, 2018

Liang - SB 35 - implementation process and other questions.