Liang - Cupertino is not subject to SB 35 at all until April 1. 2019. The SB 35 determination by HCD is premature

From: Liang

Date: Fri, Apr 20, 2018 at 8:03 PM
Subject: Cupertino is not subject to SB 35 at all until April 1. 2019. The SB 35 determination by HCD is premature
To: City Council <citycouncil@cupertino.org>, "City of Cupertino Planning Dept." <planning@cupertino.org>, David Brandt <davidb@cupertino.org>

Dear Mayor Paul, City Council Members and Planning Staff,

The bill text of SB 35, quoted below, clearly states that the determination of whether any city is subject to SB 35 should be determined after either the first "reporting period" or the second "reporting period".

From the bill text of SB 35:

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180SB35

(A) Is located in a locality that the department has determined is subject to this subparagraph on the basis that the number of units that have been issued building permits is less than the locality's share of the regional housing needs, by income category, for that reporting period. A locality shall remain eligible under this subparagraph until the department's determination for the next reporting period. 

(7) "Reporting period" means either of the following:
(A) The first half of the regional housing needs assessment cycle.
(B) The last half of the regional housing needs assessment cycle.

According to the HCD Determination report, the first reporting period should be 2015, 2016, 2017 and 2018. The SB 35 determination for the Bay Area was measured assuming that each city should make 1/8 progress towards the 8-year Housing Element goal, which was NOT a requirement stated in SB 35 at all. Thus, a SB 35 determination for Cupertino should NOT have been made until the end of the first reporting period (2015-2018). And the official report for the first reporting period is NOT due at HCD until April 1. 2019. Therefore, HCD cannot make an official SB 35 determination on Cupertino until April 1, 2019.

Please clarify this misunderstanding with HCD as soon as possible so that the community members, the city staff and the consultant team would not be threatened by the invalid, premature SB 35 application.

The article "HCD Prematurely Releases Determinations Implementing SB 35's Streamlined, Ministerial Approval Process for Certain Housing Projects", by the law firm Meyers Nave, states in more details why, in the opinion of Meyers Nave, HCD prematurely released SB 35 determination. Meyers Nave advices: "Agencies that receive SB 35 applications prior to their filing of their 2017 annual report or April 1, 2018 may wish to consider rejecting or suspending them until after the submittal of the report or the passage of the April 1, 2018 deadline. Advice of legal counsel is strongly recommended."

This Law Alert "A NON-EXCLUSIVE CLUB: HCD FINDS MOST CALIFORNIA JURISDICTIONS SUBJECT TO SB 35 STREAMLINING", by Goldfarb Lipman, states "HCD indicates it will be looking at housing production on an annual pro-rated basis for the first half of each jurisdiction's planning cycle. ... HCD says it will recalculate eligibility each year until the halfway point—typically, the fourth year—of each jurisdiction's current planning period. Then, HCD's determination for that year will remain in place until the next reporting period begins." This shows that the SB 35 determination won't be made by HCD until the end of the fourth year, which is 2018. What the HCD reports now is NOT a "determination" under SB 35, but a pro-rated eligibility to show progress.

The city should immediately take actions to protect Cupertino from further exploitation of SB 35 due to unclear standards at Vallco Shopping District. Please schedule meetings necessary to amend the General Plan to clarify that the 2 million square feet of office space is NOT an "entitlement", but a placeholder to be confirmed ONLY AFTER and ONLY IF the Vallo Specific Plan is approved by May 31, 2018.

Please firmly instruct the Opticos team to NOT take any number from the invalid and premature SB 35 application into considertaion.

Please allow the community to decide what the community wants to see at Vallco without any interference.

I hope that the City Council does not ignore this request and direct the City Attorney to take action to clarify this premature SB 35 determination for Cupertino with HCD. In case the Council choose to take no action, I would urge the Council to put this item on the Council meeting agenda to discuss this in the public meeting so that the public can understand the reasons that the Council or the City Attorney decide NOT to clarify the premature SB 35 determination with HCD.

Thank you for your consideration.

Sincerely,

Liang Chao

Cupertino Resident

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http://www.meyersnave.com/hcd-prematurely-releases-determinations-implementing-sb-35s-streamlined-ministerial-approval-process-certain-housing-projects/

HCD Prematurely Releases Determinations Implementing SB 35's Streamlined, Ministerial Approval Process for Certain Housing Projects

February 14, 2018

On January 31, 2018, the California Department of Housing and Community Development ("HCD") made several determinations pursuant to Government Code section 65913.4, commonly referred to as SB 35. SB 35 requires certain local agencies to ministerially approve multifamily housing projects that meet a long list of standards. (Please click here for our SB 35 Eligibility Checklist.) Some of HCD's determinations were, as we explain below, made prematurely and cannot be made until cities and counties submit reports to HCD that are due April 1, 2018.

SB 35 tasks HCD with making only one determination. It determines whether cities and counties are subject to SB 35. If HCD determines that a city or county has issued more building permits than their "share of the regional housing needs, by income category, for that reporting period" (subd. (a)(4)(A)), the city or county is not subject to SB 35. Reporting period is defined to mean either the "first" or "last half of the regional housing needs assessment cycle." (Id., § 65913.4, subd. (h)(7).) SB 35 also states that localities "remain eligible" until HCD's "determination for the next reporting period."

In its January 31, 2018 publication, HCD, nonetheless, determines what level of affordability is required for streamlining proposals in each jurisdiction that is subject to SB 35. SB 35 provides that in jurisdictions where the latest "production report" submitted by the jurisdiction to HCD reflects that it approved fewer above moderate-income units "than were required by the regional housing needs assessment cycle for that reporting period," 10% of the units in projects in excess of 10 units must be affordable to households making below 80% of area median income. (subd. (a)(4)(B)(i).) By contrast, the affordability requirement is 50%, where the jurisdiction's latest "production report" reflects that the agency issued building permits for fewer below moderate-income units "than were required by the regional housing needs assessment cycle for that reporting period." (subd. (a)(4)(B)(ii).) These particular sections do not direct HCD to make determinations.

Even if HCD was tasked with making SB 35's affordability requirement determinations, HCD made its determinations prematurely. SB 35 defines "production report," on which those determinations are to be based, to mean "the information reported pursuant to subparagraph (D) of paragraph (2) of subdivision (a) of [Government Code] Section 65400." Government Code section 65400 has long required the submittal of information to HCD concerning the status of the implementation of the jurisdiction's Housing Element. The cross-reference is to a newly added subsection of 65400 that was added in 2017. (We believe that the cross reference was intended to be to subdivision (a)(2)(H), another newly added subsection.) The first version of the annual report that will contain a "production report" is not due until April 1, 2018. It is also notable that HCD based its determinations solely on building permits issued, but the 10% affordability requirement must be based on "units . . . approved," information that HCD does not yet have.

Agencies that receive SB 35 applications prior to their filing of their 2017 annual report or April 1, 2018 may wish to consider rejecting or suspending them until after the submittal of the report or the passage of the April 1, 2018 deadline. Advice of legal counsel is strongly recommended.