Liang to Senators - Unintended Consequences With SB 35, Which Will Be Amplified by SB 828

From: Liang
Date: Mon, Apr 23, 2018 at 3:20 PM
Subject: Fwd: Unintended consequences with SB 35, which will be amplified by SB 828
To: <senator.beall@senate.ca.gov>, <sunshine.borelli@sen.ca.gov>, Anthony Cannella <senator.cannella@senate.ca.gov>, <tyler.munzing@sen.ca.gov>, <senator.dodd@senate.ca.gov>, <marisol.prietovalle@sen.ca.gov>, <senator.gaines@senate.ca.gov>, <matt.cox@sen.ca.gov>, <senator.galgiani@senate.ca.gov>, <taylor.wollfork@sen.ca.gov>, <senator.mcguire@senate.ca.gov>, <carole.mills@sen.ca.gov>, <senator.morrell@senate.ca.gov>, <scott.terrell@sen.ca.gov>, <senator.roth@senate.ca.gov>, <matthew.montgomery@sen.ca.gov>, <senator.skinner@senate.ca.gov>, <melanie.morelos@sen.ca.gov>, <senator.vidak@senate.ca.gov>, <lyndsay.mitchell@sen.ca.gov>, <senator.wieckowski@senate.ca.gov>, <evita.chaves@sen.ca.gov>,  <senator.wiener@senate.ca.gov>, <annie.fryman@sen.ca.gov>

The intent of SB 35 is to keep the city accountable for RHNA allocation. Good intention. But that doesn't make it a good law. The devil is in the details.

The RHNA allocation has been viewed as guidelines, not a requirement by the cities.

Is that the fault of the cities? Or is that the fault of HCD for not making the intent clear?

It is good to have some "sticks" to ask the cities to become accountable for RHNA allocation.

But the law is just passed and they are putting the cities in very difficult situation.

Here are the problems with SB 35.

1. SB 35 should not change the requirement in the middle of the current Housing Element cycle: The law only counts units permitted, not units approved.

Cupertino has already approved 62+188+600+19 = 869 units out of the 1064 units allocated.

Unfortunately, the city did not set a shorter deadline for developers to pull permits. The project approval is good 10 or 15 years. SB 35 basically punishes Cupertino for being proactive by approving 869 units within the first 2 years of the Housing Element Cycle. Now we cannot go back and shorten the duration for the project approval or a shorter deadline for pulling permits. We are stuck with these 188+600 approved units if the developers don't want to build yet. Basically, the state changed the rule in the middle of the Housing Element and now expect the city to meet a much stricter requirements.

2. SB 35 only respect "objective standards", but ignore the rest of the General Plan.

The intention is to give the developers clearer standards to follow. Good intention. But again. The law did not give the cities time to review our General Plan to clarify certain policies with objective standards. Cupertino intentionally does not set standard for Vallco to give the developers freedom to propose a project. The Vallco area has no height limit. The office space of 2 million square feet was meant to be provisional, subject to community inputs and council approval.
In no one's mind is 2 millions square feet is a proper amount for Vallco, it was meant to be a placeholder for consideration, pending Vallco Specific Plan through community engagement and adopted by the city council.
But SB 35 all of a sudden took away the right of the council to decide on the proper amount of office space. Now, the developer not only gets to streamline the residential portion of the project, but also the massive office portion.

3. SB 35 did not specify what counts as the "square footage" for "residential use"?

What's funny is that SB 35 itself did not define objective standards for "square footage" for "residential use"?

In the Vallco SB 35 application, they claim 4.7 million sqft residential use in order to justify for close to 2 million sqft office space. In fact, the total residential rooms only account for 2.2 million sqft. The other 2.5 million sqft include rooftop park, rooftop swimming pool, unusable space under the rooftop, and residential parking, all of which should not be included in "residential use", especially when office and retail parking are NOT included in the total square footage. Ironically, SB 35 itself doesn't not have objective standards on what counts as "residential use".

This begs the question: is it at all possible to specify everything in objective standards and not allow the city council to interpret its own law when its not clear? (Per SB 1515) 

4.  SB 35 illustrates the flaw for using state laws to attempt to overwrite local planning decisions since there are many small details that vary from city to city. The general plan is derived from state mandated public process. Yet, now SB 35 attempts to wipe most of the standards away for projects even with 10% BMR units.

5. The developers are in control on what projects to propose; when to build, not the cities. With SB 35, developers will NOT propose projects or pull permits until the cities are designated as SB 35. Then, the developers can submit a very dense SB 35 application as a threat, not even intending to build the BMR or pay prevailing wages. (The developers get to claim three exceptions to increase beyond the general plan specified, on top of the density bonus) Then, they pressure the city to give them approval of a non-SB 35 Plan with much higher density than previously allowed. That's exactly what Sand Hill is doing in Vallco. 

There three other developers in Cupertino waiting to use the same strategy. Two with projects already approved in 2016. But they'd rather wait for more pro-housing bills that they can use to push for more density and less fees or benefits to provide.

6. There is no requirement that the streamlined project can't be divided up and sold off individually. Very likely, the developers will sell off the more profitable parts like office and market-rate housing. Then, they might come back to the city and say that they can't find the BMR units.

7. There is no time limit on when a streamlined SB 35 projects need to be completed or whether they need to develop the BMR portion or secure funding for BMR portion first. A developer could get a streamlined SB 35 project to pass and then sit on it or sell it to the highest bidder piece by piece.

There seems to be nothing in SB 35 that holds the developers accountable to deliver the streamlined projects in a timely manner, especially the BMR portion.

A "good idea" or a "good intention" doesn't make a good bill. The devil is in the details.

Now SB 828 to be discussed in the Senate Housing and Transportation Committee tomorrow will sharpen the edge of SB 35. The Senate should really slow down and examine the impact of 15 pro-housing bills from 2017. More "good ideas" that are not well thought out would simply create more bad ideas.

And with development projects, the damage is often irreversible since each project will last 50 years or more.