Cupertino Receives First Builder’s Remedy Project Application

Cupertino has been vulnerable to the “Builder’s Remedy” since it missed its January 2023 deadline for an approved Housing Element from the California Department of Housing and Community Development (HCD).  The “Builder’s Remedy” is a State law that allows developers to bypass local zoning laws for projects that offer affordable housing.

Menlo Park developer Acclaim Properties has submitted plans for a 70-foot-tall, 141 home, apartment complex on 1.63 acres, at the corner of Stevens Creek Blvd and N. Blaney Avenue.¹ If the project proceeds, the development will force businesses like Vidyarambh Preschool and Daycare Center and Be Natural Music to vacate the site. The new complex would loom over adjacent single-family homes. 

The site is zoned for commercial use with a maximum height of 45 feet. However, the developer’s application uses the “Builder’s Remedy” to circumvent these zoning rules, raising its building height to 70 feet and not providing space for commercial businesses that bring in sales-tax revenue. The “Builder’s Remedy” is further explained in the article in Cal Matters, “‘Godzilla next door’: How California developers gained new leverage to build more homes.”² Below are our City’s specific requirements for this area.³ 

Heart of the City Specific Plan Central Stevens Creek Boulevard – Primary Use: Commercial/Commercial Office – Secondary Use: Office above ground level – Supporting Use: Residential/Residential Mixed Uses

(SOURCE – https://cupertino.granicus.com/MetaViewer.php?view_id=18&clip_id=1251&meta_id=67811)

Mayor Wei appears either unaware of or indifferent to existing height limits. Via the Mercury News, Wei stated that “five-stories on one of the city’s busiest thoroughfares isn’t unusual,” even though there currently are no other buildings of that height nearby. Wei also said that “there will be more in the next eight years.”⁴

Lack of Visibility into Cupertino Housing Element

Cupertino’s Housing Element was due on January 31, 2023. Updates, public participation, and oversight have been curtailed since the new City Council took over in 2023. Sadly, the Housing Commission (which met only 4 times this year) and Planning Commission (which met only 6 times this year) were denied the opportunity to provide any input on policies and procedures in this Housing Element. By comparison, these commissions met three times as often in 2022.

A Need for Increased & Diversified Revenue

Cupertino must diversify its income sources due to an anticipated 73% decline in sales tax income (from the State’s expected termination of a lucrative sales tax sharing agreement with Apple).⁵ While it is nearly impossible to recoup this revenue loss, the City can grow sales tax revenue by increasing retail. One percent of sales tax ($1 out of every $100 spent on taxable goods) purchased in Cupertino goes straight back to the City. 

This project, like Vallco using the SB 35 law to tear down our mall, or Westport using the Density Bonus law and decreasing the Oaks Shopping Center area, lowers Cupertino’s retail base at a time when the CDTFA audit is expected to reduce our sales tax revenue by $30M annually, plus back payments.

Cupertino has already allowed commercial properties to be rezoned for residential. One example is the new development on Stevens Creek and Foothill (22690 Stevens Creek Blvd). Others are identified in the Housing Element. On the other end, one planned project where Marina Foods is currently located (10145 N De Anza Blvd) retains nearly all of its retail space, while adding 206 condominiums.

Real estate taxes are another large source of income for Cupertino. But because commercial property owners often use legal loopholes to transfer property ownership without triggering property tax reassessment, taxes on apartment developments will likely not rise through reassessment during anyone’s lifetime. Projects with all-retail or ground-level retail with for-sale housing would raise more sales- and real-estate taxes than the proposed project.

Our city faces difficult fiscal decisions ahead. But the lack of local control to be able to retain retail is having a dire effect with regards to healthy economic planning. Most importantly, these laws will not help lower housing costs. It is unknown many more “Builder’s Remedy” projects will be proposed while we wait for Cupertino to get an approved Housing Element.

References:

Photo credit: City of Cupertino Builder’s Remedy Project Proposals, https://www.cupertino.org/our-city/departments/community-development/planning/major-projects/builder-s-remedy-project-proposals, Accessed 11/28/2023.

1. Builder’s Remedy Project Proposals, City of Cupertino, https://www.cupertino.org/our-city/departments/community-development/planning/major-projects/builder-s-remedy-project-proposals, Accessed 11/28/2023.

2. Christopher, Ben. (2023, June 5). “Godzilla next door”: How California developers gained new leverage to build more homes. CalMatters. https://calmatters.org/housing/2023/06/california-builders-remedy/, Accessed 11/28/2023.

3. Redlined Text Changes to the Heart of the City Specific Plan (see Central Stevens Creek Boulevard), City of Cupertino, https://cupertino.granicus.com/MetaViewer.php?view_id=18&clip_id=1251&meta_id=67811)

4. Hase, Grace. (2023, November 28). Cupertino sees its first “builder’s remedy” project. The Mercury News. https://www.mercurynews.com/2023/11/27/cupertino-sees-its-first-builders-remedy-project/, Accessed 11/28/2023.

5. FAQ, City of Cupertino. https://www.cupertino.org/our-city/advanced-components/faq/-seldept-6?NavID=412#:~:text=The%20reduction%20in%20sales%20tax,to%20provide%20a%20soft%20landing. Accessed 11/29/2023.