As Cupertino continues to face a budget deficit and cut services, a growing number of residents are questioning why approximately $48M in city funds are being held in an account that earns zero interest.
Councilmember Kitty Moore flagged the account to staff, who confirmed that it does not earn any interest. Cupertino uses its Wells Fargo checking account to handle day-to-day transactions. The account is regularly referenced in Treasurer’s Reports, with a stated balance $49M as of December 31, 2023. A recent Public Records Request shows all of the latest transactions in this account, with a slightly different balance of $48.4M as of December 31, 2023.
Checking accounts serve as an important source of liquidity for cities to fund regular operations. However, residents are now questioning whether it is appropriate to hold such a large amount in zero-interest checking. Assuming there is $48M in cash, if the city leaves $3M in the account for liquidity purposes, it could be earning up to $2.25M per year simply by moving the remaining $45M into a CD or Money Market bearing 5% interest.
Considering Cupertino’s proposed drastic measures to close the budget gap, the millions in lost interest income are meaningful. For example, the City recently explored tax increases to generate $1M-$5M per year, raising fees on residents, and reducing costs by requiring residents to maintain sidewalks and street trees.
Residents are always welcome to express their opinion by emailing:
Two more housing development projects that expect to build 113 new homes are under review in Cupertino’s Planning Department. These have been submitted under the State Law SB330, which streamlines housing approvals.1
10065 E Estates Dr: 55 townhomes at the “United Furniture” site at, near Wolfe and Stevens Creek Blvd. There is PCE (tetrachloroethylene) contamination at the site from the One Hour Dry Cleaner that is currently above residential screening levels.2 PCE is heavier than water, sinks to the groundwater and spreads rapidly, and its vapors then rise through the soil and enter indoor air spaces.
10065 E. Estates Dr.
20840 Stevens Creek Blvd: 58 homes, 12 of which will serve the needs of people with “moderate” incomes at the old Fontana’s Restaurant, adjacent to Staples.
Two hotel projects, which have been on hold for years, have applied to renew their development agreements.
10801 N Wolfe Rd: The Cupertino Village Hotel project at the Duke of Edinburgh pub in the Cupertino Village shopping center at Homestead Road. The 185-room hotel application was initiated in 2017 and approved by City Council in 2019. More information is available here.
10931 N De Anza Blvd: The De Anza Hotel project at the Goodyear Auto Service, adjacent to the Cupertino Hotel at the 280 interchange. The 155-room hotel application was initiated in 2018 and approved by City Council in 2020. More information is available here.
In nearby San Jose on S De Anza between Hwy 85 and Prospect Road are plans for a hotel and multifamily housing. The City of Cupertino is behind and across the road from these properties.
1655 S. De Anza Blvd.
Separately, in June 2023, Cupertino City Council approved a 34-home mixed-use project just across the road on the nearly 8-acre shopping center with the Kikusushi Restaurant at 1655 S De Anza Blvd.3
1510 S De Anza Blvd: The 4-story 132-room hotel with a roof-top deck and underground parking on a 0.86 gross acre site was approved in 2020. It is located at the old Kelly-Moore Paints Store.4
1000 S De Anza Blvd: The seven-story 99-unit multifamily residential building on a 0.72-gross acre site is located at the closed Mori Restaurant. This project has been submitted under the “Builder’s Remedy,” which is a method by which developers can obtain ministerial project approval when a City has failed to obtain its Housing Element. It is unknown as to whether the City of San Jose has accepted this project under the provisions of the “Builder’s Remedy.”5
Over 2,200 residents from the Monta Vista and Lynbrook High School attendance areas have expressed opposition to the the Fremont Union High School District’s transition from at-large to by-trustee area elections. Residents have spoken out at board meetings, community meetings, and signed a Change.org petition.
Feb. 13, 2024 FUHSD Board Meeting
A Controversial Move
With the previous at-large voting system, residents were able to elect all five FUHSD Board Trustees. But with the new Trustee Area voting system, residents will only be allowed to elect one trustee in their designated Trustee Area. See our previous article for more background.
FUHSD’s stated reason for transitioning from At Large to Trustee Area Elections is to avoid scrutiny under the California Voting Rights Act (CVRA). The CVRA, passed in 2002, helps minority groups more easily challenge At Large elections, on the grounds that they cause racially-polarized voting. However, to date, FUHSD has not done any analysis to determine whether there is racially-polarized voting in its district.
Cupertino Councilmembers Question FUHSD Plan
At the February 13th FUHSD Board Meeting, Cupertino City Councilmember Liang Chao, representing herself only, stated, “In the unanimous decision by the Supreme Court in August 2023, the Supreme Court raised the bar for the CVRA challenge. It specifically said alternatives could be ranked-choice voting and cumulative voting.”
Chao called for the FUHSD Board to immediately add an agenda item to consider other voting methods, and also “consider fiscal impacts of going through the lengthy redistricting process every 10 years with by-trustee area elections.”
Cupertino Councilmember Kitty Moore, whose children attended FUHSD schools, also spoke out representing herself only. Moore stated, “I am very concerned about the profound lack of data concerning redistricting, especially considering that we are a high school district known for our academics. This could potentially expose the district to various risks.”
Supporters of By-Trustee Areas
According to the FUHSD presentation delivered by Superintendent Graham Clark, the switch helps North Sunnyvale residents. Historically, most FUHSD trustees have come from South Sunnyvale and Cupertino. North Sunnyvale has not had any trustees. With the transition, North Sunnyvale would always be guaranteed one board member.
One of the decision’s biggest advocates is an organization called Sunnyvale Equity in Education (SEE). SEE has stated in a Facebook post that its goals include achieving equal representation on the board, and, in the long term, opening its own North Sunnyvale school.
Current and former Sunnyvale City Councilmembers are also proponents of the move. “No taxation without representation,” stated Sunnyvale’s Councilmember of District 5, which includes North Sunnyvale. “In the past 50 years, there has never been a Latino or a North Sunnyvale resident on this board. In the 40 years since the closure of Sunnyvale High School, North Sunnyvale residents have not enjoyed the same access or quality of high school educational resources as the rest of this district. Our residents deserve the same access to educational resources as South Sunnyvale, Cupertino, Los Altos, and San Jose residents.”
Opponents of By-Trustee Areas
Many Monta Vista and Lynbrook area parents expressed frustration with Trustee Areas, across multiple FUHSD meetings. Numerous public comments showed concern that the change would put Monta Vista or Lynbrook at risk of being closed, in order to make way for a Sunnyvale school. FUHSD currently has five high schools; it is unlikely to be able to afford six. During public meetings, several parents stated that it takes only three out of five board members to close a school. With the Trustee Area system, Southern FUHSD would be at risk of not having enough board members to vote against such a move, if it ever arose.
Many parents also stated that the change to Trustee Areas was made without their consent. All community outreach meetings occurred after the decision was made, asking residents to “choose a map” for Trustee Areas, rather than provide input on the Trustee Area decision itself. “By-Trustee Area will undercut the ability of every voter to have an impact, since we can only vote for one trustee every four years,” stated Councilmember Liang Chao.
Next Steps
FUHSD now faces the challenging task of managing the needs of multiple parent groups. The District continues to reassure parents that it “has no plans to close schools”. However, it also refuses to definitively state that it “will not close schools.” Ultimately, this lack of certainty is leaving many questioning the district’s motives.
How To Get Involved
There are many ways local residents can share their opinions on the move to Trustee Areas. Most immediately, there are two remaining Map Hearing Schedules. These are held during the regular board meetings at the District Office (589 W. Fremont Avenue, Sunnyvale, CA 94087).
March 20, 2024 (6 P.M.)
April 24, 2024 (6 P.M.): This is the final map hearing where the board will approve a final map of Trustee Areas, as well as which areas will be up for election.
The January 17, 2024 City Council meeting to discuss potential budget cuts (“Service-Level Reductions (SLRs)”) revealed a bloated budget and long-standing accounting errors. Remarkably, over $2.2M of the proposed Service Level Reductions were actually just accounting adjustments. These changes are now being presented as “Potential Service Level Reductions,” when there are no associated service reductions.
Council did advise on a few service reductions that may impact residents: Sidewalk and tree maintenance may now be the responsibility of the property owner. Community events, including concerts, movies, and festivals, will also have reduced funding. There were no significant staffing reductions or cutbacks for City employees.
Cupertino, We Can Do Better: Register to Vote and Vote Regularly
The Santa Clara County Registrar of Voters commits to sending vote-by-mail ballots for the March 5, 2024 Presidential Primary Election to all county voters no later than Monday, February 5.
In Cupertino, approximately 73% of all adult residents are registered to vote. Of the 73% registered, only 60% cast ballots in the November 2022 General Election. Cupertino had a better showing for the November 2020 Presidential Election, with 88% of registered voters returning ballots. However, relative to several nearby communities, Cupertino residents are registered to vote at much lower rates.
Find out more about the upcoming March 2024 Primary Election, and why you should vote.
On January 10, 2024, Cupertino settled a lawsuit filed by California Housing Defense Fund and Yes In My Back Yard (YIMBY) for missing its state-mandated Housing Element deadline. According to YIMBY Law, whose slogan includes “Sue the Suburbs,” about a dozen Bay Area jurisdictions have been sued for missing their housing-element deadlines, including Palo Alto, Burlingame, and the County of Santa Clara. Their complaint against Palo Alto drew the ire of residents who commented that the lawsuit is a scam used to raise money by organizations that are “backed by investment firms, developers and real estate lobbies.”
Read more about what the lawsuit’s settlement means for Cupertino.
On January 10, 2024, Cupertino settled a lawsuit filed by California Housing Defense Fund and Yes In My Back Yard (YIMBY) for missing its state-mandated Housing Element deadline. According to YIMBY Law, whose slogan includes “Sue the Suburbs,” about a dozen Bay Area jurisdictions have been sued for missing their housing-element deadlines, including Palo Alto, Burlingame, and the County of Santa Clara.
YIMBY Law claims that nearly half of Bay Area cities remain out of compliance. Their complaint against Palo Alto drew the ire of residents who commented that the lawsuit is a scam used to raise money by organizations that are “backed by investment firms, developers and real estate lobbies.”
Total Cost Unknown
To settle the lawsuit, Cupertino paid YIMBY Law and California Housing Defense Fund, $6,000 and $9,000 respectively. The cities of Cupertino, Palo Alto and Burlingame also hired the law firm Goldfarb & Lipman for their defense. Cupertino has paid its contract attorney tens of thousands of dollars in 2023, but it is unknown as to how much was spent on this lawsuit because the City uses the firm for other housing-related issues. Santa Clara County appears to have used its in-house counsel to defend itself from a similar lawsuit filed by Californians for Homeownership, an organization that is “financed and controlled by the California Association of Realtors.”1
Environmental Consequences
As part of the settlement with YIMBY Law and CalHDF, Cupertino agreed to exempt its entire Housing Element from the California Environmental Quality Act (“CEQA”). This saves time and expedites development projects, but silences the public’s environmental concerns.
In spite of the financial and environmental costs to the City, Vice Mayor J.R. Fruen, who has been endorsed by YIMBY organizations and represented them in legal cases, was positive about the lawsuit. Via the Mercury News, Fruen stated, “the city is right to welcome the result.”
Via San José Spotlight, Councilmember Kitty Moore countered “CEQA involves the public with public disclosure of environmental impacts to mitigate those impacts as possible, and to ultimately keep workers and residents informed and safe.” According to the New York Times, due to semiconductor manufacturing, “Santa Clara County is riddled with 23 toxic Superfund sites, more than any county in the country.” Notably, Councilmember Moore, who uncovered toxic waste at the former Vallco site, championed to have the site remediated in order to protect human health. Her actions spurred the County Department of Environmental Health to force a cleanup.
Moore emphasized, “This exemption from CEQA is not a win for anyone.”
Sources:
1 – Public Portal Superior Court of California, County of Santa Clara https://traffic.scscourt.org/ (case numbers 23CV410811, 23CV410817, 23CV410822)
The January 17, 2024 City Council meeting to discuss potential budget cuts (“Service-Level Reductions (SLRs)”) revealed a bloated budget, long-standing accounting errors, and further confirmed out-of-control spending. There were no significant staffing reductions or cutbacks for City employees.
A Closer Look at Service Level Reductions
Remarkably, over $2.2M of the proposed Service Level Reductions were actually just accounting adjustments. For example, Councilmember Kitty Moore expressed concern over calling a $160,000 reduction in extra library hours a “service level reduction”. The City has not had to pay for extra Library hours for years, as the costs are funded by the County. Other changes to the Sheriff’s Office, Public Works, and City Attorney budget were also accounting adjustments to “align the budget with the actual hours provided.” These changes are now being presented to the community as “Potential Service Level Reductions,” when there are actually no associated service level reductions.
Council did advise on a few service reductions that may impact residents: Sidewalk and tree maintenance may now be the responsibility of the property owner. Community events, such as concerts, movies, and festivals, will also have reduced funding (most notably, the elimination of July 4th fireworks in 2024). And the Cupertino Scene will now be mailed quarterly instead of monthly.
While Cupertino attempts to cut costs, its proposed changes to employee headcount remain insubstantial. The latest budget report states that the city plans to eliminate only “3-4 vacant positions annually” over the next decade, “until the City reaches a staffing level of 180 positions, which is consistent with the levels in FY 2015-16”. The January 17th proposed service level reductions included elimination of an undisclosed number of part-time roles, for an undisclosed amount of savings. As of September 2023, the city had 195 full-time equivalent employees. Most notably, in the past five years, the budgeted headcount for Administration and Administrative Services ballooned from 30 to 40 employees.1 Meanwhile, as the City struggles with its finances, its finance head was paid nearly $300K in 2022.2
Questionable Budget Reduction Target
Currently, Cupertino has a $10M financial deficit. During the January 17th City Council Meeting, Councilmember Moore questioned why staff was attempting to make $15M in expenditure reductions or revenue generation efforts. Moore noted that the $15M financial deficit was anchored to a 2033 forecast, 10 years in the future, while for the next 4 years, the deficit was only anticipated to hover around $10M.
A Need for Greater Fiscal Accountability
Once again, City Council met behind closed doors on January 29, 2024 to discuss its appeal to the California Department of Tax and Fee Administration (CDTFA). As previously reported, the CDTFA has questioned whether Apple should direct all California online sales tax revenues to Cupertino. This lucrative arrangement accounts for about 63% of Cupertino’s sales tax revenue. The potential loss of this revenue, and repayment dating back to mid-2021, has shined a spotlight on Cupertino’s budgeting practices.
Meanwhile, last November, Staff acknowledged that it had stockpiled over $80M in unassigned funds. Currently, the unassigned fund balance sits at $47M, with an additional $56M set aside as a sales tax repayment reserve for Apple. Cupertino also has $149M sitting in an investment account with Chandler Asset Management.4 This begs the question of whether raising taxes, eliminating community services, or partnering with developers to turn City-owned land into housing, such as the Sports Center, is the appropriate course of action.
Particularly when it comes to evaluating the use of public funds, the role of our publicly-elected representatives is to make decisions based upon what is good for the community. Meanwhile, the current majority of Councilmembers Wei, Fruen, and Mohan have actively discouraged other Councilmembers, such as Moore, who spends her time on the dais pushing for transparency and accuracy regarding Cupertino’s true financial situation, and highlighting accounting errors.
Now, as Council considers tax increases and elimination of resident services, it is imperative that it makes decisions with a long-term community benefit, rather than simply rubber-stamping staff recommendations. And without true fiscal accountability, it is unclear whether residents will support a sales tax hike that is expected to be on November’s election ballot.
References
1 – Staffing Report. City of Cupertino’s Financial Reporting Platform. (n.d.). https://cupertino.opengov.com/transparency/#/33189/accountType=fteCount&embed=n&breakdown=28459e6a-563e-4695-97d4-8a0d97d881e1¤tYearAmount=cumulative¤tYearPeriod=years&graph=bar&legendSort=desc&proration=true&saved_view=103397&selection=3B47265EDAEBBD4AA92D700FE18A69B7&projections=null&projectionType=null&highlighting=null&highlightingVariance=null&year=2024&selectedDataSetInddex=null&fiscal_start=earliest&fiscal_end=latest. Accessed January 29, 2024.
4. FY 2023-24 Adopted Budget. City of Cupertino. (6 June 2023). https://apps.cupertino.org/pdf/FY_2023-24_Adopted_Budget.pdf. Accessed January 29, 2024.
In a recent article published in The.Ink, Anand Giridharadas interviews Daniel Ziblatt, a scholar and co-author (with Steven Levitsky) How Democracies Die (2018) and Tyranny of the Minority (2023). The interview is thoughtful and worth the read, but the salient point is addressed in the headline, “Want to Save Democracy? Watch Less Cable News; Attend More Town Meetings”. 1
One to add to the Strengthen Democracy To Do list: vote regularly.
Why should Cupertino residents vote?
In Cupertino, approximately 73% of all adult residents are registered to vote. Of the 73% registered to vote, only 60% cast ballots in the November 2022 General Election. Cupertino had a better showing for the November 2020 Presidential Election, with 88% of registered voters returning ballots. However, relative to several nearby communities, Cupertino residents are registered to vote at much lower rates. Residents of Campbell, Gilroy, Palo Alto, Los Altos, Morgan Hill, Saratoga, and others have better voter registration rates than Cupertino.
When we choose not to vote, we lose our voices. In 2024, the rest of Cupertino joins the small sliver of the city that is part of California Senate District 13. CA SD-13 is centered in San Mateo County, where 84% of eligible adults were registered to vote for the November 2022 General Election.2 As Cupertino joins CA SD-13, we participate at a reduced capacity when our residents cannot be counted on to deliver votes or other campaign support for candidates on par with other CA SD-13 communities.3
Your vote makes a difference!
In 2018, 45 votes separated two candidates in Cupertino with very different political platforms and bases of support: one was elected to Council and the other was not. In 2022, the race for the Sunnyvale District 3 Council Member seat was decided by a draw by the County Registrar of Voters after two recounts confirmed a tie between the two candidates.
When we vote, we support democracy by ensuring that the winning candidates or measures are the ones with the broadest possible support. When voters sit out an election, we risk the total number of “non-voting” registered voters will be greater than the actual votes received by winning candidates, especially for local elections that do not have a primary.
March 5, 2024 Primary Presidential Election
The Santa Clara County Registrar of Voters commits to sending vote-by-mail ballots for the March 5, 2024 Presidential Primary Election to all county voters no later than Monday, February 5.
The March 5, 2024 election includes:4
Proposition 1, added by the Legislature, that if passed would “[Authorize] $6.38 Billion in bonds to build mental health treatment facilities for those with mental health and substance abuse challenges, [provide] housing for the homeless”
Primary voting for:
US President
US Senator
US Congressional Representative
State Senator (odd numbered districts)
Member of the Assembly, including AD-26
Judgeships and County Central Committees
If you or someone close to you are eligible to vote, but not yet registered to vote, the last day to register to vote in the March 5, 2024 election is Tuesday, February 20, 2024 (postmarked registration or electronic submission). You may also register on election day by completing a form at a polling location; however, your vote will not be counted until your information is verified.
Not sure if you are registered to vote? Check your registration status, including the name you are registered under, here. You can also sign up to receive notifications from the Registrar of Voters when your completed ballot is returned.
Take steps in 2024 to strengthen democracy in our community. Step away from the screen and step forward to in-person, community meetings whenever possible. Register to vote or investigate options to become eligible for US citizenship. If already registered to vote, learn about candidates and ballot measures and take time to vote!
References
1 – “Want to Save Democracy? Watch Less Cable News; Attend More Town Meetings,” by Anand Giridharadas, The.Ink, 1/11/2024: https://the.ink/p/want-to-save-democracy-watch-less
2 – “Report of Registration as of October 24, 2022, Registration by County,” Office of the California Secretary of State, accessed 1/24/2024: https://www.sos.ca.gov/elections/report-registration/15day-general-2022
3 – “Final Maps Report,” We Draw the Lines, 12/26/2021: https://wedrawthelines.ca.gov/final-maps/final-maps-report/
4 – “March 5, 2024 Presidential Primary Election, List of Offices.” County of Santa Clara, accessed 1/24/2024: https://files.santaclaracounty.gov/2023-10/list-of-offices-03.05.pdf
On December 5, 2023, City Council voted to explore raising Cupertino sales taxes by 0.25% (to a total of 9.375%). The decision follows staff recommendations, and would poll the business community to understand whether they would be willing to vote for a 0.25% tax hike on the November 2024 ballot.
Background
Presently, Cupertino receives approximately $0.65 for every $100 of products purchased from Apple online in California. However, the State recently decided to rescind Apple’s practice of directing online sales tax revenue to Cupertino.
The City has contemplated the loss of its lucrative Apple deal since at least 2006. The annual budget cautioned:
‘Our largest sales tax producer, Apple computer, comprises 26% and given the volatility of the high tech industry, this fact alone has put this revenue source in an “at risk” situation. To add to this concern, the State is continuing its efforts to change the way Internet sales are reported and, if they are successful, will dramatically affect the amount of sales tax revenue currently received from Apple.’
When online sales surged during the height of COVID-19, so did Cupertino’s net sales tax income, which peaked at $42.6M in fiscal year 2020/21. The average sales tax income was $23.3M in the fiscal years 2015/16 through 2018/19. If the State nullifies Apple’s agreement with the City, sales tax income is estimated to plunge from $11.4M to $9M in 2023. While the City appeals this decision, it is finally preparing for the worst-case scenario.
Muddy Messaging
In May 2023, the City anticipated a $31M or 73% decline in sales-tax revenue. Recently, the budget gap was reduced to a more realistic $15M. However, with the exception of some smaller cuts, such as cancelling 4th of July fireworks next year, the City has not significantly curbed spending since receiving its first warning letter from the California Department of Tax and Fee Administration (CDTFA) in December 2021. To the contrary, the current annual budget has increased to $113M, from an actual spending of $89M in 2018/19.
Accordingly, subsequent budgets listed various “budget-balancing” strategies, among them, taxes on sales (Transaction and Use Tax), hotel stays (Transient Occupancy Tax), parcels, and businesses (Business Operations Tax).
City Staff Pushes for Sales Tax Increase
At the December 5, City Council Study Session, staff asked Council to provide “direction to staff regarding exploring the feasibility of one or more potential revenue tax measures – Transaction and Use Tax, Transient Occupancy Tax, Parcel Tax, and/or Business Operations Tax-through opinion research for the November 2024 election.” City Staff and Urban Futures Inc (UFI) presented these four options, but the Transaction and Use Tax was the pre-determined winner: as of October 2023, the City had already entered into a $170K contract with TeamCivX for sales tax revenue measure polling and consulting services.
The following list describes the new tax proposals and compares them with information from the 2020/21 Budget.
Transaction and Use Tax (TUT): A new 0.25% Transaction and Use Tax would increase the Cupertino sales tax rate from 9.125% to 9.375%, meaning that a purchase of $100 in taxable goods would cost $0.25 more. This tax is estimated to raise $5.4M, a significant increase from the 2020/21 Budget estimate of $3M to $4M. This tax would be levied on taxable purchases made in and/or delivered to Cupertino and would not be shared with County tax pools. Only three of Santa Clara County’s fifteen cities have a tax rate this high, Campbell, Milpitas, and San Jose. Some Bay Area cities have higher rates.
Hotel Tax: The City’s Transient Occupancy Tax (TOT) of 12%, imposed on Hotel stays and Airbnbs, could be increased to 15% (for an estimated $1.875M in revenue). A hotel representative balked at the proposal, leaving Council Members mystified as to why neither the Chamber of Commerce nor Cupertino hotels had been consulted. The 2020/21 Budget did not consider a tax this high and estimated that an increase from 12% to 14% would raise an additional $1.7M.
Parcel Tax: A parcel tax would add $250 to each parcel in the City, regardless of whether it is a small single-family home or an immense industrial complex. A flat tax was considered more straight forward than the more equitable graduated rates of $27 to $613. The graduated rates seem to have been selected so that the amount of money raised for the City would be about the same, $3.7M.
Business Operations Tax: A revised Business License Tax would raise $4.3M, less than half of the $10M estimate in the 2020/21 Budget. No details were provided on how the tax would be calculated. The staff report confirmed that Cupertino has a “notably low business license tax rate compared to neighboring cities on a per capita basis” and warned that a tax-increase could deter existing and future businesses.
Next Steps
In January and February, the City will poll the business community for its opinions on a higher sales tax. Outside of the limited poll, it is unclear what communications the public will receive around a potential sales tax ballot measure. A majority vote on the November 2024 ballot would be needed to enact a new 0.25% sales tax.
City staff will also discuss budget cuts. Just after the December council meeting, City Staff contracted with Voler Strategic Advisors (VSA) for $42K to “Develop a media strategy on key issues such as the budget or major developments.” As such, the public can potentially expect to receive professional messaging around the budget cuts.
As in many other cities across California, Cupertino is trying to complete its Housing Element (HE), a document that describes how the city will meet its housing obligation for the period 2023-2031. Cupertino is required to supply a minimum of 4,588 housing units, with 41% of these units being low to very low income (affordable) plus extra just in case some sites do not develop as expected.
This long process involves identifying the properties, developing “Goals, Policies and Strategies” to guide the City in all its development then re-zoning the properties to match the densities and goals, policies and strategies selected. All this has to be approved by the California Department of Housing & Community Development (HCD).
On November 30, 2023 Cupertino submitted its “Second Draft” (3rd submittal) of its Housing Element (HE) to HCD for approval. There has been no public discussion of goals, policies and strategies at any Housing Commission, Planning Commission or City Council meeting where people would have the opportunity to ask questions, discuss or provide input.
We encourage the public to read the Housing Element Goals, Policies and Strategies section because it specifies what development will be allowed in various neighborhoods.
Strategies to Turn Cupertino Home Sites into Apartment Buildings
Two strategies that impact homes across Cupertino are buried within two bulleted items under HE-1.3.6:
“Allowing corner lots in R1 zoning districts to develop as multi-family rental housing using R3 zoning regulations to encourage missing middle developments.” This means that every Single-Family Home located on a corner lot can turn into an apartment.
“Allowing lots zoned for single family residential uses that abut (either shares a property line or is directly across the street from) property that fronts an arterial or major collector, and is zoned and used for commercial or mixed-use development, to develop with multi-family housing using R3 zoning regulations to encourage missing middle housing.” This means that every Single-Family Home located behind or around a shopping center on specific roads can turn into an apartment building. Note that “arterials” are Homestead Rd, Stevens Creek Blvd, De Anza Blvd, Wolfe Rd and “major collectors” are N. Tantau, Miller Ave, N. Stelling, Bubb Rd, N. Foothill Expressway.
These two strategies not only impact the homes specified but their neighbors, the look and feel of their neighborhoods and create uncertainty for current and prospective homeowners. Furthermore, if a developer uses Density Bonus, the height, setback and parking requirements can and will be removed (waived) without the ability to stop it.
Next Steps
The City has identified and is prepared to rezone far more Housing Element sites than is required to meet its obligation to the State. The additional sites identified (buffer) do not include the ADU units expected to be built across the city during this same 8-year cycle. These future ADUs will generate even more housing units without the need for these two strategies.
If these strategies are included in this 8-year cycle, what will the city give away next time? Sometime in January-February 2024, there will be a joint session of the Housing and Planning Commissions to discuss the HE Goals, Policies and Strategies followed by a City Council meeting sometime in April to approve the final Housing Element document.
Is your home impacted? Here is a list of streets potentially subject to this new change.
Reach out to your representatives now to provide your input. The City Council has the final say. Here is their contact information:
Individual City Council member emails can be found here.
ADDITIONAL INFORMATION:
Single Family Homes – on corner lots that may be impacted
The current Cupertino Zoning Map shows R1 (single family homes) in CREAM COLOR. Any R1-x home on a corner lot all across Cupertino can be redeveloped as an apartment (R3) and can invoke the Density Bonus Law to remove the height, setback and parking restrictions.
Single Family Homes sharing a property line with a commercial or multi-use property on any of the roads below can be redeveloped as an apartment (R3) and can invoke the Density Bonus Law to remove the height, setback and parking restrictions.
NOTE: Arterials and collectors are specific roads.
Arterials are Homestead Rd, Stevens Creek Blvd, De Anza Blvd, Wolfe Rd
Major collectors are N. Tantau, Miller Ave, N. Stelling, Bubb Rd, N. Foothill Expressway
Homes on these streets can be impacted. This list may not be complete:
Near Homestead
Shady Oak Ln
Firethorn Dr
Northpoint area-(possibly)
Near Stevens Creek Blvd
Norwich Ave-all of east side
Amherst Dr-east end
Denison Ave-south end
Wheaton Dr-all of south side
Stern Ave-north end
Bret Ave-north end
Judy Ave-north end
S Tantau Ave-north end
E. Estates Dr-north end
Richwood Dr-north end
Bixby Dr-all of north side
Brenda Ct-north and east end
Mello Place-north end
Deeprose Pl-north end (possibly)
Randy Lane-south end close to Stevens Creek Blvd
Miner Place-north end, south end
Partlett Place-north end, south end and by Donut Wheel
Scofield Dr – all of it
Alves Dr-between Sachi Way and Stelling
Peninsula Ave-south end
Santa Clara Ave-south end
Adrian Ave-south end
Eaton Place-east end
Ramona Ct-north end
Northeast side of Stevens Creek Blvd near N. Foothill Expressway
On December 5, 2023, the property owner of the former Vallco shopping mall, which is located at N. Wolfe Rd. and Stevens Creek Blvd., submitted a new development plan to the City of Cupertino. The plan, called “The Rise,” is posted on the City website. The old shopping site is replaced by a mix of housing, offices, shopping areas, and open spaces, similar to previous plans that have been submitted over the last decade.
“The Rise” Shrinks by 1M Square Feet as Compared with its Previous Application
When completed, the new project will provide:
4.38M sq. ft. of housing: 2,669 for-rent and for-sale homes. 890 homes are “affordable.” 2,603 parking spaces allocated for the homes and the entire project has approximately 9,570 parking spaces, above- and below-ground and along internal roads.
1.95M sq. ft. of office space: Note that current market demand for office space has plummeted, and the developer recently defaulted on a loan on an office building at 590 E. Middlefield Rd., Mountain View1.
226K sq. ft. of retail space: This is less than half of what was previously planned.
A Revised Design with a New Architect
The developer recently switched to a different architectural design firm, Kohn Pedersen Fox (KPF). Via the developer’s announcement, “KPF is a world-renowned design firm known for their innovative and community-driven approach to urban design.” The firm has a formidable portfolio, including the headquarters of its major investor, the Abu Dhabi Investment Authority2.
Will Cupertino Agree to the Modification?
The developer is requesting modifications from its existing application in four key areas:
Major development permit
Tentative subdivision map
Major architecture and site permit
Tree removal (714 trees would be removed and 715 trees would be added).
In spite of the significant changes from the previous plan, the developer claims that this project is a modification of the previous SB35 applications. SB35 is a housing law that allows the developer to streamline residential building applications. If the City agrees that the modifications are minor, then the new buildings can use antiquated building codes from 2016, even if the development is built years from now. This also makes the new buildings less energy-efficient and avoids the City’s 2019 bird-safe development guidelines.
The press release stated that some buildings had been reduced to 85 feet in response to community input. It is possible that financial considerations also contributed to some of the lower heights. A new State law SB423 requires skilled and trained labor for SB35 projects that exceed 85-feet. Nevertheless, the project still contains housing that is up to 200-feet tall and even higher office space that is up to nearly 230-feet tall.
Soil Contamination
The Santa Clara County Department of Environmental Health (DEH) will need clarification from the developer as to whether the clean-up of contaminated soil* dictated by a Site Management Plan (SMP) complies with the new plan. The DEH cautioned that it may rescind approval of the SMP and require additional site assessment, risk evaluations, and mitigation measures.
Next Steps
The City has 60 days to respond to the developer as to whether the project is compliant with SB35 or whether it can be considered a modification to a previously-approved SB35 project. Since the developer intends to subdivide the project and build it in phases, it is unknown when it will be completed, if ever.
References
Avalos, George. “Big Mountain View office building at choice site faces loan default.” The Mercury News, 25 Sep. 2023. https://www.mercurynews.com/2023/09/25/mountain-view-real-estate-office-develop-build-loan-tech-economy-covid/. Accessed December 20, 2023.
Li, Roland. “A dying mall near Apple’s headquarters is turning into a fight over Silicon Valley’s soul.” San Francisco Chronicle, 25 Nov. 2018, https://www.sfchronicle.com/business/article/A-dying-mall-near-Apple-s-headquarters-is-13417634.php. Accessed December 20, 2023.
*Potential contaminants of concern apparently detected in the soil at the N Wolfe Rd/Stevens Creek Blvd location and recorded by the State Water Resources Control Board website include: benzene, diesel, lead, other chlorinated hydrocarbons, other insecticides/pesticides/fumigants/herbicides, polychlorinated biphenyls (PCBs), tetrachloroethylene (PCE), trichloroethylene (TCE).[12] [12] GeoTracker, “Summary” tab. State Water Resources Control Board. 11 November 2022. https://geotracker.waterboards.ca.gov/profile_report?global_id=T10000017167
