State threatens to sue Cupertino over housing policy

Cupertino, often criticized by activists over a perceived
reluctance to build homes, is now officially on notice — the city
must shape up its housing efforts or face the consequences,
according to a warning letter from the state.

In the letter, the California Department of Housing and
Community Development (HCD) threatened a lawsuit if Cupertino does
not meet its housing obligations under state law. At issue is a
massive housing, office and retail development proposed on the site
of the old Vallco Shopping Mall, which has faced obstacle after
obstacle as developers try to get the project off the ground. If
the homes promised under that project don’t come to fruition, the
state warned, Cupertino could fall out of compliance with its
state-mandated housing goals.

While no legal action has been taken yet against Cupertino, the
letter illustrates how the state is ramping up its enforcement of
California housing law under Gov. Gavin Newsom, who has made
solving the housing crisis a top priority. State housing officials
sent a similar letter to San Bruno officials last week. In January,
the state sued the city of Huntington Beach for failing to allow
enough home building.

“HCD appreciates the difficulty jurisdictions face in
balancing competing interests when making land use decisions,”
HCD Deputy Directory Zachary Olmstead wrote in the letter to
Cupertino’s city manager Friday. “However, the City also has
the responsibility to zone adequate sites to accommodate housing
needs and to ensure that new housing development opportunities are
available to meet the housing needs of all members of the

Cupertino Mayor Steven Sharf said he had read the letter, but
would hold off commenting on how the city will respond until after
he discussed it with the city attorney. But he said Cupertino has
granted entitlements for several projects that are bringing the
city into compliance with its state housing goals. The problem is
not that the city is blocking housing — it’s that developers
aren’t building the housing, he said.

“The cities don’t actually build the housing,” he said.
“We entitle it and we approve plans and issue permits. If these
property owners don’t submit plans and ask for permits, there’s
very little we could do.”

Cupertino was responsible for zoning and planning for the
construction of 1,064 new housing units by 2023, according to the
letter. To meet that goal, city officials were supposed to adopt a
specific plan and rezoning to build housing on the Vallco Mall
site. But in May, city officials rescinded that specific plan after
pushback from some residents. Opponents got enough signatures to
place multiple referenda challenging the plan on the ballot.

Now developer Sand Hill Property Company is moving forward with
another plan — to build 2,402 homes, 1.8 million square feet of
office space and 400,000 square feet of retail on the site. That
proposal was green-lighted under a new housing law — SB 35 —
which requires cities to fast-track certain residential and
mixed-use projects.

But a group of residents who oppose the project, Friends of
Better Cupertino, is suing the city to block the project and
rescind its SB 35 approval. The city is not fighting back against
that lawsuit, the state noted in its letter.

A hearing in that case is scheduled for Sept. 6.

If the developer loses that lawsuit and the project comes to a
halt, Cupertino could land in violation of state housing law,
according to the letter. And Cupertino officials now are
considering amending the city’s general plan to remove all office
space allocations at the Vallco site. The general plan amendment
wouldn’t affect the SB 35 project, but it would affect any
project proposed for that site otherwise, and could make it
economically challenging to build housing there as well.

Councilman Rod Sinks expressed his disappointment with
Cupertino’s recent housing policies.

“We are being used as a poster child for why the state should
take away local control, which I think is very, very
unfortunate,” he said.

Reed Moulds, managing director of Sand Hill Property Company,
said Cupertino has brought the state’s letter upon itself.

“We have cautioned the City that actions to block housing like
repealing last year’s Specific Plan and undermining the legal
defense of our SB 35 project would put them out of compliance with
state law and expose them to liability,” he wrote in an emailed
statement. “We don’t buy the City Council’s lip service on
housing and apparently neither does the State.”

Source: FS – All – Real Estate News 1
State threatens to sue Cupertino over housing policy