Vallco Town Center, New SB 35-Compliant Plan for Vallco Mall Proposes 2,402 Housing Units with 50% Affordable

Vallco Property Owner, Sand Hill Property Company, Vallco Mall, Cupertino, Vallco Town Center, California Senate Bill 35, AMC Theatres, City of Cupertino, Specific Plan for Vallco, Political Action Committee, Bay Area, Regional Housing Needs Allocation

Property Owner to Pursue Dual-Track Planning Process with City to Explore Alternative Outcomes

Cupertino, Calif. – Today Vallco Property Owner, LLC (“VPO“), an affiliate of Sand Hill Property Company, the owner of Vallco Mall in Cupertino announced its new vision for Vallco Mall, the Vallco Town Center. The project application was submitted pursuant to California Senate Bill 35 (“SB 35”) providing for a streamlined, administrative approval process of the plan (the “Application”). VPO’s submission is in direct response to California’s acute housing shortage and the State Legislature’s recent declaration that access to housing, and in particular affordable housing, is a matter of statewide concern. Vallco Town Center allocates more than 2/3rds of its development area to housing and mandates 50% of the 2,402 housing units to be built as affordable housing.

Vallco Town Center will look familiar to Cupertino residents, as it borrows heavily from a previous plan for the revitalization of the mall. “Vallco Town Center retains the major design aspects, innovative features, and community benefits of the previous “Hills at Vallco” application,” said Reed Moulds, Managing Director at Sand Hill Property Company. “This includes a 30-acre rooftop park, two town center plazas, and an exciting retail and entertainment district to be anchored by a new, state-of-the-art AMC Theatres, bowling alley and ice facility. In terms of quality, this will be a world-class development.”

The Application also makes significant changes to the original “the Hills at Vallco” plan proposed in 2015 to ensure compliance with the specific requirements of SB 35 and to address past critiques. Specifically, Vallco Town Center has reduced total office area (including unoccupied or ancillary spaces) from approximately 2.4 million to 1.81 million square feet, while allowing more diversified uses such as research and development, medical office and allied labs. The retail area has been right-sized, adjusting from 640,000 square feet to 400,000 square feet to better reflect evolving and real market conditions.

“While the master plan approach is similar to “the Hills”, it is differentiated by our new approach to housing. We have increased residential units from 800 to 2,402, and of those 2,402 units an unprecedented 50%, or 1,201 units, will be affordable to low and very low-income households at rents expected to be a fraction of market rates,” said Moulds.

The evolution of “the Hills” project to Vallco Town Center also brings forward a number of changes that will benefit Cupertino, including:

  • a 25% reduction in traffic impacts compared to the former “the Hills” plan, in addition to the greenhouse gas (GHG) benefits resulting from reducing now long commute distances for area workers who will be residents;
  • a healthy fiscal impact and necessary infrastructure for the City’s sustainable economic growth, not to mention thousands of construction jobs over a period of five to eight years filled by skilled craftspeople and at the prevailing wage;
  • millions of dollars in one-time and new annual recurring revenue to Cupertino’s excellent but severely under-resourced schools.

Ongoing Vallco Specific Plan Process
The City of Cupertino is currently also in the process of developing a Specific Plan for Vallco. In October 2017, more than a year after a previous entitlement effort was blocked by a Political Action Committee’s ballot box challenge to the re-use of Vallco Mall, VPO brought forward a range of options for the City to consider in a community-driven Specific Plan process that could revitalize the failed Vallco Mall. That launched the “Envision Vallco” effort. This process is ongoing and, while SB 35 requires our Application to be processed pursuant to statutory timelines in the legislation, VPO will continue in parallel to seek a successful, community-supported outcome if it can be achieved within a reasonable timeframe.

“The City’s timely completion of the Specific Plan would still allow Cupertino to fulfill its legal obligations to the State as well as preserve the possibility of an alternative community-driven outcome,” said Moulds.

VPO’s decision to pursue a dual-track approach has been necessitated by a significant and ongoing campaign since 2012 by the same Political Action Committee (PAC) that has derailed past planning processes. Their efforts to stop revitalization of Vallco and undermine community planning processes to date include:

  • Past and ongoing litigation against the City of Cupertino over Vallco (2016-Present)
  • Ballot initiative (Measure C) against Vallco (2016)
  • Threats of ballot box challenges against Vallco (2015-Present)
  • Attempts to rewrite the General Plan, downzoning Vallco to retail only (2017)
  • Actions to strip Vallco’s Housing Element designation (2017)
  • Fundraising for litigation and ballot box challenges to prevent the revitalization of Vallco (2015-Present)
  • Attempts to unduly influence the City-sponsored community Specific Plan process (2017-Present)
  • Public request to the City to abandon the City-sponsored community Specific Plan Process (2018)

While VPO appreciates the hard work of City staff and earnest people to engage in the ongoing community process, we have reluctantly concluded that there remains a high likelihood of further efforts by this PAC to frustrate and delay any community-supported, market-feasible project.

“It is our sincere hope that the City process is successful in yielding a project that is derived from the community and addresses housing while also being viable and sufficiently robust to withstand any legal and ballot box challenges in a reasonable time frame,” said Moulds. “However, absent such an alternative, our SB35 Application offers a viable, housing-focused plan for the dead mall that will allow us to get started on a feasible project with a reasonable schedule of completion.”

About Vallco Town Center
Under the new State Law SB 35, the State has determined that projects in Cupertino require a 50% affordable housing limit to qualify. VPO’s new plans, “Vallco Town Center”, include 2,402 residential units, both for sale and for rent, 50 percent of which will be affordable.

The plan retains the same urban design features, including the green roof and town squares of earlier plans, which will create a dynamic space for community events and gatherings. With 400,000 square feet of retail and entertainment uses, the project will rejuvenate the vibrant retail scene at Vallco, with the return of the AMC Theaters, the retention of an ice rink and bowling alley and the development of a true downtown. In order to make the project economically viable and sustain the significant requirement of affordable housing and to support the retail environment, the project also has a 1.81 million square feet office component.

About Cupertino Housing Needs
Cupertino currently provides only one affordable housing unit for every fourteen of its low-income jobs, one of the most egregious ratios in the Bay Area. It’s only getting worse: two thirds of Cupertino’s own “below market rate” rental housing stock, totaling 142 units, will convert to market rates within the next decade. The City has yet to permit a single low or very low income unit from its now 3-year old Regional Housing Needs Allocation.

“This housing and affordability crisis is real and getting worse. It is affecting us on both business and personal levels and requires action now,” said Moulds. “Businesses at our neighboring Main Street Cupertino project are severely short-handed due to the lack of housing available for their workers.”