REPORT TO COUNCIL
SUBJECT
Title
Action on a Rezone from Planned Development (PD) to Planned Development (PD) of a property located at 2905 Stender Way to allow development of a four-story Data Center building (CoreSite SV9) (Continued from June 8, 2021 Council Meeting)
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
EXECUTIVE SUMMARY
On September 18, 2019, CoreSite Real Estate SV9 L.P. (“Applicant”) filed an application for the 3.9-acre site at 2905 Stender Way that is currently developed with a single-story light industrial building that is subdivided into commercial condominiums.
The proposed project includes Rezoning from Planned Development (PD) to Planned Development (PD) to allow for operation of a data center with reduced parking from the standard requirement for a data center (CEQ2020-01075, PLN2019-14118). A Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program were prepared to fulfill the California Environmental Quality Act (CEQA) requirements for the project. The rezoning would allow development of a 250,000 square-foot four-story data center including 19,600 square-foot office space for the data center tenants, a new electric power substation, equipment yards and onsite improvements (SV9) with 48-megawatt (MW) connections to Silicon Valley Power (SVP) service on a 3.9-acre site. Site improvements would include the new SV9 data center building, a covered loading dock, exterior lighting, gated driveway access, parking lot, and perimeter landscaping.
The proposed redevelopment would be consistent with the City’s General Plan land use designation in that the proposed project would implement specific goals and policies of the City’s General Plan and result in land development that is compatible with City standards, surrounding land uses, and the overall General Plan strategies, goals and policies. The proposed PD zoning standards for this Project are largely consistent with the ML district standards, with the exception of height (the limit in ML is 70 feet) and parking, which are discussed in in the Planning Commission staff report of April 14, 2021 (Attachment 1).
After a lengthy discussion at the Planning Commission hearing on the number of approved data centers in the City, the Planning Commission voted unanimously (4-0-1), with Commissioner Herro recusing, to refer the application to the City Council with no recommendation on the MND and MMRP or the rezone application from Planned Development (PD) to Planned Development (PD) noting the following concerns: 1) the City’s long term policy driving data centers; 2) noise; and 3) diesel generator emissions.
At the Planning Commission hearing staff described the benefits that data centers provide to the City from an economic development perspective. Since the Planning Commission hearing, staff has researched the significant property tax and other contributions to the General Fund from data centers, which is shared in the Discussion section below.
BACKGROUND
The project site is located at the intersection of Stender Way and Central Expressway. The project site is bound by a parcel developed with industrial uses to the north, Stender Way to the west, San Tomas Aquino Creek to the East and Central Expressway to the South. The assessor’s parcel number is 216-29-108. CoreSite’s SV3, SV4, SV5, SV6, SV7 & SV8 data centers are immediately west of the project site along Stender Way and Coronado Drive. Corporate offices for ON Semiconductor (Semiconductor supplier) are immediately to the north while San Tomas Aquino Creek and bike trail is to the east. There are various offices for Allegion, Crystal Instruments, AccuImage and Sentek Dynamics further to the east across the creek on Owen Street.
Land use zoning designations surrounding the project site consist of Light Industrial and Planned Development to the west, south, and east, Low Intensity Office/Research and Development to the north along Scott Boulevard, and High Intensity Office/Research and Development farther to the west.
While the proposed use necessitates a large warehouse type building, the building facades would be articulated with details and materials to reduce the visual impact of the overall building mass and provide an attractive appearance consistent with an industrial setting. The project includes infrastructure improvements and site design measures consistent with City requirements. A discussion of General Plan and Zoning Code conformance is provided in the Planning Commission staff report of April 14, 2021 (Attachment 1).
Existing Site Conditions:
The project site is developed with a single-story light industrial building and surface parking lot. The existing building is set back from the roadway and parcel lines on all sides, and is surrounded on the west, north, and eastern sides with surface parking. The southern side of the building is set back from Central Expressway with landscaping, trees and a paved pedestrian walkway. As part of the project, the existing single-story building would be demolished, and the associated parking lot would be removed. The current PD Zoning on the site was established in order to facilitate an industrial condominium development with an intended subdivision for multiple condominium lots. However, the previous owner decided not to move forward with the piecemeal sale of the property as the market demand from small business owners desiring to own their office was lower than expected at the time of the prior PD Rezoning.
DISCUSSION
At the April 14, 2021 Planning Commission meeting, staff and the applicant provided presentations on the proposed project. As summarized below, the Planning Commission then discussed the proposal, with much of the discussion focused on potential noise impacts and the cumulative land use impacts for the large number of data centers in the City. One public speaker expressed concerns regarding the air pollution and proposed diesel generators for this project.
Cumulative Impacts
In response to a request from Commissioner Cherukuru (made on Sunday, April 11, 2021) staff prepared a map of the approved data centers in Santa Clara (Attachment 12). The map identifies the location of 54 approved data centers, including some not yet constructed. As noted on the map, data centers begun construction in Santa Clara in the early 1990s. Some sites have multiple data centers which are listed separately on the map but would appear as an integrated site. Data centers in the city are a combination of types including hyperscale datacenters which have a single large user; co-location facilities which serve several customers; and enterprise scale data centers which have a single customer seeking to provide for their own business needs at their company site. The data centers vary in size and peak demand from 1MW up to 45MW. Some recently approved and/or under construction data centers will have a peak demand of up to 99MW.
The Planning Commission discussion centered on the number of data centers within the City. Commissioner Cherukuru expressed disappointment that staff was evaluating the subject project as a singular process because she believed a cumulative analysis of all the data centers should have been conducted to understand the repercussions of utilizing diesel generators simultaneously at multiple data center sites if power outages occurred. Commissioner Cherukuru also expressed concern regarding noise frequencies from data centers and speculated on how they could affect humans and animals. Commissioner Cherukuru stated she would like a moratorium on data centers. Staff explained that power outages are speculative, infrequent events and thus would not result in measurable impacts and further noted that Silicon Valley Power has historically a high degree of reliability. Staff reviewed the reliability at current data centers connected to SVP’s 60kV system. Data centers are typically served by a double loop system and over the last decade the reliability has been 99.98%. This means on the average that outages that affect data centers have been less the 1.75 hours a year. In addition, Assistant City Attorney Abbe informed the Commission that emergency conditions, which would be a likely situation should power outages affect multiple data centers causing diesel generators to be utilized, are not required to be evaluated by CEQA or under Bay Area Air Quality Management District (BAAQMD) regulations; the City’s noise ordinance also exempts generators operating during an emergency.
Some Commissioners expressed concern that the large number of data centers results in an area of the City with utilitarian architecture and a lack of active or lively street presence and that data centers do not contribute significantly to the City’s job base. Some Commissioners stated that the Council should consider different policy direction for future data centers. In response staff stated that data centers have historically been considered a beneficial land use for the City in that they help to meet a growing demand for internet use, and make a significant positive contribution to the City’s revenue, while generating a low demand for services and not exacerbating regional or local traffic congestion. Staff also clarified that projected emissions for the data center would meet all BAAQMD air quality standards by limiting generator testing to 11 hours per year.
Noise concerns
The noise discussion centered on the recent complaints that City received from the community in industrial areas.
Staff explained that all data centers are subject to the City’s noise ordinance and required to operate below set noise levels. Due to several complaints received in the past few months regarding night-time noise issues, the City recently contracted with a consultant to investigate the noise levels and identify the source as the noise resulting in complaints is still from a non-determined source. The City’s acoustical consultant has installed noise monitors at various locations in the City to determine where the source of the noise is coming from and how to move forward to address this concern. City staff have previously taken noise measurements late at night and early in the morning in proximity to data centers and other industrial uses, as well as within the nearby neighborhoods, but has not been able to identify noise levels that exceed the City’s standards. It is important to note that although there has been a number of recent complaints over the last 6 months, there is no historical data that shows any history or pattern of noise concerns with data centers over the last 30 years.
Commissioners Huang disclosed he met with the applicant, CoreSite, at the project site the day before the meeting. Commissioner Huang shared that during his visit he recognized that the new Data Center buildings with newer and enhanced technology make less noise than the older Data Center buildings.
Planning Commission Action
A motion was made by Commissioner Huang, seconded by Chair Saleme to approve Staff Alternative 1, which was to recommend approval of a Mitigated Negative Declaration and the Mitigation Monitoring and Reporting Program for the project. The motion failed (3-2-1), with three Commissioners in favor, two against, and one recusal. Pursuant to Charter Section 1003, a minimum of four votes in favor are required for a motion to be successful.
Then two motions were made by Commissioner Cherukuru, both seconded by Vice Chair Biagini to refer the application to the City Council without a recommendation on the MND and MMRP or the rezone application from Planned Development (PD) to Planned Development (PD), noting the following concerns: 1) the City’s long term policy to promote data centers; 2) noise; and 3) diesel generator emissions. The Planning Commission voted in favor of the two motions to refer the application with no recommendation to the City Council, with Commissioner Huang dissenting on both motions (4-1-1).
Leveraging Regional Advantage for Economic Development
At the Planning Commission hearing, staff spoke to the market advantage for companies to site data centers in Silicon Valley as the region has a high density of technology, social media, and communications companies that are hyper users of cloud services, and thus customers of data storage services. The region has strong fiber infrastructure, which is critical for data center operations. Also, the City of Santa Clara has Silicon Valley Power (SVP), which is a utility with competitive electricity rates and cleaner power. Based on these factors, the City Council has long established data centers as a key component of SVP’s growth strategy which has been discussed publicly over the past years.
Data centers also provide broader benefits to the City. In particular, data centers are large industrial users that do not generate significant traffic. If warehouse distribution or office/R&D uses were built instead, these uses would add a significant larger number of trips on local streets and more community impacts.
Since the Planning Commission meeting, staff was able to research the property taxes contributed by data centers, which fund County and City services. Upon construction and operation, recently developed individual data centers can contribute typically between $150,000 and $200,000 to the City in property taxes annually. One data center within the City pays more than $1.1 million in year to the City in property taxes. This is the only City reporting of the property tax (10.19%) and City partners such as the school district (38.36%), county of Santa Clara (18.71%) community college (11.09%) receive significant funding. The Santa Clara School District receives $4.1 million annually. In addition, in the City of Santa Clara, data centers contribute 5% of SVP utility fees paid toward the City’s General Fund. As such a 50 MW data center could contribute up to $2.5 million and a 99 MW could contribute up to $5.0 million annually to the City’s General Fund. Data centers are in demand as the world has embraced remote work and digital retail and this revenue source for the City has been reliable and growing even during the pandemic induced recession.
Any policy discussion about changing the City’s position on data centers must factor in the revenue contributions to not only the City, but other public agencies that depend on this revenue to provide public services. Indeed, the impact of data centers demonstrates the interrelatedness of this service to not only the region’s global reputation of innovation and technology, but the public service agencies that depend on this revenue to support a higher than average quality of life for residents. Undoing this Council priority must come with a strategy for continued support of the region’s support of the Silicon Valley’s data center needs to continue with its global role and the local needs to continue to meet the service needs of residents.
ENVIRONMENTAL REVIEW
A Mitigated Negative Declaration (MND) was prepared for the project by the environmental consultant firm Circlepoint, in accordance with the California Environmental Quality Act (CEQA). The MND and Notice of Availability were posted on the City’s website at www.santaclaraca.gov/ceqa and circulated for 30-day review on July 29, 2020 and closed on August 28, 2020, in accordance with CEQA requirements. The Planning Department received comments in response to the MND from the Bay Area Air Quality Management District (BAAQMD). In addition, the City received comments from the law firm Adams Broadwell Joseph & Cardozo, on behalf of “Santa Clara Citizens for Sensible Industry,” a group associated with labor unions. Those letters are attached, along with the response to comments to this staff report for review. No other comments on the MND were received by staff.
The MND examined environmental impacts associated with project development and identified potential air quality, biological, cultural resources, geology and soils, hazardous materials, and noise impacts that with incorporation of mitigation measures into the project would reduce all potential impacts to less than significant. A detailed discussion of the potential impacts including a cumulative analysis and mitigation measures to be applied to the project are specified in the MND and would be implemented through project conditions of approval and the Mitigation Monitoring and Reporting Program (MMRP) for the proposed project.
An errata Memorandum is prepared and attached to this report. As originally proposed, the applicant would have rezoned the property from Planned Development (PD) to Light Industrial (ML). After the MND was distributed, the Applicant asked to modify the application so that the rezoning would go from Planned Development to Planned Development, to accommodate the reduced parking and increased height. The MND assumed that the structure would be approximately 85 feet tall, so the 87-foot height is consistent with the MND, and the amount of parking is not a CEQA impact by itself. Since this minor process change is not going to affect any of the MND’s impacts, an errata Memorandum was prepared.
FISCAL IMPACT
There is no fiscal impact to the City for processing the requested application other than administrative staff time and expense typically covered by processing fees paid by the applicant.
COORDINATION
This report was coordinated with the City Attorney’s Office.
PUBLIC CONTACT
on May 27, 2021, the notice of public hearing for the June 8, 2021 City Council meeting for this item was posted in three conspicuous locations within 300 feet of the project site and was mailed to property owners within a 1,000-foot radius of the project boundaries.
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov>
ALTERNATIVES
1. Adopt a resolution to adopt the Mitigated Negative Declaration and the Mitigation Monitoring and Reporting Program for the 2905 Stender Way project.
2. Adopt a resolution to approve a rezoning from Planned Development (PD) to Planned Development (PD) to allow development of a 250,000 square-foot four-story data center, a new substation, equipment yards and onsite improvements (SV9).
3. Deny the rezoning from Planned Development (PD) to Planned Development (PD) to allow development of a 250,000 square-foot four-story data center, a new substation, equipment yards and onsite improvements (SV9).
RECOMMENDATION
Recommendation
Alternatives 1 and 2: That the City Council adopt resolutions for the 2905 Stender Way Project to:
1. Approve a Mitigated Negative Declaration and the Mitigation Monitoring and Reporting Program for the 2905 Stender Way project; and
2. Approve a rezoning from Planned Development (PD) to Planned Development (PD) to allow development of a 250,000 square-foot four-story data center, a new substation, equipment yards and onsite improvements (SV9).
Staff
Reviewed by: Andrew Crabtree, Director of Community Development
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. Planning Commission Staff Report of April 14, 2021
2. Mitigated Negative Declaration (MND), Response to Comment Letters, and Mitigation Monitoring and Reporting Program (MMRP)
3. Comment Letters Received on the MND
4. Supplemental Air Quality Memorandum
5. MND Erratum
6. Resolution Adopting the Mitigated Negative Declaration and Mitigation Monitoring
and Reporting Program
7. Resolution Approving the Rezoning
8. Conditions of Rezoning Approval
9. Development Plans
10. Project Data Sheet
11. Parking Study
12. Data Centers Location Map
13. Planning Commission Meeting Minutes - April 14, 2021