REPORT TO COUNCIL
SUBJECT
Title
Update on Settlement Agreements with the City of San José regarding development projects (e.g., Santana West and CityPlace)
Report
BACKGROUND
The purpose of this informational report is to provide an update on the following three (3) settlement agreements that the City of Santa Clara (Santa Clara) has with the City of San Jose (San Jose): 1) 2006 North San Jose Settlement Agreement, 2) 2018 City Place Settlement Agreement, and 3) 2018 Santana West Settlement Agreement.
As a year has passed since Santa Clara and San Jose reached a settlement over disputes related to the City Place and Santana West developments, staff is providing this update to inform the Council of recent changes that may be of interest to the Council or the general public.
This report will provide a brief background of the three settlement agreements, the key terms and timelines associated with each agreement, and the status of the key items which includes progress that both Santa Clara and San Jose have made towards fulfilling the key terms.
2006 North San Jose Settlement Agreement
In 2005, San Jose approved the North San Jose project, EIR, and Development Policy (collectively referred to as North San Jose), which includes 32,000 residential units, 26.7 million square feet of new industrial uses, and 1.7 million square feet of retail/commercial uses within northern San Jose. This 4,700 acre area is primarily bounded by Highway 237 to the north, the Guadalupe River and Highway 87 to the west, Coyote Creek to the east, and Interstate 880 to the south. In November 2006, Santa Clara entered into a settlement agreement with San Jose regarding litigation related to the North San Jose project. Additionally, the County of Santa Clara (County) and the City of Milpitas filed separate litigation actions against San Jose related to North San Jose and additional settlement agreements with these entities were executed with San Jose.
Included within the North San Jose EIR is a transportation improvement program that was projected to cost $519 million in 2005 dollars. A North San Jose Traffic Impact Fee was created in 2005 to provide the majority of the funding necessary to complete the transportation improvements. Additionally, to ensure that the jobs and housing planned with North San Jose developed in parallel, North San Jose was structured into four (4) discrete project phases as shown below. As currently structured, a subsequent North San Jose phase is not available for development until the previous phase has been completed.
Table 1 - North San Jose Project Phasing - Original
|
Original Policy Phasing |
Development Allowed |
|
Phase 1 |
7 million sf Industrial |
|
|
8,000 residential units |
|
Phase 2 |
7 million sf Industrial |
|
|
8,000 residential units |
|
Phase 3 |
7 million sf Industrial |
|
|
8,000 residential units |
|
Phase 4 |
5.7 million sf Industrial |
|
|
8,000 residential units |
The 2006 Settlement Agreement between Santa Clara and San Jose covers two main topics: 1) Schools and 2) Traffic. Key terms include:
• Schools:
o San Jose to pay $25,000 to the Santa Clara Unified School District (School District) to fund a pupil (i.e. student) generation study
o San Jose and the School District to complete a school facility plan to determine possible school site locations in North San Jose
• Traffic:
o With Phase 1 of North San Jose, San Jose to fund and complete the widening of Montague Expressway to 8-lanes from Lick Mill Boulevard to Trade Zone Boulevard.
o San Jose to provide funding and coordinate with the County regarding early design work for a proposed Montague/Mission/101 Interchange project.
2018 City Place and Santana West Settlement Agreements
On January 12, 2018, Santa Clara and San Jose reached a settlement over legal disputes regarding the City Place development in Santa Clara and the Santana West development in San Jose. Two separate settlement agreements were executed for both projects, signed by both cities, and also included the respective private developers associated with both development projects.
2018 City Place Settlement Agreement
This settlement agreement pertains to the City Place development (City Place) in Santa Clara located at 5155 Stars & Stripes Drive on 239 acres of City-owned property adjacent to Levi’s Stadium. City Place includes 5.7 million square feet of office, 1.5 million square feet of retail uses, 1,360 residential units, 700 hotel rooms, a 30-acre public park, and other public open space areas. Santa Clara, San Jose, and the Related Companies (developer for the City Place) are the parties within the settlement agreement. Key terms include:
• San Jose agreed to dismiss its appeal of the November 2017 San Mateo County Superior Court judgment upholding the City Place EIR.
• Related Companies to pay San Jose:
o $4.5 million for the first phase (1.5 million square feet) of City Place for traffic improvements in North San Jose
o Up to $10 million (less credits for first phase traffic improvement expenditures) as the second phase (1.5 million square feet) commences
o $5 million in 15 years, with credits available for market rate and affordable housing production in Santa Clara
• The Agreement also includes supportive language for Santa Clara’s future City Place Multimodal Improvement Plan in addition to San Jose’s desire to modify its North San Jose Development Policies to add additional housing.
• Both Santa Clara and San Jose agree to meet regularly to discuss development and traffic issues, particularly those in North San Jose.
2018 Santana West Settlement Agreement
This settlement agreement pertains to the Santana West development (Santana West), located in San Jose at the corner of Winchester Boulevard and Olsen Drive, within the Valley Fair/Santana Row Urban Village. Santana West includes 970,000 square feet of office space and 29,000 square feet of retail space on a 13 acre site. Santa Clara, San Jose, and Federal Realty Investment Trust (developer for Santana West) are parties to this settlement agreement. Key terms include:
• San Jose to implement $2.5 million in identified traffic improvements within and adjacent to Stevens Creek Boulevard (within San Jose) before the issuance of occupancy for the first 300,000 square feet of rentable space within Santana West.
• San Jose (at their discretion) to add Class II and/or Class III bicycle boulevard treatments along Cypress Avenue from Stevens Creek Boulevard to Williams Road.
• San Jose to provide Santa Clara $1.2 million in identified traffic calming improvements and traffic equipment upgrades before the issuance of occupancy for the first 300,000 square feet of rentable space within Santana West.
• San Jose agrees to use fees from Santana West to fund $1.2 million in traffic improvements which include a feasibility study for potential pedestrian/bicycle grade separations at intersections on Stevens Creek Boulevard at Santana Row and Winchester Boulevard in addition to providing adaptive signal traffic equipment to Santa Clara along certain transportation corridors.
• San Jose to pay Santa Clara $5 million for affordable housing and transportation improvements upon issuance of a grading or building permit for Santana West or by July 1, 2022.
• San Jose to collect fees pursuant to its Protected Intersection Policy for intersections that will also impact traffic in Santa Clara. Such fees will be directed towards transportation improvements that will alleviate traffic congestion in the City of Santa Clara that results from development in San Jose.
• Santa Clara and San Jose agree to work together to address traffic issues along the Stevens Creek corridor.
DISCUSSION
Below is an update on the three Settlement Agreements.
2006 North San Jose Settlement Agreement - Update
Status Update on Key Settlement Terms
For this settlement agreement, the schools related items have been satisfied. Regarding traffic, while Montague Expressway has been widened from First Street to Trade Zone Boulevard, the section between Lick Mill Boulevard to Trade Zone Boulevard has not been fully widened. In addition, for the Montague/Mission/101 Interchange project, early preliminary design work has been completed; however, final design and funding from San Jose has not been completed.
2018 North San Jose Proposed Changes
In the fall of 2018, San Jose informed Santa Clara about upcoming proposed changes to North San Jose that their City Council is scheduled to hear in the spring of 2019. The primary driver behind the changes involves advancing additional residential units from Phase 2 to Phase 1. Currently, in Phase 1 of North San Jose, the level of industrial development has not triggered North San Jose to advance from Phase 1 to Phase 2. To advance additional residential units in the near term, San Jose proposes to collapse North San Jose from four (4) phases into two (2) phases as shown in the Table 2 below.
Table 2 - North San Jose Project Phasing - Proposed
|
Original Policy Phasing |
Development Allowed |
|
Phase A |
14 million sf Industrial |
|
|
16,000 residential units |
|
Phase B |
12.7 million sf Industrial |
|
|
16,000 residential units |
Staff is reviewing the traffic analysis and will provide comments during San Jose’s environmental review process for the proposed changes to North San Jose. Based on an initial review, staff believes that these changes will affect the timing of when the North San Jose’s traffic improvements are completed. As we understand, San Jose does not intend to alter the level or scope of traffic improvements, the completion date for certain items will likely occur at a later time due to the 4 phases being collapsed into 2 phases.
It is important to note that included within the 2018 City Place Settlement Agreement is language that states that “Santa Clara shall make good faith efforts to support any modifications to the NSJ ADP that accelerate the construction of housing units, so long as such modifications include revision of the timing, nature, and scope of related traffic improvements where necessary to serve the acceleration of housing under the NSJ ADP.” Staff is reviewing the proposed changes to North San Jose to ensure compliance with the 2018 City Place Settlement Agreement.
2018 City Place Settlement Agreement - Update
Currently, staff is working with Related California on the City Place project to advance the project into early construction activities. It is anticipated that in early/mid 2019, pending approval from outside regulatory agencies such as the State of California Regional Water Quality Control Board, construction will begin at the project site. The construction being contemplated is related to early traffic improvement and utility relocation work necessary to advance future on-site building construction. Per the 2016 City approvals (i.e. Development Agreement, Master Community Plan, etc.) for the City Place Project, the development will be further advanced by the City’s Community Development Department with Development Area Plans (DAP) for each project phase. Staff will ensure that City’s approvals of the DAP are consistent with the Related Companies’ commitments with the 2018 City Place Settlement Agreement.
2018 Santana West Settlement Agreement - Update
Project Update
As the key terms with this settlement agreement pertain to proposed permitted construction activity within the Santana West development, staff is actively monitoring the construction permitting progress of the Santana West project. Currently, no grading or building permit has been issued for this project. Staff will continue to monitor the permitting timelines and activities for this project to ensure that the project is consistent with the terms of the 2018 Santana West Settlement Agreement.
Stevens Creek Corridor Coordination
In July 2018, staff attended the first Stevens Creek corridor meeting between San Jose, Cupertino, and the Santa Clara Valley Transportation Authority. As reported to the City Council on August 28, 2018, staff began these coordination efforts to share information amongst the affected cities and agencies to address traffic issues along this key transportation corridor. Staff continues to meet with the affected agencies and will provide updates to the Council as discussions progress.
Additional San Jose Projects along Stevens Creeks Boulevard
Staff monitors and provides relevant comments to new development projects proposed in San Jose along the Stevens Creek Boulevard corridor. As an example, staff provided a comment letter (Attachment 1) for a proposed mixed-use development at 4300 Stevens Creek Boulevard in San Jose. The intent of staff’s review and comments are to ensure that projects along the Stevens Creek Boulevard corridor adhere to the terms and conditions specified in the 2018 Santana West Settlement Agreement.
It is important to note that the City has provided three additional letters (Attachment 2) to San Jose specifically requesting clarification about recent changes made to San Jose’s Transportation Analysis Policy regarding its elimination of the Protected Intersection program. Specifically, the City has asked for clarification regarding how elimination of this developer funding source for traffic improvements will affect San Jose’s compliance with the 2018 Santana West Settlement Agreement. San Jose has not provided responses to any of the letters. Staff will continue to coordinate with the City Manager’s Office and City Attorney’s Office regarding the clarification required.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that this is a governmental organizational or administrative activity that will not result in direct or indirect changes to the environment.
FISCAL IMPACT
There is no additional cost to the City other than administrative staff time and expense.
COORDINATION
This report has been coordinated with the Finance Department, City Attorney’s Office, and Community Development Department.
PUBLIC CONTACT
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> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Note and file this report regarding City of San Jose Settlement Agreements.
Staff
Reviewed by: Craig Mobeck, Director of Public Works
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. City of Santa Clara Comment Letter on 4300 Stevens Creek Boulevard dated October 15, 2018
2. Three City of Santa Clara Letters regarding San Jose Traffic Policy Changes