REPORT TO CITY COUNCIL
SUBJECT
Title
PUBLIC HEARING: Action on an Environmental Impact Report and Mitigation Monitoring and Reporting Program, General Plan Amendment from High-Intensity Office/Research-and-Development to newly created Urban Center Mixed Use and Urban Center Residential Mixed Use land use designations, a Rezoning to PD - Planned Development, a Vesting Tentative Subdivision Map, and Introduction of an Ordinance to Approve a Development Agreement for a Mixed Use Project at 3005 Democracy Way comprised of up to 1,800 units (approximately 1.8 million square feet of residential uses), up to 3 million square feet of office/research-and-development, approximately 100,000 square feet of retail, and approximately 10,000 square feet of childcare facilities (“Option A”), with a project alternative (“Option B”) that allows for the flexibility of up to an additional 800 dwelling units (for a total of up to 2,600 residential units) with a corresponding reduction in office/research and development square footage to 2.2 million square feet.
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
EXECUTIVE SUMMARY
In March of 2022, the applicant, Kylli Inc., submitted the subject project proposal, known as Mission Point, to redevelop the subject 48.6-acre site located on the south side of Tasman Drive between Old Ironsides Drive to the east, Patrick Henry Drive to the west, and the right-of-way associated with the Hetch Hetchy aqueduct to the south, with up to 4,913,000 gross square feet of new development, including:
• 1.8 million square feet of residential uses (up to 1,800 units),
• up to 3 million square feet of office/research-and-development (R&D),
• up to 100,000 square feet of commercial retail,
• approximately 10,000 square feet of childcare facilities, and
• an 18,000 square-foot electrical substation may also be constructed on-site.
The project proposal includes a General Plan Amendment from High-Intensity Office/Research-and-Development (R&D) to newly created Urban Center Mission Point and Urban Center Mixed land use designations, a Rezoning from HO-RD High-Intensity Office/Research and Development to PD - Planned Development, a Vesting Tentative Subdivision Map, and a Development Agreement. Subsequent Architectural Review approvals would be required for the design of specific components of the project. These applications are submitted pursuant to Santa Clara City Code Chapters 18.142 (Amendments), 18.54 of the “Classic” Code (Regulations for PD and Combined Zoning Districts), 17.05 (Subdivisions) and 17.10 (Development Agreements).
A Final Environmental Impact Report (EIR) was prepared for the proposed project as required under the California Environmental Quality Act (CEQA). Except for two air quality and noise impacts that are significant and unavoidable even with mitigation, all of the significant and potentially significant impacts of the proposed project would be reduced to less than significant level with the incorporation of mitigation measures. A detailed discussion of the potential impacts and mitigation measures to be applied to the project are specified in the environmental document, provided in Attachment 4.
On October 23, 2024, the Planning Commission considered the development proposal. At the October 23rd meeting, the applicant shared a plan alternative that had been studied in the EIR, but was not part of the description in the project application. The alternative would allow an additional 800 residential units and a corresponding reduction in office development. As this alternative development option was not noticed to the public, the Planning Commission voted to continue the project until November 6, 2024 to provide public notice and consider the alternative option. At the November 6, 2024 Planning Commission meeting, the Commission voted to recommend to the City Council approval of the alternative development option, “Option B”, with a vote of 5-1-1 (Commissioner Bouza opposed, Commissioner Cherukuru absent).
BACKGROUND
The project site is located on nine parcels totaling approximately 46 acres, as well as the Democracy Way right-of-way, a privately owned street, that is subject to an existing public right-of-way easement that covers approximately 2.6 acres, for a combined total project area of 48.6 acres. The project site is bounded by Tasman Drive to the north, Old Ironsides Drive to the east, the right-of-way associated with the Hetch Hetchy aqueduct to the south, and Patrick Henry Drive to the west. The Patrick Henry Drive Specific Plan area is located directly to the south beyond the Hetch Hetchy right-of-way. The site is within walking distance of multiple Santa Clara Valley Transportation Authority (VTA) light rail stations, as well as the Great America station, which is served by Amtrak’s Capital Corridor and Altamont Corridor Express.
The project site is currently occupied by four light industrial buildings on the northern portion of the site. The current primary use of the site is temporary parking for Levi’s Stadium, providing 3,300 parking spaces for stadium events. Prior to use as a temporary parking lot, the site had six single-story office and industrial buildings. The previous owner demolished the buildings to prepare the site for redevelopment (former planned Yahoo! campus).
The primary issues for the City Council to consider in evaluating the proposed project are consistency with the General Plan and proposed design standards, development plan and development schedule associated with the Planned Development Zoning. The City Council can review these standards and development plan and identify areas where they may be enhanced, modified, or further developed to address City objectives and priorities. An analysis of the project’s consistency with the General Plan and applicable Zoning Code sections is provided in the Planning Commission reports provided as Attachment 1 to this report.
DISCUSSION
At the October 23, 2024 Planning Commission meeting, the Commission considered the Mission Point development proposal, including an Environmental Impact Report, General Plan Amendment, Rezoning to Planned Development, Tentative Map, and Development Agreement to allow Development of up to 1,800 Multi-Family Residential Units; 3 million Square Feet of Office/Research-and-Development (R&D); up to 100,000 Square Feet of Commercial Retail; and Open Space. The development is proposed in four site plan areas called Area A, B, C, & D and would allow for housing in Area D only. Attachment 1 is the staff report prepared for the October 23, 2024 Planning Commission meeting and includes the original proposal, “Option A”.
At the October 23rd meeting, the applicant’s presentation shared a plan alternative that had been studied in the EIR, but was not part of the description in the project application, to allow an additional 800 units of residential development in Area C, “Option B”, which is beyond the 1,800 units of what was initially proposed in area D. Before they acted on the project, the Planning Commission deliberated on the merits of adding another 800 residential units to the development program. Their discussion included the adequacy of parkland and parking, as well as affordable housing. The Planning Commission voted to continue the project until their next meeting on November 6, 2024 in order for the alternative development option to be publicly noticed with documents updated, and more analysis conducted and presented on the alternate scenario.
At the November 6, 2024 Planning Commission meeting, staff provided the Commission with an analysis of Option B by stating that the reduction in office square footage and the increase in residential units for the site is consistent with the General Plan as the mix of uses still supports transit, minimizing vehicle miles traveled, and is compatible with existing and proposed surrounding uses. The request was also determined to result in environmental impacts that are the same as or similar to those of the proposed project (“Option A”).
Development Agreement
The project proposal includes a Development Agreement (DA) between the City and the property owner, Kylli, Inc. The purpose of the DA is to establish the terms and obligations of development by both parties, as well as the order and timing of these obligations.
Basic terms of the DA include:
Term: Initial 10 years term with up to three five-year extensions. Up to 25 years to develop the Project.
Extensions: Each extension can be earned either through delivery of community benefits or through an extension payment option that is based on the remaining maximum allowed square feet of the Project. This is calculated starting at $1 per square foot, as adjusted for increases in CPI from the effective date and increases by $0.50 per square foot for each subsequent extension. The extension payment option allows for the extension of the term of the agreement but does not change the developer’s obligations to provide the community benefits required under the DA.
Community Benefits:
• Affordable Housing: 15% of the units at a maximum average AMI level of 80% rather than the required 100% as provided under the City’s Affordable Housing Ordinance.
• Grocery Store: Minimum 10,000 sf Grocery Store
• Childcare Center: Minimum 8,000 sf Childcare Center
• Public Park Maintenance: Project will maintain public parks and trails within the Project for a minimum of 40 years
• Park Improvements: Minimum 1.5 acres of parkland including play areas for children ages 2-5 and 5-12.
• Arts and Cultural Programming: Public Art with an aggregate value of $5 million.
• Regional Traffic Fees: Up to $3 million toward traffic intersection improvements.
• Fire Station Equipment Costs: $3.5 million in funding for the purchase of a tractor-drawn aerial apparatus and fire engine.
• Sales and Use Tax: Developer will also ensure that all contractors and subcontractors establish a job-site sub-permit for sale and use tax collection from the Project.
Option B: With the addition of the alternative development proposal, the applicant is proposing to add the following community benefits to the DA:
• Additional park on Area C: Deliver a minimum of 1.5 acres of parkland in Area C upon development of residential on the site.
• Residential Parking: Residential parking ratio of 1 space per residential unit on Area C and Area D of which up to twenty-five percent (25%) of these minimum may be provided through shared parking. This requirement has also been included in Option A.
Development Agreements are enforceable contracts, and in the event either party fails to comply with a term of the Agreement, the other party can bring an action to enforce the Agreement. This DA includes a requirement that the parties must go through mediation prior to the initiation of any litigation.
Attachment 2 is the staff report prepared for the November 6, 2024 Planning Commission meeting and includes information on the revised project proposal, “Option B”.
Economic/Fiscal Analysis
Sales and property tax revenues will accrue to the City, as well as to nearby agencies that benefit from the increases in the distribution of property tax that will grow as the project develops and is occupied. The economic analysis provided by the Developer's economic consultant (which was peer reviewed by the City's economic consultant, Keyser Marston Associates) projects as follows:
• For Option A, the fiscal surplus from the project (General Fund tax revenues minus expenditures) is estimated to generate a $4.0 million annual net surplus to the City General Fund upon full buildout. The net additional funds will be available to support other city services. For Option B, the fiscal surplus is estimated to be $3.1 million.
• The residential phase alone is projected to generate a $0.3 million annual net surplus to the City General Fund.
The project will create a substantial number and variety of jobs for residents in the City and region, and provide new retail, grocery and childcare services to residents in the area. Finally, the public benefits of the project include the purchase of fire station apparatus and a commitment that at least 15% of all residential units on the sites will be affordable at a maximum average of 80% AMI and the contribution of park space and maintenance costs.
At the November 6 Planning Commission meeting, the applicant provided a presentation, and there were seven members of the public who spoke on the item. Members of the public generally supported the project, with a few speakers concerned about a lack of an agreement with union labor for construction of the project and that the EIR did not disclose the impacts of the loss of event parking for Levi’s stadium. The Planning Commission questioned the applicant and staff on parking adequacy and potential for building sinkage. The EIR analyzed Static Settlement, Subsidence, or Collapse and a mitigation measure is included in the Mitigation Monitoring and Reporting Program (MMRP) that prior to building permit, and during building design, the Project Sponsor shall define the extent and depth of fill materials that would be placed on the Project site in the Project plans. The Project Sponsor shall hire a qualified geotechnical engineer to prepare a design-level geotechnical report for the Project. As for parking, AB2097 (2022) prohibits applying parking requirements within ½ mile of transit the app, which applies to the project site; however, the applicant has agreed in the Development Agreement to provide 1 parking space per residential unit with 25% of that parking being in a shared arrangement as a standard. The remainder of parking for the site will be provided as determined by the applicant. A Transportation Demand Management (TDM) plan that will promote use of public transportation is also required for the project.
The Planning Commission then deliberated on the proposal for both Options A and B. The Planning Commission voted 5-1-1 to recommend to the City Council approval of an EIR and MMRP, General Plan Amendment from High-Intensity Office/Research-and-Development to newly created Urban Center Mixed Use and Urban Center Mission Point land use designations, a Rezoning to PD - Planned Development, a Vesting Tentative Subdivision Map, and a Development Agreement for Option B. In summary, Option B would entitle a mixed use project with up to 3 million square feet of office/research-and-development, approximately 100,000 square feet of retail, and approximately 10,000 square feet of childcare facilities with a project alternative that allows for the flexibility of up to an additional 800 dwelling units (for a total of up to 2,600 residential units) with a corresponding reduction in office/research and development square footage to 2.2 million square feet.
The Commission also made three other motions to recommend that the City Council: (1) seriously consider additional parking requirements for a successful project as the parking ratio provided raises great concern with the Planning Commission; (2) include the Planning Commission’s recommended condition of approval in the Planned Development conditions to encourage the Owner and any contractors or subcontractors working on the project to evaluate hiring local labor, hiring from or contributing to approved, accredited apprenticeship programs, increasing resources for labor compliance, and providing living wages during the development of this Project; and (3) for the City Council to engage with the State of California about the cumulative impact of state-mandated high density housing policies on the environment and City resources, given concerns over long-term sustainability as available land and resources continue to diminish.
Staff Recommendation - Option B
The fiscal analysis of Option A and Option B show that there is approximately a $900,000 difference, with Option A providing about $4.0M in net revenue to the General Fund, versus Option B providing $3.1M in net revenue. This is approximately a 23% difference in revenue to the City between these options, as residential uses typically result in greater City expenses given the higher provision of services compared to office/industrial uses.
The fiscal analysis assumes the full build out of the project; however Option B allows for added flexibility which may allow the redevelopment of development Area C sooner as there is currently a stronger market for residential than office development and near term redevelopment would therefore increase property taxes and increased City revenue sooner.
Option B presents an opportunity for additional housing which is valuable to the City in meeting its Regional Housing Needs Allocation, which is the City’s housing obligation to the State through the City’s certified Housing Element. Kylli Mission Point was not an identified site in the City’s Housing Element; however the increase in 800 housing units provided in Option B, specifically with the project’s Development Agreement requirement to provide 15% of units at an average of 80% AMI or lower, would provide a total of at least 390 affordable units with Option B versus 270 affordable units provided with Option A. These added affordable units would be helpful for the City to achieve its specific RHNA requirements of 1,653 low income units and 1,981 moderate income units.
ENVIRONMENTAL REVIEW
An Environmental Impact Report (EIR) was prepared in accordance with the California Environmental Quality Act (CEQA) and circulated for a 45-day public review between November 17, 2023 and January 2, 2024. A total of eight comments were received during the comment period. Seven were from local/regional agencies: Caltrans, California Department of Toxic Substances Control, Santa Clara Unified School District, Santa Clara Valley Water District, San Jose Mineta International Airport, San Francisco Public Utilities Commission, and Santa Clara Valley Transportation Authority. The
eighth letter received was from a law firm representing Silicon Valley Residents for Responsible Development. None of the comment letters provided substantial evidence that the CEQA analysis is otherwise inadequate and recirculation of the EIR is therefore not required. Responses to the Draft EIR comments, as well as minor text changes and clarifications, in the form of a Final EIR, were made available to the public through the City’s website on March 13, 2024 and have been forwarded on to any commenters on the Draft EIR. A website link to the Final EIR, Mitigation, Monitoring and Reporting Program (MMRP), CEQA Findings, and Response to Comments is provided in Attachment 4 to this report.
The EIR identified potential environmental impacts associated with project and identified traffic, greenhouse gas, energy, biology, geology and soils, cultural resources, tribal cultural resources, utilities, water quality, and hazards and hazardous materials as having impacts that with the incorporation of mitigation measures would be reduced to less than significant. The EIR also identified air quality and noise as having a significant unavoidable impact with mitigation incorporated. Attachment 6 and 8 includes a Statement of Overriding Considerations regarding impacts that cannot be mitigated for Options A and B respectively.
A detailed discussion of the potential impacts and mitigation measures to be applied are specified in the EIR and would be implemented through project conditions of approval and the MMRP for the proposed project.
FISCAL IMPACT
There is no fiscal impact to the City other than administrative staff time and expense to prepare this report.
COORDINATION
This report has been coordinated with the City Attorney’s Office.
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.
On November 6, 2024 a notice of the public hearing scheduled for November 19, 2024 was published in The Weekly, a newspaper of general circulation, and on November 7, 2024, a notice of public hearing of this item was posted on the project site and in three locations within the City and was mailed to property owners within a quarter mile of the project site.
The project applicant held a total of 11 community meetings and workshops between November 2017 and June 2023. Several of the meetings were specific to different neighborhood groups (Adobe Wells residents and Rivermark residents), while others focused on specific topics such as parkland and open space. Most recently, a community meeting was held at Mission College on February 29, 2024 to show the plan to the community as it would be presented to the Planning Commission and City Council for their consideration. There were approximately 35 attendees. The audience asked questions about bicycle connectivity, affordable housing, stadium events, and project funding.
ALTERNATIVES
Option A
1. Adopt a resolution to certify the Final EIR prepared for the Mission Point Project (SCH # 2018072068) and adopt a Mitigation Monitoring and Reporting Program, CEQA Findings, and a Statement of Overriding Considerations, “Option A”.
2. Adopt a resolution to approve a General Plan Amendment to add new land use designations, Urban Center Mixed-Use (UCMU) and Urban Center Mission Point (UCMP), and to change the land use designation for the project site from High Intensity Office/Research & Development (HI O/R&D) to UCMU (on Area D) and UCMP (on Areas A, B, and C), “Option A”.
3. Adopt a resolution to approve the Planned Development Rezoning from HO-RD - High-Intensity Office/Research and Development to PD - Planned Development with land use “Option A”.
4. Adopt a resolution to approve a Vesting Tentative Subdivision Map, “Option A”.
5. Waive first reading and introduce an ordinance approving the Development Agreement, “Option A”.
Option B
6. Adopt a resolution to certify the Final EIR prepared for the Mission Point Project (SCH # 2018072068) and adopt a Mitigation Monitoring and Reporting Program, CEQA Findings, and a Statement of Overriding Considerations, “Option B”.
7. Adopt a resolution to approve a General Plan amendment to add new land use designations, Urban Center Mixed-Use (UCMU) and Urban Center Mission Point (UCMP), and to change the land use designation for the project site from High Intensity Office/Research & Development (HI O/R&D) to UCMU (on Areas C and D) and UCMP (on Areas A and B), “Option B”.
8. Adopt a resolution to approve the Planned Development Rezoning from HO-RD - High-Intensity Office/Research and Development to PD - Planned Development, with land use “Option B”.
9. Adopt a resolution to approve the Planned Development Rezoning from HO-RD - High-Intensity Office/Research and Development to PD - Planned Development, with land use “Option B”, and added Condition of Approval encouraging the use of union labor as recommended by the Planning Commission.
10. Adopt a resolution to approve a Vesting Tentative Subdivision Map, “Option B”.
11. Waive first reading and introduce an ordinance approving the Development Agreement, “Option B”.
Project Deferral or Denial
12. Defer making a decision, by continuing the hearing to a future meeting and directing staff to work with the Developer to revise the Project.
13. Deny the project, by disapproving the EIR, General Plan Amendment, Rezoning, Vesting Tentative Subdivision Map, and Development Agreement
RECOMMENDATION
Recommendation
Option B
1. Adopt a resolution to certify the Final EIR prepared for the Mission Point Project (SCH # 2018072068) and adopt a Mitigation Monitoring and Reporting Program, CEQA Findings, and a Statement of Overriding Considerations, “Option B”.
2. Adopt a resolution to approve a General Plan Amendment to add new land use designations, Urban Center Mixed-Use (UCMU) and Urban Center Mission Point (UCMP), and to change the land use designation for the project site from High Intensity Office/Research & Development (HI O/R&D) to UCMU (on Areas C and D) and UCMP (on Areas A and B), “Option B”.
3. Adopt a resolution to approve the Planned Development Rezoning from HO-RD - High-Intensity Office/Research and Development to PD - Planned Development, with land use “Option B”.
4. Adopt a resolution to approve a Vesting Tentative Subdivision Map, “Option B”.
5. Waive first reading and introduce an ordinance to approve the Development Agreement, “Option B”.
Staff
Reviewed by: Reena Brilliot, Acting Director, Community Development Department
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. October 23, 2024 Planning Commission Staff Report
2. November 6, 2024 Planning Commission Staff Report
3. Land Use Table
4. Web Links to the PD Rezoning, Final Environmental Impact Report, Mitigation, Monitoring, and Reporting Program, Response to Comments
5. Final EIR Resolution Option A
6. CEQA Findings and Statement of Overriding Considerations Option A
7. Final EIR Resolution Option B
8. CEQA Findings and Statement of Overriding Considerations Option B
9. Final EIR Attachment 3 Impacts of Option B
10. General Plan Amendment Resolution Option A
11. General Plan Amendment Resolution Option B
12. PD Rezoning Resolution Option A
13. PD Rezoning Conditions of Approval Option A
14. PD Rezoning Resolution Option B
15. PD Rezoning Conditions of Approval Option B
16. PD Rezoning Resolution Option B, Planning Commission Recommendation
17. PD Rezoning Conditions of Approval Option B, Planning Commission Recommendation
18. Tentative Subdivision Map Resolution Option A
19. Tentative Subdivision Map Resolution Option B
20. Tentative Subdivision Map Conditions of Approval
21. Development Agreement Ordinance Option A
22. Development Agreement Option A
23. Development Agreement Ordinance Option B
24. Development Agreement Option B
25. Public Correspondence
26. Keyser Marston Associates Peer Review of Fiscal Impact Analysis