Director's Report
CITY OF CUPERTINO
10300 TORRE AVENUE, CUPERTINO, CALIFORNIA 95014
DEP ARTMENT OF COMMUNITY DEVELOPMENT
Subject: Report of the Community Development Directo~
Planning Commission Agenda Date: Tuesday, December 13,2006
The City Council met on November 6, 2006, and discussed the following items of interest
to the Planning Commission:
1. Appeal of the Planning Commission's decision to deny an appeal of a Minor
Residential Permit for a IS-foot rear property line setback. The applicant dropped
the application for the minor residential permit making the appeal moot. The item
was removed from calendar.
2. Vallco Redevelopment Project Area 2006-2010 Implementation Plan Update. The
City Council adopted the updated implementation plan. Several residents asked
questions about the redevelopment process so the City Council asked staff to post
information about the Valleo Redevelopment Project Area on the City's website. (see
attached staff report)
3. Mary Avenue Bicycle Footbridge progress report: (see attached staff report)
4. Authorize the City Manager to sign an agreement to dedicate land and restore the
Nathan Hall Tank house near Blackberry Farm Golf Course: This item was
continued to January 16, 2007.
Enclosures:
Staff Reports
Newspaper Articles
G:\ Planning \ SteveP\ Director's Report \ 2006\pd12-13-06.doc
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PUBLIC WORKS DEPARTMENT
I F
CUPEI\TINO
Summary
AGENDA ITEM I 1
AGENDA DATE December 6. 2006
SUBJECT AND ISSUE
Mary Avenue Bicycle Footbridge Progress Report.
BACKGROUND
On June 21, 2005 the Council accepted a progress report on the Mary Avenue Bicycle
Footbridge Project. The project is a single span cable stayed bridge over Intersta!e Route
280 connecting an established bicycle trail system on Mary Avenue in Cupertino on the
south side of 1-280 to Mary Avenue in Sunnyvale on the north. The design concept,
developed by city staff and the design consultant team of Biggs-Cardosa Associates and
HNTB, Inc had been approved by the Council on February 1, 2005.
The Council, in adopting the FY 2005-2006 Capital Improvement program approved a
revised total project budget of $9,250,000. While that budget became the established
resource for the project, there still remained some uncertainties that could affect the
estimate of the total cost of the project. These included many Caltrans approval issues and
conditions, completion of wind force testing and other minor but yet to be resolved design
issues. As such, staff advised the Council that it would continue to seek additional funding
while the design was being completed and more refined cost estimates became available.
Bridge Design Concept
The cable-stayed bridge concept is one that has been used successfully all over the world
on large and small bridges for pedestrian, vehicular and rail traffic. It is currently being
used on a portion of the reconstruction of San Francisco Oakland Bay Bridge. However, it
is still a relatively unusual and rare concept, and it remains one that is more architecturally
and visually striking than other traditional design concepts.
The 460 foot long bridge structure (325 feet of clear span over the freeway) consists of two
eighty-five foot tall support towers, a 16-foot wide bridge deck with the capacity to support
a light maintenance vehicle. An eight foot wide paved pathway winds through nearly
thirteen acres of landscaped approaches protected by privacy screening, residential
security, lighting, and signage.
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UNIQUE NATURE OF THE MARY BICYCLE FOOTBRIDGE PROJECT
This narrative was included in the progress report in June of2005. However, it is important
that the unique and particular aspects of this project be understood so this information is
repeated here.
The proposed Mary Avenue Bicycle Footbridge (Mary BFB) project is uniquely different
in many respects from most capital projects designed and constructed bY'the City of
Cupertino. It is important as the project design is nearing completion that these unusual
characteristics of the project be understood because it is largely not relevant to make
comparisons of costs of construction, project management, design and implementation of
the Mary BFB to other more traditional projects.
As noted above, the design of the Mary BFB as a single span cable-stayed structure with a
clear span of 325 feet over an interstate freeway ata high volume interchange (IR 280/ SR
85) presents, an extremely high quality of architecture and beauty in its appearance and
function. The bridge, when completed at the proposed site, will be a signature architectural
icon as well as a practical solution to the connection of two segments of the Mary Avenue
bicycle trail.
However, the architectural and engineering. design (A&E) and the construction
management (CM) costs are in a greater proportion to the construction costs than most
capital improvement projects (ClF) that the city has undertaken. For example, the
Library/Civic Center project had a ratio of A&E and CM costs (often referred to as "soft
costs") of 20 % of total project budget with the remaining 80% of the total project budget
for construction (referred to as "hard costs"). The Mary BFB on the other hand is currently
estimated to require approximately 34% of project costs to be allocated for A&E and CM
with the remaining 66% for the construction of the bridge and the landscaping on the
approaches. A summary of the more unique aspects of the project is described as follows.
Extraordinary Requirements for Design and Construction Management
There are a number reasons why a project of this nature generates this kind of demand for
soft costs. These include the coordination of requirements with the California State
Department of Transportation (CalTrans) in the construction of a facility over an active
interstate freeway. Also, because of the structural configuration of the bridge over the
freeway, extensive structural wind load evaluations are required including active wind
tunnel tests of a model of the structure as described below.
In addition to the normal responsibilities for traditional CM tasks during construction,
because of the occupancy of the project on and over the interstate freeway, there are
additional demands for testing, construction surveys, slope stability tests and design review
of falsework (the temporary structures supporting the bridge span over the freeway during
construction). Further, because of the highly specialized material (very high strength
concrete, post-tensioned high grade steel, among others) there will be a need for a "source
inspection" by Caltrans, the construction management team and the structural engineers. A
source inspection means that the material is tested and inspected as it is fabricated at its
"source", which may be in another state, or even another country.
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Finally, owing, again, to the unique nature of the project, there are some specialty
consultant costs associated with the project such as the artwork, the bridge span fencing,
lighting, railing and additional structural engineering peer reviews because of the unique
structural design of the bridge. .
In summary, this project requires approximately $1,000,000 of additional design and
construction management effort not typically experienced on other city projects, which
accounts for the higher ratio of A&E/CM costs of 34% to construction costs of 66%. In
project budget terms as shown in Attachment A, the cost allocation for the current
proposed project cost of$ 10,822,000 is summarized as follows
Feasibility Study (2001)
A&E Design and Contract Administration
CM, Testing and Surveying
200,000
2,915,000**
600,000**
Subtotal - A&E / eM
$ 3,715,000 (34%)
Construction - Phase I
Construction - Phase II
625,000
6.482,000*
Subtotal- Construction
$ 7,107,000 (66%)
Total Project Costs
$ 10,822,000 (100%)
*lncludes 2% of construction cost ($145,000) for the project art sculpture.
**These estimates include several recommendations to the Council on this same agenda
for the Council's consideration. These are approval of amendment no. 2 to the contract
with HNTB/Biggs-Cardosa Assoc. in the amount of $470,000 and a contact for
construction management services with Swinerton CM Services, lnc.in the amount of
$600,000.
PROJECT DESIGN AND SCHEDULE IMP ACTS
The design team is currently engaged in fmalizing the Phase II bridge construction
documents. The final bid package consisting of the plans, specifications and estimates
(PS&E) is to be completed in January, 2007. It is expected that the project will be
advertised at that time, and assuming the receipt of a responsive low bid, a
recommendation for the award of the construction contract would occur in late March,
2007. The construction will proceed shortly after that and is expected to be completed in
April of 2008.
This proj ect has been delayed almost one year from its original schedule, which called for
completion in April of 2007. There are a number of reasons that have accumulated to cause
that delay.
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Following concept approval of the cable stayed bridge, the design team began a detailed
investigation into the effects of wind and seismic activity on the bridge design. A series of
computer models were developed and studied by sub-consultants specializing in wind and
earthquake analyses. The narrow deck of the bridge and the high protective screen required
by Caltrans makes it somewhat more susceptible to the effects of gusty wind conditions.
To thoroughly understand those effects, a recognized and respected wind analysis team at
the University of Western Ontario, located in London, Ontario, constructed a six-foot long
scale model of a section ofthe deck that was tested in the wind tunnel.
The bridge also underwent additional detailed analysis of its stability during a variety of
earthquakes, because current seismic specifications require that after a maximum credible
earthquake, all bridge structures shall be designed to prevent collapse or injury or loss of
life. The additional time required for wind tunnel and seismic analysis along with a number
of other requirements by Caltrans, in whose right-of-way this bridge is being constructed,
has added a full year to the schedule and, as noted above, commensurate additional costs to
the proj ect.
However, most of those actIVItIes and challenges have been met and staff and the
consultants along with the senior management of Caltrans are confident that the project can
proceed to construction early next year.
SCHEDULE
Based on the above considerations the current schedule, which is expected to prevail, is as
follows:
100% Design (PS&E) Completion
Bid and Award Construction Contract
Begin Construction
Complete Construction - Open Bridge
December
January-March
April
May
2006
2007
2007
2008
PROJECT ART
City policy requires that 1/4% of the constructed cost of a project be allocated for the
installation of public art. Because of the visibility and importance of this bridge project a
2% art allocation ($145,000 = 2% of$7.2 Million) was included in this project budget.
There is a case to be made (and has been made by some) that because of the unusual and
elegant architecture of the bridge, the bridge itself is a form of art. However, during the
feasibility study and in later forums, the Council and the community had expressed a desire
for more specific representation of sculptures or other art that reflects indigenous flora
and/or fauna of the region. Tom Aidala, a noted artist and architect was engaged to develop
art concepts for the bridge.
The initial concept, as shown to the Council in 2005 was to include art in the form of
egrets and other birds in flight on the superstructure and railings of the bridge.
Unfortunately these structures, while strikingly beautiful, created serious problems during
the wind tunnel testing to the extent that the concept had to be abandoned.
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In the alternative, a concept has been developed that would place sculptures on the
Cupertino side of the bridge approach. There would be two sculptures: one that would
include a family of California native quail elevated on a cluster of granite boulders, and the
other a red-tailed hawk elevated on a pedestal near the approach path. Staff will provide
renderings of this concept to the Council on December 6,2006.
PROJECT FUNDING & BUDGET - SEE A TT ACHMENT 'A'
FUNDING
In June of 2005 the Council had approved a budget of $ 9,250,000 which was incorporated
into the 2005-2006 CIP. Since that time additional funding has been approved in the
amount of $ 630,000 for a total funding to date of $ 9,880,000. A recommendation in the
mid-year budget adjustments on this agenda proposes to add $390,000 in funds from
Proposition 42 that were received from the state after the budget was adopted. Proposition
42 is the voter approved mandate requiring the state to sub-vent certain funds from the gas
tax to local governments for transportation purposes. In addition, $360,000 in operating
budget savings from FY 2005-2006 is also proposed for the budget for a total of $750,000.
This would result in a total final funding of the project in the, amount of $10,630,000. A
summary ofthis funding extracted from Attachment' A' is as follows:
Total Approved Fundin2 - June 2005
$ 9.250.000 (rounded to $1000's)
Funding Approved Since June 2005
Additional State TDA
Additional TDA 3 (Non BEP)
06-07 CIP Funding Mary/Meteor Approach
Total Additional Approved Funding
$ 300,000
80,000
250,000
$ 630,000
Current Total Funding
$ 9.880.000
Proposed Additional Funding - Mid- Y r FY 06-07
State Proposition 42 Funds
GF Operating Budget Savings FY 05-06
$ 390,000
360,000
Total Additional Proposed Funding
$ 750.000
FINAL PROJECT FUNDING
$ 10.630.000
It should be noted that in this project the investment from the City's general Fund in the
amount of $ 1,585,000 is highly leveraged by other outside funding som:ces in the amount
$ 9,045,000. Said another way, over 85% of the total project budget comes from sources
other than the City's general fund,ie., almost a 6 to I ratio.
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PROJECT BUDGET ESTIMATE
The project Budget as shown on Attachment' A' is as noted below:
Cost Estimate - December 2006
(Rounded to $1000's)
Item
Feasibility Study (Completed 2001))
AdminlP ermits/F ees
DesignJPS&E (BG/HNTB)
Construction Design Services (BC/HNTB)*
Construction Management (PB)*
Construction - Phase I (Completed 2005)
Cost Estimate Construction -Phase II
Public Art (2% of$7.2M)
* (Approval Recommended 12/06/06)
Total 100% Project Cost Estimate
Amount
$ .200,000
393,000
2,052,000
470,000
600,000
625,000
6,337,000
145,000
$ 10.822.000
There is a variance in the funding proposed and the cost estimate as follows:
Cost Estimate
$ 10,822,000
Funding Proposed
10,630,000
. Funding variance
$ 192,000
This difference is attributed to two uncertainties, i.e., the unknown cost of source
inspection which had been expected to be provided by Caltrans but is now included in the
budgetin the amount of $ 100,000 and approximately $ 92,000 in minor cost variances in
the construction project. Staff is not recommending additional funding for this variance at
this time because the inspection issue has not yet been resolved and the minor variances
represent less than 1.5 % of the construction cost and are within the expected margin of
error for bidding. Further cost refinements prior to advertising the job will most likely
eliminate this 1.5 % variance.
It is recommended that the Council accept this progress report on the Mary Bicycle Foot
Bridge project.
Submitted by:
Approved for submission:
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Pirector of Public Works
QJ(
DaVId W. Knapp
City Manager .
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ATTACHMENT 'A'
Avenue Bic de Footbrid
et
Rounded to $1000's
Cost Estimate - December 2006
Item
Feasibility Study (Completed 2001))
AdminlPermitslFees
DesignIPS&E (BG/HNTB)
Construction Design Services (BC/HNTB)*
Construction Management(PB)*
Construction - Phase I (Completed 2005)
Cost Estimate Construction ~Phase II
Public Art (2% of$7.2M)
*(Approval Recommended 12/06/06)
Total 100% Project Cost Estimate
Funding Sources
VT A Grant Share
State Transportation Fund (Sher)
City of Sunnyvale
Bicycle Transportation Account (State)
TDA 3 (non-BEP)
City of Cupertino CIP
Total Approved Funding - June 2005
Funding Approved Since June 2005
Additional State TDA
Additional TDA 3 (Non BEP)
06-07 CIP Funding MaryiMeteor Approach
TotalAdditional Approved Funding
Current TotalFunding
Amount
$ 200,000
393,000
2,052,000
470,000
600,000
625,000
6,337,000
145,000
$ 10,822,000
$ 7,000,000
500,000
110,000
600,000
65,000
975.000
$ 9,250,000
$ 300,000
80,000
250,000
$ 630,000
$ 9,880,000
Proposed Additional Funding - Mid-Yr FY 06-07
State proposition 42 Funds
GF Operating Budget Savings FY 05-06
Total Additional Proposed Funding
FINAL PROJECT BUDGET
$ 390,000
360,000
$ 750,000
$ 10,630,000
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CUPEI\TINO
City Hall
10300 Torre Avenue
Cupertino, CA 95014-3202
(408) 777-3354
FAX (408) 777-3333
PUBLIC WORKS DEPARTMENT
Summary
AGENDA ITEM
fl~
AGENDA DATE December 6. 2006
SUBJECT AND ISSUE
Adopt Resolution No. 06- lc J, authorizing the City Manager to negotiate and execute
Amendment No. 2 with Biggs Cardosa Associates to provide Final Design and
Construction Phase Services to the City on the Mary Avenue Bike & Pedestrian Bridge
project for a basic fee not to exceed $420,000, and an additional fee of $50,000 which
may be authorized by the Director of Public Works for Additional Services, on an as-
needed basis, for a total fee not to exceed $470,000.
BACKGROUND
On May 5, 2003, Council adopted Resolution No. 03-082, authorizing the City Manager
to execute a design services agreement with Biggs Cardosa for an amount not to exceed
$1,300,000, of which $75,000 was to be used for Additional Services, as determined to
be necessary by the Director of Public Works.
On June 21, 2005, Council adopted Resolution No. 05-109, authorizing the City Manager
to execute Amendment No.1 with Biggs Cardosa for an amount not to exceed, $752,500
for Caltrans related services and design services unique to cable stayed bridges.
Biggs Cardosa is nearing completion of the Final Design of the bridge with the award of
the construction contract, expected by mid March of 2007. Unfortunately, a number of
additional design services have been required by Caltrans since the authorization of
Amendment No.1. The design of this bridge is unique and challenging to the various
Caltrans divisions responsible Jor oversight. The Caltrans management staff, from the
outset of this project, has been unable to predict, in advance, specific needs, reports, or
analyses, of the design until the design team was well along in their own development.
Many of the additional requirements have come from independent internal groups in
Caltrans that have traditionally taken a very conservative approach resulting in
unpredictable periods of time to reach their conclusions.
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Much of the additional work covered by this amendment is considered critical and
required by Caltrans to fully complete the design to their satisfaction.
FISCAL IMPACT
The award of Amendment No.2 to Biggs Cardosa will temporarily encumber $470,000
of City funds from account 428-9449-9300, until grant reimbursement can be
accomplished.
STAFF RECOMMENDATION
Staff recommends that the City Council Adopt Resolution No. 06-1tJ '1 , authorizing the
City Manager to negotiate and execute Amendment No.2 with Biggs Cardosa Associates
to provide Final Design and Construction Phase Services to the City on the Mary Avenue
Bike & Pedestrian Bridge project for a basic fee not to exceed $420,000, and an
additional fee of $50,000 which may be authorized by the Director of Public Works for
Additional Services, on an as-needed basis, for a total fee not to exceed $470,000.
Submitted by:
Approved for submission to
the City Council:
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Ralph A. Qualls, Jr. TJ
Director of Public Works
~
David W. Knapp
City Manager
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CITY OF
CUPERTINO
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
(408) 777-3308
Fax: (408) 777-3333
Community Development Department
Summary
Agenda Item N 10. _
Agenda Date: December 6, 2006
Application Summary:
Adopt the Valko Redevelopment Project Area 2006-2010 Implementation Plan
RECOMMJENDA TION
Adopt a resolution approving the 2006-2010 Cupertino Valko Redevelopment Project
Five-Year Implementation Plan.
BACKGROUND
In 1993, the State Legislature passed into law AB 1290 requiring redevelopnlent
agencies to adopt Implementation Plans that identified specific programs that would
implement the Agency's Redevelopment Plan. The Implementation Plan is to be
reviewed eyery two to three years and updated every fIve years. The Agency adopted
its first Implementation Plan in August 2000, and did not update it in 2005 due to
intensive activity at Valko. It is now required to update the Plan to reflect current
conditions and expenditure plans. The required elements of an Implementation Plan
are:
9 Identify specific goals and objectives for the next five years.
s Identify specific programs and projects planned for the five year period, including
estimated expenditures.
<3 Provide an explanation of how the goals, objectives, programs and expenditures
will eliminate blight.
e Provide an explanation of how programs will help the Agency meet its housing
production goals.
Ii) Provide an explanation of how the Agency's low and moderate income housing
set-aside fund will be used to create or rehabilitate affordable housing.
The Implementation Plan charts a course over the next five years for continuing
revitalization efforts within the Project Area, estimates capital project expenditures and
tax increment revenues and generally outlines a blue print for the Agency Board and
community as to how the Agency intends to proceed with redevelopment activities.
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CUjpertiin1\o Vallko Redevelopment Project
Page 2. of 4
The Implementation Plan differs from the previous plan in that it contains a housing
production plan, since housing is now anticipated in the project area. Affordable
housing production is a requirement of the plan, as described in Section'C. The Plan
notes that the programs and strategies outlined in the document may vary over the next
five years, since constraints an opportunities are not fully predictable.
The Implementation Plan was prepared by a consultant Kirk Heinrichs, in conjunction
with City staff, Mr. Heinrichs .will attend the City C01Jncil meetinrr to chc;cl1sS the Plan
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and answer q:uestions.
DISCUSSION
Revenu.es, Programs and Projects
Tax increment revenues estimated over the five-year period are shown on Table 3.
Gross tax increment revenues over the five-year period are estimated to be $5,296,941.
Based on projected revenues, Tax Allocation Bonds (TABs) in the amount of
approximately $10,000,000 may be issued in 2008/09 if there are sufficient tax increment
revenues and if an investment grade bond rating can be achieved. For purposes of the
Plan, it is assumed that bond proceeds will be available to finance programs and
projects.
Expenditures for the five-year period are estimated at $14,940)05, including tax
increment revenue and bond proceeds. Of the totat approximately $9,000,000 is
expected to be used for public infrastructure, including parking facilities, road
improvements, and utility improvements. Approximately $1,500,000 will be expended
in debt service payments on the TABs. The Agency will set aside approximately
$1,336,671 in its Housing Fund for facilitating affordable housing in the community and
approximately $1,000,000 will be spent on economic development programs. The
Agency is obligated to pass through to the tax entities who share in the property tax in
the Project Area, such as school districts and public utilities, 25 % of the Agency's net tax
increment totaling approximately $1,336,671. And approximately $753,864 will be spent
on Agency administrative costs, primarily supporting a full-time staff person who will
manage the Redevelopment Agency activities as well as economic development duties.
The Plan is not an authorization to expend funds. Any expenditures would have to be
authorized by the Redevelopment Agency in a separate action.
Housing
The Implementation Plan anticipates the production of 204 housing units over the life of
the plan, which is the mixed-use I/Rosebowll/ development approved in 2004.
Therefore, the Redevelopment Agency will have housing production requirements
under California Redevelopment Law (CRL).
In addition to the CRL requirements, the Redevelopment Agency must satisfy terms of
D/R-/~
Cupertino Valko lRedevelopment Project
Page 3 of 4
a settlement agreement with the Cupertino Citizens For Affordable Housing in
resolution of a lawsuit brought about in connection with the adoption of the
Redevelopment Plan in 2000. This Implementation Plan is in compliance with the
provisions of that settlement agreement.
The settlement terms are as follows:
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it;:) 3 nl1l1a] tax illcrcrrlCll t illt() tlH::~
housing fund (rather than 20% as required under CRL).
I;J The Agency must spend 20% of the amount deposited into the
Housing Fund (5% of total tax increment collected) to provide
housing affordable to extremely low-income persons! who are
persons with household incomes not exceeding 30% of area median
income. (CRL does not have a requirenient for extremely low-
income households).
o The Agency must provide five affordable housing units (at
specified afford ability levels) for each 100,000 square feet of non-
residential area added within the Project Area if financial assistance
from the Agency has been provided (there is no comparable
. requirement in CRL).
@l The Agency Tnust satisfy specified requirements for leveraging the
use of Housing Fund monies! providing affordable housing
monitoring reports to the legal representative for the "Cupertino
Citizens For Affordable Housing" group, qnd induding certain
provisions in agreements for the provision of affordable rental
units.
The Plan identifies that 13 Very Low and 18 Very Low! Low and Moderate income units
would be provided over the life of the Project Area (see Table 9). The law requires that
15% of the units provided must be affordable! and 6% of those units must be provided
at Very Low income levels. The other 9% can be provided at any level induding Very
Low, Low and Moderate.
DI R -I 3
RESOLUTION NO.
A RESOLUTION OF THE CITY OF CUPERTINO REDEVELOPMENT AGENCY
BOARD APPROVING THE 2006-2010 IMPLEMENTATION PLAN
WHEREAS, the Cupertino City Council approved and adopted the
Vallco Redevelopment Plan on August 21, 2000 for the Vallco Redevelopment
Project Area (the "Project Area"); and
WHEREAS, in compliance with Health and Safety Code Section
33490, Redevelopment Agencies must conduct a public hearing on and
adopt an implementation plan every five years identifying goals and
objectives of the Agency.
WHEREAS, staff has presented to the Agency Board a proposed
Implementation Plan, a copy of which is on file with the Agency
Secretary; and
WHEREAS, on the date of this resolution, the Agency has conducted and
concluded a duly noticed public hearing on the Implementation Plan in
accordance with Health and Safety Code Section 33490; and
WHEREAS, the Agency finds that the Implementation Plan, with any
modifications as considered and approved in connection with the public
hearing, constitutes a statement of the Agency's goals and objectives
for the Project Area, a summary of the specific programs and proposed
expenditures proposed to be made by the Agency during the next five
years, and an explanation of how the goals and objectives, projects, and
expenditures will eliminate blight within the Project Area and implement
the affordable housing regulations of the Community Redevelopment Law;
and
WHEREAS, pursuant to Health and safety Code Section 33490, approval
of the Implementation Plan does not constitute a project for purposes of
the California Environmental Quality Act (CEQA), and therefore no
environmental documentation is required pursuant to CEQA.
NOW, THEREFORE, BE IT RESOLVED, that the Cityof Cupertino
Redevelopment Agency Board hereby approves and adopts the Implementation
Plan for the Cupertino Vallco Redevelopment Project 2006-2010.
BE IT FURTHER RESOLVED, that this resolution shall take
immediate effect from and after its passage.
DI f2 -/5
The. News
6 THE BUSINESS JOURNAL
sanjose.bizjournals.com
NOVEMBER 24, 2006
Developer gives up on housing plan; Cupertino site sold for R&D use
BY BRAD BERTON
sanjose@bizjournals.com
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A locally based and opportunistic
real estate investment fund manager
has paid a reported $62 million - up-
wards of $2.8 million per acre - for
the rare opportunity to revitalize 22
acres of Cupertino commercial prop-
erty.
It's an opportunity that comes in
part because Taylor Woodrow Homes
has given up on its bid to put housing
on about half of the site.
Belmont-based Embarcadero Capi-
tal Partners LLC purchased the
373,402-square-foot Results Way Cor-
porate Park in western Cupertino.
The complex is just across the West
Valley Freeway (Route 85) from DeAn-
za College, along Bubb Road within a
mostly industrial pocket flanking the
freeway and railroad tracks between
McClellan Road and Stevens Creek
Boulevard.
The buildings on the roughly 12-
acre portion proposed for a 94-home
development are vacant. The new
owners plan to improve and lease
those buildings amid strong tenant
demand in the western Silicon Valley,
says Embarcadero Capital co-founder
John Hamilton.
Embarcadero, co-founded by Bay
Area realty veterans. Mr. Hamilton
and Eric Yopes, is one of numerous
'There's a lot of capital
out there chasing value-added
deals like that.'
Joe Moriarty
CPS Corfac
investment managers with roots in
the local market now scouting for op-
portunities to put their capital and
expertise to work by adding value to
real estate.
The fund - dubbed Embarcadero
Capital Investors II - has the ca-
pacity to acquire between $650 mil-
lion and $700 million worth of real
estate, says Embarcadero executive
Sam Hooker.
Eml;Jarcadero's second commingled
investment fund bought the nine- -
building complex from UK-based
property concern Grosvenor's Cali-
fornia division. New York-based in-
vestment tracker Real Capital Ana-
lytics reports the price at about $62
million, or $166 per square foot.
Greg Cioth ofEastdil Secured, along
with Gregg von Thaden and John Mc-
Mahon of Colliers International, bro-
kered the sale. The property's various
buildings were developed from the
early 1970s through the late 1990s.
Current tenants include pharmaceu-
tical company Durect Corp.'s corpo-
rate headquarters, and a research
and development facility for imaging
technology company Ricoh Co. Ltd.
Taylor Woodrow Homes, which also
has its roots in the UK, had' previ-
ously proposed building 94 "small-
lot" homes on a 12-acre portion of the
property. But various stakeholders
- including residents and city of-
ficials - objected. Cupertino's City
Council earlier this year declined to
approve the plan.
The property's zoning can accom-
modate a number of uses including
R&D, a category in quite short supply
in Cupertino. The city's R&D inven-
tory amounts to a bit under 5 million
square feet with a vacancy rate of just
3.2 percent compared to 18.2 percent
valley-wide, according to Bay Area
brokerage NAI BT Commercial.
R&D space in Cupertino now rents
for an average of $1.45 per square foot
monthly on a "triple net" basis, that is
with the tenant responsible for insur-
ance, maintenance and other costs.
That's a higher average than any oth-
er valley submarket except Palo Alto,
NAI BT Commercial reports.
That's why Embarcadero faced
strong competition from numerous
would-be buyers in bidding on the
prop'erty, Mr. Hamilton says.
"There's a lot of capital out there
chasing value-added deals like that,"
says veteran valley investment bro-
ker Joe Moriarty at CPS Corfac in
Santa Clara.
The new ownership hasn't yet set
the rental rates it will ask or selected
a leasing team for the sResults Way
complex, according to Mr. Hamilton.
BRAD BERTON is a freelance writer specializing in real
estate. He is based in Portland, Ore.
-3
VLQ
OUf lifestyle magazine
looks at Silicon Valley
beyond '9 to 5.'
Real estate
~Ian shifts
at Apple
BY SHARUN SlIIIlUI\lSON
ssimonson@bi~oumals.com
Apple Computer Inc. has select-
d The Staubach Co. as its new
lobal commercial real estate
,roker and project manager, just
s the iPod maker appears tb be
,rapping up aggregation of land
tl Cupertino for, a planned office
ampus.
It is not clear how the change
ffects Apple's relationship with
:ilicon Valley broker Gregg von
'haden, a senior vice president
or Colliers International. Mr.
Ton Thaden is believed to have
oorked with Apple for more than
decade. Colliers declined com-
nent.
The selection follows Apple in-
er,views with five brokerages, of
.hich tenant brokers Staubach
nd Studley Inc. were two. The
,ther three are not known.
Staubach declined comment on
he deal, as did Apple.
The change comes as Apple
,ursues development of its sec.
,nd corporate campus in Cuper-
ino across Interstate 280 from
ts hea<jquarters. Apple Chief
;xecutive Steve Jobs told the Cu-
.ertino City Council in April that
lis company, which has grown
apidiy with the success of the
Pod, has been forced to find an
dditional 30 buildlngs to keep
lp with work force growth in the
ompany'shometown.
The eXisting headquarters
neasures a little shy of a mil-
lon square feet. The new campus
See APPLE, Page 48
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CUPE:RTU10 COMl-I1JNITY DEV
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,JO 1 8L
VOL 24, NO. 28
$1.50
t
."~ Site,
ENTERPRISE
96 N. Third St.
Suite 100
San Jose, CA
85112
Twins have teamed up on
,compensation survey firm for
30 years.
P.~.. 25, 26
'he News
NOVEMBER 17, 2006
STAY CAUGHT UP: Sign up for free e-mail news updates atslIIllijllDsQ!.lJfizjlllJlllmilllRs.CI!IIM
sanjose.bizjournal~.com
H-lEBUSINESSJOURNAL 49
APPLE : Change in brokerage relationship comes as land acquisition phase appears near completion
CONTINUEO FROM PAGE 1
is expected to be about the same size,
though no development proposals have
been filed with the Cupertino to date.
Apple set aside $265 million this year
to buy the land for the secOlid campus
and a new data center, according to its
most recent public financial filing in
May. The' company acquired' a New-
ark data center for an estimated $50
million earlier this year, according
to Business Journal research. That
presumably left $215 million to buy the
campus property.
That process now appears to be draw-
ing to a close. Since April, the compa-
ny has acquired 12 parcels measuring
about 50 acres, according to the Sant.a
Clara County assessor's office. It. is
under contract to buy a 13th parcel
measuring 5.22 acres from Grosvenor,
according to a Grosvenor source. The
source would not release the purchase
price but did say, "(Apple) paid a lot. We
were happy."
Grosvenor is a privately-owned inter.
national property group, representing
the interests of the Grosvenor family,
fI P"cels,."dbyAppleComp,lBr
o P"cel o."dby Gro,venor USA
. P"cel,o."d byTbe Irvi" Co.
"
BIGGER APPLE: Apple computer has
selected a new broker as It acquires
new property in Cupertino with
plans to expand.
headed by the Duke of Westminster in
the' United Kingdom.
The 13 parcels, all of them adjacent
to one another, appear to complete the
land acquisition phase of the develop-
ment. They are clustered in a rough
triangle bounded by 280, North Tantau
Avenue and Pruneridge Avenue and
form a relatively symmetric develop-
ment site.
Staubach, founded in 1977 by former
Dallas Cowboys foot.ball star Roger
Staubach, represents only commercial
real estat.e users, rather than landlords.
It. has 65 offices worldwide and 2,850
clients. In the fiscal year ended in June,
the company complet.ed 6,750 transac-
tions that it valued at $26 billion.
Staubach:s other Silicon Valley cli-
ent.s include Cisco Syst.ems Inc. and
Advanced Micro Devices.
Among its worldwide capabilities, the
company lists construction consulting
and project management as well as
portfolio management and financing.
George Fox, an executive vice presi.
dent for Studley, says he is not sur-
prised that Staubach had landed the
account: Apple's new director of real
estate, Duncan Scnmidt, previously
worked for Epiphany Inc., a firm that.
used Staubach. Mr. Schmidt has been
at Apple for about a year. He declined
comment. Epiphany is no longer an
independent. company.
"Get.ting Apple is a wonderful win,"
Mr. Fox says of his competitor. "I would
like to assume t.hat Apple choosing a
tenant rep company is indicative of our
(sector's) rising star."
SHARON SiMONSON covers real estate for the Business
Journal. Reach her at (408) 299-1053.
Dlt<..-/ B