Director's ReportCITY OF CUPERTINO
10300 TORRE AVENUE, CUPERTINO, CALIFORNIA 95014
DEPARTMENT OF COMMUNITY DEVELOPMENT
Subject: Report of the Community Development Director
Planning Commission Agenda Date: Tuesday, September 9, 2008
The City Council met on September 2, 2008, and discussed the following items of interest to the
Planning Commission
1. The Oaks Shopping Center expansion: Approved applications to demolish the former
Oaks theater and 2,430 square feet of commercial space and construct a 4-story, 122-
room hotel, and a 3-story 51,000 square foot mixed -use retail/office/conference center
building:
Require the CC&Rs restrict ownership of parcel #1 and condo lots for 4 years unless a
building permit is obtained and substantial construction is commenced on the
commercial building. Otherwise, ownership of mixed -use area reverts back to shopping
center owner.
Require Heart of the City landscape improvements, modified where necessary, from the
westerly Stevens Creek Boulevard driveway to Mary Avenue.
The frontage sidewalk improvements to meet the current Heart of the City specific plan
requirements modified to preserve the parking lot configuration and one field -grown
Oak must be placed in the front driveway area to replace the tree that died.
2. Sign Ordinance Amendment for temporary outdoor signs or displays: Approved the first
reading of the amended ordinance as recommended by the Planning Commission. The 2na
reading is scheduled for September 16.
3. Senior Citizens Commission work plan for FY 2008-2009: Approved work plan (see
attachment).
Miscellaneous Items
1. Enclosed is a brand new Cupertino dining guide.
2. Cupertino Square files for bankruptcy (see attached article).
Enclosures:
Staff Reports
Senior Citizens Commission work plan for FY 2008-2009
Newspaper articles
Cupertino dining guide
G: \ Planning \ SteveP � Director's Report \ 2008 \ pd09-09-08.doc
CITY OF
CUPERTINO
Summary
Agenda Item No.
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
(408) 777-3308
Fax: (408) 777-3333
Community Development
Department
Agenda Date: September 2, 2008
Application: U-2007-04, ASA-2007-06, TM-2007-09, EXC-2008-07, TR-2008-02, EA-2007-06
Applicant: Karen Ngo, Sand Hill Properties
Owner: Modena Investment LP & Sunnyvale Holding LLC
Property Location: 21265 Stevens Creek Boulevard (Oaks Shopping Center)
APPLICATION SUMMARY:
USE PERMIT and ARCHITECTURAL AND SITE APPROVAL (file nos. U-2007-04 and
ASA-2007-06) to demolish a theater and 2,430 square feet of commercial space and
construct a 4-story, 122-room hotel; a 3-story,-56,200 square -foot mixed use
retail/office/conference center building over an underground parking podium and site
improvements in two development phases at an existing shopping center.
EXCEPTION (file no. EXC-2008-07) to the Heart of the City Specific Plan to reduce one
side yard setback to 15 feet for a proposed 4-story, 122-room hotel and a 3-story, 56,200
square -foot mixed use retail/office/conference center building at an existing shopping
center.
TENTATIVE MAP (TM-2007-09) to subdivide an 8.1 net acre parcel into two parcels of
3.0 acres and 5.1 acres in size, with one parcel to be further subdivided into four
commercial condominium units and a common area lot.
TREE REMOVAL (TR-2008-02) request to remove and replace approximately 47 trees
that are part of an approved landscape plan for an existing shopping center.
RECOMMENDATIONS:
On a unanimous vote the Planning Commission recommended:
• approval of a negative declaration for the project; and
approval of the project per Resolutions Nos. 6516, 6517, 6518, 6519, 6520
Applications: U-2007-04, ASA-2007-06, TM-2007-09, EXC-2008-07, TR-2008-02, EA-2007-06
21265 Stevens Creek Boulevard
September 2, 2008
Page 2
Staff did not receive all of the information it needs from the applicant in a timely
manner to make a recommendation on this project. Some of the information is minor
and can be conditioned on the project. Other information that ties together the
subdivision, condominium map, development phasing with property ownership is
much more complex and needed review by the City Attorney from a procedural and
legal standpoint to make sure the City's interests are protected. That information is
currently being reviewed by the City Attorney and staff will have a response by the
time of the hearing.
BACKGROUND:
The Planning Commission reviewed the project on May 27, 2008 and June 10, 2008 and
took public testimony at both hearings (Exhibit A-3). A 1/2 mile radius was noticed for
the hearings. Over 1,500 notices were mailed to property owners and given to Oaks
Shopping Center tenants. The City Council reviewed the project on June 17, 2008
(Exhibit A-3), August 5, 2008 and continued the hearing to September 2, 2008 hearing.
DISCUSSION
City Council Direction
• In general the City Council felt the hotel was a good use of the property.
• The mass and bulk of the hotel was a concern and the applicant should shrink
the size of the hotel/and or the mixed- use building (lower FAR) to improve
setbacks from Mary Avenue and Highway 85.
• The project should meet Heart of the City building setbacks, but 15 feet on the
Highway 85 side would be okay if three more feet was added to the Mary
Avenue side minimum of 20 feet.
• A 3-story structure in the front was acceptable and a 4-story structure in the
rear was also acceptable.
• The hotel room count does not need to be reduced.
• The parking analysis needs to be explained in greater detail.
• Other concerns expressed by individual Council Members: extent of Heart of
the City landscape improvements on Stevens Creek Boulevard; additional
architectural treatments for the west -facing, second floor of the hotel;
parking loss on Mary Avenue; and no discounting of commercial
development allocation for the hotel.
Revised Site Plan
The applicant has revised the development to comply with Heart of the City Specific
Plan building setback requirements (Exhibit B-4), so the Specific Plan exception is no
longer relevant. There is an 18-foot side setback on the west (Highway 85) side. The
Mary Avenue (rear) setback is a minimum of 20 feet at the closest hotel building
Applications: U-2007-04, ASA-2007-06, TM-2007-09, EXC-2008-07, TR-2008-02, EA-2007-06
21265 Stevens Creek Boulevard
September 2, 2008
Page 3
corners and greater at other locations. The front setback in the Heart of the City Plan
is 35 feet from the curbface of Stevens Creek Boulevard. The front setback for non -
fronting (to Stevens Creek Boulevard) properties is unstated. Building to building
separations are also upstate.
The setback adjustments were accomplished by reducing the size of the mixed -use
building from 56,200 square feet to 51,000 square feet and shifting the buildings. The
room count of the hotel did not change.
Parking Analysis
Since 1973, the City has allowed, through the use permit process, for the Oaks Shopping
Center to operate with a parking deficit of 93 spaces. This "deficit" was based on an
antiquated parking ordinance that calculated parking demand for each land use and
then aggregated them to calculate total parking demand in relation to parking supply.
The "deficit" was allowed because past Councils realized that in middle to large size
shopping centers, the parking lot was shared among all customers. For example,
parking demand should not count twice or thrice if a retail patron frequents a
restaurant before attending a movie. Similarly, each land use has a unique parking
demand that varies through the day and week. Office and retail shops that close in the
early evening free up parking that are used by dinner patrons in the late evening.
Parking studies conducted in later years validated this shared parking behavior.
When the shopping center had more restaurants and an operating movie theater,
customer parking occupancy never exceeded 80% during peak times, except on Friday
and Saturday nights when De Anza Flint Center attendees flooded the parking lots,
rather than, parking on the college campus.
In more recent years, the Oaks Shopping Center parking lots have become even more
under-utilized because of tenant changes to less parking -intensive uses, and vacancies,
for example, the 100+ seat Pacific Fresh Restaurant/Bar was replaced by the Shane
Company, a jewelry store; A Clean Well -Lit Place for Books was replaced by Coldwell
Banker Realtors; the Oaks 3 Theaters and Bella Mia Restaurant both closed with no new
tenant replacements.
The parking ordinance has undergone numerous revisions over the past 15 years.
Significant among the ordinance changes was the adoption of a share -parking
calculation for mixed -use developments (Table 19.100.040-C in CMC Section 19.100),
which was used to calculate the current parking and proposed parking demand of the
shopping center (Exhibit C-4 ).
Applications: U-2007-04, ASA-2007-06, TM-2007-09, EXC-2008-07, TR-2008-02, EA-2007-06
21265 Stevens Creek Boulevard
September 2, 2008
Page 4
Existing Parking_ Conditions
Exhibit D-4 presents the applicant's summary of the existing tenant spaces at the Oaks
Shopping Center and the individual parking requirement for each tenant. The
Summary assumes that the vacant Oaks Theater and associated spaces would not be re -
tenanted (no parking requirement assigned), and vacant commercial spaces would have
"general commercial" tenants (estimated parking is 1 stall per 250 gross square feet).
The Existing Aggregated Parking Demand is thus 288 spaces. Applying the "Shared
Parking for Mixed -Use Developments" table to these parking numbers, you obtained a
peak shared parking demand of 234 spaces (see table below). There is an existing
parking supply of 499 spaces and thus a surplus of 265 spaces.
Use
Office
Retail
Restaurant
Entertainment
Totals
Shared Parking Analysis: Existing Conditions
Parking
Demand
Weekday
Daytime
Weekday
Evening
Weekend
Da time
Weekend
Evening
Nighttime
52.4
52.4
5.24
5.24
2.62
2.62
71
42.6
63.9
71
49.7
3.55
121.95
121.95
191.95
121.95
121.95
6.09
42.3
16.92
42.3
33.84
42.3
4.23
287.65
233.87
233.39
232.03
216.57
16.49
Phase 1 (Hotel parkin)
The applicant's parking summary (Exhibit D-4) includes the Phase 1, 122-room hotel.
Staff neglected to inform the applicant that employees should be included in the hotel
parking demand, so 15 employees are added to the parking numbers below and the
shared parking analysis is amended as follows:
Shared Parking Analysis: Existing Conditions + Phase 1
Parking
Demand
Weekday
Daytime
Weekday
Evening
Weekend
Da time
Weekend
Evening
Nighttime
Use
52.4
52.4
5.24
5.24
2.62
2.62
Office
71
42.6
63.9
71
49.7
3.55
Retail
121.95
121.95
121.95
121.95
121.95
6.09
Restaurant
42.3
16.92
42.3
33.84
42.3
4.23
Entertainment
137
424.65
102.75
137
102.75
137
102.75
Hotel
336.62
370.39
334.78
353.57
119.24
Totals
Applications: U-2007-04, ASA-2007-06, TM-2007-09, EXC-2008-07, TR-2008-02, EA-2007-06
21265 Stevens Creek Boulevard
September 2, 2008
Page 5
With the hotel addition to the table, the peak shared parking demand rises to 371
spaces, occurring during the weekday evening period from 6 pm to midnight.
Phase 2 (Mixed Use Building parking _+ Hotel parkin)
A second parking summary prepared by the applicant (Exhibit E-4) includes phase 2
development, which involves the 1) the demolition of one restaurant space, and 2) the
construction of a 3-story, mixed -use building. Based on the revised site plan the
building has been reduced in size from 56,200 to 51,000 square feet. The first floor
(estimated 15,914 square feet) was designated commercial and parking calculated at the
"general commercial" parking ratio, one stall for every 250 gross square feet. The
second floor (estimated 15,790 square feet) was designated office and parking calculated
at the "general office" parking ratio, one stall for every 285 gross square feet.
The third floor is a private meeting/conference facility of an estimated 13,169 square
feet. The City does not have a parking standard for this type of use nor is there parking
data from other similar use facilities in the City( i.e. the Kimpton Hotel meeting rooms,
Community Hall, Quinlan Center, Senior Center). The ITE (Institute of Transportation
Engineers) Parking Generation Manual does not have parking generation data for this
type of use. The closest use category is hotels that include supporting meeting and
banquet facilities. The average parking ratio for such hotels is 1.3 stalls per room. For a
122-room hotel the parking demand is 159 stalls. Subtracting the city parking
requirement of 137 stalls, the net parking demand is 22 spaces, which is slightly higher
than the 15 spaces the applicant assigned to this use. Peak demand will vary, but staff's
expectation is that the greatest utilization will be on the weekends and evenings.
The shared parking numbers are presented below with the phase 2 square footages
incorporated in the table. The peak parking demand is 420 spaces during the weekday
evening period from 6 pm to midnight.
Shared Parking Analysis: Existing Conditions + Phase 1 + Phase 2
Use
Office
Retail
Restaurant
Entertainment/
Meeting Facility
Hotel
Totals
ing
Weekday
Da time
Weekday
Evenin
Weekend
Da time
Weekend
Eve nin
Nighttime
[5and
04.5
104.5
10.45
10.45
5.22
5.22
125.35
75.21
112.81
125.35
87.74
6.26
95.1
95.1
95.1
95.1
95.1
9.51
64.3
25.72
64.3
51.44
64.3
6.43
137
102.75
137
102.75
137
102.75
526.25
403.28
419.66
385.09
389.36
130.17
Applications: U-2007-04, ASA-2007-06, TM-2007-09, EXC-2008-07, TR-2008-02, EA-2007-06
21265 Stevens Creek Boulevard
September 2, 2008
Page 6
Parking Summary Data and Potential Parking Deductions
Council members noted that not all of the parking was shared. The Shane Company
apparently has a lease agreement that allows them to reserve some parking spaces.
Staff observed that 25 spaces were partially chained off next to the Shane Company, but
the parking "restriction" is not actively controlled and appears accessible to everyone.
The Shane Company generates a city parking requirement of 38 parking spaces.
Using the parking summary data above and the parking inventory for each
development phase, staff has summarized the information below:
Oaks Shopping Center Parking Requirements and Inventory
New
Use
Shared
Parking
Regt.
Total
Parking
Supply
Shane Co.
Parking
Deduction
Net
Parking
Supply
Shared
Parking
Supply
Garage
Parking
Supply
At Grade
Phase
Existing
Aggregate
d
Demand
137
371
494
25
469
84
410 (62)
1
288 stalls
(hotel)
154
420
470
25
445
165
305 (27)
1 + 2
425 stalls+
(mixed
use)
Footnotes: + Hotel assumed built and occupied before Phase 2 commences.
(number of surface parking stalls on project property)
There is a surplus of parking associated with each phase of development: 98 spaces in
Phase 1 (469-371) and 25 spaces in Phase 2 (445-420). Per the applicant's testimony at
the last hearing, he is not requesting restricted parking in the parking structure and it
will be available to all shopping center users.
ENCLOSURES
Exhibit A-4: Staff Report to City Council dated August 5, 2008
Exhibit A-3: Staff Reports to City Council dated June 17, 2008 and to the Planning
Commission dated May 27, 2008 and June 10, 2008, including initial study, ERC
recommendation and Negative Declaration
Exhibit B-3: Summary of Public Testimony at June 17th Council Meeting and additional
emailed public comments
Exhibit C-3: Applicant responses to City Council direction and staff notes.
Exhibit D-3: Staff recommended conditions of approval (addendum to PC resolutions)
Exhibit B-4: Revised Site Plan
Applications: U-2007-04, ASA-2007-06, TM-2007-09, EXC-2008-07, TR-2008-02, EA-2007-06
21265 Stevens Creek Boulevard
September 2, 2008
Page 7
Exhibit C-4: Parking Ordinance Excerpt —Table 19.100.040-C
Exhibit D-4: Oaks Shopping Center Parking Summary: Existing and Phase 1
Exhibit E-4: Oaks Shopping Center Parking Summary: Existing, Phase 1 & Phase 2
Plan Set
Prepared by: Colin Jung, Senior Planner
Submitted by: Approved by:
Steve Piasecki David W. Knapp
Director, Community Development City Manager
G:\Planning\PDREPORT\CC\U-2007-04 ASA-2007-06 TM-2007-09 EXC-2008-07 TR-2008-02 EA-2007-06 CC3
Report.doc
CITY OF
CUPEkTINO
Summary
Agenda Item No.
Application: MCA-2008-02
Applicant: City of Cupertino
Property Owner: Various
Property Location: City-wide
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
(408) 777-3308
Fax: (408) 777-3333
Community Development
Department
Agenda Date: September 2, 2008
Summary: Municipal Code Amendment of Chapter 17 allowing temporary outdoor
signs or displays.
RECOMMENDATION
The Planning Commission recommends that the City Council approve:
• MCA-2008-02 to allow revocable permits for temporary outdoor displays/signs
(such as A -frame signs) with added design standards.
Recommend approval to remove the reference to "calendar year" for the
allowable time period for temporary banners.
BACKGROUND:
Providing effective, visible and attractive signs are vital ingredients in promoting a
successful and healthy business community while at the same time enhancing the
aesthetic appearance of the City. In examining the current Sign Ordinance the only
provision for pedestrian oriented signage is temporary. Businesses wishing to display
A -frames or other legitimate and creative outdoor displays can only do so on a time
limited basis. Shopping district success is based on the ability to attract customers and
more importantly the ability to establish identity or character. Staff believes that the
Sign Ordinance can be enhanced by including new provisions for outdoor display with
the following public objectives:
1. Enhancing the pedestrian experience, activity and convenience.
2. Maintaining the economic stability of the City by enhancing business vitality.
3. Providing opportunities for attractive, effective and visible identification
reflecting the individual character of the business.
MCA-2008-02 — Outdoor Display
July 8, 2008
Page 2
On July 22, 2008, the Planning Commission reviewed the draft ordinance amendment
and recommended approval to the City Council.
DISCUSSION:
The Planning Commission recommends that the Sign Ordinance be amended to allow
revocable permits for outdoor displays/signs in exchange for higher quality of signs
with the property owner assuming ownership and liability. If design and liability
provisions are not met, the permit can be revoked.
In addition, the Commission recommends that the time period for temporary banners
be a maximum of 120 days within a 360 day period, as opposed to within a calendar
year. This provides equitable banner time to businesses who submit banner
applications toward the end of the year.
Staff believes that the proposed ordinance amendments will improve efficiency in the
temporary sign review process and at the same time facilitate effective and attractive
signs meeting the needs of businesses, similar to the ordinance amendment approved
in 2003 at the urging of local realtors. Changes to the real estate sign regulations are
not being recommended as part of this action.
Please refer to the attached Planning Commission staff report (Exhibit C) for the
detailed analysis.
ORDINANCE AMENDEMENT FORMAT
Instead of the conventional redline version of the old/new ordinance language, the
entire section 17.08.090 of the Sign Ordinance was restructured to enhance the
readability of the document and to include the new proposed language regarding
temporary display/signs (see Exhibit A). The old language is also included as Exhibit
B.
Submitted by: Approved by:
Steve Piasecki David W. Knapp
Director, Community Development City Manager
Attachments
Exhibit A: Planning Commission proposed Model Ordinance
Exhibit B: Existing Ordinance, Section 17.08.010 and 17.32.090
Exhibit C: Planning Commission Staff Report with attachments, July 8, 2008
(postponed to July 22, 2008)
Exhibit D: Planning Commission Meeting Draft Minutes, July 22, 2008
DEPARTMENT OF PARKS AND RECREATION
CUPERTINO
Agenda Item No. -L
SUBJECT .
Senior Citizens Commission work plan for FY 2008-2009.
Meeting Date: September 2, 2008
BACKGROUND
At the City . Council meeting on February 4, 2008, Council informed the Senior Citizens
Commission that they would like to see a work plan from the Commission. Council also
encouraged the Commissioners to view their job more broadly, and attend Parks and Recreation
Commission meetings or possibly hold joint meetings, with the Parks and Recreation
Commission, as appropriate.
DISCUSSION
At their June 26, 2008 meeting, the Senior Citizens Commission discussed options for their
FY 2008-2009 work plan. Staff recommended the following items for the Senior Citizens
Commission Work Plan:
■ Studying Senior Housing Component:
— Review General Plan Housing Section
Below Market Housing Program
Commissioners research County Housing Authority Senior Housing Project
Develop a recommendation for Council on a vision for senior housing in
Cupertino
Review proposed City policy matters to obtain Seniors' input:
— Off -leash policy for dogs in parks
— Housing
— New policies for trail and park use along Stevens Creek Corridor
The Senior Citizen Commissioners proposed the following items to consider and discuss for the
FY 2008 — 2009 Work Plan:
• Explore cost and benefits of developing and conducting a survey on the senior experience
in using City parks in Cupertino.
8-1
Cupertino Square owners file for bankruptcy - San Jose Mercury News
Page 1 of 1
R�"I;dvs
Cupertino Square owners
file for bankruptcy
MALL TO STAY OPEN WHILE OWNERS SEEK
INVESTORS
Lisa Fernandez
Mercury News
Article Launched 09103'2008 0505 16 PM PDT
The owners of Cupertino Square Shopping Center,
who operate the former Vallco Fashion Park mall,
have filed for bankruptcy. But the financial maneuver
won't affect shoppers at the three -level shopping
center, which will remain open for business.
Jim Evans, an attorney in Los Angeles representing
the mall, said the Chapter 11 filing Tuesday in U.S.
Bankruptcy Court in San Jose was intended to give
Cupertino Square owners some time, prevent a
foreclosure sale scheduled for next week and
protect other creditors owed money as part of the
mall's renovation project.
Now, Evans said, the Cupertino mall owners will try
to find new investors or perhaps a new lender to
help complete the $190 million renovation started
two years ago.
According to Evans, the mall owners — who listed
assets and debts of $100 million to $500 million —
had no choice but to file for bankruptcy. He said
that's because the project lender, Gramercy Capital,
claimed Cupertino Square had defaulted on its loan
— which Cupertino Square strongly denies.
Rick Matthews, a spokesperson for Gramercy, had
no comment.
The long -struggling center's new majority owner,
Advertisement
Orbit Resources, has said it hopes to market
Cupertino Square as more of a "lifestyle destination"
than the region's competing shopping complexes,
such as Westfield Valley Fair and Santana Row,
which are less than eight miles away.
"Unfortunately, the lingering effect of all the legal
challenges has hamstrung our effort to revitalize
Cupertino Square," Orbit Resources Chief Executive
Phil Liao said in a statement.
The company's ultimate goal is to capitalize on the
affluent population of Cupertino, where the average
household income is more than $143,000. It also
hopes to become a magnet for employees of
companies with nearby offices, led by Apple and its
large expansion just to the north across Interstate
280.
Cupertino officials said the city is in the midst of a
development cycle that guarantees a surge in retail
investment, already witnessed at smaller shopping
sites in the same vicinity.
Bloomberg News contributed to this report. Contact Lisa
Fernandez at lfernandez@mercury new scorn.
Print Powered By bi ` Dynamics
http://www.mercurynews.con-dbusiness/ci-10373315?nclick—check=l 9/4/2008
Owners hope to block Cupertino Square sale
BY MARY DUAN
With less than two weeks before Cupertino Square
is due to be sold at a foreclosure auction, an attorney
representing the owners of the beleaguered mall said
he will seek a court order preventing the Sept.10 sale
from going forward.
Gramercy Warehouse Funding LLC, a unit of Gra-
mercy Capital Corp., reported in its Notice of Sale
on Aug. 7 that Cupertino Square — previously know
as Vallco Fashion Park — owned by international
firm OrbitResources Inc., owes $121 million from a
$195 million construction loan. That notice came just
months after Gramercy filed a notice of default with
the county in May, saying the mall had failed to make
a $1.2 million payment on the loan.
"That property will never sell at a foreclosure sale.
We have a number of judicial options, including seek-
ing a stay from the Court of Appeals," said Cupertino
Square attorney Jim Evans, a partner in the Los An-
geles -based firm of Fulbright & Jaworski LLP. "We'll
be going into court well before Sept.10."
Those representing Cupertino Square have also
filed an appeal against the court appointment of a
receiver, Douglas Wilson Co., in June. The receiver is
to take charge of the mall's operations, including the
collection and disbursement of its rents.
According to Evans, the mall didn't go into arrears
on its payments until Gramercy demanded that Cu-
pertino Square increase its interest reserves.
"We believe this is a concocted foreclosure, the
basis of which is that our client didn't increase the
See SALE, Page 32
heduled Se t.10 foreclosure auction swirl around Cupertino Square owners
SALE: Lawsuits, se p
managed and run, probably by one of the big mall op-
erators who has the relationships to make it happen,"
Oliver said. "The owners need to hire someone to make
it happen for them. They're not in that business:'
The owners' lawyer said they remain committed to
the project and to the tenants.
"It's been a most unfortunate situation. They're mid-
stream in construction, and the lender yanks the rug
out from under them. They've been frustrated at every
turn to gain momentum at that center," Evans added.
Some tenants appear to be frustrated as well. While
the AMC Theater at the mall is one of the top 100 the-
aters in the country based on attendance, according
to research firm Rentrak Corp., owners of the upscale
Strike Cupertino bowling and entertainment venue
aimed at corporate clientele also filed suit against the
mall, alleging management has failed to deliver on
promises of making the mall an upscale destination.
Tom Shannon, CEO of Manhattan -based Strike Hold-
ings LLC said the mall has been plagued by operating
issues, and his business has suffered. "In general, we've been very disappointed with the
condition of the mall. We signed the lease based on the
renderings shown to us that it would be a high -end, life-
style center. We signed for our rent based on that, and it
never happened;' Shannon said. "We paid for something
we never got. We never got the benefit of co -tenancy.
"For all the reasons that Cupertino Square is in de-
fault, we endured all of it. It's just a disaster. They're
hands -down the worst landlord I've ever dealt with,"
Shannon said. "I look forward to the day this mall is
developed the way it could and should be."
CONnNUEO FROM PAGE t
interest reserves that the lender demanded," Evans
said. "It's not that we didn't make payments, it's that
we didn't increase the reserves.
"In May, when the lender was going to have to start
funding the construction loan with its own money,
that's when they turned around and made the demand
for the $1.2 million, he said.
William J. Goines and Eric V. Rowen, the Greenberg
Traurig LLP attorneys representing Gramercy, did
not return calls requesting comment.
Rick Matthews, a spokesman for Gramercy's public re-
lations firm, said Gramercy officials had no comment.
According to a transcript of Gramercy Capital's
second quarter 2008 earnings call, Gramercy Chief
Operating Officer Robert Foley said the lender would-
be aggressively pursuing loan modification options,
which might include significant principal paydown
and rebalancing of capital reserves.
While not naming Cupertino Square directly, Foley
said Gramercy had five nonperforming loans at the
end of June, including majority interest in a first
mortgage secured by a shopping center.
"The sponsors completed the bulk of the physical
redevelopment called for by its business plan, but
they haven't finished the lease up. The borrower is
pursuing an equity recap and potentially a refinanc-
ing of the existing loan, Foley said, according to the
transcript from Seeking Alpha. "Nonetheless, we are
pursuing a foreclosure action scheduled for later this
year, and separately we're pursuing enforcement of
guarantees from individuals who have personally
guaranteed this loan."
ON THE BLOCK: Cupertino Square owners say they will seek to stop a sale
planned by their lender, Gramercy Warehouse Funding LLC.
Retail experts describe Cupertino Square as a po-
tential retailing juggernaut but say it is feeling the
squeeze of its location between Westfield Valley Fair
Shopping Center and Santana Row on one end and
Stanford Shopping Mall on the other.
"Cupertino Square is clearly one of the best pieces
of property in Northern California, but it needs to be
a contrasting shopping experience altogether," said
Randol Mackley, principal of San Jose -based Retail
Real Estate Group.
Todd Oliver, a partner in the retail real estate firm
Terranomics, said Cupertino Square sits on "excep-
tionally good real estate, with access from Interstate
280 and the financial wealth of the peninsula.
"The interior of the mall needs to be professionally
MANY DOAN is a freelance writer.
COUNCIL LOOKS
AT `BLUEPRINT'
FOR S. VALLCO
DEVELOPMENT
Decision pushed to
Sept. 16 meeting
By MATT WILSON
Cupertino City Council got its first look '
at abroad "blueprint" for the South Vallco
area at an Aug.19 public hearing, but post -
pond a decision to Sept.16 to allow major
stakeholders such as Apple Inc. and
Hewlett-Packard to further study the plan.
Sand Hill Property Co., which purchased
17.4 acres of the South Vallco site earlier
this year, was assigned the task of develop-
ing a master plan for integrating develop-
ment of the 125-acre site. The area is
bounded by Stevens Creek Boulevard,the
Cupertino Square mall, Wolfe Road,Tan-
tauAvenue,FmchAvenue andVallcoPark-
way.
The master plan is a proposed aesthetic
and development framework that the city
hopes will serve as a springboard to turn
the partially barren site into a downtown
district or "main street."The master plan
emphasizes the creation of a pedestrian -
friendly district with a seamless connectiv-
ity between future and current commercial
properties."This is the last 17 acres we have
left in the South Vallco area.This is some-
thing that is very important to us and we
take it very seriously," said Councilman
GilbertWong.
Representatives from Apple Inc. and
Hewlett-Packard brought up concerns
during public comments about some spe-
cific language in the master plan document.
BothApple and HP have small campuses
in the South Vallco area.
Apple and HP representatives brought
up security concerns with a potential trail
ate• Blueprint, page Z
Blueprint
were the feasibility of having the
main retail area anchored on busy
the blueprint that would hamper
flexibility when future, site specific
Stevens Creek Boulevard or on the
projects are proposed.
Continued from page I
far less congested Vallco Parkway.
Council also softened some more
"It will be a safe street, it will be
specific guidelines on sustainabilify,
opening alongthe Calabazas Creek,
evaluated in terms of the capacity
and the traffic generation and the
and requested for more involve -
ment between Sand Hill and such
traffic circulation and potential
retail frontage on Vallco Parkway
traffic generation today is lower
than most residential streets. So you
stakeholders aApple and HP
Council also tentatively eased some
near their properties.
Both companies were also con-
have a lot of room and capacity,"
said Steve Piasecki, the city's direc-
language in the document allow
more flexibility in future dacision-
cemed about a proposed guideline
for of community development, on
making.
thatsuggeststhatallnew,non-retail
buildings built may need to be con-
the possibility of Vallco Parkway
anchoring the most retail space.
Documents and information on
figured in such a way that they could
become retail facilities in the future.
Council member KrisWang cau-
tioned the council and city staff to
the South Vallco master plan are
available at www.cuperti
Major issues discussed by council
avoid adding too many specifics to
no.org/southvallco.
AUG