HomeMy WebLinkAbout2025 Mod Action Letter - Signed
February 27, 2026
Via Electronic and Regular Mail
Reed Moulds, Managing Director
Vallco Property Owner LLC
965 Page Mill Road
Palo Alto, CA 94304
SUBJECT: APPROVAL LETTER – THE RISE SB 35 DEVELOPMENT (FORMERLY
VALLCO TOWN CENTER) – THIRD MODIFICATION APPLICATION
This letter serves as ministerial approval (“Approval”) of the “The Rise SB 35
Application” (“Application”), requesting a third major modification of the Vallco Town
Center project approved pursuant to Government Code Section 65913.4 under Senate
Bill 35 (“SB 35”). The Application, which included four requested project entitlements,
was submitted to the City by Vallco Property Owner, LLC (“Applicant”) on December
1, 2025 for the 50.82-acre Vallco Mall property located between Interstate 280 and
Steven’s Creek Boulevard and on both sides of North Wolfe Road.
This Approval is based on the Application submitted by the Applicant, which is
referred to as the “Project Application.”
I. Project Approval
The following entitlements are approved:
a. Modification to Development Permit
b. Architectural and Site Approval - Major
c. Tentative Subdivision Map for Condominium Purposes
d. Tree Removal Permit
Under the State’s and City’s Density Bonus Laws, the Applicant requests a 50% density
bonus in compliance with State Law provisions in place on the date of Application. This
allows an increase in the unit count in the project from 2,402 units to 2,669 units.
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The Applicant continues to request three concessions under the Density Bonus Laws,
due to the amount of affordable housing proposed in the Project Application. These
concessions have been modified and are as follows:
1. A concession to allow the Below Market Rate (BMR) units to deviate from the
requirement that unit types be comparable to the market rate units within the
development pursuant to BMR Housing Mitigation Procedure Manual Section 2.3.4
(A);
2. A concession to allow the BMR affordable units to be smaller in size than the market
rate units of the same type pursuant to BMR Housing Mitigation Procedure Manual
Section 2.3.4 (B); and
3. A concession to allow 200,000 square feet of retail, a reduction of 400,000 square feet,
where 600,000 square feet is required in the General Plan pursuant to Strategy LU-
19.1.4.
Based on the information provided by the applicant, the City must grant these three
concessions since they will: a) result in identifiable and actual reduction in costs to
provide for affordable housing costs; b) not result in specific, adverse impacts upon
public health or safety or the physical environment or any property that is listed in the
California Register of Historical Resources; and c) not be contrary to state or federal law.
(Gov. Code, § 65915(d)(1)(A)-(C). While one of the concessions (size of BMR units being
smaller than the market rate units) has been modified with this modification, it is not
very different from the previously granted concession. The award of the density bonus
and the remaining two concessions are not affected by the request for modification of the
approved project nor by the modification to the previously granted third concession.
In addition to the density bonus, density bonus concessions, with this Application, the
applicant is additionally requesting a density bonus waiver. A density bonus waiver is
to a development standard that the project cannot meet due to the proposed design,
and if the project were required to meet the standard, it would cause the project to lose
units in the housing development. State law disallows the City to reject the request for
a waiver under the presumption that a differently designed project could meet the
existing standard.
The applicant continues to not meet the 1:1 setback to height (slope line) standard
established in the General Plan in Figure LU-2 (Community Form Diagram). This
would allow structures as proposed in Blocks 2, 5, 8, 10, 11, 13, 14 and 15 to encroach
into this setback. The encroachment is identified in the plan set in Sheet P-508 and P-
508.1. These diagrams indicate that imposition of the slope line standard would cause
the project as designed to lose residential units. As a result, the City must grant the
proposed density bonus waiver.
These Approvals, including the density bonus, the three concessions and the waiver
identified above, are collectively referred to as the “Project,” and are reflected in the
plan set included in Attachment “A.”
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This Approval does not cover encroachments or other improvements within the public
right-of-way, including but not limited to, the proposed intersection located between
Vallco Parkway and Highway 280 (right of way encroachments are subject to the City’s
permitting review process) or proposed tree removals within the public right of way,
and no structures have been proposed nor approved in the existing air rights and
associated easements across Wolfe Road. In addition, this Approval does not cover any
signage, sign programs, construction permits, or final map(s). Subsequent applications
for these permits will be required, consistent with the City’s permit approval processes
and the requirements of Government Code section 65913.4.
II. Basis for Approval
Government Code Section 65913.4 (SB 35, as amended) sets forth a streamlined,
ministerial approval process for certain housing developments in jurisdictions that
have not made sufficient progress toward meeting their affordable housing goals for
above-moderate and lower income levels as mandated by the State. The California
Department of Housing and Community Development (“HCD”) determined that the
City made sufficient progress toward its above moderate income housing goals but
made insufficient progress toward its lower (very low and low) income housing goals.
Therefore, HCD determined that the City is subject to the streamlined, ministerial
review and approval provisions in Government Code Section 65913.4 for very low and
low income housing projects.
On September 21, 2018, the Vallco Town Center project was approved pursuant to SB
35. The Applicant submitted a modification application in 2022. This initial
modification application was approved by the City. The Applicant submitted a second
request for modification of the approved project on December 5, 2023. This
modification was approved by the City in 2024. The Applicant subsequently submitted
a third request for modification of the approved project on December 1, 2025. In
addition to the Project Plans, information provided by the Applicant to support the
application that the City reviewed in making its approval determination, is available on
the City’s website, to the extent allowed by state law.
The Applicant’s current modification request is subject to a limited scope of review
under Government Code section 65913.4(h) unless the modification changes the total
number of residential units or total square footage of construction by 15 percent or
more, not including underground space. (Gov. Code, § 65913.4(h)(3).) The scope of
review of a qualified modification request under section 65913.4(h) is limited to
determining whether the modified project meets the statutory criteria for SB 35
eligibility and whether the project complies with objective planning standards in effect
at the time the original project application was submitted. (Gov. Code, §
65913.4(h)(1)(B).) Staff generally may not apply objective planning standards adopted
after the March 2018 submittal date of the original Vallco SB 35 application if these
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requirements are met. In addition, the City may not reconsider “prior determinations
that are not affected by the modification” (Gov. Code, § 65913.4(h)(4)) and must use
“the same assumptions and analytical methodology” that it used in approving the
original application. (Gov. Code, § 65913.4(h)(1)(C).)
This modification request also includes a request for modification of the approved
tentative subdivision map for the project. The streamlined approval provisions of SB 35
apply to approval of the tentative subdivision map. (Gov. Code, §65913.4(d)(2).)).
Under Government Code section 65913.4(h), review must be limited to objective
subdivision standards that were in place at the time of the original application.
Under Government Code section 65913.4(h)(2), the City must complete ministerial
review of the proposed modification request within 60 days. The deadline for
completing review of the Vallco/Rise modification request was January 30, 2026.
However, the Applicant agreed to an extension of time, until February 27, 2026, in
review of the proposed modification to allow additional time for coordination between
the Applicant, the City and other local agencies. This letter, which serves as notice of
the Approval of the modification request pursuant to Government Code section
65913.4(h), is being issued within that time period.
The City has identified its basis for approval of the project in Attachment B.
III. No Net Loss Discussion (SB166)
Government Code Section 65863 (No Net Loss Law) requires the City to ensure
development opportunities remain available to accommodate the City’s regional
housing need allocation (RHNA), especially for lower- and moderate- income
households, by maintaining adequate sites to accommodate the unmet RHNA for each
income category. In May 2024, the City adopted new Priority Housing Sites as part of
the 6th Cycle Housing Element Update. The Priority Housing Sites are anticipated, or
projected to provide the units necessary to meet the City’s RHNA for each income
category. The City calculated the number of proposed units, by RHNA affordability
categories, that are expected to be developed on each of these sites, resulting in the
estimated unit counts shown in the table below. As noted previously, a portion of the
project site (identified as Phase 1 – the portion of the project that did not have any office
development on the west side of the project site) is listed as a Pipeline Project in the
City’s 6th Cycle Housing Element and the City is required to evaluate the project’s
impacts on expected housing production under Government Code Section 65863.
Under No Net Loss Law, at the time of project approval, the decision making body must
make the following findings:
1. That the remaining sites identified in the Housing Element are adequate to meet
the jurisdiction’s remaining RHNA for the planning period, by income category.
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2. A quantification of the remaining unmet need for the jurisdiction’s RHNA at
each income level and the remaining capacity of sites identified in the Housing
Element, to accommodate that need by income level.
In the event the City is unable to make the findings of No Net Loss, the City must either
concurrently with, or within 180 days of, approval of a housing development project at
a lower density or different mix of housing affordability, identify another Priority
Housing Site or increase the density of an existing Priority Housing Site to ensure that
sites are available to accommodate its RHNA.
The table below quantifies the remaining unmet need for the 6th Cycle Housing
Element 2023-2031 RHNA, by income level, and the remaining capacity across all
Priority Housing Sites by comparing the projected number of units at this Priority
Housing Site with the actual number of units proposed by the subject project.
Income Category
Lower Income
(30-80% AMI)
Moderate
(80-120% AMI)
Above Mod.
(>120% AMI)
6th Cycle RHNA Requirement 1,880 755 1,953
SummerHill I
(Fontana's, etc.)
Projected (50-65 du/ac)59 24 62
Actual (20 du/ac)0 12 47
Change -59 -12 -15
Toll Brothers
(United Furniture)
Projected (65-80 du/ac)0 93 70
Actual (20 du/ac)0 11 44
Change 0 -82 -26
Dividend Homes I
(Partial) (20111
Stevens Creek Blvd)
Projected (50-65 du/ac)45 18 47
Actual (~20 du/ac)0 6 30
Change -45 -12 -17
Mary Ave Villas
(Charities Housing)
Projected (50-65 du/ac)40 0 0
Proposed (~50 du/ac)40 0 0
Change 0 0 0
Total Remaining Surplus/Deficit before
approval of Vallco/Rise modification 53 -14 986
Vallco Town
Center/Rise
(Pipeline project)
Projected – Phase 1 581 0 1,321
Proposed – Phase 1 232 0 1,137
Change -349 0 -184
Unmet 6th
1,312 1,497
-296 -14 802
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As of the City’s December 16, 2025 City Council meeting, at which the Toll Brother’s
United Furniture project was approved, the City has been unable to make the findings
of No Net Loss and pursuant to Government Code section 65863(c)(2) is required to
identify additional adequate sites to accommodate its share of the regional housing
need by income level within 180 days from project approval.
As indicated in the table, approval of this modification to the Rise development causes
a change to the delivery of affordable housing on this site and causes a deficit in the
lower-income levels from a surplus of 53 units to a deficit of 296 units since the Housing
Element estimated based on the project entitlement from 2024, that the project would
provide 581 lower-income units that would be developed on Pipeline Site P1 1.
Consistent with updated state law requirements, which allow a reduction in the amount
of affordable housing that needs to be provided by this SB 35 project, the project
includes only 232 affordable units within Phase 1 and 124 units in future phases (a
reduction of 534 affordable units, all at lower-income levels, in total).
The remaining sites in the City’s housing element inventory are not adequate to meet
the requirements of Government Code Section 65583.2 and to accommodate the City’s
share of the regional lower-income and moderate-income housing need. The City is
unable to make the findings under Government Code Section 65583.2. The Priority
Housing sites in the inventory are not adequate to accommodate the City’s share of the
regional lower income housing need at this time.
While the City is unable to identify additional sites to accommodate its share of the
regional lower-income and moderate-income housing need concurrently with this
project’s approval, it is working toward being compliant with State law in a timely
manner. Pursuant to the terms of the Settlement Agreement entered into on July 10,
2024, the Applicant is required to pay up to $500,000 to fund future long range planning
activities conducted by the City that have a substantial nexus to the Project site. The
City finds that since most of the deficit in the lower income levels is due to the project
reducing the affordable housing units the City had planned to be developed on the
Project Site in its Housing Element, there is a substantial nexus to request that the
Applicant contribute its equitable share toward this planning effort. City staff will be in
communication with the Applicant on their contribution.
IV. Standard Project Requirements and Project Implementation Requirements
The Project Application is approved subject to the Standard Project Requirements and
Project Implementation Requirements (collectively “Requirements”) set forth in
Attachment B. These Requirements identify objective General Plan, zoning, and/or
objective design review standards that were applied to the project at the time the
1 See Housing Element Technical Appendix here: https://www.cupertino.gov/gp#docaccess-
33693f152701fd58ef740616b2a062b590a8b4be9524bbea5762b51d3757eaee