105-D. Applicant's Justification Letters.pdf
USE MODIFICATION JUSTIFICATION
FOR 5 VRS 2 RETAIL CONDO UNITS
Menlo Equities is seeking a modification to our Use Permit to allow the approved
6,400sf of retail space to be in 5 separate retail condominiums as shown below in our
DRE approved condominium plan. We received City approval for our condominium
map which merely states that the site is approved for “condominium purposes” and
does not specify the number of residential or retail units. We received Planning
approval to “construct two mixed-use buildings consisting of 107 units and 6,400 square
feet of retail space.”
Given that the retail space has to be legally separated from the residential units and that
the retail space is in two separate buildings, there had to be at least 2 legal retail
condominium units. It had not occurred to us that City permission was required to
create 5 legal retail units versus just 2 legal units. While the Use Permit does not
specifically state this, it does not specifically prohibit it either.
One of the factors that lead us to create 5 retail units versus just have 2 retail units was
to create retail units about the same square footage as the average residential unit so
that when the HOA costs were being allocated, some on a square footage basis and
some per unit, the per unit allocation was evenly assessed to the retail units as well as
the residential units. See attached square footage sheet. Further, we expected to
lease the retail space in the sizes that broke down into 5 retail units, not 2 retail units;
and therefore, planned the front door access, underground utilities, future restrooms,
etc. for 5 retail units. This 5 retail unit scheme was depicted on the plans that were
submitted to the City for approval, as shown on the following page.
Subsequently, Menlo Equities became aware that the City is concerned that if the retail
units are separately owned they may not be coordinated as a cohesive “retail” center in
terms of (1) future redevelopment, (2) leasing and (3) maintenance.
19505 Stevens Creek Blvd 19501 Stevens Creek Blvd
Bld A - Retail Units Bld B - Retail Units
Unit # Unit SF % of Total Unit # Unit SF % of Total
101 1,273 20% 101 1,289 20%
102 1,273 20% 102 1,278 20%
Total Bld A 2,545 40% 103 1,289 20%
Total Bld B 3,855 60%
First, Metropolitan at Cupertino has only five retail units and these retail units are split
between two buildings with residential units on top and behind the retail units. We don’t
have a “retail” center, but merely 2,545 square feet under one residential building and
3,855 square feet under another residential building.
Renovation of the exterior of the retail units requires the approval of the Metropolitan at
Cupertino Condominium Owners Association (HOA) architectural review board because
the retail units, as well as the residential units, are subject to the Metropolitan at
Cupertino CC&Rs. Therefore, if one retail unit owner wanted to make exterior
renovations to his unit or adjacent common area, the HOA’s approval (as well as the
City’s) would insure that any changes made created a cohesive look for the entire
Metropolitan at Cupertino street frontage, not just one particular retail unit.
Redevelopment of the retail space is almost impossible since this would require
coordination of 107 residential unit owners which is unlikely to occur whether there is
one retail owner of all 5 retail units or 5 separate retail unit owners.
Second, coordination of leasing to create synergies among tenants is done when you
have a shopping center with a critical mass of retail space AND have demand for the
retail space. This isn’t a “shopping center” and our leasing prospects are poor due to
the negative parking situation – no street parking and onsite parking on the side of the
buildings versus along the street frontage. We are NOT is a position to pick and choose
among retailers in order to create synergy and even if the retail marketplace improves in
the future, there is not enough retail square footage to coordinate synergies. We have
to take any retailer who is interested. This will be the case whether there are 5 retail
unit owners and or just one owner of all 5 retail units. Any overlap in similar tenants will
either thrive because the marketplace can absorb both, or it will be corrected by the
marketplace when one of the tenants fails to thrive.
Third, the City requested information on how the common areas are to be maintained
with separate ownership of the retail units. Maintenance of the exterior of the buildings,
including the retail units, and the common area is controlled by the CC&Rs. There are
107 residential and 5 retail units at Metropolitan at Cupertino. All 112 units are subject
to the CC&Rs, are members of the Metropolitan at Cupertino Condominium Owners
Association (“HOA”) and are required to pay monthly assessments. The HOA maintains
ALL buildings and ALL common area, as outlined in Section 1.12 and 5.1 of the CC&Rs
and the cost of such maintenance is included in the monthly assessments which all 112
units must pay.
The individual unit owners – residential and retail - are responsible for maintaining the
interior of their units and their exclusive common area as noted in Section 7.30. The
exclusive common area for the retail units is the two plazas – one in front of each
building as shown in the condo plan. Per CC&Rs Section 7.2, each retail unit gets to
the use the portion of the retail plaza that is adjacent to their unit and they have to
adhere to the Retail Plaza Standards adopted by the HOA.
The Retail Plaza Standards are attached. The purpose of the Retail Plaza Standards is
to clarify what each Retail Unit Owner’s plaza rights and responsibilities are as well as
create a cohesive furniture and accessories look for each Retail Plaza.
If the unit owners, residential or retail, do not maintain their units or exclusive common
area in a professional manner, the HOA will do so and add the cost to the unit owner’s
monthly assessment (CC&Rs 7.30(F)).
In summary, we think that the City’s concerns are addressed through CC&R’s and/or
the retail market dynamics. We also think that allowing Metropolitan at Cupertino
residential owners the opportunity to buy a retail unit is synergistic and one of the
benefits of the mixed-use concept. We ask that the City permit the 6,400sf of approved
retail space be split into 5 retail condominium units at Metropolitan at Cupertino.
JUSTIFICATION FOR ADDITIONAL MEDICAL USE
We are seeking permission to allow 60% of our approved 6,400sf of retail space or 3 of
our 5 retail units to be leased to medical users.
Per the City Zoning Map, our site is within an area zoned for Mixed-Use Planned
Development P(CG, O, ML, Hotel & residential). Our specific zoning is as follows:
ORDINANCE NO. 1929
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CUPERTINO REZONING A 7.74-ACRE
PARCEL FROM P(CG, O, ML, HOTEL) OR PLANNED DEVELOPMENT WITH GENERAL
COMMERCIAL, OFFICE, LIGHT INDUSTRIAL AND HOTEL USES TO P(COM, OFF, RES) OR
PLANNED DEVELOPMENT WITH COMMERCIAL, OFFICE AND RESIDENTIAL USES.
Per the City zoning code, “Office” means:
1. “Administrative or executive offices” including those pertaining to the management of
office operations or the direction of enterprise but not including merchandising or sales services.
2. “Medical office” means a use providing consultation, diagnosis, therapeutic, preventative
or corrective personal treatment services by doctors, dentists, medical and dental laboratories,
and similar practitioners of medical and healing arts for humans, licensed for such practice by the
State of California and including services related to medical research, testing and analysis.
3. “Professional offices” such as those pertaining to the practice of the professions and arts
including, but not limited to, architecture, dentistry, engineering, law and medicine, but not
including sale of drugs or prescriptions except as incidental to the principal uses and where there
is external evidence of such incidental use.
Hence, our zoning permits medical office use and there were no limitations put on how
much of the 6,400sf is office or commercial and what percentage of administrative,
medical or profession offices are permitted. Since our project is a Planned
Development approval, our PD approved zoning is specific to our site and supersedes
the background zoning for Vallco South, the General Plan and/or Heart of the City Plan
limitations.
The Heart of the City Plan contains limitations on the percentage of administrative or
executive offices and professional offices, but does not specifically limit medical offices.
The 25% limitation on “other uses that do not involve the direct retailing of goods or
services to the general public” is only applicable to the medical office use that does not
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provide services to the general public. If the
office use, medical or otherwise, provides
services to the general public, then this 25%
limitation does not apply. We are requesting the
right to lease to medical users who provide
services to the public, which is why they want to
locate in what is viewed as retail space versus
office space.
Our Use Conditions state that we have approval
for “and 6,400 square feet of retail space.”
Neither “retail” or “commercial” is defined in the
municipal code, nevertheless, one commonly
thinks of commercial defined as both retail and
office uses. Presuming this common
terminology, then retail falls under General
Commercial (GC) zones which permit the
following:
C. Professional, general, administrative, business
offices, business services, such as advertising
bureaus, credit reporting, accounting and similar
consulting agencies, stenographic services, and
communication equipment buildings, except that such
uses shall not comprise more than twenty-five percent of the building space in a shopping center;
Medical office is presumed to be under “general office” category given that it is defined
as an office use and since there is no other location within General Commercial (GC) or
within Administrative and Professional Office (OA) where it is listed as a permitted,
conditional or excluded use. Please note that the Administrative and Professional
Office (OA) permits professional office uses without limitations.
The “shall not comprise more than twenty-five percent of the building space in a
shopping center” does not apply. It does not state that there shall be no more than 25%
of the retail square footage in a mixed use project, but refers to a limitation on shopping
centers. It is a stretch to say that our 6,400sf of retail under residential constitutes a
shopping center; hence, I see no reason that we are not permitted to lease our
commercial/office/retail square footage to 100% medical users as long as we can
demonstrate that they service the public and that there is adequate parking.
Nevertheless, we are restricting our request to 60% medical use – in the 3 units in
Building B at 19501 Stevens Creek. We currently have one medical office user (20% of
our retail space), an optometrist in 19501 Stevens Creek, Unit 103, who not only
services the general public but also retails eyewear. We would like to put a dentist in
Units 101 and 102 in Building B at 19501 Stevens Creek. The dentist will be serving the
public.
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19505 Stevens Creek Blvd 19501 Stevens Creek Blvd
Bld A - Retail Units Bld B - Retail Units
Unit # Unit SF % of Total Unit # Unit SF % of Total
101 1,272 20% 101 1,289 20%
102 1,272 20% 102 1,278 20%
Total Bld A 2,544 40% 103 1,289 20%
Total Bld B 3,855 60%
Units 101 and 102 in Building A at 19505 will be more traditional retail. Currently we
have Sholin Karate Academy in one and a nail salon in the other.
While we would prefer to have national, established retailers in all of our retail space,
we have been unable to attract these tenants over the last 4 years. Markets have
peaks and valleys that cause retailers to expand and contract; however, our space has
not been sought after in the peaks leading us to conclude that even the most robust
market is not going to alter the situation for these units. There are many reasons:
The parking is problematic because is it hidden from view on the side of the
buildings versus in front where it is obvious to shoppers.
There is no street parking allowing for quick in and out.
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We have so little square footage that we get no spillover from one tenant to the
next – in other words, our space does not function as a shopping center but
merely as a couple of isolated retailers.
There is no synergy with Vallco Mall since there is no pedestrian traffic along
Stevens Creek connecting the Mall with our retail and their entire retail focus is
inward.
The adjacent HP vacant land does not assist with retail foot traffic. Even the
proposed Toll Brothers plan would not have helped because the street frontage
was to be City Park, followed by inward facing retail & parking and then
residential – contradicting the Heart of the City Plan that Metropolitan at
Cupertino had to adhere in.
Why did we build the retail or design it with parking that is incongruent with market
requirements? We were required to by the City to build it and the design was dictated
by the Heart of the City Plan. The Heart of the City Plan’s vision for Stevens Creek
does not take into account the existing conditions. Stevens Creek is a busy 3 lane each
way thoroughfare, not a pedestrian friendly street with parking that is conducive to
strolling along and shopping. Until major modifications are made to Stevens Creek,
neighborhood retail space along the street frontage with parking behind will not be
successful. For that reason we ask the City to be flexible with our permitted uses until
such time that traditional retail use is able to thrive in this location.
Our specific request is for an exception to the Heart of the City Plan to allow for 60% of
our 6,400sf to be leased as medical office which serves the public, if such exception is
needed.
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PARKING FOR 60% MEDICAL USE
There are 25 spaces surface spaces available for retail parking as shown below. The
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CC&Rs specify that the 24 spaces in the first section are exclusively for retail. The 25
space is a handicap space in the next section. The HOA security personnel monitor the
use of these retail spaces and insure that they are available for retail users.
With 60% medical use, the parking requirements will be as follows:
Square% of Retail Parking Retail Parking
19501 Stevens Creek (Bld "B") FootageTotal SF Required 1/250sf Required 1/175sf
Unit 101 1,289 20% 5 7
Unit 102 1,278 20% 5 7
Unit 103 1,289 20% 5 7
Total Bld B 3,856 60% 15 22
SquareRetail Parking Retail Parking
19505 Stevens Creek (Bld "A") Footage Required Required
Unit 101 1,272 20% 5 5
Unit 102 1,272 20% 5 5
Total Bld A 2,544 40% 10 10
TOTAL 6,400 100% 25 32
The additional 6 retail parking spaces will be provided in the residential underground
garage. Currently, 57 spaces are reversed for office use as provided for in the CC&Rs.
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Since we have completed the shared parking lots/garages, we have found that at most
we have used about 25 spaces of the 57 for office. It varies with the occupancy of the
office building. We have offered the unused office spaces in the condo garage to our
residential condo owners on a monthly basis and still have 20 or more “office” condo
garage spaces unassigned. What this tells us is that the 3.5 spaces/1,000sf is a good
guide but our actual office need is somewhat less than that. At 95% occupancy (we
never get more than that and this is what we consider full occupancy) we need as most
342 spaces. If we give 6 of “office” condo spaces to the retail tenants, we still have 355
spaces for the office tenants, allowing us some spare above the 342. Please see the
attachments.
We will require the retail business owners, including the non-medical users, to park in the
underground garage, freeing up the retail spaces at grade for retail visitors.
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