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March 9, 2018
Ms. Piu Ghosh, Principal Planner
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
piug@cupertino.org
MORRISON &. .POEiRSTER LLP
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MImwalle@mofo.com
Re: Notice of Preparation (NOP): Vallco Special Area Specific Plan Environmental
Impact Report, City File Number EA -2017-05
Dear Ms. Ghosh:
This letter is provided to the City on behalf of our client, Sand Hill Property Company
(SHPCO) in response to the City's February 9, 2018 Notice of Preparation (NOP) for the
Vallco Special Area Specific Plan Draft Environmental Impact Report (EIR). As owners of
the vast majority of the Special Area, we welcome the opportunity to comment on the scope
and content of this EIR.
We believe the background information and recommendations provided in this letter will
assist the city and its consultants to prepare a more comprehensive and defensible CEQA
document for the Vallco Special Area. The City has the opportunity to build on the
extensive CEQA studies and analysis for this critical site when it prepared, considered and
adopted its Cupertino General Plan Community Vision 2015-2040 in 2015.
Recognize Vallco's Importance as a Priority Development Area and Transit Priority
Area
We appreciate that the Background section of the NOP mentions that the Vallco Special Area
is identified as a Priority Housing Element Site in the City's General Plan. Given the unique
size and opportunities presented by the Special Area, we request that the EIR identify and
analyze the Vallco site as within the Plan Bay Area 2040's potential Priority Development
Area (PDA) and Transit Priority Area (TPA).
The public and City decision -makers should be provided with EIR analysis reflecting the
regional importance and context of the Vallco plan. As both a PDA and TPA, Vallco is
identified as an area appropriate for additional compact development and focused growth
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MORRISON I FOERSTER
Ms. Piu Ghosh, Principal Planner
March 9, 2018
Page Two
with the investment potential to provide homes and create jobs. The Vallco Special Area
Specific Plan analysis will more accurately track with CEQA's goals and emphasis on
advancing the State's transit oriented, environmental sustainability and climate change goals
if the EIR addresses impacts in the context of how a large mixed use opportunity site with
high -duality transportation access may be able to relieve pressure on the South Bay's
regional housing crisis.
The EIR Should Include a Realistic CEQA Baseline to More Accurately Reflect
Vallco's Recent Occupancy Rates
To provide more meaningful analysis to the City's decision -makers and the public, we
recommend that the EIR utilize recent historic mall occupancy rates, rather than the current
occupancy, as the CEQA baseline condition for the EIR. To do otherwise risks overstating
and misrepresenting the incremental new impacts of a mixed use redevelopment of the site
with an existing outmoded shopping center. CEQA encourages accurate analysis and it is
critical that existing developed infill sites not be equated with vacant or greenfield site.
For many years, the Vallco Shopping Mall (the "Mall") struggled to compete with
contemporary regional malls. During the five-year period preceding 2014, the Mall had an
occupancy rate of approximately 82 percent. Since 2015, following SHPCO's acquisition of
the properties comprising the Vallco site, occupancy of the Mall shrank considerably to
approximately 24 percent (largely the result of the post -sale vacancies by the 3 owner -
occupied department stores, Macy's, JCPenney, and Sears). Without the department stores in
occupancy, many tenants at the Vallco Shopping Mall terminated their leases, and potential
tenants and SHPCO have understandably been unwilling to enter leases at Vallco given its
uncertain future.
A central purpose of CEQA is to inform government decision -makers and the public about
the potential environmental effects of proposed projects. The selection of an accurate
baseline is essential for the informed study of`a project's environmental effects. The
extremely low occupancy rate that currently exists at the Vallco Shopping Mall is an
anomaly and does not reflect the recent historical use of the site as a functioning shopping
center as recently as five years ago.
In a recent CEQA baseline case that presents strikingly similar facts to the situation here, an
appellate court upheld a city's decision to use a shopping mall's historic occupancy rate as
the baseline in an EIR for the redevelopment of the shopping mall. In North County
Advocates v. City of Carlsbad, 241 Cal.AppAth 94 (2015) (North County Advocates), the
court found that substantial evidence supported the city's decision because the chosen
baseline was based on recent historical use and was consistent with the mall owner's right to
fully occupy the existing mall without discretionary approvals. Rejecting arguments that the
city must use the then -existing low occupancy of the shopping mall for baseline conditions,
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MORRISON I FOERSTER
Ms. Piu Ghosh, Principal Planner
March 9, 2018
Page Three
the court noted that fluctuating occupancy is the "nature of a shopping center" and held that
it was proper to use a historic baseline to account for fluctuations. See North County
Advocates at 105-6.
Using a snapshot alone of the currently abnormally low occupancy at the Vallco Shopping
Mall as an EIR baseline would not accurately represent the infill Project's environmental
impacts, and could confuse City decision -makers and the public.
The EIR Should Analyze High Residential Density Alternatives
We request that the EIR analyze alternatives that account for higher residential densities at
the site. Cupertino's General Plan provides for a maximum residential density of 35 units per
acre in the Vallco Shopping District Special Area. Based on the Special Area's size of 58.1
acres, the General Plan allows for 2,033 units. When including a maximum density bonus
allocation under Cupertino's Density Bonus Ordinance, up to 2,745 residential units are
allowed in the Special Area. Even if the 2.1 acre hotel portion is excluded, that yields a unit
count of 1,960 residential units and 2,646 residential units with a density bonus. The EIR
should address this possibility so that the decision -makers and the public have the necessary
information when weighing various alternatives.
Although the General Plan allocates 389 residential units to the Special Area as a "priority
housing site," it does not cap residential development in the Special Area at this number of
units. In fact, the Housing Element contemplates a "minimum density of 20 units per acre" in
the Vallco Shopping District, which would allow for a minimum density of 1,162 units, well
over the 389 units allocated to the area as a priority housing site. Accordingly, we request
that the scope of the EIR include alternatives accounting for higher density housing at the
site. We are encouraged by indications that the City plans to include a "General Plan build-
out" alternative that includes the maximum number of residential units allowed under the
General Plan.
Thank you in advance for your consideration of these few recommendations.
[Signature page follows]
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MORRISON I FOERSTER
Ms. Piu Ghosh, Principal Planner
March 9, 2018
Page Four
Sincerely,
Miles H. Imwalle
CC: Randolph Hom (randolphh ,cupertino.org)
David Brandt (managerna cupertino.org)
Aarti Shrivastava (aartisncupertino.or )
Reed Moulds (nnouldsnshpco.com)
Steve Lynch (sl�nch(cr�,shpco.com)
David Gold (d_gold?ae,mofo.com)
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