A study issue allowing the development of residential units in areas zoned for industrial use was completed in 1993 to address ongoing housing shortages. As a result of the study, City Council approved a Rezone, which added the Industrial to Residential (ITR) Combining District to the existing M-S Zone. The ITR Combining District allows industrial, office, commercial and residential uses to exist within the same zoning district, and allows existing industrial, office and commercial sites to convert gradually to residential use.

The applicant proposes to develop a Mediterranean-style, three-story, 271-unit apartment complex on two adjacent lots, which are Futures Sites located on Morse Avenue and Karlstad Drive. Existing industrial buildings on both lots would be demolished. The complex would contain 126 one bedroom /one bathroom units and 145 two bedroom/two bathroom units. With the exception of one-story, two-bedroom corner units, all two-bedroom units would be two stories and located above the one-bedroom units. All one-bedroom units would be located on the ground floor.

The project would be constructed in two phases: 123 units would first be built on Morse Avenue, and the remaining 148 units would follow on Karlstad Drive. The schedule for the second phase is dependent upon the current tenant vacating the existing industrial building. The applicant has stated that this may be two to five years from now. The Morse Avenue site has therefore been evaluated as an independent project in terms of zoning requirements and compliance with development standards. A 7’ masonry wall would extend along the side and rear property lines of the Morse Avenue site until completion of the second phase. The rear wall would be constructed with two gates to allow fire access through the driveway aisles on the right and left sides of the site. Once both phases of the project are complete, the rear wall between the two lots would be removed, and the walls would be extended along the side and rear property lines on Karlstad Drive.

There would be 7 apartment buildings on Morse Avenue and 9 apartment buildings on Karlstad Drive (see Attachment 4, site plan). Two of the buildings on Morse Avenue and three of the buildings on Karlstad Drive would line the respective street frontages. The remaining buildings would be situated in rectangular patterns surrounding internal courtyards. Also located on the Morse Avenue lot would be the leasing office, one recreation center and a swimming pool.

Assigned parking, located under carports, and uncovered guest parking would surround most of the perimeter of both lots (excluding the street frontages) and the perimeters of the apartment buildings. Vehicular access would be available on both Morse Avenue and Karlstad Drive.

A Mitigated Negative Declaration has been prepared in compliance with the California Environmental Quality Act provisions and City Guidelines. An initial study has determined that the proposed project would not create any significant environmental impacts with implementation of the recommended mitigation measures (see Attachment 3, Initial Study and Mitigated Negative Declaration).

A previous Mitigated Negative Declaration was prepared for the project site and surrounding sites as part of a Council study issue to increase the residential density allowed in the area bounded by Highway 237, 101 and Lawrence Expressway (Project # 2001-0116). A traffic and transportation mitigation measure requiring eastbound and westbound right turn lanes at the intersection of Lawrence and Tasman was included in that report.

Also in that report, impacts from hazardous materials were identified as less than significant. The semiconductor equipment manufacturer on the Karlstad site uses toxic compressed gases, which could potentially be released into the environment. However, adherence to engineering and administrative controls required by the California Fire Code and Sunnyvale Toxic Gas Ordinance provide the necessary preventive measures to significantly reduce potential impacts. Based on the findings from this previous Initial Study, there is no reason to expect soil contamination on either of the subject lots. Therefore, no additional hazardous materials mitigation measures are required. However, as an added precaution, Staff is recommending Condition of Approval #12, requiring that a soil and groundwater contamination analysis be completed prior to issuance of a building permit.

Mitigation measures in the Mitigated Negative Declaration for this project address interior noise, construction noise and flood damage prevention. Interior noise would be mitigated with windows rated STC 24 that could remain closed at all times and a mechanical ventilation system. Construction noise would be mitigated by limiting construction hours per Title 16 of the Sunnyvale Municipal Code. Flood damage prevention measures are also required per Title 16, and are part of the building permit review process.

Change Under Consideration: Rezone the site from M-S/R-3/ITR/PD (Industrial and Services/Medium-Density Residential/Industrial to Residential /Planned Development) to R-4/PD (High-Density Residential/Planned Development).

Discussion: The R-4 Zoning District is the only district compatible with the Residential High Density General Plan Designation, allowing up to 36 d.u./acre without a density bonus, and 42 d.u./acre with a 15% density bonus. The continuation of the Planned Development Combining District allows for special consideration of any modifications, additions or limitations to the project.

Use: The project consists of 271 one and two bedroom apartment units, which would include 27 (10%) below market rate rental units affordable to low-income households (less than 70% area median income). The proposed density is 29 d.u./acre. This density is consistent with the General Plan Designation for the subject site.

Site Layout: The project site is a Futures Site, which encourages redevelopment of industrial sites with residential projects. The project site is also located within ¼ mile of a light rail transit station, which is defined by the Valley Transportation Authority (VTA) as an opportunity zone for transit-oriented development. VTA has several recommended design guidelines, such as internal pathways providing convenient pedestrian access through the project site to the transit stop, that facilitate the use of mass transit. Staff will continue to work with the applicant to incorporate these guidelines where feasible. Conditions of Approval #28 through #31 address these requirements.

A total of 18 apartment buildings, a leasing office, one recreation center and one swimming pool would be located on the project site. The rear elevation of two apartment buildings would face the Morse Avenue street frontage, and the rear elevation of three apartment buildings would face the Karlstad Drive street frontage. The remaining buildings are situated in a rectangular pattern to form internal courtyards for usable open space.

The applicant is proposing a deviation for the minimum distance between main buildings at the first and second floors as shown in the following table:

These distances apply at the ends of the buildings where the rectangular pattern is formed. The majority of units face a courtyard, the pool or a parking area; the distance between buildings for these units far exceeds the requirement.

The applicant is proposing deviations for setbacks on both lots as follows:

The front setback is the distance between the units that line the street frontages and the front property line. The side and rear setback distances are between the carports, which abut the masonry wall, and the respective property lines. If measured from the apartment buildings to the side and rear property lines, the side and rear setbacks would exceed 60'.

The following Guidelines were considered in analysis of the project site design.

Architecture: The applicant is proposing a three-story, Mediterranean-style development with a stucco exterior finish and concrete tile roof. The maximum height of the buildings would be 38 feet, which includes a grade of two feet after filling and re-grading to meet AE flood zone construction requirements. Each unit would have a porch or balcony. Decorative features include wood shelves and metal planting baskets below windows and decorative metal railings enclosing the fronts of the porches and balconies.

There are building modulations between units and between floors. The rear elevation of several of the buildings will face the street frontages on both Morse Avenue and Karlstad Drive. In the February 24^th hearing, the Planning Commission requested that additional design features be added to the rear elevation to ensure that the buildings along the street frontages create an aesthetically appealing streetscape. Condition of Approval #30 has been modified to incorporate this requirement.

Different colors are proposed for the exterior walls and protruding features to accentuate building modulations. The applicant originally proposed varying tones of beige, but new color schemes are currently being considered based on feedback during the February 10^th Planning Commission study session.

The following Guidelines were considered in the analysis of the project architecture.

Landscaping/Open Space: The existing landscaping on site includes a variety of trees in parking lot islands and street trees. The applicant is currently working with the City Arborist to identify possibilities for preserving street trees given the current site design. The majority of existing trees would have to be removed to allow construction of apartment buildings. In the February 24^th hearing, the Planning Commission requested that up to 40% of the existing pine and redwood trees as identified by the City Arborist be preserved (see modified Condition of Approval #14a).

A tree protection plan and a landscaping/irrigation plan with types, quantities and sizes of trees and shrubs are required before issuance of a building permit (see Condition of Approval #14). Landscaped and open space areas have been identified on the site plan. The proposed percentage of landscaping for both lots is 39% (20% is required).

The applicant is proposing one deviation to allow porches that are 7 feet in width where 10 feet is required to be counted toward the usable open space requirement. The porch design would then be consistent with the balcony design, and would minimize encroachment into the internal courtyard areas. With this deviation, the project exceeds the area requirements for landscaping and usable open space, which is 418 sq. ft./unit for both lots. If the porches were excluded, the usable open space area would be 360 sq. ft./unit, which is 20 sq. ft. less than the required 380 sq. ft./unit.

Although the usable open space requirement specifies a minimum dimension of 10 feet for porches, the minimum dimension required for balconies is 7 feet. The proposed balcony dimensions meet this minimum requirement, and balconies have therefore been included in the usable open space calculation. Staff has identified no significant negative impacts resulting from undersized porches, and given their design consistency with the balconies, Staff is recommending that they be included as usable open space (see Condition of Approval #5).

Parking/Circulation: A two-way aisle, 26 feet in width, loops around the internal apartment buildings on both lots, allowing convenient access to parking and efficient circulation around the site. Entrances to the site would be provided on both Morse Avenue and Karlstad Drive. The applicant is currently reviewing locations for trash enclosures that provide access no further than 150 feet from all units and that have sufficient space for truck access. If the location of these enclosures requires that fewer guest parking spaces be provided, Staff is recommending that no more than four guest parking spaces be eliminated. A final trash enclosure plan is required prior to issuance of a building permit per Condition of Approval #9.

The project meets parking requirements; no additional spaces are provided. Covered parking is provided under carports. The following table summarizes proposed parking:

The original proposal to provide bicycle storage on each porch and balcony is currently under review by the applicant because it does not fulfill the purpose of providing convenient bicycle parking for residents as well as guests.

As noted in the Environmental Review section of this report, a previous traffic impact analysis identified the need for traffic mitigation with increased development in the area of the project site. The mitigation requires eastbound and westbound right turn lanes at the intersection of Lawrence and Tasman. A mitigation-monitoring program was established as a part of that previous environmental review.

As previously discussed, the project site is located within a VTA transit opportunity zone. As such, several VTA-proposed design guidelines are recommended for incorporation into the site. An internal pathway system providing convenient access through the complex to the light rail stop would be included. If feasible, the street frontage would also be designed with wider sidewalks (up to 10'), tree grates and ornamental pedestrian-scale lighting. Conditions of Approval #28 through #31 contain transit-oriented design recommendations.

Easements/Undergrounding: A public utility easement, up to 10 feet, is required on Morse Avenue. All overhead utilities and service drops must be placed underground for this project.

The applicant is requesting the following deviations from development standards:

Visual - The replacement of industrial buildings with a high-density residential project will alter the predominantly industrial appearance of the area. This is in line with the General Plan Goal to transition the area from industrial to residential.

No fiscal impacts other than normal fees and taxes are expected.

One member of the public representing the Parkinson's Institute, which located adjacent to the project to the north, expressed concern regarding the continuation of an ingress/egress easement that allows emergency access through the project site. Condition of Approval #40 requires that the developer coordinate with the property owner for abandonment of the ingress/egress easement.

No other public input has been received for this project.

This project was presented to the Planning Commission on February 24, 2003. The Planning Commission approved the Rezoning Ordinance and the Special Development Permit with a 6-1 vote.

One member of the public representing the Parkinson's Institute, which located adjacent to the project to the north, expressed concern regarding the continuation of an ingress/egress easement that allows emergency access through the project site. Condition of Approval #40 requires that the developer coordinate with the property owner for abandonment of the ingress/egress easement.

No other public input has been received for this project.

1. Adopt the Mitigated Negative Declaration and introduce an Ordinance to Rezone 1150-1152 Morse Avenue and 1139 Karlstad Drive from M-S/R-3/ITR/PD to R-4/PD and approve the Special Development Permit with attached conditions.
2. Adopt the Mitigated Negative Declaration and introduce an Ordinance to Rezone 1150-1152 Morse Avenue and 1139 Karlstad Drive from M-S/R-3/ITR/PD to R-4/PD and approve the Special Development Permit with modified conditions.
3. Adopt the Mitigated Negative Declaration and do not introduce an Ordinance to Rezone 1150-1152 Morse Avenue and 1139 Karlstad Drive and deny the Special Development Permit.
4. Do not adopt the Mitigated Negative Declaration and direct staff as to where additional environmental analysis is required.

Recommend Alternative 1.

Action Statement N1.4.2 Site higher density residential development in areas to provide transitions between dissimilar neighborhoods and where impacts on adjacent land uses and transportation system are minimal.

Action Statement R.1.7.2 Support regional efforts which promote higher densities near major transit and travel facilities, without increasing the overall density of land usage.

Policy C.1 Continue efforts to balance the need for additional housing with other community values, such as preserving the character of established neighborhoods, high quality design, and promoting a sense of identity in each neighborhood.

Goal D Maintain diversity in tenure, type, size and location of housing to permit a range of individual choices for all current residents and those expected to become city residents.

In order to approve a rezoning request the City Council is required by Zoning Code Section 19.92.050 to make a finding that "the amendment, as proposed, changed or modified is deemed to be in the public interest." The proposed Rezoning is consistent with this finding because it is consistent with the General Plan land use designation and assists the city in meeting its housing goals by providing 271 additional housing units, 27 of which are below market rate rental units affordable to low-income households.

The Findings for the Special Development Permit are dependent upon the Rezoning action. Only one of the following Findings must be made to approve the Special Development Permit.

1. The proposed use attains the objectives and purposes of the General Plan of the City of Sunnyvale as the project.

The proposed project provides 271 additional housing units and eases the City’s jobs/housing imbalance. The project also contributes to the need for affordable housing as defined in the Housing and Community Revitalization Sub-Element of the General Plan by providing 27 below market rate rental units.

2. The proposed use ensures that the general appearance of proposed structures, or the uses to be made of the property to which the application refers, will not impair either the orderly development of, or the existing uses being made of, adjacent properties as.

The proposed project will complement existing medium and high-density residential development in the area and will encourage the transition from industrial use to residential.

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