2003-0613 - Forum Development Group LLC/Lehman Brothers [Applicants]: Application for a General Plan Amendment and associated text amendments to Title 19 (Zoning) of the Sunnyvale Municipal Code and Downtown Specific Plan (DSP) to increase the maximum development intensity permitted within DSP Block 18 from 200 housing units to 300 housing units and general office square footage from 202,000 square feet to a total of 300,000 square feet.  This application will also include evaluation and consideration of a revision to the calculated maximum allowable housing units of up to 100 housing units within the greater DSP area by updating unit counts based upon the current maximum density and actual land area of residentially designated DSP blocks.

The City has analyzed the environmental effects of this project within the scope of the previously certified Downtown Improvement Program Environmental Impact Report (EIR) of 2003 (SCH: 1988110816) and has prepared an addendum to the EIR to be considered with the GPA demonstrating that new environmental documentation is not required.

Comm. Hungerford recused himself due to a financial interest with the applicant.

Trudi Ryan, Planning Officer, made some remarks relative to the staff report. She explained the allowable number of housing units and allowable amount of office development in the downtown.  Staff explored different items associated with permitted housing units.  During this process, it was identified that there were errors in the calculation of the number of housing units for Blocks 4, 6 and 9.  Since then, a more thorough analysis was conducted and discovered corrections to the acreage and number of housing units.  She provided a table of analysis and explained the proposed corrections.

Kelly Diekmann, Project Planner, presented the staff report.  He explained the analysis and the needed addendum to the Environmental Impact Report (EIR) that was certified in June 17, 2003 as well as the three actions required of the Planning Commission. He noted that staff identified corrections.  He also reported that the City of Cupertino just completed a conceptual design making it feasible for traffic mitigation on De Anza Blvd.  He explained the Preferred Project between the Alternative Projects that are discussed in the EIR.  He discussed the Findings of the EIR and suggested mitigation measures and the addendum to the EIR which is Attachment 7 of the staff report, noting the correct number of buildout for the Downtown EIR.  He pointed out the corrected numbers on Page 5 of the staff reports  under DSP Approved Intensity should read  the 960,421 square feet of office, the approved housing units should be 1999 and “Difference of EIR and Downtown Specific Plan”, the office increment should be 278,279 square feet and the housing should have been 192.  He explained how the numbers were derived noting that the addendum is correct and page 5 of the staff report is now correct.  He summarized the proposed General Plan Amendment, its impacts and its suitability in the Downtown.  He noted that the City Council will consider this amendment on July 13, 2004. He also noted that the development portion of this project should the amendment be approved, is expected to be submitted sometime in July. 

Vice Chair Moylan asked staff about Page 11 of the staff report, the additional office and the additional housing units and asked staff to clarify the positive result of this project to the housing/job ratio.  Staff responded by addressing the comparison with the 1993 Specific Plan EIR and the EIR increased the housing units from the Downtown Specific Plan of 1993. He stated that the addition of the housing units would be beneficial to the overall job/housing ratio.

Comm. Simons expressed concerns that the approval was based on incorrect information.  Ms. Ryan explained that the decision made by the City Council was based on discussions, text and the table and not solely based on the table for Blocks 4 and 6.  For Block 9, there was no discussion but rather a carry over from the 1993 Plan.  For Block 13, when it was modified, it changed the total number of housing allowable and never inserted.  The decision made by the Council was based on the collective information of discussions, text and table.   She noted that the corrections does not reduce what could be built but reduces the calculated impacts associated with the developments in the downtown.

Chair Babcock opened the public hearing,

Jane Vaughan, Project Consultant for The Forum Development Group, presented a Power Point presentation, highlighting the job/housing ratio positive impact.  She clarified that the office would be only be placed along Mathilda on the second, third and fourth stories.  Housing is not being recommended due to heavier traffic on Mathilda.  She stated that development of the Mall is much needed, such as it fits the current EIR, it is a reasonable request in a community planning perspective.  She stated that the design was based on the community’s input.  She addressed the location for this type of development noting that this has minimal impact to single family housing and relative to the General Plan, this site is the rational location.  She addressed the height concerns with the proposed density noting that there would be variations of the building heights and significantly lower than the Mozart Building.  Because of the mass transit proximity, this location is an ideal housing location.  She noted that the housing units would all be for ownership, the range of housing sizes to meet the demand of different age and work demographic and would provide Below Market Rate housing.  She commented on the proposed Class A office portion of the development which is to be located above the retail.  The project assumption is developed for the future 2006-2007, since it will be a couple of years before this project is completed.  She reminded the Commission that a large number of citizens who attended the April outreach meetings are supportive of the additional housing units and for the project to go forward.

Vice Chair Moylan asked Ms. Vaughan to clarify her comments about for sale versus home ownership based on the letter submitted earlier by the applicant versus her oral presentation. Ms. Vaughan responded that it was the original plan.  But based on the public outreach efforts, the community is asking for homeownership.  

Vice Chair Moylan asked Ms. Vaughan how would one ensure that these housing units remain owner-occupied.  Ms. Vaughan deferred the response to her residential team member, Tom Paradise.

Tom Paradise, Standard Pacific, it is the intent to ensure that the properties remain owner occupied through the CC&Rs and as part of standard practice there is restriction on the ability to rent the unit.  Vice Chair Moylan asked Mr. Paradise how would they police these restrictions.  Mr. Paradise responded that there are ways.

Vice Chair Moylan asked Ms. Vaughan for information making this project financially viable based on the statement from the applicant.  Ms. Vaughan responded that the findings have been made and were presented to staff and noted that the city has an economic consultant who looks at this financial pro-forma making this project financially viable for both the developer and the city.

Robert Paternoster, Community Development Director, stated the applicant and the developer are currently in the process of negotiation and explained the financial and economic findings of the City’s consultant and noted that the return on investment is lower than anticipated. The details of the negotiation are currently not available to the public and the negations are being conducted in closed sessions.

Vice Chair Moylan commented that it appears the office space return on investment would materialize for sometime and therefore does not seem to be economically viable.  Ms. Vaughan explained what investors at look – one return on cost and other is the Internal Rate of Return (IRR).

Comm. Simons asked Ms. Vaughan if she prefers to have a flexible mixed use development.  Ms. Vaughan responded developers prefer to have more flexibility.

Trudi Ryan, Planning Officer, commented that it would be difficult to assess the environmental impact with flexible space.  She noted that the environmental review was conducted on 100,000 square feet of office and to have space with another use may not satisfy the environmental review.

Chair Babcock asked Ms. Vaughan for the current development whether to build a 300,000 square feet or only 100,000 square feet.  Ms. Vaughan responded originally it would be necessary to phase out the development.  However, she stated that they are now able to get the construction done at once.  She noted that they have lost some retail tenants and also concerns about the construction effect to existing merchants in the downtown.

Kelly Diekmann, Project Planner, reminded the Commission to have their questions focus on the General Plan Amendment and not the Special Development portion of the project which is not before the Commission that evening.

Comm. Klein asked Ms. Vaughan to clarify the initial plan for the additional units of office to be located closer to the theater and would this affect parking.  Ms. Vaughan responded that they are still planning to have somewhat shared parking with the theater.  She noted that the theater location was set by American Mall Properties and have been signed off by both Macy’s and Target and there is very limited shifting they could do.  Further rationale could be discussed during the Study Session of the Special Development Permit.

Paul Reed, President of the Friends of Sunnyvale, spoke against the 100 additional housing and increase of office space being requested. The additional units would affect infrastructure such as city services and schools.  He expressed the parking impact and locking-in the downtown with four parking structures and capping the retail space with residential units. These proposals would provide extreme minimal flexibility in the future and can never change.  He stated that there other sites such as Moffett Park which is close to mass transit would be a better place.

Ray Johnson, member of the public, spoke against the General Plan Amendment.  He commented that the staff report stated that Block 18 is intended to be the retail, entertainment anchor which is an economic engine of the City.  He stated that what is being proposed is contrary to the vision of the downtown. The city needs a place where the citizens can shop and spend dollars in Sunnyvale.  The proposal would mean an opportunity to gain a $3 million in revenue because of the proposed mixed use percentage for the developer.  He suggested eliminating 200 housing units and do not add 100 more and do not add 98,000 square feet of office space.

Andy Maloney, member of the public spoke against the proposed amendment.   He expressed concerns about the closed door sessions and private information where public assets are being discussed.  He presented his tax increment analysis based on previous discussions. He noted gifts being given to the developer.  He was not convinced that there is synergy in addressing the housing imbalance with the proposal.

Laura Stuchinsky, Silicon Valley Manufacturers’ Group, spoke in support of the General Plan Amendment.  She stated that the EIR authorized a construction of over 2,000 homes in the downtown.  She urged the Commission to support the additional units without the reduction of housing permitted in the Town and Country and elsewhere downtown.  She noted the need for more moderate homes. In addition to the below market rate housing, developer has agreed to develop a moderate market price housing making it available to lower end income earners.  She stated that the location is ideal because of its proximity to mass transit.  The increased housing in the downtown would increase the economic vitality of the business and the city as a whole.  She thanked staff for its efforts.

Tom Carrig, member of the public and member of the Heritage District Neighborhood Association, spoke against the proposal.  He stated that community surveys reveal that the desire is to have safety, education, less traffic congestion and no over development.  This proposal would not be addressing the desires of the community.  He stated that there is no environmental alternative presented. He acknowledged that there is a need for retail but additional housing should not be granted.

Julia Summers, member of the public, expressed concerns about the increased housing and retail and its negative impact to her family’s quality of life. A friend read the letter she wrote to the City Council. She wrote urging that the number should be reconciled as the result of the EIR is based on incorrect information.  She asked what would be the impact of the increased density to the neighborhood (copy attached).

Harriet Rowe, member of the public, commented on the comments made by the developer of providing housing to seniors. She noted that there have been documentaries that seniors are looking to move into downtown to have a community feeling and experience new vitality.  She was in support of the proposed General Plan Amendment to allow the 100 housing units that could be made available to seniors is a good idea.

Art Schwartz, member of the public, spoke against the additional housing units proposal in the downtown. The need for placing residential units in the downtown is superfluous.  He stated that it is not part of bringing people downtown.  The open space needs to be expanded and should bring the downtown shopping, walking, pleasant areas with plazas with little residential and commercial is necessary.

Paul Warner, member of the public, spoke against the project and commented on the traffic impact. He suggested circulation to mitigate traffic issues.  He suggested widening the Washington Avenue with three lanes to have smooth flow.

Todd Eyring, member of the public, spoke against the additional residential units in the downtown. He said the design would preclude from ever re-designing or re-building.  The downtown would not have a true heart of the downtown for community events. He suggested underground parking, parallel instead of perpendicular parking and to have more visual open access. He stated that he does not believe that the current EIR addresses the requested intensity.

Tom Paradise, Housing Consultant, stated that there is a great need for new housing in Sunnyvale due to demographic changes.  He stated that the downtown is the best site for this additional housing that is of close proximity to mass transit.  This design is putting Smart Growth into practice.  He added that the proposed urban housing is highly desirable.   He shared his experiences with providing affordable housing and what types of housing are attractive to home buyers.

Olaf Hirsch, members of the Friends of Sunnyvale, spoke against the proposed development.  He added that the developer in the long run would gain $10 million.  He also addressed the ABAG report that Sunnyvale needs housing as well as the report stating that seniors are looking into moving into smaller housing units.  He noted that if seniors move they would be subjected to higher property tax. He felt that the developer’s proposal does not make sense.

Comm. Simons asked staff about the tax implications of senior citizens buying new homes.  Ms. Ryan explained that there is a property tax break associated with some seniors buying homes.

Tim Risch, member of the public, who spoke in support of staff’s recommendation. He stated that there is no better place but the downtown and it benefits from these mixed use proposal.  It is near the transit corridor and according to the EIR there is minimal impact with the increased housing. He urged the Commission to support the regional housing goal.

Comm. Simons asked Mr. Risch to explain his reasons for his previous support of the additional units to be located in Block 1A whether he would recommend 100 units be removed from other parts of downtown.  Mr. Risch responded that the improvements have been made from the initial plan and as a result he has changed his position. Further, he stated that the improvements such as currently having a residential team, the 300 units would be positive and beneficial.  He concluded that the additional units to Block 18 is sufficient and is within the scope of the EIR. 

Further, Comm. Simons asked Mr. Risch whether he was bothered by the fact that the tables and graphics do not match the plan that was previously approved by City Council and which corrections would he intend to make.  Mr. Risch responded that his intention was to reduce the intensity of the east side of downtown. He stated that he was surprised that he did not catch the number.  However, the reduction was based upon the number presented at the time, and is in line with his intention.  Therefore with the correction, he supports the additional units as it is within the scope of the EIR.

Ms. Ryan summarized staff’s recommendation and again apologized for the errors made.  1) to correct the acreages and the densities and the number of units as presented in the table with a net change of minus 82. 2) Specific to Block 18 is to consider the 100 housing units and the 98,000 square feet of office.  3) Staff is not making specific recommendations.  However, should the Commission desires to reduce the density, staff has identified five blocks for consideration to modify the density and urged that the Commission not exceed 100 units.

Jane Vaughan, project manger for the applicant, addressed the financial number presented by the speakers. She stated that although the numbers presented by the members of public look enriching for the developers, the number is not as enriching and viable.  She asked that clearly the question to ask is whether the city is willing to live in the current state of the downtown.

Chair Babcock closed the public hearing.

Vice Chair Moylan asked staff if there is any relief from the housing requirement and whether there is a nexus between loss of jobs and housing.   Ms. Ryan responded that the mandate is to provide for the number of housing in terms of zoning and general plan designations throughout the city.  The number derived is based partly on the potential growth expectation in jobs in the community and not in the state of the economy.

Comm. Simons offered a friendly amendment to allow for additional office for mixed use for flexibility without impacting the scope of the EIR.  Vice Chair Moylan did not accept the friendly amendment.

Vice Chair Moylan commented that the Commission is charged to provide additional housing and improve the job/housing ratio per the General Plan.  He shared the concerns expressed by the citizens who are against the intense development.  He commented that the opportunity to reduce the intense housing development is to put a break on additional job creation in the city.  This proposal does not exceed the permitted housing in the downtown.  He presented a compromise to provide enough housing to improve the job/housing ratio. 

Comm. Simons commented that he is comfortable with higher density near mass transit which is also the best hub.  Although he is concerned with the commercial intensity but he is please to see a true mixed-use in the City.

Chair Babcock concurred with Vice Chair Moylan.

FINAL MOTION:

Ms. Ryan stated that the City Council will consider the item on July 13, 2004.