The Sunnyvale Town Center project recently cleared several important hurdles that will allow the transfer of the property to a new developer team, STC Venture LLC. STC Venture LLC, a joint venture comprised of J. P. Morgan Asset Management Fund, Sares Regis Group of Northern California, and Hunter Properties, Inc., entered into a purchase contract with Wells Fargo Bank in December 2015. Staff has met regularly with the new developer team since early this year to process the revised approvals and agreements to relaunch the project. With the approvals described below, they are poised to resume construction and leasing activity on the stalled project.
Amendments to Land Use Approval
On May 23, 2016, the Planning Commission amended the Special Development Permit (SDP) that defines the permitted land uses for the project. The SDP amendments did not change the quantity or mix of land uses for the project. The City’s land use approval continues to reflect the project as originally approved in 2007/08, which includes: 1) approximately 931,000 square feet of retail and restaurant uses (includes the existing Macy’s and Target stores and a proposed multi-screen movie theater with up to 2,950 seats); 2) 292 residential units; 3) 315,000 square feet of office space; 4) a hotel with up to 200 rooms; and 5) public improvements including parking structures and street improvements.
The SDP amendments include the following items:
- Completing the housing units within the project as rental apartments and requiring 12.5 percent of the units to be reserved for low-income households;
- Demolishing the steel structures in Redwood Square and replacing with temporary improvements (two-year approval) to open up the space for public use; STC Venture LLC will restudy the development plan for this block, and any future proposal will require public review and an SDP amendment;
- Complying with the City’s Green Building Program and Climate Action Plan to the extent feasible;
- Incorporating “smart city” technology or infrastructure to enhance the experience for downtown users and promote sustainability; and
- Updating conditions of approvals for the outstanding downtown street and traffic improvements.
The allowance for rental housing was appealed to the City Council, and on June 21, 2016, the Council denied the appeal and upheld the decision of the Planning Commission.
2016 Modified and Restated Amended Disposition and Development and Owner Participation Agreement (MRADDOPA)
Along with the City’s land use approval (SDP), the project was also governed by the 2010 Amended Disposition and Development and Owner Participation Agreement (ADDOPA). The ADDOPA was an agreement between the former Sunnyvale Redevelopment Agency and Wells Fargo Bank. It outlined additional property owner/developer requirements including completing a defined “Minimum Project” within a specified timeframe, constructing, operating and maintaining public improvements, sharing the costs for environmental site remediation, and other developer obligations. With California dissolving redevelopment agencies in 2011 and the anticipated transfer of the property to STC Venture LLC, updates to the ADDOPA were necessary. The MRADDOPA is a modified version of the ADDOPA.
Primary MRADDOPA revisions include the following:
- Eliminates the potential payment of “tax increment funds” (TIF) to the developer from project property tax revenues;
- Revises the “Minimum Project” and construction schedule, and requires completion by December 31, 2020, with potential liquidated damages for non-performance;
- Requires the developer to assume in the future a greater share of environmental site remediation costs; and
- Continues the developer’s obligation to construct and maintain the public parking structures and public streets within the property.
The MRADDOPA required two approvals. The City Council, acting as the Successor Agency to the former Sunnyvale Redevelopment Agency, held a study session on June 21, 2016 (Study Session Presentation), and approved the MRADDOPA on June 28, 2016. Subsequently, the Oversight Board for the Successor Agency, which represents the various taxing agencies that receive property tax revenues from the Town Center property (e.g. County of Santa Clara and local school districts), approved the MRADDOPA on July 21, 2016. A final clearance is pending from the California Department of Finance. The transfer of the property is anticipated to occur this summer. Demolition of the Redwood Square steel structures could occur this fall, with construction commencing by spring 2017.
The Town Center project is an approximately 36-acre site covering six downtown blocks bounded by Mathilda, Washington, Sunnyvale and Iowa Avenues. Located just south of the Historic Murphy Avenue District, the approved plans call for a mixed use development that emphasizes retail, restaurant and entertainment uses. The plans include supportive residential and office uses to create a vibrant daytime and nighttime environment. Attention to a walkable downtown, a central community gathering place, and connectivity to transit and adjacent neighborhoods are key goals. The development plans, approved in 2007/08, reestablish the original downtown street grid by extending Murphy, McKinley and Frances Avenues through the project site.
Although substantial construction had commenced by 2009, the project became a casualty of the economic recession. Wells Fargo Bank foreclosed on the property in 2010 and assumed ownership from the former developer, Downtown Sunnyvale Mixed Use LLC (DSMU). (The Macy’s and Target parcels are under separate ownership and were not part of the foreclosure.) The project further stalled due to litigation between Wells Fargo Bank and DSMU. Litigation concluded in August 2015 when the California Supreme Court declined to review the final decision of the California Court of Appeals. This action cleared the way for the bank to sell the property. On December 10, 2015, the Successor Agency acknowledged the financial and professional capacity of STC Venture LLC to assume the project.
Retail Market Assessment
The amount of commercial retail uses that are economically viable for downtown Sunnyvale and the Town Center project specifically, has been the subject of much discussion. To better understand the market potential, including changing retail trends, the City obtained a real estate market expert in 2015 to assess the capacity for shopping, restaurant and entertainment uses in the Town Center project. The Retail Market Assessment was presented to the City Council at a study session on December 10, 2015. It will assist the City and STC Venture LLC in creating a vibrant downtown and a premiere destination for the community.
Downtown Sunnyvale Continues to Thrive
New businesses now open in Downtown Sunnyvale:
Downtown Parking Map
There is plenty of free public parking in Downtown Sunnyvale. View our parking map to find the most convenient location for you.
There are no public meetings scheduled at this time.
For information on Downtown Sunnyvale projects, call the 24-hour message hotline at (408) 737-4900 or email Downtown Development.