*Assumption of 1500 sq. ft. per housing unit including living area, lobbies, hallways, etc.

**Does not include potential need for above ground parking structures.

The subject site has recently been part of two major land use decisions.

The General Plan was amended on June 17^th, 2003 to update the types of uses, maximum intensity and maximum heights within the Downtown Specific Plan area. The approved intensities were a refinement of the conceptually approved Downtown Design Plan of 2002. The City Council is scheduled to take action on adopting an updated Downtown Specific Plan that includes revised development standards and design guidelines in October of 2003. If this requested General Plan Amendment is approved it will be incorporated into the revised specific plan prior to adoption of the specific plan.

The proposed General Plan Amendment (GPA) is a legislative action with broad land use implications; it does not approve or even endorse potential future individual project development applications. Subsequent project development applications are required to be in full compliance with the zoning ordinance, design guidelines, and the General Plan’s minimum or maximum development levels.

The GPA is distinct from individual development applications in that the proposed amendment need only be free from conflict with provisions of the existing General Plan. Goals and Policies of the General Plan provide a strong framework for evaluation of an amendment's appropriateness. The proposed amendment is not required to be approved or denied as originally requested, but may instead be modified for approval if it is determined that the change is not more intensive or extensive than the public notice project description. A desire for an expanded or more intensive option would require additional public hearing notice.

The proposed GPA is to increase the residential development potential from 200 housing units to 300 housing units and the office development potential from 202,000 square feet to 300,000 square feet for Block 18 of the Downtown Specific Plan (DSP). Although the General Plan was recently modified to its current intensity levels, the applicant believes the site's individual merits were not considered thoroughly and the increased intensity is crucial to the viability of a redevelopment project for the Town Center Mall site.

As part of its Downtown Improvement Program Update, the City has already analyzed the environmental effects of this project's impacts and has made the necessary findings required by the California Environmental Quality Act (CEQA) at the time of the EIR certification. The proposed amendment is within the scope of the program EIR and no new environmental documentation is required (§15168e).

General Plan Amendment

Setting: Block 18 is a centrally located 36-acre sub-district within the larger 103-acre Downtown Specific Plan. In addition to being within the boundaries of the DSP, the subject area is located within Sunnyvale's only Redevelopment Area. Block 18 is generally defined as the area between Mathilda Avenue and Sunnyvale Avenue and between Washington Avenue and Iowa Avenue.

The current adjacent uses to the subject area range from new high intensity five and six-story office buildings to the northwest and one-story single-family homes towards the southeast. Existing commercial uses also abut portions of the site. Upon redevelopment of property within the specific plan area, the following uses will be predominant (Attachments 2,3):

Block 18 Intensity:

The maximum heights are to remain the same at 75 feet for general development and 80 feet for a cinema.

General Plan Amendment Initiation: On August 12, 2003 the City Council initiated the study of a General Plan Amendment. Staff supported an investigation of an increase in the intensity of use for Block 18. Staff believed a study was appropriate to review site-specific attributes in relation to the requested intensity. The study allows the City to address any opportunities particular to the site that would further advance the Downtown Specific Plan’s objectives of facilitating redevelopment and revitalizing the downtown.

Objective of the applicant is to increase the development potential of Block 18 with the hope of facilitating redevelopment of the site.

The purpose of Block 18 within the Downtown Specific Plan is to contribute substantially to invigorating the downtown as a whole by becoming the commercial core’s regional retail/entertainment anchor and hub of activity. Tangible consequences of the DSP are intended to include: added vitality through an infusion of 24-hour uses, redevelopment of a decaying commercial core, augmentation of city revenues, increased connectivity, protection of existing neighborhoods, and establishment of a sense of downtown identity that is compatible with Sunnyvale's community character.

The requests for additional housing and office entitlements can be evaluated separately; however, they do have ties to each other, e.g. jobs/housing ratio and cumulative bulk. Therefore, the report discusses the entitlements together. The fundamental topics used in the review are listed below:

• Market Context
• Appropriateness of Location
• Environmental Impacts
• Job/Housing Ratio
• Fiscal Impact
• Community Character

The evaluation of the fundamental questions was guided by the General Plan Goals and Policies of the following elements: (Detailed Goals & Policies List Attachment 1)

• Land Use and Transportation Element
• Fiscal Sub-Element
• Community Design Sub-Element
• Noise Sub-Element
• Socio-Economic Sub-Element
• Housing and Community Rehabilitation Sub-Element
• Recreation Sub-Element
• Proposed Downtown Specific Plan

The assessment of this GPA is best described in a paraphrase of a General Plan Policy-

In order to provide a context for review, the following table compares the varied levels of office development that have been associated with the Mathilda corridor of Block 18 over the span of the Downtown Specific Plan

Progression of Office Square Footage:

*(Includes retail and housing gross floor area estimates at 1500 sq. ft. per unit.

During the recent review and yearlong outreach for the Conceptual Downtown Design Plan, there was significant discussion about the correct style and intensity of development along Mathilda Avenue. The original thought was for a continuation of office development similar to the new Mozart office buildings. After consideration of public input and market analysis a reduction in height and was recommended. Staff adjusted the square footage downward in correlation to the recommended height level of 75 feet. The final Council approval dropped the height for the Block 18a to 75 feet from 100 feet and lowered the intensity from 308,000 to 202,000 as recommended.

The June 2003 General Plan land use designation changes resulted in two significant land use consequences for Block 18 in that it merged "18" and "18a" into one large mixed-use block and expanded the height limit to 75 feet for all of Block 18. The urban design implications of merged sub-districts had not been evaluated for the entire site in terms of appropriate levels of use or configuration of uses for the large mixed-use site.

Although current market demand is low for large-scale office, long-term economic prospects for office use in the region are high.  The DSP office entitlements and Forum's proposed GPA are addressing long-term sustainability issues and not necessarily near-term market conditions. 

Housing has an immediate market demand for additional ownership housing over long and short term and a demand for rental housing over the long term. Additional housing units in the downtown will contribute to housing diversity and tenure for the city. Mixed-use urban living is on an upswing as a niche in the real estate market for the Bay Area. Additional units may free up existing detached single-family homes by providing an opportunity for owners to transition to smaller space or a more convenient lifestyle.

The downtown location conforms to best practice guidelines for Smart Growth, and generally suitable for the proposed level of intensities for all land uses. Downtown is therefore a good location for increased intensity increase due to access and proximity to services upon buildout of the DSP.

Housing can be accommodated downtown with minimal incremental increases in impacts as compared to the remainder of Sunnyvale. The intrusion into existing neighborhoods or conversion of ITR zoned land would have potentially greater land use conflicts than within Block 18.

The Program EIR, certified June 17, 2003, covered the associated physical impacts for the proposed increased intensity. The increment is within the impacts analyzed due to the fact that the EIR evaluated higher intensity uses that Council reapportioned and reduced. While the EIR specifically had a setting of 200 units in Block 18 it was determined that relocation/allocation of surplus units from other sub-districts would not affect the environmental analysis for the Conceptual Downtown Design Plan. The following tables indicate the requested general plan amendment in context to the previously certified Final EIR.

Scope of Program EIR Review:

GPA Incremental Increases: (Attachment 7 includes all 4 alternatives)

The City currently has a jobs/housing ratio of 2.4:1.  The regional jobs/housing ratio goal is 1.6 jobs per house (1.6:1).

As stated in the recent Downtown EIR, the Downtown Plan as a whole would result in a slight overall decrease in the projected citywide year 2020 jobs/housing ratio from 2.61 to 2.59.  These numbers assumed creation of an additional 243 housing units and 295,000 square feet of office that Council did not utilize or allocate in its final approval of the Downtown Plan.  The Council- approved General Plan designations for downtown further reduced the imbalance of the 1993 plan by providing an additional 599 housing units and a reduction of 47 potential jobs; however, at buildout, the Downtown, still would not be "balanced" in terms of jobs to housing.

The proposed additional 98,000 s.f. of office space would create approximately 280 jobs and the need for 175 housing units (1.6 workers per household).   In the alternatives discussion, staff provides an analysis of improving the jobs/housing balance within Block 18 as an option to the Forum proposal.

Historically, commercial development and use have contributed up to about 70% of the city’s General Fund revenues through fees and taxes, including but not limited to: property, construction, sales, transient occupancy, and utility users taxes. Commercial activities use only about 25% of the city’s general fund services. Block 18 is within a Redevelopment Project Area; the Redevelopment Plan expires in 2025. As long as tax increment is allowed, the property tax increment associated with new development in the project area would contribute to the Redevelopment Fund and not to the General Fund. Sales tax is not typically associated with office development. Housing development typically utilizes more city services than the general fund revenues generated from it.

The pending Downtown Specific Plan describes Downtown Sunnyvale as an enhanced traditional downtown with appropriately scaled uses and character for a medium-sized city.   The DSP is transforming the neighborhood to a place with its own elements of character that does not rely heavily upon adjacent neighborhoods for character. The proposed additional square footage could be viewed as contributing to creation of downtown character and its sense of place and identity. 

The following table compares land use, bulk, height, and density (General Plan level community character elements), for seven downtown blocks.

Comparison to adjacent Sub-Districts: (Attachments 2,3,4)

The exact community character will be primarily determined at the time of project review through application of DSP Design Guidelines.  The General Plan has established maximum heights and potential land uses for the planning area. In the project review stage it is the applicant's burden to deliver a project that appeals to the character of the city and meets it many design goals and policies. Two conceptual proposals (i.e. Conceptual Downtown Design Plan, Forum Dev. Group preliminary plan) have demonstrated methods for developing within General Plan parameters. These examples suggest to staff that a project can be designed to meet the myriad of DSP goals and provide positive character and neighborhood identity.

Council requested a range of options be evaluated as part of the GPA study. A representative list of alternatives to the Forum Development Group's GPA is below.

Alternative "A"-Staff Recommendation Correlate intensification of Block 18 with no net change to the jobs housing ratio with an understanding that combining housing with other uses has a greater cumulative effect on building square footage and bulk than a separation of uses. The least invasive increase that meets the objectives of the developer and maintains a jobs/housing balance is a 56,000 square foot increase of office space with 100 additional housing units. Character and design of buildings will be reviewed through design guidelines at the Special Development Permit level.

Alternative "B"-Retail Reduction A reduction in developable retail square footage for Block 18 would allow for an increase in other uses with no net change to jobs/housing ratio. To allow for an additional 98,000 square feet of office that requires 175 housing units and subtracting the provided 100 housing units the retail entitlement would need reduction by 54,000 square feet for no net change to jobs/housing. A cursory review of the loss of retail is that the retail market for Sunnyvale is not likely to sustain 1 million square feet of high quality retail at this time. Loss of retail square footage would potentially affect sales tax revenue if full buildout could have been achieved with successful retailers. There would be a net increase of potential bulk for replacing retail with other uses due to the space requirements and ceiling heights of other uses.

Alternative "c"-Office No Increase There is currently not a strong market for additional office space in the near term. Underutilized buildings do not contribute to a lively downtown concept and could be detrimental in the near term. There is long term potential for office in the region and office is generally a net gain in revenue versus services. Typically sffice uses have the highest floor to ceiling heights for upper floors and a greater need for standard size spaces, thus creating the greatest design challenges for mitigating bulk and community character concerns. No increase in office space could addresses community character concerns for the downtown and does not increase the jobs/housing imbalance.

Alternative "D" Housing Units No Increase Mixed-use development has a higher potential for land use conflicts between different uses potentially creating a lower level of livability. Block 18 has been identified as having noise impacts that require mitigation during construction and design. Revenue from housing uses alone is not likely to equal the costs of providing additional services. Service demands are generally lower for attached housing in an urban setting due to unit size and demographics. Maintaining current housing levels would not increase the degree of internal livability conflicts or add bulk within the subject area. Intensification of other uses without additional housing units would exacerbate the jobs/housing ratio for the downtown and city as a whole.

The most common type of General Plan amendment request in Sunnyvale is for a single use. The questions, then, are: (1) is it an appropriate use?, and (2) is the proposed intensity acceptable? The subject application is for a mixed use, which is entirely appropriate in the Downtown. The evaluation process, however, is much more complex, determining whether the mix of uses is appropriate and combined intensity of development is acceptable.

Staff has identified six criteria for evaluation of this proposal:

Market support
Location
Environmental Impact
Jobs/housing ratio
Fiscal impact
Community character

In the preceding analysis, staff has pointed out that this proposed amendment would result in less development than was found to have acceptable impacts by certification of the Environmental Impact Report. The relatively small changes proposed by the amendment would result in insignificant changes to traffic and air quality, the two negative environmental impacts for which full mitigation could not be identified in the EIR. Therefore, environmental impact is not a deciding criteria in the final analysis.

Similarly, staff has pointed out that the impact of the proposed amendment on community character is not dependent so much on the quantity of floor area added as it is up the quality of the design of a yet-to-be approved project. Approval or disapproval of the proposed amendment does not guarantee a positive or negative impact on community character. A specific project or projects on this block need not be built to full floor area permitted in the General Plan. The Planning Commission and City Council have the ability to specifically limit the amount of development to insure a positive impact on community character as described in the DSP. Therefore, community character is also not a deciding criteria in the final analysis.

The following table summarizes the staff evaluation of the proposed increase of 100 housing units and the proposed increase of 98,000sq. ft. of office based upon the remaining four criteria:

The proposed increase in housing units rates well on practically all of the criteria. There is a strong market, especially for for-sale housing. The location is the best in the city for higher density housing, in close proximity to transit, shops and services, and not adjacent to single-family neighborhoods. The combination of housing with employment and retail uses is consistent with principles of "smart growth" and "best practices". It is the policy of the City to promote the construction of new housing units to improve our problematic jobs/housing ratio. Although the fiscal impact of any new housing is negative, multi-family units in a mixed-use setting should demand less public services, particularly those services related to children.

The evaluation of the proposed office increase is, however, mixed. There is clearly no strong near-term demand for more office space. Even if this is for a niche market of small office users, it is unlikely that it could be easily rented. The location is excellent, again promoting the principles of "smart growth" and "best practices". Adding jobs has a negative impact on the jobs/housing ratio. Nevertheless, the overall fiscal impact of office space is positive.

Staff concludes that the proposed increase of 100 units is fully supportable. It further concludes that the proposed office increase is excessive at this juncture in time, and should be reduced so as not to have a negative impact on the jobs/housing ratio. An increase of 100 housing units would support the creation of 280 new jobs, or approximately 56,000sq. ft. of new office space.

In support of Staff's recommendations the following action items are also recommended for the Downtown Specific Plan:

• Articulate appropriate gradation of intensity throughout Block 18. Most intensive uses in terms of height and bulk should be located along Mathilda and Washington Avenue corner with a reduction in intensity as development approaches Sunnyvale and Iowa Avenue intersection.
• There is a strong desire for prominent intense buildings along Mathilda Avenue with the DSP. At the time a development application is made to the City, if it does not incorporate all properties within Block 18, an appropriate amount of development potential of office and/or residential units shall be reserved for future redevelopment of appropriately scaled building(s).
• Corner Sites- In general, 50,000 square feet of office should be reserved for each of the smaller parcels located at the corners of Block 18 along Mathilda Avenue if they are not incorporated into a master planned development. Appropriate levels of first-floor retail reserve will be determined at the time of development.

No fiscal impacts are directly attributable to the General Plan Amendment.

Public Contact

1. Introduce a Resolution to increase the intensity of Block 18 by an additional 56,000 square feet of office and 100 additional housing units.
2. Introduce a Resolution to increase the intensity of Block 18 by an additional 98,000 square feet of office and 100 additional housing units.
3. Introduce a Resolution to modify the intensity of uses as determined to be appropriate for Block 18.
4. Deny the request for additional development intensity within Block 18.

Recommend Alternative 1 to the City Council.

Prepared by:

Kelly Diekmann
Project Planner

Reviewed by:

Gerri Caruso
Principal Planner

Reviewed by:

Trudi Ryan
Planning Officer

Attachments:

Attachment 1 - General Plan Goals and Policies

Residential-