Developer files claim against Cupertino over ‘downzoning’
The developer that wants to transform the defunct Vallco Shopping Mall into a mixed-use development has filed a complaint against the city of Cupertino for trying to gut the heart of its proposal.
Sand Hill Property Co. said it had no choice but to file the claim while waiting for a judge to decide whether to send the project back to the drawing board.
In its claim, Sand Hill says general plan amendments the City Council approved in August eliminated a zoning allowance for up to 2 million square feet of office space and confines housing development to 13.1 acres of the 50-acre Vallco site.
Although the amendment doesn’t affect the current proposal, it would apply to any future projects for the site if Sand Hill’s plan is tossed.
The company had “no choice” but to file a claim, Sand Hill managing director Reed Moulds said in an email blast last week, alleging the amendments would amount to “downzoning” the property and “radically the value of the Site, as they left no potential for a project that can feasibly be built.”
The council “went too far and broke state and federal law,” Moulds added. “The council’s mission has clearly been to make sure no project could happen at Vallco.”
The company has argued that office space is critical for penciling out large projects with retail and affordable housing and that the city’s action amounts to an illegal seizure of the company’s property without compensation, which would result in a “loss of tens or hundreds of millions of dollars.”
Sand Hill is hoping a judge will rule against the city’s lawsuit, which aims to block a project that envisions construction of 2,402 apartment units, 400,000 square feet of retail and 1.8 million square feet of office space at the former shopping mall.
If the judge upholds the lawsuit, Sand Hill will have to submit a new proposal for the site. So by filing the claim Feb. 21, the developer will have set the stage to sue the city over the general plan amendments.
“Our mission has always been to revitalize a dead mall and restore Vallco as Cupertino’s social heart,” Moulds said in the email. “We take action today not only to defend our rights as property owners, but to protect our ability to deliver on this vision for the Cupertino community.”
In a statement issued Feb. 24, the city said Sand Hill’s argument that it’s no longer feasible to develop the site at all is “entirely without basis.”
The city says its economic feasibility studies “demonstrate that Vallco stands to make a profit by building a project that fits within the General Plan Amendments.”
And although office buildings could be more lucrative for Sand Hill, “the law does not require the City to permit the most profitable development, only some development.”
The city’s statement adds that the purpose of the general plan amendment was to “maintain a balance between jobs and available housing units.”
In addition, the city says it has reservations about allowing up to 2 million square feet of office space “when the community’s most pressing need at this time is to grow its stock of housing, particularly affordable housing that can accommodate lower-income families.”
Council members who voted for the zoning changes and general plan amendments contend that allowing large amounts of new office space would exacerbate the region’s housing crisis by bringing in new workers without the homes to accommodate them.
Sand Hill’s current Vallco project is allowed under a state law known as SB 35, which requires cities to approve housing developments as long as they include enough affordable homes and meet zoning and planning rules.
The developer invoked the law after a faction of residents led by a group called Better Cupertino tried to block its project through a ballot referendum.
Better Cupertino countered by filing a lawsuit arguing that the city wrongfully approved the project under SB 35.
Despite the litigation, Sand Hill started razing buildings at the site several months ago.
Santa Clara County Superior Court Judge Helen Williams heard arguments in the lawsuit in December and is expected to issue a ruling in coming weeks.
Sand Hill already has filed a separate lawsuit against the city related to the zoning changes.
Contact Thy Vo at tvo@ bayareanewsgroup.com.