Cities end dispute over massive developments

Projects promising sprawling offices, retail and tens of thousands of jobs spark worries about housing, traffic

The bickering cities of San Jose and Santa Clara settled suits Tuesday over two massive developments, clearing a hurdle to building the multibillion-dollar projects along city borders.

The two projects — CityPlace in Santa Clara and Santana West in San Jose — are designed to bring sprawling office parks, retail and tens of thousands of jobs to the region, along with some new homes. Leaders from both cities have been concerned about developments in neighboring municipalities affecting their schools, traffic, taxes and housing supply.

The public rift exposed the fragile nature of regional efforts to address the housing and traffic crises that ignore city borders.

San Jose Mayor Sam Liccardo and Santa Clara Mayor Lisa Gillmor issued a joint statement Tuesday saying the two cities would work together to provide additional funding from development fees for traffic improvements and affordable housing.

“In addition to allowing these important projects to move forward,” the statement said, “this settlement will help our two cities better address the significant affordable housing and traffic congestion problems gripping our region.”

Liccardo said in an interview the settlement can create a framework for addressing those critical issues. “It takes regional collaboration,” he said. “We all would have hoped it happened a lot sooner.”

He added that new money to alleviate traffic and housing concerns will come from developer fees, not city taxpayers.

Gillmor said in an interview the settlement will allow development of CityPlace to get back on track after an 18-month delay. “It’s finally done,” she said.

CityPlace, located next to Levi’s Stadium in Santa Clara, is slated to bring 5.7 million square feet of office space and 1.5 million square feet of retail shops on about 240

acres. The project also includes 1,360 residences, 700 hotel rooms and a 30-acre park.

Santana West in San Jose is expected to bring nearly 1 million square feet of office space and 29,000 square feet of retail to the corner of Winchester Boulevard and Olsen Drive. The 13-acre parcel is near Valley Fair and Santana Row.

The settlement calls for CityPlace developers to pay San Jose $4.5 million for traffic improvements in North San Jose during the first construction phase, and up to $10 million, less some credits, as the second phase begins.

In return, San Jose agreed to drop an appeal of a judge’s November 2017 ruling that validated Santa Clara’s environmental report on CityPlace.

The agreement does not require Santa Clara to build housing — a major concern for San Jose leaders worried the city’s soaring rents and home prices would vault even higher as new residents sought homes. CityPlace could bring 25,000 new jobs, but Santa Clara has housing for only 13 percent of the new employees.

The agreement also calls for $3.7 million for traffic improvements around Santana West in both cities, and for Santa Clara to receive $5 million for transportation and affordable housing. The settlement was approved Tuesday.

San Jose sued Santa Clara in July 2016, claiming Santa Clara violated the California Environmental Quality Act when approving CityPlace. Four months later, Santa Clara sued San Jose, accusing its neighbor of also violating state environmental laws with the Santana West project.

San Jose officials claimed the Santana West suit was retaliation. San Jose City Attorney Rick Doyle said the two cities have been negotiating for about a year to settle their differences.

“There’s quite a history here,” Liccardo said. “We can do an awful lot more to get along.”