A mile from Apple HQ, housing proposal for dying Cupertino mall sparks fight

A woman walks through the Vallco shopping mall in Cupertino, Calif. on Wednesday, Feb. 14, 2018. Few tenants remain at the mall in the western Santa Clara Valley, including an AMC Theater and a couple of restaurants, but it is largely abandoned. less A woman walks through the Vallco shopping mall in Cupertino, Calif. on Wednesday, Feb. 14, 2018. Few tenants remain at the mall in the western Santa Clara Valley, including an AMC Theater and a couple of ... more Photo: Paul Chinn / The Chronicle Buy photo Photo: Paul Chinn / The Chronicle Image 1 of / 14 Caption Close A mile from Apple HQ, housing proposal for dying Cupertino mall sparks fight 1 / 14 Back to Gallery

In the shadow of Apple’s glamorous new headquarters, a pitched battle for housing is playing out.

A developer, Sand Hill Property Co., has been trying for four years to build homes on one of the most attractive sites in Silicon Valley, a dying mall barely a mile from where thousands of Apple employees now work.

Its vision of lots of housing, plus office and retail space, encountered fierce opposition from an organized group of longtime residents who generally oppose the construction of dense housing and prefer that Cupertino stay largely as it has been since the 1980s — a low-density bedroom community with a local mall called Vallco.

On Tuesday, in a dramatic escalation, Sand Hill Property filed an application to build about 2,400 housing units at the mall — a move that would not need approval from the Cupertino City Council.

“Every day the mall declines, and we have a huge hole in the middle of Cupertino,” said Reed Moulds, Sand Hill Property’s managing director. “Every day this housing crisis gets even more severe. ... Change needs to happen now.”

But Cupertino resident Danessa Techmanski called Sand Hill Property’s move “insane” because the proposal, she fears, does not adequately address the increase in traffic from an influx of office employees and residents. She’s also worried that Cupertino has lost its chance at establishing a vibrant community gathering place in a central area.

She says she doesn’t want to live in a place that just has wealthy engineers and “buildings that look like shoe boxes.”

“That’s not what California is,” she added.

Sand Hill Property, which also plans nearly 2 million square feet of office space at the site, is becoming one of the first developers to use a new state law designed to outmaneuver city governments and residents opposed to dense new housing developments. The law allows developers to avoid city-imposed limits on housing construction, and environmental scrutiny often used to block projects, if they agree to lease half of the new housing as affordable units.

Photo: Paul Chinn / The Chronicle A woman walks through the Vallco shopping mall in Cupertino, Calif....

A Sand Hill Property executive says that the firm felt it had no other choice.

Under a state mandate to set goals for adding housing, Cupertino created an eight-year plan in 2014 to add 1,064 units — a goal that falls far short of satisfying the demand of the area’s burgeoning job market. As of January, the city had approved three projects that would add roughly 800 units. The Sand Hill proposal would put Cupertino ahead of plan — but still short of regional housing needs.

Residents organized under the group Better Cupertino, which promotes “sensible growth that is aligned with the needs and interests of a majority of residents,” have been Sand Hill’s biggest opponent. The group, which includes Techmanski, says results of a survey it conducted show most respondents want a mall on the Vallco site. Better Cupertino said this month that many of its supporters would back 389 or fewer apartments at the site — the amount envisioned in the city’s general plan — but it opposes “an urban office and housing complex with thousands of housing units.” Not all members are in agreement. Techmanski said she would support up to 1,800 housing units with no new office space.

The group said it believes “adding office in any amount further exacerbates the region’s housing crisis” and could further displace residents including students and lower-wage workers. Some said nearby office growth has increased traffic.

“We are actually grabbing all of the tech people from elsewhere in the United States, and that means that we are grabbing potential economic development from elsewhere, too,” said Cupertino resident Liang Chao, adding that other cities could benefit from that growth. “Isn’t that selfish?”

Chao, who supports Better Cupertino, moved to the city in 1998 and bought her home because she liked its backyard. When she sees the redwood trees nearby, “it’s as if I am in Lake Tahoe,” she said.

Tensions between some residents and pro-housing advocates have been heated at community meetings. At one recent forum organized by Better Cupertino, Laura Foote Clark, executive director of pro-housing group YIMBY Action, was heckled for saying she was a Bay Area resident at the speaker’s microphone, but not specifying what city. “Can you show ID every time you speak? You have to be a Cupertino resident,” one audience member exclaimed. The forum had no such requirement, and Better Cupertino includes members from nearby cities.

Clark and others spoke in favor of building housing and highlighted how challenging it has become for people to live near where they work, and how younger people who used to live in Cupertino can’t afford it anymore.

“They are creating walls and keeping people out,” said Clark, who added that she lives in San Francisco.

Councilman Steven Scharf and other residents of Cupertino say they couldn’t afford to live here either when they moved to the Bay Area.

“No one owed me a house in Cupertino,” Scharf said at a Better Cupertino forum, adding that his daughter lives in Oakland because Cupertino is too expensive. “That’s all she can afford,” he said. “That’s the way it is.”

Even some Apple employees struggle to live in Cupertino, where the average home value is $2.3 million, according to Zillow. “I would live in Cupertino if I could afford it,” said an Apple engineer who declined to say his name at a Better Cupertino forum. He drives to Apple’s headquarters from San Jose, where he rents a two-bedroom apartment for $3,200 a month. He said he would consider buying a home in Cupertino if prices were lower.

Sand Hill’s new plan, called Vallco Town Center, includes 2,402 housing units along with 1.8 million square feet of office — space that could be rented out by companies like Apple. Retail space has shrunk from Sand Hill’s original pitch to the community in 2015 to just 400,000 square feet.

State Sen. Scott Wiener, D-San Francisco, who authored SB 35, which allows projects to be approved without the full environmental review and planning commission process, says he expects that more developers will choose the path outlined by the law, which allows developers to move forward without city hall approval.

“We need more housing now, and we spent 50 years erecting obstacle after obstacle to housing,” Wiener said. “We need to remove those obstacles.”

The years-long fight over the Vallco mall has included failed ballot measures and, more recently, listening sessions for the community. Moulds said part of the concern about going through the traditional city process was the potential for another ballot measure opposing the project.

“There is no question that NIMBYism is on the rise,” said Frank Noto, president of GCA Strategies, a San Francisco firm that helps developers deal with opposition from residents who take a “not in my backyard” stance.

In his state of the city address, Cupertino Mayor Darcy Paul said he didn’t see the housing situation as “dire.” Last year he raised concerns about how SB35 could affect the amount of office space at Vallco.

Paul said Tuesday that he wants to hear what city staff workers have to say about Sand Hill Property’s application and consider how the city should move forward.

“At the end of this, we need to have a fair and ongoing conversation,” Paul said.

Sand Hill Property said the city could theoretically advance or approve an alternative project to Vallco Town Center. Sand Hill Property says that it will “remain open-minded” in the event that happens.

Apple, Cupertino’s largest employer, hasn’t said much on what it thinks should happen at Vallco. The company employs more than 25,000 people in the Bay Area, including thousands of people who work at Apple Park, located close to the mall.

The company did not comment on the Vallco proposal. But at a January Cupertino Rotary Club meeting, Dan Whisenhunt, then an Apple executive overseeing real estate, was asked whether Apple has thought about “actively encouraging high density housing at Vallco so that Apple employees could just walk to work.” Whisenhunt said Apple “absolutely” thinks about that, adding the company considers transportation and housing big issues.

“If we don’t fix those in this area collectively, we’re all in bad shape,” Whisenhunt said.

Wendy Lee is a San Francisco Chronicle staff writer. Email: wlee@sfchronicle.com Twitter: @thewendylee

Features of proposed Vallco Town Center

2,402 units of housing, half of which will be affordable

30-acre rooftop garden

1.8 million square feet of office space

AMC Theatres, bowling alley and ice-skating rink

400,000 square feet of retail