Faced with threat of litigation, Cupertino promises to follow housing law

CUPERTINO — Responding to the state’s threat to sue the city over a potential housing law violation, Cupertino fired back with a letter promising to take all steps necessary to meet its production goals and remain in state officials’ good graces.

In an Aug. 2 letter, the California Department of Housing and Community Development warned that Cupertino could fall out of compliance with its state-mandated housing goals if plans to build new homes on the site of the old Vallco Shopping Mall are stymied. If that happens, the letter warned the housing department may notify the Attorney General’s office — a step that could lead to a lawsuit.

The city responded with a letter intended to assure state officials that all is well.

“As you are aware, all local governments face the challenge of balancing competing interests when making land use decisions,” Cupertino City manager Deborah Feng wrote in the letter to HCD. “The City is dedicated to finding this balance to provide housing solutions for all members of its community. We look forward to working with HCD as we make progress towards implementing the programs identified in our latest Housing Element.”

A spokeswoman for the state housing department acknowledged receiving the letter but declined to comment.

At issue is a contentious plan to turn the defunct Vallco Mall into a mixed-use housing, office and retail development. To meet its state mandate of planning for 1,064 new housing units by 2023, Cupertino was supposed to adopt a specific plan to build housing on the Vallco site. But in May, city officials rescinded that plan after opponents collected enough signatures to challenge the development on the ballot.

Developer Sand Hill Property Company is moving forward with another plan — to build 2,402 homes, 1.8 million square feet of office space and 400,000 square feet of retail on the site. That proposal was green-lighted under a new housing law — SB 35 — which requires cities to fast-track certain residential and mixed-use projects. But a group of residents who oppose the project, Friends of Better Cupertino, is suing the city to block the project and rescind its SB 35 approval. If Friends of Better Cupertino win, and the SB 35 project is halted, Cupertino could fail to meet its state-mandated housing goal, HCD warned.

But even if that happens, Cupertino officials still will make sure the necessary housing gets built, Feng wrote in the letter.

“I can assure you that the City will do all that is necessary to remain in compliance if the City’s approval of the Vallco SB 35 project is overturned by the court,” she wrote.

Feng also lauded the city’s prior efforts to build housing, including the recent opening of 19 affordable units at The Veranda — a $12 million development, to which Cupertino contributed more than $5 million.

On Tuesday, the City Council is set to discuss a proposal that could make it difficult to ever build housing on the Vallco site. Officials are considering amending the city’s general plan to remove office space allocations from the site, which could make it economically challenging to build housing there as well. The proposal would impact future development on the site if the SB 35 project fails.

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