CUPERTINO — The two sides fighting over plans to turn Vallco Mall into a massive mixed-use development are set to face off in court Friday — a showdown that will have major ramifications for Cupertino’s housing supply, and also serve as a test case for a controversial state law.
A Santa Clara County Superior Court judge will consider whether the city of Cupertino erred in approving plans to turn the defunct mall into 2,402 apartments, 400,000 square feet of retail and 1.8 million square feet of office space. On one side is a group of local residents called Friends of Better Cupertino, arguing that the proposal does not comply with state law. On the other is developer and site owner Sand Hill Property Company, arguing this lawsuit is exactly the type of delay a new pro-housing state law seeks to prevent.
The stakes are high, as the state warned Cupertino earlier this year that it could fall out of compliance with its housing mandate if the Vallco apartments don’t come to fruition. At the same time, this case is one of a handful testing the strength of SB 35 — a new state law intended to spur housing development by fast-tracking certain projects and preventing them from getting bogged down in procedural and legal delays.
“Ultimately, SB 35’s effectiveness — and its ability to function as intended by the Legislature — will largely depend on its treatment by the courts of this state,” a group of local organizations including the Bay Area Council and Housing Trust Silicon Valley wrote in an amicus curiae brief filed with the court in the Vallco case.
Meanwhile, as the legal battle progresses, Sand Hill is continuing its demolition of the old Vallco Mall, and is working on tearing down the AMC Theatre and Sears/Bay Club buildings.
Sand Hill proposed its Vallco project last year under SB 35, which requires cities to approve residential and mixed-used projects if they meet certain requirements. City officials determined the Vallco project checked all the boxes, and granted approval.
Friends of Better Cupertino quickly sued the city, claiming the project does not qualify for SB 35 status. The law requires an eligible project’s square footage be at least two-thirds residential, which the group says the Vallco plan is not. Sand Hill misleadingly counted residential parking to hit the two-third mark, they argue, but not commercial parking. Furthermore, the Vallco property has been designated a hazardous waste site by the Department of Toxic Substance Control, making it ineligible for SB 35 status, the group argues.
“The Project was never eligible for the privileged ‘streamlined, ministerial approval process’ provided by SB 35,” the group’s lawyers wrote.
Sand Hill argues those claims are baseless attempts to block development. The developers followed Cupertino’s zoning ordinance — which specifies residential parking but not commercial parking should be counted — when tallying the project’s residential space, they argue. And the site is not hazardous — it was cleaned and made safe two decades ago, Sand Hill’s lawyers wrote in a recent legal filing.
“This is exactly the type of litigation that SB 35 was designed to foreclose,” the lawyers wrote.
For its part, the city of Cupertino has remained officially neutral in the litigation — but that hasn’t stopped city officials from pointing out what they see as flaws in the Vallco proposal. Instead of helping to solve Cupertino’s housing crisis, the project would make the problem worse, the city wrote in a filing with the court. The office space proposed would bring 8,719 new jobs to the city, creating a demand for 5,812 housing units. That results in a need for 3,410 more housing units than the development would provide, the city wrote.
The judge is not expected to rule on the case Friday, and Cupertino may have to wait several weeks for her decision. But if she sides with Friends of Better Cupertino and orders the city to reverse the Vallco approval, Sand Hill could wind up back at square one. To complicate matters for the developer, any future plans it proposes for the site are allowed to have just 459 units of housing, 600,000 square feet of retail space and no office space — changes Cupertino City Council agreed on in August.
Sand Hill sued Cupertino over that change in September, arguing that by removing office space from the equation, the city has made it impossible to build financially viable housing there. The city disagrees with that calculation.
