Less than two weeks after issuing a decision that required the City of Los Altos to approve a 15-unit SB 35 project, the same Santa Clara County Superior Court judge (“Court”) issued a second favorable decision upholding the City of Cupertino’s (“City”) decision to approve an SB 35 project that would redevelop the former Vallco Fashion Mall site with more than 2.2 million square feet of mixed-use development (“Project”). The approved Project will subdivide the 50-acre site into 11 blocks consisting of 2,402 dwelling units (50% of which are affordable), 1,981,447 square feet of office space, and 485,912 square feet of retail space. After the City determined that the Project qualified for streamlined review under SB 35 and subsequently approved it, Friends of Better Cupertino (“Petitioners”) filed a lawsuit challenging the Project. The Court dismissed the Petitioners’ arguments, affirming for the second time in a matter of weeks that SB 35 is a powerful tool compelling cities to quickly accept much-needed housing development.
After unsuccessfully trying to construct a mixed-use project at the site, the developer submitted a revised project to the City under SB 35. Enacted in 2017 to increase housing production in California, SB 35 requires streamlined ministerial approvals for housing projects that meet objective planning standards and provide a certain amount of affordable housing (10% or 50% depending on the city’s failure to meet state housing construction goals). For qualifying projects, SB 35 sets time limits for the City’s review (three to six months depending on the size of the project), limits challenges to relatively narrow technical arguments, and eliminates complicated and drawn out CEQA litigation.
In its lawsuit, Petitioners argued that the City had a ministerial duty to determine that the Project did not qualify for SB 35 streamlining based on allegations that the Project: (1) was located on a hazardous waste site; (2) does not provide sufficient residential space; (3) exceeds height limits; (4) lacks sufficient setbacks; (5) does not comply with the City’s requirements for below market rate units; and (6) lacks dedicated park land. However, the Court disagreed with each of these arguments and found that the City correctly determined that the Project was eligible for SB 35 because the Project complied with all object planning criteria.
The Court held that SB 35 does not impose a ministerial duty on cities to determine whether a project qualifies for streamlined review, nor to reject the application if the project is ineligible for streamlined review. Rather, SB 35 imposes a presumption that a project qualifies for streamlined review if the city does not reject the project within the applicable time period (60 or 90 days, depending on the size of the project), even if the project does not actually qualify. While this holding rejected the Petitioners’ central argument, the Court did not stop there. The Court took the extra step of considering—and rejecting—Petitioners’ arguments as to how the Project did not qualify for streamlined review.
The Petitioners claimed that the Project site remained a hazardous waste site based on two leaking underground storage tanks related to tenants of the former mall, despite the passage of more than 20 years since remediation was completed and the State Water Resources Control Board closed its cases related to the leaks. They argued that SB 35 only identified the California Department of Toxic Substances Controls (“DTSC”) as an agency that would clear previously contaminated sites. The Court rejected the Petitioners’ suggestion that a site would remain a hazardous waste site for purposes of SB 35 unless DTSC cleared it, noting that in practice numerous agencies (including the Water Board) cleared sites. It also rejected the argument that the Legislature intended a more restrictive definition of clearance when it adopted SB 35. The Court further noted the Legislature amended SB 35 in 2019 to acknowledge that other agencies, including the Water Board, could clear sites for residential uses, and determined that this amendment had retroactive effect.
The Petitioners also asserted that SB 35’s requirement that mixed-use projects designate two-thirds of the “square footage of development” for residential uses should exclude areas of the project authorized under the Density Bonus Law, and that the “square footage of development” must be defined using the definition of “floor area” in the California Building Standards Code which Petitioners asserted would exclude parking areas. The Court rejected both arguments. It held that there was nothing in the law in effect at the time the Project application was submitted that required bonus areas to be excluded from the two-thirds requirement, and noted that the Legislature amended SB 35 in November 2019 to explicitly include bonus areas in the two-thirds calculation. The Court also rejected the idea that “square footage of development” was somehow defined by reference to the Building Standards Code.
The Petitioners next argued that the Project was inconsistent with objective standards in the City’s General Plan and Zoning Ordinance, namely height, setbacks, requirements for below market rate units, and parkland. The Court found that, as to each argument, they were not well-reasoned and failed to explain how the City lacked substantial evidence to support its determination.
Finally, the Petitioners argued that a public hearing was required to approve the Project and that the Planning Commission, rather than City staff, should have decided whether to approve the Project. The court rejected this argument as well, pointing out that although SB 35 does not prohibit public oversight, it does not require public hearings or approval by local planning commissions. To the contrary, the legislative history of SB 35 shows that “the Legislature clearly intended . . . to drastically reduce the politicization of the planning process and the use of tactics like those Petitioners resort to here.”
This decision affirming the sizable mixed-use Vallco project highlights that although there are many requirements that developers must meet to qualify for project streamlining, SB 35 is an effective solution to minimize the opportunities for project opponents to frustrate housing development through litigation.
Authored by Reuben, Junius & Rose, LLP Attorney Tiffany Kats
The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.