SAND HILL PROPERTY COMPANY

October 13, 2014

Via Overnight Delivery and E-Mail Chair Brophy and Members of the Planning Commission Cupertino City Hall 10300 Torre Avenue Cupertino, CA 95014-3202

Re:

General Plan Amendment: Office Allocation for Vallco Shopping District

Dear Chair Brophy and Members of the Planning Commission: I am writing on behalf of Sand Hill Property Company ("Sand Hill") regarding the treatment of the V allco Shopping District ("Vall co") in the General Plan Amendment. Sand Hill is in the midst of acquiring the Vall co parcels for potential redevelopment, so we are keenly interested in working with the City of Cupertino ("City") to develop a feasible plan that can benefit all stakeholders. I am writing to request that the Planning Commission recommends to the City Council that the General Plan include an office allocation for Vall co of 2,000,000 square feet and the height limits set out in "Alternative C," as analyzed in the draft General Plan' s environmental review. Without this specific office allocation, as well as the necessary retail and housing components, there will not be adequate critical mass to make it possible for Sand Hill, or any other prospective developer, to successfully redevelop Vallco. Vallco presents a unique opportunity for redevelopment and revitalization that is unmatched in the City of Cupertino. The site sits at a prime location in the City, yet for many reasons, it has long been neglected and numerous redevelopment efforts were either abandoned or have failed. Sand Hill has the financial capacity and proven track record with such projects and is poised to bring to the City what its citizens have long yearned for: a dynamic downtown where the community can live, work and play. Sand Hill plans to completely transform the current derelict site by redeveloping it with a vibrant, sustainable mixed-use neighborhood. Our plan envisions a balanced mix of 600- 700 residential units, approximately 600,000 square feet of retail, a full service hotel, and 2,000,000 square feet of office space. The overarching vision is to create a pedestrian oriented "town center" consistent with the General Plan vision that will have synergies between the uses and nearby projects, such as Main Street.

sf-3467260

2882 SAND IDLL ROAD, SUITE 241• MENLO PARK, CA 94025 • (650) 344-1500 •FAX (650) 344-0652

Chair Brophy and Members of the Planning Commission October 13, 2014 Page Two The benefits to the City of such a project go well beyond creating a sense of place. With 600,000 square feet, the retail component of the project would be the same size as Santana Row and would generate millions in sales tax revenues way in excess of what is being collected today. Property taxes would also increase significantly, perhaps by 800%, given the billion-dollar plus investment Sand Hill is prepared to make in the City of Cupertino. In addition, we recognize that in order to obtain increased height limits for Vallco under Alternative C, projects must comply with the new General Plan's community benefits program. Although our specific project plans are still developing, the community benefits we anticipate providing include ground floor retail components and [transit improvements and amenities, space for public entities, senior housing, construction of a new, or expansion to, a community facility/community gathering place, creation or dedication of new or expanded park, cash in-lieu contribution for such community benefits]. We would also be amenable to exploring, with other property developers, the potential of providing a community shuttle program in order to provide transportation between employment and community centers. As required by the General Plan, these community benefits will be equivalent to at least 15 percent in value of the parcel attributed to the increase in height. The opportunity to transform the Vall co site is now. Sand Hill has a real plan, the capabilities to implement it, and the history of working closely with the City and the community. Prior attempts at Vallco redevelopment have all run into the same problem: full ownership of the site is needed for a successful project, and the current split and passive ownership structure has made parcel assemblage extremely difficult. After nearly three years of intensive negotiations with the various Vallco ownership entities, Sand Hill is now in the process of completing purchases for the entire mall. Single ownership will remove the key barrier to redevelopment that has hampered the site for decades. However, in order to close on the Vallco parcels, Sand Hill needs assurance now that it can build a project that is financially viable. At present, the development allocation recommended in the Staff Report precludes such a project, and thus, a feasible redevelopment of the property. In particular, the StaffReport's recommendations to limit office to 1,000,000 square feet and heights to 75 feet (west of Wolfe Road) and 90 feet (east of Wolfe Road) does not work for our plan, or any plan for that matter. Redevelopment of V allco is a substantial undertaking. It entails demolition of approximately 1.2 million square feet of existing buildings and construction of an entire new downtown over 50 acres. The General Plan's vision for a redeveloped Vallco is ambitious: a ''town center" layout, a newly configured street grid, an expanded Wolfe Road bridge ofl-280 to accommodate a bikeable and walkable "boulevard," a new town square and plazas interspersed throughout. The General Plan calls for high-quality architecture and materials befitting a gateway site. Sand Hill shares this vision, but such elements are all very costly. While retail uses are critical for completing the overall vision, such uses do not support the type of amenities we and the City want to provide. In order for complete redevelopment to

sf-3467260

2882 SAND HILL ROAD, SUITE 241• MENLO PARK, CA 94025 • (650) 344-1500 •FAX (650) 344-0652

Chair Brophy and Members ofthe Planning Commission October 13, 2014 Page Three be financially feasible, the project must include 2,000,000 square feet of office already studied in the EIR. Further, in order to provide this office square footage, while also respecting the neighborhoods to the west, increased height must be allowed, including up to 160 feet on the east side of Wolfe Road. For these reasons, we respectfully request that the Planning Commission recommend to the City Council that the General Plan allocate to the Vallco Shopping District: •

2,000,000 square feet of office space;

•

Include the site in the Housing Element, including at least 600 units of housing;

•

600,000 square feet of retail; and

•

Heights analyzed in "Alternative C" be permitted (i.e., up to 85 feet west of Wolfe Road and up to 160 feet east of Wolfe Road, with community benefits).

****** Sand Hill is proud of what it has done in the City of Cupertino. We have partnered with the City and the community on a number of successful commercial, retail and residential projects since the 1990's. As with those prior projects, we view Vallco as a long-term investment. We are a local owner and take pride in our commitment to the community and the City. Main Street is now under construction and will open as a new gathering place in 2015-2016. We look forward to continued collaboration with the City and community in the redevelopment ofVallco. Sand Hill hopes it can build on its previous successes and realize a long-term community vision for a revitalized Vallco. The development team and funding is in place to move forward now. However, we want to be clear with the Planning Commission and City Council that without the necessary office, residential and retail allocations outlined above, we will not be in a position to redevelop Vall co and it will likely continue to languish for decades to come. your consideration.

Principal and Founder sf-3467260

2882 SAND IDLL ROAD, SUITE 241• MENLO PARK, CA 94025 • (650) 344-1500 •FAX (650) 344-0652

Chair Brophy and Members of the Planning Commission October 13, 2014 Page Four Sand Hill Property Company

cc:

Mayor Gilbert Wong Vice Mayor Rod Sinks Councilmember Barry Chang Councilmember Orrin Mahoney Councilmember Mark Santoro David Brandt, City Manager Aarti Shrivastava, Assistant City Manager and Community Development Director Reed Moulds, Sand Hill Property Company

sf-3467260

2882 SAND HILL ROAD, SU1TE 241• MENLO PARK, CA 94025 • (650) 344-1500 •FAX (650) 344-0652