The Latest on Vallco, Explained
The 2402-unit Bay Area mixed-use project is held up on demolition and construction permits, while a lawsuit seeks to overturn its approval
“Save the suburbs from an onslaught of anarchists and YIMBY Neoliberal fascists.” That’s how Ray Wang, chair of the planning commission of Cupertino, CA, recently described supporters of the Vallco Town Center project to anti-development residents on Nextdoor,¹ and his planning commission and the city government are attempting to block the Vallco Town Center project with the same extremist attitude.
The city had approved the project in September 2018 and issued its first set of permits promptly.² After city councilors opposed to development gained control in the 2018 election, however, additional construction and demolition permits have not been issued, more than seven months after Sand Hill Property Company, the project developer, applied for them.
Meanwhile, a local group has filed suit seeking to block the project. In case the lawsuit prevails, the city is working on rezoning Vallco to prevent office uses and reduce the number of housing units to 457, which is under a fifth of the 2402 units approved in the current proposal.³ For now, the ongoing lawsuit is not preventing the project from going forward.
The Death of a Mall
Vallco Shopping Mall (originally Vallco Fashion Park) was built in the 1970s, and in its heyday had 190 stores including Macy’s, Sears, JCPenney, and an ice skating rink.⁴ Its fortunes gradually deteriorated as it was eclipsed by the newer, more upscale Stanford Shopping Center and Valley Fair. In the 2000s, the mall underwent several changes of ownership and a rebrand to “Cupertino Square” and then to “Vallco Shopping Mall.”
After many stores had closed and with the entire first floor abandoned, Sand Hill Property Company bought the mall and its anchor stores in several transactions in October and November 2014, the first time a single company owned the entire property. Then, JCPenney, Macy’s, and Sears announced plans to close, leaving only AMC Theatres (which would later close as well) and the ice skating rink as major tenants.
A Potential Rebirth, Scorned by the City
With the mall dying, in August 2015, Sand Hill announced plans to demolish and redevelop it into a $3 billion mixed-use town center, then called The Hills at Vallco.⁵ It would have 800 housing units, 2 million square feet of office space, retail, community benefits including a new elementary school, and the world’s largest rooftop park.⁶
Vallco had originally been built on the outskirts of town, but 40 years later, it occupied a 58 acre⁷ plot of prime real estate in Silicon Valley, less than a mile from Apple’s headquarters (Apple Park, the spaceship-looking building). Especially given that Cupertino lacks a downtown,⁸ this megaproject represented a huge opportunity for the city.
The intricacies of deliberations between Sand Hill, the city government, and local residents are beyond the scope of this article— suffice it to say that after more than two years; two failed 2016 ballot measures; countless surveys, community meetings, and outreach; and offers of tens of millions of dollars of community benefits from Sand Hill, the city did not approve any project at Vallco. The project was at a standstill, even as most of the remaining tenants at the mall closed.
A Breakthrough: Senate Bill 35
A new pro-housing law: California Senate Bill 35 was authored by Sen. Scott Wiener and enacted in September 2017. It streamlines the approval process for projects in cities that aren’t building enough housing, if the projects set aside some fraction of their housing units as below market rate housing and meet other criteria. Essentially, if a developer agrees to more public benefits (affordable housing), and they meet objective standards set by the state, cities cannot introduce barriers to stop the development.⁹
In March 2018, Sand Hill invoked SB35 to reignite the project (Vallco is the largest project to make use of SB35 to date). It tripled the number of units from the initially-proposed 800 to 2402, and set aside half for low-income housing as required under the law.¹⁰ To be able to offset the losses from the low-income housing units, Sand Hill also increased the amount of office space and density in the project, and removed some of the community benefits offered to Cupertino (though the rooftop park is still in the plans).
Now, the project was no longer stuck: unless the city could find objective deficiencies with the project under the state guidelines, it had to approve it within 180 days, which it did in September 2018. Two months later, opponents of the development won control in city council elections.
The city’s alternative, proposed and walked back: When reached for comment, city council member Rod Sinks emphasized that prior to the shift in control, the council had worked constructively to pass an alternative to the SB35 plan, called the Vallco Specific Plan. This plan “would have brought more housing at all income levels (including middle income housing for folks like teachers) and less office, with numerous community benefits that are not part of the SB 35 plan,” Sinks summarizes, and the full details are still available on the city’s website.
If the Vallco Specific Plan hadn’t been revoked by the new city council, and if Sand Hill had chosen to implement it, the project could have been an instance of a developer and a city government (nudged by the threat of invoking SB35) working constructively to meet the desires of residents, while still building lots of housing.
Instead, the city seems to have chosen a path of all-out war against the plan.
Permit problems: On the issue of the withheld construction permits, Sand Hill is still working with Cupertino staff, according to Matt Larson, the Director of Public Affairs for the company. The usual process, he explained, is that within weeks city staff would begin commenting and requesting corrections, which is what had happened before the November 2018 city council election and the change in city government.
Now, when Sand Hill has submitted additional permits, Larson said that they haven’t been responded to for seven months. To add insult to injury, the company received an apparently-automated reply from the city, saying the permits had been dismissed after six months without any action being taken on them.
The stonewalling seems to be part of a strategy to obstruct the project. It is unclear if the city’s actions are illegal, and if so, under what law. If, for example, this project fell under the purview of California’s Housing Accountability Act (HAA), the minimum fine for failing to comply is $10k per housing unit, or $24 million for this project.
Ray Wang, chair of the Cupertino planning commission, did not respond to a request for comment.
Lawsuit looms: A local group filed a lawsuit attempting to overturn the city’s initial approval of the project, Friends of Better Cupertino v. City of Cupertino, with a hearing scheduled for September. The city is the defendant in the lawsuit, but it has responded with a Statement of Non-Opposition, seeking to stay neutral.¹¹ Instead, Sand Hill is defending the lawsuit, given that they have an interest in the case. If the lawsuit is resolved in favor of Friends of Better Cupertino, the existing approval under which the project is being built would be overturned. Without another approval, the project would be frozen entirely.
Despite the continuing obstacles, Larson said Sand Hill was determined: “We’re not giving up. We’re not going anywhere. We have our heels dug in, and we’re gonna do what it takes to build Vallco.”
This article was largely sourced from comments at the YIMBY Neoliberal meeting on July 8, at 1260 Mission St, San Francisco, CA 94103. A recording of the event can be found here. Let me know your thoughts and any corrections in the comments, and follow me @barakgila on Twitter for more housing content.
 @YIMBYNeoliberal, Twitter. Ray Wang did add the disclaimer that he was “SPEAKING ONLY FOR MYSELF TO DIFFUSE DISINFORMATION” [and not in his official capacity]. A Mercury News editorial has called on the Cupertino City council to condemn Wang’s remarks.
 The permits were for demolishing a pair of Vallco parking structures. See “Vallco Town Center” on the October 2018 Cupertino permits issued report.
 Hearings will be held later this month and in August. cupertino.org
 Vallco Shopping Mall, Wikipedia. According to Larson, Peter and Susanna Pau, co-founders of Sand Hill, would stroll through Vallco Fashion Park in its early years, dreaming of someday being able to buy its expensive merchandise. Little did they know they would one day buy the mall itself.
 58 acres is equivalent to a square with 0.3 mile sides. cupertino.org
 The closest Cupertino has to a downtown is a mixed-use development adjacent to Vallco, by the same developer, Sand Hill: Main Street Cupertino. mainstreetcupertino.com
 In Cupertino, $51k for an individual through $73k for a family of four is the income limit for “very low income” (361 units in the Vallco project), and $72k for an individual through $103k for a family of four is the income limit for “low income” (840 units in the Vallco project). cupertino.org
 According to the city attorney. Vallco project: Cupertino accused of trying to sink housing plan, Mercury News