Cupertino waives millions of fees for Vallco development

Cupertino has waived millions of dollars of development fees for the largest housing development in its history after years of disputes — bringing the city closer to filling the void at the former Vallco Town Center.

The Cupertino City Council voted 4-1 Tuesday to waive roughly $77 million in developer fees for The Rise in the final steps of a settlement between the city and Palo Alto-based developer Sand Hill Property Company. Councilmember Liang Chao was the only no vote and said she didn’t want to give large concessions to the developer. The city waived fees for below-market-rate housing because Sand Hill exceeded the required number of apartments by about 356. Cupertino also waived planning fees because the developer will pay up to $500,000 for future projects in the area.

The agreement is a result of consistent disputes between the developer and city, raising concern from officials about potential legal action.

The project will pay roughly $43 million to the city over its lifespan, including roughly $10.3 million for transportation and roughly $32 million earmarked for affordable housing, transportation and parks and recreation. Sand Hill is slated to begin construction this August.

Reed Moulds, Sand Hill managing director and project executive for The Rise, said the company asked for the waivers because the developer sees the project’s benefits outweighing the cost the city was requiring — including 890 affordable apartments, more developing more than seven acres of public parkland and gathering spaces.

The developer first disputed the fees around 2018, according to city documents. Moulds said the settlement feels like a major accomplishment in the saga to build on the former Vallco Mall site.

“This was the first time where the developer and the city could actually have a reasonable discussion about what is fair,” he told San José Spotlight. “I think at the end of the day, the city was able to get a fee agreement that provides a significant amount of actual monetary value to the city in terms of the fees that will be collected over the course of the project, but also allows them to meet those policy objectives.”

The settlement marks the end of a decade of construction delays and contention surrounding The Rise, a roughly 50-acre, mixed-use development located at Wolfe Road and Stevens Creek Boulevard. The project is slated to bring 2,669 apartments and homes. It also includes about 230,000 square feet of retail space and roughly 1.95 million square feet of office space.

City Attorney Christopher Jensen said this marks the start of more collaboration between the city and developer.

“Given the history of this project, it is remarkable that the city and the developer have been able to come together and reach a mutually beneficial settlement agreement,” he told San José Spotlight.

The finalized fees will help boost Cupertino’s finances after it was hit with a roughly $10.1 million deficit largely due to a loss in Apple sales tax revenue, which it managed to almost balance last month.

But not all officials and residents support the settlement and waiver.

In addition to taking issue with giving concessions to Sand Hill, Councilmember Chao said the development is too office-heavy compared to the amount of housing it provides.

“We are subsidizing an already very affluent developer at the expenses of the most vulnerable in our society. I cannot, in good conscience support that,” she said at the meeting. “This powerful developer has a large team of attorneys so they can get their way to maximize their profits again and again.”

The development will satisfy more than half of the 4,588 homes Cupertino must add by 2031 to abide by state requirements, 1,880 of which must be deemed affordable for low-income residents. The city recently received the state’s greenlight for its housing plan after missing the deadline for more than a year.

Shivani Kavuluru, spokesperson for pro-housing resident coalition Cupertino for All, said they grew up going to Vallco Mall and would love to see it turn into a vibrant city hub.

“I would like to be excited to be able to live in an apartment, an apartment that used to be where Vallco shopping mall is and create new memories,” Kavuluru said at the meeting.

Contact Annalise Freimarck at [email protected] or follow @annalise_ellen on X, formerly known as Twitter.