San Jose, Santa Clara head to mediation over north San Jose development

San Jose and Santa Clara may soon head to mediation over the future of north San Jose, an industrial part of the city projected to become a major mixed-use hub — if plans for the area can be pushed forward.

San Jose city officials have long aimed to see the corner of the city tucked between highways 237 and 101 and Interstate 880 transformed into a walkable jobs hub with tens of thousands of new homes, hotels and retail all connected by a light rail line. But a 2006 legal settlement with the city’s neighbors that phased and capped growth has stalled some development.

The settlement between the cities of Santa Clara, Milpitas and Santa Clara County, required San Jose to roll out its ambitious northside plan in four phases, in which developers can build roughly 8,000 new homes for every 7 million square feet of new commercial space. San Jose is also required to implement specified transportation improvements in time with the growth.

But new commercial development has come more slowly than expected, while developers chomp at the bit to get more housing approvals in the area and negotiations between Santa Clara and San Jose appear to be at a standstill.

“I love Santa Clara and San Jose — both cities — and I’m trying to not feel like the child of divorced parents fighting each other,” Sanjeev Acharya, president of Santa Clara-based SiliconSage Builders, told Santa Clara councilmembers Tuesday night. SiliconSage has development projects in both cities, including a large mixed-use proposal on San Jose’s northside.

“Sometimes, I feel like whatever I’m hearing on this side, that this is what you guys are willing to do, there’s the other side telling me the same thing,” he said. “But somewhere in there is a communication gap, I feel.”

Over the past year, Santa Clara and San Jose have traded multiple letters about allowing more housing to rise on the northside in the near term. San Jose officials have proposed combining some of the planned phases and more recently said a new state law could do away with some of the caps in the longstanding agreement.

Santa Clara leaders have remained steadfastly focused on the transportation improvements schedule, claiming they haven’t seen the assurances they need from San Jose that those improvements will be made in time with future development. The city is seeking a “legally enforceable” agreement on a new schedule of improvement, said Manuel Pineda, Santa Clara’s assistant city manager.

“We’ve been very clear from the beginning that new housing cannot come at the cost of providing transportation infrastructure that’s already committed as part of the policy,” he said.

San Jose officials insist they are committed to improving transportation as new projects rise. However, the officials have not agreed to a new, more “granular” schedule of when the improvements will be made as more development rises. Officials instead point to six projects that have already been completed, and others that are partially funded and implemented or are “reasonably assumed to be funded” through tax measures like Measure B.

“We have an excellent track record of delivering on those improvements right now,” Chris Burton, San Jose’s deputy director of business and economic development, told San José Spotlight. “If you were to look at the capacity of north San Jose, we’ve built about roughly 55% of the development capacity in Phase One and we’ve expended dollars equivalent to about 55% of those improvements.”

Meanwhile, real estate developers are stuck in the middle, waiting to learn whether their housing and mixed-use projects can proceed, or will remain stalled. Along with SiliconSage Builders, Cupertino-based Apple Inc. is seeking to make land the company owns in the area available for housing as part of a recent $2.5 billion housing commitment.

San Jose officials this week told San José Spotlight they’d reached an impasse with Santa Clara and the next step is mediation. As of Tuesday night, Santa Clara City Attorney Brian Doyle said Santa Clara had not yet received a request from San Jose for mediation.

Meanwhile, San Jose leaders say they feel stuck because of SB 330, a new state law that took effect Jan. 1, that does away with housing development caps across the state.

In San Jose’s view, that means the current caps on residential development in north San Jose are no longer legal.

“We’re a little bit between a rock and a hard place on this, because state law says, ‘No, you can’t limit that development based on your caps,’ and Santa Clara says, ‘No, you can’t approve that development because of our settlement agreement,’” Burton said. “So, we’re just looking to find a path to resolve that and not hold up this much-needed housing development.”

Santa Clara leaders disagree, arguing the rule doesn’t apply to old agreements. Even if the law did apply to existing housing caps, however, it wouldn’t apply to the agreement in north San Jose, Doyle said.

“We’re not trying to enforce some kind of moratorium,” Doyle said. “We’re saying, ‘Go ahead and build the housing.’ We’re just saying (whenever) anybody does any development, you always have mitigation impacts of the development and transportation is one of them.”

Now it may be up to a mediator to help fill that “communication gap” between the neighboring South Bay cities.

Contact Janice Bitters at [email protected] or follow @JaniceBitters on Twitter.