The developer of a Sunnyvale housing project will funnel millions into the city’s below-market-rate housing fund.

At the Sunnyvale City Council’s most recent meeting, Nov. 18, the council approved a change to a 111-unit multi-family, mixed-use development. The change to the design triggered the city’s 15% below-market-rate housing standard, meaning 14 of the units must be below-market-rate.

However, the developer, DeAnza Properties, is opting to pay in-lieu fees, money aimed at offsetting the project’s lack of below-market-rate units, through what’s called an alternative compliance option. The roughly $17 million collected from the fees will go into a city fund.

“The rationale behind more alternative compliance options is largely the same: to collect enough in-lieu funds to assist nonprofit developers to provide a greater number of affordable housing units to more households than could have been achieved with standard compliance,” said Ernie DeFrenchi, affordable housing manager.

DeFrenchi told the council that the fund typically enables the city to produce less-expensive housing.

Mayor Larry Klein wanted city employees to look into the legality of requiring the developer to pay a portion of the money up front. 

Since the city doesn’t know when — or if — the development will be built, he said the money could be used in the meantime to build below-market-rate housing.

“There is money lost,” he said. “Time is money, at the end of the day.”

Despite his comments, Klein said the project will “continue our pro-housing efforts as a city.”

John Vidovich, of DeAnza Properties, said since the units aren’t suitable to be below-market-rate, he called the approval “the right thing to do.”

However, Vidovich contested whether the five for-sale single-family homes that are part of the development should count for calculating the in-lieu fees. While he said it “may be popular,” he added he believes “it is not fair or legal.”

Sandra Lee, senior assistant city attorney, told the council she learned about the concern late and that her office has yet to review the legality.

Council Member Richard Mehlinger called the project “great” and “very well-needed,” adding that the fees collected will contribute a “very substantial amount” to the city’s fund for below-market-rate housing.

“There is a serious and desperate need for affordable housing in this region,” he said.

The development is in Vice Mayor Linda Sell’s district. She called the retail component “thoughtful,” adding that the project is “wonderful.”

The council approved the alternative compliance plan with the provision that city employees look into the legality of counting the for-sale units for the in-lieu fees. The vote passed unanimously, with Council Members Eileen Le and Alysa Cisneros absent. 

Trudi Ryan, community development director, told the council it will likely hold a study session around February next year to further discuss the matter. 

New Public Safety Agreement Aims to Incentivize Recruitment

The council also unanimously approved a new agreement with a police bargaining unit. 

Sarah Johnson, assistant city manager and interim human resources director, told the council that the agreement, which details compensation for captains and deputy chiefs, focuses on “internal equity” and “supports recruitment and retention efforts.”

The agreement updates the pay schedule and eliminates employer-paid contributions to the California Public Employees Retirement System (CalPERS) pension. The contract terms are for three years, with an option for a fourth year.

The contract will increase the city’s general fund burden by $7 million over the next 20 years, according to city documents.

Sell called the agreement “very fair, but very competitive,” saying it will continue to ensure the city has highly qualified officers.

Klein echoed Sell’s comments, saying the agreement does a good job of “fairly compensating” high-level officers, providing an incentive for officers to move up the ranks.

“This is one of the critical groups from providing a management team to our public safety officers,” he said.

In a 5-0 vote, the council unanimously approved the agreement.

Consent Calendar Spending

The council approved the following spending in one motion via the consent calendar:

• A $454,150 contract with Otis Elevator Company for the repair and modernization of the Department of Public Safety Headquarters elevator.

The council meets again at 7 p.m. Tuesday, Dec. 2, in the Sunnyvale City Council Chambers at City Hall, 456 W. Olive Ave. in Sunnyvale. 

To submit public comments ahead of the meeting, visit http://Sunnyvale.ca.gov/PublicComments; Meeting online link: https://sunnyvale-ca-gov.zoom.us/j/96111580540; meeting call-in telephone number: 833-548-0276, meeting ID: 961 1158 0540 

Contact David Alexander at d.todd.alexander@gmail.com

Previous Sunnyvale City Council Meetings:
Sunnyvale Upgrades Bike Connectivity
Sunnyvale Continues To Explore Food Service Worker Retention Ordinance
Sunnyvale Considers Increasing Taxes And Fees To Fund Infrastructure Needs