Cupertino expected to waive millions in fees for Vallco developers

The City Council at their July 16 meeting is expected to waive $77 million in fees from Vallco developers.

For years, Vallco developers have been at odds with Cupertino over paying one-time fees associated with building The Rise — the city’s largest-ever housing development. Now, the developers and the city have reached an agreement that will help move the project forward on the former site of the Vallco shopping mall, waiving millions of fee dollars in the process.

The agreement was reached Wednesday and is expected to be finalized at the City Council’s July 16 meeting, with the wavier of $77 million in fees. Cupertino typically collects the exempted fees to fund city planning and affordable housing related expenses, according to city documents.

In turn, the Vallco developers, which are affiliates of Sand Hills Property, will pay $10.3 million to fund infrastructure projects associated with The Rise development, $32 million in other payments and provide public park and private open spaces instead of paying another required fee in full, which is allowed by Cupertino.

Like most cities in the state, Cupertino imposes one-time fees on property developers to offset the financial impact their new development will have on public infrastructure, including roads, water and sewerage among other services.

“We greatly appreciate the City’s diligence and collaboration during this complex fees discussion,” said Reed Moulds, The Rise Project Executive, in a news release. “With this crucial agreement on the application of city fees to the project completed, we can look ahead to construction beginning in the fall, and to the emergence of The Rise.”

Cupertino Mayor Sheila Mohan said she is also “pleased” that the city and the developer have reached an agreement, and can now “work together towards building new housing in our community.”

The Rise, an ambitious mixed-use housing project, includes 2,699 housing units, 890 of which would be affordable to lower-income households — along with 226,386 square feet of retail and approximately two million square feet of office space. Construction is slated to begin this fall at the 50-acre former mall site at the corner of North Wolfe Road and Stevens Creek Boulevard near Interstate 280.

The completed Rise project will fulfill the city’s goal of adding 4,588 new homes by the end of the decade as part of a state-mandated plan that outlines how Cupertino will add a specific number of local homes at a range of price points.

The city initially approved the project in 2018 under SB 35, a state law that requires local governments to expedite housing projects in cities that fail to build enough housing. But soon after, Vallco developers disputed the validity of paying impact fees, especially one associated with affordable housing towards developing city-owned parks and recreation facilities. In 2021, The Rise’s impact fees were estimated to be more than $125 million.