In a disastrous attempt to mitigate its “bad reputation” towards affordable housing production, Cupertino elected officials attempted to skirt state laws in favor of its own legislation—potentially opening itself up to legal action in the process.

Cupertino council members voted Tuesday to adopt new rules to grant flexibility to developers willing to build affordable housing in the city. While the new ordinance is more generous to developers than the city’s previous regulations, it is still less accommodating than standards outlined in new legislation that became state law in January.

The discrepancy didn’t go unnoticed by the California Department of Housing and Community Development (HCD), which sent a letter Monday warning city officials that approving the change to the city’s zoning code would likely get them into trouble. But elected leaders seemed unaware of that correspondence Tuesday as they spent 20 minutes discussing the change and leaning on legal advice that, it seems, got them firmly back on the state’s list of housing offenders.

Mayor Darcy Paul, who did not appear to know about the HCD letter Tuesday, vehemently rejected the possibility that the city would not have control of development within its boundaries as he pushed the new ordinance forward. He said developers that want more flexibility can simply ask the city to approve an exception for their project.

“We’re not in a dictatorship, we’re not in an autocracy, we are in a system of federalism; there are states with state rights and localities have locality rights,” Paul said. “If we are demonstrably making these efforts better [to solve the housing crisis], then I'm very proud to support the legislation that we have.”

The lone “no” vote came from Council Member Hung Wei, who said she was nervous about running afoul of the state law.

State Rules

Assembly Bill 2345, authored by Assemblywoman Lorena Gonzalez, created a statewide baseline for the rules that would grant developers more flexibility on things like height and parking if a project includes affordable housing—particularly in regions that aren’t keeping up with demand. That includes Cupertino, which as of last year, boasted an affordable housing inventory that made up 1.9% of its overall housing stock.

The state bill mandates new incentives, concessions and waivers for developers to bypass rules that may drive up costs and ultimately prevent construction. It offers flexibility on height limits, retail restrictions and costly parking requirements.

Without those kinds of design and ordinance exceptions, adding flexibility on density—or the number of units that can rise on a plot of land—could create more financial roadblocks for projects, according to the HCD and other housing studies. While a city can make its own development ordinance, the local rules can’t be more restrictive than the state’s.

Despite several letters and public comments urging Cupertino not to move forward, the council brushed off compliance concerns, citing a lack of lawsuits on the issue elsewhere in the state and advice from housing attorney and outside legal counsel Barbara Kautz, of Goldfarb & Lipman.

Kautz assured the council their approach was different than those in the city of Encinitas, which received letters from the California Department of Housing and Community Development for technical assistance in December, followed by a notice of violation in March.

Either Kautz wasn’t aware, or failed to inform the council, Tuesday that the city of Encinitas—which is also her client—repealed the ordinances April 9.

Despite the legal advice, Wei urged fellow council members to wait to adopt the new ordinance to see if the HCD would send a warning, as it had in Encinitas.

“By doing this, are we going to receive that letter and get on the state's radar again saying that Cupertino is doing something different and not conforming?” Wei asked. “We don’t have a good reputation already, and I just feel that we don’t want to exacerbate that.”

Lost Letter

Wei’s concerns were on the nose. According to documents obtained by San Jose Inside, HCD sent a letter to Cupertino City Manager Deborah Feng via email at about 4pm Monday—a fact not disclosed during Tuesday’s discussion or meeting documents.

It’s unclear why the council wasn’t aware of the correspondence. Feng did not respond to a request for comment.

In the letter, Shannan West, HCD land use and planning unit chief, confirmed the city’s ordinance did not qualify for an exemption from state law, since it failed to provide additional mechanisms to incentivize development, meaning it was not superior to the state’s standards.

“Over time, the legislature has realized that substantial enticements beyond density bonus units are needed to incentivize the development of affordable housing,” West wrote in the letter, calling incentives and concessions, waivers, and reduced parking standards “essential” to the effort. “It is generally recognized that these ‘other tools are even more helpful to project economics than the density bonus itself.’”

Reached for comment Wednesday evening, Wei said she felt betrayed if city staff purposefully kept the letter from councilors.

“These are all material facts that we need to know before we vote for anything,” Wei said, adding she also wasn’t told about Encinitas’ repeals. “I mean, I voted no, but the other council members should feel betrayed.”

Paul did not respond to requests for comment.

Opponents of Cupertino’s legislation saw the vote as a cynical attempt to get away with approving fewer developments with density bonuses.

JR Fruen, a native Cupertino resident and co-founder of the pro-growth community advocacy group Cupertino for All, insisted to city leaders that increasing requirements for affordable housing units while not allowing flexibility in the other development factors that help minimize building costs is effectively a tax and will not live up to legal requirements.

“In my mind, this is just an effort on the part of Cupertino to sort of ‘woke wash’ what it's doing,” Fruen said the weekend before the vote. “It’s trying to say that they're further incentivizing affordable housing, while at the same time, overall reducing the amount of housing that would be built. That’s fundamentally their aim.”