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have a new 10-foot sidewalk and 11 feet of landscaping. Project frontage along McCandless will maintain the existing 8-foot sidewalk and provide between 10 and 16 feet of landscaping. Project frontage along Market Street will have a new 8-foot sidewalk and 12 feet of landscaping. Lastly, frontage along Centre Pointe will have a new 8-foot sidewalk and approximately 12 feet of landscaping.
Landscaping
The proposed Project incorporates a combination of groundcovers, shrubs, and trees that are drought-tolerant and consistent with the City’s approved plant palette. The vacant site currently has 15 trees, five of which are along McCandless Drive and will remain untouched, while 10 small trees along Great Mall Parkway will be removed. Although none of these removed trees are considered “protected” trees as measured from the width of the trunk, the Project will still mitigate the loss of trees and enhance the Project by planting five additional 24” box Crape Myrtle trees along McCandless Drive along the western edge of the site. 26 additional 24” box Crape Myrtle and Golden Rain Trees are also proposed along the other three street frontages, as well as 16 large, 24” box size Lacebark Elm trees along Great Mall Parkway to the north. Numerous other trees are proposed throughout the interior of the townhome development, including 23 36” box size ‘Keith Davey’ trees. A number of shrubs and groundcover are proposed throughout the project site such as cape rush shrubs, blush fringe flowers, and different various types of sage will assist the site in bioretention as well as erosion control while providing a harmonious view for the nearby residents.
Open Space
Per the Metro Specific Plan, private development must provide on-site open space at a rate of 100 square feet per unit, with at least 5% provided as publicly-accessible open space. This results in a minimum of 10,900 square feet of required open space on-site, 545 square feet of which must be publicly-accessible. The proposed Project exceeds this requirement by providing a 27,832 square- foot publicly-accessible urban plaza area, plus 7,273 square feet of public open space near public right of ways. The urban plaza features a semi-circular concrete seat wall facing a circular patch of lawn that can be used for active uses for the general public. A cantilevered trellis patio cover will overhang the seat wall to provide shade while maintaining an open feel to the urban plaza.
Additional shade to the urban plaza will be provided by eight 24” box size accent trees such as red maples and Ginkgo Biloba trees. The Project will also provide 16,745 square feet of private common space in the form of exterior yards within the innermost portion of the site, particularly near Buildings 13, 14 and 17.
Objective Design Standards
The City of Milpitas adopted its Residential and Mixed-Use Objective Design Standards (ODS) to facilitate project designs by establishing objective development and design standards for all multi- family and mixed-use projects. The ODS are intended to bring consistency and clarity to project review and permitting while eliminating subjectivity to provide uniform language. The proposed Project includes 109 townhome units and 10 ADUs on a 5.49-acre site, which would be classified as a Large project type and a “Medium” building type. While compliance with the ODS is only required for projects seeking permit streamlining (i.e., ministerial review), all projects proposing two or more dwelling units must demonstrate how it meets the intent and purpose of the ODS.
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Although the Project is not seeking ministerial review, Table 6 below shows how the Project is compliant with or meets the intent and purpose of (i.e., consistent with) the City’s ODS.
Table 6: ODS Compliance/Consistency
Standard Conformance
Section 2.1 - Block Structure /
Maximum Block Length
Consistent - The ODS require that all projects have a
maximum block length of 400 feet and a maximum perimeter length of 1,400 feet. Although the Project site exceeds both amounts, the size and shape of the lot is existing and will not be increased. Additionally, the block is broken up by private driveways and pedestrian paths along the perimeter.
Therefore, the Project is consistent with the intent and purpose of this requirement to divide large blocks and create multiple buildings.
Section 2.3 - Shared / Publicly
Accessible Open Space
Compliant – As a Large Site, the Project is required to provide shared publicly accessible open space in addition to minimum usable open space. For projects with an average building height less than 45 feet such as this one, publicly accessible open space shall be equal to or greater than 5% of the lot area, which is approximately 11,957 square feet. This Project meets this requirement through the Urban Plaza
located at the intersection of Market Street and McCandless Avenue.
Section 3.1 - Sidewalk Design Consistent - The ODS require that residential projects fronting a public street right-of-way provide a minimum effective sidewalk width of 12 feet, with a minimum 6-foot- wide pedestrian clear zone. The Project fronts Great Mall Parkway to the north, McCandless Avenue to the west,
Market Street to the south, and Centre Pointe Drive to the east. Project frontage along Great Mall Parkway will have a 10-foot sidewalk and 11 feet of landscaping. Project frontage along McCandless will have an 8-foot sidewalk and between 10 and 16 feet of landscaping. Project frontage along Market Street will have an 8-foot sidewalk and 12 feet of
landscaping. Lastly, frontage along Centre Pointe will have an 8-foot sidewalk and approximately 12 feet of landscaping.
Section 3.4 – Ground Floor
Uses
Consistent – The ODS require that active frontages have a minimum interior depth of gross building area of 15 feet for live/work units. As proposed, the Project provides between 12 and 14 feet and 8 inches of depth. However, due to the limited right-of-way along Market Street, a 15-foot active frontage is infeasible. The provided frontage area is suitable for a narrow street like Market Street.
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The ODS also require floor-to-floor heights of live/work units to be 12 feet. While 10 feet of floor-to-floor heights are proposed, this still meets the intent of the ODS by providing floor-to-ceiling windows along Market Street to encourage pedestrian activity.
Section 3.9 – Standards for
Special Conditions and
Adjacencies
Consistent – The ODS require that all ground floor
residential units shall be set back a minimum 40 feet from face-of-curb when adjacent to a Major Roadway, which is defined as a street with three or more travel lanes in each direction. Great Mall Parkway meets this definition and is directly north of the Project site. The Project proposes a building setback between 20 to 22 feet along Great Mall Parkway. However, the Project provides a number of large street trees along the Great Mall Parkway and approximately 10 feet of right-of-way dedication. The proposed height of the proposed buildings along Great Mall Parkway are also no more than 49 feet, which meets the intent of promoting
gradual transitions from high density development to
surrounding areas. Furthermore, no sound attenuation walls are proposed in order to lessen any potential noise impacts and maintain a pedestrian-friendly environment.
Section 5.1 - Ground Floor
Design
Compliant - The ODS require that all ground floor
residential units have an entry with direct access to the sidewalk, path, or open space. Ground floor residential facades must have a minimum 30% transparent glazing
between 4 and 7.5 feet in height above finished floor, with transparent glazing that is maximum 50% reflective and with visible light transmittance greater than 80%. For the nine live/work units proposed along Market Street, the facades are required to have a minimum 50% transparent glazing
between 3 and 7.5 feet in height above finished floor. This has been added as a condition of approval within the attached Resolution (COA #17).
Section 5.2 - Residential Unit
Entry Types
Compliant – The ODS require that private entries into
ground floor residential units shall be designed to provide human-scaled detailing, enhanced pedestrian experience, transition between public and private space, spaces for residents to gather and spend time outdoors, and resident privacy. The Project proposes Terrace entrances for all residential units, which are limited to 30 inches above the grade of the back of the adjacent sidewalk or accessway.
Terrace entrances are also required to have a minimum path width of 42 inches and fences or walls have a maximum of 42 inches in height and have a minimum transparency of
40%. Although no fences are proposed at this time, the
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height maximum has been added as a condition of approval within the attached Resolution (COA #18).
Section 5.5 - Building
Materials
Compliant – The ODS require building facades to include a variation in building materials, with primary materials covering between 55% and 65% of each exterior, excluding windows, doors, garage doors, and building trims. This Project accomplishes this by including metal-clad roofing materials, aluminum storefronts, and “Hartford” brick veneer, in addition to painted stucco and siding.
Section 6.2 - Usable Open
Space/ Common Open Space
Compliant – The ODS require that Common Open Space be
immediately adjacent to common spaces, hallways, or
residential units, be accessible to all residents, and have a minimum width and length of 20 feet. The common open
space must include a minimum of 20% landscaping, with a minimum of 20% area planted with ground cover/ shrubs,
and a minimum of one tree planted per 400 square feet of open space area. Staff finds that the project is consistent with ODS Section 6.2 via the proposed urban plaza.
The ODS also requires a number of standards primarily related to development of apartment buildings, including ODS Sections 4.3.2 and 5.4.1. ODS Section 4.3.2 requires that buildings three stories or taller be designed to differentiate a defined base or ground floor, a middle or body, and a top, cornice or parapet cap. This Project meets the intent by providing contemporary architecture and varying building materials, including brick veneer, metal roof accents, and stucco and siding.
ODS Section 5.4.1 requires that green roofs be required for all developments with a minimum net roof area of 5,000 square feet. Although the proposed Project meets the minimum roof area, the nature and shape of the townhome buildings are of a much narrower footprint than those of apartment buildings. The townhome buildings also feature sloped roofs to articulate building massing, which would drastically limit the feasibility of green roofs. However, the intent of increasing building performance will be met by providing solar panels.
Affordable Housing Ordinance
The City’s Affordable Housing Ordinance (AHO), adopted in February 2022, applies to all new residential development projects of ten units or more designed and intended for permanent occupancy. The proposed Project consists of 109 market-rate dwelling units and 10 ADUs, for a total of 119 housing units. Although ADUs are specifically not counted towards the total number of affordable units, the 109 townhomes exceed the 10-unit threshold and is therefore subject to the AHO.
Pursuant to MMC Section XII-1-3.00, the applicant must reserve 15% of the total number of dwelling units within the development as affordable units. The City’s AHO also states that if the project is a residential rental project, 100% of the required affordable units must be reserved for very low or low-income households. If the project is a residential ownership project, 100% of the affordable units must be reserved for very low, low, or moderate-low-income households. As the project proposes for-sale townhomes, all affordable units are required to be at the moderate-income level or lower. Applying the 15% requirement to the 109 market-rate townhomes yields an
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affordable housing obligation of approximately 16.35 moderate-income townhomes. Per the AHO, a fractional unit equal to 0.5 or greater is rounded up, resulting in a requirement of 17 on- site affordable units. However, in-lieu fees may be paid for requirements to construct fractional units of less than 0.5 units as outlined in MMC Section XII-1-3.00.
Although the City’s AHO requires projects to construct 15% of the total number of dwelling units as affordable units on-site, some exceptions can be made. All exceptions to this requirement for ownership units shall require City Council approval, which must be obtained at or prior to the last discretionary approval for development of the Project. The AHO distinguishes between ownership and rental projects for purposes of the exception process. The City Council may allow an exception to the on-site requirement when the applicant contributes to the City’s affordable housing needs through one of the alternatives found within Subsections XII-1-4.00 through XII- 1-4.02, which include in-lieu fee payments, off-site construction, and land dedication.
The Project proposes 109 market-rate townhomes without any below-market-rate (BMR) units on site, which is inconsistent with the City’s AHO. However, the Applicant is proposing to provide 22 below-market-rate (BMR) rental units by converting market-rate apartments in the adjacent mixed-use building to the south of the Project site, commonly known as Gideon. The Gideon building has 213 rental apartment units, all of which are currently rented at market-rate. The Applicant request that pursuant to Subsection XII-1-4.03 that Council approve this alternate method of compliance, which requires the City Council to find that such alternate method of compliance meets the purpose of the AHO. In addition, per Section 4 (Exceptions to On-Site Development of 15 Percent Affordable Units) of the AHO, all ownership projects proposing an alternative means of compliance must meet two findings:
1. The development as proposed with the exception as provided pursuant to this Section would further the City’s low and/or moderate income housing goals as contained in the Housing Element; and
2. The development with the exception either (i) will result in at least two of the following; a. The development of a larger number of deed-restricted affordable units than would be created under the on-site requirement;
b. The development of a larger number of deed-restricted affordable bedrooms than would be created under the on-site requirement;
c. The development of a larger amount of deed restricted affordable living area than would be created under the on-site requirement;
d. The development of deed-restricted affordable units at a lower average income target as compared to the affordable units that would be created under the on-site requirement;
or (ii) will provide other community benefits that exceed the benefit of constructing on-site affordable units.
While the Project does not propose BMR units within the Project site (Lot 3), the Project site is one of the four sites within The Fields/District development, and the affordable units will be provided within the larger development of which this specific Project is a part. Therefore, under
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the unique circumstances of this particular project and method of compliance, the above findings can apply (and not necessarily the additional findings for off-site projects in Section XII-1-4.01).
The Project proposes to provide a larger number of deed-restricted affordable units (Finding 2.a) and some of those units at a lower income level (Finding 2.d) than would be created under the on- site requirement. Of the 22 BMR rental units, 18 would be at the low-income level and 4 would be at the very low-income level. Of the 18 low-income units, 15 are proposed as part of this alternative means of compliance with the AHO, and of the 4 very low-income units, 3 are proposed as part of this alternative means of compliance with the AHO. As such, the Project proposes an alternative means of compliance consisting of 18 instead of 17 BMR units, 3 of which would be at the very low- instead of low-income level. The Project proposes to reserve the remaining BMR units (3 low- and 1 very low-income) as a public benefit as part of the proposed Development Agreement. The Applicant requests that the City Council find that this alternate proposal is compliant with the AHO and provides a greater number of affordable units at a lower income level than what would otherwise be produced in the onsite development of the townhomes. The Applicant also points out that these affordable rental units are already constructed and can be made available to qualifying low- and very low-income households as they come open for lease, whereas the onsite construction of the townhomes project may take several years and therefore present a less immediate source of affordable housing.
The Project as proposed would also further the City’s low and/or moderate income housing goals as contained in the Housing Element, which includes policies that prioritize the development of low- and very low-income levels. Additionally, the Housing Element Sites Inventory anticipated 357 market-rate units on this site based on the previous entitlement. While the Project would result in 238 fewer market-rate units than anticipated, it would provide 22 low-/very low-income units, which were not anticipated in the Sites Inventory for this site. Historically, the City has exceeded its Regional Housing Needs Allocation (RHNA) for market-rate but struggled to meet its RHNA for the low- and very low-income levels.
Furthermore, while the Project would provide smaller apartments instead of townhouse BMR units, these units would be at the low-/very low-income levels, providing greater rental savings for the Milpitas community relative to that of moderate-income units. The applicant has also demonstrated how the 18 low-/very-low apartments units are equivalent to or exceed the construction cost or value of 17.35 moderate townhomes. See the attached Affordable Housing Equivalency Analysis for more information.
Density Bonus Permit
State Density Bonus Law (Gov. Code § 65915 et seq.) incentivizes affordable housing by offering developers certain benefits. According to State Density Bonus Law (SDBL), developers that reserve “at least 10 percent of the housing units restricted to lower income residents” are entitled to waivers, concessions, and incentives (which include parking reductions). The city cannot deny a waiver, concession, or incentive unless it can demonstrate the exception will not result in an identifiable cost reduction for the project, have a specific adverse impact upon public health and safety (per Section 50052.5 of the California Health and Safety Code), would be prohibited by CEQA (Pub. Resources Code, § 21000 et seq.), or otherwise be contrary to state or federal law.
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While the Project is not reserving at least 10 percent of the proposed housing units for lower income residents onsite, the State Density Bonus Law permits local jurisdictions to provide incentives or concessions allowed under the law even where a development may otherwise not be entitled to such incentives or concessions. As such, the City could allow the Applicant to request incentives or concessions for the Project through the DA. Therefore, the applicant is requesting the following incentives or concessions:
1. A reduction in the commercial requirement; and
2. A reduction in the sidewalk width requirement.
The MXD2-Metro zoning district requires ground floor retail and active uses on 80% of frontages on any one blockface along Activity Streets as identified in the Metro Plan. The Metro Plan identifies three of the Project site’s frontages as Activity Streets, along the west, south, and east frontages. Since the Project only proposes active uses along Market Steet to the south, a waiver is required to reduce the commercial requirement for the Project accordingly. The Metro Plan also requires a minimum 18-foot-wide sidewalk along Activity Streets. However, the proposed sidewalks along the three Activity Streets range from 8 to 10 feet in width.
Both concessions are necessary to make the project economically feasible for the applicant to build since meeting the commercial requirement and minimum sidewalk width requirement would significantly increase the Project cost and affect the core townhomes project that the Applicant wishes to market. The Applicant has provided a project narrative stating why the incentives or concessions are needed and appropriate, as seen in Attachment F.
Development Agreement
A Development Agreement (DA) is needed to provide certainty regarding the applicable development standards. The California Legislature adopted the Development Agreement Statute (Section 65864 et seq. of the Government Code) to strengthen public planning, encourage private participation, and reduce development risks. This statute allows cities to enter binding agreements with property owners, establishing certainty as to the development standards and right for a particular project and thereby encouraging investment and redevelopment. On May 6, 1997, the City Council adopted Resolution No. 6642, which sets forth comprehensive procedures and requirements for the institution of development agreements.
The Project is eligible for a Development Agreement because it is a large-scale multifamily residential project and part of a multi-phased master-planned development requiring significant front-end investment and multiple years to complete construction, and otherwise requires long- term certainty on the part of the Applicant, at least for the three-year term (up to a seven-year term with options) of the currently proposed DA. This DA would provide certainty and direction for development to allow the completion of the last aspect of the District/Fields development.
Through the proposed Agreement, the landowner and City would preserve the minimum residential density previously allowed for the subject property under the TASP (30 dwelling units per acre), and thereby allow for the proposed development with additional construction and improvements only allowable through the benefit of this DA.
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In consideration, the landowner shall provide the following offsetting public benefits to the City:
1. Payment of Four Hundred Thousand Dollars ($400,000) as a voluntary contribution to the City and community benefit to fund City services and infrastructure improvements at the discretion of the Council, payable at the time of issuance of final occupancy or after 3 years, whichever comes first; and
2. Conversion of 3 low- and 1 very low-income units within the adjacent Gideon development beyond the affordable units provided for AHO compliance, to be restricted to affordable rents prior to the issuance of building permits and rented to qualifying households within 2 years.
These community benefits are meant to offset the community impacts of the DA, which staff anticipates will at least include additional transportation and other programing or infrastructure required by locating additional residential units further away from this location and the extensive infrastructure and public/private amenities next to it, including the Great Mall and the Milpitas Transit Center.
The proposed DA allows redevelopment of an underutilized site, which has long been vacant as the rest of The Fields/District development has been constructed under the previous TASP standards. The Milpitas Metro Specific Plan, which was adopted in 2023 well after amendments to the previous entitlement for this site, increased the minimum density under the TASP from 30 to 40 dwelling units per acre, which is difficult to meet under current market conditions. The proposed DA will hold these standards open for a period of three (3) years, up to seven (7) years with options, should further redevelopment of the site be sought during this period. If changes are proposed beyond what is defined as “Insubstantial Modification” in the DA, the Project would need to be re-entitled in conformity with then current development standards.
No Net Loss Law
While the proposed DA with the reduced minimum density would result in fewer units to be built on the Project site than anticipated in the Housing Element Sites Inventory (119 vs. 357 units), the No Net Loss Law as codified in Government Code Section 65863 requires a jurisdiction to maintain adequate housing sites to accommodate its remaining unmet RHNA by each income category at all times throughout the entire planning period. If a jurisdiction approves a development of a site identified in its Housing Element Sites Inventory with fewer units than shown in the Housing Element, it must find that the remaining sites have sufficient capacity to accommodate the remaining unmet RHNA by each income level. For the above-moderate income level (i.e., market-rate), the Milpitas 2023-2031 Housing Element identified a total capacity of 4,089 units, which exceeds Milpitas’ RHNA obligation of 2,346 units by 1,162 units. Although the Project would result in the loss of 238 market-rate units relative to the anticipated number of units identified in the Sites Inventory, the City currently has more than enough capacity to accommodate its remaining unmet RHNA in this income category. Furthermore, without the proposed DA, given current market conditions, the Project site would likely remain undeveloped beyond the current RHNA cycle (2023-2031), in which case the City would gain no residential units to help meet its RHNA obligations. Additionally, the proposed Project would result in 22
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additional lower income units than anticipated in the Housing Element Sites Inventory, with 18 of those units being in the low-income level and 4 being in the very low-income level.
FINDINGS FOR APPROVAL (OR DENIAL)
A finding is a statement of fact relating to the information that the Planning Commission has considered in making a decision. Findings shall identify the rationale behind the decision to take a certain action. Based on substantial evidence in the public record, Staff has found that the proposed Project is consistent with the General Plan, Zoning Ordinance, and all required Findings.
Site Development Permit Findings (MMC Section XIII-D.4.020.F(1.a-d) for All Site Development Permits and MMC Section XIII-D.4.020.F(2.a-c) for Specific Projects)
1a. The proposed project is consistent with this Title.
The proposed Project provides 109 townhome residential units, 10 ADUs, nine live/work units, and 22 below-market-rate affordable rental units at an adjacent site, which is consistent with the intent of the MXD2-Metro zoning district. The Project’s site design, including setbacks and building height is also consistent with the applicable zoning standards for the MXD2- Metro zone, as demonstrated in Table 4 above. Although the Project does not comply with the density and active commercial requirement of the MXD2-Metro zone, a Density Bonus permit and Development Agreement are proposed to meet the average minimum density of the District area and reduce the commercial requirement, respectively. Therefore, the proposed Project is consistent with this title.
1b. The proposed use and project are consistent with the goals and policies of the General Plan:
The proposed multi-family residential Project is consistent with the General Plan land use designation of Milpitas Metro Specific Plan, which encourages high-density, mixed-use, transit-oriented development, especially within the McCandless/Centre Pointe Sub-District.
As shown in Table 3 of the staff report, the Project complies with General Plan policies LU 1- 4, LU 2-1, LU 5-1, LU 5-3, CD 5-5, and CD 6-5. The townhome product type offers a family- sized housing option that is distinct from the higher-density stacked-flat apartment developments that predominate in the Metro Plan area, thereby diversifying the housing stock and providing additional choices for residents who may need more space for family, professional, or personal needs. This Project will develop a currently vacant 5.49-acre parcel, thereby activating an underutilized site and contributing to the fabric of the area. The Project site design, with live/work units oriented toward Market Street, which will provide a unique opportunity to homeowners and business owners, and will create an active ground-floor street presence that integrates with the surrounding streetscape rather than creating an insular or self- contained development. The proposed Project is a medium-density residential infill development that will complete The Fields/District development and neighborhood.
Therefore, the proposed Project is consistent with the goals and policies of the General Plan.
1c. The project will not be detrimental to public health, safety, and general welfare:
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The proposed townhome development is compatible with existing and planned land uses in the vicinity. The McCandless District of the Metro Plan is characterized by “high-density mixed-use development along larger, busier streets in the northern area and lower density townhouse development in the central area”. The development is compatible with the surrounding mixed-use development within The Fields/District area and the broader McCandless/ Centre Pointe Sub-District. The Project will not create adverse impacts on adjacent properties with respect to noise, traffic, light, or other environmental factors beyond those previously analyzed and addressed in the original TASP Environmental Impact Report and subsequent Addendum. The site plan also demonstrates adequate internal circulation, emergency vehicle access, and pedestrian connectivity. A traffic analysis has been prepared demonstrating the Project’s anticipated traffic generation can be accommodated by the existing street network. Transportation and Fire staff have also reviewed the Project plans and are requiring conditions of approval to ensure adequate emergency vehicle access and have confirmed that the internal private streets and driveways adequately serve the development.
Therefore, the Project will not be detrimental to public health, safety, and general welfare.
1d. The proposed project is in compliance with the provisions of California Environmental Quality Act (CEQA):
The proposed Project includes the development of 109 multi-family residential units and 10 Accessory Dwelling Units within an urban and mixed-use zoned area. With the proposed Development Agreement and density bonus concessions, the proposed Project meets the Metro Specific Plan zoning regulations and is consistent with the policies established in the original TASP Environmental Impact Report as well as Metro Specific Plan Subsequent EIR (SCH#2006032091). The Project is also a residential development within and subject to a Specific Plan. Therefore, the Project is categorically exempt from environmental review under the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15182 (Projects Pursuant to a Specific Plan).
2a. The proposed use and project are consistent with the goals and policies of any Specific Plan, if applicable:
The proposed Project includes the development of 109 multi-family residential units and 10 Accessory Dwelling Units, which helps implement the range of uses and development standards as set forth in the Metro Specific Plan, particularly within the Residential Retail High Density Mixed Use (RRMU) Specific Plan land use designation. The RRMU classification allows residential-only development to have a density range between 40 to 85 units per acre; however, the proposed Development Agreement would preserve the minimum residential density of 31 units per acre previously allowed for the subject property under the Transit Area Specific Plan (TASP). The current Project is proposed at a residential density of approximately 20 units per acre, which is well below the minimum allowed density within the Metro Specific Plan; however, with density averaging across The Fields/District development, the Project meets the TASP minimum density of 31 units per acre average. Furthermore, the Project would contribute to the Metro Plan vision of creating a complete and unique urban neighborhood, which includes a mix of residential and retail uses, affordable housing, a variety of shared
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public spaces, and a strong sense of place with quality architecture and key landmarks. The Project would develop a currently vacant parcel into new housing, including affordable units, that supports the transit-oriented neighborhood envisioned by the Metro Plan. The inclusion of nine live/work units along Market Street also introduces a mixed-use component that supports the Metro Plan’s goal of providing neighborhood services and a balance of jobs and housing near transit. The Project’s location within the McCandless District is also consistent with the established pattern of townhome development in this subdistrict.
2b. The proposed siting, form, architectural style, materials, and other elements of multi-family residential and mixed-use developments are consistent with City Objective Design Standards:
The proposed Project is designed in a Northwest Contemporary architectural style, incorporating clean, boxy massing, flat and low-slope roofs, large black-framed windows, and a mixed-material façade. The building massing is articulated through projections and recesses at adjacent townhomes, as well as staggered balconies that help break up the length of the structures, while top-level terraces create a stepped-back effect that reduces the overall sense of verticality. The residences are arranged in a multi-story townhome format, generally three and four levels tall, maximizing vertical space with parking and entry at the ground level, main living areas on the second and third floors, and bonus or entertaining rooms opening onto large covered terraces at the top level to take advantage of light and views. The roof design combines shed roofs, flat balcony and terrace roofs, and curved sloping roofs at prominent elements, creating a dynamic contemporary roofline. Large windows enhance natural light and provide expansive views throughout the development. Exterior materials consist primarily of stucco with lap siding accents for added texture, while brick at the ground floor introduces a natural element that helps ground the modern aesthetic. The color palette draws from coastal tones, including whites, cool grays, blues, and green-blues, complemented by the warmer earth tones of the brick. The proposed architectural style complements the surrounding neighboring residential developments and meets the intent of the City’s Objective Design Standards as shown in Table 5, thus meeting this finding.
2c. The proposed siting, form, and architectural style of single-family residential, commercial, and industrial developments are appropriate for the project site and surroundings and create a visually cohesive design, and are consistent with all applicable design standards in this Title:
The above finding is not applicable to the Project, which is a multi-family development.
Conditional Use Permit Findings (MMC Section XIII-D.4.030)
1. The proposed use is consistent with the goals and policies of the General Plan; See Site Development Permit Finding 1.b above.
2. The proposed use is consistent with the goals and policies of any Specific Plan if applicable;
See Site Development Permit Finding 2.a above.
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3. The proposed use is appropriate for the zone in which it is located, is compatible with uses allowed in the zone, and complies with all other applicable provisions of this Title; The proposed residential townhome development will not be detrimental or injurious to property or improvements in the vicinity nor to the public health, safety, and general welfare.
The Project site is a vacant, undeveloped parcel located within the McCandless District of the Metro Specific Plan area, which is planned and zoned for high-density, transit-oriented residential development. The surrounding area includes existing residential and mixed-use developments to the west and south of the Project site, and a well-established commercial shopping center to the north across from Great Mall Parkway. Therefore, the Project will complete the neighborhood by contributing to and diversifying the existing housing mix with ADUs and live-work units. Moreover, the McCandless Subdistrict specifically calls out townhomes as part of the Metro Plan’s vision. The residential units of the proposed Project are compatible with the neighboring commercial uses as residents will be able to shop nearby and/or using the Milpitas Transit Center to commute to work. Furthermore, with the density bonus concessions and Development Agreement, the Project complies with all applicable zoning and development standards in this Title. The Project has also been designed to comply with all applicable building, fire, and safety codes, and conditions of approval will be imposed to ensure ongoing compliance.
4. The proposed use will not be materially detrimental to the health, safety, and welfare of the public or the property and residents in the vicinity; See Site Development Permit Finding 1.c above.
5. The subject site is physically suitable for the use being proposed, including access and utilities;
The proposed 5.49-acre Project is adequate in size and shape to accommodate the proposed 109 townhome units and 10 ADUs, including all required setbacks, parking, landscaping, and open space. The Project provides two-car garages for each residential townhome, an approximately 28,000 square-foot urban plaza to be used for public open space, and sufficient setbacks and public rights-of-way, which meet the applicable standards of the MXD2-Metro zone. The site plan also demonstrates adequate internal circulation, emergency vehicle access, and pedestrian connectivity. A traffic analysis has been prepared demonstrating the Project’s anticipated traffic generation can be accommodated by the existing street network.
Transportation and Fire staff have also reviewed the Project plans and are requiring conditions of approval to ensure adequate emergency vehicle access and have confirmed that the internal private streets and driveways adequately serve the development. The Project will connect to existing utilities via tie-ins along McCandless Drive to the west and Great Mall Parkway to the north.
6. The design, location, size, and operating characteristics of the proposed use are compatible with existing and reasonably foreseeable future land use and circulation in the vicinity;
The Project site is located at the intersection of Great Mall Parkway and McCandless Drive.
Great Mall Parkway is an arterial street, while McCandless Drive is a collector street. The site is within half a mile of the Milpitas BART station and VTA light rail stations, providing
Agenda Item IX-1: Site Development Permit Amendment – May 6, 2026 Page 27 of 35
excellent multi-modal transit access. A traffic analysis has been prepared demonstrating the Project’s anticipated traffic generation can be accommodated by the existing street network.
Furthermore, the Project would result in a significant decrease in the number of residential units from what was previously analyzed through the Environmental Impact Report for the Milpitas Metro area. Generally, a lower level of development results in fewer environmental impacts related to public services, utilities, natural resources, local vehicular traffic, and other impact categories. Therefore, the design, location, size, and operating characteristics of the Project are suitable for the Project site and compatible with the surrounding area. The Metro Specific Plan also envisions a mix of housing and pedestrian-oriented environment in this area, which the Project will help fulfill by introducing medium-density housing with ADUs, affordable housing, and live-work units to complete The Fields/District development.
7. The proposed project is in compliance with the provisions of California Environmental Quality Act.
The proposed Project includes the development of 109 multi-family residential units and 10 Accessory Dwelling Units within an urban and mixed-use zoned area. With the proposed Development Agreement and density bonus concessions, the proposed Project meets the Metro Specific Plan zoning regulations and is consistent with the policies established in the original TASP Environmental Impact Report and Metro Specific Plan Subsequent EIR (SCH#2006032091). The Project is also a residential development within and subject to a Specific Plan. Therefore, the Project is categorically exempt from environmental review under the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15182 (Projects Pursuant to a Specific Plan.
Density Bonus Findings (California Government Code Section 65915)
1. The maximum allowable base density specified in the General Plan, including any other permitted increases to density.
The proposed Project includes 109 townhome units, equaling a residential density of approximately 20 dwelling units per acre (du/ac), which does not meet the allowed minimum density of 40 du/ac in the MXD2-Metro zoning district. However, previous approvals established the use of density averaging across The Fields/District development, allowing flexibility in the distribution of units among the various lots. Furthermore, the proposed Development Agreement would preserve the minimum residential density of 31 du/ac previously allowed for the subject property under the Transit Area Specific Plan (TASP). Therefore, with density averaging across The Fields/District development, the Project would meet the TASP minimum density of 31 units per acre average.
2. All affordable units shall be reasonably dispersed throughout the project, shall contain on average the same number of bedrooms as the non-affordable units in the project, and shall be comparable with the non-affordable units in terms of appearance, materials and finished quality. The Planning Commission may recommend to the City Council modifying the requirements as to unit size or type, if it is found that such a modification would better serve the affordable housing need of Milpitas.
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The applicant has proposed to convert 22 existing apartment units from an adjacent mixed- use development from market-rate units to low- and very-low-income affordable units. As most units in the apartment are currently occupied, market-rate units can only be converted to BMR units once the units become vacant or available. The affordable unit sizes and bedroom counts will be identified and approved by the Office Housing Department as meeting the intent of the Affordable Housing Ordinance (AHO) prior to Building Permit Issuance. This has been added as Condition of Approval No. 25 within the attached Resolution. The development will need to have converted 22 existing apartment units to BMR units within the first two years of the Development Agreement’s term. Prior to building permit issuance, and not later than one year into the Development Agreement’s term, the applicant must execute an agreement with the City imposing appropriate ownership controls on the affordable units as required by the AHO.
Since the market-rate units to be converted to BMR units have already been constructed and are existing, the appearance, materials, and finished quality of BMR units will be the same as those of the remaining market-rate units.
3. Prior to final building inspection and occupancy for a project containing affordable units, the applicant shall execute and record at the Santa Clara County Recorder’s Office the City’s Agreement Imposing Restrictions on Real Property, which Agreement shall explain the affordability requirements. The agreement shall be approved by the Milpitas City Attorney prior to recordation.
The Project has been conditioned to provide an agreement to the City of Milpitas explaining the affordability requirements, processes and procedures, to the satisfaction of the Milpitas City Manager prior to the release of final Certificate of Occupancy.
4. Retaining Affordability. A developer shall agree to, and the City shall insure continued affordability of, all lower- or very low-income density bonus units for thirty (30) years or a longer period of time, if required by the construction or mortgage financing assistance program, mortgage insurance program, or rental subsidy program.
Prior to final building inspection and occupancy for the Project containing affordable units, the applicant shall execute and record at the Santa Clara County Recorder’s Office the City’s Agreement Imposing Restrictions on Real Property, which Agreement shall explain the affordability requirements, including continue affordability for low- and very low- income households. The agreement shall be approved by the Milpitas City Manager prior to recordation.
5. Affordable Rents. Those units targeted for lower-income households, as defined in Section 50079.5 of the Health and Safety Code shall be affordable at a rent that does not exceed thirty (30%) of sixty (60%) percent of the Santa Clara County median income. Those units targeted for very low-income households, as defined in Section 50105 of the Health and Safety Code, shall be affordable at a rent that does not exceed thirty (30%) of fifty (50%) percent of County median income.
Although the Project proposes for-sale townhomes dwelling units for sale, the applicant proposes to convert 22 existing market-rate apartment units from the adjacent mixed-used
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development to 18 low- and 4 very low-income units to meet the City’s Affordable Housing Ordinance through an alternative means of compliance, which requires City Council approval. The Project will be subject to an affordable housing agreement, which must be approved by the City and executed prior to the release of final Certificate of Occupancy. The agreement will require the low- and very low-income units to be available at a rent that does not exceed the maximum limits established in Section 50079.5 of the Health and Safety Code. As apartment units in the Gideon development become vacant or available, the applicant will be required to deed restrict and rent those units in compliance with the affordable housing agreement and in a manner that meets the intent of the City’s Affordable Housing Ordinance.
6. Relation to Statute. Density bonus requirements not specified in these regulations shall be governed by the State Density Bonus Law, Government Code section 65915, et seq.
The applicant has identified and requested bonus concessions held within the State Density Bonus Law, and the Planning Department supports this request. As such, the applicant is requesting the following concessions: a decrease in required ground floor retail within the MXD2-Metro zoning district, and a decrease in the required Large Retail Storefront sidewalk, as stated within the Metro Plan. The MXD2-Metro zone requires that “ground floor retail and active uses” are required on 80% of frontages on any one blockface along Activity Streets as identified within the Metro Plan. The Metro Plan identifies three of the Project site’s frontages as Activity Streets, along the west, south, and east frontages. Since the Project only proposes active uses along Market Street to the south, a concession is required for this standard. The Metro Plan also identifies Activity Streets as having a 18- foot sidewalk. Due to the nature of the townhome development and the size of the lot, this requirement would be infeasible to the developer, so a concession is requested for this as well.
Tentative Map Findings
1. The tentative subdivision map is consistent with the General Plan.
The Vesting Tentative Map is necessary for the proposed multi-family residential Project, which is consistent with the General Plan land use designation of Milpitas Metro Specific Plan (Metro Plan), which encourages high-density, mixed-use, transit-oriented development within the McCandless/Centre Pointe Sub-District. As shown in Table 3 of the staff report, the Project complies with General Plan policies LU 1-4, LU 2-1, LU 5-1, LU 5-3, CD 5-5, and CD 6-5. The Vesting Tentative Map is also necessary for the development of a currently vacant 5.49-acre parcel, thereby activating an underutilized site and contributing to the existing neighborhood fabric of the area and complete The Fields/District development and neighborhood. Therefore, the Vesting Tentative Map is consistent with the goals and policies of the General Plan.
Furthermore, the Project is consistent with the Milpitas General Plan as demonstrated and outlined in Table 3 above.
2. None of the conditions identified in California Government Code Section 66474 existing, to wit:
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a. The proposed map is not consistent with applicable general and specific plans as specified in Government Code Section 65451.
The proposed Project includes 109 townhome units, equaling a residential density of approximately 20 dwelling units per acre (du/ac), which does not meet the allowed minimum density of 40 du/ac in the MXD2-Metro zoning district.
However, previous approvals established the use of density averaging across The Fields/District development, allowing flexibility in the distribution of units among the various lots. Furthermore, the proposed Development Agreement would preserve the minimum residential density of 31 du/ac previously allowed for the subject property under the Transit Area Specific Plan (TASP). Therefore, with density averaging across The Fields/District development, the Project would meet the TASP minimum density of 31 units per acre average.
b. The design or improvement of the proposed subdivision is not consistent with applicable general and specific plans.
The design and improvements of the Vesting Tentative Map are consistent with the General Plan in that it would allow for multifamily residential development with associated public improvements, which are consistent with the applicable General Plan goals and policies as described in Tentative Map Finding 1. The Project is also consistent with the policies associated with the Milpitas Metro Specific Plan (Metro Plan), as identified in Tables 4 and 5, except for the commercial component along Activity Streets, which is allowed per State Density Bonus Law. The Project site is located within the McCandless District of the Metro Plan, which is characterized by high-density mixed-use development along larger, busier streets in the northern area and lower density townhouse development in the central area of the District.
The Vesting Tentative Map would allow for development that is compatible with and would complete the surrounding neighborhood consistent with the Metro Plan’s vision for the McCandless District.
c. The site is not physically suitable for the type of development.
The Project site is surrounded by property designated for mixed-use development under the City’s General Plan and zoned for this type of development under the Metro Plan and MXD2-Metro zones. The proposed Project is also known as Lot 3 within the larger The Fields/ District development, which is nearly built-out and already developed with 762 residential units and over 71,000 square feet of commercial/retail space. The proposed Project will add 119 dwelling units with the included ADUs and will complete The Fields/District development. In addition, the site is suitable for the proposed townhome development based on the location and physical attributes of the site. The site is located in an urban context suitable for multifamily development and is approximately 5.49 acres in size, which is sufficient to accommodate the development. The Vesting Tentative Map includes the necessary infrastructure improvements to adequately serve the site from a transportation and utilities perspective.
d. That the site is not physically suitable for the proposed density of development.
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The Project site is suitable for the proposed medium density townhome development based on the location and physical attributes of the site. The site is located in an urban context suitable for medium density multifamily development and is approximately 5.49 acres in size, which is sufficient to accommodate the proposed density of development. The Vesting Tentative Map includes the necessary infrastructure improvements to adequately serve a multifamily residential development at the proposed density.
e. The design of the subdivision or the proposed improvements are likely to cause substantial environmental damage or substantially and avoidably injure fish or wildlife or their habitat.
The Project, including the subdivision and its associated improvements, is located within a heavily urbanized area and is surrounded by a mixture of commercial and mixed-use development. Therefore, it will not cause substantial environmental damage or substantially and avoidably injure fish or wildlife or their habitat. f. The design of the subdivision or type of improvements is likely to cause serious public health problems.
The Project, including the subdivision and its associated improvements, has been designed in a manner that will not cause serious public health problems. The Project has been reviewed by the Building, Housing Fire, Land Development, Traffic, Public Works, and Solid Waste Departments. The Vesting Tentative Map includes various public improvements in the public rights-of-way related to transportation and utilities to ensure the Project will be adequately serviced and thereby preserve public health and wellness. Public improvements include utility services such as water, wastewater, storm drain, gas, electrical, and telecommunications. Pavement restoration along the project frontage on McCandless Drive, Center Pointe Drive, and Great Mall Parkway per City Standards will be required as part of the Project. Project frontage along Great Mall Parkway will have a new 10-foot sidewalk and 11 feet of landscaping. Project frontage along McCandless will maintain the existing 8-foot sidewalk and provide between 10 and 16 feet of landscaping. Project frontage along Market Street will have a new 8-foot sidewalk and 12 feet of landscaping. Lastly, frontage along Centre Pointe will have a new 8-foot sidewalk and approximately 12 feet of landscaping.
g. The design of the subdivision or the type of improvements will conflict with easements, acquired by the public at large, for access through or use of, property within the proposed subdivision.
Upon review of the subdivision map, it has been determined that the design of the subdivision or the type of improvements will not conflict with any easements acquired by the public at large, for access through or use of, property within the proposed subdivision. Existing easements include public service utility easements throughout the perimeter of the site as well as a 20-foot PG&E easement that cuts through the middle of the site. All utility easements will be located within or near public rights-of-way and the 20-foot PG&E easement will be quitclaimed or
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removed as part of this development. Therefore, the proposed subdivision and relevant improvements will not conflict with easements or access to the property.
Development Agreement Findings (MMC Section XIII-D.14.050) The proposed Project is considered to be eligible for a Development Agreement per City Council Resolution No. 6642 Sections 2.3(a) and 2.3(c), regarding acreage and general welfare of the community. Although the Project site is under 10 acres, The District encompasses multiple lots totaling over 20 acres. Furthermore, the public health, safety and general welfare of the citizens of City will best be served by accepting an Application for consideration by the Planning Commission and City Council. The Development Agreement will facilitate the final step in a large development that has taken many years to complete and activate an otherwise vacant lot that has remained underutilized during that time while establishing affordable housing close to public transportation and other infrastructure and amenities that will particularly benefit lower income households.
1. The Development Agreement is consistent with the goals, policies, general land uses, and programs specified in the General Plan;
The proposed Development Agreement (DA) would further the General Plan goals and policies by allowing for the proposed Project with additional construction and improvements only allowable through the benefit of this DA. The Project would provide a mix of townhomes, accessory dwelling units, and live-work units in proximity to the Milpitas Transit Center, which is consistent with the General Plan’s vision for the Metro Specific Plan area. Furthermore, as part of DA and as a public benefit, the Project would provide low- and very-income level units beyond what is required by the Affordable Housing Ordinance, which will help the City achieve its affordable housing goals in its Housing Element. Lastly, the DA also includes a voluntary $400,000 contribution to the City as a community benefit, which can be used to fund City services and public improvements identified in the General Plan.
2. The Development Agreement is consistent with any Specific Plan, if applicable; The proposed Project is located within the Milpitas Metro Specific Plan (Metro Plan, formerly TASP). The Metro Plan envisions the McCandless Subdistrict with high-density mixed-use development along larger streets and lower-density townhouse developments.
The proposed DA would allow for the proposed Project, which includes a mix of housing types (townhomes, ADUs, and live-work units) that are aligned with the Metro Plan’s vision for this subdistrict. The live-work units would also contribute to the pedestrian- oriented, vibrant atmosphere envisioned along Market Street. Lastly, the DA includes a public benefit of four low- and one very low-income units, which would provide lower- income affordable housing near public transit, which is another goal of the Metro Plan.
3. The Development Agreement and accompanying development maps, plans, and other supporting information are compatible with the uses authorized in, and the performance and development standards prescribed for, the zone in which the subject parcel or site is located;
The DA would allow for the Project site to be developed with multifamily residential development, which is permitted by-right in and consistent with the intent of the MXD2-
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Metro zoning district. The purpose of the MXD2-Metro zoning district is to create and enhance areas with a mix of retail, restaurant, entertainment, and commercial service uses on the ground floor and residential or office uses on upper stories, while maintaining a pedestrian-oriented streetscape. Although the Project does not comply with the density and active commercial requirement of the MXD2-Metro zone, the DA would preserve the previously applicable minimum density in the TASP (30 du/ac), which the Project complies with once density averaging is applied throughout The Fields/District development. A waiver through the Density Bonus Permit would also reduce the commercial requirement for the Project, which is being met through the live-work units. Therefore, the proposed DA and accompanying development are compatible with the uses allowed in the applicable zoning district.
4. The Development Agreement is in conformity with and will promote public convenience, general welfare, and good land use and development practices; The proposed DA promotes public convenience and general welfare by providing affordable housing (four low- and one very low-income units) within walking distance of the Milpitas BART station and VTA light rail. These deed-restricted affordable units will not only provide rental savings over 55 years to the Milpitas community but also provide housing options near public transit for disadvantaged persons who are often dependent on public transit. Furthermore, the DA would allow for the proposed Project, which includes ADUs and live-work units. ADUs provide yet another affordable option for prospective tenants and allows homeowners to collect rental income by renting out their ADUs to tenants. Meanwhile, live-work units provide much-needed housing for artists, artisans, and small business owners and entrepreneurs in a convenient location.
5. The Development Agreement shall be shown to be of greater benefit to the community than development absent the Development Agreement;
The proposed Development Agreement would provide a one-time voluntary $400,000 contribution and the conversion of 4 low-income and 1 very low-income apartment units within the adjacent Gideon development as a community benefit to offset the loss of market-rate units, which would result from preserving the lower minimum residential density previously allowed for the subject property under the TASP (30 du/ac) rather than applying the minimum density in the Metro Specific Plan (40 du/ac). While allowing a lower density Project through a DA would result in fewer units on the subject property, the Project would provide affordable units at a lower income level than would otherwise be provided, which provides a significant public benefit to the Milpitas community through rental savings for future tenants.
6. The term or duration of the Development Agreement has a commensurate relationship to the benefit(s) provided;
The proposed DA has an initial term of three (3) years. Commencement of construction within 3 years from the Effective Date would vest the DA. “Commencement” would include the property owner/ applicant having been issued a building, demolition, and/or grading permit. Two 2-year extensions may be granted by the City provided that the property owner/ applicant is not in default of its obligations under the DA. The term of
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the DA is commensurate to the benefit provided in that the term is sufficient to allow for construction of the Project and implementation of the proposed public benefit.
7. The Development Agreement contains the mandatory provisions specified in California Government Code Section 65865.2 and any other terms required by Council; Government Code Section 65865.2 requires that a Development Agreement include the duration of the agreement, the permitted uses of the property, the density, the maximum height and size of proposed buildings, and provisions for reservation or dedication of land for public purposes. The proposed DA meets this requirement by including all of the aforementioned provisions.
8. The Development Agreement complies with all other applicable requirements of California Government Code Section 65864 et seq.
The Planning Commission is scheduled for public hearing on May 6, 2026 and the City Council is scheduled to consider the Development Agreement and Project for approval on May 19, 2026.
ENVIRONMENTAL REVIEW
The City conducted an environmental assessment in accordance with the California Environmental Quality Act (CEQA) and determined that the proposed Project is categorically exempt from CEQA in accordance with CEQA Guidelines Section 15182 (Residential Projects Pursuant to a Specific Plan) and is consistent with the Addendum to the Transit Area Specific Plan (TASP) Final Environmental Impact Report (FEIR). CEQA Guidelines Section 15182 exempts further environmental review for a predominantly residential project that is generally in conformity with a specific plan, provided that an EIR was certified for the Specific Plan after January 1, 1980, the Project is a residential project (or predominantly residential in nature), that the Project is consistent with the Specific Plan, and that no events under CEQA Guidelines Section 15162 have occurred.
The TASP EIR (SCH#2006032091) was certified by the Milpitas City Council on June 3, 2008, and was later updated by the Milpitas Metro Specific Plan Subsequent EIR, certified by the Milpitas City Council on February 7, 2023, both of which meet the time frame requirement. The proposed Project consists of 109 townhome dwelling units, 10 ADUs, and nine live/work units, which is considered predominantly residential in nature, meets the residential component of CEQA Guidelines Section 15182. The proposed Project is located within the Metro Plan, and the proposed townhome project with live/work units contributes to the Metro Plan’s vision of creating a complete neighborhood within the McCandless District. The Project is found to be consistent with the goals, policies, and development standards of the Metro Plan, as seen in Table 5 above, which meets the Specific Plan component. Lastly, CEQA Guidelines Section 15162 refers to substantial changes proposed in the EIR area that would create significant or substantially more severe impacts. Since the proposed Project involves a decrease in units, decrease in building square footage, and decrease in building height, no instances of CEQA Guidelines Section 15162 could reasonably have been known. Therefore, this Project meets CEQA Guidelines Section 15182.
PUBLIC COMMENT/OUTREACH
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Staff provided public notice for the application in accordance with City and State public noticing requirements. At the time of writing this report, there have been no inquiries from the public. A notice was published in the Milpitas Post on April 24, 2026. In addition, 1,148 notices were sent to owners within 300 feet of the Project site. A public notice was also provided on the Project site, on the City’s Website, www.milpitas.gov, and posted at City Hall.
RECOMMENDATION
STAFF RECOMMENDS THAT the Planning Commission:
1. Open the Public Hearing to receive comments;
2. Close the Public Hearing; and
3. Adopt Resolution No. 26-010, approving Amendment to Site Development Permit No. SD15- 0006, Vesting Tentative Tract Map No. P-TM26-0001, Conditional Use Permit No. UP15- 0010, and Density Bonus Permit No. P-DB25-0001, subject to the findings and attached Conditions of Approval.
ATTACHMENTS
A: Resolution 26-010
B: Project Plans
C: Draft Development Agreement
D: Site Development Permit No. SD15-0006 Planning Commission Staff Report E: Financial Analysis Report
F: Concession Request Letter
DRAFT
DEVELOPMENT AGREEMENT
RECORD WITHOUT FEE
PURSUANT TO GOVERNMENT CODE § 6103
RECORDING REQUESTED BY
AND
WHEN RECORDED MAIL TO:
City of Milpitas
City Clerk’s Office
455 Calaveras Boulevard
Milpitas, CA 95035
SPACE ABOVE THIS LINE FOR RECORDER’S USE ONLY
DEVELOPMENT AGREEMENT
BETWEEN CITY OF MILPITAS,
a California municipal corporation,
AND
MILPITAS - DISTRICT 2 ASSOCIATES, LLC,
a Delaware limited liability company; and
FIELDS CH OWNER, LLC,
a Delaware limited liability company
DRAFT
DEVELOPMENT AGREEMENT
Development Agreement/Table of Contents/ District Lot 3 (Elion) Page i of i Rev. 4-23-26
TABLE OF CONTENTS
1. Term .................................................................................................................................... 4
2. Development of the Property .............................................................................................. 5
3. Effect of Agreement ............................................................................................................ 8
4. Development Fees, Exactions and Dedications. ............................................................... 10
5. Standard of Review of Permits ......................................................................................... 13
6. Priority .............................................................................................................................. 14
7. Cooperation in Implementation ........................................................................................ 14
8. Periodic Review ................................................................................................................ 15
9. Reimbursements ................................................................................................................ 16
10. Insurance ........................................................................................................................... 16
11. Default and Remedies ....................................................................................................... 16
12. Amendment or Termination .............................................................................................. 17
13. Mortgagee Protection: Certain Rights of Cure ................................................................. 18
14. Assignability ..................................................................................................................... 19
15. Controlling Law ................................................................................................................ 20
16. General .............................................................................................................................. 21
17. Notices .............................................................................................................................. 22
18. Developer Independent Contractor .................................... Error! Bookmark not defined.
19. Project as a Private Undertaking ....................................................................................... 23
20. Nondiscrimination............................................................................................................. 24
21. Force Majeure. .................................................................................................................. 24
22. Third Parties ...................................................................................................................... 24
23. Amendments ..................................................................................................................... 24
24. No Third-Party Beneficiary .............................................................................................. 24
25. Dispute Resolution ............................................................................................................ 24
26. Consent ............................................................................................................................. 25
27. Covenant of Good Faith and Fair Dealing ........................................................................ 25
28. Authority to Execute ......................................................................................................... 25
29. Counterparts ...................................................................................................................... 25
EXHIBITS
1. Legal Description of Property
2. Selected Pages of Development Plan
3. Conditions of Approval
4. Mitigation Monitoring and Reporting Program
5. Insurance Requirements
DRAFT
DEVELOPMENT AGREEMENT
Development Agreement/ District Lot 3 (Elion) Page 1 of 26 Rev. 4-23-26
DEVELOPMENT AGREEMENT
This DEVELOPMENT AGREEMENT (“Agreement”) is entered into by and between CITY OF MILPITAS (“City”), a California municipal corporation, and MILPITAS - DISTRICT 2 ASSOCIATES, LLC, a Delaware limited liability company , as well as FIELDS CH OWNER, LLC, a Delaware limited liability company (collectively “Developer”), (collectively the “Parties” and individually and interchangeably “Party”) and is effective on the date set forth in Recital R.
RECITALS
Developer and City enter into this Agreement on the basis of the following facts, understandings and intentions, and the following recitals are a substantive part of this Agreement:
A. Sections 65864 through 65869.5 of the California Government Code authorize City to establish procedures to enter into binding development agreements with persons having legal or equitable interests in real property located within City for development of property.
B. The Milpitas Municipal Code (“MMC”), Title XIII, Chapter D.14, commencing with Section D.14.010 and following, as well as Milpitas City Council Resolution No. 6642 (“Resolution 6642”), establishes the authority and procedure for review and approval of proposed development agreements.
C. Developer is currently the legal owner of the property (“Property”) governed by this Agreement. The Property consists of three parcels (APNs 086-33-112, -113, and -114) totaling 5.49 acres, as further described in Exhibit “1”, attached hereto and incorporated by this reference.
D. In 2010, Integral Communities Inc. submitted a master -planned mixed-use development within a portion of the McCandless/Centre Pointe Sub -District, which included the Property and was known as The District . That project included multiple land areas for retail, commercial, and high-density residential development and included the Property.
E. Integral Communities Inc. subsequently sold The District project to Developer, who completed the development of a portion of The District, sometimes referred to as The Fields, and which comprises of four separate mixed-use areas located on multiple parcels totaling over 23.04 acres of developed property near the intersection of Great Mall Parkway and McCandless Drive, also referred to by the City as The District – Lot 1, Lot 2, Lot 3, and Lot 4, and by the Developer as Turing, Graham, Elion, and Gideon, respectively. The Property was part of that larger project and was designated therein as Lot 3 or Elion.
F. In November 2015, the City approved multiple entitlements for a major portion of The Fields, including Site Development Permit No. SD15-0006 and Conditional Use Permit No. UP15-0010, as part of a master-planned development comprised of six planning areas, each developed with a mix of multi-family residential and residential units, including:
DRAFT
DEVELOPMENT AGREEMENT
Development Agreement/ District Lot 3 (Elion) Page 2 of 26
District Lot 2: A 218-unit multi-family residential development with approximately 3,480 square feet of retail and commercial uses, mapped pursuant to Tentative Map No. TM11-0002 approved March 20, 2012;
District Lot 3: a 175-room hotel and associated uses as approved under SD15-0006 and UP15-0010; and
District Lot 4: A 173-unit multi-family residential development with approximately 13,941 square feet of retail, mapped pursuant to Tentative Map No. TM11-0002 approved on March 20, 2012.
G. In 2021, the Planning Commission approved Site Development Permit Amendment No.
SA20-0004 and an amendment to Conditional Use Permit No. UP15 -0010. That amendment modified the previously approved development density, uses, and architecture, including decr easing the total number of residential dwelling units from 423 to 357, decreasing the total number of hotel rooms from 175 to 162, decreasing the amount of commercial space from 59,135 square feet to 25,179 square feet, decreasing the size of the rooftop a menity deck from 49,240 square feet to 18,225 square feet, and reducing the building’s height from 130 feet to 83 feet for the hotel and 90 feet for the mixed -use buildings.
H. Developer has presently submitted the following pending application(s) to City for development of the Property , which represent further proposed amendments to what was previously approved: Amendment to Site Development Permit No. SD15 -0006, Vesting Tentative Map No. P -TM26-0001, Conditional Use Permit No. UP15 -0010, and Density Bonus Permit No. P-DB25-0001. The application(s) request that Developer be allowed to develop the 5.49-acre Property with a multi-family housing development consisting of 109 multi-family townhomes and 10 Accessory Dwelling Units (collectively, the “Project”).
As part of this Project, it is contemplated that Developer will rent restrict 22 units in the completed apartment complex in the Gideon property for affordable housing, with 18 of those units being restricted to affordable housing costs for low income households and 4 of those units being restricted for very-low income households, as those affordable housing costs and income limits are defined and determined by Health & Safety Code Sections 50079.5 and 50105, the Milpitas Affordable Housing Ordinance (“AHO”) (MMC §§ XII- 1-1.00 et seq.) , and Title 25, Chapter 6.5, Section 6932 of the California Code of Regulations.
I. The Project, including but not limited to the buildings, access and parking facilities, landscaping, and infrastructure improvements, are all more particularly shown on the Development Plan (“Development Plan”) consisting of __________ sheets of plans submitted by __________ Architects dated __________. Sheets __________ of the Development Plan are described in Exhibit “2” attached hereto and incorporated by this reference.
J. Through this Agreement, the Parties intend for the duration of this Agreement to (i) preserve the minimum residential density permitted for the Property at the time of the original entitlement of The Fields under the Milpitas Transit Area Specific Plan
DRAFT
DEVELOPMENT AGREEMENT
Development Agreement/ District Lot 3 (Elion) Page 3 of 26
(“TASP”) in order to facilitate the Project, (ii) recognize the Developer’s commitment and right to otherwise develop the Property with the Project under currently applicable standards, including the presently applicable Milpitas Metro Specific Plan (“Metro Plan”), and (iii) afford Developer the incentives and concessions allowed under the State Density Bonus Law (Gov. Code, §§ 65915 et seq.) (“Density Bonus” or “DBL”).
K. City and Developer each acknowledge that development and construction of the Project , particularly in the context of the larger development of which it has historically been a part, is a large -scale undertaking involving major investments by Developer and City, and assurances that the Project can be developed and used in accordance with the terms and conditions set forth herein and the existing rules governing development of the Prope rty will benefit both Developer and City.
L. City is willing to enter into this Agreement for public benefit, including but not limited to: (i) strengthening the public planning process, (ii) encouraging private participation in comprehensive planning by providing a greater degree of certainty, (iii) reducing the economic costs of development, (iv) allowing for orderly planning of public improvements and services and the allocation of costs in order to achieve the maximum utilization of public and private resources in the development process, (v) ensuring that appropriate measures to enhance and protect the environment are achieved, and (vi) ensuring that all conditions of approval, including the construction of off-site improvement made necessary by land development, will proceed in an orderly and economical fashion to the benefit of City.
M. Developer acknowledges and recognizes that material inducements for City to enter into this Agreement are: (i) an opportunity to create the Project on an otherwise presently vacant lot; (ii) the prompt occupancy of the Property by residential tenants within the City and the consequential housing provided thereby; (iii) the rental restriction of affordable units in the Gideon property and the occupancy thereby of qualifying low and very low income households ; and (iv) the contributions provided by Developer as recognized and established by this Agreement, including $400,000 of contributions that could be used for transportation improvements and/or other community benefits by the City.
N. Developer proposes to enter into this Agreement in order (i) to obtain assurances from City that the Property may be developed, constructed, completed and used pursuant to this Agreement, and in accordance with existing policies, rules and regulations of City, subject to the exceptions and limitations expressed herein and the term of this Agreement; and (ii) to provide for a coordinated and systematic approach to funding the cost of certain public improvements and facilities planned by City, and to establish the timing and extent of contributions required from Developer for these purposes.
O. Developer requested that City enter into a Development Agreement (“Development Agreement”), and proceedings have been taken in accordance with state law, as set forth below.
P. On __________, the Milpitas Planning Commission (“Planning Commission”) held a duly noticed public hearing on the Development Agreement and based on the findings contained
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within Planning Commission Resolution No. ______ (i) determined that consideration of this Agreement complies in all respects with California Environmental Quality Act (“CEQA”); (ii) determined that this Agreement is consistent with City’s General Plan; and (iii) recommended approval of this Agreement to the Milpitas City Council.
Q. On __________, the Milpitas City Council (“City Council”) held a duly noticed public hearing on the Development Agreement and (i) determined that consideration of this Agreement based on CEQA Guidelines Section 15182 (Cal. Code Regs., tit. 14, § 15182) complies in all respects with CEQA; (ii) determined that this Agreement is consistent with City’s General Plan; and (iii) introduced Ordinance No. __________, approving this Agreement.
R. On __________, the City Council adopted Ordinance No. __________, enacting this Agreement, and the Ordinance became effective thirty (30) days later on __________ (“Effective Date”).
S. Certain improvements as set forth in the conditions of approval (“Conditions of Approval”), which are outlined in Exhibit “3”, attached hereto and incorporated herein by this reference, are necessary to provide infrastructure support for the Project.
T. Developer plans to develop the Project in one phase, which is outlined in more detail in the Development Plan and Conditions of Approval. Any modification to the content and/or sequencing of development phases must comply with Section 12.1 of this Agreement.
U. On __________, the City Council adopted Resolution No. __________, and together with the findings in Ordinance No. __________ found, among other things, that this Agreement and the Approvals are consistent with the General Plan, any applicable Specific Pla n, and the MMC, including the Milpitas Zoning Code. Such findings are incorporated herein by this reference.
AGREEMENT
NOW, THEREFORE, pursuant to the authority contained in California Government Code Section 65864 and following, MMC Section XIII-D.14.010 and following, and Resolution 6642 , and in consideration of the mutual representations, covenants and promises of the Parties, the Parties hereto agree as follows:
1. TERM
1.1 Effective Date. The term (“Term”) of this Agreement shall commence on the later of: (a) the Effective Date as set forth in Recital R above, or (b) the effective date of Ordinance No. __________ approving this Agreement. The Term of this Agreement shall be tolled from the commencement of any legal challenge or the filing of any referenda challenging the Approvals until the time such legal challenge or referenda is finally resolved in favor of the Approvals. Final resolution in the case of legal challenge sha ll be the date final judgment is entered, with the time for any appeal expired, and in the case of referenda shall be the date the vote is certified. The Term of this Agreement shall continue for an initial
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period of three (3) years from the Effective Date, unless sooner terminated or extended as hereinafter provided.
1.2 Option to Extend . Provided that Owner is not in default of its obligations under this Agreement, Owner shall have the option to exten d this Agreement twice , with each extension being for a period of two (2) years, for a total possible seven (7) year Term of this Agreement. To exercise these two options, Owner shall provide notice to the City of its exercise of each option at least ninety (90) calendar days prior to the otherwise applicable expiration of this Agreement.
1.3 Expiration. Following expiration of the Term or any extension, or if sooner terminated, this Agreement shall have no force and effect, subject, however, to post-termination obligations of Developer and City.
2. DEVELOPMENT OF THE PROPERTY
2.1 Property. The Property that is the subject of this Agreement is that certain real property described in Exhibit “1”, attached hereto.
2.2 Binding Covenants. It is intended and agreed that the provisions of this Agreement shall constitute covenants that shall run with the Property for the Term of this Agreement, as such Term may be extended , and the benefits and burdens hereof shall bind and inure to all successors in interest to the Parties hereto.
2.3 Life of Approvals. Pursuant to Government Code Section 66452.6(a) and this Agreement, the life of the Project approvals, including but not limited to Amendment to Site Development Permit No. SD15 -0006, Vesting Tentative Map No. P -TM26-0001, Conditional Use Permit No. UP15 -0010, and Density Bonus Permit No. P -DB25-0001 (collectively, “Approvals”) shall automatically be extended to and until the later of the following: (1) the end of the Term of this Agreement , as such Term may be extended ; or (2) the end of the term or life of the Approvals. Notwithstanding the foregoing, the vested elements secured by Developer under this Agreement shall have a life no greater than the Term of this Agreement, and any extension thereof.
2.4 Vested Elements. For the purposes of this Project only, the Approvals, the Project, and the permitted uses of the Property, the maximum density and intensity of use, the maximum heights, locations, numbers and gross square footage of the proposed buildings, the provisions for vehicular access and parking, reservation or dedication of land for pub lic purposes or fees in-lieu thereof, provision for construction of public improvements and/or required fees associated with the Project as provided in, and limited by, this Agreement, shall be vested and are hereby vested and referred to as vested elements ( collectively, the “Vested Elements”). In addition to the foregoing Vested Elements, other terms and conditions of development applicable to the Project are set forth in the following documents as they exist as of the Effective Date to the extent not in conflict with this Agreement:
a. The General Plan of City of Milpitas, current as of the Effective Date, the terms and conditions of which are incorporated herein by this reference;
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b. The Metro Specific Plan, current as of the Effective Date; c. MMC, current as of the Effective Date;
d. The Metro High Density Mixed Use Zone (MXD2-Metro) Zoning District and the Residential Retail High Density Mixed Use (RRMU) General Plan Land Use Designation and the Conditions of Approval imposed thereon; e. The Development Plan, defined in Recital I, herein;
f. The AHO, current as of the Effective Date;
g. All other applicable City plans, policies, programs, regulations, ordinances and resolutions of City in effect as of the Effective Date, which regulate development of the Property and implementation of the Project, and which are not inconsistent with the terms of this Agreement (“Other Regulations”); h. Any permits and/or subsequent approvals, including but not limited to additional subdivision maps or lot line adjustments, if any, final maps, site and architectural review, demolition permits, building permits, grading permits, and infrastructure improvement plans processed in accordance with the terms of this Agreement.
Upon approval, such subsequent approvals shall be incorporated into this Agreement and vested hereby; and,
i. In the event this Project includes a subdivision as defined by Government Code § 66473.7, the tentative map for this Project will comply with the provisions of § 66473.7, as it may be amended from time-to-time.
2.5 Minimum Density . The Project may be developed at the minimum residential density allowed for development of the Property at the time of the original entitlement of The Fields under the TASP.
2.6 Density Bonus . The State DBL permits local jurisdiction to provide incentives or concessions allowed under that law even where a development may otherwise not be entitled to such incentives or concessions, and to further reduce the cost of developing the affordable housing contemplated in the Project, the City is willing to grant two (2) incentives or concessions for the Project.
2.7 Permitted Uses. The permitted uses for the Project are as established by applicable law as of the Effective Date.
2.8 Design of On -Site and Off -Site Improvements . Development of the Property shall be subject to final architectural and design review by City pursuant to the policies, regulations and ordinances in effect as of the Effective Date, and subject to the Development Plan and the Conditions of Approval. The Approvals, Development Plan, and Conditions of Approval, and all improvement plans prepared in accordance with same, shall govern the design and scope of all on -site and off-site improvements benefiting or to be constructed on the Property, including all street widths and dedications.
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2.9 Developer’s Obligation to Develop the Site . In consideration for City entering into this Agreement, Developer agrees to perform all of its obligations contained in this Agreement, including, but not limited to planning and designing the Project on the site within the times, and in substantially the same size and density, as proposed and approved.
2.10 Present Right to Develop . Subject to Developer’s fulfillment of the provisions of this Agreement, the Development Plan and the Conditions of Approval, City hereby grants to Developer the present vested right to develop and construct on the Property all the improvements authorized by, and in accordance with, the Approvals, this Agreement and the Vested Elements, including in particular the terms of the Development Plan. To the extent permitted by law, no future modification (including by later -adopted initia tive and/or referendum) of City’s General Plan, MMC, ordinances, policies or regulations that purport to (i) limit the rate or timing of development, size of buildings or other improvements (including developable square footage), or amount of development of the portions of the Project to be built; or (ii ) impose fees, exactions or conditions upon development, occupancy or use of the Property other than as provided in the Development Plan or Conditions of Approval or pursuant to this Agreement, shall apply t o the Project during the Term of this Agreement ; provided, however, that nothing in this Agreement shall prevent or preclude City from adopting and applying any fees or land use regulations or amendments thereto, expressly permitted herein , or prevent or preclude Developer, at its election, from waiving such protections in writing and accepting the application of all such later-adopted laws, policies, and regulations effective as of the date of such waiver.
2.11 Timing of Improvements . If Developer implements the Development Plan in phases, as described herein or as outlined in the Development Plan , the phasing set forth in the Development Plan is the approved phasing as of the Effective Date . It is the Parties’ specific intent that this Agreement shall prevail over any later -adopted initiative or moratorium that might otherwise have the effect of restricting or limiting the timing of development of the Project and that Developer shall have th e right to develop the Project at such time as Developer has specified in the Development Plan and no annual (or other) limit, moratoria, or other limitation upon the number of, or phasing or pacing of, buildings which may be constructed, or building permits which may be obtain ed, shall apply to the Project.
2.12 Agreement and Comprehensive Development Plan. The Parties acknowledge that, except as specifically set forth herein, this Agreement, the Development Plan, the Mitigation Monitoring and Reporting Program (described in Exhibit “4”, attached hereto) and the Conditions of Approval set forth a comprehensive schedule of all development terms and conditions, development mitigation measures and fees, special assessments, special taxes, exactions, fees in -lieu, charges and dedications required in the public interest to be contributed, paid or constructed due to development of the Property as defined in the Development Plan. All fees referred to herein m ay be subject to an annual increase until paid, but only if such increase is applied equally to similarly situated projects on a citywide or area-wide basis.
2.13 Design of On -Site and Off -Site Improvements . Development of the Property shall be subject to final architectural and design review by City pursuant to the policies, regulations
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and ordinances in effect as of the Effective Date, and subject to the Development Plan, the Conditions of Approval, Mitigation Monitoring and Reporting Program, and this Agreement. No such architectural and design review shall, without Developer’s consent, require development of the Property inconsistent with the Approvals, the Development Plan, the Conditions of Approval, the Mitigation Monitoring and Reporting Program, and this Agreement, unless City determines it is necessary to protect against condition s which create a risk to the physical health or safety of residents or users of the Project or the affected surrounding region. The Approvals, the Development Plan, Mitigation Monitoring and Reporting Program, and Conditions of Approval, and all improvement plans prepared in accordance thereof, shall govern the design and scope of all on -site and off -site improvements benefiting or to be constructed on the Property.
2.14 Development of the Site. In consideration for City entering into this Agreement, Developer agrees to perform all of its obligations contained in this Agreement in the time and manner set forth in this Agreement and the Development Plan, any Mitigation Monitoring and Reporting Program, and Conditions of Approval.
2.15 Single Integrated Development. City and Developer acknowledge that the Project is, and shall be considered, a single, integrated development project, and that each component of the Project is dependent upon the completion and occupancy of all other components. The viability of each component of the Project is and shall be dependent upon completion and occupancy of all other components and the full performance of this Development Agreement. It is the intention of the Parties that, if construction on one com ponent of the Project is commenced, any additional development of the Property will adhere to the Development Plan.
2.16 Building Standards. Developer hereby agrees to employ all reasonable efforts such that the Project will be built to the then applicable building standards for each phase of development.
3. EFFECT OF AGREEMENT
3.1 Subsequent State or Federal Laws or Regulations . As provided in California Government Code § 65869.5, this Agreement shall not preclude the application to the Project of changes in laws, regulations, plans or policies, to the extent that such changes are required by changes in county, regional, state or federal laws or regulations (“Changes in the Law”).
In the event Changes in the Law prevent or preclude compliance with one or more material provisions of this Agreement, Developer may request that such mat erial provisions be modified or suspended, or performance delayed, as may be necessary to comply with Changes in the Law, and City may take such action as it deems necessary to be consistent with the intent of this Agreement.
3.2 Changes to Existing Regulations . Except as otherwise specifically provided, only the following changes to the Vested Elements, including such changes adopted by the electorate through the powers of initiative, or otherwise, shall apply to the development of the Property for the duration of this Agreement:
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a. Citywide regulations, ordinances, policies, programs, resolutions or fees adopted after the Effective Date that are not in conflict with the Vested Elements and the terms and conditions for development of the Property established by this Agreement, or otherwise applicable regulations existing as of the Effective Date.
Changes to the General Plan, MMC or Other Regulations shall be deemed to conflict with the approvals and this Agreement (“Conflicting City Law”) if such changes prevent development of the Project on the Property in substantial accordance with the Approvals; require significant changes in the development of the Project from what is contemplated by the Approvals; significantly delay, ration or impose a moratorium on development of the Project; or require the issuance of discretionary or nondiscretionary permits or approvals by City other than those required as of the Effective Date.
b. Any law, regulation or policy that would otherwise be Conflicting City Law, but through this Agreement or by later separate document, application to the Property has been consented to in writing by the Developer.
3.3 Further Reviews. Developer acknowledges that existing land use regulations, the Vested Elements and this Agreement contemplate the possibility of further reviews of elements or portions of the Project by City including potential CEQA analysis, if required. Nothing in this Agreement shall be deemed to limit the legal authority of City with respect to these reviews as provided by and otherwise consistent with, this Agreement. In no event shall such further review by City revisit the Development Plan, Conditio ns of Approval, or the Approvals or be conditioned on or require any change in the Project except as may be contemplated by the Development Plan, Conditions of Approval or this Agreement.
3.4 Local Rules. Future development on the Property shall be subject to all the official rules, regulations and policies (collectively “Local Rules”) of City which govern uses, architectural design, landscaping, public improvements and construction standards, and which are contained in the Development Plan or are in effect as of the Effective Date, with the exception that revisions or amendments to the Local Rules necessitated by reasonable public health or fire and life -safety considerations shall apply as tho ugh the rules were in effect as of the Effective Date. Notwithstanding any other provision of this Agreement, and without limitation as to any other exceptions contained in this Agreement, City shall retain the authority to take the following actions, so long as such action is applied on a citywide basis to similarly situated projects:
a. Adopt and apply property transfer taxes and/or excise taxes; b. Adopt updates to building and/or fire codes;
c. Maintain the right of voters to act by initiative or referendum, but only to the extent that the initiative or referendum does not affect or interfere with any vested rights acquired by the Developer in this Agreement; except that this Agreement itself is subject to referendum; and,
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d. Take other actions not expressly prohibited by the terms or provisions of this Agreement.
3.5 Future Exercise of Discretion by City . This Agreement shall not be construed to limit the authority or obligation of City to hold necessary public hearings, or, except as provided herein, to limit discretion of City or any of its officers or officials with regard to rules, regulations, ordinances or laws which require the exercise of discretion by City or any of its officers or officials. Except as provided, this Agreement shall not prevent City from applying new rules, regulations and policies, or from conditioning future Project development approval applications on new rules, regulations and policies that do not conflict with the terms of the Approvals, Project, Development Plan, or this Agreement.
4. DEVELOPMENT FEES, EXACTIONS AND DEDICATIONS.
4.1 Development Fees, Exactions and Dedications . The fees, special assessments, special taxes, exactions and dedications (collectively “Fees”) payable to City due to the development, build out, occupancy and use of the Property pursuant to this Agreement shall be exclusively those in effect as of the Effective Date, including as set forth in the Conditions of Approval and the Development Plan and as specified in this Agreement.
City may apply new or increased fees if the fees apply citywide or area-wide and are of the type of cost recovery fees typically imposed by cities.
4.2 Processing Fees. Developer shall be responsible for the costs to City of processing any Developer requested land use approvals, including without limitation, building permits, plan checks, environmental studies required under CEQA and other similar requests for City permits and entitlements, when such costs are incurred by City (“Processing Fees”).
Processing Fees may be increased if the increase is applicable citywide and reflects the reasonable cost to City of performing the administrative processing or o ther service for which the particular Processing Fee is charged. City shall impose those funding requirements needed to ensure that the processing costs to City are fully covered by the Project (including Developer as owner of same). Further, if additional, accelerated, or more frequent inspections are requested by Developer of City than would otherwise take place in City’s ordinary course of business, then City may either hire additional contract inspectors, plan checkers, engineers or planners or City may hire a full or part -time employee(s). If City hires additional contractors or consultants, then Developer shall reimburse City the cost of hiring additional contractors or consultants, plus 10 percent (10%). If City hires a full or part -time employee(s), then Developer shall reimburse City for a pro rata share of the total cost of the employee(s).
4.3 New Processing Fees. New processing fees may be imposed by City if such new fees apply to all similarly situated projects or works within City and if the application of these Processing Fees to the Property is prospective only. Processing Fees shall be due and payable on a p hase-by-phase basis, so that only those fees applicable to the actual construction of each phase shall be paid upon the issuance of the appropriate permits for that phase. Developer shall pay the costs associated with the planning, proce ssing and environmental review process for the Project, provided that such costs shall be limited to (i) reasonable costs directly associated with the planning, processing and environmental
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review process; (ii) fees ordinarily charged by City for processing land use applications and permits, provided that such fees and costs are applied to Developer in the same manner as other similarly situated applicants seeking similar land use approvals and are not limited in applicability to the Project or to related uses; and (iii) fees associated with third -party permit plan checking, if applicable, above those normally charged by City. Developer shall reimburse City for reasonable staff overtime expen ses incurred by City in processing review, approval, inspection and completion of the Project provided that such overtime expenses are reasonably necessary for the completion of the Project in accordance with Developer’s schedule.
4.4 Development Agreement Fee. Developer agrees to pay the City the sum of four hundred thousand dollars ($400,000) prior to the City’s issuance of the Project’s final certificate of occupancy (“Development Agreement Fee”) but in no event later than the date that is three (3) years from the Effective Date. If this Agreement is tolled pursuant to Section 1.1, this period for payment shall also be tolled.
4.5 Monetary Exaction. Developer and City acknowledge that it is difficult to calculate the exact impact of the Project upon City infrastructure and City services. Developer acknowledges that the Project will have a direct impact by creating a greater demand upon City, including for residential and other development that may have to be located elsewhere in the City and further away from transportation and other infrastructure previously planned for and developed by the City in the vicinity of the Project. Property taxes or any other impact fee paid by the Project does not offset this increased demand. Consequently, Developer agrees to pay and provide the Development Agreement Fee , community benefits, and other sums and fees contemplated by this Agreement , and City shall accept such payments to the extent not otherwise required by applicable law as payment in full for impacts to City services caused by this Agreement. Unless otherwise indicated herein, such fees, sums, and benefits shall be paid and provided no later than the date of issuance of the Final Certificate of Occupancy for the Project.
4.6 Dedications. Developer shall offer to dedicate to City, upon request by City, all portions of the Property designated in the Conditions of Approval for public easements, streets or public areas and/or other improvements.
4.7 Contribution to Costs of Facilities and Services. Developer agrees to contribute to the costs of public facilities and services as required herein to mitigate impacts of the development of the Property, and City agrees to assure that Developer may proceed and complete development of the Property in acco rdance with the terms of this Agreement. City and Developer recognize and agree that but for Developer’s contributions to mitigate the impacts arising as a result of development entitlement granted pursuant to this Agreement, City would not and could not approve the development of the Property as provided by this Agreement. City’s approval of development of the Property is in reliance upon and in consideration of Developer’s agreement to make contributions tow ard the cost of public improvements and public services as provided to mitigate the impacts of development of the Property.
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4.8 Sewer Facilities, Storm Drains and Runoff . This Agreement does not affect the Developer’s obligations to pay for or construct improvements in the storm drain system required to implement the Project, nor does it affect the Developer’s obligations to meet any applicable federal, state and local discharge limits and requirements pertaining to sewer facilities, storm drains or runoff.
4.9 Limited Effect on Right to Tax, Assess, or Levy Fees or Charges . Except as expressly provided herein, this Agreement does not limit the power and right of City to impose the same taxes, levy the same assessments, or require the payment of the same permit fees and charges by the Developer as City requires for all other residential development or property on a citywide basis. The Developer shall be required to pay all development impact fees in effect on the Effective Date.
4.10 No Limit on Right of City to Adopt and Modify Uniform Codes. This Agreement does not limit the right of City, to the extent permitted by state law, to adopt Building, Plumbing, Electrical, Fire and similar uniform construction codes, and to adopt local modifications of those codes, from time to time.
4.11 California Environmental Quality Act Compliance (“CEQA”) . City determined that the Project is exempt from further environmental review pursuant to CEQA under CEQA Guidelines Section 15182 (Cal. Code Regs., tit. 14, § 15182) . This Agreement does not limit City’s duty to comply with the provisions of CEQA and the associated Guidelines, as they may be amended from time to time, that comply with the provisions of § 21082 of CEQA. However, City shall not undertake additional env ironmental review under CEQA unless required to do so by CEQA. In the event that any such further environmental review is required for a subsequent approval or other discretionary action, it shall be in accordance with §§ 15162-15164 of the CEQA Guidelines, and the scope of analysis and e valuation shall be as required by CEQA.
4.12 No General Limitation on Future Exercise of Police Power. City retains its right to exercise its general police power except when such exercise would conflict with this Agreement.
The police powers so retained and enforceable under this Agreement shall include, but are not limited to, the enactment of regulation s that apply generally to City concerning the disposition of construction and demolition materials. The police powers so retained and enforceable under this Agreement shall also include, but are not limited to, the modification or suspension the provision of this Agreement if the City determines that the failure of the City to do so would place resident s in a condition dangerous to their health or safety, or both.
4.13 Mitigations. Developer agrees to contribute to the costs of public facilities and services in the amounts set forth in this Agreement, the Development Plan, Mitigation Monitoring and Reporting Program and Conditions of Approval, as required to mitigate impacts of the development of the Property (“Mitigations”). City and Developer recognize and agree that but for Developer’s contributions to mitigate the impacts arising as a result of the entitlements granted pursuant to this Agreement, City would not and could not approve the development of the Property as provided by this Agreement. City’s approval of development of the Property is in reliance upon, and in consideration of, Developer’s
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agreement to make contributions toward the cost of public improvements and public services as provided to mitigate the impacts of development of the Property.
4.14 Affordable Housing Development . As a community benefit and Mitigation to establish more affordable housing closer to greater public transportation resources, and as a material inducement to the City’s willingness to enter into this Agreement, Developer agrees to develop more affordable units than it would otherwise be required to develop , including more affordable units than it would otherwise be required to develop under the AHO.
Developer agrees to impose rent restrictions for a period of not less than 55 years upon 22 units in the Gideon property such that 18 of those units are restricted to low -income households and 4 of those units are restricted to very low-income households in conformity with the AHO . In a form acceptable to the City Attorney, Developer shall record a regulatory agreement against the Gideon property that runs with the land and binds the owners and successors to that property to restrict the rents for those units consistent with the AHO and this Agreement . This regulatory agreement must be recorded by the earlier of (a) the issuance of the Project’s first vertical building permit; or (b) the date that is one (1) year from the Effective Date. That regulatory agreement shall require the owner of the affordable units to ensure that the units are occupied by tenants whose monthly income levels do not exceed very low- or low-income levels, as the case may be, and shall preclude tenants from subletting or subleasing the unit. The regulatory agreement shall also require the owner of the affordable units to submit an annual report to the City Manager, in a format approved by the City. The report shall include, but not be limited to the following information: an identification of the affordable u nits within the project; the monthly rents charged and proposed to be charged; vacancy information for the prior year; and the monthly income for tenants of each affordable unit throughout the prior year. Prior to lease or release of the affordable units, t he regulatory agreement shall require the owner of the affordable unit s to provide a marketing plan, to be approved by the City , and income certifications, to be approved by the City, and in all other material respects comply with the AHO and the program requirements of the City below market rate housing program.
That regulatory agreement shall also require that the affordable units be rented to qualifying and approved low- and very low-income households no later than two (2) years from the Effective Date. If this Agreement is tolled pursuant to Section 1.1, then the period s to record the regulatory agreement and rent the affordable units to qualifying households shall also be tolled.
4.15 Transportation and Other Improvements. Developer shall pay the Development Agreement Fee in the sum of Four Hundred Thousand Dollars ($400,000.00) to City for transportation and other improvements or programs deemed necessary by the City, including as Mitigation for public services that may need to be further developed elsewhere in the City as a result of the Project and the standards and conditions of development allowed by this Agreement, to be paid as specified in Section 4.4.
5. STANDARD OF REVIEW OF PERMITS
5.1 Standard of Review of Permits. All permits (“Permits”) required by Developer to develop the Property, excepting the rezoning, but including (i) road construction permits, (ii) grading permits, (iii) building permits, (iv) fire permits, and (v) certificates of
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occupancy, shall be issued by City after City’s review and approval of Developer’s applications, provided that City’s review of the applications is limited to determining whether the following conditions are met:
a. The application is complete; and,
b. The application demonstrates that Developer has complied with this Agreement, the Development Plan, the Mitigation Monitoring and Reporting Program, the Conditions of Approval and the applicable Local Rules.
5.2 Construction Codes. Developer shall be subject to the California Building Code and all other state-adopted construction, fire and other codes and the applicable version or revision of the codes by local City Action (collectively referred to as “Construction Codes”) in place at the time that a plan check application for a building, grading or other permit subject to Construction Codes is submitted to City for approval, provided that the Construction Codes have been adopted by City and are in effect on a citywide basis.
6. PRIORITY
6.1 Priority. In the event of conflict between the General Plan, the Metro Specific Plan, this Agreement, MMC, Other Regulations and Local Rules, all as they exist on the Effective Date, the Parties agree that the following sequence establishes the relative priority of each item: (1) the General Plan, as existing on the Effective Date; (2) any applicable Specific Plan, as existing on the Effective Date; (3) this Agreement; ( 4) the Development Plan; (5) Mitigation Monitoring and Reporting Program; (6) the Approvals; and (7) MMC, Other Regulations and Local Rules.
7. COOPERATION IN IMPLEMENTATION
7.1 Cooperation in Implementation. Upon Developer’s satisfactory completion of all required preliminary actions provided in the Development Plan, and payment of required fees, if any, City shall proceed in a reasonable and expeditious manner, in compliance with the deadlines mandated by applicable agreements, statutes or ordinances, to complete all steps necessary for implementation of this Agreement and development of the Property in accordance with the Development Plan, including the following actions:
a. Scheduling all required public hearings by the Planning Commission and City Council; and,
b. Processing and checking all maps, plans, land use and architectural review permits, permits, building plans and specifications and other plans relating to development of the Property filed by Developer as necessary for complete development of the Property. Developer, in a timely manner, shall provide City with all documents, applications, plans and other information necessary for City to carry out its obligations hereunder and to cause City’s planners, engineers and all other consultants to submit in a timely manner all necessary materials and documents. It is the Parties’ express intent to cooperate with one another and diligently work to implement all land use and building approvals for development
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of the Property in accordance with the Development Plan and the terms hereof.
At Developer’s request and sole expense, City shall retain outside building consultants to review plans or otherwise assist City’s efforts in order to expedite City processing and approval work. City shall cooperate with Developer, and assist Developer in obtaining any third-party governmental or private party permits, approvals, consents, rights of entry, or encroachment permits, needed for development of the Project or any other on or offsite improvements.
8. PERIODIC REVIEW
8.1 Annual Review. City and Developer shall review all actions taken pursuant to the terms of this Agreement annually during each year of the Term, within thirty (30) days prior to each anniversary of the Effective Date.
8.2 Developer’s Submittal. At least sixty (60) days before each anniversary of the Effective Date, Developer shall submit a compliance letter (“Compliance Letter”) to the Director of the Planning Department (“Director”), along with a copy directed to the City Attorney, describing Developer’s compliance with the terms of the Conditions of Approval and this Agreement during the preceding year. The Compliance Letter shall include a statement that the Compliance Letter is submitted to City pursuant to the requireme nts of Government Code § 65865.1, this Agreement, and MMC.
8.3 City’s Findings. Within thirty (30) days after receipt of the Compliance Letter, the Director shall determine whether, for the year under review, Developer has demonstrated good faith substantial compliance with the terms of this Agreement. If the Director finds and determines that Developer has complied substantially with the terms of this Agreement, or does not determine otherwise within thirty (30) days after delivery of the Compliance Letter, the annual review shall be deemed concluded, Developer shall be deemed to have complied in goo d faith with the terms and conditions of this Agreement during the year under review, and this Agreement shall remain in full force and effect. Upon a determination of compliance, the Director shall, if requested by Developer, issue a recordable certificate confirming Developer’s compliance through the year under review.
Developer may record the certificate with the Santa Clara County Recorder’s Office. If the Director initially determines the Compliance Letter to be inadequate in any respect, he/she shall provide notice to that effect to Developer. If, after a duly noticed public hearing thereon, the Council finds and determines based on substantial evidence that Developer has not complied substantially in good faith with the terms of this Agreement for the year under review, the Director shall give written notice thereof to Developer specifying the noncompliance and such notice shall serve as a notice of default under Section 9.1. If Developer fails to cure the noncompliance within a reasonable period of time as established by the Director, the Council, in its discretion, may (i) grant additional time for compliance by Developer, or (ii) following the hearing described in Resolution 6642 , modify this Agreement to the extent necessary to remedy or mitigate the noncompliance, or (iii) terminate this Agreement. Except as affected by the terms hereof, the terms of Resolution 6642 , shall govern City’s compliance review process. During any review, Developer shall bear the burden of proof to demonstrate good faith c ompliance with the terms of this Agreement. If the Council does not hold a hearing and make its determination
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within one hundred and twenty (120) days after delivery of the Compliance Letter for a given year, then it shall be deemed conclusive that Developer has complied in good faith with the terms and conditions of this Agreement during the period under review.
9. REIMBURSEMENTS
9.1 Reimbursements. The Parties agree that Developer shall not be entitled to any reimbursement for the construction of any private or public improvement required by this Agreement, unless explicitly provided by this Agreement or the Conditions of Approval.
10. INSURANCE
10.1 Insurance. During the term of this Agreement, Developer shall maintain in full force and effect the following insurance policies:
a. a commercial general liability policy (“CGL”) (bodily injury and property damage);
b. a worker’s compensation/employer’s liability policy; and c. a comprehensive automobile liability insurance policy.
These policies shall be maintained with coverage amounts, required endorsements, certificates of insurance and coverage verifications included, as defined in Exhibit “5”, attached hereto and incorporated by this reference.
11. DEFAULT AND REMEDIES
11.1 Default. Failure by either Party to perform any material term or provision of this Agreement shall constitute a default, provided that the Party alleging the default gave the other Party advance written notice of the default and thirty (30) days to cure the condi tion, or, if the nature of the default is such that it cannot be cured within thirty (30) days, the Party receiving notice shall not be in default if the Party commences performance of its obligations within the thirty (30) day period and diligently completes that performance.
Written notice shall specify in detail the nature of the obligation to be performed by the Party receiving notice.
11.2 Remedies. It is acknowledged by the Parties that City and Developer would not have entered into this Agreement if City were to be liable in damages under, or with respect to, this Agreement or the application thereof. City and Developer shall not be liable in damages to one another, or to any assignee, transferee or any other person, and Developer covenants not to sue for or claim damages. Each Party shall have the right to (i) bring any proceeding in the nature of specific performance, injunctive relief or mandamus, and/or (ii) bring any action at law or in equity as may be permitted by law or this Agreement. The Parties acknowledge that monetary damages and remedies at law generally are inadequate upon the occurrence of a default. Therefore, specific perfo rmance or other extraordinary equitable relief (such as injunction) is an appropriate remedy for the enforcement of this Agreement, other remedies at law being inadequate under all the circumstances pertaining
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as of the Effective Date of this Agreement and any such equitable remedy shall be available to the Parties.
11.3 Default by Developer/Withholding of Building Permit . City may, without submitting to mediation, refuse to issue a building permit for any structure within the Property if City, in its reasonable discretion, determines Developer has materially failed and refused to complete any requirement that is a Condition of Approval, or that is applicable to the building permit requested. In addition, where City has determined that Developer is in default as described above, City m ay also refuse to issue the Developer a ny permit or entitlement for any structure or property located within the Project. This remedy shall be in addition to any other remedies provided for by this Agreement.
12. AMENDMENT OR TERMINATION
12.1 Development Plan. City and Developer anticipate that the Project will be implemented in accordance with the Approvals, the Development Plan, Mitigation Monitoring and Reporting Program, and the Conditions of Approval. The foregoing actions and other necessary or convenien t implementation actions shall not require an amendment to this Agreement. Any subsequent amendment or modification of the Development Plan shall be done pursuant to a Development Agreement Amendment pursuant to applicable Government Code p rovisions, MMC Section XIII -D.14.010 and following, and Section
24.1 herein.
a. Insubstantial Modifications and Operating Memoranda. The Parties acknowledge that refinements and further development of the Project may demonstrate that minor changes or clarifications are appropriate with respect to the details of the Project development and the performance of the parties under this Agreement.
The Parties desire to retain a certain degree of flexibility with respect to the details of the Project development and with respect to those items covered in general terms under this Agreement, and thus desire to provide a streamlined method of approving insubstantial modifications to, or clarifications of the Parties responsibilities and obligations under this Agreement. Therefore, to the extent allowed by applicable law, any minor modification or clarification to this Agreement which does not modify (i) the Term of this Agreement; (ii) permitted uses of the Property, (iii) maximum density or intensity of use, (iv) the approved floor area, number or type of dwelling units, or building height, (v) provisions for the reservation or dedication of land, (vi) conditions, terms, restrictions or requirements for subsequent discretionary actions, (vii) monetary obligations of Developer, or (viii) the original findings and Conditions of Approval for the Project and (ix) would not result in any threat to the public health, safety, or welfare or any new or detrimental effects from the Project (hereinafter an “Insubstantial Modification”), and that can be processed under CEQA as exempt from CEQA, and that do not require a notice of amendment and/or hearing, including pursuant to Government Code Section 65868, shall not require a public hearing or City Council approval prior to the Parties executing a modification to this Agreement. Upon receiving a written request from the Developer for an Insubstantial Modification, the City Manager or a designated representative will
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evaluate the request, considering: (1) whether the requested modification falls under the definition of an “Insubstantial Modification”; and (2) whether the requested modification aligns with the objectives of this Agreement. The City Manager will not unreasonably withhold a decision, but will also ensure the City's interests are adequately protected. If the City Manager or designee determines that the requested modification is an “Insubstantial Modification” that is consistent with the Approvals and this Agreement and tends to promote the goals of the Approvals and this Agreement, the proposed modification may be approved by the City Manager as an Insubstantial Modification, and a written modification will be executed by the Parties and attached to this Agreement as an operating memorandum (“Operating Memorandum”).
12.2 Termination upon Completion of Development. This Agreement shall terminate upon the expiration of the Term, or when the Property has been fully developed and all of the Developer’s obligations are satisfied as determined by City. Upon termination of this Agreement, City may record a Notice of Termination in a form satisfactory to the City Attorney.
12.3 Effect of Termination Upon Developer Obligations . Termination of this Agreement as to the Developer shall not affect any of the Developer’s obligations to comply with City General Plan and the terms and conditions of any applicable zoning, or subdivision map or other land use entitlement approved with respect to the Project, nor shall it affect any other covenants or development requirements in this Agreement specified to continue after the termination of this Agreement, or obligations to pay assessments, liens, fees or taxes.
12.4 Effect of Termination Upon City . Upon any termination of this Agreement as to the Developer, the entitlement, conditions of development, and all other terms and conditions of this Agreement shall no longer be vested with respect to the Property and City shall no longer be limited by thi s Agreement, to make any changes or modifications to the entitlement, conditions or fees applicable to the Property.
12.5 Elements of Termination. This Agreement shall be deemed terminated and of no further effect upon the occurrence of any of the following events:
(a) Expiration of the Term;
(b) Entry after all appeals have been exhausted of a final court judgment or issuance of a final court order directed to City to set aside, withdraw, or abrogate the Approvals, the City’s approval of this Agreement or any material part thereof; or (c) The effective date of a Party’s election to terminate the Agreement as provided in this Agreement.
13. MORTGAGEE PROTECTION: CERTAIN RIGHTS OF CURE
13.1 Mortgagee Protection. This Agreement shall be superior and senior to all liens placed upon the Property or any portion thereof after the date on which this Agreement or a memorandum thereof is recorded, including the lien of any deed of trust or mortgage (“Mortgage”). Notwithstanding the foregoing, no breach hereof shall defeat, render invalid,
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diminish or impair the lien of any Mortgage made in good faith and for value, but all of the terms and conditions contained in this Agreement shall be binding upon and effective against all persons and entities, including all deed of trust beneficiaries or mortgagees (“Mortgagees”) who acquire title to the Property or any portion thereof by foreclosure, trustee’s sale, deed in-lieu-of foreclosure, voluntary transfer or otherwise.
13.2 Mortgagee Obligations . City, upon receipt of a written request from a foreclosing Mortgagee, shall permit the Mortgagee to succeed to the rights and obligations of Developer under this Agreement, provided that all defaults by Developer that are reasonably susceptible of being cured are cured by the Mortgagee as soon as reasonably possible, provided, however, that in no event shall such Mortgagee personally be liable for any defaults or monetary obligations of Developer arising prior to acquisition of possession of such Property by such Mortgagee. The foreclosing Mortgagee shall have the right to find a substitute developer to assume the obligations of Developer, which substitute shall be considered for approval by City pursuant to Section 13 of this Agreement, but shall not, itself, be required to comply with all of the provisions of this Agreement.
13.3 Notice of Default to Mortgagee. If City receives notice from a Mortgagee requesting a copy of any notice of default given to Developer and specifying the address for service thereof, City shall endeavor to deliver to the Mortgagee, concurrently with service thereof to Developer, all notices given to Developer describing all claims by City that Developer has defaulted hereunder. If City determines that Developer is not in compliance with this Agreement, City also shall endeavor to serve notice of noncomplian ce on the Mortgagee concurrently with service on Developer. Each Mortgagee shall have the right, but not the obligation, during the same period available to Developer to cure or remedy, or to commence to cure or remedy, the condition of default claimed or the areas of noncompliance set forth in City’s notice.
14. ASSIGNABILITY
14.1 Assignment. Except as provided in Section 13, neither Party shall convey, assign or transfer (“Transfer”) any of its interests, rights or obligations under this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. In no event shall the obligations conferred upon Developer under this Agreement be transferred except through a Transfer of all or a portion of the Property.
Should Developer Transfer any of its interests, rights or obligations under this Agreement, it shall nonetheless remain liable for performance of the obligations for installation of public improvements, provision of affordable housing, and payment of fees, unless the transferee executes an Assumption Agreement in a form reasonably acceptable to City whereby the transferee agrees to be bound by the relevant Terms of the Agreement, including the obligations for installation of public impr ovements, provision of affordable housing, and payment of fees. During the Term, Developer shall provide City with written notice of a request to Transfer any interest in this Agreement sixty (60) days prior to any such contemplated Transfer. Any such request for a Transfer shall be accompanied by quantitative and qualitative information that substantiates, to City’s reasonable satisfaction, that the proposed transferee has the capability to assume the rights and fulfill the obligations of this Agreement. Any transferee (including parents and subsidiary entities)
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shall have a net worth, valuation, or liquidity (including debt capacity), of not less than $50,000,000.00 Dollars. The City Manager shall have sole discretion to find and determine that transferees with a net worth, valuation, or liquidity (including debt capacity) of less than $50,000,000.00 Dollars are otherwise eligible transferees under this Agreement.
Within thirty (30) days of such a request and delivery of information, the Milpitas City Manager shall make a determination, in his or her reasonable discretion, as to whether the Transfer shall be permitted or whether such Transfer necessitates an Amendment to this Agreement, subject to approval by the Council. The Milpitas City Manager’s approval of a proposed Transfer shall not be unreasonably withheld provided that the terms of this Section 14.1 are met. Each successor-in-interest to Developer shall be bound by all of the terms and provisions applicable to the portion of the Property acquired. This Agreement shall be binding upon and inure to the benef it of the Parties’ successors, assigns and legal representatives. Developer or its successor shall record notice of such approved Transfers in the Santa Clara County Recorder’s Office promptly upon execution by each of the Parties.
14.2 Covenants Run With The Land. The terms of this Agreement are legislative in nature, and apply to the Property as regulatory ordinances. All of the provisions, agreements, rights, powers, standards, terms, covenants and obligations contained in this Agreement shall run with the land and shall be binding upon the Parties and their respective heirs, successors (by merger, consolidation or otherwise) and assigns, devisees, administrators, representatives, lessees and all other persons or entities acquiring the Property, any lot, parcel or any portion thereof and any interest therein, whether by sale, operation of law or other manner, and shall inure to the benefit of the Parties and their respective successors.
14.3 Foreclosure. Nothing contained in this Section 14 shall prevent a Transfer of the Property, or any portion thereof, to a lender as a result of a foreclosure or deed in lieu of foreclosure, and any lender acquiring the Property, or any portion thereof, as a result of foreclosure or a deed in lieu of foreclosure shall take such Property subject to the rights and obligations of Developer under this Agreement; provided, however, in no event shall such lender be liable for any defaults or monetary obligations of Developer arising prior to acquisition of title to the Property by such lender, and provided further, in no event shall any such lender or its successors or assigns be entitled to a building permit or occupancy certificate until all fees due under this Agreement (relating to the portion of the Property acquired by such lender) have been paid to City.
15. CONTROLLING LAW
15.1 Controlling Law. This Agreement shall be governed by the laws of the State of California, and the exclusive venue for any disputes or legal actions shall be the Superior Court of California in and for the County of Santa Clara. Developer shall comply with all requirements of state and federal law, in addition to the requirements of this Agreement, including, without limitation, the payment of prevailing wages, if required. In any event, Developer shall pay prevailing wages for all work on off-site public improvements related to the Project.
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16. GENERAL
16.1 Construction of Agreement. The language in this Agreement in all cases shall be construed as a whole and in accordance with its fair meaning.
16.2 No Waiver. No delay or omission by either Party in exercising any right or power accruing upon the other Party’s noncompliance or failure to perform under the provisions of this Agreement shall impair or be construed to waive any right or power. A waiver by either Party of any of the covenants or conditions to be performed by Developer or City shall not be construed as a waiver of any succeeding breach of the same or other covenants and conditions.
16.3 Agreement is Entire Agreement . This Agreement and all exhibits attached hereto or incorporated herein, together with the Development Plan, Mitigation Monitoring and Reporting Program, and the Conditions of Approval, are the sole and entire Agreement between the Parties concerning the Property. The Parties acknowledge and agree that they have not made any representation with respect to the subject matter of this Agreement or any representations inducing the execution and delivery, except representations set forth herein, and each Party acknowledges that it has relied on its own judgment in entering this Agreement. The Parties further acknowledge that all statements or representations that heretofore may have been made by either of them to the other are void and of no effect, and that neither of them has relied thereon in its dealings with the other. To the extent that there is any conflict between the approved Development Plan and this Agreement, the approved Development Plan shall govern the Parties’ respective rights and obligations.
16.4 Estoppel Certificate. Either Party from time to time may deliver written notice to the other Party requesting written certification that, to the knowledge of the certifying Party, (i) this Agreement is in full force and effect and constitutes a binding obligation of the Parti es, (ii) this Agreement has not been amended or modified either orally or in writing, or, if it has been amended or modified, specifying the nature of the amendments or modifications, and, (iii) the requesting Party does not have knowledge of default in the performance of its obligations under this Agreement, or if in known default, describing therein the nature and monetary amount, if any, of the default. A Party receiving such a request shall execute and return the certificate within thirty (30) days after receipt thereof. City Manager shall have the right to execute the certificates requested by Developer. At the request of Developer, the certificates provided by City establishing the status of this Agreement with respect to any lot or parcel shall be in recordable form, and Developer shall have the right to record the certificate for the affected portion of the Property at its cost.
16.5 Severability. Each provision of this Agreement which is adjudged by a court of competent jurisdiction to be invalid, void or illegal shall in no way shall affect, impair or invalidate any other provisions, and the other provisions shall remain in full force and effect.
16.6 Further Documents. Each Party shall execute and deliver to the other all other instruments and documents as may be reasonably necessary to carry out this Agreement.
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16.7 Time of Essence. Time is of the essence in the performance of each and every covenant and obligation to be performed by the Parties hereunder.
16.8 Defense, Indemnification and Hold -Harmless Provisions . Developer shall hold City, its elective and appointive boards, commissions, officers, agents, and employees (the “Indemnified Parties”) harmless from any liability for damage for personal injury, including death, as well as from claims for property damag e which may arise from Developer’s contractors, subcontractors’, agents’ or employees’ operations on the Project, whether the actions be by the Developer or by any of Developer’s contractors, subcontractors, or by any one or more persons directly or indirectly employed by, or acting as agent for Developer or any of Developer’s contractors or subcontractor’s. Developer shall indemnify and defend Indemnified Parties from any suit or actions at law or in equity for damages caused, or alleged to have been caused, by reason of the operations and Developer shall pay all reasonable attorneys’ fees and costs that City may incur. City does not, and shall not waive any rights against Developer that it may have by r eason of the aforesaid hold -harmless requirement of Developer because of the acceptance of improvements by City, or the deposit of security with City by Developer. The hold - harmless requirement of Developer shall apply to all damages and claims for damage s of every kind suffered, or alleged to have been suffered, by reason of any of the operations referred to in this paragraph, regardless of whether or not City has prepared, supplied or approved of, plans and/or specifications for the Project. Notwithstand ing anything to the contrary, Developer’s indemnification of City shall not apply to the extent that such action, proceedings, demands, claims, damages, injuries or liability is based upon the active negligence of City.
16.9 Third-Party Challenge . Developer agrees to defend the Indemnified Parties from any challenge to the validity of this Agreement, environmental review for the Project, entitlements, or anything related to the passage of the Agreement by City.
16.10 Construction. This Agreement has been reviewed and revised by legal counsel for both City and Developer and no presumption or rule that ambiguities shall be construed against the drafting Party shall apply to the interpretation or enforcement of this Agreement.
16.11 Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement.
17. NOTICES
17.1 Notices. Except as otherwise expressly provided herein, all notices and demands pursuant to this Agreement shall be in writing and delivered in person, by commercial courier or by first-class certified U.S. mail, postage prepaid. Except as otherwise expressly pro vided herein, notices shall be considered delivered when personally served, upon delivery if delivered by commercial courier, or two (2) days after mailing if sent by U.S. mail. Notices shall be sent to the addresses below for the respective Parties ; provided, however, that either Party may change its address for purposes of this section by giving written notice to the other Party. These addresses may be used for service of process:
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City:
City of Milpitas
Attn: City Manager
455 E. Calaveras Blvd.
Milpitas, CA 95035
With copy to:
City of Milpitas
Attn: City Attorney
455 E. Calaveras Blvd.
Milpitas, CA 95035
Developer:
Lyon Living
Attn: Mike Barmettler
4901 Birch St.
Newport Beach, CA 92660
With copy to:
Pete Zak
3 Corporate Plaza Drive, Suite 230
Newport Beach, CA 92660
And:
Cox, Castle & Nicholson LLP
Attn: Sean Matsler
3121 Michelson Drive, Suite 200
Irvine, CA 92612
The provisions of this section shall be deemed directive only and shall not detract from the validity of any notice given in a manner that would be legally effective in the absence of this section.
18. RELATIONSHIP BETWEEN CITY AND DEVELOPER
18.1 Developer is an Independent Contractor. Developer is not an agent or employee of City, but is an independent contractor with full rights to manage its employees subject to the requirements of the law. All persons employed or utilized by Developer in connection with this Agreement are employees or contractors of Developer and shall not be considered employees of City in any respect.
19. PROJECT AS A PRIVATE UNDERTAKING
19.1 Project as a Private Undertaking . It is specifically understood and agreed that the Project is a private development. No partnership, joint venture or other association of any kind between City and Developer is formed by this Agreement.
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20. NONDISCRIMINATION
20.1 Nondiscrimination. Developer shall not discriminate, in any way, against any person on the basis of race, color, national origin, gender, marital status, sexual orientation, age, creed, religion or disability in connection with or related to the performance of this Agreement.
21. FORCE MAJEURE.
21.1 Force Majeure. Performance by either Party hereto shall not be deemed to be in default where delays or defaults are due to war, insurrection, strikes, walkouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of other governmental entities or enactment of conflicting state or federal laws or regulations.
22. THIRD PARTIES
22.1 Third Parties. If any person or entity not a Party to this Agreement initiates an action at law or in equity to challenge the validity of any provision of this Agreement or the Approvals, the Parties shall reasonably cooperate in defending such action. Developer shall bear its own costs of defense as a real Party in interest in any such action, and shall reimburse City for all reasonable costs and attorneys’ fees expended by City in defense of any such action or other proceedings.
23. AMENDMENTS
23.1 Amendments. No alterations or changes to the Terms of this Agreement shall be valid unless made in writing and signed by both Parties, and completed in compliance with the procedures listed in MMC and/or the Government Code for Development Agreement Amendments.
24. NO THIRD-PARTY BENEFICIARY
24.1 No Third-Party Beneficiary. This Agreement shall not be construed or deemed to be an Agreement for the benefit of any third -party or Parties, and no third -party or Parties shall have any claim or right of action hereunder for any cause whatsoever.
25. DISPUTE RESOLUTION
25.1 Mediation. Any controversies between Developer and City regarding the construction or application of this Agreement, and claims arising out of this Agreement or its breach, shall be submitted to mediation within thirty (30) days of the written request of one Party after the service of that request on the other Party.
25.2 Mediator Selection/Length of Mediation. The Parties may agree on one mediator. If they cannot agree on one mediator, the Party demanding mediation shall request the Superior Court of Santa Clara County to appoint a mediator. The mediation meeting shall not exceed one day (eight (8) hours). The Parties may agree to extend the time allowed for mediation under this Agreement.
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25.3 Mediation Costs. The costs of the mediator shall be borne by the Parties equally; however, each Party shall bear its own attorney, consultant, staff and miscellaneous fees and costs.
25.4 Exhaustion of Mediation As A Remedy . Mediation under this Section is a condition precedent to filing an action in any court, but it is not a condition precedent to City’s refusal to issue a building permit or any other entitlement under Section 5.
26. CONSENT
26.1 Consent. Where consent or approval of a Party is required or necessary under this Agreement, the consent or Agreement shall not be unreasonably withheld or delayed.
27. COVENANT OF GOOD FAITH AND FAIR DEALING
27.1 Covenant of Good Faith and Fair Dealing . Neither Party to this Agreement shall do anything which shall have the effect of harming or injuring the right of the other Party to receive benefits of this Agreement; each Party shall refrain from doing anything which would render its performance under this Agreement impossible; and, each Party shall do everything which this Agreement contemplates to accomplish the objectives and purpose of this Agreement.
28. AUTHORITY TO EXECUTE
28.1 Authority to Execute . The person or persons executing this Agreement on behalf of Developer warrant and represent that they have the authority to execute this Agreement on behalf of Developer, and further represent that they have the authority to bind Developer to the performance of its obligations in this Agreement.
29. COUNTERPARTS
29.1 Counterparts. This Agreement may be executed in multiple originals, each of which is deemed an original, and may be signed in Counterparts. The Parties acknowledge and accept the terms and conditions of this Agreement as evidenced by the following signatures of their duly authorized representatives. It is the intent of the Parties that this Agreement shall become operative on the Effective Date.
SIGNATURES FOLLOW ON PAGE 26
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CITY OF MILPITAS, CALIFORNIA
a chartered California municipal corporation
APPROVED AS TO FORM:
CHRISTIAN CURTIS
City Attorney
ATTEST:
JARED HERNANDEZ
Acting City Manager
455 E. Calaveras Blvd.
Milpitas, CA 95035
SUZANNE GUZZETTA
City Clerk
“CITY”
DEVELOPER
CHOOSE ONE: CORPORATION/PARTNERSHIP/INDIVIDUAL
By:
Signature of Person executing the Agreement on behalf of Developer Name:
Title:
Local Address:
Telephone ( )
Facsimile: ( )
Exhibit “1” Legal Description
Exhibit “2” Selected Pages of Development Plan
Exhibit “3” Conditions of Approval
Exhibit “4” Mitigation and Monitoring Plan
Exhibit “5” Insurance Requirements
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DEVELOPMENT AGREEMENT
BETWEEN CITY OF MILPITAS,
a California municipal corporation,
AND
MILPITAS - DISTRICT 2 ASSOCIATES, LLC,
a Delaware limited liability company; and
FIELDS CH OWNER, LLC,
a Delaware limited liability company
EXHIBIT 1
LEGAL PROPERTY DESCRIPTION
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DEVELOPMENT AGREEMENT
BETWEEN CITY OF MILPITAS,
a California municipal corporation,
AND
MILPITAS - DISTRICT 2 ASSOCIATES, LLC,
a Delaware limited liability company; and
FIELDS CH OWNER, LLC,
a Delaware limited liability company
EXHIBIT 2
SELECTED PAGES OF DEVELOPMENT PLAN
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DEVELOPMENT AGREEMENT
BETWEEN CITY OF MILPITAS,
a California municipal corporation,
AND
MILPITAS - DISTRICT 2 ASSOCIATES, LLC,
a Delaware limited liability company; and
FIELDS CH OWNER, LLC,
a Delaware limited liability company
EXHIBIT 3
CONDITIONS OF APPROVAL
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DEVELOPMENT AGREEMENT
BETWEEN CITY OF MILPITAS,
a California municipal corporation,
AND
MILPITAS - DISTRICT 2 ASSOCIATES, LLC,
a Delaware limited liability company; and
FIELDS CH OWNER, LLC,
a Delaware limited liability company
EXHIBIT 4
MITIGATION MONITORING AND REPORTING PROGRAM
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DEVELOPMENT AGREEMENT
BETWEEN CITY OF MILPITAS,
a California municipal corporation,
AND
MILPITAS - DISTRICT 2 ASSOCIATES, LLC,
a Delaware limited liability company; and
FIELDS CH OWNER, LLC,
a Delaware limited liability company
EXHIBIT 5
INSURANCE REQUIREMENTS
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INSURANCE REQUIREMENTS
Developer shall purchase and maintain the insurance policies set forth below at its sole cost and expense. Such policies shall be maintained for the full Term of this Agreement. The term “City” shall include the duly elected or appointed council members, c ommissioners, officers, agents, employees and volunteers of the City of Milpitas, California, individually or collectively (“City”).
1. MINIMUM SCOPE AND LIMITS OF REQUIRED INSURANCE POLICIES
On or before the commencement of the Term of this Agreement, Developer shall furnish City with certificates showing the type, amount, class of operations covered, effective dates and dates of expiration of insurance coverage in compliance with this Exhibit. These certificates, which do not limit Developer's indemnification, shall also contain substantially the following statement:
"Should any of the above insurance covered by this certificate be canceled or coverage reduced before the expiration date ther eof, the insurer affording coverage shall provide thirty (30) days' advance written notice to City by certified mail, "Attention: City Manager." Endorsements naming City as additional insured shall be submitted with the insurance certificates. The following policies shall be maintained with insurers authorized to do business in the State of California and shall be issued under forms of policies satisfactory to City:
(a) Workers' Compensation:
Statutory coverage as required by the State of California.
(b) Liability:
Commercial general liability coverage in the following minimum limits:
Bodily Injury: $1,000,000 each occurrence
$10,000,000 aggregate - all other
Property Damage: $1,000,000 each occurrence
$10,000,000 aggregate
If submitted, combined single limit policy with aggregate limits in the amounts of $10,000,000 will be considered equivalent to the required minimum limits shown above. (c) Automotive:
Comprehensive automobile liability coverage in the
following minimum limits:
Bodily injury: $1,000,000 each occurrence
Property Damage: $1,000,000 each occurrence
or
Combined Single Limit: $2,000,000 each occurrence
2. ACCEPTABILITY OF INSURERS
DRAFT
DEVELOPMENT AGREEMENT
Development Agreement/ District Lot 3 (Elion)/Exhibit 5 Page 3 of 4
Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A -:VII, unless otherwise agreed to by the Risk Management Division of the City in writing.
3. DEDUCTIBLES AND SELF-INSURED RETENTIONS (“SIR”)
Any deductibles self-insured retentions must be declared to and approved by City. The City may require Developer to purchase coverage with a lower deductible or retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. At the option of the City, either (1) the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its elected and appointed officials, officers, attorneys, agents , and employees; or (2) Developer shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses.
The initial Developer to this Agreement has disclosed a two hundred and fifty thousand dollar ($250,000) self -insured retention upon applicable policies as part of the negotiation of this Agreement, which is hereby deemed approved by the City.
All SIRs must be disclosed to the City’s Risk Management Division for approval and shall not reduce the limits of liability.
Policies containing any SIR provision shall provide or be endorsed to provide that the SIR may be satisfied by either the named insured or the City.
City reserves the right to obtain a full -certified copy of any insurance policy and endorsements.
Failure to exercise this right shall not constitute a waiver of right to exercise later.
4. FAILURE TO COMPLY
Each insurance policy required above shall contain or be endorsed to contain that any failure to comply with reporting provisions of the policies shall not affect coverage provided to the City, its elected and appointed officials, officers, attorneys, agents, and employees.
5. SUBROGATION WAIVER
Developer agrees that in the event of loss due to any of the perils for which it has agreed to provide comprehensive general and automotive liability insurance, Developer shall look solely to its insurance for recovery. Developer hereby grants to City, on behalf of any insurer providing comprehensive general and automotive liability insurance to either Developer or City with respect to the actions of Developer herein, a waiver of any right to subrogation, which any insurer of the Developer may acquire against City by virtue of the payment of any loss under the insurance.
6. ABSENCE OF INSURANCE COVERAGE
City may direct Developer to immediately cease all activities with respect to this Agreement if it determines that Developer fails to carry, in full force and effect, all insurance policies with coverages at or above the limits specified in this lease. Any delays or expense caused due to
DRAFT
DEVELOPMENT AGREEMENT
Development Agreement/ District Lot 3 (Elion)/Exhibit 5 Page 4 of 4
stopping of work and change of insurance shall be considered Developer’s delay and expense. At City’s discretion, under conditions of lapse, City may purchase appropriate insurance and charge all costs related to such policy to Developer.
7. NOTICE OF CANCELLATION, SUSPENSION OR OTHERWISE VOIDING
Each insurance policy required above shall contain or be endorsed to contain that coverage shall not be suspended, voided, canceled or reduced in coverage or in limits except with thirty (30) days’ prior written notice by certified mail, return receipt requested to the City.
8. PROOF OF INSURANCE COVERAGE AND COVERAGE VERIFICATION
Developer shall provide its insurance broker(s)/agent(s) with a copy of these requirements and request that they provide Certificates of Insurance complete with copies of all required endorsements prior to the commencement of this Agreement and annually thereafter for the Term of this Agreement . Developer shall furnish City with copies of original endorsements affecting coverage as herein required . The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. All e ndorsements and certificates are to be received and approved by City before the Term of the Agreement commences . City has the right to require Developer’s insurer to provide complete, certified copies of all required insurance policies, including endorsements affecting the coverage required by this Agreement. Should any required policy of insurance be modified, canceled , not renewed or otherwise change, Developer shall provide the City promptly with notice of that change, at least 30 days prior to any conte mplated change, and thereafter provide compliant certificates of insurance, endorsements, policies, and such information as reasonably requested by the City for approval and determination of continuing compliance with these insurance requirements.
The Certificate of Insurance and coverage verification and all other notices related to cancellation or non-renewal of insurance shall be mailed to:
City of Milpitas
Attn: Finance Department, Risk Management Division
455 E. Calaveras Blvd.
Milpitas, CA 95035
Economic Equivalency Memorandum
District Lot 3 Re-Entitlement – Affordable Housing Compliance
1. Executive Summary
This memorandum evaluates the economic and policy equivalency of satisfying the Townhome Project’s inclusionary housing obligation through off-site affordable units located at the Gideon apartment community. The Townhome Project consists of 109 for- sale townhomes. Under the City’s affordable housing ordinance, the project would typically be required to provide approximately 16 Moderate-Income Below Market Rate (BMR) ownership units (15% of total units).
The Applicant proposes to instead satisfy this requirement through 17 Low-Income BMR rental units located within the Gideon apartment community directly across the street. The Gideon development was completed in 2022 and consists of a high-quality multifamily community with modern unit designs, high-end finishes, and an extensive amenity program.
Key benefits of the proposed approach include:
• Provision of more units than required (17 units vs. 16 required). • Provision of deeper affordability by serving households at a lower Area Median Income (AMI) band (Low-Income rather than Moderate-Income).
• Immediate availability of affordable housing because the units already exist. • A 55-year affordability covenant ensuring long-term affordability. • A higher underlying replacement-cost investment associated with the Gideon units. • Access for residents to a substantially more robust amenity environment.
When evaluated through multiple economic and housing policy lenses- including affordability depth, replacement cost, resident utility, scarcity of unit type, and delivery certainty- the proposed off-site compliance strategy provides an economically equivalent, and in several respects superior, affordable housing outcome for the City of Milpitas.
2. Project Overview and Inclusionary Requirement
The Townhome Project proposes 109 for-sale townhomes. Under the City’s affordable housing requirements, 15% of units would be required as Moderate-Income BMR ownership units.
Total Townhome Units 109
Required Inclusionary Percentage 15%
Calculated Inclusionary Units 16.35
Rounded Requirement 16 Moderate-Income Units
In lieu of providing these units on-site, the Applicant proposes to deed restrict 17 Low- Income BMR rental units within the Gideon apartment community for a period of 55 years, effective upon issuance of building permits for the Townhome Project.
3. Economic Comparison of Housing Products
Economic equivalency between the two approaches can be evaluated using several metrics, including replacement cost, market value versus restricted value, and overall housing product quality.
Metric Townhome
Market
Townhome
BMR
Gideon Market Gideon BMR
Average
Construction
Cost
$577,000 - $750,000 -
Market Value /
Price
$1,330,000 - $575,000 -
Restricted
Value
- $636,000 - $510,000
Value Discount
Per Unit
- $694,000 - $65,000
Number of
Units
16 16 - 17
The Townhome Project’s required inclusionary units represent approximately $9.23 million in replacement cost (16 units × $577,000). By comparison, the 17 Gideon units represent approximately $12.75 million in replacement cost (17 units × $750,000), reflecting a substantially greater underlying investment in housing that will be restricted for affordable occupancy.
4. Housing Product and Resident Utility
The Townhome Project will include minimal shared amenities consisting primarily of a passive park area. By contrast, the Gideon apartment community provides residents with a comprehensive amenity package including a rooftop pool, modern fitness center, business center, and other resident-serving facilities.
For households occupying affordable units, access to these amenities represents meaningful resident utility that is not captured solely through financial comparisons. These amenities enhance quality of life, provide spaces for work-from-home activities, and support overall resident well-being.
5. Scarcity of Low-Income Housing Units
In addition to providing units serving a lower AMI band, the proposed approach contributes to a housing type that is significantly more difficult for cities to produce.
Moderate-Income inclusionary ownership units are commonly delivered through market- rate housing developments and therefore represent the most typical form of inclusionary housing production. By contrast, Low-Income housing units are substantially more challenging to deliver because they typically require layered public subsidy sources such as Low-Income Housing Tax Credits, local housing trust funds, or other public financing programs.
As a result, the supply of Low-Income housing units is significantly more constrained than Moderate-Income units in most California jurisdictions. By providing 17 Low-Income units, the proposal contributes to the segment of the housing spectrum that cities most often struggle to produce through market-rate development alone.
From a housing policy perspective, the provision of Low-Income units therefore represents a higher-value addition to the City’s affordable housing inventory than Moderate-Income units that would otherwise be produced within the Townhome Project.
6. Delivery Certainty and Timing
The Gideon units are already constructed and operational. As a result, the City benefits from immediate affordable housing availability upon recordation of the affordability covenant.
In contrast, on-site delivery of BMR ownership units within the Townhome Project would occur only after completion and sale of units, which typically introduces a delivery timeline of approximately 18 to 24 months.
The proposed approach therefore accelerates the availability of affordable housing while eliminating construction and market delivery risk.
7. Draft Findings for Economic Equivalency
• The proposed compliance approach provides 17 Low-Income BMR units, exceeding the 16 Moderate-Income units otherwise required.
• The proposed units serve households at a lower Area Median Income (AMI) band than would otherwise be required.
• The Gideon units represent a higher replacement-cost investment than the Townhome Project’s on-site inclusionary units.
• The Gideon units provide access to a significantly more robust amenity environment, increasing resident utility.
• The units are already constructed, providing certainty of delivery and immediate availability.
• A 55-year affordability covenant ensures long-term affordability. • The proposal contributes to the segment of the affordable housing market- Low-Income units- that cities most often struggle to produce.
Based on these considerations, the proposed off-site compliance strategy satisfies the City’s affordable housing objectives and provides an economically equivalent and beneficial affordable housing outcome for the City of Milpitas.
Appendix A – Limitations of Cap-Rate Discount Comparisons A commonly used financial metric in affordable housing analysis is the difference between market value and restricted value. For rental housing, this difference is typically derived through capitalization of net operating income.
While informative, this approach has limitations when comparing rental housing to for-sale ownership housing.
• For-sale housing prices incorporate ownership premiums and land scarcity that are not reflected in rental valuation.
• Apartment values derived from capitalization rates depend heavily on assumptions regarding rents and expenses.
• The cap-rate method measures investor value rather than the replacement cost or the housing benefit delivered to residents.
For this reason, housing policy evaluations typically consider additional lenses including affordability depth, replacement cost, resident utility, scarcity of unit type, and certainty of delivery. When evaluated across these dimensions, the Gideon affordable housing commitment demonstrates clear public benefit.
MEMORANDUM
PROJECT
o
o
o
o
Ordinance No. ___ 1
REGULAR
NUMBER: ___.__
TITLE: AN UNCODIFIED ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
MILPITAS APPROVING A DEVELOPMENT AGREEMENT BETWEEN THE
CITY OF MILPITAS AND FIELDS CH OWNER, LLC AND MILPITAS – DISTRICT 2 ASSOCIATES, LLC
HISTORY: This Ordinance was introduced (first reading) by the City Council at its meeting of May 19, 2026 upon motion by_________________________ and was adopted (second reading) by the City Council at its meeting of _______________, upon motion by ____________________________. The Ordinance was duly passed and ordered published in accordance with law by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST: APPROVED:
________________________________ __________________________ Suzanne Guzzetta, City Clerk Carmen Montano, Mayor
APPROVED AS TO FORM:
________________________________
Christian Curtis, City Attorney
Ordinance No. ___ 2
RECITALS AND FINDINGS:
WHEREAS, the City of Milpitas, California (the “City”) is a municipal corporation, duly organized under the constitution and laws of the State of California; and
WHEREAS, in July 2025, an application was submitted by Lyon Living (“Applicant”) to develop 109 multi-family townhomes and 10 Accessory Dwelling Units (“Project”) on a 5.49-acre vacant lot located at 1320 McCandless Drive, Milpitas, CA 95035 (APN: 086-33-112, -113, and -114); and
WHEREAS, the City and the applicant wish to memorialize the rights to development in the document entitled “Development Agreement Between the City of Milpitas and Milpitas – District 2 Associates, LLC and Fields CH Owner, LLC” (hereinafter referred to as the “Development Agreement”), a draft of which is attached hereto as Exhibit 1; and
WHEREAS, the Planning Department completed an environmental impact assessment for the project in accordance with the California Environmental Quality Act (“CEQA”) and determined that the Project was exempt from further CEQA review pursuant to CEQA Guidelines Section 15182 (Residential Projects Pursuant to a Specific Plan); and
WHEREAS, on May 6, 2026, the Planning Commission held a duly noticed public hearing, during which the Planning Commission, by the adoption of Resolution No. 26-010, recommended that the City Council approve SA25-0002, TM26-0001, UA25-0003, DB26-0001, and DA26-0001 and approve the Project based on the findings and subject to the Conditions of Approval; and
WHEREAS, on May 19, 2026, the City Council held a duly-noticed public hearing and considered the proposed Development Agreement for compliance with City of Milpitas Resolution No. 6642, the Milpitas Municipal Code (“MMC”), Title XIII, Chapter D.14, commencing with Section D.14.010, and Government Code Sections §§ 65864 et seq.
NOW, THEREFORE, the City Council of the City of Milpitas does ordain as follows:
SECTION 1. RECORD AND BASIS FOR ACTION
The City Council has duly considered the full record before it, which may include but is not limited to such things as the City staff report, testimony by staff and the public, and other materials and evidence submitted or provided to the City Council. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.
SECTION 2: CEQA FINDINGS
The City conducted an environmental assessment in accordance with the California Environmental Quality Act (CEQA) and determined that the proposed Project is categorically exempt from CEQA in accordance with CEQA Guidelines Section 15182 (Residential Projects Pursuant to a Specific Plan) and is consistent with the Addendum to the Transit Area Specific Plan (TASP) Final Environmental Impact Report (FEIR). CEQA Guidelines Section 15182 exempts further environmental review for a predominantly residential project that is generally in conformity with a specific plan, provided that an EIR was certified for the Specific Plan after January 1, 1980, the Project is a residential project (or predominantly residential in nature), that the Project is consistent with the Specific Plan, and that no events under CEQA Guidelines Section 15162 have occurred. The TASP EIR (SCH#2006032091) was certified by the Milpitas City Council on June 3, 2008, and was later updated by the Milpitas Metro Specific Plan Subsequent EIR, certified by the Milpitas City Council on February 7, 2023, both of which meet the time frame requirement.
Ordinance No. ___ 3
The proposed Project consists of 109 townhome dwelling units, 10 ADUs, and nine live/work units, which is considered predominantly residential in nature, meets the residential component of CEQA Guidelines Section 15182. The proposed Project is located within the Metro Plan, and the proposed townhome project with live/work units contributes to the Metro Plan’s vision of creating a complete neighborhood within the McCandless District. The Project is found to be consistent with the goals, policies, and development standards of the Metro Plan which meets the Specific Plan component. Lastly, CEQA Guidelines Section 15162 refers to substantial changes proposed in the EIR area that would create significant or substantially more severe impacts. Since the proposed Project involves a decrease in units, decrease in building square footage, and decrease in building height, no instances of CEQA Guidelines Section 15162 could reasonably have been known. Therefore, this Project meets CEQA Guidelines Section 15182.
SECTION 3. DEVELOPMENT AGREEMENT FINDINGS (MMC SECTION XIII-D.14.050)
The proposed Project is considered to be eligible for a Development Agreement per City Council Resolution No. 6642 Sections 2.3(a) and 2.3(c), regarding acreage and general welfare of the community.
Although the Project site is under 10 acres, it is part of a larger development (The District), which encompasses multiple lots totaling over 20 acres. Furthermore, the public health, safety and general welfare of the citizens of City will best be served by accepting an Application for consideration by the Planning Commission and City Council. The Development Agreement will facilitate the final step in a large development that has taken many years to complete and activate an otherwise vacant lot that has remained underutilized during that time. The Project will establish affordable housing close to public transportation and other infrastructure and amenities that will particularly benefit lower income households.
1. The Development Agreement is consistent with the goals, policies, general land uses, and programs specified in the General Plan;
The proposed Development Agreement (DA) would further the General Plan goals and policies by allowing for the proposed Project with additional construction and improvements only allowable through the benefit of this DA. The Project would provide a mix of townhomes, accessory dwelling units, and live-work units in proximity to the Milpitas Transit Center, which is consistent with the General Plan’s vision for the Metro Specific Plan area. Furthermore, as part of DA and as a public benefit, the Project would provide low- and very-low-income level units beyond what is required by the Affordable Housing Ordinance, which will help the City achieve its affordable housing goals in its Housing Element. Lastly, the DA also includes a voluntary $400,000 contribution to the City as a community benefit, which can be used to fund City services and public improvements identified in the General Plan.
2. The Development Agreement is consistent with any Specific Plan, if applicable; The proposed Project is located within the Milpitas Metro Specific Plan (Metro Plan, formerly TASP). The Metro Plan envisions the McCandless Subdistrict with high-density mixed-use development along larger streets and lower-density townhouse developments. The proposed DA would allow for the proposed Project, which includes a mix of housing types (townhomes, ADUs, and live-work units) that are aligned with the Metro Plan’s vision for this subdistrict. The live- work units would also contribute to the pedestrian-oriented, vibrant atmosphere envisioned along Market Street. Lastly, the DA includes a public benefit of four low- and one very low-income units, which would provide lower-income affordable housing near public transit, which is another goal of the Metro Plan.
3. The Development Agreement and accompanying development maps, plans, and other supporting information are compatible with the uses authorized in, and the performance and development standards prescribed for, the zone in which the subject parcel or site is located;
Ordinance No. ___ 4
The DA would allow for the Project site to be developed with multifamily residential development, which is permitted by-right in and consistent with the intent of the MXD2-Metro zoning district.
The purpose of the MXD2-Metro zoning district is to create and enhance areas with a mix of retail, restaurant, entertainment, and commercial service uses on the ground floor and residential or office uses on upper stories, while maintaining a pedestrian-oriented streetscape. Although the Project does not comply with the density and active commercial requirement of the MXD2-Metro zone, the DA would preserve the previously applicable minimum density in the TASP (30 du/ac), which the Project complies with once density averaging is applied throughout The Fields/District development. A waiver through the Density Bonus Permit would also reduce the commercial requirement for the Project, which is being met through the live-work units. Therefore, the proposed DA and accompanying development are compatible with the uses allowed in the applicable zoning district.
4. The Development Agreement is in conformity with and will promote public convenience, general welfare, and good land use and development practices;
The proposed DA promotes public convenience and general welfare by providing affordable housing (four low- and one very low-income units) within walking distance of the Milpitas BART station and VTA light rail. These deed-restricted affordable units will not only provide rental savings over 55 years to the Milpitas community but also provide housing options near public transit for disadvantaged persons who are often dependent on public transit. Furthermore, the DA would allow for the proposed Project, which includes ADUs and live-work units. ADUs provide yet another affordable option for prospective tenants and allows homeowners to collect rental income by renting out their ADUs to tenants. Meanwhile, live-work units provide much-needed housing for artists, artisans, and small business owners and entrepreneurs in a convenient location.
5. The Development Agreement shall be shown to be of greater benefit to the community than development absent the Development Agreement;
The proposed Development Agreement would provide a one-time voluntary $400,000 contribution and the conversion of 4 low-income and 1 very low-income apartment units within the adjacent Gideon development as a community benefit to offset the loss of market-rate units, which would result from preserving the lower minimum residential density previously allowed for the subject property under the TASP (31 du/ac) rather than applying the minimum density in the Metro Specific Plan (40 du/ac). While allowing a lower density Project through a DA would result in fewer units on the subject property, the Project would provide affordable units at a lower income level than would otherwise be provided, which provides a significant public benefit to the Milpitas community through rental savings for future tenants.
6. The term or duration of the Development Agreement has a commensurate relationship to the benefit(s) provided;
The proposed DA has an initial term of three (3) years. Commencement of construction within 3 years from the Effective Date would vest the DA. “Commencement” would include the property owner/ applicant having been issued a building, demolition, and/or grading permit. Two 2-year extensions may be granted by the City provided that the property owner/ applicant is not in default of its obligations under the DA. The term of the DA is commensurate to the benefit provided in that the term is sufficient to allow for construction of the Project and implementation of the proposed public benefit.
7. The Development Agreement contains the mandatory provisions specified in California Government Code Section 65865.2 and any other terms required by Council;
Ordinance No. ___ 5
Government Code Section 65865.2 requires that a Development Agreement include the duration of the agreement, the permitted uses of the property, the density, the maximum height and size of proposed buildings, and provisions for reservation or dedication of land for public purposes. The proposed DA meets this requirement by including all of the aforementioned provisions.
8. The Development Agreement complies with all other applicable requirements of California Government Code Section 65864 et seq.
The Planning Commission is scheduled for public hearing on May 6, 2026 and the City Council is scheduled to consider the Development Agreement and Project for approval on May 19, 2026.
SECTION 4: No Net Loss Findings (Gov. Code, §§ 65863 and 66300) The Project, as conditioned and approved, does not result in changing the general plan land use designation, specific plan land use designation, or zoning of a parcel or parcels of property to a less intensive use or reduce the intensity of land use within an existing general plan land use designation, specific plan land use designation, or zoning district below what was allowed under the land use designation or zoning ordinances of the City in effect as of January 1, 2018, and is therefore approved in conformity with California Government Code Section 66300.
In conformity with California Government Code Section 65863, any reduction caused by the approval of this Project in the number of units anticipated for construction in the Housing Element Sites Inventory contained in the Housing Element of the General Plan is found to be consistent with the General Plan, together with the Housing Element, including because the Project would continue to contribute meaningfully to the development of housing at levels greater than or equal to the applicable residential density for the property at the time of the General Plan’s adoption and moreover would allow and incentivize the development of a greater number of affordable units closer to transportation and other community resources than was otherwise anticipated in the Housing Element Sites Inventory. The Project’s residential density is consistent with the Housing Element, and the remaining sites identified in the Housing Element remain unchanged and are adequate to meet the requirements of Government Code Section 65583.2 and to accommodate the City’s share of the regional housing need pursuant to Section 65584. This finding demonstrates that the Project is not subject to Government Code Section 65583.2 and will still ensure that the City can accommodate the remaining share of the regional housing need pursuant to Section 65584.
SECTION 5. APPROVAL AND AUTHORIZATION
The City Council hereby approves and authorizes the City Manager or his or her designee to execute the Development Agreement between the City of Milpitas and Fields CH Owner, LLC and Milpitas – District 2 Associates, LLC, attached hereto as Exhibit 1. Within ten (10) days of the effective date of this Ordinance, the City Clerk shall have the Development Agreement recorded with the Santa Clara County Recorder if it has not been so recorded by the applicant or otherwise prior to that date.
SECTION 6. SEVERABILITY
The provisions of this Ordinance are separable, and the invalidity of any phrase, clause, provision or part shall not affect the validity of the remainder.
SECTION 7. EFFECTIVE DATE AND POSTING
In accordance with Section 36937 of the Government Code of the State of California, this Ordinance shall take effect thirty (30) days from and after the date of its passage. The City Clerk of the City of Milpitas
Ordinance No. ___ 6
shall cause this Ordinance or a summary thereof to be published in accordance with Section 36933 of the Government Code of the State of California.
CITY OF MILPITAS
AGENDA REPORT
(AR)
Item Title: Conduct a Public Hearing and Adopt a Resolution Confirming the Assessment and Ordering the Levy for the Landscaping and Lighting Maintenance Assessment District No. 95-1, McCarthy Ranch in Fiscal Year 2026-27 (Staff Contact: Christian Di Renzo, Public Works Director, 408-586-2602; and Michael Silveira, City Engineer, 408-586-3303)
Category: Public Hearings-Community Development
Meeting Date: 5/19/2026
Recommendation: (1) Conduct a public hearing; and (2) adopt a resolution confirming the assessment and ordering the levy for Landscaping and Lighting Maintenance Assessment District No. 95-1, McCarthy Ranch in Fiscal Year 2026-27.
BACKGROUND:
On May 2, 1995, the City Council completed its proceedings in accordance with and pursuant to the Landscaping and Lighting Act of 1972, Part 2, Division 15 of the California Streets and Highways Code (commencing with Section 22500) (Act) to establish the Landscaping and Lighting Maintenance Assessment District 95-1 (LLMD 95-1 McCarthy Ranch). The LLMD provides for the maintenance and improvement of public landscaping, irrigation systems, pedestrian lighting, gateway columns and entry signs along North McCarthy Boulevard between State Route 237 and Dixon Landing Road and Ranch Drive in the areas as shown on the attached location map (Attachment A).
Staff retained NBS Government Finance Group (NBS) for the purpose of assisting with the annual levy assessment, and the preparation and filing of the report required pursuant to Section 22622 of the Act. The City Council adopted Resolution No. 9479 initiating proceedings for the annual levy and collection of assessments and ordering the preparation of the Annual Engineer’s Report on February 17, 2026; and adopted Resolution No. 9498 approving the Annual Engineer’s Report, and Resolution No. 9499 declaring its intention to levy and collect assessment and provide notice of a public hearing to be held on May 19, 2026 for LLMD 95-1 McCarthy Ranch in Fiscal Year (FY) 2026-27.
ANALYSIS:
The Act requires City Council to conduct a public hearing and adopt a Resolution confirming the assessment and ordering the levy (Attachment B) for the LLMD 95-1 McCarthy Ranch in Fiscal Year 2026-27. According to the FY2026-27 Annual Engineer’s Report (Attachment C), the total assessment in FY2026-27 is $0.03897 per lot square foot which is under the maximum assessment rate of $0.05864 per lot square foot. The FY2026-27 rate is approximately 2.28% higher than the prior fiscal year (FY2025-26) rate of $0.0381 due to increased costs for materials and utilities, and accommodating cost of living increases for staff.
Staff recommend the City Council open the public hearing, receive any comments or written protests, and move to close the hearing following any testimony, and adopt a Resolution confirming the assessment and ordering the levy for the LLMD 95-1 McCarthy Ranch in FY2026-27.
PROJECT SCHEDULE/KEY MILESTONES
Upon City Council adoption of the Resolution, NBS will prepare and submit the levy of assessment to the County of Santa Clara for FY2026-27 to secure tax roll.
POLICY ALTERNATIVE(S):
Alternative 1: Do not adopt a resolution confirming the assessment and ordering the levy for LLMD 95-1 McCarthy Ranch in FY2026-27.
Pros: None.
Cons: If the City Council does not adopt the Resolution according to the Act, the City will be unable to collect assessments for LLMD 95-1 McCarthy Ranch.
Reason not recommended: Staff recommends approving the Resolution confirming the assessment and ordering the levy for FY2026-27 to allow for the continued maintenance and service of LLMD 95-1 McCarthy Ranch.
FISCAL IMPACT:
The levy and collection of assessments provides the City with the needed resources for the maintenance and the servicing of improvements of the LLMD 95-1 McCarthy Ranch. The FY 2026-27 maintenance cost budget is estimated to be $468,800. This funding is estimated and included in the FY 2026-27 Proposed Operating Budget, which will be brought forward to City Council for review and approval in June 2026.The City maintains an operating reserve, not to exceed the estimated maintenance costs, prior to December 10 of the fiscal year or when it expects to receive its apportionments of special assessments from the County of Santa Clara, whichever comes first.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):
A levy and collection of assessments has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment and is not a project pursuant to Pub. Resources Code, § 21065 and Cal. Code Regs., tit. 14, § 15378. The action is a fiscal activity of the City government or an action to create a City government funding mechanism that does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment and is not a project pursuant to Cal. Code of Regs., tit. 14, § 15378. To the extent the funds generated by this levy and collection would be used to fund any currently contemplated projects, such projects entail the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use and is exempt from CEQA pursuant to Cal. Code Regs., tit. 14, § 15301.
ATTACHMENT(S):
(a) Location Map
(b) Resolution Confirming the Assessment and Ordering the Levy (c) FY2026-27 Annual Engineer’s Report for LLMD 95-1 McCarthy Ranch
CITY OF MILPITAS
LANDSCAPING MAINTENANCE DISTRICT (LMD) 95-1
(N.T.S.)
2026-2027 FISCAL YEAR LANDSCAPE AREA FUNDED FOR MAINTENANCE
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILPITAS
CONFIRMING THE ASSESSMENT AND ORDERING THE LEVY FOR THE
LANDSCAPING AND LIGHTING MAINTENANCE ASSESSMENT DISTRICT NO. 95-1 - MCCATHY RANCH FOR FISCAL YEAR 2026-27
WHEREAS, on May 2, 1995, the City Council (the “City Council”) of the City of Milpitas (the “City”) completed its proceedings in accordance with and pursuant to the Landscaping and Lighting Act of 1972, Part 2, Division 15 of the California Streets and Highways Code (commencing with Section 22500) (the “Act”) to establish Landscaping and Lighting Maintenance Assessment District No. 95-1 - McCarthy Ranch (the “Assessment District”), for the purpose of paying for the installation, construction, maintenance and/or servicing of certain improvements authorized under the Act, and incidental expenses in connection therewith (collectively, the “Improvements”); and
WHEREAS, the City retained NBS Government Finance Group for the purpose of assisting with the annual levy of the Assessment District, and the preparation and filing of an Annual Engineer Report in accordance with Section 22565, et seq., of the Act; and
WHEREAS, on February 17, 2026, the City Council adopted a resolution initiating processing of the annual levy of the Assessment District, and the preparation and filing of an Annual Engineering Report; and
WHEREAS, on April 21, 2026, the City Council adopted resolution approving the Annual Engineer Report and declaring its intention to hold a Public Hearing concerning the levy and collection of assessments within the Assessment District; and
WHEREAS, a Public Hearing has been held and concluded and notice thereof was duly given in accordance with Section 22626 of the Act; and
WHEREAS, at the time and place specified in the Resolution of Intention the City Council conducted such hearing and considered all objections to the assessment.
NOW, THEREFORE, the City Council of the City of Milpitas hereby finds, determines, and resolves as follows:
1. Confirmation of Assessment and Diagram: The City Council hereby confirms the assessment and the diagram as is described in full detail in the Annual Engineer Report on file with the City Clerk. All protests not sustained by majority vote of the City Council at the hearing are overruled.
2. Levy of Assessment: Pursuant to Section 22631 of the Act, the adoption of this Resolution shall constitute the levy of an assessment for the fiscal year commencing July 1, 2026 and ending June 30, 2027.
3. Ordering of the Levy: The City Council hereby orders NBS to prepare and submit the levy of assessments to Santa Clara County for placement on the Fiscal Year 2026-27 secured property tax roll.
2 Resolution No. xxxx
PASSED AND ADOPTED this _____ day of ____________, 2026, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST: APPROVED:
_____________________________ _____________________________ Suzanne Guzzetta, City Clerk Carmon Montano, Mayor
APPROVED AS TO FORM:
_____________________________
Christian M. Curtis, City Attorney
Fiscal Year 2026/27 Engineer’s Report For:
Landscaping and Lighting Maintenance
Assessment District No. 95-1
May 2026
CITY OF MILPITAS
LANDSCAPING AND LIGHTING MAINTENANCE ASSESSMENT DISTRICT NO. 95-1 455 East Calaveras Boulevard
Milpitas, California 95035
Phone (408) 586-3000
CITY COUNCIL
Carmen Montano, Mayor
Gary Barbadillo, Vice Mayor
Evelyn Chua, Council Member
Hon Lien, Council Member
William Lam, Council Member
CITY STAFF
Michael Silveira, PE, City Engineer
Luz Cofresi-Howe, Finance Director/Risk Manager
Christian Di Renzo, Public Works Director
NBS
Kristin Harvey, Client Success Ambassador
Adina McCargo, Project Manager
Jason Roth, Administrator
TABLE OF CONTENTS
1. Engineer’s Letter ............................................................................................................. 1
2. Plans and Specifications .................................................................................................. 3
2.1 Location of Improvements ........................................................................................ 3
2.2 Landscaping Improvements ...................................................................................... 3
2.3 Capital Improvements ............................................................................................... 4
2.4 Overhead ................................................................................................................... 4
3. Estimate of Costs ............................................................................................................ 5
3.1 District Budget ........................................................................................................... 5
4. Special and General Benefit ............................................................................................ 7
4.1 Identification of Benefit ............................................................................................ 7
4.2 Special Benefits Identified ......................................................................................... 7
4.3 General Benefits Identified ....................................................................................... 8
4.4 Quantification of Benefit ........................................................................................... 8
4.5 Special Benefit Trips ................................................................................................ 12
5. Method of Assessment ................................................................................................. 14
5.1 Introduction ............................................................................................................. 14
5.2 Method of Assessment Spread ............................................................................... 14
5.3 Maximum Assessment Rates .................................................................................. 15
5.4 Appeals .................................................................................................................... 15 Appendix A - Assessment Diagram ......................................................................................... A Appendix B - Assessment Roll ................................................................................................ B
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 1
1. ENGINEER’S LETTER
WHEREAS, in 1995, the City Council of the City of Milpitas (the “City”), State of California, under the Landscaping and Lighting Act of 1972 (the “Act”), created the City of Milpitas Landscaping and Lighting Maintenance Assessment District No. 95-1 (the “District”) in order to provide for the continued maintenance, operation, and administration of various improvements within the boundaries of the District; and
WHEREAS, the City Council has directed NBS to prepare and file a report for Fiscal Year 2026/27 in accordance with Chapter 1, Article 4 of the Act presenting plans and specifications describing the general nature, location, and extent of the improvements to be maintained; an estimate of the costs to maintain, operate, and service the improvements for the District for the referenced fiscal year; a diagram for the District showing the area and properties to be assessed; and an assessment of the estimated costs to maintain and service the improvements, stating the net amount to be assessed upon all assessable lots or parcels within the District in proportion to the special benefit received.
NOW THEREFORE, the following assessments have been calculated in accordance with the assessment methodology adopted and approved by the City Council at the time of District formation, and are made to cover the portion of the estimated costs of maintenance, operation, and servicing of the improvements, to be paid by the assessable real property within the District in proportion to the special benefit received:
District Parcels
2026/27
Maximum Assessment
Rate per Lot Sq. Ft.(1)
2026/27
Actual Assessment
Rate per Lot Sq. Ft.
2026/27
Net Amount to be
Assessed(2)(3)
LLMAD 95-1 45 $0.0586 $0.03897 $459,672
(1) The April 1, 2026 Consumer Price Index (CPI) provided by the U.S. Bureau of Labor Statistics was not available at the time of writing of this report. The Fiscal Year 2026/27 CPI increase was estimated using the February 1, 2026 CPI. (2) Amounts placed on the tax roll include the 1% Santa Clara County Collection Fee. (3) This amount is only an estimate and does not reflect the final billed amount with rounding adjustments. Refer to Section 7 for the rounded figure.
I identified all parcels which will have a special benefit conferred upon them from the improvements described in District’s Plans and Specifications section of this Engineer’s Report (the “Benefited Parcels”) have been identified. For particulars as to the identification of said parcels, reference is made to the Assessment Diagram, a copy of which is on file in the office of the City Clerk.
I have assessed the costs and expenses of the improvements upon the Benefited Parcels. In making such assessment:
a. The proportionate special benefit derived by each Benefited Parcel from the improvements was determined in relationship to the entirety of the maintenance costs of the improvements; b. No assessment has been imposed on any Benefited Parcel which exceeds the reasonable cost of the proportional special benefit conferred on such parcel from the improvements; and c. Any general benefits from the improvements have been separated from the special benefits and only special benefits have been assessed.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 3
2. PLANS AND SPECIFICATIONS
The District provides for the continued administration, maintenance, operation, and servicing of various improvements located within the public right-of-way and dedicated easements within the boundaries of the District.
2.1 Location of Improvements
The District is located on the west side of the City of Milpitas, bounded on the east by State Route 880, on the west by Coyote Creek, on the south by State Route 237, and on the north by Dixon Landing Road. The improvements maintained include public landscaping and irrigation improvements, including jogging paths, pedestrian lighting, gateway improvements, and entry signage, which are primarily situated within the public right-of-way and dedicated public easements within the District.
2.2 Landscaping Improvements
Landscaping, pedestrian lighting, gateway, and signage improvements were installed along the roadways and sidewalks within the District to enhance the overall visual appearance for adjacent parcels.
The improvements within the District consist of the maintenance and installation of any or all public landscaping and irrigation improvements adjacent to curbs of the following described streets, including jogging paths, planter walls, grass berms, pedestrian lighting and appurtenant irrigation systems, ornamental planting including lawns, shrubs, and trees; installation and maintenance of gateway columns and entry signs. Such maintenance includes all necessary repairs, replacements, water, electric current, spraying, care, supervision, debris removal and all other items of work necessary and incidental for property maintenance and operation thereof. The landscaping, irrigation, pedestrian lighting, gateway, and signage improvements are collectively referred to as “landscaping improvements.” All such work will be performed in the following areas:
2.2.1 N. MCCARTHY BOULEVARD
1. A strip of land including an earth berm approximately 50 feet in width from face of each curb line, from the southerly connection with Ranch Drive northerly 2,400 feet, more or less, to the northerly connection with Ranch Drive. A strip of land including a grass berm approximately 35 feet in width, west of the face of westerly curb, along the West Side of N. McCarthy Boulevard, from the southerly connection with Ranch Drive, northerly 2,400 feet, more or less. The initial phase includes a strip of land 6 feet wide on the west side of McCarthy Boulevard.
2. Commencing at a location approximately 2,400 feet north of State Route 237 thence proceeding north to the northern boundary of Lands of N. McCarthy, 7,800 feet more or less, a strip of land approximately 27 to 34 feet in width on each side along the east and west sides of McCarthy Boulevard between the northerly connection with Ranch Drive and Dixon Landing Road.
3. A median island from the southerly intersection with Ranch Drive northerly to the intersection with Dixon Landing Road.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 4
4. Gateway Improvements, at the southerly intersection of N. McCarthy Boulevard and Ranch Drive and southerly of Bridge No. 1 along N. McCarthy Boulevard, including curved stone planter walls, gateway columns with entry sign appurtenant mounding ornamental plantings including flat work, trees and ground cover, irrigation systems; all as shown on landscape plans.
5. Lighting costs in the District are limited to the supplemental pedestrian lights installed on the east side of McCarthy Boulevard between the two intersections at Ranch Drive and McCarthy Boulevard. The conventional lighting along McCarthy Boulevard is not included. There also exists decorative up-lighting for the Gateway Towers in other areas near the southern Ranch Drive intersection of McCarthy.
2.2.2 MILPITAS ENTRY SIGN
1. City of Milpitas Entry Identification Sign along N. McCarthy Blvd., including walls, columns, lighting, and other appurtenances.
2.2.3 RANCH DRIVE
1. Commencing at a Northerly location where the right-of-way of Ranch Drive is contiguous with the right-of-way of Interstate 880, thence southerly, a strip of land approximately 10 feet in width measured from the east face of curb of Ranch Drive, from the northerly connection with Interstate 880 and Ranch Drive, southerly 630 feet, more or less, thence 405 feet south to the southerly end of Gateway location, varying in width from 10 feet to 132 feet, more or less.
2. Gateway Improvements, at the southerly connection of Ranch Drive and Interstate 880, including curved stone planter walls, gateway columns with entry sign appurtenant mounding ornamental plantings including flat work, trees and ground cover, irrigation systems; all as shown on landscape plans (Part A), except the Shopping Center’s Monument Sign. As mentioned above, there also exists decorative up-lighting for the Gateway Towers in other areas near the southern Ranch Drive intersection of McCarthy.
2.3 Capital Improvements
In Fiscal Year 2021/22, the City initiated the design and construction of landscape and irrigation renovation on N. McCarthy Blvd. between State Route 237 and Dixon Landing Road and a portion of Ranch Drive. The landscape and irrigation renovation design has been completed and planting renovations will continue in 2026/27.
2.4 Overhead
In addition to the costs of maintaining the improvements mentioned above, the City will incur costs for staff time and expenses related to the management and maintenance of the improvements within the District. Staff time includes oversight and coordination of both City and contractor provided services, annual tax roll preparation, and addressing property owner questions and concerns. These activities are directly related to the maintenance of the improvements, and without them the improvements could not be efficiently completed or properly maintained on an ongoing basis.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 5
3. ESTIMATE OF COSTS
The estimated costs of maintenance and servicing of the improvements as described in the Plans and Specifications are summarized below.
3.1 District Budget
The Fiscal Year 2026/27 estimated cost budget for the maintenance and servicing of the improvements is as follows:
Description Fiscal Year 2026/27 Budget
Maintenance Staff and Contract Services(1) $388,800
Capital Equipment 0
Supplies 15,000
Utilities (Water, Electricity) 65,000
Reserve Fund 0
Capital Improvement Program 0
Maintenance Costs $468,800
NBS $5,380
City Staff District Administration 4,520
County Auditor-Controller Fee(2) 4,600
District Specific Costs $14,500
Total District Costs $483,300
General Benefit Contribution(3) (23,628)
Operating Reserve Contribution 0
Net Amount to be Assessed $459,672
Total District Square Footage(4) 11,794,540
Rate per Square Foot(5)(6) $0.03897
Maximum Rate Per Square Foot – 2026/27(7) $0.05864
(1) Fiscal Year 2026/27 Landscape Maintenance Contract Services includes Terracare and Irvine Company. (2) County Auditor-Controller Fee is currently 1% of the total levy submittal amount. (3) General Benefit Contribution is not applied to District Specific Costs, as these are special benefits to the District. (4) Total District Square Footage includes a 50% reduction for Parcel 5-7 (Sewer Main Pump Station) and Parcel 5-3C (Storm Pump Station).
(5) The Rate per Square Foot equals the Net Amount to be Assessed / Total District Square Footage. (6) The assessed rate cannot exceed the maximum rate.
(7) The April 1, 2026 CPI was not available at the time of writing of this report. The Fiscal Year 2026/27 CPI increase was estimated by using the February 1, 2026 CPI.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 6
3.1.1 OPERATING RESERVE
It is the intent of the City to maintain an operating reserve which shall not exceed the estimated costs of maintenance and servicing of the improvements prior to December 10 of the fiscal year, or when the City expects to receive its apportionment of special assessments from the County, whichever is later. The operating reserve balance information for the District is as follows:
Estimated Fiscal Year Ending 6/30/2026 Operating Reserve Cash Balance $333,345 Operating Reserve Collection for Fiscal Year 2026/27 0
Estimated Fiscal Year Ending 6/30/2027 Operating Reserve Cash Balance $333,345
3.1.2 CAPITAL IMPROVEMENT BUDGET
The City completed the replacement of the irrigation controllers and repairs of the irrigation system on N.
McCarthy Blvd. (between State Route 237 and Dixon Landing Road) and a portion of Ranch Drive. The City also installed planting in the median on Ranch Drive at the intersection of N. McCarthy Blvd. Planting renovations will continue in 2026/2027. As of March 20, 2026, the balance available for the Capital Improvement Project is $328,033.88. The City will utilize these funds, along with an annual collection of $75,000 via the District from Fiscal Year 2024/25 to Fiscal Year 2028/29, to finance the work.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 7
4. SPECIAL AND GENERAL BENEFIT
The improvements defined in Section 2 are expected to confer certain special benefits to parcels within the District. The special benefits are described in this section. Figures in this section are derived from a Special v. General Benefit Analysis performed in Fiscal Year 2020/21.
4.1 Identification of Benefit
Section 4 of Article XIIID of the California Constitution provides that once a local agency which proposes to impose assessments on property has identified those parcels that will have special benefits conferred upon them and upon which an assessment will be imposed, the local agency must next “separate the general benefits from the special benefits conferred,” and only the special benefits can be included in the amount of the assessments imposed.
4.2 Special Benefits Identified
The improvements described in Section 2 are expected to confer certain special benefits to parcels within the District. The special benefits conferred to property within the District can be grouped into three primary benefit categories: aesthetic benefit, safety benefit, and economic benefit. The three District benefit categories are further expanded upon below.
• Improved Aesthetics: The aesthetic benefit relates to the increase in the overall aesthetics as a result of the ongoing maintenance, servicing, and operation of the improvements within the District. The landscaping improvements enhance the overall image and desirability of the properties within the District. Street landscaping improvements improve the livability, commercial activity, appearance, and desirability for properties within the District. Regular maintenance ensures that the improvements do not reach a state of deterioration or disrepair, so as to be materially detrimental to properties adjacent to or in close proximity to the improvements. The overall appeal of the District is enhanced when improvements are in place and kept in a healthy and satisfactory condition. Conversely, appeal decreases when improvements are not well- maintained, unsafe, or destroyed by the elements or vandalism. Streetscapes have a significant effect on how people view and interact with their community.1 With streetscapes that are safe and inviting, people are more likely to walk, which can help reduce automobile traffic, improve public health, stimulate local economic activity, and attract residents and visitors to the community.2 • Increased Safety: Well-maintained areas mitigate crime, especially vandalism, and enhance pedestrian safety. A recent study found that after landscape improvements were installed, there was a 46% decrease in crash rates across urban arterial and highway sites and a second study reviewed found a 5% to 20% reduction in mid-block crashes after trees and planters in urban arterial roads were put in place. In addition, there is less graffiti, vandalism, and littering in outdoor spaces with natural landscapes than in comparable plant-less spaces. 3 The Victoria Transport
1 Victoria Transport Policy Institute. (2011). Community Livability. Helping to Create Attractive, Safe, Cohesive Communities.
Retrieved from http://www.vtpi.org/tdm/tdm97.htm.
2 Ibid.
3 Wolf, Kathleen L. (2010). Safe Streets – A Literature Review. In: Green Cities: Good Health (www.greenhealth.washington.edu).
College of the Environment, University of Washington.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 8 Policy Institute has found that streetscapes reduce traffic speeds and when combined with improved pedestrian crossing conditions can significantly reduce collisions. 4 • Economic Activity: Well-maintained street landscape improvements not only make adjacent properties appear more stable and prosperous but can spur investment in the property. The National Complete Streets Coalition notes that street design that is inclusive of all modes of transportation, where appropriate, not only improves conditions for existing businesses, but also is a proven method for revitalizing an area and attracting new development. 5 Landscaped sidewalks create an inviting place for customers to shop and do business. 6 Well-maintained and safe District areas will encourage an increase in the overall pedestrian activity. The area will become more pedestrian friendly, thus improving the retail environment by encouraging individuals to shop, dine, and stay within the District boundaries. The District will provide a cleaner more inviting environment to businesses and consumers which will attract, retain and expand the retail and business climate throughout. The effort will reduce vacancy rates and increase lease rates and utilization of property within the District.
4.3 General Benefits Identified
Section 4 of Article XIIID of the California Constitution provides that once a local agency which proposes to impose assessments on property has identified those parcels that will have special benefits conferred upon them and upon which an assessment will be imposed, the local agency must next “separate the general benefits from the special benefits conferred,” and only the special benefits can be included in the amount of the assessments imposed.
General benefit is an overall and similar benefit to the public at large resulting from the maintenance of the District’s improvements provided by the assessments levied. The improvements to be maintained by the District are located within the District boundaries only. There will be no District maintenance activities provided for improvements located outside of the District boundaries.
The ongoing maintenance of the District improvements will provide aesthetic, safety and economic activity benefits to the property within the District. However, it is recognized that the ongoing maintenance activities will also provide a level of benefit to some property within proximity to the District, as well as individuals passing through. Therefore, the general benefit created as a result of the District maintenance activities has been considered.
4.4 Quantification of Benefit
As a result of the maintenance and operation of the improvements, there will be a level of general benefit to people that do not work or intend to conduct business within the District. In order for property within the District to be assessed only for that portion of special benefits received from the District’s maintenance
4 Victoria Transport Policy Institute. (2011). Community Livability. Helping to Create Attractive, Safe, Cohesive Communities.
Retrieved from http://www.vtpi.org/tdm/tdm97.htm.
5 Pugliese, Philip. (2008). Complete Streets provide all the elements of multi-modal transportation. Retrieved from http://www.americantrails.org/resources/trans/completestreets08.html 6 U.S Department of Transportation. Federal Highway Administration. (2001). Designing Sidewalks and Trails for Access, Part II of II: Best Practices Design Guide. Retrieved from http://www.fhwa. dot. gov/ environment/bicycle_pedestrian/publications/sidewalk2/
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 9 activities, general benefits provided by the ongoing maintenance of the improvements need to be quantified. The amount of general benefit that is provided from the District’s maintenance activities cannot be funded via property owners’ assessments.
Based upon the City’s General Plan, the streets within the City are classified into one of the following categories: freeway, expressway, arterial, collector or local streets. The landscaping improvements are primarily located along N McCarthy Boulevard and Ranch Drive and situated within the public rights-of- way. The portion of the maintained landscaping that is located along N McCarthy Boulevard (classified as an arterial street) provides some general benefit to pass-through traffic.
Arterial streets are intended to provide a higher degree of mobility and generally serve longer vehicle trips.
The landscape improvements within the District boundaries not only serve the parcels in the immediate vicinity, but persons who live outside of the District and are passing by. The City’s most recent traffic study7 completed in 2016 does not identify the percentage of traffic, which is pass-through traffic, but it does provide an estimated number of daily trips for N McCarthy Boulevard at the entrance of the District.
However, the daily trip count estimate is lower than the trip count utilized in the 2015 findings report. This would not be expected with the increase in development to this area. Therefore, In the absence of a more recent reading of traffic along N. McCarthy Boulevard, the 2015 average number of daily trips of 35,050 per the General Plan has been utilized for the base trip count.
In order to account for the estimated increase in daily average trips as a result of the increased development, the City commissioned a traffic study for each new development. Per the traffic studies, it is estimated there will be an increase of 9,156 average daily trips. Adding this increase to the 35,050 previously identified above, the estimated number of average vehicles per day is 44,206 as shown below.
Street Name
Average Number of
Vehicles per Day
N McCarthy Boulevard – between SR 237 and Ranch Drive 44,206
Before the determination and allocation of the percentage of special and general benefit for the District can be made, the estimated pass-through traffic must be computed. The pass-through trips are vehicles driving along the maintained streets for a portion of their trips, but not working, shopping or conducting business in the District or benefiting from the landscaping improvements in place.
Research consistently shows that developments with multiple land uses that make walking safe and convenient and are near other development, allow residents and workers to drive significantly less if they choose. While this District is not a mixed-use development, there are multiple land uses adjacent to one another. Therefore, treating this development area as though the uses were separated and accessible only by car would result in inflated trip counts in comparison to conventional, single-use developments.
In lieu of having a comprehensive traffic study that identifies the pass-through traffic, the estimated number of special benefit trips for each parcel has been determined using the average daily trips according
7 City of Milpitas. (2016 Traffic Study). Retrieved from City’s Assistant Traffic Engineer
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 10 to the ITE Trip Generation Report, 9th Edition8 and the 2010 NCHRP Report 684 Enhancing Trip Capture Estimation for Mixed-use Developments9.
Utilizing the ITE Trip Generation Report, each parcel within the District was assigned an average daily number of special benefit trips using the parcel’s land use, building size or number of units. Further, to ensure the number of trips generated by the parcels has not been overstated, the percentage of total trips that are made internally within the development has been considered. Using the 2010 NCHRP Report 684 Enhancing Trip Capture Estimation for Mixed-Use Developments, the total special benefit trips have been reduced by approximately 31% (19,258 trips) to account for internal trips between the various businesses within the District. The total number of special benefit trips is therefore 42,864 as shown below.
Property Type Combined Trip Generations
Retail (ITE Land Uses 815, 820, 869) 24,978.76
Office (ITE Land Uses 710, 714, 750) 15,832.41
Industrial/Warehousing (ITE Land Uses
140, 150, 151) 8,660.43
Fast-Food Restaurant w/ drive thru (ITE
Land Use 934) 3,925.30
Gas Station (ITE Land Use 945) 3,758.16
Restaurant (ITE Land Uses 931, 932) 3,710.03
Hotel (ITE Land Use 310) 1,256.82
Total Trips 62,121.92
Internal Trip Reduction1 (19,257.79)
Total Adjusted Special Benefit Trips 42,864.12
(1) The internal trip rate percentage was calculated by using the NCHRP 684 Internal Rate Capture Estimation Tool.10
The total of all special benefit trips was removed from the average number of vehicles per day traveling within the District to estimate the number of pass-through trips daily.
Street Name
Average Number
of Vehicles
per Day
Less:
Estimated Special
Benefit Trips
Estimated Number
of Pass
Through Trips
Estimated %
General
Benefit
McCarthy Blvd. 44,206 42,864 1,342 3.04%
Based on the above calculations, the general benefit portion of the improved aesthetics, increased safety, and economic activity benefits resulting from the landscaping improvements is estimated to be 3.04%.
Pass-thru Vehicle General Benefit 3.04%
8 Trip Generation, 9th Edition: An Informational Report of the Institute of Transportation Engineers. (2012) Washington, DC: Institute of Transportation Engineers.
9 Bochner, Brian S., Hooper, Kevin, Sperry, Benjamin and Dunphy, Robert. National Cooperative Highway Research Program, Transportation Research Board of National Academies (2011). NCHRP Report 684 Enhancing Trip Capture Estimation for Mixed - Use Developments. Retrieved from onlinepubs.trb.org/onlinepubs/nchrp/nchrp_rpt_684.pdf 10 Ibid.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 11 The commonly accepted distance people will walk for public transportation, goods and services is one- quarter mile.11 However, based on the location of the District, and given that it is bounded by State Route 880 and 237, and Coyote Creek, there is not an efficient or practical means of walking into the District.
Although unlikely, a person may decide to use the paths within the District, and as such the general benefit portion of the improved aesthetics, increased safety, and economic activity benefits resulting from the landscaping improvements is estimated to be 1.00%.
Pass-thru Walking General Benefit 1.00%
An estimated 1% of all US trips are made by bicycle12. Although the District is bounded by State Route 880 and 237, and Coyote Creek, there is a bike lane on N McCarthy Boulevard and a bike path along Coyote Creek13. According to the National Household Travel Surveys, 49% of bike trips are for recreation, exercise, and sports14. As result of the District maintenance activities, there will be a level of general benefit to bicycle traffic that is not associated with property in the District. As such the general benefit portion of the improved aesthetics, increased safety, and economic activity benefits resulting from the landscaping improvements is estimated to be .50%, rounded up to 1.00%.
Pass-thru Biking General Benefit 1.00%
Collective District-Wide General Benefit
Since the District is comprised of improved aesthetics, safety, and economic activity benefits resulting from the collective landscaping improvements, the activity of both pedestrians and vehicles must be addressed in a collective form rather than independently. The sum of the calculated general benefits is the total general benefit related to vehicle, walking, and biking pass-thru traffic. This general benefit result is provided in the table below:
Pass-thru Vehicle General Benefit 3.04%
Pass-thru Walking General Benefit 1.00%
Pass-thru Biking General Benefit 1.00%
Total General Benefit 5.04%
The general benefit, which is the percentage of the total budget that must be funded through sources other than assessments, is 5.04%. The special benefit then, which is the percentage of the budget that may be funded by assessments, is 95.00%. This general benefit percentage is in line with the level of general benefit determined by the assessment engineer at formation of the District (less than 10%).
11 Walkscore. (2014). Walk Score Methodology. Retrieved from http://www.walkscore.com/methodology.shtml 12 U.S Department of Transportation. Federal Highway Administration. (2011). Summary of Travel Trends: 2009 National Household Travel Survey. (Report No. FHWA-PL-11-022). Retrieved from http://nhts.ornl.gov 13 City of Milpitas. (2002). General Plan. Retrieved from http://www.ci.milpitas.ca.gov 14 Pucher, J., Buehler R., Meron, F., and Bauman, A. American Journals of Public Health, Supplement 1, Vol 101, No S1 (2011).
Walking and Cycling in the United States, 2001-2009: Evidence from the National Household Travel Surveys. Retrieved from http://www.ncbi.nlm.nih.gov/pubmed/21551387
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 12
4.5 Special Benefit Trips
The detailed breakdown of the estimated special benefit trips for each parcel in the District is shown in the following table.
Assmt ID
Assessor’s
Parcel
Number Land Use Description Acreage
Gross
Leasable
Area
Average
Trip Rate1
Estimated # of
Daily Special
Benefit Trips2
1-1A-1 022-54-016 710 - General office 1.05 8,500 11.03 93.76 1-1A-2 022-54-017(3) 310 – Hotel 3.29 83,310 8.17 680.64 1-1A-3 022-54-018(3) 310 – Hotel 2.31 70,524 8.17 576.18 1-1A-4 022-54-019 934 - Fast Food 0.19 0.00 496.12 0.00 1-1B 022-54-008 934 - Fast Food 0.78 2,912 496.12 1,444.70 1-2 022-54-002 820 - Shopping Center 0.58 5,600 42.70 239.12 1-3 022-54-003 932 - High Vol. Restaurant 1.02 5,465 127.15 694.87 1-4A 022-54-009 869 - Home Superstore 8.47 86,250 20.00 1,725.00 1-4B 022-54-012 820 - Shopping Center 3.02 15,000 42.70 640.50 1-4C 022-54-013 820 - Shopping Center 0.23 10,000 42.70 427.00 1-4D 022-54-015 931 - Quality Restaurant 1.78 8,285 89.95 745.24 1-4E 022-54-014 932 - High Vol. Restaurant 0.64 3,710 127.15 471.73 1-4F 022-54-011 820 - Shopping Center 1.31 9,100 42.70 388.57 1-4G 022-54-010 931 - Quality Restaurant 1.03 7,476 89.95 672.47 2-1 022-53-001 931 - Quality Restaurant 0.75 6,500 89.95 584.68 2-2 022-53-002 820 - Shopping Center 1.23 15,020 42.70 641.35 2-3 022-53-003 820 - Shopping Center 0.76 12,000 42.70 512.40 2-4 022-53-004 934 - Fast Food 0.6 2,000 496.12 992.24 2-5 022-53-005 934 - Fast Food 0.74 3,000 496.12 1,488.36 2-6 022-53-006 820 – Shopping Center 1.19 51,250 45.04 2,308.30 2-7 022-53-007 820 - Shopping Center 21.92 187,134 42.70 7,990.62 3 022-29-016 815 - Discount Superstore 14.56 125,000 50.75 6,343.75 4-1A-1 022-56-005 714 - Corp Headquarters 2.04 115,753 7.98 923.71 4-1A-2 022-56-006 714 - Corp Headquarters 2.06 174,483 7.98 1,392.37 4-1A-3 022-56-007 714 - Corp Headquarters 2.07 174,483 7.98 1,392.37 4-1A-4 022-56-008 Undeveloped 34.52 - - -
4-1A-5 022-56-009 Parking Lot 24.32 - - -
4-1B 022-29-037 Undeveloped 6 - - -
5-1A-1 022-29-034 750 - Office Park 36.49 572,660 11.42 6,539.78 5-2A-1 022-29-035 750 - Office Park 31.31 480,772 11.42 5,490.42 5-3A-1 022-29-040 150 – Warehousing/710
General Office
15.55 313,978 8.87 2,784.67
5-3A-2 022-29-041 931 – Quality Restaurant 0.14 6,015 89.95 541.05 5-3A-3 022-29-042 150 – Warehousing/710
General Office 6.94 136,632 8.87 1,211.79
5-3A-4 022-29-043 150 – Warehousing/710
General Office 7.36 122,208 8.87 1,083.86
5-3A-5 022-29-044 140 - Manufacturing and 710
General Office 7.73 131,331 8.87 1,164.77
5-3B-1A 022-30-054 140 - Manufacturing and 710
General Office 5.63 99,576 8.87 883.14
5-3B-2 022-30-038 Undeveloped 10 - - -
5-3B-3 022-30-039 Undeveloped 5 - - -
5-3C 022-30-0354 Pump Station 0.19 - - 1.00
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 13 Assmt ID
Assessor’s
Parcel
Number Land Use Description Acreage
Gross
Leasable
Area
Average
Trip Rate1
Estimated # of
Daily Special
Benefit Trips2
5-5A-1 022-30-055 815 - Discount Superstore 5.6 74,131 50.75 3,762.15 5-5A-2 022-30-056 915 – Gasoline/Service Station 0.59 3,182 1,181.07 3,758.16 5-5A-3 022-30-057 151 – Mini-Warehouse 3.15 114,707 13.34 1,530.19 5-6 022-30-041 Open Space 0 - - -
5-7 022-30-0494 Sewer Pump Station 9.12 8,500 11.03 1.00 Total Estimated Daily Special Benefit Trips 62,121.92
Internal Trip Reduction5 (19,257.79)
Total Special Benefit Trips 42,864.12
(1) Average Trip Rate per Day is from the Institute of Traffic Engineer’s, Trip Generation Report. 15 (2) Average Number of Special Benefit Trips per Day is the Average Trip Rate times each 1,000 square feet of gross leasable area. (3) Average Number of Special Benefit Trips per Day is the Average Trip Rate times number of hotel rooms for this parcel. (4) Pump Station trips are an estimate.
(5) The internal trip rate percentage was calculated by using the NCHRP 684 Internal Rate Capture Estimation Tool. 16
15 Trip Generation, 9th Edition: An Informational Report of the Institute of Transportation Engineers. (2012) Washington, DC: Institute of Transportation Engineers.
16 Bochner, Brian S., Hooper, Kevin, Sperry, Benjamin and Dunphy, Robert. National Cooperative Highway Research Program, Transportation Research Board of National Academies (2011). NCHRP Report 684 Enhancing Trip Capture Estimation for Mixed - Use Developments. Retrieved from onlinepubs.trb.org/onlinepubs/nchrp/nchrp_rpt_684.pdf
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 14
5. METHOD OF ASSESSMENT
5.1 Introduction
The special benefits that accrue to the properties in the District are limited to those properties that abut an improved public street or which have been obligated by issuance of bonds for necessary public improvements (the “Benefited Parcels”). Other properties in the District receive only a general benefit from the work of the improvements, and there is also some general benefit that accrues to the community as a whole. As outlined in Section 4, the total amount of general benefit from the improvements is determined to be 5.04%.
The Benefited Parcels receive a special benefit proportionate to their net acreage and thus they are assessed on the basis of total net acreage for all costs associated with the maintenance and installation of the District’s improvements, with the following exceptions:
• Of the 9.12 acres of parcel 022-30-049 (sewer pump station), 5.51 acres is the pump station and is not assessable. The remaining 3.61 acres does not benefit from landscaping as much as other Benefited Parcels because it is dedicated to municipal sanitary sewer and storm facilities use and will not otherwise be developed. Therefore, it is assigned a special benefit equal to 50% of other Benefited Parcels.
• Parcel 022-30-035 (storm pump station) does not benefit from landscaping as much as other Benefited Parcels because it is dedicated to municipal sanitary sewer and storm facilities use and will not otherwise be developed. Therefore, it is assigned a special benefit equal to 50% of other Benefited Parcels.
• Parcel 022-29-037 and parcel 022-30-041 are dedicated to open space and therefore do not receive special benefit from the maintenance and improvements.
5.2 Method of Assessment Spread
The amount of assessment levied on each Benefited Parcel in the District, for Fiscal Year 2026/27, is $0.03897 per square foot. The assessment rate was determined by taking the Fiscal Year 2026/27 Net Amount to be assessed ($459,672) divided by the total net square footage of the District (11,794,540 sq. ft.).
The maximum assessment rate for Fiscal Year 2026/27 is approximately $0.0586, which is a preliminary number. Each year the maximum assessment rate per square foot is increased by the percentage change from April 1st of the prior year to April 1st of the current year in the U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Indexes, Pacific Cities and U.S. City Average, San Francisco-Oakland- Hayward. The April 1, 2026 CPI was not available at the time of writing of this report. For purposes of this report, the CPI increase was estimated by using the February 1, 2026 CPI.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report 15
5.3 Maximum Assessment Rates
The following table provides the historical maximum assessment rate for Fiscal Year 2001/02 through the current fiscal year:
Fiscal Year CPI Percentage Increase(1) Assessment Rate Range(2) 2001/02 189.1 N/A $0.0120 $0.0300
2002/03 193.0 2.06% 0.0122 0.0306
2003/04 197.3 2.23% 0.0125 0.0313
2004/05 198.3 0.51% 0.0126 0.0315
2005/06 202.5 2.12% 0.0129 0.0321
2006/07 208.9 3.16% 0.0133 0.0331
2007/08 215.842 3.32% 0.0137 0.0342
2008/09 222.074 2.89% 0.0141 0.0352
2009/10 223.854 0.80% 0.0142 0.0355
2010/11 227.697 1.72% 0.0144 0.0361
2011/12 234.121 2.82% 0.0149 0.0371
2012/13 238.985 2.08% 0.0152 0.0379
2013/14 244.675 2.38% 0.0155 0.0388
2014/15 251.495 2.79% 0.0160 0.0399
2015/16 257.622 2.44% 0.0163 0.0409
2016/17 264.565 2.70% 0.0168 0.0420
2017/18 274.589 3.79% 0.0174 0.0436
2018/19 283.422 3.22% 0.0180 0.0450
2019/20 294.801 4.01% 0.0187 0.0468
2020/21 298.074 1.11% 0.0189 0.0473
2021/22 309.419 3.81% 0.0196 0.0491
2022/23 324.878 5.00% 0.0206 0.0515
2023/24 338.496 4.19% 0.0215 0.0537
2024/25 351.247 3.77% 0.0223 0.0557
(1) Percentage increase from April 1 of the prior year to April 1 of the current year in the US Department of Labor, Bureau of Labor Statistics, Consumer Price Indexes, Pacific Cities and US City Average, San Francisco-Oakland-Hayward. (2) The left and right column indicate the minimum and maximum assessment rate, respectively. (3) The April 1, 2026 CPI was not available at the time of writing of this report. The Fiscal Year 2026/27 CPI increase was estimated using the February 1, 2026 CPI.
5.4 Appeals
Any property owner who feels that the amount of their assessment is in error as a result of incorrect information being used to apply the foregoing method of spread may file an appeal with the Finance Director of the City. Any such appeal is limited to the correction of an assessment during the current or, if before July 1, the upcoming fiscal year. Upon the filing of any such appeal, the Finance Director shall promptly review the information provided by the property owner and if he/she finds that the assessment should be modified, he/she shall have the authority to make the appropriate changes in the assessment roll. If any such changes are provided after the assessment roll has been filed with the County for collection, the Finance Director is authorized to refund to the property owner the amount of any approved reduction.
2025/26 354.432 2.69% 0.0229 0.0572
2026/27 363.211 2.48 (3) 0.0235 0.0586
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report A
APPENDIX A - ASSESSMENT DIAGRAM
The following page provides a copy of the assessment diagram of the District.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 95-1 Engineer’s Report B
APPENDIX B - ASSESSMENT ROLL
Assessor’s parcel identification, for each lot or parcel within the District, shall be based on the Santa Clara County Assessor’s secured roll data for the applicable year in which this report is prepared and is incorporated herein by reference.
A listing of assessor’s parcels assessed within the District for Fiscal Year 2026/27, along with the assessment amounts, is on file in the office of the City Clerk and incorporated herein by reference. Based on County Assessor’s secured roll data, current assessor’s parcels, including corrected and/or new assessor’s parcels, will be submitted and/or resubmitted to the Santa Clara County Auditor/Controller. The annual assessment amount to be levied and collected for the resubmitted parcel(s) shall be determined in accordance with the method of apportionment and assessment rate approved in this report. Therefore, if a single assessor’s parcel has a status change in development, other land use change, or subdivides into multiple assessor’s parcels, the assessment amounts applied to each of the new assessor’s parcels shall be recalculated and applied according to the approved method of apportionment and assessment rate rather than a proportionate share of the original assessment amount.
City of Milpitas
LLMAD No. 95-1
Final Billing Detail Report for Fiscal Year 2026/27
APN Situs Address Net Square Foot Fiscal Year 2026/27 Levy 022-29-016 301 RANCH DR 634,234 $24,718.16
022-29-034 430 N MCCARTHY BLVD 1,589,504 61,948.20
022-29-035 820 N MCCARTHY BLVD 1,363,864 53,154.24
022-29-040 407N N N MCCARTHY BLVD 677,532 26,405.64
022-29-041 507N N N MCCARTHY BLVD 43,691 1,702.76
022-29-042 607N N N MCCARTHY BLVD 302,350 11,783.56
022-29-043 707 N MCCARTHY BLVD 320,732 12,499.98
022-29-044 807 N MCCARTHY BLVD 336,545 13,116.24
022-30-035 4,138 161.26
022-30-038 435,600 16,976.76
022-30-039 1207 N MCCARTHY BLVD 217,800 8,488.38
022-30-049 78,626 3,064.30
022-30-054 907 N MCCARTHY BLVD 245,330 9,561.30
022-30-055 1645 N MCCARTHY BLVD 243,936 9,506.98
022-30-056 1605 N MCCARTHY BLVD 25,875 1,008.40
022-30-057 1585 N MCCARTHY BLVD 137,040 5,340.88
022-53-001 275 RANCH DR 32,670 1,273.24
022-53-002 179 RANCH DR 53,579 2,088.14
022-53-003 125 RANCH DR 33,106 1,290.22
022-53-004 81 RANCH DR 26,136 1,018.60
022-53-005 41 RANCH DR 32,234 1,256.28
022-53-006 63 RANCH DR 51,836 2,020.22
022-53-007 11 RANCH DR 954,835 37,213.06
022-54-002 74 RANCH DR 25,265 984.64
022-54-003 84 RANCH AVE 44,431 1,731.62
022-54-008 50 RANCH DR 33,977 1,324.18
022-54-009 120 RANCH DR 368,953 14,379.30
022-54-010 110 RANCH DR 44,867 1,748.60
022-54-011 170 RANCH DR 57,064 2,223.94
022-54-012 200 RANCH DR 131,551 5,126.98
022-54-013 212 RANCH DR 10,019 390.46
022-54-014 190 RANCH DR 27,878 1,086.50
022-54-015 260 RANCH DR 77,537 3,021.86
022-54-016 12 RANCH DR 46,174 1,799.52
022-54-017 30 RANCH RD 143,312 5,585.34
022-54-018 40 RANCH DR 100,624 3,921.62
022-54-019 8,276 322.54
022-56-005 115 N MCCARTHY BLVD 88,427 3,446.28
022-56-006 135 N MCCARTHY BLVD 89,734 3,497.20
022-56-007 155 N MCCARTHY BLVD 90,169 3,514.18
022-56-010 205 N MCCARTHY BLVD 1,489,899 58,066.26
022-56-011 1,075,192 41,903.76
Slight variances may occur due to rounding
Copyright © 2013 by NBS Page 1 of 2 03/25/2026 03:52:44PM
City of Milpitas
LLMAD No. 95-1
Final Billing Detail Report for Fiscal Year 2026/27
APN Situs Address Net Square Foot Fiscal Year 2026/27 Levy 11,794,540 $459,671.5842 Accounts
Slight variances may occur due to rounding
Copyright © 2013 by NBS Page 2 of 2 03/25/2026 03:52:44PM
CITY OF MILPITAS
AGENDA REPORT
(AR)
Item Title: Conduct a Public Hearing and Adopt a Resolution Confirming the Assessment and Ordering the Levy for the Landscaping and Lighting Maintenance Assessment District No. 98-1 - Sinclair Horizon in Fiscal Year 2026-27 (Staff Contact: Christian Di Renzo, Public Works Director, 408-586-2602; and Michael Silveira, City Engineer, 408-586-3303)
Category: Public Hearings-Community Development
Meeting Date: 5/19/2026
Recommendation: (1) Open the public hearing, receive any comments, and move to close the hearing following any testimony, and (2) adopt a resolution confirming the assessment and ordering the levy for Landscaping and Lighting Maintenance Assessment District No. 98-1 - Sinclair Horizon in Fiscal Year 2026-27.
BACKGROUND:
On June 16, 1998, the City Council completed its proceedings in accordance with and pursuant to the Landscaping and Lighting Act of 1972, Part 2, Division 15 of the California Streets and Highways Code (commencing with Section 22500) (Act) to establish the Landscaping and Lighting Maintenance Assessment District 98-1 (LLMD 98-1 Sinclair Horizon). The LLMD provides for the maintenance and improvement of public landscaping, irrigation systems, and pedestrian walking path adjacent to Sinclair Frontage Road and Los Coches Creek abutting the Sinclair Horizon residential subdivision areas as shown on the attached location map (Attachment A).
Staff retained NBS Government Finance Group (NBS) for the purpose of assisting with the annual levy assessment, and the preparation and filing of the report required pursuant to Section 22622 of the Act. The City Council adopted Resolution No. 9480 initiating proceedings for the annual levy and collection of assessments and ordering the preparation of the Annual Engineer’s Report on February 17, 2026; and adopted Resolution No. 9496 approving the Annual Engineer’s Report, and Resolution No. 9497 declaring its intention to levy and collect assessment and provide notice of a public hearing to be held on May 19, 2026 for LLMD 98-1 Sinclair Horizon in Fiscal Year (FY) 2026-27.
ANALYSIS:
The Act requires City Council to conduct a public hearing and adopt a Resolution confirming the assessment and ordering the levy (Attachment B) for the LLMD 98-1 Sinclair Horizon in FY 2026-27. According to the FY 2026-27 Annual Engineer’s Report (Attachment C), the total assessment in FY 2026-27 is $538.32 per lot which is under the maximum assessment rate of $605.63 per lot. The FY2026-27 rate is approximately .0167% lower than the previous fiscal year (FY 2025-26) rate of $538.41.
Staff recommend the City Council open the public hearing, receive any comments or written protests, and move to close the hearing following any testimony, and adopt a Resolution confirming the assessment and ordering the levy for the LLMD 98-1 Sinclair Horizon in FY 2026-27.
PROJECT SCHEDULE/KEY MILESTONES
Upon City Council adoption of the Resolution, NBS will prepare and submit the levy of assessment to the County of Santa Clara for FY 2026-27 to secure tax roll.
POLICY ALTERNATIVE(S):
Alternative 1: Do not adopt a Resolution confirming the assessment and ordering the levy for LLMD 98-1 Sinclair Horizon in FY 2026-27.
Pros: None.
Cons: If the City Council does not adopt the Resolution according to the Act, the City will be unable to collect assessments for LLMD 98-1 Sinclair Horizon.
Reason not recommended: Staff recommend approving the Resolution confirming the assessment and ordering the levy for FY2026-27 to allow for the continued maintenance and service of LLMD 98-1 Sinclair Horizon.
FISCAL IMPACT:
The levy and collection of assessments provides the City with the needed resources for the maintenance and the servicing improvements of the LLMD 98-1 Sinclair Horizon. The FY 2026-2027 maintenance budget is estimated to be $66,785. This funding is estimated and included in the FY 2026-27 Proposed budget, which will be brought forward to City Council for review and approval in June 2026. The City maintains an operating reserve, not to exceed the estimated maintenance costs, prior to December 10th of the fiscal year or when it expects to receive its apportionments of special assessments from the County of Santa Clara, whichever comes first.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):
A levy and collection of assessments has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment and is not a project pursuant to Pub. Resources Code, § 21065 and Cal. Code Regs., tit. 14, § 15378. The action is a fiscal activity of the City government or an action to create a City government funding mechanism that does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment and is not a project pursuant to Cal. Code of Regs., tit. 14, § 15378. To the extent the funds generated by this levy and collection would be used to fund any currently contemplated projects, such projects entail the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use and is exempt from CEQA pursuant to Cal. Code Regs., tit. 14, § 15301.
ATTACHMENT(S):
(a) Location Map
(b) Resolution Confirming the Assessment and Ordering the Levy (c) FY2026-27 Annual Engineer’s Report for LLMD No. 98-1 Sinclair Horizon
CITY OF MILPITAS
LANDSCAPING MAINTENANCE DISTRICT (LMD) 98-1
(N.T.S.)
2026-2027 FISCAL YEAR LANDSCAPE AREA FUNDED FOR MAINTENANCE S T
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILPITAS
CONFIRMING THE ASSESSMENT AND ORDERING THE LEVY FOR THE
LANDSCAPING AND LIGHTING MAINTENANCE ASSESSMENT DISTRICT NO. 98-1 - SINCLAIR HORIZON FOR FISCAL YEAR 2026-27
WHEREAS, on June 16, 1998, the City Council (the “City Council”) of the City of Milpitas (the “City”) completed its proceedings in accordance with and pursuant to the Landscaping and Lighting Act of 1972, Part 2, Division 15 of the California Streets and Highways Code (commencing with Section 22500) (the “Act”) to establish Landscaping and Lighting Maintenance Assessment District No. 98-1 - Sinclair Horizon (the “Assessment District”), for the purpose of paying for the installation, construction, maintenance and/or servicing of certain improvements authorized under the Act, and incidental expenses in connection therewith (collectively, the “Improvements”); and
WHEREAS, the City retained NBS Government Finance Group for the purpose of assisting with the annual levy of the Assessment District, and the preparation and filing of an Annual Engineer Report in accordance with Section 22565, et seq., of the Act; and
WHEREAS, on February 17, 2026, the City Council adopted a resolution initiating processing of the annual levy of the Assessment District, and the preparation and filing of an Annual Engineering Report; and
WHEREAS, on April 21, 2026, the City Council adopted resolution approving the Annual Engineer Report and declaring its intention to hold a Public Hearing concerning the levy and collection of assessments within the Assessment District; and
WHEREAS, a Public Hearing has been held and concluded and notice thereof was duly given in accordance with Section 22626 of the Act; and
WHEREAS, at the time and place specified in the Resolution of Intention the City Council conducted such hearing and considered all objections to the assessment.
NOW, THEREFORE, the City Council of the City of Milpitas hereby finds, determines, and resolves as follows:
1. Confirmation of Assessment and Diagram: The City Council hereby confirms the assessment and the diagram as is described in full detail in the Annual Report on file with the City Clerk.
2. Levy of Assessment: Pursuant to Section 22631 of the Act, the adoption of this resolution shall constitute the levy of an assessment for the fiscal year commencing July 1, 2026, and ending June 30, 2027.
3. Ordering of the Levy: The City Council hereby orders NBS to prepare and submit the levy of assessments to Santa Clara County for placement on the Fiscal Year 2026-27 secured property tax roll.
2 Resolution No. xxxx
PASSED AND ADOPTED this _____ day of ___________, 2026, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST: APPROVED:
_____________________________ _____________________________ Suzanne Guzzetta, City Clerk Carmon Montano, Mayor
APPROVED AS TO FORM:
_____________________________
Christian M. Curtis, City Attorney
Fiscal Year 2026/27 Engineer’s Report For:
Landscaping and Lighting Maintenance
Assessment District No. 98-1
May 2026
CITY OF MILPITAS
LANDSCAPING AND LIGHTING MAINTENANCE ASSESSMENT DISTRICT NO. 98-1 455 East Calaveras Boulevard
Milpitas, California 95035
(408) 586-3000
CITY COUNCIL
Carmen Montano, Mayor
Gary Barbadillo, Vice Mayor
Evelyn Chua, Council Member
Hon Lien, Council Member
William Lam, Council Member
CITY STAFF
Michael Silveira, PE, City Engineer
Luz Cofresi-Howe, Finance Director/Risk Manager
Christian Di Renzo, Public Works Director
NBS
Kristin Harvey, Client Success Ambassador
Adina McCargo, Project Manager
Jason Roth, Administrator
TABLE OF CONTENTS
1. Engineer’s Letter ............................................................................................................. 1
2. Plans and Specifications .................................................................................................. 3
2.1 Location of Improvements ...................................................................................... 3
2.2 Landscaping Improvements .................................................................................... 3
2.3 Capital Improvements ............................................................................................. 4
2.4 Overhead ................................................................................................................. 4
3. Estimate of Costs ............................................................................................................ 5
3.1 District Budget ......................................................................................................... 5
4. Special and General Benefit ............................................................................................ 7
4.1 Introduction ............................................................................................................. 7
4.2 Special Benefits Identified ....................................................................................... 7
4.3 General Benefits Identified ..................................................................................... 8
4.4 Quantification of Benefit ......................................................................................... 8
5. Method of Assessment ................................................................................................. 13
5.1 Method of Assessment Spread ............................................................................. 13
5.2 Maximum Assessment Rates ................................................................................ 14
5.3 Appeals .................................................................................................................. 14 Appendix A - Assessment Diagram ......................................................................................... A Appendix B - Assessment Roll ................................................................................................ B
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 98-1 Engineer’s Report 1
1. ENGINEER’S LETTER
WHEREAS, in 1998, the City Council of the City of Milpitas (the “City”), State of California, under the Landscaping and Lighting Act of 1972 (the “Act”), created the City of Milpitas Landscaping and Lighting Maintenance Assessment District No. 98-1 (the “District”) to provide for the continued maintenance, operation, and administration of various improvements within the boundaries of the District; and WHEREAS, the City Council has directed NBS to prepare and file a report for Fiscal Year 2026/27 in accordance with Chapter 1, Article 4 of the Act presenting plans and specifications describing the general nature, location, and extent of the improvements to be maintained; an estimate of the costs to maintain, operate, and service the improvements for the District for the referenced fiscal year; a diagram for the District showing the area and properties to be assessed; and an assessment of the estimated costs to maintain and service the improvements, stating the net amount to be assessed upon all assessable lots or parcels within the District in proportion to the special benefit received.
NOW THEREFORE, the following assessments have been calculated in accordance with the assessment methodology adopted and approved by the City Council at the time of District formation, and are made to cover the portion of the estimated costs of maintenance, operation, and servicing of the improvements, to be paid by the assessable real property within the District in proportion to the special benefit received:
District Parcels
2026/27
Maximum Assessment
Rate per Lot(1)
2026/27
Actual Assessment
Rate per Lot
2026/27
Net Amount to be
Assessed(2)(3)
LLMAD 98-1 98 $605.63 $538.32 $52,755.36
(1) The April 1, 2026 Consumer Price Index (CPI) provided by the U.S. Bureau of Labor Statistics was not available at the time of writing of this report. The Fiscal Year 2026/27 CPI increase was estimated using the February 1, 2026 CPI. (2) Amounts placed on the tax roll include the 1% Santa Clara County Collection Fee. (3) This amount is only an estimate and does not reflect the final billed amount with rounding adjustments. Refer to Section 7 for the rounded figure.
I identified all parcels which will have a special benefit conferred upon them from the improvements described in District’s Plans and Specifications section of this Engineer’s Report (the “Benefited Parcels”).
For particulars as to the identification of said parcels, reference is made to the Assessment Diagram, a copy is on file in the office of the City Clerk.
I have assessed the costs and expenses of the improvements upon the Benefited Parcels. In making such assessment:
a. The proportionate special benefit derived by each Benefited Parcel from the improvements was determined in relationship to the entirety of the maintenance costs of the improvements; b. No assessment has been imposed on any Benefited Parcel which exceeds the reasonable cost of the proportional special benefit conferred on such parcel from the improvements; and c. Any general benefits from the improvements have been separated from the special benefits and only special benefits have been assessed.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 98-1 Engineer’s Report 3
2. PLANS AND SPECIFICATIONS
The District provides for the continued administration, maintenance, operation, and servicing of various improvements located within the public right-of-way and dedicated easements within the boundaries of the District.
2.1 Location of Improvements
The District is located in the City of Milpitas, bounded on the east by Sinclair Frontage Road, on the west by Berryessa Creek, and on the north by Los Coches Street. The improvements maintained include public landscaping and irrigation improvements, including jogging paths, planter walls, grass berms, and ornamental planting, which are primarily situated within the public rights-of-way and dedicated public easements within the District.
2.2 Landscaping Improvements
The landscaping and irrigation improvements were installed within the District in order to enhance the overall visual appearance for adjacent parcels. The improvements consist of the maintenance and operation of any or all public landscaping and irrigation improvements adjacent to curbs, including asphalt concrete jogging paths, planter walls, grass berms, and appurtenant irrigation systems; ornamental planting including lawns, shrubs, and trees, including necessary repairs, replacements, water, electric current, spraying, care, supervision, debris removal and all other items of work necessary and incidental for proper maintenance and operation thereof. The landscaping and irrigation improvements are collectively referred to as “landscaping improvements.” All such work will be performed in the following areas:
2.2.1 BERRYESSA CREEK
Due to the widening of the creek, improvements in Berryessa Creek were removed. Any improvements maintained in this reach (asphalt concrete jogging path, exercise equipment, planting, and irrigation) will no longer be maintained or improved.
2.2.2 LOS COCHES CREEK
1. A strip of land 812 feet long, 14 feet in width along the south bank of Los Coches Creek adjacent to Tract 9018. The improvements include an asphalt concrete jogging path, exercise equipment, planting, and irrigation.
2. A strip of land 5.5 feet wide within the Los Coches Street right-of-way between the back of sidewalk and the right-of-way along the south side of Los Coches Street between Berryessa Creek and Sinclair Frontage Road. The improvements include planting and irrigation.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 98-1 Engineer’s Report 4
2.3 Capital Improvements
In 2023, the City completed the replacement of the irrigation controller and repairs of the irrigation system along portions of Los Coches Street and Sinclair Frontage Road. The City is planning to continue planting renovations in 2026/2027.
2.4 Overhead
In addition to the hard costs of maintaining the improvements mentioned above, the City will incur costs for staff time and expenses related to the management and maintenance of the improvements within the District. Staff time includes oversight and coordination of both City and contractor provided services, annual tax roll preparation, and addressing property owner questions and concerns. These activities are directly related to the maintenance of the improvements, and without them the improvements could not be efficiently completed or properly maintained on an ongoing basis.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 98-1 Engineer’s Report 5
3. ESTIMATE OF COSTS
The estimated costs of maintenance and servicing of the improvements as described in the Plans and Specifications are summarized below.
3.1 District Budget
The Fiscal Year 2026/27 estimated cost budget for the maintenance and servicing of the improvements is as follows:
Description Fiscal Year 2026/27 Budget
Maintenance Staff(1) $32,085
Capital Equipment 0
Supplies 2,400
Utilities (Water, Electricity) 11,800
Reserve Fund 0
Capital Improvement Program 19,500
Maintenance Costs $65,785
NBS $4,300
City Staff District Administration 3,040
County Auditor-Controller Fee(2) 550
District Specific Costs $7,890
Total District Costs $73,675
General Benefit Contribution(3) (20,920)
Operating Reserve Contribution 0
Capital Improvement Fund Contribution 0
Net Amount to be Assessed $52,755
Total District Lots 98
Rate per Lot(4) $538.32
Maximum Rate Per Lot – 2026/27(5) $605.63
(1) The City’s Department of Public Works is the provider of Maintenance Services. (2) County Auditor-Controller Fee is currently 1% of the total levy submittal. (3) General Benefit Contribution is not applied to District Specific Costs, as these are special benefits to the District. (4) The Rate per Lot equals the Net Amount to be Assessed / Total District Lots. The Rate per Lot cannot exceed the maximum rate.
(5) The April 1, 20 26 CPI was not available at the time of writing of this report. The Fiscal Year 20 26/27 CPI increase was estimated by using the February 1, 2026 CPI.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 98-1 Engineer’s Report 6
3.1.1 OPERATING RESERVE
It is the intent of the City to maintain an operating reserve which shall not exceed the estimated costs of maintenance and servicing of the improvements prior to December 10 of the fiscal year, or when the City expects to receive its apportionment of special assessments from the County, whichever is later. The operating reserve balance information for the District is as follows:
Estimated Fiscal Year Ending 6/30/2026 Operating Reserve Cash Balance $147,201 Operating Reserve Collection for Fiscal Year 2026/27 0
Estimated Fiscal Year Ending 6/30/2027 Operating Reserve Cash Balance $147,201
3.1.2 CAPITAL IMPROVEMENT BUDGET
The City completed the replacement of the irrigation controller and repairs of the irrigation system along portions of Los Coches Street and Sinclair Frontage Road in 2023. The City is planning to continue planting renovations in 2026/2027. As of March 20, 2026, the balance available for the Capital Improvement Project was $142,391.35. The City will utilize these funds, along with an annual collection of $20,000 via the District from Fiscal Year 2025/26 to Fiscal Year 2028/29, to finance the project.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 98-1 Engineer’s Report 7
4. SPECIAL AND GENERAL BENEFIT
The improvements defined in Section 2 are expected to confer certain special benefits to parcels within the District. The special benefits are described in this section. Figures in this section are derived from a Special v. General Benefit Analysis performed in Fiscal Year 2014/15.
4.1 Introduction
Pursuant to Article XIIID, all parcels that receive a special benefit conferred upon them as a result of the installation, implementation and maintenance of the improvements, services and activities shall be identified, and the proportionate special benefit derived by each identified parcel shall be determined in relationship to the entire costs of the installation, implementation and maintenance of the improvements, services and activities.
Article XIIID, Section 4(a) of the California Constitution limits the amount of any assessment to the proportional special benefit conferred on the property. Proposition 218 requires that the City separate the general benefit from special benefit, so that only special benefit may be assessed to properties within the District. Furthermore, Article XIIID also provides that publicly owned properties must be assessed unless there is clear and convincing evidence that those properties receive no special benefit from the assessment.
4.2 Special Benefits Identified
The improvements described in Section 2 are expected to confer certain special benefits to parcels within the District. The special benefits conferred to property within the District can be grouped into two primary benefit categories: aesthetic benefit and safety benefit. The two district benefit categories are further expanded upon below.
• Improved Aesthetics: The aesthetic benefit relates to the increase in the overall aesthetics as a result of the ongoing maintenance, servicing and operation of the improvements within the District. Street landscaping improvements improve the livability, commercial activity, appearance and desirability for properties within the District. Regular maintenance ensures that the improvements do not reach a state of deterioration or disrepair so as to be materially detrimental to properties adjacent to or in close proximity to the improvements. The overall appeal of the District is enhanced when improvements are in place and kept in a healthy and satisfactory condition. Conversely, appeal decreases when improvements are not well-maintained, unsafe, or destroyed by the elements or vandalism. Streetscapes have a significant effect on how people view and interact with their community1. With streetscapes that are safe and inviting, people are more likely to walk, which can help reduce automobile traffic, improve public health, stimulate local economic activity and attract residents and visitors to the community2. • Increased Safety: Well maintained areas mitigate crime, especially vandalism, and enhance pedestrian safety. A recent study found that after landscape improvements were installed, there
1 Victoria Transport Policy Institute. (2011). Community Livability. Helping to Create Attractive, Safe, Cohesive Communities. Retrieved from http://www.vtpi.org/tdm/tdm97.htm.
2 Ibid.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 98-1 Engineer’s Report 8 was a 46% decrease in crash rates across urban arterial and highway sites and a second study reviewed found a 5% to 20% reduction in mid-block crashes after trees and planters in urban arterial roads were put in place. In addition, there is less graffiti, vandalism, and littering in outdoor spaces with natural landscapes than in comparable plant-less spaces3. The Victoria Transport Policy Institute has found that streetscapes reduce traffic speeds and when combined with improved pedestrian crossing conditions can significantly reduce collisions4.
4.3 General Benefits Identified
Section 4 of Article XIIID of the California Constitution provides that once a local agency which proposes to impose assessments on property has identified those parcels that will have special benefits conferred upon them and upon which an assessment will be imposed, the local agency must next “separate the general benefits from the special benefits conferred,” and only the special benefits can be included in the amount of the assessments imposed.
General benefit is an overall and similar benefit to the public at large resulting from the maintenance of the District’s improvements provided by the assessments levied. The improvements to be maintained by the District are located within the District boundaries only. There will be no District maintenance activities provided for improvements located outside of the District boundaries.
The ongoing maintenance of the District improvements will provide aesthetic and safety benefits to the property within the District. However, it is recognized that the ongoing District maintenance activities will also provide a level of benefit to some property within proximity to the District, as well as individuals passing through. Therefore, the general benefit created as a result of the District maintenance activities has been considered.
4.4 Quantification of Benefit
As a result of the maintenance and operation of the improvements, there will be a level of general benefit to people that do not live in or intend to conduct business within the District. In order for property within the District to be assessed only for that portion of special benefits received from the district’s maintenance activities, general benefits provided by the ongoing maintenance of the improvements needs to be quantified. The amount of general benefit that is provided from the District’s maintenance activities cannot be funded via property owners’ assessments.
The landscaping improvements are primarily located along Los Coches Street and Sinclair Frontage Road and within the subdivision along Los Coches Creek and Berryessa Creek. A portion of the maintained landscaping provides some general benefit to pass-thru traffic. Per the City, there is 52,912 square feet of landscaping being maintained.
Los Coches Creek and Berryessa Creek
As result of the District maintenance activities, there will be a level of general benefit to pedestrians and vehicular traffic that are not associated with property in the District. As expressed by the Court in Beutz v.
3 Wolf, Kathleen L. (2010). Safe Streets – A Literature Review. In: Green Cities: Good Health (www.greenhealth.washington.edu). College of the Environment, University of Washington.
4 Victoria Transport Policy Institute. (2011). Community Livability. Helping to Create Attractive, Safe, Cohesive Communities. Retrieved from http://www.vtpi.org/tdm/tdm97.htm.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 98-1 Engineer’s Report 9 County of Riverside (2010), “... courts of this state have long recognized that virtually all public improvement projects provide general benefits." A route beginning or ending with a parcel within the District does not include the “general public” for purposes of determining general benefit. The landscaping improvements along the south side of Los Coches Creek and Berryessa Creek are local in nature, however even though they are intended primarily for localized access, there is some portion of pedestrian traffic that may not be accessing the adjacent properties. The landscaping improvements are located adjacent to the backyard of homes, and access is only available by walking or bicycling. There is no vehicular access to these improvements.
The Summary of Travel Trends, 2009 National Household Travel Survey (NHTS) prepared by the U.S.
Department of Transportation Federal Highway Administration analyzed the number of person trips by various modes of transportations such as private vehicle, transit, walking or some other means of transportation. According to the Pacific Division data extracted from the 2009 NHTS database, of the annual 181,703 (in millions) total person trips, 21,252 (in millions) or 11.70% of those person trips were made by using walking as their mode of transportation, and 2,066 (in millions) or 1.14% of those person trips were made by bicycling5.
According to the U.S. Census Bureau (2010), the average household size in the City is 3.34 persons6. Based on this average household size, and considering there are 98 residential units within the District, there are approximately 327 people residing within the District boundaries. There are an estimated 163 residential units in close proximity, but outside of the District boundaries. Based on the City’s average household size, there are approximately 544 persons residing outside of the District boundaries, but have access to the landscaping improvements.
Community
Estimated Number
of Residential Units
Estimated
Number of Persons(1)
District 98 327
Sundrop Subdivision 83 277
Sinclair Renaissance Subdivision 80 267
Total Residential Population 261 871
(1) U.S. Census Bureau (2010) average household size in the City is 3.34 persons.7
In order to determine the estimated total number of persons who are within close proximity to the landscaping improvements, and would utilize walking or bicycling as their mode of transportation, we applied the 12.84% (11.70% walking, 1.14% bicycling) of person trips reported from the NHTS Pacific Division study, to the total nearby residential population (871). There are approximately 112 people within close proximity of the District that utilize walking or bicycling as their mode of transportation.
In order to determine the portion of the 112 persons that reside within the District, we applied the 2009 NHTS walking trip percentage (12.84%) to the District population (327). Approximately 42 people within the
5 U.S Department of Transportation. Federal Highway Administration. (2011). Summary of Travel Trends: 2009 National Household Travel Survey. (Report No. FHWA-PL-11-022). Retrieved from http://nhts.ornl.gov 6 U.S. Census Bureau. (2010). Profile of General Population and Housing Characteristics: 2010, 2010 Demographic Profile Data. Milpitas, C.A. Retrieved March 23, 2015, http://quickf acts.census.gov/qf d/states/06/0647766.html 7 Ibid.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 98-1 Engineer’s Report 10 District boundaries use walking or bicycling as their primary mode of transportation. Therefore, the total surrounding neighborhood area population, located outside of the District boundaries, but in close proximity the landscaping improvements, that uses walking or bicycling as their primary mode of transportation is estimated to be 70 people.
Community
Estimated Number of
Persons
District 42
Sundrop Subdivision 36
Sinclair Renaissance Subdivision 34
Walking or Bicycling Population 112
In order to obtain a better picture of the overall level of general benefit provided by the landscaping improvements, the pedestrian traffic that utilizes walking or bicycling as the mode of transportation that will seek out and use the District improvements, but live outside of the District, must be considered. The 2009 NHTS further details the purposes of the reported walking (21,252 in millions) and bicycling (2,066 in millions) trips; based on the property types people entering the District would most likely do so for social or recreational activities.
The following details the number of walking and bicycling trips, based on the 2009 NHTS study, for each of the activities that are the most likely reasons people outside of the District would use the landscaping improvements:
Trip Purpose
Number of Walking or
Bicycling Trips (in millions)
Social/Recreational 6,442
Total 6,442
Of the total number of walking and bicycling trips reported, 6,442 (in millions) or 27.63% are for purposes that persons outside of the District may use the landscaping improvements. Applying this percentage (27.63%) to the number of people walking or bicycling as their mode of transportation and that reside outside of the District (70), there are approximately 19 people (general benefit) that may use the landscaping improvements, but do not reside within the District. Taking the 19 people that may walk or bicycle, but reside outside of the District, divided by total residential population with access to the landscaping improvements (871), the estimated percentage of persons, engaging in what is considered general benefit because they do not reside within the District, represents 2.21%.
Los Coches Street and Sinclair Frontage Road
The City does not have a study showing traffic volume along Los Coches Street and Sinclair Frontage Road along the District boundaries. The portion of the maintained landscaping that is located along Los Coches Street and Sinclair Frontage Road provides some general benefit to pass-through traffic. Before the determination and allocation of the percentage of special and general benefit for the District can be made, the estimated pass-through traffic must be computed. The pass-through trips are vehicles driving along the
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 98-1 Engineer’s Report 11 maintained streets within the District for a portion of their trips, but not living or conducting business in the District and benefiting from the landscaping improvements in place.
The Sundrop and Sinclair Renaissance residential communities are located directly across the street and next to the District, and vehicles entering and/or exiting these communities in all likelihood are passing by a portion of the landscaping improvements for a portion of their trip. In lieu of having a study that identifies the pass-through traffic, the estimated number of trips generated for each community has been calculated based on the number of units and average number of trips per dwelling unit.
Community
Number of
Residential Units(1)
Estimated Number of
Daily Vehicle Trips(2)
% of Total Daily
Vehicle Trips(3)
District 98 933.0 44.34%
Sundrop Subdivision 83 790.2 37.56%
Sinclair Renaissance Subdivision 80 380.8 18.10%
Total 261 2,104.0 100.00%
(1) Number of Residential Units is from the City’s Approved Projects map.8 (2) Per the ITE Trip Generation Report a single family residence generates an average of 9.52 trips per dwelling unit.9 (3) Number of daily trips has been reduced by 50% to account for vehicles entering and exiting the community from the opposite direction on Sinclair Frontage Road, and not driving along the portion of Los Coches Street and Sinclair Frontage Road with landscaping improvements maintained by the District.
As detailed above, based on the average number of daily vehicle trips generated for the communities in close proximity to the District, 1,171 (55.66%) are generated by residential units located outside of the District (general benefit).
All Locations and Landscaping Improvements – Residential Pass-thru Benefit The general benefit percentages determined in the previous sections for Los Coches Creek and Berryessa Creek (2.21%) and Los Coches Street and Sinclair Frontage Road (55.66%) were then applied to each corresponding location with landscaping improvements. The landscaping square footage being maintained by the District was provided by the City’s Public Works Department. The general benefit percentage for each street type was multiplied by the total square footage being maintained for such street. The general benefit square footage was summed for all street segments and divided into the total square footage of all landscaping maintenance. The result is the combined general benefit percentage. The following table details this calculation.
Street Name
Total Square
Footage
General Benefit
Percentage
General Benefit Square
Footage
Los Coches Creek 4,572 2.21% 101
Berryessa Creek 21,025 2.21% 465
Los Coches Street 24,747 55.66% 13,773
Sinclair Frontage 2,568 55.66% 1,429
Totals: 52,912 15,768
Landscaping General Benefit 29.80%
8 City of Milpitas. (2013). Approved Development Projects. Retrieved from http://www.ci.milpitas.ca.gov/government/planning/proj_approved.asp 9 Trip Generation, 9th Edition: An Informational Report of the Institute of Transportation Engineers. (2012). Washington, DC: Institute of Transportation Engineers.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 98-1 Engineer’s Report 12 Based on the above calculations, the general benefit portion of the improved aesthetics and increased safety resulting from the landscaping improvements is estimated to be 29.80%.
Public at Large General Benefit
Given the location and nature of the improvements, it is very unlikely the public at large would seek out or use the landscaping improvements within the District. In addition, there are more direct routes to access the industrial complexes/businesses located to the south of the District than the 2 lane Los Coches Street and Sinclair Frontage Road. Nevertheless, it is perceivable that members of the public at large may pass- thru a portion of the landscaping improvements, even if it’s lost or leisure traffic. As such, general benefit of 2.00% has been assigned for the landscaping improvements to the public at large.
4.4.1 COLLECTIVE DISTRICT-WIDE GENERAL BENEFIT
Since the District is comprised of improved aesthetics and increased safety benefits resulting from the collective landscaping improvements, the activity of both pedestrians and vehicles, and the public at large must be addressed in a collective form rather than independently. The sum of the calculated general benefits is the total general benefit related to all pass-thru traffic. This general benefit result is provided in the table below:
Residential Pass-thru General Benefit 29.80%
Public at Large General Benefit 2.00%
Total General Benefit 31.80%
The general benefit, which is the percentage of the total budget that must be funded through sources other than assessments, is 31.80%. The special benefit then, which is the percentage of the budget that may be funded by assessments, is 68.20%.
City of Milpitas
Fiscal Year 2026/27 – LLMAD No. 98-1 Engineer’s Report 13
5. METHOD OF ASSESSMENT
5.1 Method of Assessment Spread
All parcels in the District on which residential dwellings will be constructed specially benefit from the improvements to an equivalent extent. These parcels are therefore assessed on a per lot basis for the maintenance and operation of the District, including incidentals and appurtenances, and will include all the costs of maintenance and/or operating the improvements. As outlined in Section 4, the total amount of general benefit from the improvements is determined to be 31.80%.
The preliminary maximum assessment rate for Fiscal Year 2026/27 is $605.63. The actual assessment rate levied on each taxable parcel for Fiscal Year 2026/27 is $538.32.
Each year the maximum assessment rate shall be increased by the percentage change from April 1st of the prior year to April 1st of the current year by the U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Indexes, Pacific Cities and U.S. City Average, San Francisco-Oakland-Hayward. The April 1, 2026 CPI was not available at the time of writing of this report. For purposes of this report, the CPI increase was estimated by using the February 1, 2026 CPI.