Mayor of Cupertino abandons housing at Vallco, pushing for a retail-dominant complex at Vallco Mall

Below is an email from Reed Moulds, the Managing Director of Sand Hill Property Company:

Mayor abandons housing at Vallco, pushing for a retail-dominant complex at Vallco Mall, on eve of Vallco Specific Plan community engagement kick-off (please attend!)

Dear neighbor:

Wednesday night, during his State of the City address, Mayor Darcy Paul put forward his "personal" opinion of the future of Vallco. Unfortunately, his future looks to recreate past failures and calls for a retail-dominant mall with some office and little to no housing. If you haven’t seen his speech, you can watch it here.

His vision for the Vallco planning area is an inefficient 1.2 million square foot project, less than what exists today, where at least half of the space – 600,000 feet – would be reserved for retail.

Needless to say, such a project is infeasible and not supported by the market, and it just ensures that Vallco will not be revitalized and remain a vacant, dead mall. With his focus on retail and office, and accounting for the new hotel already being built there by another developer, his proposal doesn’t leave a lot of space for residential use. By ignoring the need for housing at Vallco – Cupertino’s best opportunity to provide real solutions to the housing crisis – the Mayor fails to acknowledge the single greatest challenge facing our region and the City of Cupertino, which happens to be the region’s most unaffordable city.

In October, compelled to address this unprecedented housing crisis, we requested that the City analyze alternatives to add significant housing through a Vallco Specific Plan and reduce housing demand generators like office and retail uses.

The timing of the Mayor’s statements about Vallco – which threaten to influence this planning process before the community engagement on the Vallco Specific Plan has even started – is irresponsible and disappointing. That is why we, once again, are asking for your help.

Next week on Monday, February 5, 2018 from 6 pm to 8:30 pm the City is hosting a “Vallco Specific Plan Kick-off Meeting” at Community Hall, a.k.a. Council Chambers. At this meeting the City’s planning consultant, Opticos Design, will further explain the Specific Plan, discuss the range of outcomes and ask the community to talk about their perspective on the future of Vallco.

With this note, we want to encourage you all to attend this first in a series of community meetings. Your voice is needed on the future of Vallco. The Opticos team should hear what the majority view of Cupertino is and how a smart and dynamic town center plan with a good mix of uses will benefit the City, the community and everyone who lives, works and is a visitor in Cupertino.

For our part, we are convinced more than ever that Vallco offers a unique opportunity to help address the region’s housing shortage and affordability crisis, while adding greatly to the lives of those of you who are already settled here. A sustainable mixed-use plan that includes shopping, dining, a cutting-edge entertainment district, community facilities, great streets and outdoor spaces, a meaningful amount of housing and a manageable amount of office has the tremendous potential to turn a lifeless part of the city into a vibrant and community-driven new downtown district. And let’s not forget that, absent significant mitigations, the most traffic-sensitive proposals are the ones where there is a balance among the different uses, not the ones that are office- or retail-heavy.

All around us, other cities throughout Silicon Valley are already setting examples. Delaying or undermining Vallco’s revitalization is a lose-lose strategy, not just for the landowner but for the Cupertino community as well. Let’s all help Cupertino’s decision-makers see the benefit of a realistic plan for Vallco through a collaborative planning process; my hope is this would have the dual benefit of preventing the partisan few from trying to sway it. But if supporters of true revitalization don’t show up and let themselves be heard, given the Mayor’s mindset, this process certainly cannot succeed.

We will continue to send updates throughout the rest of the process. Once again, thank you for your support.

Reed Moulds
Managing Director
Sand Hill Property Company

SUNNYVALE — For decades, the Raynor Park neighborhood was an island of modest living in Silicon Valley. Almost rural in flavor, it was developed on old orchard land after World War II: an affordable community for returning GIs and other new homeowners who snapped up its little flat-topped bungalows, situated on oversized lots with plenty of fruit trees.

No more. Just over a half-mile from Apple’s “spaceship” campus under construction in Cupertino, Raynor Park — like neighborhoods throughout the Bay Area — is a community in transition. It’s one more island of affordability that’s going poof amid the housing crunch brought on by the tech boom.
“You say it’s near Apple, people want it,”  a 1,050-square-foot bungalow that sold for $1.2 million, the neighborhood’s cheapest sale of 2015. “The people that are coming in here, they’re techies and doctors. That’s it. Otherwise, you can’t afford it.”

Last month, the Trulia real estate website reported that million-dollar homes are the new norm for much of the Bay Area. Crunching data from scores of neighborhoods, Trulia included Raynor Park as one dramatic example of the trend: From 2012 to 2016, its share of homes valued at $1 million or more rose from 19 percent to 94.4 percent.

nondescript bungalows — increasingly torn down by developers and private buyers — are sandwiched between Mediterranean-style McMansions. a weedy front yard where someone had parked a pickup truck; the two-story house next door, with an immaculate garden, showed off a freshly washed Tesla in the driveway.

“It’s less and less like a community and more and more where people live when they’re not at their 90-hour tech jobs,” said Laura Richardson, a systems engineer who raised her two daughters in the Raynor Park house she bought in 1987 for $275,000. “But it’s happening everywhere. There are very few neighborhoods that feel like Mayberry these days.”

Even with its escalating prices, Raynor Park is the most affordable neighborhood in Sunnyvale’s sought-after 94087 ZIP code.

Two of its public schools — Laurelwood Elementary and Peterson Middle School — are well-ranked. And its proximity to Apple’s new campus makes it “a jackpot,” said Karishma Arora, a physician in San Jose. Sensing “an investment opportunity,” she and her husband, an engineer, bought a 1,200-square-foot ranch house in 2013 for $850,000. They made it their home for three years with their young son, then sold it in February for $1.41 million.
Arora had anticipated healthy appreciation, but not that much: “Had I known, I would’ve bought two.”

While living in her Raynor Park house, she added, “We were constantly approached by real estate people. We would get fliers, knocks on the door: ‘Hey, are you interested in selling? We have all-cash buyers.’ So I think they’re going to be all wiped out, those little shacks. And it’ll be all two-story expensive houses.”

Those little houses — old-time residents refer to them as “flattops” — were built starting in the late 1940s. The neighborhood was a homey place then, full of chicken coops and well-loved gardens. Its street names recall its founders: Bryant Way was named for original landowners Clarence and Clara Bryant. Ramon and Navarro drives were named for Hollywood actor Ramon Navarro, one of Clara Bryant’s favorite leading men of the ’20s and ’30s.

The very name Raynor Park — originally spelled Ray-Nor, with a hyphen — is a contraction of “Raymond” and “Eleanor,” two of the Bryants’ children.

Close to bustling El Camino Real, with its shopping and restaurants, Raynor Park’s rapid transformation — all those McMansions — is a shock to old-timers such as Warren Campbell, a retired aircraft mechanic whose handcrafted mailboxes dot the neighborhood.
“Years ago, everyone had a flattop,” he said. “Now they tear them all down and put up something new for a million-and-a-half dollars. It’s a shame when I see these flattops torn down. The beams inside — they’re all two-by-six heart redwood. I hate to see all that redwood gone, because I could use it for my mailboxes.”

Such changes aside, the neighborhood remains relatively quiet and even boasts expanses of open land.

It adjoins Full Circle Farm, a nonprofit dedicated to sustainable food systems that sits on 11 acres leased from the Santa Clara Unified School District. With a community garden and its stable of alpacas and mini-horses, the farm is a favorite destination for local schoolchildren. Across the street is the city of Sunnyvale’s eponymous Raynor Park, with ballfields and a community activity center on close to 15 acres.

From: http://www.mercurynews.com/2016/06/05/sunnyvales-raynor-park-one-more-island-of-affordability-gone/

1031 Exchange in a Tight Housing Market

Taxes have increased this year, so successful completion of a 1031 Exchange will be more than worth your time and effort.

However, with inventory tight in almost every market across the nation and the 180 day timeframe required to complete a 1031 Exchange, it's very important for 1031 Exchangors to start searching for replacement property ASAP.  

A couple other strategies that may help in meeting the required timeframes for a 1031 exchange in a tight market:


1. Consider asking for an extension of the closing date.

2. Consider making your offer to purchase a replacement property contingent upon selling the relinquished property.

3. Consider a Reverse 1031 Exchange

What is a Reverse 1031 Exchange?
In a typical 1031 Exchange, a property is sold and then replacement property is acquired. On occasion however, it may be advantageous to do it in the opposite order; acquire property first and then sell. This is called a Reverse Exchange. It sounds simple, however acquiring replacement property first in a 1031 Exchange presents a few difficulties.



First of all, funds will need to be available for the down payment on the acquisition property (keep in mind nothing has been sold yet). Second, the properties involved in an exchange cannot be owned at the same time. To properly structure a reverse exchange, an Exchange Accommodating Title Holder, or EAT (your Exchange Company), will go on title to either the property being acquired (replacement) or the property to be sold (relinquished).



If the EAT is to go on title to the replacement property, problems may arise if the investor is financing part of the acquisition costs. Many lenders balk at the idea of an EAT going on title to the property the investor is acquiring.

The lender issues are as follows:

• The loan will be made to the EAT not to the Exchanger.

• The EAT will require the loan to be non-recourse.

• The EAT will require the Lender to waive its due on sale clause for transfer of the new property from the EAT to the Exchanger.

• The EAT will require the Lender to waive its requirement that the EAT sign any warranties or representations concerning the new property.

• The EAT will require the Lender to allow junior or subordinate financing on the new property.



If the lender decides not to loan on the property because of the constraints previously stated, the investor has two choices: find a new lender or structure the exchange with the EAT taking title to the relinquished property that is ultimately to be sold as a straw buyer.

Challenges with the EAT acting as straw buyer include:


• The EAT will require cash to buy the property. The cash must come from the exchanger.

• The amount of cash advanced by the investor is the amount of estimated equity in the relinquished property.

• There may be a due on sale clause on the debt of the relinquished property.

• A property tax re-assessment may be made at the time title transfers

• The exchanger may be burdened with an additional county transfer tax



Also, keep in mind that with a Reverse Exchange the relinquished property must be sold within 180 days. The time-frame start at the close of escrow of the purchase property.



Despite the complications, the reverse exchange can be a powerful tool for the investor provided they are aware of the obstacles and have plenty of time to work through the challenges.




Disclaimer: The subject matter in this blog post is intended as general information only and not intended as tax or legal advice. Please always consult your tax or legal advisor for any specific tax or legal matters.