Memorandum. 5"f(* ((b SAN IPSE TO: HONORABLE MAYOR AND CITY COUNCIL. FROM: Harry Freitas SUBJECT: SEE BELOW. DATE: May 5, 2016 COUNCIL DISTRICT: 3

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1 mm CITY OF SAN IPSE CAPITAL OF SILICON VALLEY COUNCIL AGENDA: 05/17/16 ITEM: H2. Memorandum TO: HONORABLE MAYOR AND CITY COUNCIL SUBJECT: SEE BELOW FROM: Harry Freitas DATE: Approved Date 5"f(* ((b COUNCIL DISTRICT: 3 SUBJECT: FILE NOS. PDC AND PD CONFORMING PLANNED DEVELOPMENT REZONING FROM A(PD) PLANNED DEVELOPMENT ZONING DISTRICT TO A(PD) PLANNED DEVELOPMENT ZONING DISTRICT AND A PLANNED DEVELOPMENT PERMIT TO ALLOW A MIXED USE DEVELOPMENT WITH UP TO 1.04 MILLION SQUARE FEET FOR OFFICE/COMMERCIAL SPACE AND UP TO 325 MULTI- FAMILY ATTACHED RESIDENCES AND AN OVERRIDE OF THE SANTA CLARA COUNTY AIRPORT LAND USE COMMISSION'S (ALUC) ACTION REGARDING PLANNED DEVELOPMENT REZONING ON AN APPROXIMATELY 8.93 GROSS ACRE SITE BOUNDED BY THE LOS GATOS CREEK TO THE WEST, THE GUADALUPE RIVER/FLOOD CHANNEL TO THE EAST, WEST SANTA CLARA STREET TO THE NORTH AND WEST SAN FERNANDO STREET TO THE SOUTH (374 WEST SANTA CLARA STREET) RECOMMENDATION Planning staff recommends that the City Council: Adopt a resolution adopting the Delmas Mixed-Use Development Project Addendum to the San Jose Water Land Company Planned Development Rezoning Final Environmental Impact Report, the Downtown Strategy 2000 Final Program Environmental Impact Report, and the Envision San Jose 2040 General Plan Final Program Environmental Impact Report and Supplemental Environmental Impact Report, all in accordance with CEQA, as amended, and adopting a revised Mitigation Monitoring and Reporting Program (MMRP). Adopt a resolution by 2/3 majority making certain findings required by California Public Utilities Code Section that Proposed Planned Development Rezoning Application File No. PDC (374 West Santa Clara Street) is consistent with the purposes set forth in California Public Utilities Code Section and overruling the Santa Clara

2 . Page 2 County Airport Land Use Commission's (ALUC) determination that the proposed project is inconsistent with the ALUC noise and height policies as defined by the Comprehensive Land Use Plan for the San Jose International Airport (CLUP). Consideration of an ordinance rezoning the real property located at the southeast and southwest corner of West Santa Clara Street and Delmas Avenue (374 & 402 West Santa Clara Street; 415 West San Fernando Street; 15, 35, 45, 55, 63, & 99 Delmas Avenue) from the A(PD) Planned Development Zoning District to the A(PD) Planned Development Zoning District to allow a mixed use development with up to 1.04 million square feet for office/commercial space and up to 325 multi-family attached residences on a 8.93 gross acre site (Trammell Crow Company, Owner). Adopt a resolution approving the Planned Development Permit to allow the construction of a mixed use development with up to 1.04 million square feet for office/commercial space and up to 325 multi-family attached residences on an 8.93 gross acre site located at the southeast and southwest corner of West Santa Clara Street and Delmas Avenue (374 & 402 West Santa Clara Street; 415 West San Fernando Street; 15, 35, 45, 55, 63, & 99 Delmas Avenue). OUTCOME Should the City Council approve the Rezoning, Override the Santa Clara County Airport Land Use Commission, and approve the Planned Development Permit as recommended by staff, the applicant would be able to able to proceed with the construction of two office buildings, one residential building for up to 1.04 million square feet of office/commercial uses, and a 325 multifamily attached residences. EXECUTIVE SUMMARY The purpose of the proposed rezoning of the subject site is to allow a reduced Guadalupe River flood channel setback from 50 feet to 30 feet, to increase underground parking from two floors to four floors, and to modify certain development standards that are no longer relevant in the previously approved Planned Development Rezoning, which can be found at the following link in strikeout/underline format: This rezoning does not change the amount of development previously approved, which included 1.04 million square feet of commercial/retail and up to 325 multi-family residences. The Planned Development Rezoning has been reviewed concurrently with the Planned Development Permit. The Planned Development Permit will allow construction of 1.04 million square feet of commercial space in two office building towers with ground floor commercial space and up to 325 multi-family residences in one building with ground floor commercial space. The site design maintains a view corridor down West Santa Clara providing a viewshed to the Downtown, which creates a public plaza between the two office buildings and the historic San

3 Page 3 Jose Water Works City Landmark building. The buildings are located within the boundary of Downtown, are developed to the appropriate scale for the urban core, and are sufficiently setback from the Guadalupe River flood channel, the Los Gatos Creek, and the historic San Jose Water Works City Landmark. Pursuant to the provisions of the California Public Utilities Code ("Section 21676"), the City referred the Planned Development Rezoning to the Airport Land Use Commission of Santa Clara County (ALUC) for a determination of consistency with the ALUC land use plan. On February 25, 2015, the ALUC found the project to be inconsistent with the noise and height policies defined in its Comprehensive Land Use Plan for San Jose International Airport (CLUP). The project was found inconsistent with height policies in that a Determination of No Hazard was not issued by the Federal Aviation Administration (FAA) for all three buildings, and only the residential building has received such clearance, with the two office buildings pending. The project was found inconsistent with noise policies in that approximately 27 units out of 325 are partially within the ALUC CLUP 65 dba CNEL noise contour, 18 of the units have outdoor balconies, while a vast majority of the project is outside the ALUC CLUP restrictive noise contour. Pursuant to State law, the City Council may adopt a resolution by 2/3 majority making certain findings to overrule the determination of ALUC of inconsistency with the CLUP. Aside from noise and height, the ALUC has determined that the subject project is otherwise consistent with other policies within the CLUP. BACKGROUND On September 24, 2015, the applicant, Trammel Crow Company, filed for a Conforming Planned Development Rezoning of the subject 8.93 gross acre site from the A(PD) Planned Development Zoning District to a A(PD) Planned Development Zoning District (Link to Planned Development Zoning Plans: The applicant also filed a Planned Development Permit to allow the construction of up to 1.04 million square feet of commercial/retail space and up to 325 multi-family residences (Link to Planned Development Permit Plans: In addition, the below table identifies prior permit approvals. RELATED APPROVALS Date Action Designated the San Jose Water Works Building and Site a City Landmark of Special Historical, Architectural, Cultural, Aesthetic or Engineering Interest or value of a historic nature. (File No. HL91-057) Relocation and expansion of surface parking lot (File No. CP93-047) Planned Development Rezoning from CN Commercial District to A(PD) Planned Development District to allow mixed use (1.04 million square feet for office/commercial and 325 multi-family attached residences) on an 8.93 gross acre site (File No. PDC02-046) Planned Development Permit to demolish an existing single-family house and allow for use as temporary parking lot on a 0.19 gross acre site (File No. PD04-080).

4 Page 4 Existing and Proposed Conforming Rezoning The existing A(PD) Planned Development Zoning District (PDC02-046) approved by the City Council in 2004 allows the development of up to 1.04 million square feet of commercial/retail space and up to 325 multi-family residences. Municipal Code Chapter allows a rezoning that conforms to the General Plan Land Use/Transportation Diagram to be referred directly to the City Council for a decision, in lieu of the Planning Commission Hearing. The purpose of rezoning the subject site is to allow a reduced Guadalupe River flood channel setback from 50 feet to 30 feet, to increase underground parking from two floors to four floors, and to modify certain development standards that are no longer relevant in the previously approved Planned Development Rezoning: http ://www. sanioseca. gov/documentcenter/view/ This rezoning does not change the amount of development previously approved which included 1.04 million square feet of commercial/retail and up to 325 multi-family residences. Project Design The project design maximizes development of the site by providing space that can accommodate a full range of commercial and entertainment options for visitors and residents of San Jose. The project is comprised of two sites separated by Delmas Avenue. Site A, located east of Delmas Avenue, incorporates two Class A office towers. Tower A is 12 stories in height and Tower B is 13 stories in height. The office towers are connected by a 14-story transparent building architectural element that is open on the ground floor with publicly accessible space connecting Delmas Avenue to a plaza and the Guadalupe River. The office towers and building connector are designed with the ability to be leased by one tenant or multiple tenants. The floor plan allows the connection of the two towers to create approximately 80,000 square feet on a single floor of leasable tenant space. Site A also includes the San Jose Water Works City Landmark at the northeast comer of the site that fronts onto West Santa Clara Street. The project will demolish the non-historic additions to the main building and relocate the small transformer house to the rear of the main building. (See Figure 1 for Site Plan)

5 May 5,2016 Page 5 iblic Plaza ^ San Jose S Water Works K Building Relocated T ransformer House Office Tower A Guadalup^ River Floor Channel Los Gatos Creek " Office Tower B Residential Building Figure 1: Site Plan of Project The site design maintains a view corridor down West Santa Clara providing a viewshed to the Downtown, which creates a public plaza between the two office buildings and the San Jose Water Works City Landmark building. Office Tower A will be wrapped on the ground floor by retail/commercial space that faces onto the plaza and West Santa Clara Street. The site will have pedestrian walkways along both edges of the sites that are adjacent to the Guadalupe River Flood Channel and the Los Gatos Creek. Site B, located west of Delmas Avenue, will include a 10-story mixed-use multi-family residential building with 325 units. The residential development will have approximately 3,000 square feet of ground floor retail/commercial space located near the corner of West Santa Clara Street and Delmas Avenue. The project will also extend the existing Los Gatos Creek Trail that is located on the north side of West Santa Clara Street by developing the trail along the west side of the residential building adjacent to the Creek. (See Figure 2: Ground floor rendering of the residential building and trail)

6 Page 6 Figure 2: Southeast Corner of West Santa Clara Street and Delmas Avenue This project provides pedestrian and bike connectivity with multiple points of access throughout the site. The site design also provides dedicated bus/shuttle drop off zones located on West Santa Clara Street and on both sides of Delmas Avenue. The site is also provided with convenient multi-modal transit opportunities given its location is within 15 feet of a Valley Transportation Authority (VTA) lightrail station and within 1,000 feet of the Diridon Transit Station that is served by Caltrain, VTA buses, and the eventual Bay Area Rapid Transit (BART) and high speed rail. As a part of Phase II of the BART Silicon Valley Extension project, a tunnel is planned to travel directly below the site heading towards the Diridon Station. The applicant anticipates breaking ground in August and is proposing that the project be constructed in one or two phases. Phase one, would include the development of the residential building and Office Tower A; and phase two, would be the development of Office Tower B.

7 Page 7 Figure 3: Rendering of the office building Historic Site and City Landmark Figure 4: Rendering of the residential building Within the subject site is the San Jose Water Works City Landmark site. On December 3, 1991, the City Council designated the San Jose Water Works building, and the entire parcel on which it resides, as a City Landmark (Resolution No ). The site was home to the San Jose Water Works since 1888, with the existing building replacing the original wooden structure in The significance of the building includes its historic contribution to the development of utilities and its associated relationship to the growth of the agriculture industry and the City's expansion. The transformer house built in 1913 is the only building on this complex that dates earlier than

8 Page 8 the main building and retains its historic integrity from that period. Given the building's association with the oldest privately owned water utility in California, the site is eligible for the State and National Register. Figure 5: Aerial of Entire Project Site and Historic Landmark Site The Historic Preservation Ordinance states that no person shall perform any work on a City Landmark except pursuant to, and in compliance with, the terms and conditions of a Historic Preservation permit. Therefore, prior to the adoption of the proposed Planned Development Permit, the project has gone to the Historic Landmark Commission on May 4, 2016, for a recommendation for the Historic Preservation Permit (File No. HP ) and to provide comments on the proposed Planned Development Permit. The Director of Planning, Building, and Code Enforcement, at a May 11, 2016, Director Hearing, will make a decision on the Historic Preservation Permit and will forward comments, if any, for the Planned Development Permit to the City Council in a supplemental memo.

9 May 5,2016 Page 9 The Historic Preservation Permit (HP ) is to allow the demolition of non-historic structures and relocation of the transformer house. The proposed Planned Development Permit would modify the 1.02 gross acre City Landmark site by: Demolishing the San Jose Water Works non-historic addition buildings Relocating the transformer house to the rear of the historic building Constructing of an underground garage near the historic building Constructing a garage access structure, a paved plaza, and landscaping Site and Surrounding Uses SURROUNDING USES General Plan Land Use Zoning Existing Use North Open Space, Parklands and Habitat CO (PD) Planned Development (File No. PDC73-098) & Light Arena Green Public Park South East West Open Space, Parklands, Habitat & Mixed Use Neighborhood & Residential Neighborhood Open Space, Parklands and Habitat Open Space, Parklands and Habitat Industrial R-2 Single-Family Residence & Light Industrial VTA Light Rail Light Industrial Guadalupe River / Flood Channel CN Commercial Neighborhood Los Gatos Creek & Light Industrial The subject site is currently developed with a surface parking lot and the San Jose Water Works building. The Los Gatos Creek is to the west and the Guadalupe River/Flood Channel is to the east. The northern edge of the site is bounded by West Santa Clara Street and the southern edge of the site is bounded by West San Fernando Street. Bisecting the site north to south is Delmas Avenue (See Figure 5). The site is adjacent to the VTA Lightrail Station to the south, within 500 feet of the SAP Center, and adjacent to bike trails on the Guadalupe River Trail to the east. Phase II of the Bay Area Rapid Transit (BART) Silicon Valley Extension Project includes a new BART station at the Diridon transit hub via a tunnel under the site of the proposed project. Norman Y. Mineta San Jose International Airport and ALUC Override The Norman Y. Mineta San Jose International Airport has strengthened its position as a major international and regional airport since the initial rezoning approval. As part of the proposed rezoning, the applicant and Planning staff have coordinated with the City's Airport Department to ensure that the project does not detrimentally impact the airport or City's economic competitiveness. The proposed development standards reflect the building height and layout taking into account comments from the Airport staff.

10 Page 10 The Santa Clara County Airport Land-Use Commission (ALUC) was established to provide review for appropriate development of areas surrounding public airports in Santa Clara County. Consistent with State law, ALUC has adopted a Comprehensive Land use Plan (CLUP) for the Norman Y. Mineta San Jose International Airport that provides policies for developments in the general vicinity of the airport to safeguard the welfare of the residents and to review rezoning application within the jurisdiction of the CLUP. The CLUP seeks to protect the public from the adverse effects of aircraft noise, to ensure that people and facilities are not concentrated in areas susceptible to aircraft accidents, and to ensure that no structures or activities adversely affect navigable airspace. The implementation of this CLUP is intended to prevent future incompatible development from encroaching on the Airport and allow for its development in accordance with the current airport master plan. Pursuant to the provisions of Section of the California Public Utilities Code ("Section 21676"), the City referred the Planned Development Rezoning File No. PDC to the Airport Land Use Commission of Santa Clara County (ALUC) for a determination of consistency with the ALUC land use plan. The subject project falls within the ALUC's Airport Influence Area surrounding Mineta San Jose International Airport. On February 25, 2015, ALUC found the project to be inconsistent with the noise and height policies defined in its Comprehensive Land Use Plan for San Jose International Airport (CLUP). Pursuant to State law, the City Council may adopt a resolution by 2/3 majority making certain findings to overrule the determination of ALUC of inconsistency with the CLUP. Consistent with State law, the City has provided sufficient notice and a draft of an override resolution, 45 days in advance of an override hearing, to the ALUC and the Department of Transportation Division of Aeronautics (DTD A). On March 22, 2016, staff provided drafts of the override resolution to ALUC and on March 24, 2016, provided drafts to DTD A. Both ALUC and DTD A had 30 days to provide comments to the proposal for an override. ALUC provided a response to the City's Draft finding: DTDA provided a response to the City's Draft findings: http ://www. sani oseca. gov/documentcenter/v iew/ The existing Planned Development Zoning District (PDC02-046) approved by the City Council in 2004 did not require an ALUC Override as the residential building was designed in such a manner that it was located outside of the noise contour boundary, and at that time of the public hearing the project had received a Determination of No Hazard from the FAA for all of the proposed buildings. The proposed override resolution provides the following reasons for the City's override of the ALUC's determination of inconsistency with the CLUP for the proposed Planned Development Rezoning, summarized as follows: Noise Override Justification The CLUP's 65 A-weighted decibels (dba) Community Noise Level (CNEL) noise contour discourages residential uses with open space and balconies within the 65 dba CNEL noise contour.

11 Page 11 Approximately 27 units out of 325 (8.3%) units are partially within the ALUC CLUP 65 dba CNEL contour, 18 of the units have outdoor balconies (5.5%), while a vast majority of the project is outside the ALUC CLUP restrictive noise contour. The City, in the Airport Master Plan, adopted a different and smaller 65 dba CNEL noise contour than what was adopted in the CLUP. The smaller noise contour was adopted considering the advances in technology in airport noise reduction and consideration that mitigations and conditions for projects could reduce the impact of noise on residential development. The entire residential portion of the project is outside the 65 dba CNEL noise contour in the adopted Airport Master Plan. The CLUP adopted a more conservative 65 dba CNEL noise contour that does not match or conform to the City's noise contour. The City's General Plan requires that projects have acceptable noise level objective of 60 dba or less for residential, except in the environs of the San Jose International Airport and Downtown as long as it meets the interior noise level. Prior to approval of a building occupancy permit, there will be analysis of those units within the 65 CNEL noise contour, at which time it must be demonstrated that the interior noise is below 45 dba DNL. n i i i i Figure 6: Comparison of ALUC's CLUP and the City's 65 dba CNEL Noise Contour

12 May 5,2016 Subject: File Nos. PDC15-05I & PD15-061, ALUC Override Page 12 Height Override Justification ALUC finds a project inconsistent if it exceeds the Federal Aviation Regulation (FAR) Part 77 obstruction surfaces. The proposed Development Standards exceed the FAR Part 77 obstruction surface, as the maximum height under the Part 77 is 212 feet Above Mean Sea Level (AMSL) and the proposed project has a maximum height of 316 feet AMSL. However, based on a Federal Aviation Administration (FAA) aeronautical study conducted under the provisions of FAR Part 77, a project may receive a "Determination of No Hazard" from the FAA authorizing a maximum elevation exceeding the FAR Part 77 obstruction surface. The applicant submitted for FAA clearance in January of 2016 for the residential and office buildings. The residential building received a Determination of No Hazard from the FAA on April 22,2016. The review of the FAA clearance of the office buildings was pending at the time of this staff report. The Planned Development Permit includes a condition that the project must receive FAA clearance prior to the issuance of a building permit if the building exceeds what is allowed in FAR Part 77 or beyond what is allowed in any Determination of No Hazard. Aside from noise and height, the ALUC has determined that the subject project is located outside of the outer safety zone (OSZ) and is otherwise consistent with other policies within the CLUP. Considering that the project is outside the City's adopted 65 dba CNEL noise contour and any height concerns can be resolved by receiving FAA clearance for the two office buildings and as such is required as a condition in the Planned Development Permit Resolution, the City Council has the authority with a 2/3 majority vote to override the ALUC findings of inconsistency. The findings described above and set forth in the proposed resolution support an override of ALUC's determination of inconsistency with the CLUP. ANALYSIS The proposed rezoning and Planned Development Permit were analyzed with respect to conformance with the 1) Envision San Jose 2040 General Plan, 2) Planned Development Permit Findings, 3) Historic Ordinance, 4)Downtown Design Guidelines, and 5) Riparian Corridor Policy. Envision San Jose 2040 General Plan Conformance The subject site is designated as Downtown on the Envision San Jose 2040 General Plan Land Use/Transportation Diagram. The Downtown designation is intended for a mix of office, retail, services, residential, and entertainment uses. The proposed rezoning supports the goals of this

13 Page 13 designation as it would allow a broad range of uses that would further the creation of a "complete community" in Downtown, in which people can live, work, and play. Figure 7: GP Map GENERAL PLAN CONSISTENCY General Plan Designation Downtown 1X1 Consistent O Inconsistent Consistent Policies Major Strategy #3- Focused Growth; Major Strategy #6- Streetscapes for People; Major Strategy # 8- Fiscally Strong City; Major Strategy #9 - Destination Downtown; IE-1.5; IE- 1.13, FS-4.1; CD-6.1; VN-1.7; LU-1.1; LU-2.1; ER-2.1; CD- 3.8; CD-6.7; LU-13.3; LU-3.5; LU-10.3; and TR-14.4 Inconsistent Policies None In addition, the proposed rezoning and Planned Development Permit are supported by and further the following General Plan Major Strategies, Goals and Policies, as discussed in the following: 1. Major Strategy #3 - Focused Growth. Strategically focus new growth into areas of San Jose that will enable the achievement of City goals for economic growth, fiscal sustainability and environmental stewardship and support the development of new, attractive urban neighborhoods. The Plan focuses significant growth, particularly to increase employment capacity, in areas surrounding the City's regional Employment

14 Page 14 Center, achieve fiscal sustainability, and to maximize the use of transit systems within the region. Analysis: project is located The in an area with multi-modal transit opportunities and is proposing oyer a million square feet of commercial/retail space for a significant amount of employment use. While the proposed use provides parking spaces required by the Zoning Ordinance, it promotes the use of alternative transit methods with convenient access to buses, lightrail, the Diridon Station, and bike trails. The proposed project is poised to be the first major commercial development in Downtown that promotes the General Plan's fiscal first focus. 2. Major Strategy #6 - Streetscapes for People. Design streets for people, not just cars, and to support a diverse range of urban activities and functions. Develop important roadways as Grand Boulevards to connect multiple neighborhoods and act as urban design elements at a citywide scale. Promote the ongoing development of main streets to foster community identity and walkability, recognizing that they serve as important destinations for retail and other activities within neighborhood areas. Analysis: The proposal enhances the public realm with significant amenity and retail space fronting West Santa Clara Street and utilizing the existing public activity generated by the surrounding uses such as the SAP Center to activate the pedestrian street level and generate economic activity with retail and commercial opportunity on-site. The project will also provide improvements to the surrounding park trails and connectivity between the transit systems through Delmas Avenue to West Santa Clara Street. 3. Major Strategy # 8 - Fiscally Strong City. Establish a land use planning framework that promotes the right fiscal balance of revenue and costs to allow the City to deliver high-quality municipal services, consistent with community expectations. Analysis: Consistent with this strategy, the project is the first significant office space development in Downtown since the adoption of the Envision San Jose 2040 General Plan, as the proposed use is concentrating over a million square feet of commercial/retail space and high density residential on an 8.39 gross acre site. The urban core of the downtown has infrastructure and municipal services to adequately serve the site and continue meeting the community's service needs. 4. Major Strategy #9 - Destination Downtown. Support continued growth in the Downtown as the City's cultural center and as a unique and important employment and residential neighborhood. Focusing growth within the Downtown will support the Plan's economic, fiscal, environmental, and urban design/placemaking goals Analysis: The subject mixed-use project bridges the Downtown Core east of Highway 87 with the Diridon Station area, and adds to the placemaking element of the SAP Center by providing a focal point for gathering and outdoor activities. The proposed office and commercial employment component will help bolster the General Plan's economic

15 Page 15 growth and fiscal goals and policies. The project will maintain and reinvigorate the Historic San Jose Water Works building with adaptive reuse and by making it a focus of the public plaza. Further, the development will maintain a riparian corridor setback from the Las Gatos Creek and extend trail connections adjacent to the development. 5. Land Use and Employment IE-1.5: Promote the intensification of employment activities on sites in close proximity to transit facilities and other existing infrastructure, in particular; the Downtown, North San Jose, the Berryessa International Business Park and Edenvale. Analysis: The subject project provides a million square feet of commercial/office space in the Downtown growth area within 1,000feet of the Diridon Station Area Plan and the adjacent VTA lightrail system. 6. Land Use and Employment IE-1.13: Achieve goals related to Quality Neighborhoods, including diverse housing options, a walkable/bikable public street and trail network, and a compact, mixed-use development where infrastructure exists to distinguish San Jose as a livable and attractive city, to promote interaction among community members, and to attract talented workers to the City. Analysis: The subject project will offer one of the largest available floor plates in the office market in the Bay Area, as well as retail and other amenities. The project will create additional housing that promotes a mixed-use project near transit and employment uses. The project will allow the City to attract residents and a workforce who would prefer to live or work in a transit-oriented development near the urban core of the city with existing infrastructure to support the growth. 7. Fiscal Sustainabilitv FS-4.1: Preserve and enhance employment land acreage and building floor area capacity for various employment activities because they provide revenue, near-term jobs, contribute to our City's long-term achievement of economic development and job growth goals, and provide opportunities for the development of retail to serve individual neighborhoods, larger community areas, and the Bay Area. Analysis: The subject project fully maximizes the above ground development with limited ground floor parking and a mixture of space for residential, office, commercial and retail development. The retail and commercial uses would serve the future employees on the site, as well as patrons of the SAP center and the surrounding residents. 8. Community Design CD-6.1: Recognize Downtown as the most vibrant urban area of San Jose and maximize development potential and overall density within the Downtown. Analysis: The proposed development includes a commercial/retail density FAR of 4.46 and a residential dwelling unit ratio of dwelling units per acre (DU/AC). The project utilizes the maximum building footprint, as well as the maximum height allowed by the airport and FAA regulations and policy.

16 Page Vibrant Neighborhood VN-1.7: Use new development within neighborhoods to enhance the public realm, provide for direct and convenient pedestrian access, and visually connect to the surrounding neighborhood. As opportunities arise, improve existing development to meet these objectives as well. Analysis: subject project The will expand the sidewalk on Delmas Avenue to 12 feet, as well as create parallel pedestrian landscaped paths adjacent to the Los Gatos Creek and the Guadalupe River / Flood Channel. The two office towers will provide a landscaped pedestrian cut through to a proposed public plaza between the buildings. The design will provide pedestrian access for transit users and the existing residential neighborhood across West San Fernando Street. 10. Land Use LU-1.1: Foster development patterns that will achieve a complete community in San Jose, particularly with respect to increasing jobs and economic development and increasing the City's jobs-to-employed resident ratio while recognizing the importance of housing and a resident workforce. Analysis: The proposed project achieves both goals of this policy as it provides a substantial amount of employment use in a mixed-use project with 325 multi-family residences directly across from the commercial development. 11. Land Use LU-2.1: Provide significant job and housing growth capacity within strategically identified "Growth Areas" in order to maximize use of existing or planned infrastructure (including fixed transit facilities), minimize the environmental impacts of new development, provide for more efficient delivery of City services, and foster the development of more vibrant, walkable urban settings. Analysis: Consistent with this policy, the subject project will provide jobs with up to 1.04 million square feet of office/commercial space and up to 325 residential units within the Downtown boundary, which has been identified as a Growth Area in the General Plan. 12. Environmental Resources ER-2.1: Ensure that new public and private development adjacent to riparian corridors in San Jose are consistent with the provisions of the City's Riparian Corridor Policy Study and any adopted Santa Clara Valley Habitat Conservation Plan/Natural Communities Conservation Plan (HCP/NCCP). Analysis: Staff has assessed the Riparian Habitat on the Guadalupe River/Food Channel and in coordination with staff from the Santa Clara Valley Habitat Agency, has determined that the engineered flood channel is not subject to the Habitat Conservation Plan policies. However, the subject project will maintain a minimum setback of 30 foot on the eastern edge of the project site (top of the flood channel wall), along the Guadalupe River flood control channel. A recreational pathway will be constructed within this 30 foot setback allowing access from Santa Clara Street to San Fernando Street through the site. This corridor will include native landscaping and shade trees,

17 May 5,2016 Page 17 compatible with riparian habitats. The proposed project will maintain the 50 foot setback from the Los Gatos Creek as approved with the previous rezoning. 13. Community Design CD-3.8: Provide direct access from developments to adjacent parks or open spaces, and encourage residential development to provide common open space contiguous to such areas. Analysis: The subject project is located across the street from the Arena Green East Park and the Guadalupe River Park and would facilitate pedestrian connectivity with the installation of a traffic light and crosswalk to the park area. The residential development will provide residential common open space adjacent to the Los Gatos Creek pedestrian/bike trail. 14. Community Design CD-6.7: Recognize Downtown's unique character as the oldest part, the heart of the City, and leverage historic resources to create a unique urban environment there. Respect and respond to on-site and surrounding historic character in proposals for development. Analysis: The subject project will retain the existing historic San Jose Water Works building and feature it prominently on the site with a proposed public plaza to increase visibility and promote a successful re-use of the historic building and site. 15. Land Use LU-13.3: For landmark structures located within new development areas, incorporate the landmark structures within the new development as a means to create a sense of place, contribute to a vibrant economy, provide a connection to the past, and make more attractive employment, shopping, and residential areas. Analysis: A proposed public plaza has been designed to enhance the re-use potential, aesthetic, and access to the San Jose Water Works City Landmark building and proposed ground floor retail/commercial space in the plaza. The plaza functions as a public gathering space for residents, workers, and visitors to the Downtown area. 16. Land Use LU-3.5: Balance the need for parking to support a thriving Downtown with the need to minimize the impacts of parking upon a vibrant pedestrian and transit oriented urban environment. Provide for the needs of bicyclists and pedestrians, including adequate bicycle parking areas and design measures to promote bicyclist and pedestrian safety. Analysis: The subject project will provide parking near the minimum parking requirement for Downtown developments. Limited parking is provided at the ground floor level for the residential development. The project will also provide sufficient bike and pedestrian access with parallel paths on both sides of the project and wider sidewalks.

18 Page Land Use LU-10.3: Develop residentially- and mixed-use-designated lands adjacent to major transit facilities at high densities to reduce motor vehicle travel by encouraging the use of public transit. Analysis: The subject is within 1,000feet of the Diridon Station and is immediately adjacent to a VTA lightrail line station. 18. Balanced Transportation System TR-14-4: Require avigation and "no build" easement dedications, setting forth maximum elevation limits as well as for acceptance of noise or other aircraft related effects, as needed, as a condition of approval of development in the vicinity of airports. Analysis: The Planned Development Permit includes a condition requiring the granting of an avigation easement to limit building obstruction to the navigable airspace of aircrafts. Planned Development Permits Findings The subject project meets the findings for the issuance of a Planned Development Permit as the project is: 1. Consistent with and furthers the policies of the General Plan 2. Conforms in all respects to the Planned Development zoning of the property 3. The interrelationship between the orientation, location, mass and scale of building volumes, and elevations of proposed buildings, structures and other uses on-site are appropriate, compatible and aesthetically harmonious, and 4. The environmental impacts of the project, including but not limited to noise, vibration, dust, drainage, erosion, storm water runoff, and odor, which even if insignificant for purposes of the California Environmental Quality Act (CEQA), will not have an unacceptable negative effect on adjacent property or properties. Analysis: As discussed in detail above, the proposed project is consistent with the General Plan policies. In addition, the project conforms to all respects of the new Planned Development Zoning District, as the Planned Development Rezoning and Planned Development Permit have been reviewed concurrently. The buildings are located in the Downtown boundary and are developed to the appropriate scale for the Downtown Urban core and sufficiently setback from the other surrounding uses. The addendum to the San Jose Water Land Company Planned Development Rezoning Final Environmental Impact Report (Resolution No ), the Downtown Strategy 2000 Final Program Environmental Impact Report (Resolution No ), and the Envision San Jose 2040 General Plan Final Program Environmental Impact Report (Resolution No ) and Supplemental Environmental Impact Report (Resolution No ) have

19 Page 19 determined that the project will not have an unacceptable negative effect on adjacent property or properties. Historic Ordinance Conformance Pursuant to San Jose Municipal Code Chapter 13.48, on May 4, 2016, the project was heard by the Historic Landmark Commission as the proposed Rezoning and Planned Development Permit would involve modification and construction within the historic site of the San Jose Water Works City Landmark site. The proposed Historic Preservation Permit would allow for the demolition of the non-historic building additions to the San Jose Water Works building, relocation of the transformer house on site, construction of an underground garage near the historic building garage access structure, a paved plaza, and landscaping on the 1.02 gross acre San Jose Water Works historic City Landmark site. The Historic Landmark Commission will provide a recommendation on the Historic Preservation Permit and comments on the Planned Development Permit to the Director of Planning, Building, Code Enforcement for a Director's Hearing scheduled on May 11, Staff will provide a supplemental memo of any substantial comment for the Planned Development Permit. Staff has analyzed the project for consistency with the General Plan policies for Historic Preservation goals and policies. Staff has found that the proposed modifications would complement and facilitate a public plaza that prominently features the historic buildings, as described above. Downtown Design Guidelines Conformance Pursuant to the Downtown Design Guidelines, the proposed project will provide public plaza spaces with access to ground floor commercial and retail. The project will integrate existing historic buildings and enhance adjacent trails and corridors near creeks and rivers. The office and residential buildings will use varying glass and stone materials and articulations of horizontal metal elements to create a sense of movement with the building, while providing an appropriate scale for the size of the site. The Design Guidelines encourage that the ground floor must have a minimum of 15 feet clear height to finished ceiling; the project will provide a 20 foot clearance. The site will provide sufficient lighting to ensure safe pedestrian activities and corridors, while featuring the building's architecture and public space during the evening. Riparian Corridor Policy Conformance The previous zoning established a 50-foot setback from Los Gatos Creek and the Guadalupe River Channels. The City of San Jose's Riparian Corridor Policy generally requires that new developments be set back 100 feet from the edge of riparian corridors; however, there are exceptions provided for "locations in or near downtown San Jose and urban infill projects." The minimum setback distance allowed under the exception is "no less than 30 feet." The 2004 FEIR concluded that the proposed minimum 50-foot setbacks for buildings and active use areas from both the Los Gatos Creek and Guadalupe River were sufficient to protect sensitive species and buffer the habitat from impacts resulting from the project.

20 Page 20 The proposed project would maintain the existing zoning's 50-foot above and below grade setback from Los Gatos Creek but would reduce the above-ground setback from the Guadalupe River top-of-bank to 30 feet. There are current buildings and land uses on the site that are legal uses established before there was a City Riparian Setback Policy. Based on the developed nature of the site, a lack of suitable habitat, as well as a finding that no species or sensitive habitat covered by the Santa Clara Valley Habitat Conservation Plan could occur on the portion of the project adjacent to the west side of the Guadalupe River flood channel wall, the proposed 30 foot setback from Guadalupe River flood channel would not result in impacts to a riparian corridor. The proposed project will add pervious surface with locally native trees and vegetation along a planned pedestrian pathway within the 30-foot setback, thus improving the existing conditions along the Guadalupe River channel. EVALUATION AND FOLLOW-UP If the Rezoning, Planned Development Permit, and Override of Santa Clara County Airport Land Use Commission are approved, the applicant could proceed to the Building Division for a building permit. PUBLIC OUTREACH/INTEREST A community meeting was held on March 8, 2016, at the Westminster Presbyterian Church. This community meeting was posted on the City's website and a notice was sent to property owners and residents within 1,000 feet of the subject site. There were approximately 30 community members in attendance at the meeting. The majority of attendees were in support of the project. Attendees did have some concern about the riparian corridor along Los Gatos Creek, bird safe design sustainable building methods, greenhouse gas, event parking, and transit connectivity. The applicant and staff took notes to incorporate certain design changes to address their concerns. The applicant revised the plan set to replace the transparent materials on the residential balcony to reduce bird strikes. Additional Public Comments were submitted to the staff: http ://www. sani oseca. gov/documentcenter/view/ A notice of the May 17, 2016, Public Hearing was distributed to the owners and tenants of all properties located within 500 feet of the project site and posted on the City website. The Council Staff Report is also posted on the City's website. Staff has been available to respond to questions from the public. COORDINATION This memorandum was coordinated with the Airport Department, Department of Public Works and the City Attorney's Office. In addition, given its close proximity to the project site, the City has also coordinated this project

21 Page 21 with the San Jose Arena Management. Staff provided them with copies of the proposed project and met with various stakeholders. The applicant will continue to actively engage with the San Jose Arena Management to optimize garage operations for potential use during SAP Center Events. CEOA An addendum to the San Jose Water Land Company Planned Development Rezoning Final Environmental Impact Report, the Downtown Strategy 2000 Final Program Environmental Impact Report, and the Envision San Jose 2040 General Plan Final Program Environmental Impact Report and Supplemental Environmental Impact Report, were prepared for the project under the provisions of the environmental review requirements the California Environmental Quality Act of 1970, as amended (CEQA), including State and local implementing regulations. The Addendum is available for review at httn:// The CEQA Guidelines Section states that when an EIR has been certified, no subsequent EIR shall be prepared for that project unless the lead agency determines that either (1) substantial changes are proposed to the project which will require major revisions to the previous EIR due to new or substantially more severe significant effects, (2) substantial changes have occurred with respect to the circumstances under which the project is undertaken which will require major revisions of the previous EIRs due to new or substantially more severe significant effects, or (3) new information of substantial importance that was not known and could not have been known previously with the exercise of reasonable diligence shows that the project will have one or more significant effect or substantially more severe effect than disclosed in the previous EIR, or a mitigation measure or alternative that is new or is now feasible, when previously found infeasible, would substantially reduce a significant effect and the project proponent declines to adopt it. An addendum to a previously certified EIR shall be prepared if some changes or additions are needed to the EIR; however, none of the conditions described in Section have occurred. The proposed project would not result in any new or substantially increased significant impacts. The proposed project would comply with all standard permit conditions and mitigation measures set forth in the Initial Study/Addendum Analysis and Mitigation Measure and Monitoring Report Program for this project. The proposed project, therefore, will not result in new impact or impacts of greater severity than those previously identified in the San Jose Water Land Company Planned Development Rezoning Final EIR, the Downtown Strategy 2000 Final Program EIR, the Envision San Jose 2040 General Plan Final Program EIR, and the Envision San Jose 2040 General Plan SEIR. /s/ HARRY FREITAS, DIRECTOR Planning, Building and Code Enforcement For questions please contact Steve McHarris, Planning Official, at (408)