Image Source: McClellan Terrace Apartments, Apartments.com
See Agenda here.
The Cupertino City Council has taken the unprecedented step of attempting to block the conversion of a market-rate affordable housing development to permanently affordable housing. The Foothill-De Anza (FHDA) Community College Board of Trustees, following months of due diligence, voted on May 5th to approve the purchase of the McClellan Terrace Apartments, a 94-unit complex for sale by its current owners. FHDA plans to use the apartments as permanently affordable housing for 332 students of Foothill College and DeAnza College.
The lack of affordable housing in Cupertino is a significant barrier to a higher education for students in the community. By securing dedicated student housing, the District is making a long-term investment in student, community, and economic sustainability.
Source: Foothill-DeAnza Community College: Many current Foothill DeAnza students are housing insecure or are experiencing homelessness.
The purchase is part of voter-approved Measure G, an $898 million general obligation measure to upgrade FHDA facilities and classrooms and to construct or acquire affordable employee and student housing units. It was passed on March 3, 2020, with 58.8% voter approval.
Generally when older apartment buildings are sold, they are renovated and rented at higher rates, often unaffordable to the current tenants. Cupertino has not adopted a local rent stabilization ordinance, so rents for current tenants could increase by as much as 10% if the apartments remain at market rate. Conversion of market-rate housing to deed-restricted affordable housing, when nonprofits or public entities hold these homes as permanently affordable housing, is widely acknowledged as a preservation tool that prevents displacement.
On May 6th, Cupertino’s City Council considered approval of an Interim Urgency Ordinance Imposing a Moratorium on the Transition of Multiple-Family Use Housing to Student Housing within a One Half Mile Radius of Foothill-De Anza Community College in the City of Cupertino. SV@Home Director of Policy Alison Cingolani attended the City Council meeting to speak in opposition to the urgency ordinance:
We are glad to see that the staff memo acknowledges the need to protect vulnerable residents from displacement and the severe shortage of rental housing in Cupertino. We look forward to seeing Council’s strong support for robust tenant protections and the construction of an abundant supply of new affordable housing.
Alison Cingolani, SV@Home’s Director of Policy
SV@Home strongly supports the purchase by the Foothill-De Anza Community College District of this market-rate apartment building and conversion to deed-restricted, permanently affordable housing. The conversion of market rate housing to affordable housing is a widely acknowledged and effective strategy to PREVENT displacement.
Economic headwinds and financial uncertainty are currently creating an exceptionally difficult environment to construct new housing, both market rate and affordable. Tenant protections and housing preservation are more important than ever to protect members of the Cupertino community- which include Deanza College students. The conversion provides deeply affordable homes now, complementing the City’s efforts to quickly advance the construction of new affordable housing.
The McClellan Terrace apartments are being offered for sale by the current owners. They will be sold to someone. Usually when older apartments are purchased, they are renovated and leased at much higher rents, often unaffordable to existing tenants, and resulting in a loss of relatively more affordable homes. This purchase, instead, preserves the apartments as permanently affordable homes to serve generations of Cupertino community members.
Protections for existing tenants of McClellan Terrace far exceed what is required under state law. Existing leases will remain in place and all tenants will be able to extend their lease (at the same rate) up until June 2026. The District has committed to providing relocation assistance to all current residents, including helping tenants find comparable housing locally and providing financial assistance to qualified tenants.
Finally, this ordinance likely violates Fair Housing Law by discriminating on the basis of family status- an improper use of the police powers the City has to impose zoning regulations.
The urgency ordinance under consideration is unnecessary and harmful to the City’s efforts to advance housing affordability, and we urge the Council to reject it.
Senator Josh Becker and Assemblymember Patrick Ahrens also submitted a joint letter in support of the District’s acquisition. Council has been notified that Prometheus, the current owner of McClellan Terrace, would seek legal action if a moratorium is passed.
Despite the fact that there would be no conversion of use, since the property would continue as multifamily housing, the Council adopted a motion to (1) abandon the urgency ordinance and (2) approve a “Resolution Encouraging the Building of Newly Constructed Student Housing and Preventing the Conversion of Multiple-Family Use Housing to Student Housing within the City of Cupertino.”