Santa Clara council holds study session on Related Santa Clara project; developers propose ‘Scheme C’ land‑use shift

Mayor Lisa Gilmore convened a special study session of the Santa Clara City Council to review the Related Santa Clara mixed‑use redevelopment and a proposed master community plan amendment known as "Scheme C." The session, led by City Manager Jovan Grogan and Assistant City Manager Liz Klotz, updated the council on entitlements, delays, fiscal terms of the disposition and development agreement (DDA) and a draft land‑use change that would add light industrial and some data‑center uses on Parcels 1 and 2 while increasing density in the city‑center parcels (Parcels 4 and 5).

The discussion matters because the project covers a total of 9,160,000 gross square feet across five parcels adjacent to Levi's Stadium and represents a multidecade public‑private partnership with significant city revenues, infrastructure obligations and public‑service impacts. Staff framed the study session as information‑gathering only: council did not take action on Scheme C and no ordinance or plan amendment was approved.

City staff reviewed the project's history and legal framework. Afshan Hamid, community development director, said the master community plan, general plan amendment, rezoning and certified environmental impact report were adopted in 2016, and subsequent development area plans (DAPs) and addenda were approved for early phases. Anna Shimko, outside counsel, explained that the DDA and the related development agreement set detailed schedule‑of‑performance requirements and ground‑lease terms. She reminded the council that Related (the developer) already executed the ground lease for Parcel 5 (phase 1) in December 2022 and the DDA still obligates Related to ground‑lease phase 2 by current deadline 2027‑09‑23 unless excusable delays apply.

Staff and Related presented Scheme C: replace most of the planned office campus on Parcels 1 and 2 with light industrial/advanced manufacturing and allow limited data‑center uses (including California Energy Commission small‑power‑plant‑exemption, or SPPE, data centers) there. To keep the project total at 9,160,000 gross square feet, the proposal shifts more office and housing into the city‑center parcels (4 and 5). Namisha Agrawal (senior planner) said the amendment would require a general plan amendment and rezoning to create the new land‑use categories and would add design guidelines and a minor‑use permit track for non‑SPPE and ancillary data‑center proposals.

Economic and fiscal presentations framed why Related advanced Scheme C. David Doezema, the city’s independent fiscal consultant, said office vacancy and values have declined since 2016 (class A vacancy roughly 24.7% across Silicon Valley), construction costs and interest rates have risen and some product types (office and business hotels) are difficult to finance in the current cycle. Doezema and Related representatives said those market realities are the principal reasons Related has not yet built the originally envisioned office and hotel components.

Financial terms discussed included the DDA's ground‑rent schedule and the effective land cost the developer bears when landfill remediation and extraordinary foundation costs are included. Doezema summarized that the land value implicit in ground rent at the time of the DDA was about $115 million and that the landfill‑related premium costs estimated at precedent time (roughly $900 million then; staff said the inflation‑adjusted estimate is roughly $1.3 billion today) yield an effective per‑square‑foot burden that staff compared to market land sales. Related and city staff said the city has collected roughly $1.8 million in ground rent since Related took the Parcel 5 ground lease in December 2022, and the DDA contains long‑term fair‑market adjustments that could produce wide ranges of rent over 99 years (presentations listed a range of roughly $6.4 billion to $9.0 billion over 99 years depending on future adjustments). Related told council it would agree to charge data‑center parcels a higher rent multiplier (staff said Related proposed doubling the rent on acreage used for data‑center purposes).

Public‑service commitments in the DDA remain central to the council's questions. Staff and counsel explained that Related must design and fund a new Fire Station 10 with at least three bays, pay for increased fire staffing up to 4.5 full‑time equivalents if required by a fire assessment, and fund enhanced police services in the city center (off‑duty or assigned officers). Multiple council members and public commenters, including Anthony Pascual, president of the Santa Clara City Firefighters, urged the city to accelerate Fire Station 10 design and construction to restore emergency coverage in the north Tasman area.

Council members pressed Related and staff on several follow‑up items: (1) whether the city should re‑open the DDA to renegotiate rents or other terms (staff said Related is not in default and that market conditions mean ground‑rent comparables today do not clearly improve the city's position relative to 2016); (2) whether construction of parcels that shift to industrial/data‑center uses would start sooner if Scheme C is adopted (Related said it could pursue industrial work faster and estimated construction on those parcels could begin within 18–24 months in an optimistic scenario, subject to long‑lead landfill testing and utility upgrades); (3) power availability for data centers (Related and staff said Silicon Valley Power currently does not have spare capacity to serve large data‑center loads on the site and that any data‑center build would be contingent on SVP capacity and permitting); and (4) impacts to traffic, parks and the project’s retail program (staff said the city park acreage on Parcel 3 remains as previously planned and that some private open space previously shown for office parcels would change under Scheme C; staff committed to provide traffic‑analysis comparisons quantifying truck trip differences versus the previously planned office campus).

Council members also asked for detailed fiscal breakdowns: how much of the projected net general‑fund benefit attaches to Parcels 1 and 2 alone, the long‑term numbers that include ground rent, and a comparison of outcomes if the city ultimately realizes 1,502,000 square feet of retail versus the 800,000‑square‑foot retail minimum embedded in the DDA. Staff and the fiscal consultant said they will return with parcel‑level fiscal analyses and more granular revenue projections in the formal scheme‑approval process.

Public commenters included labor representatives urging the city and Related to adopt strong prevailing‑wage and local‑hiring practices, firefighters urging an accelerated Fire Station 10 timeline and other residents asking for faster delivery of the entertainment/retail components. Staff reminded the council that the Department of Industrial Relations currently has an open proceeding about whether prevailing wage applies to some parts of the project; that administrative appeal is pending.

Council direction at the session was procedural: staff will bring Scheme C back through the standard review path (Planning Commission and then council) with the additional analyses requested — parcel‑level fiscal impact, traffic comparisons, clarifications on power availability and data‑center thresholds, and options for advancing Fire Station 10 design/financing. No land‑use map or ordinance was adopted at the study session. Related said it remains committed to the project and to continuing negotiations with the city to refine details.

The council set a general schedule: staff anticipates Planning Commission review and a subsequent council hearing this summer for formal action on any MCP amendment, but no final dates were set at the session.