Council approves developers request to pay below-market in-lieu fees for West El Camino Real condominium conversion
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Summary
Council approved De Anza Properties request for alternative compliance allowing in-lieu BMR payments (7% of final sales price) for a condominium conversion at 1124 W. El Camino Real; staff estimated roughly $16M from ownership in-lieu fees plus ~$950K in rental impact fee (estimates subject to final sales prices). Council asked staff to confirm whether fee calculation is based on 86 or 91 units after a revised tentative map.
The City Council voted to approve a developers request to satisfy below-market-rate (BMR) obligations for a West El Camino Real residential project by paying in-lieu fees rather than providing on-site ownership units.
What was approved: The developers revised plan converts an originally grandfathered multifamily rental building into condominiums (proposed 86 for-sale units plus five single-family lots), making 91 ownership units potentially subject to Sunnyvales 15% inclusionary requirement. Staff recommended accepting an alternative compliance plan that collects an in-lieu fee of 7% of final sales price on ownership units (collected at escrow on sale) and a separate housing-impact fee for grandfathered rental units (collected prior to certificate of occupancy). Staff estimated the ownership in-lieu amount could be about $16 million (market dependent) and the rental-impact fee approximately $950,000; totals may change with final sales prices.
Council discussion: The applicant, represented at the meeting by John Vidovich, argued the five single-family rear lots were created under a prior vested tentative map and should not be counted for inclusionary purposes; city staff and the city attorney advised staff would analyze that legal point and return a determination. Council approved the staff recommendation with a direction for staff to determine whether the fee calculation should be based on 86 or 91 units.
Why it matters: The accepted in-lieu payments would be earmarked for deeper-affordability projects (very-low and extremely-low-income households) and provide a concentrated pool of funds for affordable-housing non-profits. Councilmembers said in-lieu funds can sometimes be used to produce more deeply targeted housing than small on-site BMRs.
Next steps: Staff will finalize the legal calculation of the unit count (86 vs. 91) and proceed with the alternative-compliance framework; in-lieu fees will be collected at unit sale and rental-impact fees at certificate of occupancy as required by code. Council asked staff to review whether timing or partial up-front deposits are lawful under state law and the citys inclusionary program; staff said a related administrative study of the BMR program and in-lieu options is under way and expected early next year.
