Cupertino Matters

Budgets at all levels of  government are in the news this month. According to the Mercury News, Gov. Newsom says state has $27 billion budget shortfall, but it can be balanced without raising taxes. This is the proposed budget, which will undergo scrutiny in the Legislature, and will be adjusted even more as revenue and expenditure estimates change over the next few weeks. At the county level, according to San Jose Spotlight, Santa Clara County closes deficit but can’t escape budget cuts. Note the statement: “A key driver of the structural deficit is the slower pace of property tax rolls — the largest source of county discretionary revenue. Fewer home sales and Prop. 13 — which only allows a reassessment when there’s actual change in ownership of property — have had an effect.” This has had a similar impact on Cupertino, due to its lack of development under previous councils.

Meanwhile, the city has released its 640-page proposed budget for FY2023-24. Cupertino may be impacted by state and county budget cuts, but the biggest issue is the loss of $30 million in ongoing revenue due to an administrative decision by the California Department of Tax and Fee Administration (CDTFA). The city reduced expenditures by $15 million, but needed an additional $15 million to address the ongoing structural deficit. Through a combination of service level reductions, modestly increased property tax revenues and other revenue improvements, the proposed budget is $146.5 million in expenses, with the General Fund proposed at $89.9 million funded with $89.8 million in revenue, with $0.1 funded from the unassigned fund balance.

UPCOMING – CITY COUNCIL – Tues, May 14, 2024, 6:45 p.m., Special Meeting; 5:30 p.m., Closed Session

Agenda and Presentations

Closed Session:
Item No. 1: Conference with legal counsel – existing litigation pursuant to Government Code § 54956.9 (Pacific Autism Center for Education v. City of Cupertino, Santa Clara Superior Court Case No. 23CV423995). This regards a deed-restricted property.

Item No. 2: Conference with legal counsel – existing litigation pursuant to Government Code § 54956.9 (City of Cupertino v. Jennifer Chang, Santa Clara County Superior Court Case No. 21CV380291). This case has been considered at a previous session involving a follow-on civil action initiated by the city to recover additional money over and above those already recovered from Ms. Chang’s criminal restitution. The judge handling this matter recently decided portions of the case through “summary adjudication” in favor of the city. As readers will recall, these cases stem from the 2018 discovery of an embezzlement scheme run by Ms. Chang when she was still a city employee.

Special Meeting:
Item No. 1: 6th Cycle Housing Element and Associated General Plan Amendments  Even though the city has been notified that the revised third draft of the Housing Element meets the statutory state requirements, the city has to adopt the Housing Element and rezone Priority Housing Sites in order to be fully compliant. There are 36 sites consisting of a total of 62 parcels. Non-compliance means loss of land use local control–including ongoing eligibility for the “builder’s remedy” of the Housing Accountability Act, potential exposure to litigation, ineligibility for significant grant funds, and other adverse consequences.  

As a result, staff is recommending a plan that would create four new land use designations for higher density, particularly in commercial/residential areas. To encourage development of “missing middle” housing in established single family neighborhoods, corner lots will be allowed to develop using the standards for duplexes.  This is consistent with earlier ADU changes which allowed development of up to two primary units and two ADUs in R1 zoning districts. The plan also commits to reviewing parking standards and parkland dedication fees in order to reduce constraints on housing development. As noted at both the prior council study session in April and the Planning Commission hearing on the topic, any changes would jeopardize certification of the Housing Element.

Item No. 2: Fiscal Year 2024-25 Fee Schedule (continued from May 7, 2024). Annually, city fees are reviewed and revised. Most of the fees are adjusted using an index-based metric such as CPI and labor costs. In light of the city’s financial challenges, council had also directed staff to move toward full cost recovery of services, except for policy related charges, such as appeals and block parties. A Credit Card Transaction fee has been added. Several Planning Division fees have been added to recover increased demand for review processes which had been previously subsidized by the General Fund. If  possible, services have been streamlined and the associated fees consolidated. Fees for services no longer provided are eliminated from the schedule. The total of these fee updates would generate an estimated $774,680 for the General Fund.

Item No. 3: Consider accepting the City’s Investment Policy. This Consent Calendar item was added at the last minute. This policy is reviewed annually. The most recent review and acceptance of the investment policy by the Audit Committee occurred on April 22, 2024, and needs to be formally approved by the City Council. Changes are minor to comply with state code or to make clearer declaratory statements of existing policy. If the policy is not adopted, then a gap in investment authority will arise leaving the city unable to fully dispose of its assets.

RECAP  – CITY COUNCIL – Tues, May 7, 2024, 6:45 p.m., Regular Meeting; 6:00 Closed Session

YouTube:  2 hr. 22 min. (Meeting adjourned at 9:07)

Agenda and Presentations

The sole action item was Item No. 10: 2024 Legislative Update. The legislative consultant highlighted the number of new members that will be elected this year, potentially affecting two year legislative bills. The state budget deficit and proposed budget are a moving target. Council discussed the three pieces of legislation that the consultant recommended taking a position, then these were considered individually:

(1) Senate Bill (SB) 1143 (Allen)  voted 5-0 to support

(2) Assembly Bill (AB) 1779 (Irwin) – Public Safety voted 5-0 to support

(3) Bay Area Affordable Housing Measure (BAHFA) – Affordable Housing garnered more discussion with a substitute motion by Moore to watch, rather than support. The original motion by Councilmember Wei, as amended by Vice Mayor Fruen to support the measure passed 4-1 with Moore voting nay.

CUPERTINO COURIER: May 10, 2024

The front page photo and community brief on page 3 is entitled National Rebuilding Day:  Volunteers perform maintenance, repairs at 18 projects. Community Briefs on page 5 are (1) Rebuilding Day, (2) Live Well, Age Well, and  (3) Housing Resource Fair on May 30 Agriculture Walk. The sole legal notice is a Bid Invitation for Preventative Maintenance Programs Project.

Warm regards,
Jean Bedord
Cupertino Matters
Publisher and Editor