SAN JOSE, Calif. (CN) – Two of Silicon Valley’s largest cities have agreed to settle a border war that involved large billion-dollar commercial projects, the persistent problems of affordable housing in the region and an ever-worsening transportation situation.
The mayors of Santa Clara and San Jose announce they had reached a settlement that will bring an end to two separate lawsuits involving the approval of City Place – a $6.5 billion complex adjacent to Levi Stadium in Santa Clara, and Santana West – a 1 million square-foot office complex next to San Jose’s posh shopping district.
“We’ve reached a fair settlement that will benefit both of our cities’ residents,” San Jose Mayor Sam Liccardo and Santa Clara Mayor Lisa Gillmor said in a joint statement released Tuesday morning. “In addition to allowing these important projects to move forward, this settlement will help our two cities better address the significant affordable housing and traffic congestion problems gripping our region.”
The dispute began when San Jose sued Santa Clara in August 2016 over the City Place approval, saying the city hadn’t followed the California Environmental Quality Act when it approved the large retail project.
Specifically, San Jose said the large project would require more housing and put greater burden on the transportation, all of which will spill over into its territory.
The City Place project encompasses 240 acres separated into five different parcels with phased construction. The complex is slated to feature about 1 million square feet of retail space, 5.7 million square feet of office space, 700 hotel rooms and about 1,360 residential units.
San Jose claimed the housing was insufficient to supply the anticipated creation of 25,000 jobs and would instead require importing workers from neighboring communities and compound congestion problems on area roads.
Furthermore, the city said Santa Clara failed to consider the health ramifications of building a large housing project on a former landfill that saw about 5.5 million tons of garbage over its lifetime. The project is also slated to feature open space and a 30-acre public park.
Four months after suing Santa Clara, the San Jose City Council approved the application for Santana West, a 13-acre office park located next to the luxury shopping district and residential area known as Santana Row.
Santa Clara city officials had protested during San Jose’s deliberation of the project, claiming Santana West would also create jobs without new housing, causing more affordability problems in both the purchase and rental housing market, while making transportation problems worse.
San Jose officials complained the suit was pure retaliation, but Gillmor said Santa Clara was left little choice.
The City Place suit was moved out of Santa Clara Superior Court to San Mateo to provide a neutral battleground for the two Silicon Valley municipalities.
After a judge ruled that Santa Clara’s environmental analysis was not flawed, San Jose appealed but a settlement appeared likely.
Tuesday’s settlement means both transformative projects can move forward.
But both mayors also touted the agreement’s ability to address the housing and transportation problems that prompted both lawsuits.
The settlement stipulates that Related Companies, the private development firm behind the City Place development, will contribute $14.5 million toward transportation infrastructure in North San Jose throughout the different phases of the project
Related Companies has also pledged $5 million over a 15-year period, which can be reduced by the creation of affordable housing.
San Jose has also agreed to use developer fees and other private money to invest an additional $8.7 million into both transportation and affordable housing in the North San Jose area as part of the settlement.
San Jose Spokesman David Low said the settlement will not result in an additional burden to city taxpayers.