REPORT TO COUNCIL
SUBJECT
Title
Proposed Project: Appeal and City Council Call for Review of a decision of the Planning Commission approving related applications on a 20.55-acre site:
USE PERMIT: to demolish six industrial office buildings and construct 329 three-story townhomes and detached dwelling units which includes 41 Accessory Dwelling Units; and,
VESTING TENTATIVE MAP: to subdivide the existing two lots into 151 single family lots, 23 lots with 178 condominium units, and 30 common parcels.
Location: 510 and 920 De Guigne Drive (APNs: 205-22-022 and 205-22-023)
File #: PLNG-2025-0230
Zoning: M-S (Industrial and Service)
Applicant / Owner: TC III SPP NORTH LLC (applicant) / TC III SPP NORTH LLC (owner)
Environmental Review: Environmental impacts of the project are addressed in the Land Use and Transportation Element (LUTE) Environmental Impact Report (EIR); no additional review required per California Environmental Quality Act (CEQA) Guidelines Section 15183.
Project Planner: Momo Ishijima, (408) 730-7532, mishijima@sunnyvale.ca.gov
Report
REPORT IN BRIEF
The Use Permit and Vesting Tentative Map #PLNG-2025-0230 were considered by the Planning Commission on February 24, 2026 (Attachment 17 - PC Staff Report). Minutes of the Planning Commission public hearing can be found in Attachment 18.
The Planning Commission voted (6-0, Sigura absent) to make the required findings to approve the CEQA determination that the project is consistent with the LUTE EIR and no additional environmental review is required pursuant to CEQA Guidelines Section 15183, and approve the Use Permit and Vesting Tentative Map based on the findings in Attachment 3 to the Planning Commission staff report and subject to the Conditions of Approval in Attachment 4 to the report.
On February 24, 2026, two residents of the neighboring The Vale development timely filed an appeal of the Planning Commission decision. (SMC Section 19.98.070.) Subsequently, on March 4, 2026, two City Council members requested that the City Council review the Planning Commission decision, which is referred to as a Call for Review in Section 19.98.070. The Zoning Code enables a Call for Review by the request of at least two councilmembers and states that no reason shall be stated in the request for review and, further, if the councilmembers call for review of a decision of the planning commission “there is a presumption that the reason for the review is that the action is of significant importance to the community. No inference of bias shall be made or implied due to such a request for review being filed ….”
The City Council’s hearing for a project on appeal or call for review is considered a de novo hearing. In a de novo hearing, the reviewing body considers the project as if it had not been decided before. The reviewing body is not bound by the decision that has been appealed or limited to the issues raised on appeal by the appellant.
APPEAL
The letter of appeal is included as Attachment 19 to this report and includes the following reasons for the appeal:
1. Density Bonus Waivers: inadequate demonstration of physical preclusion
2. Traffic and safety concerns on De Guigne Drive
3. CEQA Reliance on Guidelines Section 15183
4. Parking and neighborhood impacts
The appellants have also submitted a Petition for Traffic and Safety Mitigation (Attachment 20).
STAFF COMMENTS ON APPEAL
1. Density Bonus Waivers
The appellant states that the Planning Commission approved the waivers of development standards with inadequate demonstration of physical preclusion and requests evidence showing:
• Which standard would truly prevent construction if applied; and
• Why the proposed design represents the least-deviating approach consistent with State Density Bonus Law.
The project will include 49 units (15% of the total units) that will be available for sale to moderate income households. This affordability level qualifies the project for a density bonus under State Density Bonus Law (SDBL) and other benefits, including one “concession” and unlimited number of “waivers” of development standards, as those terms are defined in the SDBL. A concession can cover a broad range of requests and includes any of the following: a “reduction in site development standards or a modification of zoning code requirements or architectural design requirements that exceed minimum building standards [in the State Code],” “approval of mixed use zoning,” or “other regulatory incentives or concessions proposed by the developer … that result in identifiable and actual cost reductions to provide for affordable housing costs … or [affordable] rents ….” (Government Code Section 65915(k).)
Regarding waivers, the SDBL states that a local agency “shall not apply any development standard that will have the effect of physically precluding the construction of a development [that qualifies for a density bonus] at the densities or with the concessions or incentives permitted ….” (Government Code Section 65915(e)(1).) Courts considering that “physically precluding” provision have interpreted it very broadly, giving great latitude to the project applicant to design their density bonus project without regard to development standards and then receiving waivers if the project as designed conflicts with a development standard. (Wollmer v. City of Berkeley (2011) 193 Cal.App.4th 1329; Bankers Hill 150 v. City of San Diego (2022) 74 Cal.App.5th 755.)
Moreover, the SDBL requires a local agency to grant concessions and waivers to development standards, with limited and narrow exceptions, based on specific factual findings in the record. The only lawful reasons to deny a waiver are if:
(i) the waiver would have a specific, adverse impact on public health or safety and there is no feasible way to mitigate or avoid the specific, adverse impact; or,
(ii) the waiver would have an adverse impact on any real property listed in the California Register of Historical Resources; or
(iii) the waiver would be contrary to state or federal law. (Government Code Section 65915(e)(1).)
Based on case law and guidance from the California Department of Housing and Community Development (HCD), the SDBL does not require that a project be designed to minimize the need for waivers.
This project requests one (1) concession and 17 waivers. Of the 17 waivers, nine (9) are from Sunnyvale Municipal Code (SMC) development standards and eight (8) are from the Citywide Objective Design Standards for Multi-Family and Mixed-Use Development (ODS), adopted in June 2023. Staff and the Planning Commission found that none of the waivers requested would have a specific, adverse impact on health or safety or meet the other criteria for denial. The waivers for lot size, lot width, height and setbacks, are modifications that, in the past, the City has granted to similar townhome and small lot single family subdivision projects under the deviation process allowed by the SMC (i.e., SMC Section 19.90.030 - SDP deviations). The waivers requested from the ODS are related to design requirements for open space, number of trees, placement of buildings and garages in relation to minimum setbacks, and providing loading spaces. These waivers would not cause an adverse impact on health or safety.
Staff also notes that since the City Council adoption of the ODS in June 2023, SB330 residential development projects have requested waivers from ODS in addition to waivers from SMC development standards, while development projects before the adoption of the ODS did not need these waivers.
2. Traffic and Safety Concerns
The appellant states that the staff report relies on VMT/CEQA metrics but does not fully address real-world safety concerns, including:
• Concentrated driveway movements from 329 new units (370 including ADUs);
• Existing neighborhood speeding and limited traffic-calming measures;
• Deferred intersection control and traffic-calming measures until after occupancy;
• Vehicle trip estimates that fail to reflect real-world conditions: nearby office lots across the street have not been fully occupied since The Vale was built, and some staff continue to work from home, making reported “current trip volumes” an inaccurate baseline.
The appellants request pre-occupancy mitigation, including enforceable traffic-calming triggers, intersection evaluation, and safety signage/striping.
The project provides enhanced multimodal transportation access, and would install sidewalk improvements along its project frontages, including street trees and pedestrian-scaled lighting in accordance with East Sunnyvale Sense of Place Plan (ESSPP) requirements. Per Council Policy 1.2.8, Vehicles Miles Traveled (VMT) is used to identify potential transportation impacts of a proposed land use project. The project is in an area where the average VMT per capita is 15% below the Countywide VMT Baseline Average. Therefore, the project will not trigger any transportation-related impacts per CEQA and a VMT analysis is not required. Using the Institute of Transportation Engineers Trip Generation Manual, as is the City standard, the peak hour vehicle trips generated by 381,000 square feet of industrial office space would be approximately 511 AM and 490 PM trips. The peak hour vehicle trips generated by 192 single-family units (including ADUs) and 178 multi-family units would be approximately 213 AM and 281 PM trips, which is significantly lower than the trips that would be associated with the existing office use.
At the time of the Planning Commission meeting, the City’s Transportation and Traffic Division indicated that the roadway classification for De Guigne Drive and Stewart Drive are Commercial/Industrial Collector in the General Plan and intended to serve regional traffic and connect local streets. Collector streets cannot have vertical devices such as speed bumps that could impede emergency vehicles or discourage vehicles from using the street. After-hours parking over a bicycle lane is not recommended due to recent Council action on a similar configuration on Homestead Road. These bike lanes caused confusion amongst multiple modes of travelers and the Council directed staff to convert the part time bike lane/part time parking lane into full time bike lanes. Since the Planning Commission hearing, the Transportation and Traffic Division has identified speed management tools which can be implemented and reviewed as part of the off-site improvement plans (construction plans for the public right-of-way) for the project. To clarify the off-site improvements, an addition to the Recommended Conditions of Approval (EP-40) is proposed to outline the types of improvements that would be implemented; in summary these are:
• Bulb out at De Guigne Drive and Santa Real Avenue T-intersection
• Sign to yield to pedestrians at De Guigne Drive and Santa Real Avenue T-intersection
• Reconfigure the westbound/southbound portion of De Guigne Drive (from Santa Real to Stewart Drive) by placing the bicycle lane and a buffer lane between the curb and a parking lane
• Inclusion of delineators adjacent to the bicycle lanes on De Guigne Drive
A 2019 stop sign warrant study concluded that additional STOP signs were not warranted at the De Guigne Drive and Santa Real Avenue T-intersection. However, the Transportation and Traffic Division will complete a new stop sign warrant study at the T-intersection at De Guigne Drive and Santa Real Avenue after the development is built and occupied.
3. CEQA
The appellant states “Given the project size, ADU potential, extensive waivers, and neighborhood traffic issues, careful scrutiny is warranted to ensure the environmental checklist addresses site-specific impacts and feasible mitigation measures-not solely prior program-level assumptions.”
The City’s CEQA consultant, Ascent, prepared an environmental checklist (Attachment 6) to determine whether the environmental impacts of the proposed project are within the scope of the LUTE EIR, or if the project or changed environmental conditions result in new or substantially more severe environmental impacts, as compared to those considered in the LUTE EIR. Under Public Resources Code Section 21083.3(e) and State CEQA Guidelines Section 15183(a), projects that are consistent with the development density established by existing zoning, community plan, or general plan policies for which an EIR was certified “shall not” be required to undergo additional environmental review, except as might be necessary to examine whether there are project-specific significant effects that are peculiar to the project or its site. This streamlines the review of such projects and reduces the need to prepare repetitive environmental studies.
Staff notes that although this project site was not included with the other Industrial-to-Residential (ITR) rezonings in 2025 due to the need to review the site’s compatibility with residential use given potential soil contamination, since then, the San Francisco Bay Regional Water Quality Control Board as the regulatory agency overseeing remediation, has approved a Site Management Plan (SMP) for the site (see Attachments 12 ND 13) and further details are discussed in the Planning Commission staff report (Attachment 17).
Regarding other potential site-specific environmental concerns, staff notes that Sections 4.1 through 4.21 of the environmental checklist addresses each CEQA environmental issue with a summary of the LUTE EIR impact conclusions. These sections analyze project-specific impacts and determine whether they are within the scope of the LUTE EIR impact analysis. These sections also identify applicable LUTE mitigation measures, as well as any uniformly applied development policies or standards that address the environmental impacts of the project.
The environmental checklist provides substantial evidence that there are (1) no peculiar impacts; (2) no impacts not analyzed in the LUTE EIR; (3) no significant off-site impacts and cumulative impacts not discussed in the LUTE Update EIR; and that (4) there is no substantial new information indicating that an impact would be more severe than discussed in the LUTE EIR. The findings of the certified LUTE EIR remain valid and no further analysis is required for the project consistent with Public Resources Code Section 21083.3(e) and State CEQA Guidelines Section 15183(a). The proposed total 370 residential units (with ADUs) is consistent with the residential density studied in the LUTE EIR. Therefore, staff finds that the environmental impacts of the project are addressed in the LUTE EIR and that no additional review is required as per CEQA Guidelines 15183. (See Attachment 15 for the website link to the LUTE EIR.)
4. Parking
The appellant states parking availability in the neighborhood is already constrained: when residents of The Vale return home late, they often cannot find legal spaces and are forced to park in fire lanes, requiring HOA towing. With ADUs allowed both as part of the project and potentially through garage conversions in new homes, parking demand will further increase, exacerbating traffic, safety, and fire/emergency access concerns.
The appellant requests the City Council consider enforceable, pre-occupancy parking mitigation, including:
• Addressing the current shortage of legal parking in the neighborhood;
• Anticipating additional demand from all new units, including ADUs and garage conversions;
• Allowing street parking in safe locations; and
• Ensuring fire lanes remain clear at all times to protect emergency access.
Under the State Density Bonus Law parking standard, the project is only required to have 652 parking spaces (1.5 parking spaces for two- and three-bedroom units, 2.5 parking spaces for four- and five-bedroom units, and no unassigned parking requirements). No off-street parking is required for ADUs. The project proposes 767 total parking spaces, including 116 unassigned parking spaces which are uncovered parking spaces distributed within the development. The project exceeds the State Density Bonus Law parking standards by 115 parking spaces. Each single-family and townhome will have garages: 18 two-bedroom townhomes will have a one-car garage, 11 five-bedroom single-family homes will have a three-car garage, and 300 single-family homes and townhomes will have two-car garages. The garage sizes range from 252 square feet for the one car-car garage to 702 square feet for the three-car garage.
There is no on-street parking along both De Guigne Drive (east side) and Stewart Drive (north side) frontages of the project site due to Class 2 bicycle lanes.
The State Density Bonus Law’s reduced parking standards must be automatically granted.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
ALTERNATIVES
1. Deny the appeal and make the required findings to approve the California Environmental Quality Act (CEQA) determination that the project is consistent with the Land Use and Transportation Element (LUTE) Environmental Impact Report (EIR) and no additional environmental review is required pursuant to CEQA Guidelines Section 15183, and approve the Use Permit and Vesting Tentative Map based on the recommended findings in Attachment 3 and subject to the conditions of approval in Attachment 4 to the report.
2. Deny the appeal and make the required findings to approve the CEQA determination that the project is consistent with the LUTE EIR and no additional environmental review is required pursuant to CEQA Guidelines Section 15183, and approve the Use Permit and Vesting Tentative Map based on the recommended findings in Attachment 3 to the report and subject to modified Conditions of Approval.
STAFF RECOMMENDATION
Recommendation
Alternative 1: Deny the appeal and make the required findings to approve the California Environmental Quality Act (CEQA) determination that the project is consistent with the Land Use and Transportation Element (LUTE) Environmental Impact Report (EIR) and no additional environmental review is required pursuant to CEQA Guidelines Section 15183, and approve the Use Permit and Vesting Tentative Map based on the recommended findings in Attachment 3 and subject to the conditions of approval in Attachment 4 to the report.
JUSTIFICATION FOR RECOMMENDATION
Staff is recommending denial of the appeal and approval of the proposed project based on the project’s consistency with the General Plan and Zoning Code. The project density is consistent with the Medium Density Residential land use by providing 370 residential units. Parking for the project is within that allowed by the State Density Bonus Law. In addition, the City has no discretion to deny the requested waivers under State Density Bonus Law. Staff also finds that the project meets the objectives of the General Plan, Zoning District, and relevant objective design guidelines. Further, the recommended conditions of approval will address noise and traffic concerns during construction, as well as other concerns raised by commenters during the entitlement process. The project also provides homeownership opportunities on underutilized land within the City.
In response to the concerns and requests by the neighbors, speed management tools on De Guigne Drive are proposed with the addition of Condition EP-40. This change, made after the Planning Commission hearing, is shown in Attachment 4 to this report in red text.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
_X_ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
___ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Momo Ishijima, Senior Planner
Reviewed by: Noren Caliva-Lepe, Principal Planner
Reviewed by: Shaunn Mendrin, Planning Officer
Reviewed by: Trudi Ryan, Director of Community Development
Reviewed by: Connie Verceles, Deputy City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
Attachments from Report to Planning Commission
1. Noticing and Vicinity Map
2. Project Data Table
3. Recommended Findings
4. Recommended Conditions of Approval
5. Site and Architectural Plans
6. CEQA Environmental Checklist
7. LUTE EIR Mitigation Monitoring and Reporting Program (MMRP)
8. State Density Bonus Law Request Letter from Applicant and Waiver Exhibit
9. Applicant Use Permit Justification
10. Transportation Demand Management (TDM) Plan
11. Public Comments Received
12. Link to East Sunnyvale Sense of Place Plan (ESSPP)
13. Link to LUTE Final EIR
14. Links to Phase I and Phase II Environmental Site Assessments
15. Site Management Plan
16. Approval from Regional Water Quality Control Board of Site Management Plan
Additional Attachments for Report to Council
17. Planning Commission February 23, 2026 Staff Report (without attachments)
18. Planning Commission February 23, 2026 Final Minutes
19. Appeal Letter by Neighbors March 4, 2026
20. Petition for Traffic and Safety Mitigation
21. Applicant Letter to City Council