REPORT TO COUNCIL
SUBJECT
Title
Proposed Project: Introduce an Ordinance to Amend Sunnyvale Municipal Code (SMC) Title 19 (Zoning) to Repeal and Replace Chapter 19.78 (Dual Urban Opportunity (DUO) Housing) and Title 18 (Subdivisions) to Repeal and Replace Chapter 18.26 (Urban Lot Splits (ULS)) and to Amend Title 19 (Zoning) and Title 3 (Revenue and Finance) to Conform with New State Laws.
File #: PLNG-2025-0078
Environmental Review: The action is exempt pursuant to California Environmental Quality Act (CEQA) Guidelines Sections 15061(b)(3) and 15378(b)(4)-(5) and Government Code Sections 65852.21(j) and 66411.7(m).
Project Planner: Gabriela Ventura, (408) 730-7407, gventura@sunnyvale.ca.gov
Report
SUMMARY OF COMMISSION ACTION
The Planning Commission considered this item on September 14, 2026. No members of the public spoke on this item. An excerpt of the meeting minutes is in Attachment 4.
The Planning Commission voted unanimously (7-0) to approve the staff recommendation with no modifications, to recommend to the City Council: Alternative 1, to Introduce the Ordinance (Attachment 3) Amending Sunnyvale Municipal Code Title 19 (Zoning) to Repeal and Replace Chapter 19.78 (Dual Urban Opportunity Housing) and Title 18 (Subdivisions) to Repeal and Replace Chapter 18.26 (Urban Lot Splits) to Conform with New State Laws; and to Amend Title 19 (Zoning) and Title 3 (Revenue and Finance) to Conform with State Legislation Regarding Deferral and Reduction of Development Impact Fees for Certain Housing Projects Pursuant to Senate Bill 937 and Assembly Bill 2553.
DISCUSSION
Commissioners asked questions about State law requirements for Dual Urban Opportunity (DUO) projects, including parking. Staff explained that DUO projects are subject to one parking space per DUO unit unless State law requires that there be no minimum parking requirement. This applies, for example, when a project is within one-half mile of a high-quality transit corridor or major transit stop, or within one block from a car-share vehicle.
The Commission also asked whether the City could require additional parking for DUO projects. Staff clarified that SB 450 prohibits local jurisdictions from imposing additional requirements for DUO projects that are not uniformly applied to the underlying zoning district. The Commission asked about the purpose of the proposed changes. Staff responded that the update would bring the municipal code in line with State law and provide accurate and consistent information to the public.
A Commissioner also asked questions about traffic impact fee reductions allowed under AB 2553 and delayed development impact fees for designated housing projects allowed under SB 937. Before the Planning Commission meeting, staff updated the proposed zoning ordinance to include SB 358, which took effect January 1, 2026. SB 358 changed the location requirements for housing projects that qualify for traffic impact fee reductions. These requirements include being near one or more of the following:
• A supermarket or grocery store,
• A public park,
• A community center,
• A pharmacy or drugstore,
• A medical clinic or hospital,
• A public library,
• A school that maintains a kindergarten or any of grades 1 to 12, inclusive, and
• A licensed childcare facility.
The proposed zoning ordinance (Attachment 2) addresses both AB 2553 and SB 358 and was provided as an updated attachment to the Report to Planning Commission.
A Commissioner expressed concerns that the proposed zoning code amendments referenced State law but did not clearly describe how the City would implement SB 937.
The proposed code changes refer to State law for payment deadlines rather than including detailed instructions. This approach will help avoid repeated code changes if State law is updated.
Staff noted that SB 937 implementation will be further clarified through administrative policy and procedures. These are summarized below:
1. An administrative policy identifying eligibility criteria, the types of fees that can be deferred, payment timing, Fee Deferral Contract requirement, and procedures and operating processes.
2. A fee Deferral Contract specifying the terms and legal obligations associated with deferring fees (Attachment 5).
3. An SB 937 Acknowledgement and Checklist form to identify projects that are submitted for building permits.
4. Additional workflow and permit holds to ensure collection of deferred fee at the time of Certificate of Occupancy.
The Planning Commission requested clarification on the terms “Certificate of Occupancy” and “Building Final.” Under SB 937, fees must be paid at Building Final or at issuance of the Certificate of Occupancy, whichever occurs first. According to California Building Code Section 111 and SMC Chapter 16.16, a certificate is issued after the Building Official completes the inspection and determines that the building complies with all applicable codes and laws. The Building Official’s signature on the final inspection card may serve as the Certificate of Occupancy, or a separate certificate may be issued upon request. As a result, the Building Final and Certificate of Occupancy for housing projects typically occur simultaneously, and development impact fees must be paid when the final inspection is scheduled.
Administrative policies and conditions of approval were updated to clarify this terminology.
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. Introduce the Ordinance (Attachment 2 to the report) Amending Sunnyvale Municipal Code Title 19 (Zoning) to Repeal and Replace Chapter 19.78 (Dual Urban Opportunity Housing) and Title 18 (Subdivisions) to Repeal and Replace Chapter 18.26 (Urban Lot Splits) to Conform with New State Laws; and to Amend Title 19 (Zoning) and Title 3 (Revenue and Finance) to Conform with State Legislation Regarding Deferral and Reduction of Development Impact Fees for Certain Housing Projects Pursuant to Senate Bill 937 and Assembly Bill 2553, and Find that this Action is Exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Sections 15061(b)(3) and 15378(b)(4)-(5) and Government Code Sections 65852.21(j) and 66411.7(m).
2. Introduce the Ordinance with modifications.
3. Do not introduce the Ordinance and provide feedback on desired changes.
STAFF RECOMMENDATION
Recommendation
Alternative 1: Introduce the Ordinance (Attachment 2 to the report) Amending Sunnyvale Municipal Code Title 19 (Zoning) to Repeal and Replace Chapter 19.78 (Dual Urban Opportunity Housing) and Title 18 (Subdivisions) to Repeal and Replace Chapter 18.26 (Urban Lot Splits) to Conform with New State Laws; and to Amend Title 19 (Zoning) and Title 3 (Revenue and Finance) to Conform with State Legislation Regarding Deferral and Reduction of Development Impact Fees for Certain Housing Projects Pursuant to Senate Bill 937 and Assembly Bill 2553, and Find that this Action is Exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Sections 15061(b)(3) and 15378(b)(4)-(5) and Government Code Sections 65852.21(j) and 66411.7(m).
JUSTIFICATION FOR RECOMMENDATION
The proposed ordinance will help staff provide clear, accurate, and consistent information to the community. The amendments to the Sunnyvale Municipal Code seek consistency with current State law and also further General Plan goals related to housing production by reducing barriers to development and streamlining the review and approval process for eligible projects.
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
___ 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
_X_ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Gabriela Ventura, Associate Planner
Reviewed by: Aastha Vashist, Principal Planner
Reviewed by: Matt VanHua, Assistant Director of Community Development
Reviewed by: Trudi Ryan, Director of Community Development
Reviewed by: Connie Verceles, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Report to Planning Commission [26-0709, September 14, 2026] (without attachments)
2. Draft Ordinance
Additional Attachments for Report to Council
3. Presentation to Planning Commission 20260914
4. Excerpt of Final Minutes of the Planning Commission Meeting of September 14, 2026
5. Fee Deferral Contract Template