Milpitas, population 66,790 (2010), is located five miles north of San Jose, California. The western-most slope of the Los Buellis Hills, referred to in Milpitas as the “Western Face”, forms the eastern edge of the developed portion of Milpitas. However, the Milpitas sphere of influence extends east for a few miles to include the eastern slope, or “Eastern Hills”, which are also part of the Los Buellis Hills.
In 1981, the City adopted a hillside ordinance designed primarily to reduce the amount of new development in the Western Face, the hills which form the backdrop for downtown Milpitas. This ordinance included TDR to shift development from the Western Face to the Eastern Hills. Eleven years later, development restrictions were increased on land on the Western Face and the TDR provisions were removed from the City’s hillside ordinance.
The stated purpose of the Milpitas Ordinance was to transfer development from hillside parcels which should be preserved as open space due to visibility, access, geology, slope or other factors. Sending sites could be parcels in either the Western Face or the Eastern Hills. However, only land in the Eastern Hills designated for village development could receive transferred development rights. When property owners relinquished the right to build one dwelling unit on a sending site, they were allowed to build 2.6 units on approved receiving sites in the Eastern Hills when all bonus factors were calculated. In other words, the transfer ratio for this program featured a maximum bonus of 2.6 to 1.
Developers wanting to transfer development rights needed to apply for a planned unit development (PUD) containing both the sending and receiving parcels. The sending and receiving parcels could be under separate ownership. The sending site, following approval of the PUD, had to be kept in its natural condition. However, through the PUD, the City could authorize consistent uses such as watershed, pasture and trails. Open space easements on the sending parcels had to be dedicated to the City.
The Planning Commission was required to make a recommendation on the PUD application. In order to approve an application, the City Council had to find that the receiving parcel had adequate area to accommodate both the amount of development allowed by right plus the additional development granted through TDR. The Council also had to find that the proposed development was consistent with all applicable provisions of the City’s General Plan.
The Milpitas program had some features found in successful TDR programs, such as a transfer ratio that provided an incentive to participate. Nevertheless, the TDR portion of the ordinance went unused for eleven years. Owners of property on the Western Face continued to propose development on their own land rather than transfer rights to the Eastern Hills.
According to Wesley D. Smith, Community Development Manager of Milpitas, the TDR program was hindered because there are numerous property owners involved. As a result no large development proposal surfaced to create an organized effort to use the TDR program. Also, development tends to be more expensive in the Eastern Hills than on the Western Face due to the need to extend roads and utilities; consequently, the incentive provided by the 2.6:1 transfer ratio was at least partly offset by additional development costs. In addition, the lack of view lots in the Eastern Hills tended to make these lots sell at a lower price. Finally, the density limit in the Eastern Hills was one dwelling unit per ten acres while the Western Face density limit was one unit per acre except within the PUD village area. This further reduced the benefits of transferring development rights.
Although no transfers occurred from the Western Face to the Eastern Hills, slope-density restrictions imposed on the Western Face served to reduce development in this area. Only a dozen homes were built on lots on the Western Face created between 1981 and 1992.
In 1990, a Hillside Committee was formed to review various hillside issues including the TDR program. The Committee met over 40 times over the course of two years and ultimately recommended that the transfer ratio be increased from 2.6:1 to 6:1 in order to encourage transfers. However, when this recommendation was presented to the Milpitas City Council, concern was expressed that the City might be protecting the Western Face at the expense of the Eastern Hills.
In September 1992, the City adopted a new Hillside Ordinance which eliminated the transfer mechanism entirely and rezoned the Western Face from a density of one unit per acre to one unit per ten acres, matching the density limits of the Eastern Hills. Even though the TDR component was eliminated, discussions about how to improve the TDR mechanism were instrumental in making the city acknowledge the importance of their hillsides, the Eastern Hills as well as the Western Face.