It has to do with history and grandfathering. A long time ago, the FCC only required that FM stations don't interfere with each other. There were no mileage separation restrictions. 99.1 used to be KSCO-FM in Santa Cruz, transmitting from a low-elevation tower with significant shielding from the Bay Area due to the Santa Cruz mountains. Sometime around 1987 (not sure of the exact timetable, but close) that transmitter was moved to Loma Prieta. The only requirement was that the "predicted" contours at the higher elevation match the previous short-spaced contours when the transmitter was at negative HAAT. So the Loma Prieta transmitter was installed with a directional antenna to achieve this.
I can't remember, but I think the ERP on 99.1 towards San Francisco is quite low - like on the order of 160 watts. But it's 4000 feet above sea level. When 99.1 first moved to Loma they were not co-owned. 99.1 was KLRS, a pre-NAC NewAge station, and 98.9 was KKCY, with an eclectic format. I had many friends in San Jose who were quite upset at the loss of KKCY when KLRS signed on from Loma Prieta. Both stations went through a couple of format changes & owners, until Viacom bought them both & they became "double 99". From that point on, the two have been co-owned and simulcasted, so the interference issues are less significant.
Interestingly enough, the old rules regarding short-spacing and interference are still in place in the non-comm band. The other 1st adjacent spacing in the SF Bay Area is KALW and KKUP (91.5 and 91.7). KKUP is on the exact same tower as KSQL and KALW is on Twin Peaks, less than a mile away from KSOL.
Dave B.