This developer bonanza has been brought to you by new State laws, Town inertia

In case you didn’t know, 1887 was the year Los Gatos was established upon a vote of 126-44. Since then, this community has been no stranger to change. Back in the day, the local economy thrived thanks to milling, logging and orchard cultivation—and now largely because of multinational technology companies.

Sure, the community has gone through major shifts, both large and small. The 1989 Loma Prieta earthquake dismantled many structures, for one. But now, the community is set to grow taller than ever before. This change, which doesn’t exactly feel comfortable to many residents, has been ushered in by new State laws.

Senate Bill 330 was approved by Governor Newsom in 2020 as “The Housing Crisis Act of 2019.” The law is designed to force changes to zoning to spur affordable housing in areas that’ve been more reluctant to allow housing in.

Along with SB 330 comes the Builder’s Remedy, which allows developers to overstep the Town’s ordinances to further Sacramento’s aim of creating affordable housing. In layman’s terms, the State has determined the Town did not create its fair share of housing to satisfy demand from people across the income spectrum, so this legal tool (Builder’s Remedy) lets developers to overstep traditional barriers to generate living options for a broader audience.

The professor + the mayor

The Los Gatan reached out to Kelly Snider, a professor of urban and regional planning at San José State University, to better understand the interplay between SB 330 and Builder’s Remedy.

“SB 330 was passed because a majority of California’s legislators observed that towns and counties were taking unethical votes with the purpose of avoiding new housing and residents,” she said. “So, SB 330 was specifically put in place to correct poor behavior, statewide.”

Snider, who is also a developer, explains that, because the government doesn’t have enough money to just build all the affordable housing that’s needed, it chose to incentivize the marketplace with carrots and sticks.

“Developers can build, and with that, they are creating 20% of their development to be affordable for people who make less than 80% of the median income of the town,” she said.

Mayor Matthew Hudes says he’s concerned about the trajectory of State legislation. “What I am interested in is the quality of this community,” he said, adding he wants teachers, police and firefighters to be able to continue living in Los Gatos—but doesn’t think Sacramento’s approach will work. “I think there’s a balance between local control and measures to try and encourage housing. I am skeptical of the current process of using inclusionary requirements to create affordable housing.”

Hudes says he isn’t a fan of a one-size-fits-all approach imposed by the State. “Inclusionary requirements don’t necessarily take into factors the evacuation routes,” he said. “So, if you have housing developments with parking capacity, then you are going to have those cars parked on potential evacuation routes. Fire safety, public safety and health are important considerations for evaluating plans like the Housing Element.”

He added that SB 423, which was passed last year, allowed developers to lower the percentage of affordable units that allow the suspension of local rules—from 20% down to as low as 7%.

But from Snider’s standpoint, Sacramento’s approach has already borne fruit. “SB 330 just says read the zoning code, put a proposal in, and if it complies, the city must say yes,” she said, adding SB 330 is on a stronger legal footing than the Builder’s Remedy provision at this point. “Builder’s Remedy projects are ones that do not comply with the zoning code or the law, so therefore they can be taller. Builder’s Remedy is not settled law. SB 330 is settled law.”

Many Los Gatos residents have been blindsided by the arrival of dozens of proposals for housing—much of it larger than anything built before in town—that have landed on the Planning Department’s desk in the past couple years. Snider sees an ongoing tussle between local height and density limits and State codes, such as Builder’s Remedy. “There are two laws that are in conflict,” she said. “The question is, who is going to win in that battle?”

For Snider, the LA wildfires have shone a light on what happens when you don’t build enough homes. “The housing shortage in California is so bad,” she said. “We aren’t even keeping up with the destruction of them.” More than 10,000 houses burned down in the LA fires this month alone. “I believe that the State is correct in forcing cities to accept projects that they don’t want…and Builder’s Remedy is an extreme way to force these small towns and counties to allow these projects to succeed. Otherwise, we are going to collapse even more upon ourselves.”

As development renderings have popped up at the locations in town, people scurried to Town Hall, developer meetings and social media platforms like Nextdoor to voice their concerns. Will Los Gatos change to the point that it’s no longer recognizable?

Los Gatans have already begun to get a glimpse of projects already in the works, as they walk past official signage at 14849 Los Gatos Blvd., 101 S. Santa Cruz Ave., 143-151 E. Main St., 178 Twin Peaks Dr., 647 N. Santa Cruz Ave., 980 University Ave., 14789 Oka Rd., 50 Los Gatos-Saratoga Rd. and 15495 Los Gatos Blvd.—just to name a few.

The architect speaks

Some of these addresses may ring a bell as they currently house existing businesses. 15300-15330 Los Gatos Blvd., for example, is home to one of two Ace Hardware locations in town. But if Kurt Anderson, of Anderson Architects, has his way, it will soon be known as “The Arya.” The potential eight-story apartment complex—with a commercial podium with seven stories of residential above (175 units)—is one of four SB 330 projects he has in the works. The others are: 14288 Capri Dr., “Vista Capri” (120 units, 24 affordable); 14849 Los Gatos Blvd., “The Luxe” (117 units); and 101 S. Santa Cruz Ave. (58 units, 12 affordable).

“SB 330 was enacted to encourage all the municipal counties to have higher densities,” he said, pointing to how including 20% affordable housing opens up development possibilities—and how Los Gatos’ slow-growth approach to residential construction opened the door to the current bonanza for developers. “The jurisdiction didn’t have the RHNA (regional housing needs allocation) numbers. They are the numbers that are established by the state of California for the next eight years.”

According to Anderson, because the Town didn’t enact a “housing compliance plan”—known as its Housing Element—fast enough, that gave the go-ahead to developers to essentially do what they thought was best. “Basically, the Town didn’t work fast enough. They had several reiterations,” he said, referring to how the Town kept turning in draft after draft Housing Element that wasn’t up to Sacramento’s demands. “It went on for months.” Also managed by Anderson is 101 S. Santa Cruz Ave., home of the USPS building that so many visit each week. The proposed mixed-use development is seven stories, including 58 condominium units.

Local voices

By law, only 20% of the total units built under Builder’s Remedy need to be affordable housing. Or, 100% of the units need to be sold or rented to moderate or middle-income households. For instance, 151 E. Main St.—sited right beside Los Gatos High School—is a four-story development under SB 330. This development consists of 30 units, 24 market rate and six affordable units. The ground level would be for retail shopping and restaurants, with a parking garage underground.

As the possibility of welcoming new neighbors into the town is on the horizon, Los Gatos native Annette Seaborn shares her perspective on the changes ahead. Seaborn is a Los Gatos real estate area specialist, and has been living on the same street in Los Gatos since she was born.

“I actually don’t mind the heights, because I care more about the land—like fruit trees and walking our dogs,” she said. “I care about the aesthetics and how it looks. So, I don’t mind keeping the traditional look while also bringing in a modern feel. I much rather go up, even if others think that’s more city-like.”

Seaborn says, in the early 1900s, Los Gatos was a vacation destination. “Very wealthy San Francisco residents came to town to camp and holiday,” she said. “One day, they realized they needed more housing, so they built low-income housing across from the DMV. Los Gatos has always had housing issues.”

Meanwhile, Lee Fagot, a 29-year resident of Los Gatos who runs the civic discussion group called Democracy Tent, prefers a more cautious approach to growth. “These developments don’t fit the character of the town,” he said. “A minimum of 1,993 units have to be allowed to build. The Town failed in five attempts to get their Housing Element approved; therefore we have what is called Builder’s Remedy…The Town failed to make its submission on time.”

Fagot says these projects were only able to emerge because Los Gatos’ elected officials didn’t form a united front. “The Council was divided 3-2 in developing that new Housing Element document,” he said. “With that, we now have these proposals with 7-12 stories. Whereas the town only allows 45-foot height in downtown, and in some mixed-use residential neighborhoods.”

Fagot says he doesn’t believe overbuilding will solve the housing crisis. “There is also no consideration for the architectural style to fit the character of the current housing in town, and no consideration for the densities that the Town has mandated…for what it could do for safety and clogging the infrastructure,” he said. “It’s beyond disappointing. It’s scary as hell.”

Down the road from Los Gatos Boulevard is another SB 330 development at the location of 980 University Ave. Current owner of the land, James Rees, describes his journey of arriving upon this agreement to sell, considering this land has been in the family for over 25 years.

“We first leased it to Netflix in the early 2000s—before the company had even gone public,” he said. “Shortly after, Cryptic Studios leased it for their headquarters and are the current tenants until their lease ends. We think that the building has reached (the end of) its lifetime, and the land is ready for a new start.”

Sanctuary Real Estate founder Ed Dee, who has been in Los Gatos since the 1970s, embodies the complexity of the current housing market. “People want to live in Los Gatos,” he said. “As a realtor, I want inventory to sell. As a resident of the town, I don’t like the density.” He says he’d like to see more planning around public safety, education and traffic issues.

“You can add all these units, but where are all these kids going to go to school? Are the police going to keep the peace? That’s where Builder’s Remedy feels like a ramrod,” he said. “You can’t just kick the can down the road until the streets are gridlocked. Los Gatos is a very unique place. It’s a town, not a city. One of the most economic and affluent places in the world. Los Gatos has always had the charm of a small town. And although the change has been constant, at the same time, people need to live somewhere.”

Formal SB 330 applications received by the Town of Los Gatos (that were active at press time):

• 101 Blossom Hill Rd.
• 14288 Capri Dr.
• 14849 Los Gatos Blvd.
• 14859, 14917, 14925 and 16392 Los Gatos Blvd.; 16250, 16260, and 16270 Burton Rd.; and Assessor Parcel Number 424-07-116
• 15300 and 15330 Los Gatos Blvd.
• 15349 and 15367 Los Gatos Blvd.
• 15495 Los Gatos Blvd.
• 50 Los Gatos-Saratoga Rd.
• 143-151 E. Main St.
• 647 N. Santa Cruz Ave.
• 101 S. Santa Cruz Ave.
• 178 Twin Oaks Dr.
• 14789 Oka Rd. and 424-08-035
• 980 University Ave.