The developer behind the 119-unit, 13-story “Capri Fruitstand” proposal for 14288 Capri Dr.—which includes 24 units of affordable housing—has renewed its legal claim that the Town of Los Gatos has been taking illegal steps to block residential development in this corner of Silicon Valley.
In Los Gatos LLC’s “second amended petition” filed Dec. 5 in Santa Clara County Superior Court, the Fullerton-based plaintiff says, not only is the Town blatantly disregarding State housing directives to rip development rights from their “Builder’s Remedy” project, but also—following a recent court decision—Los Gatos’ entire Housing Element is likely invalid.
“The California Court of Appeals just ruled that another city’s (Redondo Beach) Housing Element is non-compliant because of the use of zoning ‘overlays’ to fulfill its Regional Housing Needs Allocations,” the plaintiff’s lawyers wrote, referring to New Commune DTLA LLC v. City of Redondo Beach. “The Town of Los Gatos used the same method of zoning ‘overlays’ as Redondo Beach in its Housing Element.”
The latest stage in the Los Gatos LLC lawsuit comes as the leadership on Council swings back from former-mayor Matthew Hudes, who fought many of the Housing Element provisions demanded by the Department of Housing and Community Development, to current mayor Rob Moore, a big booster for affordable housing and “missing middle” homes.
It was Moore who moved the original approval of the Housing Element (which was soon found lacking by Sacramento due to the Town not going far enough to address a lack of housing diversity and fix built-in problems with segregation), with the support of current Vice Mayor Maria Ristow and Councilmember Rob Rennie. Hudes (who opposed that motion) and then-vice mayor Mary Badame (who abstained in that January 2023 vote) have long contended approving a faulty housing plan was a bad move.
Because Los Gatos was late by more than a year in approving a successful Housing Element, it opened the door to several so-called “Builder’s Remedy” projects, which are given special rights to be able to build beyond what would normally be allowed.
Los Gatos LLC accuses the town of trying to make a ‘bad-faith end-run’ around State housing rules
The Town was able to negotiate a “tolling agreement” with Swenson Builders to reduce the size of its Builder’s Remedy project, and residents of the area are now quite pleased with the townhomes set to go in at 15495 Los Gatos Blvd.
On March 28, the Town took offensive action against Arya Properties’ and Los Gatos Boulevard Properties’ Builder’s Remedy applications, in the hopes of succeeding where many other municipalities have failed—opposing the Gavin Newsom Administration’s approach to solving the housing crisis, by aiming at invalidating part of the way the Builder’s Remedy tool functions.
The lawsuit Los Gatos’ lawyers filed that day (The Town of Los Gatos v. Arya Properties et al.) takes aim at The Luxe, a 120-unit proposal that would rise more than 148 feet (with 24 affordable units), and The Arya, which would rise more than 116 feet at the Ace Hardware site on Los Gatos Boulevard, creating 175 units (including 35 affordable) in the process.
The Town contends that HCD is actually slowing residential unit production by allowing unlimited 90-day periods for developers to continue to tweak their designs, essentially sitting on valuable vesting rights indefinitely.
Richard B. Jacobs, the lawyer for Los Gatos LLC, said in the Dec. 5 filing (in its lawsuit against the Town) that Los Gatos—after having lost its opportunity to adjudicate Builder’s Remedy projects by missing the statutory Housing Element deadline—is trying to regain that power in an illicit manner.
“This is another case in the continuing battle between the Town of Los Gatos, the State of California, and low income housing groups acting under State law, where the Town of Los Gatos is attempting to block affordable housing projects in violation of State law,” he wrote. “Local governments that do not prepare a housing element substantially in compliance with state law, thereby failing to plan for an adequate supply of housing, become subject to various legal consequences.”
For example, he hinted that Los Gatos LLC may decide to seek attorney’s fees from the Town for initially deeming the full development application it submitted Aug. 23, 2024 incomplete.
He also argued that the Town is making a “bad faith end-run” around the Builder’s Remedy by introducing new, illegal, environmental requirements (like environmental impact reports).
“Notably, the Town just finished their EIR for their Housing Element in June 2024 and there should be no additional cumulative impacts from the Builder’s Remedy projects,” he wrote, adding Council even discussed how adding extra environmental red tape “would allow them to suspend the Builder’s Remedy developments by approximately 2-4 years because of the comprehensive EIR policy.”
On Dec. 2, Council met in closed session to discuss its approach to the Los Gatos LLC lawsuit. On Dec. 16, Council heard from a representative of the developer, but voted not to change course.
