Los Gatos Sues to Clarify Builder’s Remedy

Developers for two builder’s remedy projects in Los Gatos wanted unlimited time to complete their applications. Not so fast, city officials say.

The unincorporated South Bay town has filed a lawsuit seeking clarification as to whether developers can continuously refile incomplete applications for builder’s remedy projects, the San Jose Mercury News reported.

Builder’s remedy, a provision in state housing law, allows developers to bypass zoning in cities or counties that fail to certify their state housing plans, provided they include 20 percent affordable housing.

The town is now processing 12 or 13 builder’s remedy applications, according to Los Gatos Mayor Matthew Hudes.

“The purpose of this lawsuit is not to stop housing construction in Los Gatos, but rather to know how to comply with the law,” the city stated in a news release.

Developers have 180 days after submitting a preliminary application to submit a full application for a builder’s remedy housing project, or their preliminary application will expire, according to state housing law.

After that, they have 90 days to resolve any missing pieces in their applications.

Los Gatos interpreted the law to mean that there was only one 90-day period in which developers can resolve any issues with their applications.

But the state Department of Housing and Community Development says a developer can have successive 90-day periods to fix their applications, which could run indefinitely. The department also threatened to get the state attorney general to enforce its interpretation.

Hudes said clarifying the law would make sure the town can efficiently approve builder’s remedy applications to make way for much-needed housing. It’s not clear how, if the city has been holding up the builder’s remedy projects, further clarification could further expedite them.

“This action is necessary to protect the interests of our town and provide much-needed clarity,” Hudes said in a release. “By seeking the court’s help, we aim to avoid further confusion and ensure that the town’s actions are consistent with the law.

“Without resolution of this issue, applications could remain incomplete indefinitely, which would only delay the construction of much-needed housing.”

After the Los Gatos Town Council approved its state-mandated plan to allow for 1,993 homes by 2031 last summer, the municipality faced 15 qualified builder’s remedy projects. The wealthy town south of San Jose approved its state-mandated housing element in June last year — 17 months after the January 2023 deadline.

The window of noncompliance left Los Gatos open to the builder’s remedy.

The projects include the proposed conversion of the Post Office at 101 South Santa Cruz Avenue into a seven-story, 58-unit condominium complex and a plan by locally based Arya Properties to replace an Ace Hardware store at 15300 Los Gatos Boulevard with a nine-story, 182-unit apartment complex.

The clarification sought by the town lawsuit was raised when applications for two builder’s remedy projects were deemed incomplete, with the developers asserting that they had unlimited time to resolve them.

The contested projects include the redevelopment of the Ace Hardware and a proposal for a proposal for The Luxe, a 117-unit mixed-use development at 14849 Los Gatos Blvd.

— Dana Bartholomew

Correction: This story has been edited to reflect that the contested projects include The Luxe.