Modular Developer Invokes Builder’s Remedy in North San Jose

A shapeshifting group of developers has employed the builder’s remedy for nearly 800 affordable apartments in north San Jose.

The latest is Los Angeles-based LH Housing, which filed plans under the state housing provision to fast-track approval for 780 modular apartments at 7 Topgolf Drive, in the Alviso District, the San Jose Mercury News reported. The seven-story project, designed by JPark Architects, based in L.A.’s Koreatown, is using modular construction to control costs.

The builder’s remedy is a decades-old loophole in state housing law that allows developers to bypass local zoning rules in cities or counties that failed to certify their state housing plans if a project includes at least 20 percent affordable housing.

The building site, next to a Topgolf range, has been eyed by builders, some operating under different names, for years.

A year ago, LH filed plans to build the 780-unit affordable apartment complex on the 3.2-acre 7 Topgolf site, according to the Mercury News. The project is similar to one pitched by L.A.-based Genesis Commercial Capital in late 2023.

LH and Genesis are both led by David Kim, of L.A.’s Koreatown, who at one point revised the plans to build 804 units, with each application filed under the builder’s remedy.

The proposals were filed after South Korea-based Pine Tree Investment & Management bought the lot at the close of a foreclosure proceeding for $27.6 million.

Pine Tree is an affiliate of KEB Hana Bank, based in South Korea, which had loaned money to the property’s previous owner, Mirae Asset Global Investments. Mirae’s loan went into default in 2022.

Mirae paid $22.5 million in 2019 for the boomerang-shaped site, north of Highway 237 and the Guadalupe River, next to the Topgolf San Jose driving range. That year, it won approval for the hotel project, which then stalled during the pandemic.

The proposed 200-key hotel, to include a 15,400-square-foot retail building, was eyed for development by Shilla Stay, an affiliate of Samsung Group.

At the 7 Topgolf site, Richmond-based Cloud Apartments — led by modular specialist Curtis Wong of San Jose — is the project manager.

“We are working closely with the developer on this,” Marika Krause, a spokesperson for the San Jose Planning Department, told the Mercury News. “We are working sincerely with the applicant to allow their proposed density.

“Builder’s remedy is a complicated law that’s been clarified a few times” in recent months, she said.

San Jose’s shifting assessment of the builder’s remedy rules is helpful, according to Bob Staedler of Silicon Valley Synergy, a land use consultancy.

“It appears the city is becoming more receptive to these kinds of projects than they were in the past,” Staedler told the newspaper. “Getting more housing in north San Jose is always helpful.”

— Dana Bartholomew

Correction: This story has been updated to reflect that Cloud Apartments is the project manager for 7 Topgolf Drive.