Gilroy City Council Greenlights 530-Unit Housing Complex

Gilroy City Council is giving the green light to a 530-unit builder’s remedy project after more than a year of legal back-and-forth.

On Tuesday, the City Council voted unanimously to settle a lawsuit with Gandolfi Investments that allows the developer to proceed with a planned apartment and townhouse complex at 315 Las Animas Avenue, The Mercury News reported. The approximately 27-acre plot on the northern end of Gilroy is currently an empty field zoned for limited industrial use.

It all started in December 2023 when Gandolfi Investments, a subsidiary of Chicago-based Ten South Construction, applied to build the apartments and townhouses — 20 percent of which would be set aside for affordable housing — along with clubhouses, parks and resort-style pools.

The company sought to use the state’s builder’s remedy law, which allows developers to bypass local zoning regulations when building housing projects that are not in compliance with state housing element law, but the city deemed the application incomplete and ineligible for the incentives. Gilroy’s housing element requires the city to add 1,773 new homes by 2031.

In July, Gandolfi filed a lawsuit against the city claiming certain officials owned adjacent parcels of land, which the Mercury News said it debunked. The developer and the city came to an agreement earlier this week to settle the lawsuit, in which the city would streamline the application process for the developer by clarifying certain requirements for the project and allowing Gandolfi to take a loan from the city to pay some fees.

In exchange, Gandolfi would pay the city over $7,000 for every unit it opens, resulting in a $4 million payday for the city if the project is completed. The developer would also pay to create a plan for the development of the area surrounding the complex.

“It’s an opportunity in that section of the city to have a smart way of potentially expanding by creating a new kind of master plan, a new way of looking at this area,” City Council member Terence Fugazzi said of the project.

Gilroy City Attorney Andy Faber acknowledged that turning down the project would “entertain” substantial legal risk” given that state builder’s remedy laws tended to lean in favor of developers.

The city and the developer expect to finalize the agreement in the coming weeks.

— Chris Malone Méndez