The statewide implications of a Los Gatos tower proposal

In Los Gatos, the quaint town in the Santa Cruz Mountains widely viewed as the southern gateway to Silicon Valley, the crown for tallest building is shared between The Altan condominium and the El Gato Penthouse apartments, which each reportedly rising about 61 feet.

Now, after a court ruling last week, Los Gatos will be forced to process a pair of applications that propose apartment buildings between 100 and 120 feet in height, not to mention the combined 292 new housing units intended to come with them. The court’s decision sharpens the threat — and the potential — of California’s builder’s remedy law, and could have statewide implications.

The local developer behind the applications, Arya Properties LLC — run by Ali Moayed, a doctor charged with insurance fraud in 2019 and convicted of elder abuse in 2008 — submitted the projects through the state’s builder’s remedy provision. When a local jurisdiction fails to get state approval on its plan — known as a housing element — to make room for additional state-mandated housing supply, builder’s remedy kicks-in. The provision, intended as a big stick against noncompliant cities and counties, essentially eliminates local zoning rules and standards, and allows developers to propose wildly incongruous and outsized housing projects. The local jurisdictions are often powerless to deny these projects.

Alas, Los Gatos tried by deeming the project application incomplete. State law allows a 90-day window for developers to cure any issues. On the developer’s second try, Los Gatos again determined the application incomplete. The city interpreted state law to only allow one 90-day window to address application issues, after which an applicant must start all over. The developer argued it had indefinite 90-day windows to resubmit and fix its applications.

The court, in an opinion published last week, sided with the developer.

Of course, a 120-foot apartment building would hardly register on the Richter Scale in California’s great metropolises. But think, here, of the scale. Through the state’s builder’s remedy law, Arya Properties LLC was able to submit for housing structures that are about twice as tall as any building standing in Los Gatos. And, now, according to the court, it’s almost impossible to throw these applications out.

Now, three years into California’s latest cycle of requiring cities and counties to add more housing supply — and the first in which the state is applying real teeth to its mandates — the threat and promise of builder’s remedy is becoming clearer. In Pacifica, the peninsula city 10 miles south of San Francisco, a developer is pushing forward on a new, 86-acre, 1,225-home neighborhood through the builder’s remedy provision. In Davis, the 25-acre infill neighborhood, dubbed Palomino Place, recently won approval after employing the state law.

San Francisco is watching these developments closely. Late last year, the city council approved Mayor Daniel Lurie’s Family Zoning Plan, which upzoned neighborhoods across the city for the first time in decades, aimed at making room for the 82,000 new units the state is requiring San Francisco to permit by 2031. However, groups on both sides of the housing debate — those who think the upzoning went too far, and those who believe it didn’t go far enough — have sued the city on those grounds.

If a court rules the zoning plan void, it could put San Francisco out of compliance with state housing mandates and trigger builder’s remedy.

Lurie has previously warned what builder’s remedy in San Francisco could mean.

“They’ll put towers everywhere,” Lurie said of developers.

Bill Fulton, publisher of the California Planning and Development Report, which tracks land use issues throughout the state, told The Real Deal that builder’s remedy can often tempt developers’ egos.

“Some developers fall into the trap of their egos with builder’s remedy,” Fulton said over the phone this week. “They think, ‘I’m going to build the greatest project ever.’ I think there is a lot of ego, but a lot of developers want to play ball with their city. But others want to go nuclear.”

California has not seen many builder’s remedy projects break ground, often due to macro economic factors like the cost of debt and construction materials. However, Fulton said the state is likely to only see builder’s remedy projects crop up where the rents are high, because the law requires developers to pay prevailing wages in the construction of the projects.

The state has recently shown an interest in pushing builder’s remedy projects as well. In 2025, AB 1893 went into effect, lowering the affordability thresholds for developers from 20 percent to 13 percent, while also limiting how far a project’s proposed density could go beyond local zoning rules.