News

Los Altos drops appeal to block five-story downtown housing project

A housing project at 40 Main Street in Los Altos will move forward after the city dropped its legal fight against the proposal. Rendering courtesy Los Altos.

A proposed five-story housing project in downtown Los Altos can move forward after the city announced Sept. 5 that it will drop its legal battle against the controversial development.

The Los Altos City Council voted 5-0 over the weekend to drop its appeal against the project at 40 Main Street, citing the financial risks of continuing its fight against the development. If the city lost, it would have been required to pay out $7 million on top of legal fees, threatening a critical blow to an already strained budget.

"The council determined that the potential cost of the litigation could severely impact the city's ability to provide even basic municipal services," city officials said in a statement Sept. 5. "In light of this huge financial risk to the city and the uncertainty and risk of losing the appeal, the City Council decided to withdraw the appeal."

The proposal, a 15-unit apartment building with first-floor offices, is one of the first in California to seek streamlined approval under a new state housing law, SB 35. The law was designed to clear the way for housing development in cities that have failed to produce enough housing -- particularly affordable housing -- by allowing certain projects to sidestep discretionary review.

But city building officials, and later the Los Altos City Council, have repeatedly denied that the project qualifies for streamlined approval, blocking the project from proceeding in April 2019. At the time, the project also faced heavy opposition from Los Altos residents, who decried the size of the 66-foot-tall project as a departure from quaint, "village" feel of the city.

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Two months later, housing advocates sued the city, arguing that it violated SB 35 and other state housing laws. They ultimately prevailed: Santa Clara County Superior Court Judge Helen Williams ruled in April that the project must proceed, and that the city acted in bad faith by blocking the project in ways that go beyond "benign" errors.

The city filed an appeal against the judgment in July, doubling down on its determination that the project doesn't comply with downtown zoning standards and is not eligible for streamlined approval.

The clincher that forced the city to back down was the financial repercussions of losing the appeal. A 2005 revision in state law requires that cities battling housing projects in court must pony up money in the form of a bond and, in the event that they lose, must pay out that money to the developer. The rationale behind the law was that cities could delay housing projects in lengthy court battles to the point of killing the financial viability of the developments.

Though the law is fuzzy on how big the bond should be, Ted Sorensen, one of the property owners of 40 Main Street, argued in court filings that the city should be on the hook for $13.8 million -- a number that takes into account past and projected losses due to delays dating back to February 2019. Daniel Golub, an attorney representing 40 Main Street, argued the bond should be set at $13.3 million, in part because of the recent downturn in the economy due to the coronavirus pandemic.

"Instead of allowing the project to begin when the law required, in February 2019, which would have allowed the project to be well underway before COVID-19 hit California, the city's bad faith actions succeeded in delaying project initiation into the highly uncertain pandemic economy," Golub wrote in court filings.

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The city of Los Altos, on the other hand, contends that the bond should be set at $100,000.

In a Sept. 2 ruling, Judge Williams landed in the middle, requiring the city to post a $7 million bond within 10 business days -- giving the city limited time to put up the money or drop the appeal. Williams also noted that the city did not comply with the court's requirements to allow the project to move forward in April, apparently seeing its appeal as an automatic stay on the court's judgment, and failed to offer a bond as "expressly required" under state law.

In its statement, Los Altos city officials said that describing the decision to drop the appeal as difficult "would be an understatement," but that the appeal bond -- combined with attorney's fees -- could cost the city upwards of $10 million that the Los Altos can't afford to lose. They also warned that the use of appeal bonds will have a chilling effect on any city's ability to challenge lower court rulings.

City officials also fiercely denied that the appeal was an attempt to stop housing, particularly affordable housing, from being built in Los Altos, and that the legal fight was specifically to stop a project that they believe was inconsistent with downtown zoning rules.

"It was in no way to prevent the construction of the two affordable housing units that would have been part of this five-story structure," according to the statement. "State laws such as SB 35 and the Housing Accountability Act should not be used as tools to strip cities of their ability to review projects to ensure they conform with its zoning and safety requirements."

The City Council is scheduled to discuss the project on Thursday, Sept. 10, and is expected to formally rescind its denial of the project. City officials say they will "continue to reach out to the developer in good faith" in hopes of revising the project to better match the surrounding properties.

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Los Altos drops appeal to block five-story downtown housing project

by / Mountain View Voice

Uploaded: Tue, Sep 8, 2020, 12:52 pm

A proposed five-story housing project in downtown Los Altos can move forward after the city announced Sept. 5 that it will drop its legal battle against the controversial development.

The Los Altos City Council voted 5-0 over the weekend to drop its appeal against the project at 40 Main Street, citing the financial risks of continuing its fight against the development. If the city lost, it would have been required to pay out $7 million on top of legal fees, threatening a critical blow to an already strained budget.

"The council determined that the potential cost of the litigation could severely impact the city's ability to provide even basic municipal services," city officials said in a statement Sept. 5. "In light of this huge financial risk to the city and the uncertainty and risk of losing the appeal, the City Council decided to withdraw the appeal."

The proposal, a 15-unit apartment building with first-floor offices, is one of the first in California to seek streamlined approval under a new state housing law, SB 35. The law was designed to clear the way for housing development in cities that have failed to produce enough housing -- particularly affordable housing -- by allowing certain projects to sidestep discretionary review.

But city building officials, and later the Los Altos City Council, have repeatedly denied that the project qualifies for streamlined approval, blocking the project from proceeding in April 2019. At the time, the project also faced heavy opposition from Los Altos residents, who decried the size of the 66-foot-tall project as a departure from quaint, "village" feel of the city.

Two months later, housing advocates sued the city, arguing that it violated SB 35 and other state housing laws. They ultimately prevailed: Santa Clara County Superior Court Judge Helen Williams ruled in April that the project must proceed, and that the city acted in bad faith by blocking the project in ways that go beyond "benign" errors.

The city filed an appeal against the judgment in July, doubling down on its determination that the project doesn't comply with downtown zoning standards and is not eligible for streamlined approval.

The clincher that forced the city to back down was the financial repercussions of losing the appeal. A 2005 revision in state law requires that cities battling housing projects in court must pony up money in the form of a bond and, in the event that they lose, must pay out that money to the developer. The rationale behind the law was that cities could delay housing projects in lengthy court battles to the point of killing the financial viability of the developments.

Though the law is fuzzy on how big the bond should be, Ted Sorensen, one of the property owners of 40 Main Street, argued in court filings that the city should be on the hook for $13.8 million -- a number that takes into account past and projected losses due to delays dating back to February 2019. Daniel Golub, an attorney representing 40 Main Street, argued the bond should be set at $13.3 million, in part because of the recent downturn in the economy due to the coronavirus pandemic.

"Instead of allowing the project to begin when the law required, in February 2019, which would have allowed the project to be well underway before COVID-19 hit California, the city's bad faith actions succeeded in delaying project initiation into the highly uncertain pandemic economy," Golub wrote in court filings.

The city of Los Altos, on the other hand, contends that the bond should be set at $100,000.

In a Sept. 2 ruling, Judge Williams landed in the middle, requiring the city to post a $7 million bond within 10 business days -- giving the city limited time to put up the money or drop the appeal. Williams also noted that the city did not comply with the court's requirements to allow the project to move forward in April, apparently seeing its appeal as an automatic stay on the court's judgment, and failed to offer a bond as "expressly required" under state law.

In its statement, Los Altos city officials said that describing the decision to drop the appeal as difficult "would be an understatement," but that the appeal bond -- combined with attorney's fees -- could cost the city upwards of $10 million that the Los Altos can't afford to lose. They also warned that the use of appeal bonds will have a chilling effect on any city's ability to challenge lower court rulings.

City officials also fiercely denied that the appeal was an attempt to stop housing, particularly affordable housing, from being built in Los Altos, and that the legal fight was specifically to stop a project that they believe was inconsistent with downtown zoning rules.

"It was in no way to prevent the construction of the two affordable housing units that would have been part of this five-story structure," according to the statement. "State laws such as SB 35 and the Housing Accountability Act should not be used as tools to strip cities of their ability to review projects to ensure they conform with its zoning and safety requirements."

The City Council is scheduled to discuss the project on Thursday, Sept. 10, and is expected to formally rescind its denial of the project. City officials say they will "continue to reach out to the developer in good faith" in hopes of revising the project to better match the surrounding properties.

Comments

Steven Nelson
Registered user
Cuesta Park
on Sep 8, 2020 at 1:10 pm
Steven Nelson, Cuesta Park
Registered user
on Sep 8, 2020 at 1:10 pm
14 people like this

To this YIMBY it seems more like the Los Altos Council, still doesn't get the idea that SB 35 is the LAW. And, even Los Altos needs to follow the LAW. If they want to challenge the LAW, up to the Calif. Supreme Court - that means that they need to put MILLIONS of their constituent's tax funds, into a Bond for the Court of Appeals.
And - other legal stuff - that The COUNCIL has the RESPONSIBILITY to understand and direct their lawyers to follow. Closed Sessions - ah, we can see what this Council has been doing about directing their lawyers.


LongResident
Registered user
another community
on Sep 8, 2020 at 2:02 pm
LongResident, another community
Registered user
on Sep 8, 2020 at 2:02 pm
4 people like this

The city tried to honor SB35, but the developer was unreasonable. There were a number of true issues. The city may not have handled communicating them well. The problem was that the same owner had been trying to put a large project on that small 7000 sf lot for 7 years at that point. Many of the concerns had already been communicated to the developer. Basically, he was always trying to omit parking needed to support a building with a lot of office space. At the time of the SB35 proposal, he submitted an alternative project which is not subject to expediting, and it had some of the same problems.

What the SB35 version holds is 15 large apartments averaging 1600 sq ft and he is providing each with a single parking spot. But the city did not object to that, owing to SB35 requiring it. The city did object to the 5700 sf of office space not having a single parking space. I think the city standards are objective, but if they aren't it is not a trumped up issue to thwart SB35.

So anyway, then there is the amount of the bond. $13.8 Million is clearly too much. $7 Million is also too much. But the thing is, the city can still appeal that. If the developer still claims damages after the project is now approved. If that happens the city can appeal without submitting a bond, say if the developer claims $3 Million in damages. At that point the city can present its argument that its rejection was based on objective standards, which I think is true.

The whole project is not that large. 15 luxury apartments may sound like a big help to the housing shortage but it's really not very much. The frontage in the picture attacked to the article is just 75 feet and the lot tapers off to 50 feet in the back where it fronts the city parking lot. It's going to stick out like a sore thumb if it gets built, but a palace like that by itself can't ruin the neighborhood for the other owners. The main issue is that if EVERYONE builds up with no parking, there will be a really parking disaster.


LongResident
Registered user
another community
on Sep 8, 2020 at 2:11 pm
LongResident, another community
Registered user
on Sep 8, 2020 at 2:11 pm
2 people like this

Saying the project could be done now is a stretch. But imagine if it was. It would just be leasing. It would be leasing with all this Covid-inspired apartment vacancies all around it. It seems to me that opening up in this market would be a problem, not an asset. Similar would likely occur if it finished at the end of the year too.


Elna
Registered user
Monta Loma
on Sep 8, 2020 at 2:45 pm
Elna, Monta Loma
Registered user
on Sep 8, 2020 at 2:45 pm
18 people like this

I am so very relieved to see Los Altos finally being forced into stepping up.to the Bay Area need for affordable housing. I have been active in the affordable housing advocacy group for nearly 30 years and have seen the hills communities routinely shirk their responsibilities to the Bay Area as a whole year after year, hiding behind every local and state regulation they could find and getting away with it. For shame! Los Altos benefits hugely from the economics of the Bay Area, which relies just as much on lower-wage workers as it does on the highly paid. And because nobody's making new land any more, it behooves those who treasure the "small town feel" of communities like Los Altos to look for ways to help house the many lower-wage workers who provide Los Altans with the very businesses they love. It's high time Los Altos joins the real world and help shoulder it's portion of the responsibilities of affordable housing.


Steven Goldstein
Registered user
Old Mountain View
on Sep 8, 2020 at 3:12 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 8, 2020 at 3:12 pm
6 people like this

This should also be a clear message.

Mountain View better not even give the state ANY reason to question if it is threatening the existing affordable housing or not adding to the current inventory.

BUT!

There is new indications that developers are going bankrupt. You can read the report in the Mercury News here (Web Link).

WHY?

Because the bet on building luxury housing for the "tech" workers and not on a diverse market that allows for all workers to be abler to afford housing. I used my model of the 93 Octane gas stations in the past. This is what happened, the developers "bet" on an unlimited "tech" worker customer base.

NOW COVID and AB5 has torn that business model up for good, and the market is going to have to change or more of these developers are going to go out of business.

Time to change your expectations. In fact, I wonder if many projects in Mountain View are going to freeze at best or cancel at worst.




Steven Nelson
Registered user
Cuesta Park
on Sep 8, 2020 at 3:52 pm
Steven Nelson, Cuesta Park
Registered user
on Sep 8, 2020 at 3:52 pm
Like this comment

Thank the former TBM for less than one page! 2 Longer Reside? HERE Come the JUDGE! HERE Come the JUDGE! And a woman judge.

First tier state judges may make errors, and be overturned on appeal. Even the local government opponents of SB35 ("tried to honor"? that is a real laugh) need to realize that the sovereignty of the People of the Great State of California is where the power lies, not with their city councils or their city voter majorities.

Hail the Republic.


Steven Goldstein
Registered user
Old Mountain View
on Sep 8, 2020 at 4:34 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 8, 2020 at 4:34 pm
Like this comment

Steven,

What kind of reaction could happen if the Prop 21 actually passes?

I know the previous attempt sank like the titanic.

But this time, there is a lot of things going on, it may have a better chance.

I have noticed that no one is doing any polls. The current Googles are showing nothing but letters to the editor and not reporting on any polling. Why?

Maybe, no one wants to report bad news in the news because "Real Estate" revenues are the highest paid advertising? IDK.

We still have a very bumpy ride coming.


Tal Shaya
Registered user
another community
on Sep 8, 2020 at 4:41 pm
Tal Shaya, another community
Registered user
on Sep 8, 2020 at 4:41 pm
4 people like this

Los Altos thumbed its nose at the new housing law. So it's good the town was forced to comply. But to put the flophouse on Main St. is a mistake. Los Altos maintained its towny atmosphere for decades but that's about to end.


LongResident
Registered user
another community
on Sep 8, 2020 at 4:57 pm
LongResident, another community
Registered user
on Sep 8, 2020 at 4:57 pm
6 people like this

This project has actually got 13 luxury apartments (average > 1600 sf) and 1 smaller low income apartment and 1 smaller apartment affordable to those making up to 120% of the median area income (moderate). Los Altos has approved several larger projects with more affordable units. Interesting fact, one project a few years back was bought entirely by Stanford University. Only the affordable units (about a dozen) remain available to those not affiliated with Stanford. Also, they are the only units to result in property tax paid to the county, city and local school districts!


Steven Nelson
Registered user
Cuesta Park
on Sep 8, 2020 at 5:01 pm
Steven Nelson, Cuesta Park
Registered user
on Sep 8, 2020 at 5:01 pm
Like this comment

Dress it UP! With a Mansard dark roof, to match the 4 star boutique hotel across the street from City Hall, and some dark shutters and a little window iron work - Vola!
(google street view)
Web Link


LongResident
Registered user
another community
on Sep 8, 2020 at 5:02 pm
LongResident, another community
Registered user
on Sep 8, 2020 at 5:02 pm
7 people like this

There are so many details to this. The city requires either 15% or 20% of the units to be set aside for low income rentals. This unit is 15 total units, so 3 should be affordable because 20% applies since one unit is not for low income but rather moderate. The developer is using loopholes to build 1 less affordable unit than the city requires.


Steven Nelson
Registered user
Cuesta Park
on Sep 8, 2020 at 5:12 pm
Steven Nelson, Cuesta Park
Registered user
on Sep 8, 2020 at 5:12 pm
1 person likes this

Dear @LongReside. Yeah - the Stanford tax escape is Not That Great (In MV we have the Great Tax Diversion, Gogglevile to the City/Shoreline, over $4-5 Billion in Assessed Valuation). So many details - what Elna, and I and Goldstein are mentioning - if the LA City Council had tried to play (nicer) and work on these details, rather than trying to grandstand*, a better decision would have resulted. (*LA Mayor up in SF grandstand speaking at demonstration)
Town Crier coverage Dec 2018
Web Link


Bernie Brightman
Registered user
North Whisman
on Sep 9, 2020 at 9:50 am
Bernie Brightman, North Whisman
Registered user
on Sep 9, 2020 at 9:50 am
5 people like this

Looks like housing advocates are allowing themselves to be used by building contractors.Doubt those apartments on Main Street are gonna be affordable at all. Of course once they're built nobody will be able to do anything about it.


LongResident
Registered user
another community
on Sep 10, 2020 at 4:45 pm
LongResident, another community
Registered user
on Sep 10, 2020 at 4:45 pm
Like this comment

Different Los Altos council members have had different attitudes.
As in all cities, they each get a turn to be mayor. Eng made some
odd comments that Skinner corrected.

This particular project had been going on since 2010 or so. Continually,
the issue was with parking. Height was a secondary concern. The developer
used SB35 as a threat, and obviously did not want to build that project,
or why would he give the city an alternative proposal at the same time
with lower height, less housing and more office? The city response was
related to the THREAT aspect of the developer making 2 proposals, and also
in the context of at least one lawsuit he had filed against a neighboring
property owner claiming undue influence on the city requiring him
to meet their parking standards for the office development. This is not
a typical case of SB35 development or of housing development. Keep
in mind that the city has over produced market rate housing vs. the RHNA
quota housing. This project manages to get 13 luxury apartments
and only provide the 1 low income unit and the 1 moderate income unit.
The city is short on both of those quotas, but 1 each is not much to provide,
when the city requires 15% or 20% such units in each new project.


Jeremy Hoffman
Registered user
Rengstorff Park
on Sep 10, 2020 at 6:46 pm
Jeremy Hoffman, Rengstorff Park
Registered user
on Sep 10, 2020 at 6:46 pm
1 person likes this

To anyone blaming this particular development for being insufficiently affordable: I would love to hear your plan for adding even more and even more affordable housing to Los Altos. And think fast! Zillow says the median home price in Los Altos is $3,363,386, a 4% increase over the past year.


Steven Goldstein
Registered user
Old Mountain View
on Sep 10, 2020 at 6:52 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 10, 2020 at 6:52 pm
Like this comment

Jeremy,

Your talking about a Single Family Home, which is the most inefficient use of land, and is likely not a good comparison in this case.

Please describe the average amenities and characteristics as well?

There are so many cohorts to change the value of any residential project.


LongResident
Registered user
another community
on Sep 10, 2020 at 8:49 pm
LongResident, another community
Registered user
on Sep 10, 2020 at 8:49 pm
1 person likes this

The developer of 5150 El Camino Real will be including 30 affordable units, if that project ever gets built. It's at least as likely as the 40 Main project. The city asked the 200 unit project if it could have 10 more affordable units in it. The developer was willing but just needed a cash contribution of $10 Million or so. The problem is not with the zoning, it is the fact that the subsidy is not being provided by the state. It really won't work anywhere to count on 8-9 times as much market rate development as any new affordable development. There just isn't demand for that much more housing. We need subsidies just for affordable units and then they will happen. That's the plan--pony up the cash.

Also, in Mountain View as well as Los Altos, we have a demand for moderate income housing, which really is getting built even less than affordable units. The cash to be ponied up for that is much less than for the affordable units.


What is "YIMBY"
Registered user
Slater
on Sep 11, 2020 at 1:22 pm
What is "YIMBY", Slater
Registered user
on Sep 11, 2020 at 1:22 pm
2 people like this

"Jeremy Hoffman" of Mountain View is shown online to be part of the high tech corporate YIMBY political group and lists himself online as an "affordable housing development and strategy consultant." High-density housing - especially with subsidized "affordable" units - with parking on the streets in single-family neighborhoods is his (potential) BREAD AND BUTTER.


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