Los Gatos asks courts for legal clarity on proposed developments

Los Gatos wants clarity over a housing dispute with the state, and land use experts say the results of the legal spat could slow needed housing.Los Gatos requested legal clarification from the Santa Clara County Superior Court March 28 about a land use disagreement between the town and California Department of Housing and Community Development. The town is disputing the state’s claim that developers using builder’s remedy — a law exempting developers from local zoning laws when municipalities are noncompliant with state housing mandates — have an unlimited number of 90-day periods to submit a formal application.

Town officials argue developers have one 90-day period for their formal application until it expires.The legal action could affect some of the town’s 12 pending builder’s remedy applications, including the controversial 175 homes proposed for The Arya development at the Ace Hardware site and 120 homes proposed for The Luxe development in the North 40 project. The town wants applications for both projects, located at 15300 to 15330 and 14849 Los Gatos boulevards respectively, to expire if the court rules in Los Gatos’ favor.



It also wants its legal costs covered. Related Stories March 18, 2025 Los Gatos orchard could become townhomes March 5, 2025 Los Gatos to replace landmark hotel with housing February 27, 2025 Los Gatos will defend councilmembers in defamation lawsuit Mayor Matthew Hudes said the town wants clarity so it can better handle builder’s remedy applications. He said the town is still processing applications for the area’s needed housing, adding the state’s interpretation has unintended consequences.

“An unlimited length of time for an application to be open allows for property development to be delayed an infinite amount of time,” Hudes told San José Spotlight. “Without moving through a process where there are timelines essentially doesn’t produce housing at all. It has the opposite effect.

”A spokesperson with the California Department of Housing and Community Development said the agency is aware of the action, but can’t comment on the case. The spokesperson referred San José Spotlight to a letter the agency sent the town Feb. 12 stating Los Gatos’ failure to “not reset the 90-day period after each incompleteness determination would be in potential violation of state housing law.

”Ali Moayed, who owns the properties where The Arya and The Luxe are proposed, said he doesn’t know enough about the legal action to comment.The legal action comes as Los Gatos is working on accommodating at least 1,993 new homes by 2031 to comply with state mandates. The town is processing more than 1,200 homes in development proposals, according to housing data.

The Town Council also unanimously approved a 155-home development to replace the Los Gatos Lodge last month.But Melanie Griswold, partner at land use, real estate and business law firm HSW LLC, said if the court rules in Los Gatos’ favor, it’ll set a precedent that slows growth. This year, she appealed a Cupertino housing application’s expiration after the city deemed it incomplete, citing the 90-day period.

She said meeting a single 90-day period is often not possible because of all that is needed for a final application.“Our state is in a housing crisis borne in large part due to the difficulty of getting projects approved,” Griswold told San José Spotlight. “If Los Gatos is successful in its action for declaratory relief, this will reintroduce uncertainty in the housing development application process that state legislators have been working hard to reduce.

More risk means fewer homes will be built.” If the town did win the case, it would mean the projects under builder’s remedy that exceeded the first 90-day period would be void.Hudes said the intent is not to prevent development, but to make housing laws clearer to serve the Los Gatos community.

“All of those different perspectives and requirements (make it) really important that we have clarity,” he said.Contact Annalise Freimarck at [email protected] or follow @annalise_ellen on X.

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