North 40 Lawsuit – Los Gatos Response

 

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ROBERT SCHULTZ (Bar No. 128938)

TOWN ATTORNEY TOWN OF LOS GATOS 110 East Main Street Los Gatos, CA 95030 Telephone: 408.354.6818 Facsimile: 408.354.8431 rschultz@losgatosca.gov

RICHARDS, WATSON & GERSHON A Professional Corporation T. PETER PIERCE (Bar No. 160408) ppierce@rwglaw.com

WHITNEY G. MCDONALD (Bar No. 245587)

wmcdonald@rwglaw.com

847 Monterey Street, Suite 201

San Luis Obispo, CA 93401

Telephone: 805.439.3515

Facsimile: 800.552.0078

Attorneys for Respondent TOWN OF LOS GATOS

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SANTA CLARA

TOWN OF LOS GATOS, and DOES I-V,
Respondents.

TABLE OF CONTENTS

Page

1. INTRODUCTION…………………………………………………………………… 1
2. STATEMENT OF FACTS………………………………………………………… 2
3. The Town of Los Gatos and its Housing Needs……………………… 2
4. The North 40 Specific Plan………………………………………………. 3
5. Petitioners’Application……………………………………………………. 5
6. The Town’s Consideration and Denial of Petitioners’

Application…………………………………………………………………… 6

• STANDARD OF REVIEW……………………………………………………….. 9

1. ARGUMENT……………………………………………………………………….. 11
2. Petitioners’ Project Is Discretionary and Could Not Be

Approved “By Right”……………………………………………………. 11

1. The Subdivision Map Act Required General Plan Consistency Findings and Discretionary Review of

Petitioners’ Project………………………………………………. 11

2. The Town Could Not Approve the Application “By

Right”………………………………………………………………. 14

1. The Housing Accountability Act Does Not Preclude the Town From Exercising Discretion or Finding That the Project is

Inconsistent with its General Plan…………………………………….. 17

1. Substantial Evidence Supports the Town Council’s Findings

that the Project Is Inconsistent with the Housing Element……….. 19

1. Substantial Evidence Supports the Town Council’s Findings

That the Project is Inconsistent with the Specific Plan……………. 26

1. The Density Bonus Law Does Not Require Approval of the

Project……………………………………………………………………….. 28

1. Petitioners’ Requested Relief is Inappropriate……………………… 29
2. CONCLUSION…………………………………………………………………….. 30

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Cases

Bixby v. Pierno

(1971) 4 Cal.3d 130…………………………………………………………………………………….. 9, 10

Boreta Enterprises, Inc. v. Dept. of Alcoholic Beverage Control

(1970) 2 Cal.3d 85………………………………………………………………… 11

California Assn. of Psychology Providers v. Rank

(1990)51 Cal.3d 1…………………………………………………………………. 26

California Native Plant Society v. City of Rancho Cordova

(2009) 172 Cal.App.4th 603…………………………………………………………………………………… 20, 21

California Youth Auth. v. State Personnel Bd.

(2002) 104 Cal.App.4th 575……………………………………………………. 10

Citizens of Goleta Valley v. Bd. of Supervisors

(1990) 52 Cal.3d 553…………………………………………………………….. 28

City ofW. Hollywood v. Beverly Towers, Inc.

(1991)52 Cal.3d 1184……………………………………………………………. 13

Crawford v. Southern Pac. Co.

(1935) 3 Cal.2d 427………………………………………………………………. 11

Desmond v. County of Contra Costa

(1992) 21 Cal.App.4th 330…………………………………………………………………………………… 10, 25

Drummey v. State Bd. of Funeral Directors & Embalmers

(1939) 13 Cal.2d 75………………………………………………………………. 10

Endangered Habitats League, Inc. v. County of Orange

(2005) 131 Cal.App.4th 777……………………………………………………. 20

Foothill Communities Coal. v. County of Orange

(2014) 222 Cal.App.4th 1302…………………………………………………… 27

Friends of Lagoon Valley v. City of Vacaville

(2007) 154 Cal.App.4th 807……………………………………………………. 28

Friends of Westwood, Inc. v. City of Los Angeles

(1987) 191 Cal.App.3d 259…………………………………………………….. 17

Fukuda v. City of Angels

(1999) 20 Cal.4th 805……………………………………………………………. 10

Honchariw v. County of Stanislaus

(2011) 200 Cal.App.4th 1066……………………………………………………………………………………….. 17, 18, 30

Horn v. County of Ventura

(1979) 24 Cal.3d 605…………………………………………………………….. 13

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JKH Enterprises, Inc. v. Dept. of Industrial Relations

(2006) 142 Cal.App.4th 1046…………………………………………………… 10

Kaufman & Broad Cent. Valley, Inc. v. City of Modesto

(1994) 25 Cal.App.4th 1577…………………………………………………….. 24

Laurel Heights Improvement Assn. v. Regents ofUniv. of Cal.

(1988) 47 Cal.3d 376……………………………………………………………… 11

Lindell Co. v. Bd. of Permit Appeals

(1943)23 Cal.2d 303………………………………………………………………. 29

Mahdavi v. Fair Employment Practice Com.

(1977) 67 Cal.App.3d 326……………………………………………………….. 11

Miller v. City ofHermosa Beach

(1993) 13 Cal.App.4th 1118…………………………………………………….. 17

Mountain Def. League v. Bd. of Supervisors

(1977) 65 Cal.App.3d 723……………………………………………………….. 29

Pac. Palisades Bowl Mobile Estates, LLC v. City of Los Angeles

(2012) 55 Cal.4th 783…………………………………………………………….. 15

Penziner v. West American Finance Co.

(1937) 10 Cal.2d 160……………………………………………………………… 19

People ex rel. Deukmejian v. County of Mendocino

(1984)36 Cal.3d 476………………………………………………………………. 15

People ex rel. State Air Resources Bd. v. Wilmshurst

(1999) 68 Cal.App.4th 1332…………………………………………………….. 17

People v. Stuyvesant Ins. Co.

(1968) 261 Cal.App.2d 773……………………………………………………… 17

Rominger v. County of Colusa

(2014) 229 Cal.App.4th 690…………………………………………………….. 13

Save Our Peninsula Comm. v. Monterey County Bd. of Supervisors

(2001) 87 Cal.App.4th 99……………………………………………………….. 26

Scott Co. v. Workers’ Comp. Appeals Bd.

(1983) 139 Cal.App.3d 98……………………………………………………….. 19

Sladovich v. Fresno County

(1958) 158 Cal.App.2d 230……………………………………………………… 29

SP Star Enterprises, Inc. v. City of Los Angeles

(2009) 173 Cal.App.4th 459…………………………………………………….. 10

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Spring Valley Lake Assn. v. City of Victorville

(2016) 248 Cal.App.4th 91……………………………………………………………………………………………………….. 12, 21

Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho

Cordova (2007) 40 Cal.4th 412………………………………………………… 11

1. Oil & Gas Assn. v. Monterey Bay Unified Air Pollution Control Dist.

(1989) 49 Cal.3d 408……………………………………………………………… 19

Woodland Hills Residents Assn., Inc. v. City Council

(1979) 23 Cal.3d 917……………………………………………………………… 12

Youngblood v. Bd. of Supervisors

(1987) 22 Cal.3d 644……………………………………………………………… 13

Statutes

Code of Civil Procedure

Section 1094.5…………………………………………………………………………………. 9, 29

Code of Civil Procedure

Section 1094.5(a)………………………………………………………………………………. 9

Code of Civil Procedure

Section 1094.5(b)……………………………………………………………………. 9

Code of Civil Procedure

Section 1094.5(f)…………………………………………………………………… 29

Government Code

Section 65008………………………………………………………………………. 18

Government Code

Section 65302(e)…………………………………………………………………… 21

Government Code

Section 65580(a)…………………………………………………………………… 21

Government Code

Section 65583………………………………………………………………………. 21

Government Code

Section 65583(c)(2)……………………………………………………………….. 21

Government Code

Section 65583.2(i)…………………………………………………………………. 14

Government Code

Section 65584………………………………………………………………………. 21

Government Code

Section 65589.5……………………………………………………………………. 14

-iv-

Government Code

Section 65589.5(b)………………………………………………………………… 17

Government Code

Section 65589.5(d)………………………………………………………………… 18

Government Code

Section 65589.5(d)(2)…………………………………………………………….. 18

Government Code

Section 65589.5(f)(1)………………………………………………………………………. 18, 25

Government Code

Section 65589.5(h)(2)(B)………………………………………………………… 29

Government Code

Section 65589.5(h)(3)…………………………………………………………….. 18

Government Code

Section 65589.5(j)………………………………………………………………………………………… 18, 19, 29

Government Code

Section 65915………………………………………………………………………. 28

Government Code

Section 65915(a)…………………………………………………………………… 28

Government Code

Section 65915(b)…………………………………………………………………… 28

Government Code

Section 65915(b)(1)……………………………………………………………….. 28

Government Code

Section 66411………………………………………………………………………. 12

Government Code

Section 66412.3 ……………………………………………………………………  12

Government Code

Section 66428 ……………………………………………………………………..  26

Government Code

Section 66451.3 ……………………………………………………………………  13

Government Code

Section 66473.5 ……………………………………………………………………………………………..  12, 28

Government Code

Section 66474………………………………………………………………………. 12

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Government Code

Section 66474.60(c)…………………………………………………………………………. 12

Government Code

Section 66498.1 ……………………………………………………………………. 24

Government Code

Section 66498.1(c)(2)…………………………………………………………….. 15

Health & Safety Code

Section 50079.5……………………………………………………………………. 18

Health & Safety Code

Section 50093………………………………………………………………………. 18

Public Resources Code

Section 21000………………………………………………………………………. 14

Public Resources Code

Section 21080………………………………………………………………………. 13

Public Resources Code

Section 21080(a)…………………………………………………………………… 13

Public Resources Code

Section 21080(b)(1)……………………………………………………………….. 13

Other Authorities

Los Gatos Municipal Code

Section 24.10.020……………………………………………………………………………… 6

Los Gatos Municipal Code

Section 24.70.020……………………………………………………………………………. 13

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1. INTRODUCTION

It is undeniable that California’s housing shortage is indeed severe, particularly for those with lower household incomes. The Town of Los Gatos (“Town” or “Los Gatos”), certainly is not immune from this reality, which has caused significant concern within this community that prides itself on its inclusivity and diversity as well its small-town charm. So, when the Town prepared plans for the last large development site known as the North 40, it identified this site in its Housing Element as the preeminent location for meeting the Town’s lower-income housing needs. At the same time, the Town sought to ensure that new development in the North 40 would blend with its surroundings and allow the area to retain characteristics unique to Los Gatos.

Petitioners Eden Housing, Inc., SummerHill Homes LLC, and Grosvenor USA Limited (collectively, “Petitioners”) proposed to develop roughly half of the North 40 area with 320 new residential units and 66,800 square feet of new commercial space, representing 50 more residential units than was planned for the entire North 40 (“Project”). In order to obtain these additional units, Petitioners proposed to include 49 senior rental units and one moderate-income manager’s unit. This proposal fell significantly short of the 270 lower income units identified for the site in the Town’s certified 2015 Housing Element. In fact, rather than 270 affordable units, Petitioners proposed 270 market rate units that were expected to sell for up to $1.5 million each. In addition, a large percentage of the housing units were proposed to be located within the southern portion of the North 40, which was planned for much lower intensity development.

Following several hearings to consider Petitioners’ proposal, where the public expressed significant concerns regarding the Project’s lack of affordable units and its improper site design, the Town Council denied the Project’s based on its inconsistencies with the Town’s Housing Element and the North 40 Specific Plan. This decision was well within the Town Council’s discretion, as authorized by the Subdivision Map Act, and is supported by ample evidence in the record. The Court should deny Petitioners’ request that it order the Town to exercise its discretion to approve the Project.

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1. STATEMENT OF FACTS
3. The Town of Los Gatos and its Housing Needs

Situated approximately 43 miles south of San Francisco, Los Gatos is one of Santa Clara County’s oldest communities with a population of 30,804 in 2010. (1 AR 10-13.^[1]) Despite its close proximity and ties to Silicon Valley, the Town has maintained its small­town image and boasts an inclusive community of mixed age ranges, family sizes, and incomes. (1 AR 13-14.) As a result, Los Gatos remains a highly desirable place to live. (1 AR 22; 4 AR 2358.)

Meeting the housing needs of this diverse population, however, has become an increasingly difficult challenge. As described in the Town’s 2015 Housing Element, roughly one fifth of the Town’s households qualify as low- or very low-income. (4 AR 2350.) Meanwhile, median home prices in Los Gatos reached $1.2 million in 2013, some of the highest in Santa Clara County, and even moderate income households were generally overpaying for rental units within the Town. (4 AR 2349-50.) To help address the situation, the Town initiated a number of affordable housing programs, including a Below Market Price (“BMP”) Program, which requires new residential construction to include a certain number of affordable units, an Affordable Housing Fund, and a Rental Mediation and Dispute Ordinance, which limits annual rent increases to 5%. (4 AR 2357.) Despite these efforts, market pressures continued to strain the Town’s ability to meet the housing needs of its lower income households. (4 AR 2349-50.) By the time the Town updated its Housing Element in 2015, the California Department of Housing and Community Development identified a need for 201 very low, 112 low, and 132 moderate income, new housing units within the Town. (4 AR 2359.)

To meet these needs, the Town’s 2015 Housing Element identified a number of strategies, and inventoried appropriate sites to accommodate the new units needed by its lower income households. (4 AR 2359-61, 2464-87.) The largest site identified through this process was the area known as the North 40, which the Town’s General Plan designated with an overlay that required the adoption of a specific plan to guide development of the site. (See 1 AR 42; 4 AR 2472.) By the time the Town began its 2015 Housing Element update, preparation of the North 40 Specific Plan (“Specific Plan”) had been underway for some time and was nearing completion. (4 AR 2472.) The 2015 Housing Element, therefore, incorporated the North 40 into its sites inventory and identified it as the preeminent site for meeting the Town’s lower income household needs. (4 AR 2465, 2466.) In fact, the North 40 was expected to accommodate up to 270 affordable housing units, including 156 very low, 84 low, and 30 moderate-income units. (4 AR 2362.)

When reviewing the Town’s 2015 Housing Element for consistency with the state Housing Element Law, the HCD also echoed the importance of the North 40 meeting the Town’s affordable housing needs, and requested revisions for the purpose of further strengthening those affordable housing provisions on the North 40 site. (Stipulation Regarding Additional Records for Consideration at Trial, Exh. B.) After completing those revisions, the HCD certified the Town’s Housing Element on May 20, 2015. (4 AR 2587.)

1. The North 40 Specific Plan

In geographic terms, the Specific Plan encompasses an approximately 44-acre area bounded by Los Gatos Boulevard to the east, Highway 17 to the west, Lark Avenue to the south, and Highway 85 to the north (“Plan Area”). (5 AR 2615.) Roughly 27 acres of the Plan Area are used for agriculture, including land designated as “Unique Farmland,” and the rest are developed with urban uses, including residences and commercial uses. (2 AR 595; 5 AR 2617.) There are 32 existing homes within the Plan Area, which are anticipated to be removed by development of the Specific Plan Area. (2 AR 595, 821.)

The guiding Vision Statement for the Specific Plan provides:

The North 40 reflects the special nature of our hometown. It celebrates our history, agricultural heritage, hillside views, and small town character. The North 40 is seamlessly woven into the fabric of our community, complementing other Los Gatos

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residential and business neighborhoods. It is respectful of precious community resources and offers unique attributes that enrich the quality of life of all of our residents.

Guiding Principles to achieve this vision:

• The North 40 will look and feel like Los Gatos.
• The North 40 will embrace hillside views, trees, and open space.
• The North 40 will address the Town’s residential and/or commercial unmet needs.
• The North 40 will minimize or mitigate impacts on town infrastructure, schools, and other community services.

(5 AR 2613.) To accomplish these goals, the Specific Plan divides the Plan Area into three land use districts: the Lark District, which occupies the area at the northeast corner of Los Gatos Boulevard and Lark Avenue, the Northern District, which is bordered on two sides by Highways 17 and 85, and the Transition District, which encompasses the central portion of the plan area between the Lark and Northern Districts. (5 AR 2629-31.) The Specific Plan then identifies land use and development standards, design standards, circulation and streetscape standards, infrastructure and public facilities requirements, and plan implementation and phasing provisions. (5 AR 2629-2764.) A total of 270 residential units, up to 250,000 square feet of office/hotel space, and up to 400,000 square feet of commercial space may be built within the plan area. (5 AR 2636.)

As part of the Specific Plan preparation process, the Town also prepared and circulated an Environmental Impact Report (“EIR”) that analyzed the potential environmental consequences of the Specific Plan, in accordance with the California Environmental Quality Act (“CEQA”). That report concluded that the Specific Plan would result in potentially significant and unavoidable environmental impacts to cultural resources and traffic, even with the implementation of applicable mitigation measures. (2 AR 860­61; 4 AR 2208-12.) In addition, the EIR identified potentially significant, negative health effects, including cancer risks, to future residents within the Specific Plan area due to particulates from Highways 17 and 85. (2 AR 686-89.) To mitigate these impacts, the EIR

-4- identifies two measures: (1) high-efficiency filtration ventilation systems must be used on all residential, office, and hotel units where cancer risks exceed 10 in a million, and (2) no ground-level outdoor residential yards located within 50 feet of Highway 17 may be oriented toward the highway. (2 AR 639.)

Following several public hearings, the Town Council adopted the Specific Plan and certified the EIR on June 17, 2015. (5 AR 2589-93, 2965-70.)

1. Petitioners’ Application

Originally submitted in 2013, Petitioners applied for approval of Architecture and Site Application S-13-090 and Vesting Tentative Map M-13-014 to allow the subdivision and development of 20.7 acres of the North 40 Plan Area into 113 lots with 320 residential units and 66,800 square feet of commercial space (“Application” or “Project”). (6 AR 3753, 3758; 13 AR 11155.) Of the 320 residential units, 49 would be reserved for very-low income seniors, with one additional unit to be reserved for a moderate-income manager of the senior units.^[2] (6 AR 3759.)

To enable the development of the 50 units that exceeded the 270-unit maximum allowed by the Specific Plan, Petitioners’ requested approval of a density bonus pursuant to the State Density Bonus Law due to its inclusion of the 49 very low income units. (Id.) In addition, Petitioners requested waivers or reductions of two standards relating to building heights. (6 AR 3759-60.) Petitioners’ Project also required modifications to the Town’s BMP Program standards, including the requirements that the affordable units be dispersed throughout the development and be sized and designed consistent with the rest of the units, in order to allow Petitioners to use the 49 senior units to satisfy the BMP ordinance. (6 AR 3760, 4348-57.)

The Project proposed to develop the entirety of the Specific Plan’s Lark District with 193 residential units and a majority of the Transition District with the remaining 127 residences, plus the 66,800 square feet of commercial space. (6 AR 3774, 3791.) A number of residences would be built within the 50-foot setback from Highway 17 required by the Specific Plan EIR, including outdoor living areas oriented toward the highway. (2 AR 687-88; 6 AR 4049-50.) The Project also proposed to demolish 16 houses, 5 commercial buildings, an equipment barn, and walnut orchard trees currently existing on the site. (6 AR 4023-24.) In total, the Project required approval of a vesting tentative map, an Architecture and Site Application, demolition of existing structures, a density bonus, waivers and reductions of development standards, and exceptions to the Town’s BMP ordinance.

1. The Town’s Consideration and Denial of Petitioners’ Application

Because Petitioners’ Application included a number of requested entitlements, it was required to undergo review by a number of Town advisory bodies, including the Planning Commission.^[3] (5 AR 3091-92, 3138-41; 6 AR 3499-5500, 3510-11; 6 AR 3577-79; 8 AR 6783-89.) The Planning Commission considered the Application over the course of three hearings, during which it received substantial input from the public and Petitioners. (6 AR 3577-4824; 7 AR 5394-98 AR 6782.) The Commission was unable to make a final recommendation on the Project at the first of those hearings because the Applicant had not yet complied with the Town’s story pole requirements. (6 AR 3769-71.) To cure this defect, Petitioners requested several exceptions to the story pole requirements, which the Town Council considered through the course of two applications and four hearings. (6 AR 3548-49; 7 AR 4988-89, 4963-66, 5325-27.) Petitioners finally completed the story pole requirements on May 4, 2016. (7 AR 5908.)

During its public hearings, the Planning Commission received correspondence and testimony expressing concern that the Application did not meet the Town’s affordable housing needs. (See 6 AR 4772; 8 AR 6259-62, 6345; 10 AR 8552, 8568; 11 AR 9194, 9263, 9274.) Others identified problems with the overconcentration of the residential units within the Lark District despite the Specific Plan’s designation of the area for lower intensity residential development. (E.g., 6 AR 5402; 7 AR 5660; see also 13 AR 11372­75.) Traffic congestion and safety were also sources of significant concern, as were questions of potential school impacts. (E.g. 6 AR 4524, 4528, 4534, 4540.) In addition, several concerns were raised regarding the negative health effects and cancer risks posed by locating residences and outdoor living spaces within the 50-foot area next to Highway 17 as identified in the EIR. (E.g., 8 AR 6185-6214, 6347-6413, 6970; 10 AR 8748.)

After considering all of the public testimony and a number of presentations by Petitioners, the Planning Commission voted to recommend denial of the Project based on a number of findings, including the Project’s inconsistency with the General Plan and Specific Plan, the Project’s failure to meet unmet needs for senior housing, and the Project’s inconsistency with the lower intensity residential development standards for the Lark District. (See 6 AR 4797-4824; 8 AR 6480-6502, 6511-88, 6691-94; 9 AR 7154.)

The Town Council then considered the Application and the Planning Commission’s recommendation over the course of four public hearings, held during August and September 2016.^[4] Again, the public testified and submitted evidence in support of its concerns regarding the Project, and, again, a number of those comments were focused on the Project’s failure to provide adequate affordable housing. (E.g., 11 AR 9858-60; 12 AR 10453.) Hearing these concerns, the Town Council inquired of the expected sales prices of the 270 market rate units as well as the relative income and down payment requirements to purchase the units. (8 AR 6883-84, 6997, 6999; see also 13 AR 10909-12, 11231, 11373­74.) Petitioners’ representative testified that unit prices were expected to range from $900,000-$1.5 million, which he believed were reasonable given the market. (8 AR 6883.) A buyer would need down payment of $180,000-$300,000 and hold an annual income of $128,000-$222,000 to afford these prices. (8 AR 6998-99; 12 AR 10451-52, 10482.)

A number of individuals also submitted correspondence and testimony expressing concern for the existing tenants and residents living on the site who would be evicted and unlikely to find nearby replacement housing at affordable rates. (12 AR 10457-60; 13 AR 11097-98, 11157-58, 11324, 11345-49.) This was an issue of particular interest in light of recent changes in the State Density Bonus Law, which imposed additional requirements for replacement of existing affordable units but which only applied to projects submitted after January 1, 2015. (See 12 AR 10388; 13 AR 11155-58, 11345-49.)

Throughout this process, Petitioners were afforded several opportunities to make presentations to the Town’s decision makers and Petitioners’ attorneys submitted numerous letters to the Town arguing that state law virtually eliminated the Town’s discretion to modify or deny the Project. (E.g., 7 AR 5392; 8 AR 6279-87; 11 AR 9921-22; 13 AR 10673, 11351-52.) To aid the Town Council in sifting through these legal issues, it regularly called on its Town Attorney and obtained an advice memo from the law firm of Remy, Moose, & Manley concerning interpretation of the Density Bonus Law.^[5] (13 AR 11166-74.)

But after carefully considering its own General Plan, Housing Element, Specific

Plan, the public’s comments and evidence, and the Petitioners’ submittals, the Town Council voted to deny the Application on September 1, 2016.^[6] (13 AR 10816, 11469-70.) The Council based this decision on the Project’s inconsistencies with the Town’s General Plan, Housing Element, and Specific Plan, as set forth in Resolution 2016-046 adopted on September 6, 2016. (13 AR 11466-73.)

• STANDARD OF REVIEW

In an administrative mandamus action such as this, review of an agency’s decision is available under Code of Civil Procedure section 1094.5 (“Section 1094.5”) to “inquir[e] into the validity of any final administrative order or decision made as the result of a proceeding in which by law a hearing is required to be given, evidence is required to be taken, and discretion in the determination of facts is vested in the inferior tribunal, corporation, board, or officer.” (Code Civ. Proc. §1094.5(a).) In such actions, review of the decision is limited to (1) whether the agency proceeded without or in excess of its jurisdiction, (2) whether there was a fair trial, and (3) whether there was a prejudicial abuse of discretion. (Code Civ. Proc. §1094.5(b). ) A prejudicial abuse of discretion occurs where (i) the agency did not proceed in the manner required by law, (ii) the agency’s decision is not supported by its findings, or (iii) the agency’s findings are not supported by the evidence. (Id.)

In interpreting Section 1094.5, the California Supreme Court has declared that “courts should not substitute their own judgment for that of the agency, but should uphold the administrative decision unless it is arbitrary, capricious, or fraudulent, having no reasonable basis in law or no substantial basis in fact.” (Bixby v. Pierno (1971) 4 Cal.3d 130, 151 (“Bixby”).) This deferential standard of review recognizes that administrative mandamus is available to review discretionary decisions and that “[b]y its very nature, the

exercise of discretion requires the ability to choose between permissible alternatives.” (Id. at p. 150.)

Where the administrative decision did not involve a fundamental vested right, as here, the trial court “reviews the administrative record to determine whether the agency’s findings were supported by substantial evidence, resolving all conflicts in the evidence and drawing all inferences in support of them.” (SP Star Enterprises, Inc. v. City of Los Angeles (2009) 173 Cal.App.4th 459, 469 (“SP Star Enterprises”), quoting JKH Enterprises, Inc. v. Dept. of Industrial Relations (2006) 142 Cal.App.4th 1046, 1058.) The agency’s findings “come before the court with a strong presumption of correctness” and “are presumed to be supported by the administrative record.” (Fukuda v. City of Angels (1999) 20 Cal.4th 805, 812 (“Fukuda”), quoting Drummey v. State Bd. of Funeral Directors

• Embalmers (1939) 13 Cal.2d 75, 85; SP Star Enterprises, supra, 173 Cal.App.4th at p. 469.) The agency’s decision must be upheld unless “there is no substantial evidence whatsoever to support the findings of the Board.” (DesmondCounty of Contra Costa (1992) 21 Cal.App.4th 330, 336 (“Desmond”) (emphasis added).) Typically, “the party challenging the administrative decision bears the burden of convincing the court that the administrative findings are contrary to the weight of the evidence.” (Fukuda, supra, 20 Cal.4th at p. 817.)

Importantly, substantial evidence review does not allow the court to reweigh the evidence before the administrative agency, or to substitute its judgment for that of the agency. (California Youth Auth. v. State Personnel Bd. (2002) 104 Cal.App.4th 575, 584.) As stated by the California Supreme Court:

In reviewing for substantial evidence, the reviewing court ‘may ^[7]

not set aside an agency’s [decision] on the ground that an opposite conclusion would have been equally or more reasonable,’ for, on factual questions, our task ‘is not to weigh conflicting evidence and determine who has the better argument.’

(Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40 Cal.4th 412, 435, quoting Laurel Heights Improvement Assn. v. Regents ofUniv. of Cal. (1988) 47 Cal.3d 376, 393.) Where the evidence permits an inference either way, the court may not disregard or overturn the finding because “a contrary finding would have been equally or more reasonable.” (Mahdavi v. Fair Employment Practice Com. (1977) 67 Cal.App.3d 326, 340, quoting Boreta Enterprises, Inc. v. Dept. of Alcoholic Beverage Control (1970) 2 Cal.3d 85, 94; see also Crawford v. Southern Pac. Co. (1935) 3 Cal.2d 427, 429 (“If more than one inference can be drawn from the evidence, ‘a reviewing court is without power to substitute its deductions’ for those of the agency.”).)

Here, the Town’s decision on the Application must be upheld unless there is no significant evidence whatsoever to support it such that the decision was arbitrary, capricious, or having no reasonable basis in law or no substantial basis in fact. While the Court may independently review the Town’s interpretation of the law, the Town’s weighing of the facts and evidence in the record should be presumed valid.

1. ARGUMENT
2. Petitioners’ Project Is Discretionary and Could Not Be Approved “By Right”

Controlling provisions of state law required the Town to exercise discretion in reviewing Petitioners’ Project and precluded the Town from approving the Project “by right.” As part of this review, the Town was required to determine consistency with its General Plan and Housing Element, regardless of the Housing Accountability Act.

1. The Subdivision Map Act Required General Plan Consistency Findings and Discretionary Review of Petitioners’ Project

Because Petitioners’ Project included an application for a vesting tentative

-11 subdivision map, the Subdivision Map Act (“Map Act”) applied to the Town’s review of

the Project and required both the exercise of discretion and findings of consistency with the

Town’s General Plan. The Map Act vests in cities and counties the power to regulate and

control the design and improvement of subdivisions of land. (Gov. Code §66411.) In

1971, the Map Act was amended to preclude local agencies from approving a tentative map

“unless the legislative body finds that the proposed subdivision, together with the provision

for its design and improvement, is consistent with the general plan … or any specific

plan…” (Gov. Code §66473.5.) As explained by the California Supreme Court, this

requirement serves an important purpose:

the legislative history of the Subdivision Map Act illuminates the Legislature’s acute awareness that approval of subdivisions which are inconsistent with a locality’s general plan “subverts the integrity … of the local planning process.” [Citation.] To preserve the integrity of the “general plan” concept, the Legislature enacted Government Code sections 66473.5 and 66474.60, subd. (c) [citation], mandating that a subdivision map may not be approved unless the appropriate agencies first find that the subdivision is consistent with the applicable general plan. Plaintiffs argue, with much force, that once a general plan has been formulated, the public has an overriding interest in the faithful enforcement of the guidelines established by the plan as applied to proposed subdivisions. [Citations.]

(Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 936.)

In addition to these important general plan consistency determinations, the Map Act also requires the reviewing city or county to make specific, affirmative findings that the site is physically suitable for the type or density of development, that the design or improvements are not likely to cause significant environmental damage or serious health problems, and that the design or improvements will not conflict with public easements. (Gov. Code §66474; Spring Valley Lake Assn. v. City of Victorville (2016) 248 Cal.App.4th 91, 106 (“Spring Valley Lake’’”).) The Map Act also states that, in carrying out its provisions, a city shall consider the effect of its actions on the housing needs of the region in which it is situated. (Gov. Code §66412.3) In addition, each reviewing agency must

-12- hold at least one noticed, public hearing before approving tentative subdivision maps.

(Gov. Code §66451.3.) These statutory requirements are hallmarks of discretionary decision-making and are necessary to afford due process to members of the public whose interests may be significantly affected by the decision. (Horn v. County of Ventura (1979) 24 Cal.3d 605, 614-15 (tentative map review “involves the exercise of judgment, and the careful balancing of conflicting interests, the hallmark of the adjudicative process); see also Youngblood v. Bd. of Supervisors (1987) 22 Cal.3d 644, 651, fn. 2; City ofW. Hollywood v. Beverly Towers, Inc. (1991) 52 Cal.3d 1184, 1191, fn. 5 (“Tentative map approval is the final discretionary approval issued by a local government under the Map Act…”).)

CEQA also supports the proposition that all tentative subdivision map decisions are discretionary. As stated in Public Resources Code section 21080, CEQA applies to “discretionary projects proposed to be carried out or approved by public agencies, including…the approval of tentative subdivision maps… ” (Pub. Res. Code §21080(a) (emphasis added).) Based on this language, courts have held that tentative map approvals are always considered “projects” under CEQA. (Rominger v. County of Colusa (2014) 229 Cal.App.4th 690, 702.) Because CEQA does not apply to government decisions that are ministerial or otherwise non-discretionary, the fact that it unquestionably applies to subdivision map approvals also means that such maps are also unquestionably discretionary. (See Pub. Res. Code §21080(a), (b)(1).)

Because Petitioners’ Project included a tentative map application, that application, too, is discretionary and requires the Town to determine consistency with its General Plan. (See also Los Gatos Municipal Code §24.70.020 (“No land shall be subdivided and developed pursuant to a vesting tentative map for any purpose which is inconsistent with the general plan and any applicable specific plan.”) (1 AR 322).) Resolution 2016-046 properly reflects these state law requirements, identifying the relevant provisions of the Map Act and concluding that Petitioners’ tentative map is inconsistent with the Town’s General Plan and North 40 Specific Plan. (13 AR 11471.)

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2. The Town Could Not Approve the Application “By Right”

Although both the Housing Element Law and the Town’s 2015 Housing Element

address “by right” development, Petitioners’ Application did not qualify for treatment as a

“by right” project under either. The Housing Element Law supplies the following relevant

definition of a “by right” use:

.. .the phrase “use by right” shall mean that the local government’s review of the owner-occupied or multifamily residential use may not require a conditional use permit, planned unit development permit, or other discretionary local government review or approval that would constitute a “project” for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code. Any subdivision of the sites shall be subject to all laws, including, but not limited

to, the local government ordinance implementing the Subdivision Map Act. A local ordinance may provide that “use by right” does not exempt the use from design review.

However, that design review shall not constitute a “project” for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code. Use by right for all rental multifamily residential housing shall be provided in accordance with subdivision (f) of Section 65589.5.

(Gov. Code §65583.2(i) (emphasis added).) Significantly, this definition requires compliance with the Map Act and any other laws applicable to subdivisions. As discussed above, the Map Act requires discretionary review of all tentative map applications, which is inherently incompatible with “by right” concepts that would preclude discretionary local review. Consequently, Petitioners’ Project did not qualify as a “by right” use under the Housing Element Law.

The Town’s 2015 Housing Element’s “by right” provisions support a similar

conclusion. For instance, Action HOU-1.7 provides:

North 40 Specific Plan Rezoning: the Town will rezone 13.5 acres within the North 40 Specific Plan area within three years of Housing Element adoption at minimum a density of 20 dwelling units per acre to facilitate affordable housing production. After rezoning, owner occupied or multiple family development will be by-right as defined by not requiring a conditional use permit or other discretionary approval;

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however, design review according to the objective standards contained in the Specific Plan can occur (see Action HOU- 2.4)…

(4 AR 2368 (emphasis added).) Notably, this language addresses certain types (owner

occupied or multiple family development) of discretionary permitting and not subdivision

map review. Similarly, Action HOU-2.4, referenced in HOU-1.7 described above,

elaborates on what is meant by “by right” development:

By Right Findings: For multi family residential development within the North 40 and the Southbay AHOZ site subject to by right development, the Town will amend the Town Code to add by right development findings that, among other items, state that if a project meets the objective review criteria contained in the AHOZ Design Guidelines or North 40 Specific Plan design guidelines (available on the Town’s website) the deciding body will approve the affordable housing proposal.

(4 AR 2373 (emphasis added).) Other portions of the Housing Element describe a similar

understanding of “by right development”:

The [North 40] Specific Plan would provide certainty regarding objective criteria in the form of development standards and design guidelines that would be implemented through “by right development” in the consideration of Architecture and Site applications. This process involves site and architectural review and if a proposal meets the objective criteria in the Design Guidelines, then the project is approved.

(4 AR 2357 (emphasis added).)

Importantly, the Housing Element does not state that subdivision map applications within the North 40 will be approved “by right.” Nor could it. The Housing Element must be read in a manner consistent with state law, and, as described above, state law requires discretionary review of tentative map applications. (People ex rel. Deukmejian v. County of Mendocino (1984) 36 Cal.3d 476, 487-88; Pac. Palisades Bowl Mobile Estates, LLC v.

City of Los Angeles (2012) 55 Cal.4th 783, 801, fn. 3 (“In addition, Government Code section 66498.1, subdivision (c)(2), part of the Subdivision Map Act, by conferring

-15- authority on local governmental agencies to deny or condition a permit to ensure compliance with state law, necessarily contemplates a showing of compliance with state law before or as part of the map application process.”).) Consistent with this requirement, the Housing Element’s discussion of “by right” development focuses on limiting conditional use permit requirements and Architecture and Site review and makes no mention of subdivision maps. (4 AR 2357, 2368.) Moreover, Action HOU-2.4 includes the phrase “development within the North 40 … subject to by right development,” indicating that not all development within the North 40 will be subject to “by right” considerations. (See 4 AR 2373 (emphasis added).) The Housing Element, therefore, properly excludes subdivision map applications from “by right” development.

Such a reading still retains meaning for the “by right” provisions, as not all housing projects would require tentative map approval and may otherwise qualify for approval by right. Notably, multi-family housing could have been proposed for development on the existing 33 parcels within the North 40 Specific Plan area without requiring a tentative map or triggering discretionary review under the Map Act. (See 2 AR 595.) Housing Element Action HOU-2.4 contemplates as much by limiting its discussion of by right findings to multi-family residential developments. (See 4 AR 2373; see also Action HOU-1.7, 4 AR 2368, discussed below.) Here, Petitioners chose to request approval of a tentative map that would have created 113 separate parcels. (6 AR 3758, 3991.) By law, the Town could not approve such a map by right, and the Housing Element does nothing to change that.

Additionally, Petitioners’ Project does not meet the requirements of Housing Element Action HOU-1.7 for “by right” development. Action HOU-1.7 “anticipated that by-right, multiple-family development at a minimum of 20 units to the acre will occur as a single use development as permitted by the zoning.” (4 AR 2368 (emphasis added).) Here, the Project is not a single use development. Rather, it proposes a mixed-use development that included commercial as well as residential units. (6 AR 3762, 3791; 9 AR 7152, 7160.) As a result, it does not qualify as a “by right” development under Action-1.7.

Finally, the Town could not have approved Petitioners’ Project “by right” even if

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Town staff or HCD representatives may have indicated otherwise. The determination that Petitioners’ Project is discretionary is a matter of law. (See Friends of Westwood, Inc. v. City of Los Angeles (1987) 191 Cal.App.3d 259, 264, 282 (whether project was discretionary or ministerial was legal issue); Miller v. City ofHermosa Beach (1993) 13 Cal.App.4th 1118, 1124 (central “legal issue” was whether issuance of building permit was ministerial or discretionary).) As such, statements which any representatives of the Town may have made regarding this matter of law cannot give rise to estoppel and do not preclude the Town from arguing otherwise now. (People v. Stuyvesant Ins. Co. (1968) 261 Cal.App.2d 773, 784; People ex rel. State Air Resources Bd. v. Wilmshurst (1999) 68 Cal.App.4th 1332, 1347 (“it does not offend traditional notions of fair play and substantial justice to apply the true meaning of a statute regardless of a defendant’s claimed reliance on mistaken opinions which do not have the weight of a ruling of a court of law.”).)

In sum, Petitioners’ Project is subject to discretionary review and could not be approved “by right” under either the Housing Element Law or the Town’s Housing Element provisions.

1. The Housing Accountability Act Does Not Preclude the Town From

Exercising Discretion or Finding That the Project is Inconsistent with its General Plan

The Housing Accountability Act (“HAA”) does not bar the Town from exercising discretion in reviewing Petitioner’s Application and determining that it is inconsistent with its General Plan, as called for by the Map Act and the Town’s Housing Element. The HAA was enacted to ensure that “local government not reject or make infeasible housing developments, including emergency shelters, that contribute to meeting the need determined pursuant to [the Housing Element Law] without a thorough analysis of the economic, social, and environmental effects of the action…” (Gov. Code §65589.5(b).)

The purpose of the statute was “to assure that local governments did not ignore their own housing development policies and general plans when reviewing housing development proposals.” (Honchariw v. County of Stanislaus (2011) 200 Cal.App.4th 1066, 1075

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(“Honchariw”).)

In particular, the HAA seeks to ensure the provision of housing for very low, low-, or moderate-income households by significantly limiting the discretion afforded to local governments to deny such projects. (See Gov. Code §65589.5(d).) For instance, such projects may not be denied for inconsistency with the city’s zoning ordinance or general plan land use designation. (Gov. Code. §65589.5(d)(2).) To qualify as a “housing for very low, low-, or moderate-income households,” at least 20% of the total units must be sold or rented to lower income households, or 100% of the units must be sold or rented to moderate or middle income persons. (Gov. Code §65589.5(h)(3); see also Health & Safety Code §§50079.5, 50093, and Gov. Code §65008 for definitions of “lower income,” “moderate income,” and “middle income.”).) Here, Petitioners’ Project does not qualify under this definition of “housing for very low, low-, or moderate-income households” because 20% of the total units are not reserved for lower income households. (6 AR 3791 (affordable units equal 15.6% of total).) As a result, the highly restrictive provisions of Section 65589.5(d) do not apply, which Petitioners appear to acknowledge. (See Opening Brief, p. 13.)

The HAA also contains provisions applicable to market rate housing projects as well, though they are less restrictive of local government review. For instance, unlike the protections afforded to housing for lower income households, non-affordable housing projects must comply with all “applicable, objective general plan and zoning standards and criteria, including design review standards, in effect at the time that the housing development project’s application is determined to be complete…” (Gov. Code §65589.5(j).) The statute does not specifically define the terms “objective general plan and zoning standards and criteria,” but other provisions confirm that local governments have not been stripped of all review. (See Gov. Code §65589.5(f)(1) (“Nothing in this section shall be construed to prohibit a local agency from requiring the development project to comply with objective, quantifiable, written development standards, conditions and policies.”); Honchariw, supra, 200 Cal.App.4th at p. 1080 (“if a proposed project “complies with applicable, objective general plan and zoning standards and criteria,

-18- including design review standards then subdivision (j) findings are triggered.”) (emphasis added).) Once the local government determines that the housing project complies with all such standards, the HAA requires that the local government make written findings before denying or reducing the density of the project. (Gov. Code §65589.5(j).) Those findings must conclude that both of the following conditions exist: (1) the project would have a specific adverse impact on the health and safety unless the project is disapproved or developed at a lower density; and (2) there is no feasible method of mitigating or avoiding the impact other than disapproval or reduction of density. (Id.)

Notably, the HAA does not exempt housing projects from the Map Act. And as an equally applicable state law, the Map Act does not simply vanish because a project includes housing. (See W. Oil & Gas Assn. v. Monterey Bay Unified Air Pollution Control Dist. (1989) 49 Cal.3d 408, 419-20, quoting Penzinerv. West American Finance Co. (1937) 10 Cal.2d 160, 176 (where two statutes apply concurrently, they must be read to stand together); Scott Co. v. Workers’ Comp. Appeals Bd. (1983) 139 Cal.App.3d 98, 105 (we must assume that the Legislature “intended to maintain a consistent body of rules.”).) As a result, housing projects that include proposed subdivision maps are also subject to discretionary review by the local jurisdiction and must be consistent with that jurisdiction’s general plan in order to be approved, regardless of the HAA.

Here, Petitioners’ Project is inconsistent with a number of objective standards and provisions of the Town’s General Plan and the Specific Plan, as reflected in Resolution 2016-046 and discussed further below. Because the Project did not meet all of the objective standards and requirements applicable under the Town’s General and Specific plans, the HAA did not require the Town to adopt written findings of any specific adverse public health impacts resulting from the Project, nor did it mandate approval of the Project.

1. Substantial Evidence Supports the Town Council’s Findings that the Project Is Inconsistent with the Housing Element In denying the Project, the Town Council found that the Project is inconsistent with several objective provisions of the Housing Element and based these findings on substantial

-19 evidence. As stated in Resolution 2016-046, the Town Council found:

1. The proposed project is inconsistent [with] the Residential Unit Size Mix and Table set forth on page 6-14 of the Specific Plan and the Residential Unit Size Mix should have smaller units to come closer to the income distribution of affordable housing identified in the Town’s certified General Plan Housing Element for 156 very low, 84 low, and 30 moderate income units.
2. The only promised Below Market Rate housing is the 49 units above Market Hall and the remainder would have home values estimated at $900,000 to $1,500,000 requiring a 20 percent down payment and income of approximately $130,000 to $200,000 per year.

(13 AR 11472; see also 13 AR 11470 (“The project is not consistent with the Housing Element which planned for an income distribution of 156 very low, 84 low, and 30 moderate income households for the North 40 site.”).)

These findings concerning consistency with the Town’s General Plan must be given

significant deference and are reviewed under the arbitrary and capricious standard.

(California Native Plant Society v. City of Rancho Cordova (2009) 172 Cal.App.4th 603,

637 (“California Native Plant”).) Under this standard, the inquiry is limited to “whether

the decision is arbitrary, capricious, entirely lacking in evidentiary support, unlawful, or

procedurally unfair” and the court should “defer to an agency’s factual finding of

consistency unless no reasonable person could have reached the same conclusion on the

evidence before it.” (Id., quoting Endangered Habitats League, Inc. v. County of Orange

(2005) 131 Cal.App.4th 777, 782.) As explained recently by one Court of Appeal:

In addressing a claim of inconsistency, “it is important to keep in mind the deferential nature of our review. It is not for us to substitute our judgment for that of a local agency in making a determination of consistency; rather, the agency’s determination ‘comes to this court with a strong presumption of regularity.’

[Citation.] ‘Once a general plan is in place, it is the province of elected city officials to examine the specifics of a proposed project to determine whether it would be “in harmony” with the policies stated in the plan. [Citation.] It is, emphatically, not the role of the courts to micromanage these development decisions.’

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[Citation.] Thus, as long as the City reasonably could have made a determination of consistency, the City’s decision must be upheld, regardless of whether we would have made that determination in the first instance.”

(Spring Valley Lake, supra, 248 Cal.App.4th at p. 99, quoting California Native Plant,

supra, 172 Cal.App.4th at p. 638.) Here, the Town’s findings of inconsistency with its

8

General Plan relate to its certified 2015 Housing Element.

In enacting the Housing Element Law, the Legislature declared that “the early attainment of decent housing and a suitable living environment for every Californian.. .is a priority of the highest order” and that the “early attainment of this goal requires the cooperative participation of government and the private sector in an effort to expand housing opportunities and accommodate the housing needs of Californians of all economic levels.” (Gov. Code § 65580(a), (b).) Toward this end, all cities and counties are required to adopt a housing element as part of its general plan. (Gov. Code § 65302(e).) Each housing element must contain an assessment of the jurisdiction’s existing and projected housing needs, including specific analyses of the needs of very low, low, and moderate income households as allocated to the jurisdiction by the HCD. (Gov. Code §§65583, 65584.) Among other requirements, each housing element “shall make adequate provision for the existing and projected needs of all economic segments of the community” and include programs to provide adequate housing “to meet the needs of extremely low, very low, low-, and moderate-income households.” (Gov. Code §§65583, (c)(2).)

Here, the Town’s certified 2015 Housing Element paints a relatively dire picture of affordable housing in Los Gatos. In 2013, median home prices reached $1.2 million, some of the highest in Santa Clara County. (4 AR 2349-50.) Meanwhile, close to one-fifth of the households in Los Gatos qualified as low or very low income, and even moderate income households would generally overpay for rental units within the Town. (4 AR 2350.) The ^[8]

Town’s 2014-2022 RHNA requirements reflect these realities, allocating a total of 201 very low, 112 low, and 132 moderate income units to the Town. (4 AR 2359.) To meet these affordable housing needs, the Town’s 2015 Housing Element identifies a number of strategies, chief among them the North 40 Plan Area. (4 AR 2359-62.) As the Housing Element states:

Based on a detailed analysis of potential housing sites in Los Gatos, the Town has identified a set of strategies that would successfully accommodate Los Gatos’ remaining RHNA number:

♦ North 40 Specific Plan. Reserving a portion of the pending North Forty Specific Plan housing capacity for the provision of affordable units. Action item HOU-1.7 commits the Town to rezoning 13.5 acres within the North 40 Specific Plan area within three years of Housing Element Adoption at a density of 20 dwelling units per acre to facilitate affordable housing production. The 44-acre Specific Plan area has multiple opportunities to achieve the planned maximum housing yield of 270 units as documented in Appendix 6, page 6-3. Table 6-2.

This table identifies specific sites that individually or in combination achieve the maximum of 270 units.

(4 AR 2359-60 (emphasis added).) In fact, the Housing Element relies very specifically and integrally on the North 40 to meet its lower income housing requirements, identifying it

as a key site for meeting these specific needs: Table H-2 Summary of Community Strategies to Meet RHNA Very Above Low Low Mod. Mod. Total RHNA — Total Units Needed (2015-2023) 201 112 132 174 619 Approved Units 0 2 6 49 57 Southbay (AHOZ) 45 9 68 26 148 Second Units under the Town’s Existing Program NA NA 28 NA 28 Proposed Enhanced Second Unit Program: Non-Conforming Lots & Hillside Lots NA 27 NA NA 27 Proposed North 40 Specific Plan 156 84 30 0 270 Vacant Housing Element Sites (based on existing zoning): Oka Road Sites 0 0 0 99 99

 

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Total Units	201	128	132	174	629
Units Above RHNA
	0	+10	0	0	+10

 

(4 AR 2362 (highlighting added).) As shown in Table H-2 and stated in Resolution 2016­046, the Housing Element clearly and objectively identifies 156 very low income, 84 low income, and 30 moderate income units to be developed within the North 40.⁹ In fact, this is precisely why the site was rezoned to accommodate at least 20 units per acre. (4 AR 2368 (requiring 13.5 acres in the North 40 to be rezoned to allow a minimum of 20 dwelling units per acre “to facilitate affordable housing production”).)

However, Petitioners’ Project would not have supplied anything close to the needed affordable units identified for the North 40 site. In fact, the Project would have provided only 49 very low income units and one moderate income unit, amounting to a mere 18.5% of the needed affordable housing units that the Housing Element identified for this specific site.¹⁰ (4 AR 2362; 6 AR 3791.) Meanwhile, Petitioners would have used up to 118.5% of the site’s residential capacity allowed under the Specific Plan.¹¹ As the Town Council’s denial findings state, 270 of the proposed residential units are expected to sell for between $900,000 and $1.5 million each, nowhere near the prices that were affordable for lower income households. (8 AR 6883-84; 4 AR 2416 (in 2014, sales price affordable to low- income households was $317,100 and $494,631 for moderate-income households).)

Had the Town Council allowed Petitioners to subdivide and develop the site with

• The Town also sought to provide up to 50 extremely low income units as subset of the very low income category and, again, identified the North 40 as one of two sites capable of accommodating those units. (4 AR 2388.)
• 49 very low units + 1 moderate unit ^ 270 total allocated affordable units =18.5 %.
• Petitioners’ proposed total of 320 units amounts to 87.7-118.5% of the entire North 40 Specific Plan maximum capacity: proposed total 320 units ^ Specific Plan maximum 270 units = 118.5%; proposed total 320 units ^ Specific Plan EIR maximum 364 units = 87.9%; proposed 237 base units ^ Specific Plan maximum 270 units = 87.77%. (See 2 AR 617; 5 AR 2636, 2652; 6 AR 3791; 9 AR 7160.)

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these $1.5 million housing units, it would have been significantly more difficult to meet the housing needs of the Town’s low-income households. (See 4 AR 2465, 2472 (North 40 area is “largest site remaining for possible development in Los Gatos”).) In fact, because the Application included a vesting tentative map, approval would have entitled Petitioners to develop the Project without any intervening changes in local laws, and the Town would have lost the ability to require future changes to the Project that would have obtained anywhere near the number of affordable housing units called for in the Housing Element. (See Gov. Code §66498.1; Kaufman & Broad Cent. Valley, Inc. v. City of Modesto (1994) 25 Cal.App.4th 1577, 1586.) Under these circumstances, the Town Council reasonably found that the Project is inconsistent with the Town’s Housing Element.

In addition, Petitioners’ proposal to develop the North 40 with unaffordable housing would have created inconsistencies with the Town’s “No Net Loss” Housing Element provision, which states:

No Net Loss: To ensure adequate residential capacity to accommodate the RHNA for each income category, the Town will develop and implement an ongoing formal evaluation procedure (project-by-project) of sites identified in the Sites Inventory to maintain sufficient sites at appropriate densities to accommodate its RHNA for lower-income households. If an approval of a development results in a reduction of site capacity below the residential capacity needed to accommodate the remaining RHNA, including for lower-income households, the Town will identify and zone sufficient adequate sites at appropriate densities to accommodate the remaining RHNA.

(4 AR 2374 (emphasis added).) The North 40 site was clearly identified within the Sites Inventory and planned for lower-income housing. (4 AR 2464-66.) Yet Petitioners’

Project planned on the North 40 site would have supplied only 18.5% of the lower-income housing that was called for in the Housing Element. As a result, the Town would have suffered a net loss of lower income housing, potentially requiring the Town to identify additional sites capable of supplying the housing needed by its lower-income households pursuant to HOU-2.5. It was, therefore, entirely reasonable for the Town to deny the

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1 9

Application in order to avoid this net loss in affordable housing capacity.

Moreover, the loss of affordable housing was very much at issue during the public hearings on the Project and formed the basis of the Town Council’s decision. As described in the Section II.D, infra, the public expressed significant concerns regarding the Project’s failure to come close to meeting its lower, or even moderate, income housing needs. (E.g., 8 AR 6998-99, 7024; 11 AR 9263-64, 9279-80; 13 AR 10909-11.) As one member of the public astutely testified:

But, this current proposal is unprecedented and it’s been crafted and sold to this community using clever tactics… The community was told they were going to get 270 RHNA credits from the 619 allocated by the State. This is even used by Grosvenor on their FAQ page up for their website…The Town planned for 270 Low to Moderate income units, which you can see here, but under this application the developer will deliver 50. The rest of the units are market rate.

(11 AR 9279-80.) The Town Council also echoed these concerns during its consideration and ultimate denial of Petitioners’ Application, which are also reflected in Resolution 2016­046. (See 13 AR 10909-12, 11102, 11470-73.)

It was, therefore, well within the Town Council’s discretion, and in no way arbitrary, capricious, or lacking in evidentiary support, to determine that Petitioners’ Project is inconsistent with the affordable housing provisions of the Town’s Housing Element. For this reason alone, the Town Council’s decision should be upheld and Petitioners’ Petition should be denied. (See Desmond, supra, 21 Cal.App.4th at pp. 336-37 (“Because we are reviewing a denial of a requested land use permit, it is not necessary to determine that each finding by the Board was supported by substantial evidence. As long as the Board made a finding that any one of the necessary elements enumerated in the ordinances was lacking, i ‘j

The HAA also supports denial of housing projects in such situations, where the local jurisdiction is applying policies that enable it to meet its share of regional housing need. (Gov. Code §65589.5(f)(1).)

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and this finding was itself supported by substantial evidence, the Board’s denial of appellant’s application must be upheld.”).)

Finally, opinions expressed by HCD staff regarding the Town’s review of Petitioners’ Project cannot supplant the Town Council’s interpretation and application of its own General Plan element. HCD did not have jurisdiction over the Project or over the Town’s processing of the Project in accordance with state law and Town ordinances. (See Gov. Code §66428.) Moreover, the interpretation of the Town’s General Plan is inherently a matter vested with the final decision-making authority of the Town’s legislative body, not the HCD. (See Save Our Peninsula Comm. v. Monterey County Bd. of Supervisors (2001) 87 Cal.App.4th 99, 142 (“the body which adopted the general plan policies in its legislative capacity has unique competence to interpret those policies when applying them in its adjudicatory capacity”).) While the HCD’s interpretations of state law may be entitled to some measure of deference, the same is not true of its opinions and interpretations of a local jurisdiction’s housing element policies. (See California Assn. of Psychology Providers v. Rank (1990) 51 Cal.3d 1, 11.) Any opinions expressed by the HCD staff concerning the Town Council’s interpretation of its own General Plan are, therefore, irrelevant and cannot be used to undermine the Council’s determination that Petitioners’ Project is inconsistent with its Housing Element.

1. Substantial Evidence Supports the Town Council’s Findings That the

Project is Inconsistent with the Specific Plan

The Town Council properly found that Petitioners’ Project is inconsistent with key objective design standards identified in the Specific Plan. As stated in Resolution 2016­046, the Town Council determined:

2. The proposed project overly concentrates all of the residential units that can be built pursuant to the North 40 Specific Plan and the General Plan Housing Element on the southern portion of the North 40 Specific Plan area and is therefore inconsistent with Specific Plan Section 2.5…
3. The proposed project is inconsistent with the North 40 Specific Plan Section 2.3.1 and its requirements for lower

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intensity residential uses in the Lark District.

(13 AR 11471.) Asa factual finding of consistency with its own adopted planning document, this determination is entitled to great deference. (Foothill Communities Coal. v. County of Orange (2014) 222 Cal.App.4th 1302, 1314-15.)

Specific Plan Section 2.5 identifies area-wide development regulations and sets maximum development capacity for the entire North 40 area at 270 residential units, up to 250,000 sq/ft of office/hotel space, and up to 400,000 sq/ft of commercial space. (5 AR 2636.) As a maximum for the entire Specific Plan area, it must be split among all three of its land use districts. (See 5 AR 2629, 2636.) Specific Plan Section 2.3.1 describes the allowed uses within the Lark District as “Lower intensity residential and limited retail/office uses,” “Limited retail, personal services, and restaurants (primarily along Los Gatos Boulevard), “Office (along Los Gatos Boulevard),” and “Open Space.” (5 AR 2629.) The purpose of this lower-intensity focus is to bring consistency with the existing residential neighborhood that sits in close proximity to this portion of the Plan Area. (Id.) Reading Specific Plan Sections 2.3.1 and 2.5 together, it is apparent that the Lark District must be developed with a lower share residential units than its sister districts. Specific Plan Sections 2.3.2 and 2.3.3 support such a reading. Unlike the Lark District, which limits the allowed types of housing units to condominiums, cottage clusters, garden clusters, rowhouses, and townhomes, the Transition and Northern Districts allow condos, live-work flats, multi-family flats, multiplexes, rowhouses, and townhomes, which can accommodate much higher density residential development. (5 AR 2628-40.)

Petitioners’ proposal, however, would have built out the Lark District with a total of 193 residential units, which amounts to 71% of the entire Specific Plan area’s maximum capacity.^[9] (5 AR 2631, 2636; 6 AR 3791.) This is objectively inconsistent with the Specific Plan’s limitation of the Lark District to lower intensity residential development.

The Town Council’s findings to this effect are, therefore, reasonable and supported by substantial evidence. Thus, the Town properly denied the Project due to its inconsistencies with the Specific Plan.

1. The Density Bonus Law Does Not Require Approval of the Project

The Town did not unlawfully deny Petitioners’ requested density bonus. The State

Density Bonus Law offers incentives to developers to include affordable housing new

projects. (Gov. Code §65915.) As explained by one Court of Appeal:

Although application of the statute can be complicated, its aim is fairly simple: When a developer agrees to construct a certain percentage of the units in a housing development for low or very low income households, or to construct a senior citizen housing development, the city or county must grant the developer one or more itemized concessions and a “density bonus,” which allows the developer to increase the density of the development by a certain percentage above the maximum allowable limit under local zoning law. (Gov. Code, § 65915, subds. (a), (b).) In other words, the Density Bonus Law “reward[s] a developer who agrees to build a certain percentage of low-income housing with the opportunity to build more residences than would otherwise be permitted by the applicable local regulations.” [Citation.]

(Friends of Lagoon Valley v. City of Vacaville (2007) 154 Cal.App.4th 807, 824 (“Friends of Lagoon Valley”).) If a project qualifies for a density bonus, the local jurisdiction must grant the bonus, plus certain concessions and incentives consistent with Section 65915. (Gov. Code §65915(b)(1).) However, this does not require the local jurisdiction to approve the project as a whole, particularly where the project is inconsistent with the applicable general plan. (See Friends of Lagoon Valley, supra, 154 Cal.App.4th at p. 815, quoting Citizens of Goleta Valley v. Bd. of Supervisors (1990) 52 Cal.3d 553, 570-571 (“[T]he propriety of virtually any local decision affecting land use and development depends upon consistency with the applicable general plan and its elements.”).) Nor does the Density Bonus Law provide an escape from the Map Act, which precludes approval if the project is inconsistent with the local general plan. (Gov. Code §66473.5.) Here, the Project is

-28- inconsistent with the Town’s General Plan and, therefore, could not be approved. The Density Bonus Law does not alter this conclusion.

1. Petitioners’ Requested Relief is Inappropriate

The Court cannot issue an order requiring the Town to exercise its discretion to approve the Project. Section 1094.5 provides that the court shall enter judgment either denying the writ or ordering the governmental entity to set aside its challenged decision. (Code of Civ. Proc. §1094.5(f).) The judgment may also require the entity to reconsider its decision in light of the court’s opinion, but the “the judgment shall not limit or control in any way the discretion legally vested in the respondent.” (Id.; Lindell Co. v. Bd. of Permit Appeals (1943) 23 Cal.2d 303, 310 (“the remedy of mandate is not available to control the exercise of official discretion or judgment…”).) Ordering the Town to approve Petitioners’ Project would violate Section 1094.5.

Such an outcome would be particularly objectionable were the Court to find error in the Town’s findings or the evidence supporting its findings. In such situations, the matter must be remanded to the agency to make appropriate findings, take additional evidence, or both. (Mountain Def. League v. Bd. of Supervisors (1977) 65 Cal.App.3d 723, 732.) The only situation allowing otherwise is if the law provided no other option. (See Sladovich v. Fresno County (1958) 158 Cal.App.2d 230, 242.) This is not the case here.

For instance, the HAA would allow the Town to deny the Project if it found that the Project would create an unavoidable adverse public health impact. (Gov. Code §65589.5(j).) While Resolution 2016-046 does not contain such findings at this time, the Town must be afforded the opportunity to do so, particularly in light of indications in the record that the Project may result in adverse health impacts.^[10] (See, e.g. 2 AR 686-89 (EIR

 

identified significant health effects of locating residences within 50 feet of Highway 17), compared to 6 AR 3993, 4049 (Project locates residences within 50 feet of Highway 17).) Additionally, there may be other General Plan, Specific Plan, and design standards that the Town wishes to consider before determining the first threshold question of consistency with the Town’s General Plan. The law does not foreclose all such possibilities. Therefore, the Town must be allowed to retain its discretion here.

The Court of Appeal in Honchariw instituted a similar outcome after determining that the Stanislaus County Board of Supervisors (‘’Board”) had failed to make appropriate findings meeting the requirements of the HAA. (Honchariw, supra, 200 Cal.App.4th at p. 1081.) Rather than ordering the Board to approve the project, it directed the Board to vacate and reconsider its decision, and then the Court provided a roadmap for developing new findings that would comply with the HAA in the event the Board decided to deny the project again. {Id.) Here, the same course of action would be appropriate if the Court concludes that the Town abused its discretion in denying the Project. The law does not support simply ordering the Town to approve the Project.

1. CONCLUSION

The Court should deny Petitioners’ request for an order requiring the Town to approve a project that the Town Council properly determined is inconsistent with its General Plan and Specific Plan.

Dated: February 24, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROOF OF SERVICE

Eden Housing, Inc., et al. v. Town of Los Gatos
Santa Clara County Superior Court Case No. 16CV300733

I, Pamela Saunders, declare:

I am a resident of the State of California and over the age of eighteen years and not a party to the within action. My business address is 355 South Grand Avenue, 40th Floor, Los Angeles, California 90071-3101. On February 24, 2017, I served the within document(s) described as:

RESPONDENT’S OPPOSITION TO PETITIONERS’ OPENING BRIEF

on the interested parties in this action as stated below:

Andrew Faber Michael C. Branson Berliner Cohen, LLP 10 S. Almaden Blvd., 11^th Floor San Jose, CA 95113 (408) 286-5800 (FAX) (408) 998-5388 andrew.faber@ber1iner.com

Robert Schultz Town Attorney Town of Los Gatos 110 East Main Street Los Gatos, CA 95030 (408) 354-6818 rschultz@losgatosca. gov

(BY OVERNIGHT DELIVERY) By placing the document(s) listed above in a sealed envelope and affixing a pre-paid air bill, and causing the envelope to be delivered to a FedEx agent for delivery, or deposited in a FedEx box or other facility regularly maintained by FedEx, in an envelope or package designated by the express service carrier, with delivery fees paid or provided for, addressed to the person(s) at the address(es) set forth above.

(BY E-MAIL) By transmitting a true copy of the foregoing document(s) to the e-mail addresses set forth above.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Executed on February 24, 2017, at Los Angeles, California.

Pamela Saunders

(Type or print nam

^[1] All references to the Certified Administrative Record are referenced herein by the volume number, followed by the abbreviation “AR,” followed by the specific page reference.

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^[2] These numbers represent decreases from Petitioners’ original proposal, which was for 335 units, 60 of which would have been affordable. (13 AR 11155.)

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-j

Because the Project included an application for a vesting tentative map, the Town’s Municipal Code required approval by the Town Council rather than the Planning Commission. (Los Gatos Municipal Code §24.10.020 (1 AR 299-300).)

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^[4] It was no easy feat for the Town Council to complete its consideration of the Application in such a short time frame. During the hearings on the Project, Petitioners asserted that, although they had not complied with the Town’s story pole requirements until May 4, 2016, the Subdivision Map Act and Permit Streamlining Act required the Planning Commission to act by June 17, 2016, and the Town Council to act 60 days thereafter. (7 AR 5907-10.) The Town disagreed with these assertions but, in the interests of resolving the issue, entered into an agreement with Petitioners that established an August 31, 2016 deadline for the Planning Commission to make its recommendation and a September 7, 2016 deadline for the Town Council to make its final decision. (7 AR 5909-11.) To accomplish this and affording the public its due process opportunity to comment on the Project, the Town was forced to hold several special meetings to consider the Project. (See 7 AR 5394-95; 8 AR 6828-30; 12 AR 10100-02; 13 AR 10809-11.)

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^[5] Contrary to Petitioners’ claims, the memo does not “support” the Project. (See Opening Brief, p. 9.) It simply provides objective advice regarding the interpretation of certain provisions of the Density Bonus Law. (See 13 AR 11166-74.)

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^[6] The vote of the Town Council on September 1, 2016, was 3-2 to deny the Project, but Resolution 2016-046 denying Petitioners’ Application was approved 5-0. (13 AR 10816, 11388,11473.)

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_[7]

Petitioners do not argue that the Town’s action implicates its fundamental rights. (See Opening Brief, pp. 11-14.) Nor would such an argument prevail. It is well settled that challenges to administrative decisions “in the area of land use regulation do not involve fundamental vested rights.” (City of Walnut Creek v. County of Contra Costa (1980) 101 Cal.App.3d 1012, 1016; PMI Mortgage Ins. Co. v. City of Pacific Grove (1981) 128 Cal.App.3d 724, 729.)

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_[8]

Project inconsistencies with the Specific Plan are addressed in Section IV.D, infra.

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[9]

193 Lark District units ^ 270 Specific Plan maximum

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^[10] The Town may also wish to consider whether the Project truly qualifies as a “housing project” under the HAA, which applies to mixed-use projects only if the non-residential component is limited to “neighborhood serving” uses. (Gov. Code §65589.5(h)(2)(B).)

The economic study prepared for the Project indicates that at least the proposed market hall is expected to draw shoppers from the region, not just neighborhood. (6 AR 4333.)

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