Today, we’re pleased to announce that Los Altos has conceded defeat in our lawsuit against them for an unlawful denial of affordable housing under Senate Bill 35’s streamlined approval provisions. The city tried announcing this late Saturday night in the middle of the labor day weekend, hoping nobody would notice. To recap, Los Altos first attempted to deny this project nearly a century ago in early 2019, using specious arguments about parking and a fabricated appeals process.
The court didn’t buy it. We decisively won that fight and, perhaps naively, assumed that Los Altos had learned its lesson and the housing would move forward.
At the time, the city had 60 days to respond to the ruling by allowing the housing to proceed. Instead, Los Altos appealed this ruling to the California Court of Appeals. Appeals like this are a very common tactic to delay projects. They set up a war of attrition, where the city aims to drain the developer of resources. If a developer runs out of money to fund their legal defense, the project goes away. Cities like Los Altos act like they have endless funds to support litigation. They can grind housing developments into dust by simply dragging out their lawsuits, as was attempted here.
In response to this tactic, the Housing Accountability Act includes a provision that required a city post a bond up front, in case the appeal was filed in bad faith. This works like a kind of insurance, payable to the developer if the city loses. If the city wins, the developer loses their investment in the project. If the developer wins, the city has to pay off the developer’s expenses in defending the appeal plus carrying costs like real estate taxes or loan interest that were built up while the project is delayed. This guarantees that even if fighting an appeal takes two years to conclude, the housing development is still financially viable. It greatly levels the playing field.
What’s interesting about this case, however, is that the HAA doesn’t actually specify the details of the bond that must be posted, other than a requirement that it benefit the developer. The implication from the legislative intent of the HAA is that the bond covers carrying costs such as those explained above, and the judge in this case agreed with that assessment.
The city was given 10 days to post a $7,000,000 bond with the court if they wished to continue their appeal. What’s remarkable is that we’ve done what previously was thought to be impossible: setting a price tag on NIMBYism. Here, it would cost the good people of Los Altos roughly 14% of their annual city budget to keep renters and affordable housing out of their city. This was apparently too much for even Los Altos, and they’ve withdrawn their appeal.