Los Altos – 40 North Main St.

In late 2018, a developer in Los Altos took a discretionary project that had been denied by the Los Altos City Council and reworked it to qualify for ministerial approval under SB 35. The project, which had initially been entirely office space was converted to a mixed-use development with multiple on-site below-market-rate units. 

The developer submitted an application for ministerial approval to the Los Altos Planning Department in November of 2018 and in December of 2018 the Planning Department informed the developer that the project did not qualify for ministerial approval under SB 35. They alleged that the project did not comply with parking egress standards and that the project should be subject to a 50% affordability threshold rather than a 10% affordability threshold. The developer disagreed with this assessment and contended that neither of these points rendered the project ineligible for streamlining. In particular the developer pointed out that the city failed to submit the mandatory annual housing production report required by state law automatically setting the SB 35 streamlining threshold at 10%.The Planning Department still maintains that the project violates design standards related to parking but they concede that the 10% threshold is the correct one.

The Planning Department also alleged in their December letter that the project did not qualify for streamlining under SB 35 because less than ⅔ of the project’s sq. footage was residential. This assertion is clearly unfounded and the California Department of Housing and Community Development has issued an advisory letter confirming this. Residential sq. footage for the purposes of SB 35 includes both the floor area of the actual units and the floor area of any residential parking. Under this definition, the project exceeds ⅔ residential floor area and qualifies for streamlining under SB 35.

SB 35 sets forth a 60 day timeline from the submittal of a project application to any denial or approval by an agency. To deny a project under this process it must be found to violate specific objective design or zoning standards and this must be communicated to the project sponsor within 60 days. The initial application for this project was submitted on November 8, 2018 and therefore the 60 day clock elapsed on January 7, 2019. This puts only the first response from the Planning Department within the acceptable timeline. All other communication is invalid, though the project sponsor maintains that the concerns communicated after January 7 were also baseless.

In subsequent communication in January and February of 2019 the Planning Department in Los Altos raised additional concerns regarding the projects utilization of state and local density bonus programs and lack of sufficient parking circulation. The density bonus concern is difficult to adjudicate and rests on differing interpretations of local and state law. The parking circulation assertion is not founded on a specific statutory standard and so cannot be considered to be an objective design standard. Regardless none of these concerns, no matter how baseless, have any bearing on the project as they were brought up after the 60 day window for project denial/approval had elapsed.

This case seeks to defend SB 35 from being rendered toothless. The key contention in this case is that a city must communicate all violations of objective standards within 60 days of receiving an application. If the City in this case is relieved of this responsibility it will seriously undermine the “streamlining” aspect of SB 35. Utilizing a streamlined procedure becomes significantly less attractive to developers if the law’s time constraints are unenforceable.

This case is also a test of what can be considered an objective standard for the purposes of ministerial approval or denial. Denials under SB 35 are contingent on the identification of objective standards because the law, and ministerial processes more generally, are meant to eliminate discretion and subjective criteria from planning processes. The Planning Department in Los Altos alleges that they did cite a specific objective standard in their denial of the project. They asserted that the project failed to comply with standards relating to parking ingress and egress. The specific citation however was to a diagram appearing in the City’s building code with specifications for vehicle ramps. The application of this specific portion of building code to this project, which uses a parking lift rather than a ramp, requires far too much extrapolation to be considered objective. The application of unrelated standards to matters of design, especially when the standards have been applied differentially in the past, is fundamentally subjective. A loss on this point would set a bad precedent and imply that planning departments have much more discretion in denying projects than the law sought to provide.

Lastly, it is important that this case upholds the interpretation that residential sq. footage includes residential parking. Many of the ongoing SB35 projects in the Bay Area are mixed use as office or commercial space can help to subsidize the affordable units. If the parking that accompanies residential units is not counted as residential floor space it would become extremely difficult to build mixed-use ministerial projects.

How it ended

When cities don’t meet their housing production goals, there are consequences. The most important of these consequences is Senate Bill 35. When cities fall behind on their housing production goals, SB 35 requires that they quickly approve affordable housing developments without discretionary review or hearing. When Los Altos fell behind on their housing goals, a developer wanted to take advantage of SB 35 and was met with obstruction, inaction, and arbitrary denials from city staff. CaRLA sued to challenge the city and force them to comply with SB 35 and approve the development immediately. We won a resounding victory and established a model for pursuing SB 35 developments in cities determined to obstruct housing. This model will only grow in importance as cities around the state struggle to meet this planning cycle’s higher housing production targets.

Update

At a Nov 2021 City Council meeting, the City decided to try to propose a settlement with the developer. The settlement would pay the developer $800,000 (in addition to $1.2 mil already owed from our suit) to drop the SB35-approved 5-story project and come back to Council with a smaller non-SB35 protected 4-story proposal. In the proposed settlement, the City stipulates that this smaller project would have to go back through the discretionary review process and that the City is has no obligation to approve it in the end. The developer says he will continue with the SB35 project. Read the details below:

Settlement agreement OK’d for 40 Main; developers still pursuing 5-story building
Los Altos Town Crier, 11/9/21