Mercury News: ‘Nuclear Option’? Supersized Housing Projects are Planned for Bay Area’s Wealthiest Cities. Is One Coming to Your Neighborhood?

Eight-story condo buildings rising above the billionaire bedroom community of Los Altos Hills? Hundreds of apartments flanking the sprawling single-family subdivisions of Brentwood? A hundred and fifty homes perched high on a bucolic hillside in rural Marin County?

These aren’t part of some fictional “Supersize the Suburbs” version of Monopoly.

They’re among a growing number of jumbo housing projects developers are scoping out in the Bay Area’s most exclusive neighborhoods. And to the horror of some longtime residents, local officials could be helpless to halt construction.

It’s all thanks to an until-recently forgotten provision in state housing law meant as a penalty for cities that fail to do their part to alleviate a deepening housing crisis. Developers have begun invoking the rule — dubbed the “builder’s remedy” — in hopes of pushing through projects that are much bigger than local zoning restrictions typically allow.

So far this year, at least 34 such projects totaling more than 6,400 units have been proposed across 11 local cities and counties according to a Bay Area News Group survey of local officials and planning documents throughout the region. Many of the proposals target affluent areas that have long resisted large housing projects.

When the state passed the “builder’s remedy” rule three decades ago, it was envisioned as a “nuclear option” to spur cities to follow through on their housing responsibilities, said Matt Regan, a housing policy expert with the pro-business group Bay Area Council, which helped draft the legislation. But until a Southern California developer invoked it last year, hardly anyone had heard of the provision. And even if more developers had been familiar with it, most would’ve been wary of upsetting local officials whose support they need to build most projects. But fed up with the red tape of the local permitting process, some now see the rule as a prime opportunity.

“Those nuclear buttons are being pushed,” Regan said.

Cities and counties where developers have proposed “builder’s remedy” projects include San Jose (15 projects), Mountain View (five), Palo Alto (three), Los Altos Hills (three), Brentwood (two), Menlo Park, San Mateo, Pleasanton, Sonoma, Fairfax and Marin County.

Many of the proposals call for high- and mid-rise projects along main thoroughfares and commercial centers in Palo Alto, Mountain View and neighborhoods across San Jose, or adding dozens of units to already planned developments, including in downtown San Mateo. Other proposals, including in Los Altos Hills, lay out new plans for multifamily housing in almost exclusively single-family neighborhoods.

One of the main reasons the proposals target wealthy cities is that developers can charge higher rents and sale prices to offset the reduced revenue from the portion of affordable units they’re required to include in their projects.

Exactly how many “builder’s remedy” projects are in the works is unclear: The state housing department doesn’t keep a tally, and it’s likely developers are attempting to use the rule in other cities as well.

According to housing advocates’ interpretation of the law, any city without a state-approved plan for meeting its future housing goals must accept a “builder’s remedy” project, so long as at least 20% of the units are cost-restricted at affordable rates. In the Bay Area, local governments had until Jan. 31 to get approval for their housing plans and guarantee they avoided all consequences, but only a handful met the deadline.

Four months later, just 28 of the 109 cities and counties in the region have gotten regulators to sign off on their every-eight-year plans, which together aim for a roughly 15% increase in the Bay Area’s total housing stock.

With the specter of more potentially controversial proposals on the horizon, cities across the region are under growing pressure to get their housing plans in order — while some local officials are developing legal strategies to stop any “builder’s remedy” project from getting off the ground.

“They’ve been feeling the heat,” said Forrest Linebarger, a Peninsula developer behind one “builder’s remedy” project in Mountain View and two others in Los Altos Hills. “A lot of affluent cities are struggling with this process.”

When Los Altos Hills residents learned of proposals to build more than a hundred apartments, condos and townhomes across three sites in the wooded Silicon Valley suburb, they were predictably aghast.

“I think it’s wrong — totally wrong,” said Duffy Price, 89, who’s lived in Los Altos Hills for over 40 years and is the former editor of the town’s quarterly newsletter. Price worries that adding more residents to the oak-dotted hills would hinder evacuations during a wildfire. She also wants desperately to protect the “rural quality of life” of the town.

“Let us preserve what is the heritage and the natural beauty of Los Altos Hills,” she said.

In response to the outcry, the town hired a public relations firm to take a more “offensive position to explain our perspective” after becoming the “poster child of the builder’s remedy” in local news reports, City Manager Peter Pirnejad said during a February council meeting.

Los Altos Hills also retained a lobbyist to help convince the state to approve its plan to add 438 new homes. In May, the town joined cities, including San Francisco and Oakland, as one of the few local governments with a state-certified plan.

But even with state approval, housing advocates and developers say Los Altos Hills should still have to accept the “builder’s remedy” proposals because they were filed before the town got the OK from regulators. Los Altos Hills, however, has indicated it could argue that an earlier version of its plan was in “substantial compliance” with state law and therefore would be free to deny them.

To complicate matters, housing advocates with the California Housing Defense Fund, contend Los Altos Hills’ plan, while adding some multifamily housing, doesn’t go far enough. They have threatened to sue to invalidate it. For its part, the town said in a statement it worked closely with the state housing department on its plan and touted the finalized version as a “significant milestone in our ongoing efforts to meet the housing needs of our community.”

Cities and towns, including San Mateo, Menlo Park, Atherton, Woodside, Lafayette, Concord and Pleasanton, have also indicated they could deny “builder’s remedy” proposals regardless of state approval of their plans, according to housing advocates.

“Every city should be making every effort to get a certified housing (plan),” said Pleasanton City Councilmember Julie Testa, an outspoken critic of the state’s push to build. “But at the same time, there has to be a point at which the overreach and subjective process has to be corrected.”

Linebarger, the Peninsula developer, said he’s prepared to sue Los Altos Hills if the town denies his two 54-unit senior housing projects on nearby lots sandwiching a single-family home on Mora Drive. (He expects Mountain View will likely approve his project in that city.) Linebarger said recent state laws should give him the upper hand in a potential court case.

“The legal landscape is changing all the time,” he said. “I think cities that are trying to keep housing from us are on the wrong side of history.”

Earlier this year, a state appeals court held that judges should defer to the state on cities’ housing plans unless regulators’ decisions are “clearly erroneous or unauthorized.” While many legal questions remain, the opinion means “cities that want to go up against the determination of (the state) are going to face a tough road in persuading the court to side with them,” said Daniel Golub, a San Francisco real estate attorney with the firm Holland and Knight.

In Southern California, Santa Monica recently struck a deal with a developer to allow 10 scaled-down “builder’s remedy” proposals rather than risk going to court over the high-rise projects. Housing advocates say that could embolden more developers to use the rule to gain leverage in getting projects approved.

Already in Marin County, a Michigan-based real estate private equity firm has threatened to use the provision to develop 150 homes in rustic Lucas Valley if his original 39-home application is denied.

Regan with the Bay Area Council said the tactic could be spreading.

“We’re starting to see real legit household-name developers utter the word ‘builder’s remedy,’” he said. “They’re starting to look at this as this is the silver bullet we’ve been looking for.”


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