Item2.Addendum and Attachment 9
PREPARED BY: ERIN WALTERS AND JOCELYN SHOOPMAN
Associate Planner and Associate Planner
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
MEETING DATE: 02/16/2023 ITEM NO: 2 ADDENDUM
TOWN OF LOS GATOS
HOUSING ELEMENT ADVISORY BOARD REPORT
DATE: February 15, 2022
TO: Housing Element Advisory Board
FROM: Joel Paulson, Community Development Director
SUBJECT: Review and Discuss the California Department of Housing and Community
Development’s (HCD) Findings/Comment Letter Received by the Town on January
12, 2023, and How the Comments/Findings Will be Addressed.
REMARKS:
Attachment 9 contains public comments received after the completion of the Staff Report.
ATTACHMENTS:
Previously received with the February 10, 2023, Staff Report:
1. December 20, 2022, Town Council Meeting Minutes
2. January 11, 2023, Planning Commission Verbatim Meeting Minutes
3. January 11, 2023, Public Comments from a Planning Commissioner
4. January 12, 2023, HCD’s Findings/Comment Letter
5. January 30, 2023, Town Council Meeting Minutes
6. Public Comments Received by HCD
7. Draft Response Table to HCD’s Findings/Comment Letter
8. Public Comments Received Between 11:01 a.m., Thursday, December 1, 2022, and 11:00 a.m.
Friday, February 10, 2023
Attachment received with this Addendum Report:
9. Public Comments Received Between 11:01 a.m., Friday, February 10, 2023, and 11:00 a.m.,
Wednesday, February 15, 2023
This Page
Intentionally
Left Blank
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Dear Mayor Ristow and Council Members,
Re: Housing Element and Public Comment Period
We are writing to provide our comments as part of the seven-day public review of the 6th cycle Housing
Element that was adopted by the Town Council on January 30, 2023.
This is a challenging process for all involved, and we appreciate the work that has been put forth by
many individuals over the past 18 months. The Los Gatos Community Alliance, like all residents, is highly
desirous of the Town developing and adopting a 6th cycle Housing Element that is in substantial
compliance with State Law and is certified by the California Housing and Community Development
Department (HCD) within the state-mandated deadline. We believe this outcome is at risk because the
Housing Element adopted by the Town Council does not meet State Law and – unless modified
appropriately – will not be certified by HCD.
Having adopted the Housing Element on January 30, 2023, the Town must now be found in substantial
compliance (meaning a letter from HCD affirming compliance with Housing Element Law) within 120
days of the January 31, 2023 statutory deadline. If the Town is not found to be in substantial compliance
within 120-days of the statutory deadline, all rezoning required within the housing element must be
completed within one year of the housing element due date (as opposed to three years) to maintain
housing element compliance. Additionally, having a certified Housing Element will make the Town
eligible for a variety of State grants, including funds for affordable housing, parks, and infrastructure. It
cannot be stressed enough how critical it is to receive HCD certification by May 31, 2023.
With this understanding we offer the following comments and recommendations:
Comment # 1 – The Planning Commission failed to meet any reasonable standard of objective review
of the draft Housing Element.
On January 11, 2023, the Planning Commission held a meeting to consider and make a recommendation
to the Town Council on the draft of the Housing Element that the Town submitted to HCD on October
14, 2022. At that meeting there was considerable discussion regarding whether the draft was in
substantial compliance with State Law as well as the expectation that the Town would receive HCD’s
comment letter the very next day - January 12, 2023. Also at that meeting, Staff did not present the
HCD’s “Housing Element Completeness Checklist” to ensure that every housing element at least
“substantially complies” with the statutory requirements for housing elements.
Additionally, at that meeting the Chair of the Planning Commission stated after reviewing letters
received by other jurisdictions from HCD that for the Town, “there are certainly some modifications that
have to happen to make sure we’re in compliance with State Law.” Staff also testified that “the verbal
comments we received were, that there is additional work to be done, but the term ‘substantial
ATTACHMENT 9
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compliance’ was never brought up or discussed.” Why Staff would not raise the question directly to HCD
regarding substantial compliance is baffling. This was the primary reason for submitting the draft
Housing Element to HCD.
The Planning Commission after this discussion proceeded to find that the draft Housing Element
submitted to HCD was in substantial compliance with State Law and voted unanimously to recommend
to the Town Council to adopt the draft Housing Element that had been submitted to HCD with only
slightly revised site inventory analysis and site inventory forms. The revisions to the site inventory added
two additional sites and used minimum density for sites that accommodate affordable units. This
resulted in the total units in the site inventory declining from 2,371 units to 2,312 units. The difference
between the housing element and RHNA plus 15% buffer declined from 79 to 20 units. This was not
discussed by the Planning Commission.
The very next day, on January 12, 2023, the Town received HCD’s findings/comment letter on the Draft
Housing Element. The letter, as anticipated by the Planning Commission, included the finding that
“revisions will be necessary to comply with State Housing Element Law.” The letter was 11 pages in
length and contained numerous findings that substantive changes were necessary to bring the Town’s
housing element into compliance with Article 10.6 of the Government Code. The revisions were
required to make the draft Housing Element compliant in respect to the substance essential to the
objectives of State Law (as distinguished from mere technical imperfections.)
We are deeply troubled by the Planning Commission’s actions. The Commission failed to meet any
reasonable standard of objective review of the draft Housing element. The fact that the Planning
Commission intentionally chose to proceed with a vote knowing the very next day HCD’s letter would be
received, and the likelihood that the letter would advise the Town that the draft Housing Element was
not in substantial compliance, clearly shows the Planning Commission’s analysis was pre-ordained,
arbitrary, capricious, and entirely lacking in evidentiary support. If the Planning Commission had
received and reviewed HCD’s letter prior to taking their action, it is inconceivable that a finding of
substantial compliance could have been made based on substantial evidence in the record.
Recommendation #1 - The Planning Commission’s findings must be based on substantial evidence in
the Public Record and a reasonable standard of review. As part of a reasonable review process, The
Planning Commission should complete the HCD’s recommended “Housing Element Completeness
Checklist” and review the HCD Comment Letter before making any finding of substantial compliance.
Comment #2 – Table 10-3 is not updated and does not provide the information necessary to
summarize the site inventory analysis
The Town Council adopted a site inventory that identified a total of 2,312 units, not the 2,371 shown in
Table 10-3. Additionally, the table should show the affordability level of each component of the site
inventory. The components of 2,312 units are:
Site Inventory 1,840 units
ADU 200
SB 9 units 96
Pipeline units 176
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With a total of 2,312 units, there is an excess of only 20 units over the RHNA plus 15% buffer of 2,292.
This was not disclosed.
Recommendation #2 – In any subsequent Housing Element drafts, ensure that Table 10 is updated to
(i) comport with the site inventory (ii) break out the total into the affordability level of each
component and (iii) disclose the relationship between the site inventory and the RHNA requirements.
Comment #3 – There are substantial development constraints regarding the North 40 sites D1 – D7
which have not been considered and properly analyzed.
HCD’s comment letter specifically stated that the analysis of land use controls for the North Forty
required additional analysis to evaluate the ability to achieve the maximum densities in the site
inventory analysis. We agree.
The North Forty development is governed by a North Forty Specific Plan. Under the Specific Plan a total
of 270 units are allowed to be developed. And, in accordance with the adopted EIR a maximum of 455
housing units was analyzed under the alternative #2 – increased residential/ reduced commercial.
Under Phase 1 of the North Forty Specific Plan, a total of 320 units was approved. This was composed of
237 baseline units plus 83 density bonus units. This means that under the Specific Plan only 33
additional units (270 units less 237 baseline units) are permitted to be developed.
The Specific Plan does allow for amendments either through a developer agreement or amendment to
the Specific Plan. This will be a long and complicated process and potentially subject to legal challenges,
as was the case for the Phase 1 development of the North 40.
The North Forty is the single largest and best area in the Town to make meaningful additions to low-
income housing. Therefore, the focus of the North forty site inventory analysis is to make sure that the
sites designated for lower income housing are adequate and have a reasonable chance of development
during the 6th housing cycle. The Town is not required to ensure that housing will be built, but the
Town’s conclusions regarding the development of low-income housing must be supported by substantial
evidence in the public record.
A major failing of the Town’s 5th cycle Housing Element was due to the Town inappropriately proposing
270 units, of which 240 units were for low-income groups, on the North Forty toward the Town’s 619 5th
Cycle RHNA units. The 5th cycle Housing Element programmed 77% of the total low-income group
housing for the North Forty. The subsequent history shows that this was not supported by any evidence
and was simply a “paper planning” exercise for which there was no reasonable expectation of success.
The North Forty development that occurred during the 5th cycle completely failed to achieve the
targeted low-income housing. There were 240 low-income units planned for development in the 5th
cycle, yet only 50 units (21%) were developed. As a result, the Town failed to meet its 5th cycle low-
income housing target.
On the other end of the spectrum, of the 30 moderate- and above-income units (all market rate
housing) planned for development, a total of 270 units or 9x the planned amount, were developed. This
clearly is proof that the prior planning exercise was deeply flawed and must not be repeated in the 6th
cycle.
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The Los Gatos Community Alliance for some time has been deeply concerned about the site inventory
analysis for the North Forty. If the Town again fails to properly analyze the site and fails to identify
development constraints, the Town will be facing the same outcome realized in the 5th RHNA cycle. It
will again completely miss the required low-income housing target. This must be avoided.
The site inventory for parcels D1 – D7 show a total of 584 units planned for development. Adding these
units to the 320 Phase 1 units, a total of 904 units would be planned (before any allowed bonus
densities) for the entire North Forty site. This clearly exceeds the maximum 270 units under the North
Forty Specific Plan.
The draft Housing Element Program D mentions the need to “increase the total number of dwelling units
allowed in the Specific Plan” but fails to disclose the magnitude of this increase (more than 3x the
current Specific Plan maximum units). It also does not analyze the complexity of completing this task.
Additionally, Program D does not disclose that the 904 units would exceed the 455 maximum units
studied by the EIR, and that even if it is possible to amend the Specific Plan to achieve this increase, it is
likely that a new EIR would be required. This will create an additional constraint.
Based on this, we believe that the public record does not provide substantial evidence that Program D
can be accomplished. This means that the site inventory for the North Forty has not been properly
analyzed and adjustments are needed if the Town is to have any reasonable chance of developing the
low-income housing assigned by RHNA (much less the higher number in the Town’s original General
Plan).
Recommendation #3 –For subsequent Housing Element drafts, perform the required detailed analysis
of all development constraints, especially including any assumptions of development of the North 40
site that conflict with the current Specific Plan. Also perform a detailed analysis of why the 5th Cycle so
badly missed its low-income housing targets and ensure that the 6th Cycle Housing Element does not
contain similar flaws.
Comment #4 – Site D-1 has not been properly analyzed and adjustments are needed to the total units
and low-income units to reflect realistic development potential.
The site inventory has allocated a total of 461 units, with 299 units low-income, 69 units moderate
income and 93 units above moderate. The site is governed by the Specific Plan and controlled by a
developer who has not submitted a property owner interest form but has been active in providing public
comment to the Housing Element Update. Additionally, the site was included in the prior 5th cycle RHNA,
is non-vacant and subject to “by right with 20% affordable” development and is planned to be rezoned
to 30 D/U per acre.
The developer has submitted a letter to the Town dated September 27, 2022, stating that due to market
conditions, the site development is projected to be 200 units and not the 461 units in the site inventory.
Furthermore, the developer has stated they will “meet the Town’s generally applicable affordability
requirements” which is the Town’s BMP program. This is further supported by the development that has
occurred on the Phase 1 property of the North Forty.
The only control the Town has to meet affordability levels in the Specific Plan is the requirement that a
minimum 20 percent of residential units must be below market price (BMP) units. The Town’s BMP
guidelines require for sale BMP units to be equally split between the moderate and low affordability
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categories. If an applicant applies for a density bonus, then the affordability categories are typically low,
very low and/or extremely low.
Based on the substantial evidence in the record, and mindful of the actual development on Phase 1 of
the North Forty, it is difficult to understand how the Staff, Planning Commission and Town Council could
conclude that there is substantial evidence in the record to support the allocation of 461 units in total
and 299 low-income units to site D-1. To the contrary, there appear to be substantial development
constraints that will prevent the development of D-1 as planned in the site inventory. Assuming the
higher numbers currently in site D-1 appears to be another example of a paper planning exercise with
no evidence to support it and for which there is no reasonable expectation of success.
Recommendation #4 – Adjust the site inventory to be to reflect the realistic development potential of
site D-1.
Comment #5 – Sites D2 – D7 have no evidence that they will be redeveloped during the 6th cycle
Sites D-2 through D-7 have a total of 123 units allocated with 78 units for low-income groups. All sites
are non-vacant, and no owner forms have been submitted. While the sites are part of the North Forty
Specific Plan, they are separately owned and not controlled by the developer currently developing
Phase 1.
The HCD letter discusses the need to include an analysis demonstrating the potential for additional
development of nonvacant sites. Under Government Code section 65583.2 subsection (g) (2) the
housing element must demonstrate existing uses are not an impediment to additional residential
development and will likely discontinue in the planning period. Absent findings based on substantial
evidence in the record, the existing uses will be presumed to impede additional residential development
and must not be utilized to demonstrate adequate sites exist to accommodate the RHNA requirement.
A review of the record clearly shows there is no evidence supporting the Town Council findings outlined
in paragraph 4 of the adopted resolution that sites D-2 through D-7 do not constitute an impediment to
the planned residential development. The Town Council’s findings were arbitrary and lacked any
evidentiary support.
Recommendation #5 – Exclude sites D-2 through D-7 from the site inventory. Alternatively, provide
substantial evidence that the existing uses will be discontinued during the planning period and do not
provide substantial constraints to the development anticipated by the Housing Element.
Comment #6 – Non-vacant sites accommodate 98% of lower-income units and there is no evidence in
the record that supports a finding that all existing uses will likely discontinue during the planning
period.
If the Housing Element relies on nonvacant sites to accommodate more than 50% of the RHNA for
lower-income households, the element must demonstrate existing uses are not an impediment to
additional residential development and will likely discontinue in the planning period. Of the 972 lower-
income units in the site inventory analysis, 951 units are on 38 non-vacant parcels. Of these 38 parcels,
20 parcels (with 321 planned low-income units) had no property owner interest form submitted. The
resolution passed by the Town Council stated that substantial evidence in the record was solely based
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on the submittal of property owner interest forms. Therefore, lacking this form, substantial evidence
does not exist for these 20 parcels.
Recommendation #6 – Adjust the site inventory analysis to reflect the impact of excluding these 20
parcels.
Concluding Comment
As a concluding comment we feel it is important to highlight the public comment process regarding the
recently adopted Housing Element. As discussed by HCD, public participation in the development,
adoption and implementation of the housing element is essential to effective housing planning. The HCD
goes further in stating that during the revision process, the Town must continue to engage the
community by making information regularly available.
Since receiving HCD’s comment letter on January 12, 2023, and prior to the adoption of the draft
Housing element on January 30, the Town hosted a booth at the Los Gatos Farmers Market (no results
published) on January 15, and “attended” a Democracy Tent meeting on January 19. That is the total
extent of the public engagement process after receiving the HCD letter.
Regrettably, there were no meetings with non-profit organizations that work in the community facing
homelessness, nor any community-wide study sessions to discuss necessary revisions, nor any meetings
with senior groups or even the Los Gatos Chamber of Commerce.
Worse, the housing element that was adopted was substantially identical to the housing element HCD
found not to be in substantial compliance. There was no real effort to substantively address HCD’s
findings and to submit a revised Housing Element that would be compliant with State Law. Other than
adding two parcels and adjusting for minimum densities for sites accommodating low-income groups on
the site inventory, no other changes were made to the body of the draft Housing Element. Yet such
changes are clearly required by the HCD letter.
As a result, we fully expect the adopted Housing Element will not be certified by HCD and numerous
revisions will be required to obtain certification. The Los Gatos Community Alliance welcomes the
opportunity to engage in ongoing discussions as the Housing Element moves through the certification
process. We remained concerned about the Town’s ability to meet the May 31, 2023 certification
deadline. We share the goal of obtaining certification from HCD and addressing the Town’s overall
housing needs, with a strong focus on below market rate housing that historically has been
underprovided.
Thank you for receiving our comments. For questions, Mr. Koen is our primary contact.
Jak Van Nada, On Behalf of the
Los Gatos Community Alliance
1 California Street - Suite 3050
San Francisco, California 94111-5432
voice 415.655.8100 - fax 415.655.8099
www.bwslaw.com
Direct No.: 415.655.8114
ephillips@bwslaw.com
Los Angeles – Inland Empire – Marin County – Oakland – Orange County – Palm Desert – San Diego – San Francisco – Silicon Valley – Ventura County
February 10, 2023
VIA E-MAIL: HEUPDATE@LOSGATOSCA.GOV
Joel Paulson, Director
Community Development Department
Town of Los Gatos
110 E Main Street,
Los Gatos, CA 95030
Re: Comments on 2023-2031 Housing Element Update
Dear Mr. Paulson:
Our firm represents Grosvenor USA Limited (“Grosvenor”) in connection with
housing and land use matters for development of the North Forty Specific Plan Area in
the Town of Los Gatos (the “Town”). As you are aware, Grosvenor has expressed
interest in developing the North Forty Phase II site included as Site D-1 in the Town’s
recently adopted 2023-2031 Housing Element. We commend the Town on taking the
first step towards achieving its housing goals, and the Grosvenor team looks forward to
working with the Town to deliver much needed housing during the planning period.
Although the Town adopted its Housing Element, we understand that it will be
reviewing HCD’s January 12, 2023 letter during the February 16, 2023 Housing Element
Advisory Board meeting and considering further refinements to the adopted Housing
Element in response . As HCD expressed in its letter, the Housing Element does not
yet meet all of the requirements of State Housing Element Law (Government Code
Article 10.6). We submit this comment letter to bring the Town’s attention to two
particular governmental constraints and to suggest that the Town include programs to
mitigate these constraints in future revisions of its Housing Element.
As HCD points out in its comment letter, the Housing Element must include an
analysis of potential and actual governmental constraints upon the maintenance,
improvement, or development of housing for all income levels, including land use
controls, building codes and their enforcement, site improvements, fees and other
exactions required of developers, and local processing and permit procedures. (Gov.
Code, § 65583(a)(5).) Additionally, the Housing Element must propose programs to
Joel Paulson, Director
February 10, 2023
Page 2
address and remove constraints to the maintenance, improvement, and development of
housing. (Gov. Code, § 65583(c)(3).)
The Town has included an analysis of the governmental constraints to housing
development in Appendix C of its adopted 2023-2031 Housing Element; however, it has
not addressed all of the development standards, requirements, and fees that impose
constraints on development in Los Gatos. Without an analysis of these constraints or
implementation of programs to address and remove these constraints, Grosvenor and
other developers will find it difficult to build in Los Gatos and the Town will be unlikely to
meet its RHNA requirements.
Specifically, the Town’s Housing Element should include an analysis of the
constraints created by the requirement to install story poles before development begins
and by the imposition of fees that are not tied to specific impact mitigation requirements
such as the TDM Program Fee. In addition, the Town must include programs to remove
these constraints in the Housing Element as high-priority implementation items.
1. Story Poles
Requiring installation of story poles on a site before any development can begin
imposes a significant financial and political obstacle to housing development. The Town
has stated that the primary purposes of this requirement are to help illustrate proposed
building locations and heights for pending development applications and to help alert
the community of development applications that are scheduled for consideration at a
public hearing. There are significantly less burdensome ways to achieve these goals.
First, installing story poles is extremely expensive. Installing story poles for
Phase 1 of the North 40 development cost hundreds of thousands of dollars and took
weeks to install, only to be later uninstalled before development could begin. Modern
tools such as 3D renderings could just as effectively illustrate the proposed building
locations and heights for a fraction of the cost and time. Moreover, while members of
the public must physically travel to the development site during a finite period to “see”
the proposed development, 3D renderings could be made available online for members
of the public to view from anywhere at any time, and would provide specific detail
regarding the aesthetics of the proposed buildings rather than requiring viewer
speculation.
Requiring story poles also creates unnecessary tension within the community
and can create false expectations about the Town’s ability to deny or modify design
Joel Paulson, Director
February 10, 2023
Page 3
elements such as height or massing that are consistent with the Town’s development
standards.
For example, during Phase 1 of the North 40 development, acres and acres of
unsightly story poles stirred enough angst among community members to temporarily
derail the approval process. However, given that the Phase 1 development (and many
other housing developments) are protected by state laws that prevent the Town from
denying or reducing the density of housing development projects, including the Housing
Accountability Act and the State Density Bonus Law, the story poles do nothing more
than create unnecessary opposition to projects that are legally entitled to move forward,
which in turn can create an impediment for projects to achieve the full density ostensibly
allowed by the Town’s development standards.
Story poles are an ineffective way to put the community on notice of proposed
developments, and the cost and time delays created by story poles pose significant
hurdles to development in Los Gatos. The Town should consider allowing simpler, less
burdensome ways of providing notice, such as through large informational signs posted
onsite and using 3-D renderings, fly-through videos, and other technological methods
that convey similar information without unreasonably burdening development projects.
2. Development Impact Fees and Program Exactions
As HCD’s letter notes, the Town’s Housing Element does not identify the full
stack of fees that comprise the total amount of exactions applicable to housing projects,
nor does the Housing Element evaluate those fees’ impacts on development. The
Town’s multitude of fees disincentivizes development in Los Gatos and increases
housing costs for renters and buyers. These additional development costs are then
passed onto renters and buyers in the form of increased rents and purchase prices
once development is complete, contributing to the high cost of housing in Los Gatos.
By way of illustration, the Town imposed a TDM Program Fee after discretionary
entitlements were completed on Phase I of the North 40. This fee was in addition to the
developer proposing to implement TDM measures that met or exceeded the Town’s
desired trip reductions, as well as paying significant traffic impact fees. This TDM
Program Fee was imposed without a nexus study being completed. It is our
understanding that a VMT Impact Fee Nexus Study has since been commissioned by
the Town but has not yet been completed. Imposing a new fee -- in addition to requiring
projects to implement a TDM plan that will meet the trip-reduction percentages recently
established by the Town -- is superfluous and an example of the types of exactions that
could impede housing development feasibility without further reducing impacts. Multiple
Joel Paulson, Director
February 10, 2023
Page 4
exactions and fees devoted to similar purposes serve to drive up the cost of
development throughout the Town, and the Housing Element should include a program
to ensure that fees remain at a level that is compatible with development feasibility and
that Conditions of Approval imposed on discretionary approvals have a clear nexus to
project impacts.
We hope that as the town works with HCD to achieve a fully certified housing
element, it enhances its housing element with additional programs that reduce these
constraints so that the Town is able to successfully meet its required housing
obligations.
Sincerely,
Eric S. Phillips
cc: Jose Armando Jauregui, HCD
Don Capobres, Harmonie Park
Jennifer Renk, Sheppard Mullin
Whitney Christopoulos, Grosvenor
Louis Liss, Eden Housing