Palo Alto may lead efforts to restrict ‘builder’s remedy’

Palo Alto is preparing to lead the charge in support of a new legislative effort to limit builder’s remedy applications, which allow housing developers to bypass zoning regulations in cities that don’t have compliant housing plans.

The city is working with Sen. Josh Becker to modify the Housing Accountability Act in a way that would shorten the window during which the builder’s remedy would apply. Under the proposed modification, the builder’s remedy would stop applying once a local jurisdiction approves its Housing Element, provided the document ultimately passes muster with the state Department of Housing and Development.

In Palo Alto, the City Council has been critical of recent builder’s remedy applications, including the 192-apartment complex proposed for 156 California Ave., site of Mollie Stone’s, that would include two towers, one with 11 stories and another with 17 stories; and a 231-unit complex at the Creekside Inn site at 3400 El Camino Real.

Several developers have rescinded their builder’s remedy proposal in the last few months and resubmitted applications that comply with the council’s newly updated zoning regulations, which now allow for greater height and density in areas like El Camino Real and San Antonio Road.

In Palo Alto, the council approved in April 2024 the city’s Housing Element, but it didn’t get the stamp of approval from the Department of Housing and Community Development until August. During that window, the city received two preliminary applications for projects at 2300 Geng Road, which includes 159 apartments, and 680 University Ave, which features 88 apartments.

Smith Development submitted the builder’s remedy application for the University Avenue project just as the developer is in the final stages of approval for a 66-apartment project on the same site, through the city’s more traditional “planned community” process. Members of the Planning and Transportation Commission, which reviewed the project earlier this month, acknowledged the leverage that the builder’s remedy application has given to the builder.

“Somebody is going to be unhappy,” Commissioner Cari Templeton said during the March 12 hearing. “Something is going to be built on this lot and it is up to us to cooperate with the owners and the builders to have something that is the best, that we can all agree on.”

In the past, Palo Alto council members and legal staff had argued that some of these applications are illegal because they were pitched after the City Council had approved its Housing Element, notwithstanding the fact that document had yet to get state approval. That “self-certification” argument was invalidated last year, when the state Legislature passed Assembly Bill 1886, which clarified that a Housing Element can only be deemed compliant after a local jurisdiction adopts it and the state certifies it.

The bill’s author, Assemblyman David Alvarez, D-San Diego, argued during a hearing on the legislation last May that AB 1886 is a “good governance” bill that clarifies local law. He noted that recent attempts to “self-certify” their Housing Elements have slowed down housing production.

“Despite the uptick in proposed projects, due to the lack of clarity, many cities have used the argument that self-certifying their Housing Element is sufficient for compliance purposes,” Alvarez said. “This has led to a multitude of applications not beiing processed by the local governments or outright denied, and various court cases that have slowed down housing development in areas.”

The proposed amendment that Palo Alto is championing would effectively undo that change and give more deference to self-certification. A new memo from Townsend Public Affairs, the city’s lobbyist in Sacramento, states that the purpose of the change is to “eliminate the current window of uncertainty wherein developers can exploit the delay between adoption and HCD approval by submitting applications under the Builder’s Remedy provision.”

The proposed bill would also raise the threshold for the types of applications that can be submitted through the builder’s remedy process. All proposals would now need to be complete formal applications to qualify. This would disqualify from consideration preliminary applications that have not yet undergone a thorough analysis or finalized the designs of the proposed projects.

“This measure seeks to prevent instances where developers file preliminary applications with minimal substantive detail solely to establish eligibility for the Builder’s Remedy, even after the jurisdiction has completed the necessary analysis, polices, and programs required by state law,” the memo states. “By ensuring that Builder’s Remedy protections are only available when a jurisdiction is genuinely out of compliance, the legislation reinforces the original intent of the remedy while preventing misuse that circumvents legitimate land use planning processes.”

The Palo Alto council is scheduled to discuss the proposed bill at its March 24 meeting. It will also consider taking a sponsorship position on the legislation, which would make it the lead advocate for passing the bill. The Townsend memo recommends that the city take on a sponsorship position because the legislative proposal originated from the city.

This story originally appeared in Palo Alto Weekly. Gennady Sheyner covers local and regional politics, housing, transportation and other topics for the Palo Alto Weekly, Palo Alto Online and their sister publications.