2024.05.20 Letter Brief re Appeal of City's Incompleteness Determination.pdf 707 Wilshire Blvd., 24th Floor
Los Angeles, California 90017
tel (213) 626-2906
fax (213) 626-0215
www.meyersnave.com
Russell E. Morse
rmorse@meyersnave.com
May 20, 2024
Via Online Submittal
Honorable Mayor Blankley
Members of the City of Gilroy City Council
City of Gilroy
7351 Rosanna Street
Gilroy, CA 95020
Re: Appeal of City’s Notification of Application Incompleteness
315 Las Animas Avenue, Gilroy California 95020
Project No. AS 23-21
Builder’s Remedy (Government Code Section 65589.5(d)(5))
Dear Mayor Blankley and Members of the Gilroy City Council:
We represent Gandolfi Investments LLC (“Applicant”), applicant of the proposed
housing development project at the property located at 315 Las Animas Avenue in Gilroy,
California (“Property”). This letter shall serve as the Applicant’s brief in support of its appeal
of the City’s Notifications of Application Incompleteness, dated January 11, 2024 and March
15, 2024, pursuant to California Government Code Section 65943 (the “Permit Streamlining
Act”) and Gilroy Municipal Code Section 30.51.50.
I. Project Background and Legal Framework.
On December 12, 2023, the Applicant filed its Formal Application (“Application”) for
a 501-unit housing development project (“Project”) at the Property pursuant to Government
Code Section 65589.5(d)(5), the portion of the Housing Accountability Act referred to as the
Builder’s Remedy. The proposed Project includes at least twenty percent (20%) of the total
units dedicated affordable to lower-income households, the requisite affordable housing for
processing a Builder’s Remedy project.
When the Applicant filed its preliminary application pursuant to SB 330 on July 5,
2023, the City of Gilroy (“City”) did not have a compliant Housing Element certified by the
California Department of Housing and Community Development (“HCD”). In fact, the City’s
draft Housing Element was determined non-compliant by HCD after the Applicant filed its SB
330 preliminary application for the Project in a July 6 comment letter from HCD, in which
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HCD stated in no uncertain terms that “additional revisions are necessary to substantially
comply with State Housing Element Law.” HCD did not certify the City’s Housing Element
until August 21, 2023. Pursuant to Government Code Section 65585 (Housing Element Law),
only HCD can make a determination that a city’s submitted Housing Element is in substantial
compliance with Housing Element Law. Gilroy’s mayor, Marie Blankley, admitted as much
in her August 24, 2023 article in the Gilroy Dispatch, entitled “Mayor’s Update: The ‘Builder’s
Remedy’” in which she states: “On Aug. 21, we received official notification that our
certification process for this eight-year cycle is now complete.” As the deadline for securing a
compliant Housing Element had passed and the City was without a certified Housing Element,
the City is therefore subject to the Builder’s Remedy, which requires approval of any housing
project containing at least twenty percent (20%) lower-income, or one-hundred percent (100%)
moderate-income housing, regardless of its consistency with the general plan or zoning
ordinance. Here, the 501-unit project provides 101 units of lower income housing (equal to
20% of the total number of units), meeting the statutory minimum required number of
affordable housing units. As a result, the Builder’s Remedy applies to this Project.
Further, as described in our letters filed with the preliminary application and the formal
application, the filing of the SB 330 preliminary application vests all “ordinances, policies, and
standards adopted and in effect” at the time of submittal of the Application. Pursuant to SB
330, a preliminary application that meets the list of required items is considered “deemed
complete.” The SB 330 preliminary application included all materials required in the SB 330
Preliminary Application, and therefore vested the application. (See HCD’s October 5, 2022
Letter of Technical Assistance, which provides that a Builder’s Remedy Project is vested under
the City’s non-compliant Housing Element status and the Builder’s Remedy provision in the
Government Code shall apply to the Project throughout the duration of the entitlement process
and its March 16, 2023 Letter, which summarizes and clarifies requirements for Housing
Element compliance.) In sum, the Applicant obtained vested rights to maintain its Builder’s
Remedy application despite the subsequent certification of the City’s Housing Element by
HCD.
Finally, following submittal of the preliminary application to the City, the Applicant
had one hundred eighty (180) days to submit a full application. Here, the Applicant filed its
formal Application on December 12, 2023, 160 days after the preliminary application filing,
and within the required time period. A preliminary application may be amended after filing
for up to twenty percent (20%) of the density or square footage of the proposed Project. Here,
the formal application reduced the project unit count by only three units and increased the
square footage by approximately 35,000 square feet, both of which are less than twenty percent
(20%) from the preliminary application. Accordingly, this application meets all requirements
under State law.
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II. Notifications of Application Incompleteness.
On January 11, 2024, the Applicant received the City’s Notification of Application
Incompleteness stating that the Application has been determined to be incomplete because,
among other things, “staff has taken the position that the Builder’s Remedy under the Housing
Accountability Act (HAA) is not available to applicants pursuing housing projects in the City
of Gilroy since May 1, 2023 [the date of adoption of the City’s uncertified Housing Element]”
and therefore “[a] General Plan Amendment application and Zoning Map Amendment
application would be required to amend the General Plan and Zoning Map in this area to High
Density Residential to allow the proposed residential development on this parcel.”
The Notification goes on to provide a list of items staff has deemed to be incomplete,
all of which stem from the City’s General Plan and Zoning Ordinance. For example, the list of
incomplete items includes the following:
• “Data table including required front and street side setbacks and the number of
accessible (ADA) parking spaces required and proposed.”
• “Color & Material Sample Board”
• “In general, callouts to site plan elements do not reference City Standards.”
• “This project will be required to provide new easements (various types) and
right of way dedications. The submitted plan package does not show, include,
or describe neither [sic] of these items.”
• “The site plan does not show the required sidewalk along the project.”
On March 15, 2024, after the Applicant resubmitted the application supplementing it
with an updated title report and some other information the City requested, the City provided
its second Notification of Application Incompleteness, listing the same incompleteness items
as it did in its first Notification.
III. Analysis
Based on the information provided above, the City’s response to our Application in its
Notification of Application Incompleteness is legally insufficient and supported by neither law
nor HCD guidance. As expressly stated by HCD, “a jurisdiction does not have the authority to
determine that its adopted element is in substantial compliance but may provide reasoning why
HCD should make a finding of substantial compliance.” (HCD’s March 16, 2023 Housing
Element Guidance Letter.) In addition, a jurisdiction is “in compliance” as of the date of HCD’s
letter finding the adopted element in substantial compliance. Any other letters are not a finding
of substantial compliance…” (Ibid; emphasis added.) In sum, the City’s decision in its
Notification of Application Incompleteness regarding the inapplicability of the Builder’s
Remedy here is not supported by law nor supported by the facts in this case.
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Because the Application is subject to the Builder’s Remedy, it cannot be denied on the
basis of inconsistencies with the City’s General Plan and Zoning Ordinance. And because the
General Plan and Zoning Ordinance do not apply to this project, the items identified by staff
as missing from the Application are not “actually required” for the Application’s processing
and cannot form the basis of an incompleteness determination.
Accordingly, the Applicant has submitted this appeal to the City Council to make a
final determination on the Application. Specifically, we request the City Council find that the
Application and the Project complies with the Housing Accountability Act and the Builder’s
Remedy, and that the Application is complete. This project should be processed as a Builder’s
Remedy project. Current law, State Agency guidance, and the facts in this case support no
other result.
A. Under the HAA, Gilroy’s housing element was in substantially compliance only
as of August 21, 2023.
A timeline of Gilroy’s housing element submissions and HCD’s responses follows:
October 31, 2022: Gilroy submitted its first sixth cycle draft housing element.
January 27, 2023: HCD reviewed the City’s draft element and provided its written findings
that “revisions will be necessary to comply with State Housing Element
Law.” HCD included an eleven-page appendix listing the specific
deficiencies it identified.
May 1, 2023: Gilroy City Council passed Resolution No. 2023-26,1 adopting the
Gilroy 2023-2031 Housing Element. Consistent with the requirement of
Gov. Code § 65585(f)(1), Gilroy revised its draft element in response to
HCD’s January 27 deficiency findings.2 Despite its purported finding
that its revised housing element “substantially complies with Housing
Element Law,”3 at no point did Gilroy pursue the provisions of section
65585(f)(2), by “[a]dopting the draft element . . . without changes[, and]
include[ing] in its resolution of adoption written findings which explain
the reasons the legislative body believes that the draft element or draft
amendment substantially complies with this article despite the findings
of the department.” Rather, the Resolution expressly directed Gilroy’s
Community Development Director “to make any changes to the
1 See Gilroy Resolution No. 2023-26.
2 See Gilroy Resolution No. 2023-26, page 3, item 4; see also Attachment B to Resolution
No. 2023-26 (City of Gilroy Comment Response Matrix).
3 See Gilroy Resolution No. 2023-26, page 3, item 3.
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Housing Element necessary to . . . conform to State Housing Element
Law as provided in Government Code 65580 et seq, and address any
changes or amendments requested by HCD to achieve certification.”4
May 8, 2023: Gilroy submitted to HCD the revised second draft of its housing element
that it adopted on May 1.
July 5, 2023: Ten South filed its SB-330 application.
July 6, 2023: HCD determined that the draft was still not substantially compliant
without additional revisions. HCD’s determination included five pages
of identified deficiencies and necessary revisions.
August 9, 2023: Gilroy submitted to HCD a revised third draft housing element, after
addressing the deficiencies identified in HCD’s July 6 letter and making
the revised draft available to the public for seven days.
August 21, 2023: HCD found Gilroy’s housing element “in substantial compliance with
State Housing Element Law (Gov Code, § 65580 et seq) as of August
21, 2023.”
Despite this timeline, City staff has taken the position “that the Builder’s Remedy does
not apply to this application because the City adopted a Housing Element that was in
substantial compliance with state law on May 1, 2023, prior to the submittal of the preliminary
application for this project.”5
Staff states that it “respectfully disagrees” with HCD, whose position it believes is
“contrary to both statutory and case law.”6 In support Gilroy cites Government Code §§
65585(a), 65585(e), 65589.3; Fonseca v. City of Gilroy, 148 Cal. App. 4th 1174 (2007); and
Martinez v. City of Clovis, 90 Cal.App.5th 193 (2023). None of these authorities provides any
support for Gilroy’s position. Section 65585(a) refers to the advisory nature of HCD’s
guidelines for preparing a housing element; it does not address certification requirements
whatsoever. Subsection (e) permits a city to adopt a draft element without consideration of
HCD’s findings, only if “the department’s findings are not available within the time limits set
by this section;” again, it does not lend any support to the City’s position on compliance.
Section 65589.3 pertains to actions challenging the validity of a housing element and provides
a rebuttable presumption of validity if HCD has found the element to be in substantial
compliance; nowhere does it address either the question of when a city’s housing element is
4 See id., page 4, item 7.
5 See January 11, 2024 Notification of Application Incompleteness, pages 2–3.
6 See id., page 2.
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deemed in substantial compliance for purposes of Builder’s Remedy or what should be done
with a housing element that HCD has explicitly found not in substantial compliance.
Staff’s citations to Fonseca and Martinez are similarly of no avail. The Fonseca
decision is seventeen years old and was based on the 2002 version of the Housing Element
Law. In fact, Fonseca itself acknowledged that its conclusion is limited to “the Housing
Element Law as it existed in 2002.”7 As for the Martinez decision, it does not at all address a
finding of substantial compliance absent HCD certification; on the contrary, there the Court of
Appeal reversed the lower court’s finding of noncompliance in large part based on HCD’s
finding of compliance and the position that HCD’s findings are presumptively valid.8 Here,
HCD found Gilroy’s housing element non-compliant. Were a court to follow the precedent set
by Martinez of deferring to the presumptively valid conclusions of HCD, it would conclude
that the law prevents self-certification of a housing element (as HCD maintains) and that Gilroy
was not compliant until August 21, 2023 (as HCD explicitly states).
Staff is incorrect. Under no scenario is the City’s housing element deemed substantially
compliant as of May 1, 2023. Rather, where HCD finds that a City’s draft element does not
substantially comply, section 65585 provides two routes for compliance: (1) the City may
change the draft element per HCD’s comments; or (2) the City may adopt the draft element
without changes, and include in its resolution of adoption written findings that explain the
reasons the City believes the draft element substantially complies despite HCD’s finding to the
contrary.9 As noted in the above timeline, the City elected to proceed with the first option—it
made multiple revisions to its housing element to make it substantially compliant per HCD’s
findings. Although the City adopted a draft element on May 1, 2023, the resolution neither
adopted the original October 31, 2022 housing element nor provided any written findings
explaining its disagreement with HCD, as required by law. On the contrary, the City
continually made the changes HCD required and resubmitted multiple revised versions of its
housing element for HCD certification.
B. Under the Builder’s Remedy law, Gilroy cannot deny the Application based on
inconsistencies with the General Plan or the Zoning Ordinance.
Pursuant to Section 65589.5(d)(5), the relevant provision of the Builder’s Remedy, the
City cannot deny a Builder’s Remedy application for being “inconsistent with both the
jurisdiction’s zoning ordinance and general plan land use designation” if the City has not
“adopted a revised housing element . . . that is in substantial compliance . . . .”10 Stated in the
7 Fonseca, 148 Cal. App. 4th at 1180.
8 Martinez, 90 Cal. App. 5th at 251.
9 See Gov. Code § 65585(f).
10 Gov. Code § 65589.5(d)(5).
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inverse, because Gilroy did not have a substantially compliant housing element when Ten
South’s application was submitted, Gilroy cannot deny the Application for being inconsistent
with the General Plan or Zoning Ordinance.
C. The Application is complete because the items staff has identified as missing
are items that are not “actually required.”
Finally, in light of the above, staff has wrongly determined that the Application is
incomplete. Pursuant to the Permit Streamlining Act, an incompleteness determination must
be “limited to those items actually required on the lead agency’s submittal requirement
checklist.”11 The statute recognizes that not all items on the City’s submittal requirement
checklist are “actually required” for any given project,12 and it limits the completeness
determination to those specific items that are “actually required.”
Nevertheless, City Staff has repeatedly deemed the Application incomplete based on a
list of items that all stem from requirements of the General Plan or Zoning Ordinance,
requirements that are not applicable to Builder’s Remedy applications. Specifically, City Staff
has deemed the Application incomplete for missing elements such as “a sidewalk along the
project” or “easements and right of way dedications” that the Applicant is not required to
provide.
Because the Application cannot be denied for inconsistencies with the General Plan
and Zoning Ordinance, these items are not “actually required” and are irrelevant to a Builder’s
Remedy application.
Some of these requirements constitute an effective denial of the Project as
proposed—a violation of the HAA. For example, in the Notification of Incompleteness, City
Staff deems the application incomplete for not “show[ing], include[ing], or describe[ing]”
new easements and right of way dedications staff claim are required. Or, in another example,
Staff deems the application incomplete for not “show[ing] the required sidewalk along the
project.” Neither of these elements are required, and deeming the application incomplete
until they are added is an effective denial of the Project as it is proposed.
11 Gov. Code § 65943(a).
12 The City’s own Application Submittal Details acknowledges this expressly, noting that
“Some of the submittal requirement items may not apply to all projects, depending on the
type or complexity of the project application.” See Application Submittal Details, p. 11
(https://www.cityofgilroy.org/DocumentCenter/View/7554).
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Other allegedly missing items constitute an illegal conditioning that makes the Project
as proposed infeasible, as that term is defined by the HAA and understood by HCD—another
violation of the HAA. For example, Staff states that “[t]he project will be required to show
all road offsite improvement improvements, including widening and/or road intersections.
Some of these will be related to the project specific traffic study. These plans will not be
deemed complete until these items are identified, conceptually designed, and explained.”
Again, this item is not actually required for the application, and therefore is not grounds for
an incompleteness determination. Attempting to require the applicant to include additional
information, conceptual designs, and explanations are conditions that add unnecessary cost
and delay to the project in order to be deemed complete is a condition prohibited by the
HAA.
To the extent other items are not actually required and could cause unnecessary cost
and delay, they too are violations of the HAA. The HAA provides an explicit framework for
when and how a City can impose conditions on a Builder’s Remedy application. But those
conditions must arise from and be governed by the rules of the HAA.
For the reasons provided above, we respectfully request the City Council deny the
recommendation of Staff and uphold the appeal.
Very truly yours,
Russell E. Morse
cc: Ms. Sharon Goei, Community Development Director
Mr. Robert Schultz, Outside Special Counsel to City of Gilroy
Ms. Erin Freitas, Senior Planner
Mr. Scott Canel, Gandolfi Investments, LLC
Ms. Beth Minor, City Clerk
5730141.1