City fights `builder's remedy' to boost housing supply

to fight back against the “builder's remedy,” an obscure provision of state law that allows developers to build projects of any height and size almost anywhere in cities without a state-certified housing plan.

But unlike some other places, the city doesn't want to block housing units from getting built — it wants to win them back. This week, the city sent letters of rejection to developers who used the builder's remedy after June 20, including to some who tried to scale back previously approved housing projects, telling them that they will not proceed with their applications. The move opens the door to a legal battle over the future of major urban development projects around the city.

“Builder's remedy is about enabling more housing construction, not downzoning,” Mayor Matt Mahan said in an interview. Developers of 29 housing projects around San Jose have taken advantage of the “builder's remedy” since San Jose failed to submit its “housing element,” a blueprint for its future residential growth that the state requires cities to revise and resubmit every eight years, by the January

2023 deadline. The city finally came into compliance Monday when the state signed off on its plan.

Of the 29 plans submitted in the last year, nearly a third would downsize projects previously approved by the city, putting 4,177 previously-approved units on the chopping block. Most notable among them is the Berryessa BART Urban Village at the San Jose Flea Market site, where the developer asserted the builder's remedy to reduce the scope of the project to 940 housing units from the 3,450 originally proposed — a move that Mahan has said “decimates” one of the city's signature transit-oriented projects.

“There's so much investment in that infrastructure right there,” said Chris Burton, who heads San Jose's planning department. “It's such a unique opportunity to place high-density employment and housing on a transit line.” “The public sector has done our part by investing billions of dollars in the transit infrastructure connecting BART to Berryessa, now it's time for our development partners to do their part by producing dense housing and jobs near the station as they committed to do,” Mahan previously told The Mercury News.

San Jose's argument hinges on two points. First, they argue that the city's housing element was in “substantial compliance” with state law from the moment that the City Council adopted it on June 20 and that any builder's remedy applications submitted after that would be moot.

But housing experts say that argument could be flimsy. A court recently sided with a developer who filed suit against La Cañada Flintridge when it used the same rationale, deciding that a city is subject to the builder's remedy until the state gives its official sign-off on a housing plan. California's Department of Housing and Community

Development has reaffirmed that stance in its own memos. The city's second argument is more novel. In its letter to the Berryessa BART developers, San Jose argues that builder's remedy does not apply for projects that wouldn't help the city to meet its housing production goals.

In other words, the city is asking: Why would builder's remedy, a penalty levied on cities that aren't building enough housing, apply to a project seeking to build fewer units?

“The tool is intended to create housing, not to reduce housing,” said Mathew Reed, policy director